Visa 2012 Annual Report Download - page 47

Table of Contents
and the ongoing strength and quality of credit markets. We will continue to review our portfolio in light of evolving market and
economic conditions. However, if current market conditions deteriorate, the liquidity of our investment portfolio may be impacted
and we could determine that some of our investments are impaired, which could adversely impact our financial results. We have
policies that limit the amount of credit exposure to any one financial institution or type of investment. See Item 1A—Risk Factors.
Revolving credit facilities. In February 2008, we entered into a $3.0 billion five-year revolving credit facility with a syndicate of
banks including affiliates of certain holders of shares of our class B and class C common stock and certain of our clients and
affiliates of our clients. Loans under the five-year facility may be in the form of: (1) Base Rate Advance, which will bear interest at a
rate equal to the higher of the Federal Funds Rate plus 0.5% and the Bank of America prime rate; (2) Eurocurrency Advance, which
will bear interest at a rate equal to LIBOR (as adjusted for applicable reserve requirements) plus an applicable cost adjustment and
an applicable margin of 0.11% to 0.30% based on our credit rating; or (3) U.S. Swing Loan, Euro Swing Loan, or Foreign Currency
Swing Loan, which will bear interest at the rate equal to the applicable Swing Loan rate for that currency plus the same applicable
margin plus additionally for Euro and Sterling loans, an applicable reserve requirement and cost adjustment. We also agreed to pay
a facility fee on the aggregate commitment amount, whether used or unused, at a rate ranging from 0.04% to 0.10% and a
utilization fee on loans at a rate ranging from 0.05% to 0.10% based on our credit rating. Currently, the applicable margin is 0.15%,
the facility fee is 0.05% and the utilization fee is 0.05%. This facility contains certain covenants, including financial covenant
requirements relating to a maximum level of debt to EBITDA and events of default customary for financings of this type. This facility
expires on February 15, 2013. We are in the process of replacing this facility in fiscal 2013. There were no borrowings under this
facility and we were in compliance with all covenants during and at the end of fiscal 2012 .
U.S. commercial paper program . We maintain a $500 million U.S. commercial paper program, which provides for the
issuance of unsecured debt with maturities up to 270 days from the date of issuance at interest rates generally extended to
companies with comparable credit ratings. The commercial paper program is a source of short-term borrowed funds that may be
used from time to time to cover short-term cash needs. We had no obligations outstanding under this program during and at the
end of fiscal 2012 . There are no financial covenants related to this program.
Universal shelf registration statement. In July 2012, we filed a registration statement with the U.S. Securities and Exchange
Commission using a shelf registration process. As permitted by the registration statement, we may, from time to time, sell shares of
debt or equity securities in one or more transactions. The registration statement expires in July 2015.
Litigation escrow account. Pursuant to the terms of the retrospective responsibility plan, we maintain a litigation escrow
account from which monetary liabilities from settlements of, or judgments in, the covered litigation will be payable. When the
Company funds the litigation escrow account, the shares of class B common stock held by our stockholders are subject to dilution
through an adjustment to the conversion rate of the shares of class B common stock to shares of class A common stock. See Note
3—Retrospective Responsibility Plan and Note 21—Legal Matters to our consolidated financial statements. The balance in this
account at September 30, 2012 , was $4.4 billion and is reflected as restricted cash on our consolidated balance sheet. As these
funds are restricted for the sole purpose of making payments related to the covered litigation matters, as described below under
Uses of Liquidity , we do not rely on them for other operational needs.
Credit Ratings
At September 30, 2012 , our credit ratings by Standard and Poor’s and Moody’s were as follows:
Various factors affect our credit ratings, including changes in our operating performance, the economic environment,
conditions in the electronic payment industry, our financial position and changes in our business strategy. We do not currently
foresee any reasonable circumstances under which our credit ratings would be significantly downgraded. If a downgrade were to
occur, it could adversely impact, among other things, our future borrowing costs and access to capital markets.
Uses of Liquidity
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Standard and Poor’s Moody’s
Debt type Rating
Outlook Rating Outlook
Short-term unsecured debt A-1
Stable P-1 Stable
Long-term unsecured debt A+
Stable A1 Stable