Visa 2008 Annual Report Download - page 172

Table of Contents
VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2008
(in millions, except as noted)
Note 21—Related Parties
Visa Inc. is a stock corporation and certain of its customers are also its stockholders. The Company considers an entity to be a related party for purposes
of this Note 21 if the entity owns more than 10% of the Company's total voting common stock or if an officer or employee of the entity also serves on the
Company's board of directors. The Company also considers an investee to be a related party if the Company's ownership interest in the entity is greater than or
equal to 10% or if the investment is accounted for under the equity method of accounting. The Company believes that all related party transactions are at arms
length.
At September 30, 2008, the Company had four customers with officers who also serve on the Company's board of directors. Total operating revenues
and total operating expenses for these customers were approximately $538 million and $11 million, respectively, for fiscal 2008. These operating expenses
primarily related to marketing costs. At September 30, 2008, the Company did not owe any amounts to these customers and the customers owed the Company
approximately $21 million in accounts receivable. In addition, the Company was in a net asset position of $5 million at September 30, 2008, attributed to
volume and support incentive arrangements with these customers.
One of the Company's directors, and the spouse of another of the Company's directors, are also officers of entities that participated in (or are affiliated
with an entity that participated in) the Company's IPO as underwriters, and one of those entities is also one of the Company's customers. As underwriters, each
was offered and purchased 113 million shares of class A common stock at a price of $42.77 per share, a discount of $1.23 per share based on the IPO price of
$44.00 per share. This price per share is the same as that paid by all underwriters in the IPO. Also as underwriters, each received total underwriter fees from
the Company of $139 million in March 2008.
In addition to the four customers described above, the Company incurred operating expenses of approximately $7 million from a corporation with a
representative who served on the Company's board of directors. These operating expenses primarily relate to software maintenance. At September 30, 2008,
the Company owed this corporation less than $1 million.
The Company also maintains banking relationships and has credit facilities (See Note 11—Debt) with customers that have representation on the
Company's board of directors.
Visa Europe is also a related party of the Company as a result of the nature of the contractual arrangements between itself and the Company and Visa
Europe's ownership in the Company (See Note 4—Visa Europe ). The Company is also a party to numerous agreements with Visa Europe which allow each
entity to provide services to the other at negotiated fees, including the allocation of costs for office premises which are shared by the Company and Visa
Europe. For fiscal 2008, total operating revenues and operating expenses related to Visa Europe totaled $221 million and $7 million, respectively. At
September 30, 2008, Visa Europe owed the Company approximately $3 million in net accounts receivable.
During fiscal 2008, the Company generated total operating revenues of $39 million from related party investees, and related investees owed the
Company $1 million in net accounts receivable at September 30, 2008. Total operating expenses incurred for fiscal 2008 and related amounts owed to related
investees at September 30, 2008 were less than $1 million, respectively. The Company
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