UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June 30,~~December 31, 2013

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-33977

VISA INC.

(Exact name of Registrant as specified in its charter)



Delaware		26-0267673
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

P.O. Box 8999 San Francisco, California		94128-8999
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (650) 432-3200

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes R No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes R No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer R	Accelerated filer o
Non-accelerated filer o (Do not check if a smaller reporting company.)	Smaller Reporting Company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No R

As of ~~July 19, 2013~~January 24, 2014, there were ~~514,589,442~~504,306,404 shares of class A common stock, par value $0.0001 per share, 245,513,385 shares of class B common stock, par value $0.0001 per share, and ~~27,393,264~~26,047,808 shares of class C common stock, par value $0.0001 per share, of Visa Inc. outstanding.

VISA INC.

TABLE OF CONTENTS




		Page
PART I.	Financial Information	4

Item 1.	Financial Statements (unaudited)	4
	Consolidated Balance Sheets—~~June 30,~~December 31, 2013 and September 30, ~~2012~~2013	4
	Consolidated Statements of Operations—Three ~~and Nine~~ Months Ended ~~June 30,~~December 31, 2013 and 2012	6
	Consolidated Statements of Comprehensive Income—Three ~~and Nine~~ Months Ended ~~June 30,~~December 31, 2013 and 2012	8
	Consolidated Statement of Changes in Equity—~~Nine~~Three Months Ended ~~June 30,~~December 31, 2013	9
	Consolidated Statements of Cash Flows—~~Nine~~Three Months Ended ~~June 30,~~December 31, 2013 and 2012	10
	Notes to Consolidated Financial Statements (unaudited)	12
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2624
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3530
Item 4.	Controls and Procedures	3530

PART II.	Other Information	3631

Item 1.	Legal Proceedings	3631
Item 1A.	Risk Factors	3631
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3631
Item 3.	Defaults Upon Senior Securities	3631
Item 4.	Mine Safety Disclosures	3631
Item 5.	Other Information	3631
Item 6.	Exhibits	3632
	Signatures	3833
	Exhibit Index	3934

Table of Contents

PART I. FINANCIAL INFORMATION



ITEM 1.	Financial Statements

VISA INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


	June 30, 2013		September 30, 2012		December 31, 2013		September 30, 2013
	(in millions, except par value data)				(in millions, except par value data)
Assets
Cash and cash equivalents	$	1,453	$	2,074	$	2,121	$	2,186
Restricted cash—litigation escrow (Note 2)	49		4,432		49		49
Investment securities:
Trading	73		66		89		75
Available-for-sale	1,822		677		1,880		1,994
Income tax receivable	600		179		20		142
Settlement receivable	459		454		888		799
Accounts receivable	779		723		840		761
Customer collateral (Note 6)	817		823
Customer collateral (Note 5)					886		866
Current portion of client incentives	240		209		235		282
Deferred tax assets	429		2,027		466		481
Prepaid expenses and other current assets	220		122		291		187
Total current assets	6,941		11,786		7,765		7,822
Investment securities, available-for-sale	3,189		3,283		3,040		2,760
Client incentives	85		58		98		89
Property, equipment and technology, net	1,689		1,634		1,746		1,732
Other assets	332		151		584		521
Intangible assets, net	11,368		11,420		11,334		11,351
Goodwill	11,681		11,681		11,681		11,681
Total assets	$	35,285	$	40,013	$	36,248	$	35,956
Liabilities
Accounts payable	$	131	$	152	$	101	$	184
Settlement payable	817		719		1,246		1,225
Customer collateral (Note 6)	817		823
Customer collateral (Note 5)					886		866
Accrued compensation and benefits	444		460		337		523
Client incentives	829		830		864		919
Accrued liabilities	628		584
Accrued liabilities (Note 6)					947		613
Accrued litigation (Note 11)	5		4,386		4		5
Total current liabilities	3,671		7,954		4,385		4,335
Deferred tax liabilities	4,043		4,058		4,160		4,149
Other liabilities	568		371
Other liabilities (Note 6)					689		602
Total liabilities	8,282		12,383		9,234		9,086

See accompanying notes, which are an integral part of these unaudited consolidated financial statements.

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VISA INC.

CONSOLIDATED BALANCE SHEETS—(Continued)

(UNAUDITED)


