Visa 2012 Annual Report Download - page 92

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Table of Contents VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2012
Level 3 assets. Asset-backed securities are bonds that are backed by various types of assets and primarily consist of
mortgage-backed securities. Asset-backed securities are classified as Level 3 due to a lack of observable inputs in measuring fair
value.
There were no transfers between Level 1 and Level 2 assets during fiscal 2012 or 2011 . A separate roll-forward of Level 3
plan assets measured at fair value is not presented because activities during fiscal 2012 and 2011 were immaterial.
Cash Flows
Other Benefits
The Company sponsors a defined contribution plan, or 401(K) plan, that covers substantially all of its employees residing in
the United States. Personnel costs included $37 million , $34 million and $29 million in fiscal 2012 , 2011 and 2010 , respectively,
for expenses attributable to the Company’s employees under the plan. The Company’s contributions to this plan are funded on a
current basis, and the related expenses are recognized in the period that the payroll expenses are incurred.
Note 12—Settlement Guarantee Management
The Company indemnifies clients for settlement losses suffered due to failure of any other customer to honor Visa cards,
travelers cheques, deposit access products, point-of-sale check service drivers and other instruments processed in accordance
with the operating regulations. This indemnification creates settlement risk for the Company due to the difference in timing between
the date of a payment transaction and the date of subsequent settlement. Settlement at risk (or exposure) is estimated based on
the sum of the following inputs: (1) average daily volumes during the quarter multiplied by the estimated number of days to settle
plus a safety margin; (2) four months of rolling average chargebacks volume; and (3) the total balance for outstanding travelers
cheques.
The Company maintains and regularly reviews global settlement risk policies and procedures to manage settlement exposure,
which may require clients to post collateral if certain credit standards are not met.
The Company's settlement exposure is limited to the amount of unsettled Visa payment transactions at any point in time. The
Company's estimated maximum settlement exposure was approximately $49.3 billion at September 30, 2012 , compared to $47.5
billion at September 30, 2011 . Of these amounts, $3.5 billion and $3.2 billion at September 30, 2012 and 2011, respectively, were
covered by collateral. The total available collateral balances presented below were greater than the settlement exposure covered
by customer collateral held due to instances in which the available collateral exceeded the total settlement exposure for certain
financial institutions at each date presented.
89
Pension
Benefits
Other
Postretirement
Benefits
Actual employer contributions (in millions)
2012
$
84
$
4
2011
70
4
Expected employer contributions
2013
$
48
4
Expected benefit payments
2013
$
116
$
4
2014
117
4
2015
107
4
2016
108
4
2017
100
4
2018-2022
419
13