Visa 2009 Annual Report Download - page 49

Table of Contents
sustainable income at the date of exercise. The $75 million of assumed adjusted sustainable income provided below for illustrative purposes only is based on
Visa Europe's financial results for the year ended September 30, 2008. However, this does not represent an estimate of the amount of adjusted sustainable
income Visa Europe would have been able to demonstrate at September 30, 2008 or will be able to demonstrate at any point in time in the future. The table
also provides the amount of increase or decrease in the payout, assuming the same range of estimated P/E ratios, for each $25 million of adjusted sustainable
income above or below the assumed $75 million demonstrated at the time of exercise. At September 30, 2009, our estimated long-term P/E ratio was 22.0 and
the P/E differential, the difference between this ratio and the estimated ratio applicable to Visa Europe, was 4.5x as compared to the estimated long term
differential of 5.3x we used to value the put option. However these ratios are for reference purposes only and are not necessarily indicative of the ratio or
differential that could be applicable if the put option were to be exercised at any point in the future.
Visa Inc's Forward
Price-to-Earnings Ratio
Payout Assuming Adjusted
Projected Sustainable Net
Operating Income of
$75 million(1)
Increase/Decrease in Payout
for Each $25 million of
Sustainable Net Income
Above/Below $75 million
(in millions) (in millions)
25 $1,875 $625
20 $1,500 $500
15 $1,125 $375
(1) Given the large range of different economic environments and circumstances under which Visa Europe could decide to exercise its option the ultimate
purchase price could be several billion dollars or more.
Pension and Other Postretirement Benefits. We sponsor various qualified and nonqualified defined benefit pension plans which generally provide
benefits based on years of service, age and employees' final three to five years of earnings, as well as a postretirement benefit plan which provides
postretirement medical benefits for retirees and dependents upon meeting minimum age and service requirements. Our policy with respect to our qualified
pension plan is to contribute annually not less than the minimum required under the Employee Retirement Income Security Act, or ERISA. Our nonqualified
pension and other postretirement benefit plans are funded on a current basis. We typically fund our qualified pension plan in September of each year. Funding
does not impact current period pension expense but has the positive impact of reducing future period expense for the plan. In fiscal 2009, 2008 and for Visa
U.S.A. in fiscal 2007, we made contributions to our pension and other postretirement plans of $170 million, $190 million and $65 million, respectively. In
fiscal 2010, we intend to fund our defined benefit pension plans and postretirement plan by approximately $70 million.
Capital Expenditures. During fiscal 2009, we completed the construction of a new data center on the east coast of the United States. Upon completion
in March 2009, we migrated our current east coast data center to this new facility. The new data center is intended to support our technology objectives related
to reliability, scalability, security and new product development. In fiscal 2009, 2008 and 2007 we incurred total costs of $156 million, $241 million and $23
million, respectively related to the construction of this new data center. We will continue to make ongoing investments in technology and our payments
system infrastructure, some of which we treat as capital expenditures.
Other Uses. In addition to the principal uses of liquidity described above, we are also required to make interest and principal payments under our
outstanding indebtedness. Our total outstanding principal balance of debt at September 30, 2009, net of unamortized issuance costs, was $56 million.
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