Visa 2008 Annual Report Download - page 134

Table of Contents
VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2008
(in millions, except as noted)
The contractual maturity of available-for-sale debt securities regardless of their balance sheet classification is as follows:
Amortized Cost Fair Value
(in millions)
September 30, 2008:
Due within one year $ 263 $ 264
Due after 1 year through 5 years 177 180
Due after 5 years through 10 years 4 4
Due after 10 years 13 13
Debt securities with no single maturity date 46 45
Total $ 503 $ 506
Equity securities primarily consist of mutual fund investments related to various employee compensation plans. For these plans, employees bear the risk
of market fluctuations over the term of their participation in the compensation plan. Losses experienced on these equity investments are offset by reductions in
personnel expense. During the fourth fiscal quarter, the Company evaluated the unrealized loss positions of 26 mutual fund investments in these various
compensation plans. Due to sharp declines in the market values of these equity securities between the third and fourth fiscal quarters, the period of time that
these equity securities have been in unrealized loss positions, and the prevalent uncertainty in the financial markets, the Company considered these
investments to be other-than-temporarily impaired. As a result, the Company recognized other-than-temporary losses on these equity securities of $19 million
during the fourth fiscal quarter. Effective October 1, 2008, the Company elected the fair value option under SFAS No. 159 and will report these equity
securities as trading assets with changes in fair value recorded as other income (expense).
The Company also evaluated its investments in corporate debt, asset backed, and mortgage backed securities at September 30, 2008 for other-than-
temporary impairment. Approximately $2 million of these securities were considered other-than-temporarily impaired based on the period of time these
securities were in a loss position, the severity of the losses, and the overall uncertainty in the financial markets. The remaining investments were not
considered other-than-temporarily impaired because the principal balances of these investments are expected to be repaid according to their original maturity
schedules. The Company intends to hold these investments until their value is recovered and has the ability to do so given its current liquidity position.
During March 2008, the Company also recognized other-than-temporary impairment on auction rate securities of $7 million. The balance of auction
rate securities at September 30, 2008 was $13 million.
Other Investments
At September 30, 2008, investments accounted for under the cost and equity methods totaled $592 million, of which $565 million were acquired in the
reorganization from Visa International and were recorded at their fair value at the date of acquisition. An impairment analysis of investments accounted for
under the cost and equity methods resulted in recognized losses of $2 million during the fourth fiscal quarter as the Company does not expect to recover its
investment based on the investments' near term prospects. At September 30, 2007, investments accounted for under the cost
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