Other Noncurrent Assets and Liabilities

12 Months Ended

Dec. 31, 2019

Other Noncurrent Assets and Liabilities [Abstract]

Other noncurrent assets as of December 31, 2019 and 2018 consists of the following (in millions):



	2019		2018
Visa Europe and contingent value rights ("CVR") related assets	$	940	$	—
Operating lease ROU assets (1)	564		—
Other noncurrent assets	799		503
Total Other noncurrent assets	$	2,303	$	503

Other noncurrent liabilities as of December 31, 2019 and 2018 consists of the following (in millions):



	2019		2018
CVR liability	$	838	$	—
Tax Receivable Agreement liability (2)	532		—
Operating lease liabilities (1)	466		—
Other noncurrent liabilities	570		326
Total Other noncurrent liabilities	$	2,406	$	326


(1)	See Note 14, Operating Leases


(2)	See Note 16, Commitments and Contingencies

Visa Europe and Contingent Value Rights

As part of the Worldpay acquisition, the Company acquired certain assets and liabilities related to the June 2016 Worldpay Group plc ("Legacy Worldpay") disposal of its ownership interest in Visa Europe to Visa Inc. As part of the disposal, Legacy Worldpay received consideration from Visa Inc. in the form of cash and convertible Visa Inc. Series B preferred stock ("preferred stock"), the value of which may be reduced by settlement of potential liabilities relating to ongoing interchange-related litigation involving Visa Europe. Also in connection with the disposal, Legacy Worldpay agreed to pay former Legacy Worldpay owners 90% of the net-of-tax proceeds from the disposal, known as contingent value rights ("CVR"), pending the finalization of the proceeds from disposal, which is expected to occur no later than June 2028, at which time the preferred stock is subject to mandatory conversion into Visa Inc. Class A common stock.

The Company has elected the fair value option under ASC 825, Financial Instruments ("ASC 825"), for measuring its preferred stock asset and related CVR liability. The estimated fair value of the preferred stock and related CVR liability are determined using Level 3-type measurements. Significant inputs into the valuation of the preferred stock include the Visa Inc. Class A common stock price per share and the conversion ratio, which are observable, and an estimate of potential losses that will result from the ongoing litigation involving Visa Europe, which is unobservable. The Company engaged third-party valuation specialists and external counsel to assist management in making the fair value determination for the preferred stock. The fair value of the preferred stock is $400 million at December 31, 2019, recorded in Other noncurrent assets on the Consolidated Balance Sheet.

The fair value of the CVR liability is determined based on 90% of the net-of-tax proceeds from the disposal, including the preferred stock and the cash consideration. The portion of the cash consideration that is payable as part of the CVR liability is segregated pursuant to contractual provisions and reflected as restricted cash in the amount of $540 million at December 31, 2019 (see Note 2(b)) and is recorded in Other noncurrent assets on the Consolidated Balance Sheet. The fair value of the CVR liability is $838 million at December 31, 2019, recorded in Other noncurrent liabilities on the Consolidated Balance Sheet. Pursuant to ASC 825, the Company remeasures the fair value of the preferred stock and related CVR liability each reporting period after the initial recognition at fair value as of the Worldpay acquisition date. The net change in fair value was $5 million for the year ended December 31, 2019, recorded in Other income (expense), net on the Consolidated Statement of Earnings.