Visa 2013 Annual Report Download - page 59

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$160 million of liabilities. Of these instruments, $152 million, or 2%, had significant unobservable
inputs, including the Visa Europe put option liability of $145 million, and $7 million of auction rate
securities. See Note 4—Fair Value Measurements and Investments to our consolidated financial
statements.
Off-Balance Sheet Arrangements
Our off-balance sheet arrangements are primarily comprised of guarantees and indemnifications.
Visa has no off-balance sheet debt, other than lease and purchase order commitments, as discussed
below and reflected in our contractual obligations table.
Indemnifications
We indemnify clients for settlement losses suffered due to the failure of any other clients to honor
Visa-branded cards and payment products processed in accordance with our operating regulations.
The amount of the indemnification is limited to the amount of unsettled Visa payment transactions at
any point in time. 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 11—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.
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 as of September 30, 2013.
We believe that we will be able to fund these obligations through cash generated from our operations
and available credit facilities.
Payments Due by Period
Less than
1 Year
1-3
Years
3-5
Years
More than
5 Years Total
(in millions)
Purchase orders(1) ............... $ 922 $ 213 $ 52 $ — $ 1,187
Leases(2) ....................... 100 120 55 82 357
Client incentives(3) ............... 2,835 3,969 2,406 1,705 10,915
Marketing and sponsorship(4) ....... 116 178 108 178 580
Dividends(5) ..................... 255 — — — 255
Total(6,7,8) ....................... $ 4,228 $ 4,480 $ 2,621 $ 1,965 $ 13,294
(1) Represents agreements to purchase goods and services 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 operating leases for premises, equipment and software licenses, which range in terms from
one to eighteen years.
(3) Represents future cash payments for long-term contracts with financial institution clients and other
business partners for various programs designed to build payments volume, increase Visa-branded
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