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Table of Contents VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2012
Note 18—Commitments and Contingencies
Commitments. The Company leases certain premises and equipment throughout the world with varying expiration dates. The
Company incurred total rent expense of $89 million , $76 million and $59 million in fiscal 2012 , 2011 and 2010 , respectively.
Future minimum payments on leases and marketing and sponsorship agreements per fiscal year, at September 30, 2012 , are as
follows:
Select sponsorship agreements require the Company to spend certain minimum amounts for advertising and marketing
promotion over the life of the contract. For commitments where the individual years of spend are not specified in the contract, the
Company has estimated the timing of when these amounts will be spent. In addition to the fixed payments stated above, select
sponsorship agreements require the Company to undertake marketing, promotional or other activities up to stated monetary values
to support events which the Company is sponsoring. The stated monetary value of these activities typically represents the value in
the marketplace, which may be significantly in excess of the actual costs incurred by the Company.
Client Incentives. The Company has agreements with select clients and other business partners designed to build payments
volume, increase acceptance and win merchant preference to route transactions over our network. These agreements, with original
terms ranging from one to thirteen years, can provide card issuance and/or conversion support, volume / growth targets and
marketing and program support based on specific performance requirements. These agreements are designed to encourage client
business and to increase overall Visa-branded payment and transaction volume, thereby reducing per 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 reflected on the balance
sheet. Client Incentives are recognized primarily as a reduction to revenue in the period the related volumes and transactions
occur, 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 client incentive agreements in effect at September 30,
2012 :
The amount of client incentives recorded as a reduction of revenue in future periods under the Company's incentive
arrangements, will be greater or less than the estimates above due to changes in performance expectations, actual client
performance, amendments to existing contracts or the execution of new 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 the above estimates, such payments are not expected to have a material effect on the Company's financial
condition, results of operations or cash flows.
Note 19—Related Parties
Visa considers an entity to be a related party for purposes of this disclosure 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 Company's 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 2012 , 2011 and
98
(in millions) 2013
2014
2015
2016
2017
Thereafter
Total
Operating leases
$
95
$
75
$
48
$
35
$
28
$
64
$
345
Capital leases
6
—
—
—
—
—
6
Marketing and sponsorships
120
120
117
61
54
231
703
Total
$
221
$
195
$
165
$
96
$
82
$
295
$
1,054
(in millions) 2013
2014
2015
2016
2017
Thereafter
Total
Client incentives
$
2,277
$
1,947
$
1,590
$
1,189
$
675
$
523
$
8,201