Visa 2010 Annual Report Download - page 120

Table of Contents
VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2010
(in millions, except as noted)
encourage customer business and to increase overall Visa-branded payment volume, thereby reducing unit transaction processing costs and increasing brand
awareness for all Visa clients.
Payments made that qualify for capitalization, and obligations incurred under these programs are included on the balance sheet. Obligations under these
customer agreements are amortized as a reduction to revenue in the same period as the related revenues are earned, based on management's estimate of the
customer's performance in accordance with the terms of the incentive agreement. The agreements may or may not limit the amount of customer incentive
payments.
The table below sets forth the expected future reduction of revenue for volume and support incentive agreements in effect at September 30, 2010:
(in millions) 2011 2012 2013 2014 2015 Thereafter Total
Volume and support incentives $ 1,575 $ 1,515 $ 1,318 $ 895 $ 539 $ 458 $ 6,300
The actual amounts that are recorded will be greater or less than the estimates above due to customer performance, execution of new contracts, or
amendments to existing contracts. Based on these agreements, increases in incentive payments are generally driven by increased payment and transaction
volume, and as a result, in the event incentive payments exceed this estimate, such payments are not expected to have a material effect on the Company's
financial condition, results of operations or cash flows.
Other Contingencies
In the ordinary course of business, the Company enters into contractual arrangements with financial institution and other clients pursuant to which the
Company may agree to indemnify the client for certain types of losses incurred relating to the services Visa provides or otherwise relating to the Company's
performance under the applicable agreement.
In October 2010, one of the Company's processing clients tendered a contractual indemnity claim to Visa relating to the Company's customer call center
operational practices. Visa's agreement with this client provides for contractual indemnity up to approximately $3 million and the Company has reserved for
this amount in fiscal 2010. However, the processing client asserts that the Company is responsible for additional amounts. The likelihood of losses that may
become payable to this processing client under such claims (or to cardholders or others under additional claims they may bring in connection with the
Company's call center operations) and the amount of potential losses associated with such claims cannot be determined or estimated at this time and the
Company has therefore not established any additional accounting reserve for them.
Note 20—Related Parties
Visa considers an entity to be a related party for purposes of this Note 20 if that entity owns more than 10% of Visa's total voting common stock at the
end of the fiscal year or if an officer or employee of that entity also serves on the board of directors. The Company considers an investee to be a related party
if the Company's: (i) ownership interest in the investee is greater than or equal to 10%; or (ii) if the investment is accounted for under the equity method of
accounting. There were no material operating expenses incurred during fiscal 2010, 2009 and 2008, or material amounts due to or from related parties at the
end of fiscal 2010 and 2009.
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