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Table of Contents
VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2009
(in millions, except as noted)
Visa Europe put option agreement. The Company granted Visa Europe a perpetual put option which is carried at fair value in accrued liabilities on the
consolidated balance sheet with changes in the fair value recorded in the consolidated statement of operations. See Note 3—Visa Europe. The liability is
classified within Level 3 as the assumed probability that Visa Europe will elect to exercise its option and the estimated P/E differential are unobservable
inputs used to value the put option. There was no change in the fair value of the put option during fiscal 2009.
The table below provides a roll-forward of Level 3 investments which are measured at fair value on a recurring basis from October 1, 2008 to
September 30, 2009:
Financial Assets Using Significant Unobservable Inputs
(Level 3)
Corporate
Debt
Securities
Mortgage
Backed
Securities
Other
Asset
Backed
Securities
Auction
Rate
Securities Total
(in millions)
Balances at October 1, 2008 $ 45 $ 22 $ 23 $ 13 $ 103
Other-than-temporary impairment included in investment income, net (3) (4) (1) — (8)
Maturities and principal payments (32) (12) (17) (61)
Transfers in (out) of Level 3 — — — — —
Balances at September 30, 2009 $ 10 $ 6 $ 5 $ 13 $ 34
Assets Measured at Fair Value on a Nonrecurring Basis
Certain financial assets are measured at fair value on a nonrecurring basis and therefore are not included in the tables above.
Non-marketable equity investments. The Company applies fair value measurement to its strategic investments which are accounted for under the cost
and equity methods. Strategic investments are classified as Level 3 due to the absence of quoted market prices, inherent lack of liquidity, and the fact that
inputs used to measure the fair value are unobservable and require management judgment. If events or circumstances indicate that these investments may be
impaired, the Company revalues the investments using various assumptions including financial metrics and ratios of comparable public companies. During
fiscal 2009, certain events and circumstances triggered impairment analyses for certain non-marketable equity securities which resulted in recognized losses
of $7 million. The Company will estimate the fair value of the non-marketable equity investments in the event of a triggering event that would require an
impairment assessment. At September 30, 2009, non-marketable equity security investments totaled $102 million in other assets on the consolidated balance
sheet. During fiscal 2009, Visa International, a wholly-owned subsidiary, sold its investment in Companhia Brasileira de Meios de Pagamento ("VisaNet do
Brasil"). See Note 6—Prepaid Expenses and Other Assets.
Reserve Primary Fund. The Company's investment in the Reserve Primary Fund (the "Fund") was originally recorded as a cash equivalent on the
consolidated balance sheet. In September 2008, the Fund was unable to honor the Company's request for the full redemption of its investment and the
Company considered its shares in the Fund to represent an equity investment for which a market price
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