Visa 2009 Annual Report Download - page 35

Table of Contents
ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
This management's discussion and analysis ("MD&A") provides a review of the results of operations, financial condition, the liquidity and capital
resources of Visa Inc. and its subsidiaries ("Visa," "we," "our" and "the Company") on a historical basis and outlines the factors that have affected recent
earnings, as well as those factors that may affect future earnings. The MD&A should be read in conjunction with the consolidated financial statements and
related notes included in Item 8.
Overview
Visa is a global payments technology company that connects consumers, businesses, banks and governments around the world, enabling them to use
digital currency instead of checks and cash. We provide financial institutions with payment processing platforms that encompass consumer credit, debit,
prepaid and commercial payments. We facilitate global commerce through the transfer of value and information among financial institutions, merchants,
consumers, businesses and government entities. Each of these constituencies has played a key role in the ongoing worldwide migration from paper-based to
electronic forms of payment, and we believe that this transformation continues to yield significant growth opportunities. We continue to explore additional
opportunities to enhance our competitive position by expanding the scope of payment services to benefit our existing customers and to position Visa to serve
more and different constituencies.
In order to respond to industry dynamics and enhance Visa's ability to compete, we consummated a reorganization in October 2007, and in March 2008
completed our IPO. The global alignment of various functions and best practices provides us the business scale to effectively deliver our existing core
products across more and different geographies and to accelerate the delivery of product innovations across different market segments.
Overall Economic Conditions
Our business is affected by overall economic conditions and consumer spending. We expect that soft economic conditions will continue to moderate
consumer and commercial spending, and our rate of payments volume growth, in the near term. Regulatory measures enacted in the United States during the
third quarter of fiscal 2009 expected to take effect in fiscal 2010 will impact our financial institution customers. Should financial institutions constrict credit
offerings in response to these measures, this could ultimately impact consumer spending and our payments volumes. However, we believe that the continuing
secular shift to electronic payment products for non-discretionary spending will buffer the impact to our overall payments volume growth. This shift is
particularly clear in debit products, where Visa has a strong market position in the United States and significant growth opportunities internationally.
Funding of the Litigation Escrow Account
During December 2008 and July 2009, we deposited $1.1 billion and $0.7 billion, respectively, into the litigation escrow account (the "Escrow
Account") previously established under the Retrospective Responsibility Plan (the "Plan"). Under the terms of the Plan, when Visa funds the Escrow Account,
the shares of class B common stock retained by our U.S. financial institution customers and their affiliates are subject to dilution through an adjustment to the
conversion rate of the shares of class B common stock to shares of class A common stock. On that basis, fundings of the Escrow Account in December 2008
and July 2009 had the effect of repurchasing 20,800,824 and 11,578,878 class A common stock equivalents, respectively. See Note 4—Retrospective
Responsibility Plan to our consolidated financial statements.
34