	June 30, 2013			September 30, 2012			December 31, 2013			September 30, 2013
	(in millions, except par value data)						(in millions, except par value data)
Equity
Preferred stock, $0.0001 par value, 25 shares authorized and none issued	$	—		$	—		$	—		$	—
Class A common stock, $0.0001 par value, 2,001,622 shares authorized, 515 and 535 shares issued and outstanding at June 30, 2013, and September 30, 2012, respectively (Note 7)	—			—
Class B common stock, $0.0001 par value, 622 shares authorized, 245 shares issued and outstanding at June 30, 2013, and September 30, 2012 (Note 7)	—			—
Class C common stock, $0.0001 par value, 1,097 shares authorized, 27 and 31 shares issued and outstanding at June 30, 2013, and September 30, 2012, respectively (Note 7)	—			—
Class A common stock, $0.0001 par value, 2,001,622 shares authorized, 505 and 508 shares issued and outstanding at December 31, 2013 and September 30, 2013, respectively (Note 7)							—			—
Class B common stock, $0.0001 par value, 622 shares authorized, 245 shares issued and outstanding at December 31, 2013 and September 30, 2013 (Note 7)							—			—
Class C common stock, $0.0001 par value, 1,097 shares authorized, 26 and 27 shares issued and outstanding at December 31, 2013 and September 30, 2013, respectively (Note 7)							—			—
Additional paid-in capital	19,130			19,992			18,702			18,875
Accumulated income	7,989			7,809			8,269			7,974
Accumulated other comprehensive income (loss), net:
Investment securities, available-for-sale	26			3			70			59
Defined benefit pension and other postretirement plans	(181		)	(186		)	(60		)	(60		)
Derivative instruments classified as cash flow hedges	40			13			34			23
Foreign currency translation adjustments	(1		)	(1		)	(1		)	(1		)
Total accumulated other comprehensive loss, net	(116		)	(171		)
Total accumulated other comprehensive income, net							43			21
Total equity	27,003			27,630			27,014			26,870
Total liabilities and equity	$	35,285		$	40,013		$	36,248		$	35,956

See accompanying notes, which are an integral part of these unaudited consolidated financial statements.

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VISA INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)


	Three Months Ended June 30,						Nine Months Ended June 30,						Three Months Ended December 31,
	2013			2012			2013			2012			2013			2012
	(in millions, except per share data)												(in millions, except per share data)
Operating Revenues
Service revenues	$	1,298		$	1,216		$	3,967		$	3,608		$	1,419		$	1,300
Data processing revenues	1,191			1,040			3,456			2,913			1,264			1,115
International transaction revenues	854			748			2,490			2,229			891			805
Other revenues	179			175			533			532			180			179
Client incentives	(521		)	(614		)	(1,641		)	(1,592		)	(599		)	(553		)
Total operating revenues	3,001			2,565			8,805			7,690			3,155			2,846
Operating Expenses
Personnel	493			435			1,433			1,255			470			454
Marketing	252			242			640			602			186			193
Network and processing	117			102			346			303			132			110
Professional fees	103			99			282			251			75			88
Depreciation and amortization	101			84			291			244			107			92
General and administrative	108			112			322			320			108			106
Litigation provision (Note 11)	(1		)	4,098			3			4,098			—			3
Total operating expenses	1,173			5,172			3,317			7,073			1,078			1,046
Operating income (loss)	1,828			(2,607		)	5,488			617
Operating income													2,077			1,800
Non-operating income	5			—			3			2			6			1
Income (loss) before income taxes	1,833			(2,607		)	5,491			619
Income tax provision (benefit)	608			(768		)	1,703			139
Net income (loss) including non-controlling interest	1,225			(1,839		)	3,788			480
Loss attributable to non-controlling interest	—			—			—			2
Net income (loss) attributable to Visa Inc.	$	1,225		$	(1,839	)	$	3,788		$	482
Income before income taxes													2,083			1,801
Income tax provision													676			508
Net income													$	1,407		$	1,293

See accompanying notes, which are an integral part of these unaudited consolidated financial statements.

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VISA INC.

CONSOLIDATED STATEMENTS OF OPERATIONS—(Continued)

(UNAUDITED)


	Three Months Ended June 30,					Nine Months Ended June 30,				Three Months Ended December 31,
	2013		2012			2013		2012		2013		2012
	(in millions, except per share data)									(in millions, except per share data)
Basic earnings (loss) per share (Note 8)
Basic earnings per share (Note 8)
Class A common stock	$	1.89	$	(2.74	)	$	5.76	$	0.71	$	2.21	$	1.94
Class B common stock	$	0.79	$	(1.16	)	$	2.42	$	0.32	$	0.93	$	0.82
Class C common stock	$	1.89	$	(2.74	)	$	5.76	$	0.71	$	2.21	$	1.94
Basic weighted-average shares outstanding (Note 8)
Class A common stock	515		525			524		523		505		531
Class B common stock	245		245			245		245		245		245
Class C common stock	28		40			29		43		27		30
Diluted earnings (loss) per share (Note 8)
Diluted earnings per share (Note 8)
Class A common stock	$	1.88	$	(2.74	)	$	5.74	$	0.71	$	2.20	$	1.93
Class B common stock	$	0.79	$	(1.16	)	$	2.41	$	0.32	$	0.93	$	0.81
Class C common stock	$	1.88	$	(2.74	)	$	5.74	$	0.71	$	2.20	$	1.93
Diluted weighted-average shares outstanding (Note 8)
Class A common stock	651		672			660		681		639		669
Class B common stock	245		245			245		245		245		245
Class C common stock	28		40			29		43		27		30

See accompanying notes, which are an integral part of these unaudited consolidated financial statements.

