Visa 2011 Annual Report Download - page 120

Table of Contents
VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2011
(in millions, except as noted)
Note 18—Commitments and Contingencies
Commitments. The Company leases certain premises and equipment throughout the world with varying expiration dates. The Company incurred total
rent expense of $76 million in fiscal 2011, $59 million in fiscal 2010, and $77 million in fiscal 2009. Future minimum payments on leases and marketing and
sponsorship agreements per fiscal year, at September 30, 2011 are as follows:
(in millions) 2012 2013 2014 2015 2016 Thereafter Total
Operating leases $ 65 $ 56 $ 23 $ 19 $ 10 $ 34 $ 207
Capital leases 6 6 — — — — 12
Marketing and sponsorships 119 108 106 71 23 86 513
Total $ 190 $ 170 $ 129 $ 90 $ 33 $ 120 $ 732
Select sponsorship agreements require the Company to spend a certain amount for advertising and marketing promotion over the term of the contract
without specifying the exact year of spend. For these obligations, the Company has estimated the timing of when these amounts will be spent. In addition to
the fixed payments stated above, select sponsorship agreements require the Company to undertake marketing, promotional or other activities up to stated
monetary values to support events which the Company is sponsoring. The stated monetary value of these activities typically represents the value in the
marketplace, which may be significantly in excess of the actual costs incurred by the Company.
Client Incentives. The Company has agreements with select clients for various programs designed to build payments volume, increase the acceptance of
its products and win merchant preference for transaction routing. These agreements, with original terms ranging from one to thirteen years, can provide card
issuance and/or conversion support, volume / growth targets and marketing and program support based on specific performance requirements. These
agreements are designed to encourage client business and to increase overall Visa-branded payment and transaction volume, thereby reducing unit transaction
processing costs and increasing brand awareness for all Visa clients.
Payments made that qualify for capitalization and obligations incurred under these programs are included on the balance sheet. Obligations under these
customer agreements are primarily amortized as a reduction to revenue in the same period as the related revenues are earned, based on management's estimate
of the customer's performance in accordance with the terms of the incentive agreement. The agreements may or may not limit the amount of customer
incentive payments.
The table below sets forth the expected future reduction of revenue for client incentive agreements in effect at September 30, 2011:
(in millions) 2012 2013 2014 2015 2016 Thereafter Total
Client incentives $ 1,634 $ 1,519 $ 1,170 $ 833 $ 558 $ 472 $ 6,186
The actual amounts that are recorded will be greater or less than the estimates above due to customer performance, execution of new contracts, or
amendments to existing contracts. Based on these agreements, increases in incentive payments are generally driven by increased payment and transaction
volume, and as a result, in the event incentive payments exceed this estimate, such payments are not expected to have a material effect on the Company's
financial condition, results of operations or cash flows.
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