Visa 2008 Annual Report Download - page 130

Table of Contents
VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2008
(in millions, except as noted)
(2) Reduction due to adjustments to remeasure the fair value of the liability at the applicable LIBOR rate with an offset to other income (expense) in the
consolidated statements of operations. The liability was remeasured at September 30, 2008 using a LIBOR rate of 4.05%.
(3) Reduction of the liability to reflect license fees earned during the period, which were not received in cash, as a result of the first and second fee
reduction components under the framework agreement.
(4) Liability under the framework agreement is recorded in accrued liabilities on the consolidated balance sheet at September 30, 2008 and represents the
remaining liability from October 1, 2008 until the redemption of class C (series II) and class C (series III) common shares on October 10, 2008.
Other Obligations under Trademark and Technology Licenses
Visa Europe must comply with certain agreed upon global rules governing the use and interoperability of the Visa trademarks and interoperability of
Visa Inc.'s systems with the systems of Visa Europe. In addition, the parties will guarantee the obligations of their respective customers and members to settle
transactions between such customers and members, service global customers, participate in certain global sponsorships, manage certain global programs,
establish rules for servicing global merchants, ensure that their customers and members require acceptance of globally accepted cards, maintain adequate
capital levels to support their ongoing business operations and establish and comply with rules relating to the operation of the Visa enterprise. The Company
will indemnify Visa Europe for any claims arising from activities in the field of financial payment and processing services brought outside Visa Europe's
region and Visa Europe will indemnify Visa Inc. for any claims arising from activities in the field of financial payments and processing services brought
within Visa Europe's region. The Company has not recorded liabilities associated with these obligations as the fair value of such obligations was determined
to be nominal at September 30, 2008.
Bilateral Services
Visa Inc. and Visa Europe provide each other with transitional and ongoing services similar to those services previously provided among Visa U.S.A.,
Visa International, Inovant, Visa Canada and Visa Europe. Visa Inc. provides Visa Europe, on an ongoing basis, with authorization services for cross-border
transactions involving Visa Europe's region and the rest of the world, as well as clearing and settlement system services between Visa Europe's region and the
rest of the world. Until Visa Europe's regional clearing and settlement system is deployed, Visa Inc. will provide clearing and settlement system services
within Visa Europe's region. In addition, the parties share foreign exchange revenues related to currency conversion for transactions involving European
cardholders as well as other cross-border transactions that take place in Visa Europe's region until Visa Europe's regional clearing and settlement system is
deployed, at which time this arrangement will cease. The parties also use each others' switching and processing services.
Visa Europe indemnifies Visa Inc. for any claims arising out of the provision of the services brought by Visa Europe's member banks against Visa Inc.,
while Visa Inc. indemnifies Visa Europe for any claims arising out of the provision of the services brought against Visa Europe by Visa Inc.'s customer
financial institutions.
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