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VISA INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

Three Months Ended
June 30, Nine Months Ended
June 30,
2013 2012 2013 2012
(in millions)
Net income (loss) including non-controlling interest $ 1,225
$ (1,839 ) $ 3,788
$ 480
Other comprehensive (loss) income, net of tax:
Investment securities, available-for-sale:
Net unrealized (loss) gain (10 ) (6 ) 40
1
Income tax effect 1
2
(16 ) —
Reclassification adjustment for net gain realized in net income including non-controlling interest —
—
(1 ) —
Income tax effect —
—
—
—
Defined benefit pension and other postretirement plans 3
9
8
1
Income tax effect (1 ) (3 ) (3 ) (3 )
Derivative instruments classified as cash flow hedges:
Net unrealized gain 40
21
55
9
Income tax effect (9 ) (9 ) (9 ) (3 )
Reclassification adjustment for net gain realized in net income including non-controlling interest (9 ) (7 ) (26 ) (3 )
Income tax effect 2
2
7
3
Foreign currency translation adjustments —
(8 ) —
(4 )
Other comprehensive income, net of tax 17
1
55
1
Comprehensive income (loss) including non-controlling interest 1,242
(1,838 ) 3,843
481
Comprehensive loss attributable to non-controlling interest —
—
—
2
Comprehensive income (loss) attributable to Visa Inc. $ 1,242
$ (1,838 ) $ 3,843
$ 483



	Three Months Ended December 31,
	2013			2012
	(in millions)
Net income	$	1,407		$	1,293
Other comprehensive income (loss), net of tax:
Investment securities, available-for-sale:
Net unrealized gain	17			48
Income tax effect	(6		)	(17		)
Defined benefit pension and other postretirement plans:
Net unrealized actuarial gain and prior service credit	1			—
Amortization of actuarial (gain) loss and prior service credit realized in net income	(2		)	3
Income tax effect	1			(1		)
Derivative instruments classified as cash flow hedges:
Net unrealized gain	24			9
Income tax effect	(4		)	—
Reclassification adjustment for net gain realized in net income	(11		)	(11		)
Income tax effect	2			3
Other comprehensive income, net of tax	22			34
Comprehensive income	$	1,429		$	1,327

See accompanying notes, which are an integral part of these unaudited consolidated financial statements.

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VISA INC.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(UNAUDITED)


	Common Stock					Additional Paid-In Capital				Accumulated Income (Deficit)			Accumulated Other Comprehensive (Loss) Income				Total Equity			Common Stock						Additional Paid-in Capital			Accumulated Income			Accumulated Other Comprehensive Income		Total Equity
	Class A		Class B	Class C					Class A							Class B					Class C
	(in millions, except per share data)																			(in millions, except per share data)
Balance as of September 30, 2012	535		245	31					$		19,992		$	7,809				$	(171	)		$	27,630
Net income attributable to Visa Inc.										3,788							3,788
Balance as of September 30, 2013																				508			245	27		$	18,875		$	7,974		$	21	$	26,870
Net income																													1,407					1,407
Other comprehensive income, net of tax													55				55															22		22
Comprehensive income including non-controlling interest																	3,843
Comprehensive income																																		1,429
Issuance of restricted stock awards(1)	1																—			—														—
Conversion of class C common stock upon sale into public market	4			(4	)												—			1				(1	)									—
Share-based compensation						139											139									45								45
Excess tax benefit for share-based compensation						64											64									54								54
Cash proceeds from exercise of stock options	1					98											98			1						38								38
Restricted stock and performance shares settled in cash for taxes⁽¹⁾⁽²⁾	—					(64		)									(64		)	—						(77		)						(77		)
Cash dividends declared and paid, at a quarterly amount of $0.33 per as-converted share (Note 7)										(653		)					(653		)
Cash dividends declared and paid, at a quarterly amount of $0.40 per as-converted share (Note 7)																													(254		)			(254		)
Repurchase of class A common stock (Note 7)	(26	)				(1,099		)		(2,955		)					(4,054		)	(5	)					(233		)	(858		)			(1,091		)
Balance as of June 30, 2013	515		245	27		$	19,130			$	7,989		$	(116	)		$	27,003
Balance as of December 31, 2013																				505			245	26		$	18,702		$	8,269		$	43	$	27,014


⁽¹⁾	Increase in class A common stock is less than 1 million shares.


⁽²⁾	Decrease in class A common stock is less than 1 million shares.

See accompanying notes, which are an integral part of these unaudited consolidated financial statements.

