Visa 2008 Annual Report Download - page 123

Table of Contents
VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2008
(in millions, except as noted)
Visa Europe Put-Call Option Agreement
Under the put-call option agreement between the Company and Visa Europe, the Company has granted Visa Europe a put option under which the
Company is required to purchase from its members all of the share capital of Visa Europe. This option is exercisable beginning on March 25, 2009. The
Company is required to repurchase the shares of Visa Europe no later than 285 days after exercise of the put option. The purchase price of the Visa Europe
shares under the put option is based upon a formula that, subject to certain adjustments, applies the 12-month forward price-to-earnings multiple applicable to
the Company's common stock at the time the option is exercised to Visa Europe's projected sustainable adjusted net operating income for the same 12-month
period. At the date of reorganization and at September 30, 2008, the fair value of the put option was approximately $346 million. Refer to Note 4—Visa
Europe for more information related to the Visa Europe put-call option agreement.
Liability Under Framework Agreement
The relationship between the Company and Visa Europe subsequent to the reorganization is governed by the framework agreement, which provides for
trademark and technology licenses and bilateral services.
Visa Inc., Visa U.S.A., Visa International and Inovant, as licensors, granted Visa Europe exclusive, irrevocable and perpetual licenses to use the Visa
trademarks and technology intellectual property owned by the licensors and certain affiliates within the Visa Europe region for use in the field of financial
services, payments, related information technology and information processing services and participation in the Visa system. The Company determined that
the base license fee (the "fee"), as adjusted in future periods based on the growth of the gross domestic product of the European Union, approximated fair
value. The Company made this determination through an analysis of the fee rates implied by the economics of the licenses. As more fully described in Note 4
—Visa Europe, the base fee was reduced by an amount and for a period of time dependent on the timing and results of the IPO. At October 1, 2007, the
Company calculated its liability to provide these licenses at below fair value to be approximately $132 million, based on the Company's initial registration
statement filing on November 9, 2007, an assumed offering closing date of March 31, 2008 and the applicable three-month London Interbank Offered Rate
("LIBOR") rate at September 30, 2007 of 5.23%. See Note 4—Visa Europe for more information related to the liability under the framework agreement.
Fair Value of Assets Acquired and Liabilities Assumed
Total purchase consideration has been allocated to the tangible and identifiable intangible assets and liabilities assumed underlying the acquired
interests based on their fair value on the date of the reorganization. The excess of purchase consideration over the tangible and identifiable intangible assets
and liabilities assumed was recorded as goodwill.
122