Visa 2007 Annual Report Download - page 108

Table of Contents
The purchased intangibles and goodwill are not deductible for tax purposes. Substantially all of the identifiable intangible assets have an indefinite life
and accordingly are not subject to amortization.
Contingent Consideration
As discussed in Note 4, Global Restructuring Agreement, the initial allocation of Visa Inc. common stock is subject to a true-up mechanism in order to
reflect the actual relative contribution of the participating regions to the Company's financial performance, under the terms of reorganization. Under the
guidelines of SFAS No. 141 to the extent the ownership interest of the Visa U.S.A. member group in the Company is reduced as a result of the true-up, with a
corresponding increase in the collective ownership interest of the other stockholders, additional purchase consideration will be recorded resulting in an
increase in goodwill. To the extent that the ownership interest of the Visa U.S.A. member group is increased as a result of the true-up, with a corresponding
decrease in the collective ownership interest of the other stockholders, the increase will be treated as a stock dividend to Visa U.S.A. members.
Other Contingencies
The Company has not identified any material unrecorded pre-acquisition contingencies where the related asset, liability or impairment is probable and
the amount can be reasonably estimated. Prior to the end of the one-year purchase price allocation period, if information becomes available that would
indicate it is probable that such events had occurred and the amounts can be reasonably estimated, such items will be included in the final purchase price
allocation and may adjust goodwill.
Pro Forma Results of Operations
The following Visa Inc. pro forma results of operations for fiscal 2007 and 2006 have been prepared to give effect to the reorganization described above
assuming it occurred on October 1 of each fiscal year presented.
The pro forma statements of operations are presented for illustrative purposes only and are not necessarily indicative of the results of operations that
would have been obtained had these events actually occurred at the beginning of the periods presented, nor do they intend to be a projection of future results
of operations. The pro forma results of operations have been prepared from the historical audited consolidated statements of operations for fiscal 2007 and
2006 of Visa U.S.A., Visa International and Visa Canada.
Fiscal
2007 2006
(in millions)
Operating revenues $ 5,193 $ 3,902
Net (loss) income $ (861) $ 453
(ii) Settlement Agreement with American Express
The Company, Visa U.S.A. and Visa International entered into an agreement with American Express that became effective on November 9, 2007 to
settle previously disclosed litigation, American Express Travel Related Services Co., Inc. v. Visa U.S.A. Inc. et al, that had been pending since 2004. The
settlement ends all current litigation between American Express and Visa U.S.A. and Visa International, as well as the related litigation between American
Express and the five co-defendant banks.
Under the settlement agreement, American Express will receive maximum payments of $2.25 billion, including up to $2.07 billion from Visa Inc. and
$185 million from the five co-defendant banks. An initial payment of $1.13 billion will be made on or before March 31, 2008 including $945 million from the
Company and $185 million from the five co-defendant banks. Beginning March 31, 2008, the Company will pay American Express an additional amount up
to $70 million each quarter for 16 quarters, for a maximum total of $1.12 billion.
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