Visa 2007 Annual Report Download - page 90

Table of Contents
$1.9 billion, are reflected in the litigation provision on Visa U.S.A.'s consolidated statements of operations for fiscal 2007 and in current and long-term
accrued litigation on its consolidated balance sheet at September 30, 2007. Visa Inc. expects to fund future payments under the American Express settlement
under its retrospective responsibility plan. The plan includes an escrow arrangement in which Visa Inc. will deposit a portion of the expected proceeds from
an initial public offering, as determined by the Visa Inc. litigation committee (a committee established pursuant to a litigation management agreement among
Visa Inc., Visa International, Visa U.S.A. and the members of the committee, all of whom are affiliated with, or acting for, certain Visa U.S.A. members), into
an escrow account from which settlements of, or judgments in, covered litigation will be payable. The plan also includes a loss sharing agreement in which
Visa U.S.A. members that are parties to the agreement are responsible for covered litigation in proportion to the member's ownership percentage, as calculated
in accordance with Visa U.S.A.'s certificate of incorporation. This plan includes multi-step mechanisms to fund financial obligations of Visa U.S.A. and Visa
International related to certain litigation, including the American Express litigation covered by this settlement agreement. See "Business—Retrospective
Responsibility Plan."
Visa U.S.A. has an uncommitted credit facility with Visa International whereby Visa U.S.A. or Visa International may provide each other short-term
financing with a maximum term of five business days. Neither Visa U.S.A. nor Visa International has the obligation to lend to or to borrow from the other
company. There were no outstanding balances at September 30, 2007 or September 30, 2006 under this arrangement.
In July 2006, Visa U.S.A.'s board of directors approved a plan to build a new data center on the east coast of the United States at an estimated cost of
$397 million, which Visa U.S.A. plans to fund with its existing liquid assets and projected cash flows. Visa U.S.A. completed the land purchase and began
construction in fiscal 2007; construction is expected to continue through fiscal 2010. Upon completion, Visa U.S.A. will migrate its current east coast data
center to this new facility. Visa U.S.A. assesses the estimated cost to build the new data center on a regular basis and the corresponding liquidity required
during each stage of the building process. In March 2007, Visa U.S.A. executed two performance bond agreements with the county in which the east coast
data center will be constructed to provide assurance that land development and construction will be completed as planned. The bonds have a total value of $2
million and become due in the event that land development and construction are not completed as planned. At September 30, 2007, Visa U.S.A. had
remaining committed obligations of $186 million related to the new data center.
Visa U.S.A. had negative working capital at September 30, 2007, primarily due to the financial statement impact of the American Express litigation.
See Note 20—Legal Matters to the Visa U.S.A. fiscal 2007 consolidated financial statements. Visa U.S.A. believes its existing liquid assets and projected cash
flows will be sufficient to fund its business operations, working capital requirements, capital expenditures, future strategic developments and other
commitments during fiscal 2008. Visa U.S.A. anticipates that future increases in its operating cash flows from new acceptance fees initiated in April 2007 will
be offset by obligations assumed in connection with the retirement of two restricted liability programs. See Note 19—Commitments and Contingencies to the
Visa U.S.A. fiscal 2007 consolidated financial statements. Visa U.S.A.'s ability to maintain these levels of liquidity could be adversely affected by several
factors described under "Risk Factors," including the adverse outcome of any of the legal or regulatory proceedings to which Visa U.S.A. is a party. As part of
Visa Inc., Visa U.S.A. will continue to assess its liquidity position and potential sources of supplemental liquidity in view of its operating performance and
other relevant circumstances.
Visa U.S.A. has certain off-balance sheet commitments and contingencies that may have significant future cash requirements. See "Off-Balance Sheet
Arrangements and Contractual Obligations" and Note 12—Pension, Postretirement and Other Benefits, Note 14—Debt, Note 19—Commitments and
Contingencies and Note 20—Legal Matters to the Visa U.S.A. fiscal 2007 consolidated financial statements.
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