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VISA INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	Nine Months Ended June 30,						Three Months Ended December 31,
	2013			2012			2013			2012
	(in millions)						(in millions)
Operating Activities
Net income including non-controlling interest	$	3,788		$	480
Adjustments to reconcile net income including non-controlling interest to net cash provided by operating activities:
Net income							$	1,407		$	1,293
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Amortization of client incentives	1,641			1,592			599			553
Share-based compensation	139			112			45			48
Excess tax benefit for share-based compensation	(64		)	(42		)	(54		)	(50		)
Depreciation and amortization of property, equipment, technology and intangible assets	291			244			107			92
Deferred income taxes	1,562			(1,427		)	19			1,622
Litigation provision and accretion (Note 11)	3			4,099
Other	39			(34		)	5			12
Change in operating assets and liabilities:
Income tax receivable	(421		)	(41		)	122			(1,162		)
Settlement receivable	(5		)	(31		)	(89		)	(405		)
Accounts receivable	(56		)	(231		)	(79		)	(78		)
Client incentives	(1,700		)	(1,315		)	(616		)	(453		)
Other assets	(310		)	—			(199		)	(228		)
Accounts payable	5			(58		)	(80		)	1
Settlement payable	98			298			21			353
Accrued and other liabilities	351			134			334			(38		)
Accrued litigation (Note 11)	(4,384		)	(140		)	(1		)	(4,384		)
Net cash provided by operating activities	977			3,640
Net cash provided by (used in) operating activities							1,541			(2,824		)
Investing Activities
Purchases of property, equipment, technology and intangible assets	(333		)	(270		)	(120		)	(100		)
Proceeds from disposal of property, equipment and technology	—			2
Investment securities, available-for-sale:
Purchases	(2,789		)	(3,326		)	(754		)	(1,184		)
Proceeds from sales and maturities	1,767			1,640			600			418
Net distributions from other investments	1			14
Acquisitions, net of cash received	—			(3		)
Purchases of / contributions to other investments							(2		)	—
Proceeds / distributions from other investments							—			1
Net cash used in investing activities	(1,354		)	(1,943		)	(276		)	(865		)

See accompanying notes, which are an integral part of these unaudited consolidated financial statements.

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VISA INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS—(Continued)

(UNAUDITED)


	Nine Months Ended June 30,						Three Months Ended December 31,
	2013			2012			2013			2012
	(in millions)						(in millions)
Financing Activities
Repurchase of class A common stock (Note 7)	$	(4,054	)	$	(536	)	$	(1,091	)	$	(1,253	)
Dividends paid (Note 7)	(653		)	(448		)	(254		)	(220		)
Deposits into litigation escrow account—retrospective responsibility plan	—			(1,565		)
Payments from litigation escrow account—retrospective responsibility plan (Note 2)	4,383			140
Payments from litigation escrow account—retrospective responsibility plan (Note 11)							—			4,383
Cash proceeds from exercise of stock options	98			111			38			70
Restricted stock and performance shares settled in cash for taxes	(64		)	—			(77		)	(64		)
Excess tax benefit for share-based compensation	64			42			54			50
Payment for earn-out related to PlaySpan acquisition	(12		)	—			—			(12		)
Principal payments on capital lease obligations	(6		)	(6		)	—			(5		)
Net cash used in financing activities	(244		)	(2,262		)
Effect of exchange rate changes on cash and cash equivalents	—			(4		)
Net cash (used in) provided by financing activities							(1,330		)	2,949
Decrease in cash and cash equivalents	(621		)	(569		)	(65		)	(740		)
Cash and cash equivalents at beginning of year	2,074			2,127			2,186			2,074
Cash and cash equivalents at end of period	$	1,453		$	1,558		$	2,121		$	1,334
Supplemental Disclosure of Cash Flow Information
Supplemental Disclosure
Income taxes paid, net of refunds	$	478		$	1,575		$	96		$	45
Amounts included in accounts payable and accrued and other liabilities related to purchases of property, equipment, technology and intangible assets	$	27		$	85
Non-cash accruals related to purchases of property, equipment, technology and intangible assets							$	20		$	33

See accompanying notes, which are an integral part of these unaudited consolidated financial statements.

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VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~June 30,~~December 31, 2013

(unaudited)

Note 1—Summary of Significant Accounting Policies

Organization. Visa Inc. (“Visa” or the “Company”) is a global payments technology company that connects consumers, businesses, financial institutions and governments ~~around the world~~in more than 200 countries and territories to fast, secure and reliable electronic payments. Visa and its wholly-owned consolidated subsidiaries, including Visa U.S.A. Inc. (“Visa U.S.A.”), Visa International Service Association (“Visa International”), Visa Worldwide Pte. Limited, Visa Canada Corporation, Inovant LLC and CyberSource Corporation (“CyberSource”), operate one of the world’s most advanced processing ~~networks. The Company provides its clients with~~networks — VisaNet — which facilitates authorization, clearing and settlement of payment ~~processing platforms that encompass consumer credit, debit, prepaid~~transactions worldwide. VisaNet also offers fraud protection for account holders and ~~commercial payments, and facilitates global commerce through the transfer of value and information among financial institutions, merchants, consumers, businesses and government entities. The Company~~assured payment for merchants. Visa is not a bank and does not issue cards, extend credit or ~~collect, assess~~set rates and fees for account holders on Visa-branded cards and payment products. In most cases, account holder and merchant relationships belong to, and are managed by, Visa's financial institution clients. Visa provides a wide variety of payment solutions that support payment products that issuers can offer to their account holders: pay now with debit, pay ahead with prepaid or ~~set cardholder fees or interest charges.~~pay later with credit products. These services facilitate transactions on Visa's network among account holders, merchants, financial institutions and governments in mature and emerging markets globally.

