Visa 2010 Annual Report Download - page 57

Table of Contents
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 2010, 2009 and 2008, we made contributions to our pension and other
postretirement plans of $66 million, $170 million and $190 million, respectively. In fiscal 2011, we anticipate to fund our defined benefit pension plans and
postretirement plan by approximately $60 million. The actual contribution amount will vary depending upon the funded status of the pension plan, movements
in the discount rate, performance of the plan assets, and related tax consequences.
Capital expenditures. Our capital expenditures decreased during fiscal 2010 reflecting the completion of our new east coast data center in fiscal 2009.
The new data center supports our technology objectives related to reliability, scalability, security and new product development. We expect capital
expenditures to be approximately $250 million to $275 million in fiscal 2011, as we continue to make ongoing investments in technology and our payments
system infrastructure.
Acquisition of CyberSource. On July 21, 2010, we completed our acquisition of CyberSource Corporation for approximately $2.0 billion in cash, or
$1.8 billion net of cash received. The combination is expected to accelerate the growth of our eCommerce category and enhance the value of our network,
product and service offerings to financial institutions, merchants, partners and consumers. See Note 6—CyberSource Acquisition to our consolidated financial
statements.
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, 2010, net of unamortized issuance costs, was $44 million.
Fair Value Measurements—Financial Instruments
The assessment of fair value of our financial instruments is based on a fair value hierarchy that requires an entity to maximize the use of observable
inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs are obtained from independent sources and can be validated
by a third party, whereas unobservable inputs reflect assumptions regarding what a third party would use in pricing an asset or liability. As of September 30,
2010, our financial instruments measured at fair value on a recurring basis included approximately $5.7 billion of assets, of which $13 million, or less than
1%, had significant unobservable inputs. For these instruments, we lacked observable market data to corroborate either the non-binding market consensus
prices or the non-binding broker quotes. At September, 30, 2010, debt instruments in this category included auction rate securities. See Note 5—Investments
and Fair Value Measurements to our consolidated financial statements.
Off-Balance Sheet Arrangements
Our off-balance sheet arrangements primarily comprise guarantees. Visa has no off-balance sheet debt, other than lease and purchase order
commitments as discussed below and reflected in our contractual obligations table.
Guarantees and Indemnifications
In 2001, Visa International entered into a 20-year lease agreement for premises in London to be occupied by Visa Europe and what is now the
headquarters for our Central and Eastern Europe, Middle East and Africa operations. The lease is assigned to Visa Europe Services, Inc., or VESI, a wholly-
owned subsidiary of Visa Europe, with Visa International acting as a guarantor to the landlord as required by the laws of the United Kingdom. In the event of
a default by VESI, Visa International is obligated to make base lease payments. VESI has agreed to reimburse Visa International for any liabilities that may
arise under Visa International's guarantee to the landlord. Visa International has not made any payments under this guarantee and the estimated fair value of
this guarantee was less than $1 million at September 30, 2010.
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