Visa 2007 Annual Report Download - page 105

Table of Contents
On the date of the reorganization, the fair value of the put option is required to be recorded as a long-term liability in the Company's financial
statements. Thereafter, this liability will be carried at fair value with changes in fair value included in the statement of operations similar to the treatment
required by SFAS No. 133 "Accounting for Derivative Instruments and Hedging Activities" and reclassified as a short-term liability when it becomes
exercisable within one year.
5. Subsequent Events
(i) October 2007 Reorganization
In October 2007, the Company completed the series of transactions under the GRA, as detailed in Note 4, Global Restructuring Agreement, in which
Visa U.S.A., Visa International, Visa Canada and Inovant became direct or indirect subsidiaries of Visa Inc. Visa Europe did not become a subsidiary of Visa
Inc., but rather remained owned and governed by its European member financial institutions and entered into a set of contractual arrangements with the
Company in connection with the reorganization.
The reorganization was accounted for using the purchase method of accounting under the guidelines of Statement of Financial Accounting Standards
("SFAS") No. 141 "Business Combinations" with Visa U.S.A. deemed to be the accounting acquirer of Visa Canada and the remaining ownership interest in
Visa International and Inovant not previously held (the "acquired interests"). The net assets underlying the acquired interests were recorded at fair value at the
reorganization date with the excess purchase price over this value attributed to goodwill.
In the reorganization, the Company issued different classes and series of common stock reflecting the different rights and obligations of Visa financial
institution members and Visa Europe based on the geographic region in which they are located. In addition to the common stock, the Company provided other
consideration to Visa Europe in exchange for its ownership interest in Visa International and Inovant.
The Company believes that the reorganization will allow it to more effectively respond to industry dynamics and enhance the Company's ability to
compete.
At the time of the reorganization, the allocation of the Company's common stock to each of Visa AP, Visa CEMEA, Visa LAC, and Visa Canada
(collectively the "acquired regions") and Visa U.S.A. (collectively the "participating regions") was based on each entity's relative contribution to the
Company's projected net income estimated for fiscal 2008, after giving effect to negotiated adjustments. The allocation of Company common stock and other
consideration conveyed to Visa Europe in exchange for its membership interest in Visa International and its ownership interest in Inovant was determined
based on the fair value of each element exchanged in the reorganization.
Purchase Consideration
Total purchase consideration of approximately $17.3 billion was exchanged for the acquired interests. The consideration was comprised of the
following:
(in millions)
Visa Inc. common stock $ 16,785
Visa Europe put option 346
Liability under framework agreement 132
Total Purchase Consideration $ 17,263
Visa Inc. Common Stock Issued in Exchange for the Acquired Regions
The value of the purchase consideration conveyed to each of the member groups of the acquired regions was determined by valuing the underlying
businesses contributed by each, after giving effect to negotiated
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