Visa 2010 Annual Report Download - page 63

Table of Contents
measured as the amount by which the carrying amount of the asset or asset group exceeds its fair value. No events or changes in circumstances indicate that
finite-lived intangible assets were impaired as of September 30, 2010.
Goodwill. Review of goodwill impairment is completed annually or whenever events or changes in circumstances indicate that impairment may exist.
Goodwill impairment is reviewed using a two-step process that involves comparing the fair value of the reporting unit to its carrying value and comparing the
implied fair value of reporting unit goodwill with the carrying amount of that goodwill. We rely on a number of factors when completing impairment
assessment including a review of discounted future cash flows, business plans and use of present value techniques. We evaluated our goodwill for impairment
on July 1, 2010, and concluded there was no impairment as of that date. Subsequent to this annual assessment, we completed the CyberSource acquisition on
July 21, 2010, which resulted in an additional $1.2 billion in goodwill and established a second reporting unit. We allocate goodwill to reporting units based
on the reporting unit expected to benefit from the acquisition. Of the $1.2 billion, approximately $0.8 billion was allocated to the second reporting unit. The
remainder was allocated to our original reporting unit to reflect the incremental growth and synergy this acquisition will provide to our existing business. No
recent events or changes in circumstances indicate that impairment exist as reflected by the business performance of our reporting units and overall market
capitalization.
Impact if Actual Results Differ from Assumptions. If actual results are not consistent with our assumptions and estimates, we may be exposed to
impairment charges. The carrying values of goodwill and intangible assets, net were $11.4 billion and $11.5 billion, respectively, including $10.9 billion of
indefinite-lived intangible assets and $595 million of finite-lived intangible assets, net at September 30, 2010.
Legal and Regulatory Matters
Critical Estimates. We are currently involved in various legal proceedings, the outcomes of which are not within our complete control or may not be
known for prolonged periods of time. Management is required to assess the probability of loss and amount of such loss, if any, in preparing our financial
statements.
Assumptions and Judgment. We evaluate the likelihood of a potential loss from legal or regulatory proceedings to which we are a party. We record a
liability for such claims when a loss is considered probable and the amount can be reasonably estimated. Significant judgment may be required in the
determination of both probability and whether an exposure is reasonably estimable. Our judgments are subjective based on the status of the legal or regulatory
proceedings, the merits of our defenses and consultation with in-house and outside legal counsel. As additional information becomes available, we reassess
the potential liability related to pending claims and may revise our estimates.
Our retrospective responsibility plan only addresses monetary liabilities from settlements of, or final judgments in, the covered litigation. The plan's
mechanisms include the use of the litigation escrow account. The accrual related to covered litigation could be either higher or lower than the escrow account
balance. We did not record an additional accrual for covered litigation during fiscal 2010. See Note 4—Retrospective Responsibility Plan to our consolidated
financial statements.
Impact if Actual Results Differ from Assumptions. Due to the inherent uncertainties of the legal and regulatory processes in the multiple jurisdictions in
which we operate, our judgments may be materially different than the actual outcomes, which could have material adverse effects on our business, financial
conditions and results of operations. See Note 22—Legal Matters to our consolidated financial statements.
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