Consolidation and basis of presentation. The accompanying unaudited consolidated financial statements include the accounts of Visa and its consolidated entities and are presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The Company consolidates its majority-owned and controlled entities, including variable interest entities ("VIEs") for which the Company is the primary beneficiary. The Company’s investments in VIEs have not been material to its consolidated financial statements as of and for the periods presented. All significant intercompany accounts and transactions are eliminated in consolidation.

~~Beginning with the~~ ~~first quarter of fiscal 2013~~, income tax receivable is presented separately on the consolidated balance sheets. Previously, it had been included in the prepaid expenses and other current assets line. The Company also combined the interest income (expense), investment income and other lines on the consolidated statements of operations into one line entitled, "Non-operating income." All prior period information has been reclassified to conform to current period presentation.

The accompanying unaudited consolidated financial statements are presented in accordance with the U.S. Securities and Exchange Commission ("SEC") requirements for Quarterly Reports on Form 10-Q and, consequently, do not include all of the annual disclosures required by U.S. GAAP. Reference should be made to the Visa Annual Report on Form 10-K for the year ended September 30, ~~2012~~2013 for additional disclosures, including a summary of the Company’s significant accounting policies.

In the opinion of management, the accompanying unaudited consolidated financial statements include all normal recurring adjustments necessary for a fair presentation of the Company's financial position, results of ~~operation~~operations and cash flows for the interim periods presented.

Recently ~~issued~~Issued and ~~adopted accounting pronouncements.~~ ~~In June 2011, the Financial~~Adopted Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2011-05, which impacts the presentation of comprehensive income. The guidance requires components of other comprehensive income to be presented with net income to arrive at total comprehensive income. This ASU impacts presentation only and does not impact the underlying components of other comprehensive income or net income. In December 2011, the FASB issued an amendment to ASU 2011-05, which deferred the requirement to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income. All other components of ASU 2011-05 were adopted effective October 1, 2012. The adoption did not have a material impact on the consolidated financial statements.

In July 2012, the FASB issued ASU 2012-02, which allows an entity to first assess qualitative factors to determine whether it is necessary to perform a quantitative impairment test for indefinite-lived intangible assets. The

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~~VISA INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~Company adopted ASU 2012-02 effective October 1, 2012, and applied the new guidance in its annual impairment review of indefinite-lived intangible assets as of February 1, 2013. See~~ ~~Note 3—Fair Value Measurements and Investments. The adoption did not have a material impact on the consolidated financial statements.~~Pronouncements.

In January 2013, the FASB issued ~~ASU~~Accounting Standards Update ("ASU") 2013-01, which clarifies the scope of ASU 2011-11. As amended, ASU 2011-11 requires disclosure of the effect or potential effect of offsetting arrangements on a Company's financial position as well as enhanced disclosure of the rights of offset associated with a Company's recognized derivative instruments, including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and lending transactions. The amended standard impacts presentation ~~only and is~~only. The Company adopted the standard effective October 1, 2013. The adoption did not ~~expected to~~ have a material impact on the consolidated financial statements.

In February 2013, the FASB issued ASU 2013-02, which established the effective date for the requirement to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income. The standard impacts presentation only and does not impact the underlying components of other comprehensive income or net income. The Company ~~will adopt~~adopted the standard effective October 1, 2013. Beginning with fiscal 2014, the components related to pension and postretirement benefit plans are presented on the consolidated statements of comprehensive income. All prior period information has been reclassified to conform to current period presentation. The adoption did not have a material impact on the consolidated financial statements.

In February 2013, the FASB issued ASU 2013-04, which provides guidance for the recognition, measurement and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the

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VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

obligation is fixed at the reporting date. The Company will adopt the standard effective October 1, 2014. The adoption is not expected to have a material impact on the consolidated financial statements.

In March 2013, the FASB issued ASU 2013-05, which clarifies the applicable guidance for the release of the cumulative translation adjustment into net income when a parent either sells a part or all of its investment in a foreign entity, or no longer holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business within a foreign entity. The Company will adopt the standard effective October 1, 2014. The adoption is not expected to have a material impact on the consolidated financial statements.

In July 2013, the FASB issued ASU 2013-11, which provides guidance for the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The Company will adopt the standard effective October 1, 2014. The adoption is not expected to have a material impact on the consolidated financial statements.

Note 2—Retrospective Responsibility Plan

Under the terms of the retrospective responsibility plan, the Company maintains an escrow account from which settlements of, or judgments in, the covered litigation are paid. At December 31, 2013 and September 30, 2013, the balance of the escrow account was $49 million.

