Visa 2014 Annual Report Download - page 118
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Cash Flows
Pension
Benefits
Other
Postretirement
Benefits
Actual employer contributions (in millions)
2014 ....................................................... $ 10 $ 4
2013 ....................................................... $ — $ 4
Expected employer contributions
2015 ....................................................... $ 7 $ 3
Expected benefit payments
2015 ....................................................... $ 123 $ 3
2016 ....................................................... $ 124 $ 3
2017 ....................................................... $ 115 $ 3
2018 ....................................................... $ 108 $ 3
2019 ....................................................... $ 103 $ 3
2020-2024 .................................................. $ 437 $ 6
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 $46 million, $44 million and $37
million in fiscal 2014, 2013 and 2012, respectively, for expenses attributable to the Company’s
employees under the 401(k) plan. The Company’s contributions to this 401(k) plan are funded on a
current basis, and the related expenses are recognized in the period that the payroll expenses are
incurred.
Note 11—Settlement Guarantee Management
The Company indemnifies its financial institution clients for settlement losses suffered due to
failure of any other client to fund its settlement obligations in accordance with Visa’s 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 Visa 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 increased
to approximately $56.9 billion at September 30, 2014, compared to $53.8 billion at September 30,
2013, as a result of continued growth in the Company’s business. Of these amounts, $3.2 billion and
$3.0 billion at September 30, 2014 and 2013, respectively, were covered by collateral. The total
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