Visa 2010 Annual Report Download - page 51

Table of Contents
• Investment income, net decreased in fiscal 2010 primarily due to the absence of a pre-tax gain of $473 million and the loss of dividend income
upon the sale of our ownership interest in VisaNet do Brasil in fiscal 2009. Additionally, we earned lower interest income in fiscal 2010 as a
result of lower interest rates and lower investment balances, reflecting the use of $1.0 billion to repurchase class A common stock under the share
repurchase plan, $682 million to prepay the Retailers' litigation and $500 million to fund the litigation escrow account under the retrospective
responsibility plan.
The increase in fiscal 2009 primarily reflects the pre-tax gain of $473 million discussed above, partially offset by lower interest income earned
from lower investment balances after funding our October 2008 stock redemptions.
• Other non-operating income in fiscal 2010 reflects a non-cash adjustment to the fair market value of the Visa Europe put option, which is not
subject to tax. The change in value does not reflect any change in the likelihood that Visa Europe will exercise its option. See Note 3 – Visa
Europe to our consolidated financial statements.
Other non-operating income in fiscal 2008 reflects adjustments to the fair market value of our liability under the Framework Agreement with
Visa Europe, which was settled during the first fiscal quarter of 2009.
Effective Income Tax Rate
The effective tax rate decreased to 36% in fiscal 2010, compared with 41% in fiscal 2009 and 40% in fiscal 2008.
The effective tax rate in fiscal 2010 was lower than the rate in fiscal 2009 primarily due to changes in the geographic mix of our global income, the
benefit of tax incentives in Singapore, our largest operating hub outside the U.S., the nontaxable revaluation of the Visa Europe put option in fiscal 2010, and
the additional foreign tax related to the sale of our investment in VisaNet do Brasil in fiscal 2009.
The increase in the effective income tax rate in fiscal 2009 compared to fiscal 2008 was primarily due to additional foreign tax in fiscal 2009 on the sale
of our investment in VisaNet do Brasil.
Liquidity and Capital Resources
Management of Our Liquidity
We regularly evaluate cash requirements for current operations, commitments, development activities and capital expenditures and we may elect to
raise additional funds for these purposes in the future through the issuance of either debt or equity. Our treasury policies provide management with the
guidelines and authority to manage liquidity risk in a manner consistent with corporate objectives.
The objectives of our treasury policies are to provide adequate liquidity to cover operating expenditures and liquidity contingency scenarios, to ensure
payments on required litigation settlements, to ensure timely completion of payments settlement activities, to make planned capital investments in our
business, to pay dividends, to repurchase our shares at the discretion of our board of directors, to service the payments of principal and interest on outstanding
debt, and to optimize income earned by investing excess cash in securities that we believe are high-quality and marketable in the short term.
Based on our current cash flow budgets and forecasts of our short-term and long-term liquidity needs, we believe that our projected sources of liquidity
will be sufficient to meet our projected liquidity needs for more than the next 12 months. We will continue to assess our liquidity position and potential
sources of supplemental liquidity in view of our operating performance, current economic and capital market conditions, and other relevant circumstances.
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