On January 14, 2014, the court entered the final judgment order approving the settlement with the class plaintiffs in the interchange multidistrict litigation proceedings, which is subject to the adjudication of any appeals. Takedown payments of approximately $1.1 billion related to the opt-out merchants were received on January 27, 2014, and were deposited into the litigation escrow account. The deposit into the litigation escrow account, and a related increase in accrued litigation to address opt-out claims will be recorded in the second quarter of fiscal 2014. See Note 11—Legal Matters.

~~The following table summarizes activity related to the litigation escrow account.~~

(in millions)
Balance at October 1, 2012 $ 4,432
Payments to settlement funds⁽¹⁾:

Class plaintiffs (4,033 )
Individual plaintiffs (350 )
Balance at June 30, 2013 $ 49


⁽¹⁾	These payments are associated with the Multidistrict Litigation Proceedings. The settlement with the class plaintiffs in these proceedings is subject to final court approval, which the Company cannot assure will be received, and to the adjudication of any appeals. See ~~Note 11—Legal Matters~~.

The accrual related to the covered litigation could be either higher or lower than the litigation escrow account balance. The Company did not record an additional accrual for the covered litigation during the ~~nine~~three months ended ~~June 30,~~December 31, 2013.

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VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Note 3—Fair Value Measurements and Investments

Fair Value Measurements

Assets and Liabilities Measured at Fair Value on a Recurring ~~Basis.~~Basis


	Fair Value Measurements Using Inputs Considered as												Fair Value Measurements Using Inputs Considered as
	Level 1				Level 2				Level 3				Level 1				Level 2				Level 3
	June 30, 2013		September 30, 2012		June 30, 2013		September 30, 2012		June 30, 2013		September 30, 2012		December 31, 2013		September 30, 2013		December 31, 2013		September 30, 2013		December 31, 2013		September 30, 2013
	(in millions)												(in millions)
Assets
Cash equivalents and restricted cash:
Money market funds	$	620	$	5,676									$	998	$	1,071
Commercial paper					$	52	$	93									$	44	$	51
Investment securities, trading:
Equity securities	73		66										89		75
Investment securities, available-for-sale:
U.S. government-sponsored debt securities					2,880		2,821										2,743		2,704
U.S. Treasury securities	1,574		1,066										1,670		1,673
Equity securities	60		2										122		101
Corporate debt securities					491		63										378		269
Auction rate securities									$	7	$	7									$	7	$	7
Prepaid and other current assets:
Foreign exchange derivative instruments					44		13										34		23
Total	$	2,327	$	6,810	$	3,467	$	2,990	$	7	$	7	$	2,879	$	2,920	$	3,199	$	3,047	$	7	$	7
Liabilities
Accrued liabilities:
Visa Europe put option									$	145	$	145									$	145	$	145
Earn-out related to PlaySpan acquisition									—		12
Foreign exchange derivative instruments					$	6	$	11									$	13	$	15
Total	$	—	$	—	$	6	$	11	$	145	$	157	$	—	$	—	$	13	$	15	$	145	$	145

There were no significant transfers between Level 1 and Level 2 assets during the ~~nine~~three months ended ~~June 30,~~December 31, 2013 and 2012.

Level 1 assets measured at fair value on a recurring basis. Money market funds, publicly-traded equity securities and U.S. Treasury securities are classified as Level 1 within the fair value hierarchy, as fair value is based on quoted prices in active markets. ~~The significant decrease in the Company's Level 1 assets primarily reflects payments from the litigation escrow account totaling~~ ~~$4.4 billion~~ ~~in connection with the covered litigation. See~~ ~~Note 2—Retrospective Responsibility Plan~~ ~~and~~ ~~Note 11—Legal Matters~~.

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~~VISA INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

Level 2 assets and liabilities measured at fair value on a recurring basis. The fair value of U.S. government-sponsored debt securities and corporate debt securities, as provided by third-party pricing vendors, is based on quoted prices in active markets for similar, ~~(not identical)~~not identical, assets. The pricing data obtained from outside sources is

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VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

reviewed internally for reasonableness, compared against benchmark quotes from independent pricing sources, then confirmed or revised accordingly. Commercial paper and foreign exchange derivative instruments are valued using inputs that are observable in the market or can be derived principally from or corroborated by observable market data. There were no substantive changes to the valuation techniques and related inputs used to measure fair value during the ~~nine~~three months ended ~~June 30,~~December 31, 2013.

Level 3 assets and liabilities measured at fair value on a recurring basis. Auction rate securities are classified as Level 3 due to a lack of trading in active markets and a lack of observable inputs in measuring fair value. There were no substantive changes to the valuation techniques and related inputs used to measure fair value during the ~~nine~~three months ended ~~June 30,~~December 31, 2013.

