Visa 2010 Annual Report Download - page 96

Table of Contents
VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2010
(in millions, except as noted)
Total purchase consideration has been allocated to the tangible and identifiable intangible assets and to liabilities assumed based on their respective fair
values on the acquisition date. The excess of purchase consideration over net assets assumed was recorded as goodwill, which represents the value that is
expected from expanding the Company's online payment and related fraud and security management capabilities, and other synergies. The $1.2 billion of
additional goodwill represents the only activity to the Company's goodwill during the fiscal year. The Company allocates 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 a second reporting unit. The
remainder was allocated to the Company's original reporting unit to reflect the incremental growth and synergy this acquisition will provide to the Company's
existing business. None of the additional goodwill is expected to be deductible for tax purposes. The following table summarizes the purchase price allocation,
which is preliminary pending finalization of the valuation analysis.
(in millions)
Tangible assets and liabilities
Current assets $ 259
Non-current assets 150
Current liabilities (45)
Non-current liabilities (256)
Intangible assets 605
Goodwill 1,239
Net assets acquired $ 1,952
Intangible assets consist of customer relationships, reseller relationships and tradenames, which have useful lives ranging from 5 to 15 years. See Note 9
—Intangible Assets, Net. The Company also acquired $122 million of technology assets, which have weighted average useful lives of 7 years, and are
recognized in property, equipment and technology, net on the consolidated balance sheets. See Note 8—Property, Equipment and Technology, Net. The
following table summarizes the fair value of the acquired intangible assets. See Note 9—Intangible Assets, Net.
Fair Value
Weighted-Average
Useful Life
(in millions)
Customer relationships $ 320 10
Reseller relationships 95 9
Tradenames 190 15
Total amortizable intangible assets $ 605 12
In connection with the acquisition, non-vested in-the-money stock options held by CyberSource employees on the acquisition date were terminated and
replaced with approximately 1.6 million of the Company's non-qualified stock options, with a total fair value of approximately $46 million to be expensed
over a period of three years from the original grant date of the CyberSource options. See Note 18—Share-based Compensation. The Company also expensed
as incurred approximately $13 million of acquisition-related costs during fiscal 2010, which consisted primarily of professional fees related to closing the
transaction. There was no contingent consideration related to the acquisition.
The consolidated financial statements include the operating results of CyberSource from the date of the acquisition.
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