Visa 2013 Annual Report Download - page 117

Download and view the complete annual report

Please find page 117 of the 2013 Visa annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 150

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150

VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2013
to operating revenue in the period the related volumes and transactions occur, based on
management’s estimate of the client’s performance in accordance with the terms of the incentive
agreement. The agreements may or may not limit the amount of client incentive payments.
The table below sets forth the expected future reduction of revenue per fiscal year for client
incentive agreements in effect at September 30, 2013:
(in millions) 2014 2015 2016 2017 2018 Thereafter Total
Client incentives ......... $2,450 $ 2,206 $ 1,802 $ 1,429 $ 987 $ 1,447 $10,321
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 18—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. At
September 30, 2013 and 2012, no entity owned more than 10% of the Company’s total voting common
stock. Except as described below, there were no significant transactions with related parties during
fiscal 2013, 2012 and 2011.
In fiscal 2011, the Company recognized $172 million in operating revenues from clients that were
represented on the Company’s board of directors. Due to changes in the board of directors made in
January 2011, the Company’s non-executive board members are now comprised exclusively of
independent directors, and these clients are no longer considered related parties.
Note 19—Income Taxes
The Company’s income before taxes by fiscal year consisted of the following:
2013 2012 2011
(in millions)
U.S. ..................................................... $ 5,992 $ 1,030 $ 4,650
Non-U.S. ................................................. 1,265 1,177 1,006
Total income before taxes and non-controlling interest ............ $ 7,257 $ 2,207 $ 5,656
U.S. income before taxes included $2.0 billion, $1.6 billion and $1.3 billion from non-U.S. clients
for fiscal 2013, 2012 and 2011, respectively.
109