Visa Europe put option agreement. The Company has granted Visa Europe a perpetual put option, ~~(the "put option")~~or the put option, which, if exercised, will require Visa Inc. to purchase all of the outstanding shares of capital stock of Visa Europe from its members. The put option provides a formula for determining the purchase price of the Visa Europe shares, which, subject to certain adjustments, applies Visa Inc.’s forward price-to-earnings multiple (as defined in the put option agreement), or the P/E ratio, ~~(as defined in the option agreement),~~ at the time the option is exercised, to Visa Europe’s ~~projected~~ adjusted ~~sustainable~~net income for the forward 12-month period (as defined in the put option agreement), or the adjusted sustainable ~~income (as defined in the option agreement).~~income. The calculation of Visa Europe’s adjusted sustainable income under the terms of the put option agreement includes potentially material adjustments for cost synergies and other negotiated items. Upon exercise, the key inputs to this formula, including Visa Europe’s adjusted sustainable income, will be the result of negotiation between the Company and Visa Europe. The put option provides an arbitration mechanism in the event that the two parties are unable to agree on the ultimate purchase price.

The fair value of the put option represents the value of Visa Europe’s option, which under certain conditions could obligate the Company to purchase its member equity interest for an amount above fair value. While the put option is in fact non-transferable, its fair value represents the Company’s estimate of the amount the Company would be required to pay a third-party market participant to transfer the potential obligation in an orderly transaction at the measurement date. The valuation of the put option therefore requires substantial judgment. The most subjective estimates applied in valuing the put option are the assumed probability that Visa Europe will elect to exercise its option and the estimated differential between the P/E ratio and the P/E ratio applicable to Visa Europe on a standalone basis at the time of exercise, ~~which~~or the ~~Company refers to as the “P/~~P/E differential.” The liability is classified within Level 3, as the assumed probability that Visa Europe will elect to exercise its option, the estimated P/E differential, and other inputs used to value the put option are unobservable.

At ~~June 30,~~December 31, 2013 and September 30, ~~2012~~2013, the Company determined the fair value of the put option to be $145 million. While $145 million represents the fair value of the put option at ~~June 30,~~December 31, 2013, it does not represent the actual purchase price that the Company may be required to pay if the option is exercised, which could be several billion dollars or more. During the ~~nine~~three months ended ~~June 30,~~December 31, 2013, there were no changes to the valuation methodology used to estimate the fair value of the put option. At ~~June 30,~~December 31, 2013, the key unobservable inputs included a 40% probability of exercise by Visa Europe at some point in the future and an estimated P/E differential of 1.9x. At ~~June 30,~~December 31, 2013, the Company's spot P/E was ~~21.0x~~21.5x, and there was a differential of ~~2.4x~~(1.3x) between this ratio and the estimated spot ratio applicable to Visa Europe. These ratios are for reference only and are not necessarily indicative of the ratio or differential that could be applicable if the put option were exercised at any point in the future. The use of an assumed probability of exercise that is 5% higher than the Company's estimate would have resulted in an increase of approximately $18 million in the value of the put option. An increase of 1.0x in the assumed P/E differential would have resulted in an increase of approximately $84 million in the value of the put option.

The put option is exercisable at any time at the sole discretion of Visa Europe. As such, the put option liability is included in accrued liabilities on the Company's consolidated balance sheet at ~~June 30,~~December 31, 2013. Classification in current liabilities is not an indication of management’s expectation of exercise and simply reflects the fact that the obligation resulting from the exercise of the instrument could become payable within 12 months. Any non-cash changes in fair value are recorded in non-operating income on the consolidated statements of operations.

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~~VISA INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~Earn-out related to PlaySpan acquisition.~~ ~~The fair value of the earn-out liability was reduced to~~ ~~zero, reflecting payments made in full during the quarter ended December 31, 2012, upon achieving certain revenue targets and other milestones.~~

A separate roll-forward of Level 3 assets and liabilities measured at fair value on a recurring basis is not presented as the primary activities during the ~~nine~~three months ended ~~June 30,~~December 31, 2013 and 2012 ~~were~~are already discussed above.

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VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Assets ~~and Liabilities~~ Measured at Fair Value on a Non-recurring Basis.

Non-marketable equity investments and investments accounted for under the equity method. These investments are classified as Level 3 due to the absence of quoted market prices, the inherent lack of liquidity, and the fact that inputs used to measure fair value are unobservable and require management's judgment. When certain events or circumstances indicate that impairment may exist, the Company revalues the investments using various assumptions, including the financial metrics and ratios of comparable public companies. ~~The Company recognized a~~ There were no~~$15 million~~ ~~other-than-temporary impairment loss~~

events or circumstances that indicated these investments became impaired during the ~~nine~~three months ended

~~June 30,~~December 31, 2013~~. There were no impairment charges recorded during the~~ ~~nine~~ ~~months ended~~ ~~June 30, 2012~~. or 2012. At ~~June 30,~~December 31, 2013, and September 30, ~~2012~~2013, these investments totaled $5432 million and $8630 million, respectively. These assets are classified in other assets on the consolidated balance sheets.

