Visa 2010 Annual Report Download - page 58

Table of Contents
We indemnify clients for settlement losses suffered by reason of the failure of any other customer to honor Visa cards, traveler's cheques, or other
instruments processed in accordance with our operating regulations. The amount of the indemnification is unlimited. We maintain global credit settlement risk
policies and procedures to manage settlement risk which may require clients to post collateral if certain credit standards are not met. See Note 1—Summary of
Significant Accounting Policies and Note 13—Settlement Guarantee Management to our consolidated financial statements.
In the ordinary course of business, we enter into contractual arrangements with financial institutions and other clients under which we may agree to
indemnify the client for certain types of losses incurred relating to the services we provide or otherwise relating to our performance under the applicable
agreement. See Note 19—Commitments and Contingencies to our consolidated financial statements.
Contractual Obligations
Our contractual commitments will have an impact on our future liquidity. The contractual obligations identified in the table below include both on- and
off-balance sheet transactions that represent a material expected or contractually committed future obligation at September 30, 2010. We believe that we will
be able to fund these obligations through cash generated from our operations and available credit facilities. See Note 3—Visa Europe, Note 11—Debt, Note 12
—Pension, Postretirement and Other Benefits, Note 19—Commitments and Contingencies, and Note 22—Legal Matters to our consolidated financial
statements.
Payments Due by Period
Less than
1 Year
1-3
Years
3-5
Years
More than
5 Years Total
(in millions)
Purchase orders(1) $ 725 $ 102 $ 60 $ — $ 887
Leases(2) 70 90 24 12 196
Volume and support incentives(3) 1,788 2,666 1,450 519 6,423
Marketing and sponsorships(4) 110 202 168 105 585
Litigation settlement payments 352 70 — — 422
Debt 15 24 12 — 51
Other(5) 107 — — — 107
Total(6, 7, 8) $ 3,167 $ 3,154 $ 1,714 $ 636 $ 8,671
(1) Represents agreements to purchase goods and services that are enforceable and legally binding and that specify significant terms, including: fixed or
minimum quantities to be purchased and fixed, minimum or variable price provisions, and the approximate timing of the transaction.
(2) Includes both operating and capital leases. Visa leases certain premises, equipment and software licenses under leases with varying expiration dates.
(3) Represents future cash payments for volume and support incentive agreements with financial institutions and merchants under various programs
designed to build sales volume and increase payment product acceptance. These agreements, which range in term from one to thirteen years, provide
card issuance, marketing and program support based on specific performance requirements. Payments under these agreements will be offset by
revenues earned from higher corresponding payments and transaction volumes. These payment amounts are estimates and will change based on
customer performance, execution of new contracts, or amendments to existing contracts. Related amounts disclosed in Note 19—Commitments and
Contingencies to our consolidated financial statements represent the associated expected future reduction of revenues related to these agreements.
(4) Visa is a party to contractual sponsorship agreements ranging from approximately three years to sixteen years. These contracts are designed to help us
increase Visa-branded cards and volumes. Over the life of these contracts, Visa is required to make payments in exchange for certain
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