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Table of Contents VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2012
The effective portion of changes in the fair value of derivatives designated as cash flow hedges is recorded as a component of
accumulated other comprehensive income (loss) on the consolidated balance sheets. When the forecasted transaction occurs and
is recognized in earnings, the amount in accumulated other comprehensive income (loss) related to that hedge is reclassified to
operating revenue or expense. The Company expects to reclassify $19 million pre-tax, to earnings during fiscal 2013.
In the event there is recognized ineffectiveness or the underlying forecasted transaction does not occur within the designated
hedge period, or it becomes remote that the forecasted transaction will occur, the related gains and losses on the cash flow hedges
are reclassified from accumulated other comprehensive income on the consolidated balance sheet to general and administrative
expense on the consolidated statement of operations at that time. The amount of gain or loss recognized in earnings related to
ineffectiveness was $1 million or less for each of fiscal 2012, 2011 and 2010.
Derivatives Not Designated as Hedging Instruments
Derivatives not designated as hedging instruments include foreign exchange forward contracts used to manage the impact of
fluctuations in foreign currency exchange rates relative to recognized assets and liabilities denominated in non-functional
currencies. As these derivatives are not designated in hedging relationships, related gains and losses are recorded directly in
earnings as part of general and administrative expense. The Company recorded less than $1 million of gains related to these
derivatives during fiscal 2012. At September 30, 2012, these derivative contracts had an aggregate notional amount of $49 million ,
and a fair value of $1 million , which was classified in prepaid expenses and other current assets on the consolidated balance
sheet. See Note 4—Fair Value Measurements and Investments .
The Company's derivative financial instruments are subject to both credit and market risk. The Company monitors the credit-
worthiness of the financial institutions that are counterparties to its derivative financial instruments and does not consider the risks
of counterparty nonperformance to be significant. The Company mitigates this risk by entering into agreements which require each
party to post collateral against its net liability position with the respective counterparty. As of September 30, 2012 , the Company
has posted and received collateral of $3 million and $4 million , respectively, with counterparties, which are included in prepaid and
other current assets, and accrued liabilities, respectively, on the consolidated balance sheet. Notwithstanding the Company’
s efforts
to manage foreign exchange risk, there can be no absolute assurance that its hedging activities will adequately protect against the
risks associated with foreign currency fluctuations. Credit and market risks related to derivative instruments were not considered
significant at September 30, 2012 .
Note 14—Enterprise-wide Disclosures and Concentration of Business
The Company’s long-lived net property, equipment and technology assets are classified by major geographic area as follows:
Revenue by geographic market is primarily based on the location of the issuing financial institution. Revenues earned in the
U.S. were approximately 55% , 56% and 58% of total operating revenues in fiscal 2012 , 2011 and 2010 , respectively. No
individual country, other than the U.S., generated more than 10% of total operating revenues in these years.
A significant portion of Visa’s operating revenues are concentrated among its largest clients. Loss of business from any of
these clients could have an adverse effect on the Company. The Company did not have any customer that generated greater than
10% of its net operating revenues in fiscal 2012 , 2011 or 2010 .
Note 15—Stockholders' Equity
91
September 30,
2012
September 30,
2011
(in millions)
U.S.
$
1,539
$
1,487
Non-U.S.
95
54
Total
$
1,634
$
1,541