Visa 2008 Annual Report Download - page 38

Table of Contents
U.S. dollar denominated revenues that we recognize and appreciation of non-U.S. currencies against the U.S. dollar increases the U.S. dollar value of
expenses that we incur that are denominated in those foreign currencies. We enter into foreign currency hedging contracts to reduce the effect of adverse
changes in the value of a limited number of foreign currencies and for a limited period of time (typically up to one year).
Some of our financial incentives to customers are recorded using estimates of our customers' performance. Material changes in our customers'
performance compared to our estimates could have a material adverse impact on our results of operations.
In certain instances, we offer our customers financial incentives, which are typically tied to their payments volume or transaction messages processed,
often under particular programs. These financial incentives are typically recorded as a reduction of revenues. We generally make estimates of our customers'
performance under these programs (sometimes over several years) in order to derive our estimates of the financial incentives that we will pay them. The
reduction of revenues that we record each quarter under volume and support agreements is based on these estimates. Material changes in our customers'
performance compared to estimates could have a material adverse impact on our results of operations. For example, if a customer performs better than
expected, we may be required to reduce future period revenues to account for the fact that we did not reduce revenues enough in prior periods. On the other
hand, if a customer performs worse than expected, we may conclude that we reduced revenues by too much in previous periods.
We have significant contingent liabilities for settlement payment of all issued and outstanding travelers cheques.
At September 30, 2008, we had approximately $830 million in contingent liabilities for settlement payment of all issued and outstanding travelers
cheques. Approximately 35% of these travelers cheques were issued outside of the United States by a single issuer. While these obligations are supported in
part by a bank guarantee, if the issuer were to fail to pay, we would be obligated to fund partial settlement of presented travelers cheques.
Risks Related to our Structure and Organization
The recent change to our governance structure could have a material adverse effect on our business relationships with our customers.
Prior to our reorganization in October 2007, a number of Visa's key members had officers who also served on the boards of directors of Visa U.S.A.,
Visa International, Visa Canada or the regional boards of directors of the unincorporated regions of Visa AP, Visa LAC and Visa CEMEA. As a result of our
reorganization, the regional boards of directors of the unincorporated regions have been eliminated, and the boards of directors of Visa U.S.A. and Visa
Canada are now comprised of management and are largely administrative in nature. In addition, although our regions are represented on our board by six of
our 17 directors, the holders of our class B and class C common stock are not otherwise entitled to vote in the election of directors. As a result, the role of
member-nominated and member-elected directors in our corporate governance has been reduced as a result of the reorganization. These changes could have a
detrimental effect on our business relationships with members associated with a particular region. In addition, if a member that had an officer who also served
on one of the regional boards of directors does not have an officer who currently serves on our board of directors, our business relationship with that member
could suffer. A significant loss of revenues or payments volume attributable to such members could have a material adverse effect on our business.
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