Visa 2010 Annual Report Download - page 53

Table of Contents
equipment and technology purchases primarily related to construction of our data center. In addition, we reclassified our $953 million investment in the Fund
from cash equivalents to other current assets on our consolidated balance sheet. See further discussion under Sources of Liquidity, below, and Note 7—
Prepaid Expenses and Other Assets to our consolidated financial statements.
Financing activities. Cash used in financing activities during fiscal 2010 primarily reflects $1 billion in repurchases of class A common stock in the
open market, funding of $500 million to the litigation escrow account and $368 million of dividend payments.
Cash used in financing activities during fiscal 2009 primarily reflects contractually-required redemption of certain of our series class C common shares
for $2.6 billion, funding of $1.8 billion to the litigation escrow account and dividend payments of $318 million, offset by covered litigation payments totaling
$2.0 billion from the litigation escrow account.
Cash provided by financing activities for fiscal 2008 is attributable to IPO-related activities including $19.1 billion in net proceeds from the issuance of
class A common stock, offset by $13.4 billion used for the partial redemption of class B and class C common stock, and $3.0 billion payment to the litigation
escrow account for the covered litigation matters in accordance with the retrospective responsibility plan. See Note 4—Retrospective Responsibility Plan to
our consolidated financial statements. In addition, there was a source of cash of $1.1 billion, reflecting covered litigation payments from the litigation escrow
account, offset by $93 million and $22 million for dividend and routine debt payments, respectively.
Sources of Liquidity
Our primary sources of liquidity are cash on hand, cash flow from our operations, an investment portfolio, and access to various equity and borrowing
arrangements. Funds from operations are maintained in cash and cash equivalents, short-term available-for-sale investment securities, or long-term available-
for-sale investment securities based upon our funding requirements, access to liquidity from these holdings, and return that these holdings provide.
Investment portfolio. Our investment portfolio is primarily comprised of securities which enable us to meet our working capital needs. Our investment
portfolio primarily consists of liquid securities, including money market funds and debt securities issued by U.S. government-sponsored agencies. The
liquidity of our investment portfolio is subject to uncertainties that are difficult to predict.
Other factors that may impact the liquidity of our investment portfolio include changes to credit ratings of the securities as well as to the underlying
assets supporting those securities, rates of default of the underlying assets, underlying collateral value, discount rates, and ongoing strength and quality of
credit markets. We will continue to review our portfolio in light of evolving market and economic conditions. However, if current market conditions
deteriorate, the liquidity of our investment portfolio may be impacted and we could determine that some of our investments are impaired, which could
adversely impact our financial results. We have policies that limit the amount of credit exposure to any one financial institution or type of investment.
Revolving credit facilities. On February 15, 2008, we entered into a $3.0 billion five-year revolving credit facility with a syndicate of banks including
affiliates of certain holders of shares of our class B and class C common stock and certain of our clients and affiliates of our clients. Loans under the five-year
facility may be in the form of: (1) Base Rate Advance, which will bear interest at a rate equal to the higher of the Federal Funds Rate plus 0.5% and the Bank
of America prime rate; (2) Eurocurrency Advance, which will bear interest at a rate equal to LIBOR (as adjusted for applicable reserve requirements) plus an
applicable cost adjustment and an applicable margin of 0.11% to 0.30% based
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