Visa 2007 Annual Report Download - page 147

Table of Contents
VISA U.S.A. INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Volume and Support Incentives and Sponsorship Agreements
The Company has agreements with financial institutions and merchants for various programs designed to build payments volume and increase payment
product acceptance. These agreements, which range in term from approximately 1 to 13 years, provide card issuance, marketing and program support based
on specific performance requirements. These agreements are designed to encourage more customer business and to increase overall Visa-branded payment
volume, thereby reducing unit transaction processing costs and increasing brand awareness for all Visa U.S.A. customers. Payments made and obligations
incurred under these programs are included in current portion of volume and support incentives, volume and support incentives asset and volume and support
incentive liability on the Company's consolidated balance sheets. The Company's obligation under financial institution and merchant agreements is amortized
as a reduction to revenue over the period of benefit and recorded in volume and support incentives on the Company's consolidated statements of operations.
The expected reduction of future earnings resulting from volume and support incentives is estimated below under "Restricted Liabilities—Program
Retirement."
The Company is currently a party to other long-term contractual sponsorship arrangements ranging from approximately 3 to 6 years. These contracts are
designed to help the Company increase Visa-branded card usage and payments volumes. Over the life of these contracts, the Company is required to make
payments in exchange for certain advertising and promotional rights. Payments made and obligations incurred under these programs are included in prepaid
and other current assets, other assets, and accrued liabilities on the Company's consolidated balance sheets. Amortization for sponsorship agreements is
recorded in advertising, marketing and promotion on the Company's consolidated statements of operations. The expected reduction of future earnings
resulting from sponsorship agreements is estimated as follows:
For the Years Ending September 30 In Thousands
2008 $ 18,170
2009 14,945
2010 8,902
2011 1,789
2012 905
Thereafter 556
Total sponsorship agreements $ 45,267
Restricted Liabilities—Program Retirement
In April 2005, the Company introduced a program that supported card product usage for selected utilities that met certain acceptance standards. The
program was funded by debit issuers at the time of settlement, to support efforts on their behalf to secure utility merchant acceptance and promote debit
products usage. Under current program rules, unused funds were required to be returned to debit issuers at the conclusion of the program. The balance for this
program was $0.0 million at September 30, 2007 and $2.3 million at September 30, 2006.
In January 2004, the Company introduced a program that supported Visa Check card usage and other business arrangements for selected merchants that
met certain acceptance standards. The program was funded by Visa Check card issuers at the time of settlement, to support efforts on their behalf to secure
merchant acceptance and promote card usage. Under program rules, unused funds were required to be returned to Visa Check card issuers at the conclusion of
the program. The balance for this program was $0.0 million at September 30, 2007 and $74.5 million at September 30, 2006. These funds are included in cash
and cash equivalents, investment securities and accrued liabilities on the Company's consolidated balance sheets as appropriate.
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