Visa 2007 Annual Report Download - page 99

Table of Contents
Interest Rate Risk
A significant portion of Visa U.S.A.'s investment portfolio assets is held in fixed-income securities. These assets are reflected as cash equivalents,
short-term available-for-sale investments and long-term available-for-sale investments. Visa U.S.A. does not consider its cash and cash equivalents or its
auction rate securities to be subject to significant market risks from a fair value perspective, as amounts consist of liquid investments with original maturities
or repricing characteristics of three months or less. The fair value balances of Visa U.S.A.'s short-term and long-term available-for-sale investments at
September 30, 2007 and September 30, 2006 include:
September 30,
2007 2006
(in millions, except
percentages)
Government-sponsored entities 1,274 895
Tax-exempt municipal bonds 9 249
Total $ 1,283 $ 1,144
Percentage of Total Assets 29% 39%
Visa U.S.A. manages its exposure to interest rate risk by investing primarily in rate-adjustable, or short-term securities, and a modest amount of fixed
rate government agency securities to support longer term obligations. However, Visa U.S.A.'s efforts do not provide complete assurance that it will be
protected from interest rate fluctuations. A sharp rise in interest rates could have a significant impact on the fair value of Visa U.S.A.'s investment portfolio.
A hypothetical 100 basis point increase or decrease in interest rates would impact the fair value of the investment portfolio by approximately $7 million
or $2 million, respectively, at September 30, 2007 and approximately $12 million and $6 million, respectively, at September 30, 2006.
Equity Price Risk
Visa U.S.A. owns equity securities which are selected to offset obligations in connection with Visa U.S.A.'s long-term incentive and deferred compensation
plans. Equity securities primarily consist of mutual fund investments related to various employee compensation plans. For these plans, employees bear the
risk of market fluctuations. Gains and losses experienced on these equity investments are offset by increases or reductions in personnel expense, respectively.
The effect of a hypothetical 10% change in market value would have increased or decreased unrealized losses and personnel expense, respectively, by $5
million for fiscal 2007 and fiscal 2006.
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk
Quantitative and qualitative disclosures about market risk are included in Item 7—"Management's Discussion and Analysis of Financial Condition and
Results of Operations".
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