Due to a change in the Company's relationship with one of its investees during fiscal 2013, the Company reclassified equity securities previously accounted for as an equity method investment, with a carrying value of ~~$12 million, to long-term available-for-sale investment securities. The fair value of this investment at~~ ~~June 30, 2013~~ ~~was~~ ~~$57 million, resulting in the recognition of a pre-tax unrealized gain of~~ ~~$45 million~~ ~~in other comprehensive income.~~

Non-financial assets and liabilities. Long-lived assets such as goodwill, indefinite-lived intangible assets, finite-lived intangible assets, and property, equipment and technology are considered non-financial assets. The Company does not have any non-financial liabilities measured at fair value on a non-recurring basis. Finite-lived intangible assets primarily consist of customer relationships, ~~reacquired rights,~~tradenames and reseller relationships, ~~and tradenames,~~ all of which were obtained through acquisitions.

If the Company were required to perform a quantitative assessment for impairment testing of goodwill and indefinite-lived intangible assets, the fair values would generally be estimated using an income approach. As the assumptions employed to measure these assets on a non-recurring basis are based on management's judgment using internal and external data, these fair value determinations are classified as Level 3 in the fair value hierarchy. ~~The Company completed its annual impairment review of its indefinite-lived intangible assets and goodwill as of February 1, 2013, and concluded that there was~~There were no ~~impairment. No recent~~ events or ~~changes in~~ circumstances ~~indicate~~ that ~~impairment existed at~~indicated these assets became impaired during the three months ended ~~June 30,~~December 31, 2013 or 2012.

Other Financial Instruments Not Measured at Fair Value

The following financial instruments are not measured at fair value on the Company's consolidated balance sheet at ~~June 30,~~December 31, 2013, but require disclosure of their fair values: time deposits recorded in prepaid expenses and other current assets, settlement receivable and payable, and customer collateral. The estimated fair value of such instruments at ~~June 30,~~December 31, 2013, approximates their carrying value due to their generally short maturities. If measured at fair value in the financial statements, these financial instruments would be classified as Level 2 in the fair value hierarchy.

Investments

Available-for-sale investment securities

The Company had $48110 million in gross unrealized gains and $6$1 million in gross unrealized losses at ~~June 30,~~December 31, 2013. ~~The unrealized gains were primarily related to the Company's reclassified equity investment discussed above.~~ There were $493 million gross unrealized gains and $1 million gross unrealized losses at September 30, ~~2012~~2013. The gross unrealized gains at December 31, 2013 and September 30, 2013 primarily relate to the Company's available-for-sale equity securities. A majority of the Company's available-for-sale investment securities with stated maturities are due within one to ~~five~~three years.

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~~VISA INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~Note 4—Debt~~

~~Commercial paper program.~~ ~~Visa maintains a commercial paper program to support its working capital requirements and for other general corporate purposes. On~~ ~~February 7, 2013, the Company replaced the existing~~ ~~$500 million~~ ~~program with a new commercial paper program. Under the new program, the Company is authorized to issue up to~~ ~~$3.0 billion~~ ~~in outstanding notes, with maturities up to~~ ~~397~~ ~~days from the date of issuance. The Company had no outstanding obligations under the new program at~~ ~~June 30, 2013~~.

~~Credit facility.~~ ~~On January 31, 2013, the Company entered into an unsecured~~ ~~$3.0 billion~~ ~~revolving credit facility. This credit facility, which expires on January 30, 2014, replaced the Company's existing~~ ~~$3.0 billion~~ ~~credit facility, which would have expired on~~ ~~February 15, 2013~~. The new credit facility contains covenants and events of default customary for facilities of this type. The participating lenders in the new credit facility include affiliates of certain holders of the Company's class B and class C common stock and some of the Company's clients or affiliates of its clients. The new credit facility is maintained to provide liquidity in the event of settlement failures by the Company's clients, to back up the commercial paper program and for general corporate purposes.

Interest on borrowings under the Credit Facility would be charged at the London Interbank Offered Rate ("LIBOR") or an alternative base rate, in each case plus applicable margins that fluctuate based on the applicable credit rating of the Company's senior unsecured long-term debt. Visa also agreed to pay a commitment fee that fluctuates based on the credit rating of the Company's senior unsecured long-term debt. Currently, the applicable margin is ~~0.00%~~ to ~~0.75%~~ ~~depending on the type of the loan, and the commitment fee is~~ ~~0.05%. There were no borrowings under this facility and the Company was in compliance with all related covenants at~~ ~~June 30, 2013~~ .

Note 5—4—Pension and Other Postretirement Benefits

The Company sponsors various qualified and non-qualified defined benefit pension and other postretirement benefit plans that provide for retirement and medical benefits for substantially all employees residing in the United States.

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VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The components of net periodic benefit cost are as follows:


	Pension Benefits												Other Postretirement Benefits											Pension Benefits						Other Postretirement Benefits
	Three Months Ended June 30,						Nine Months Ended June 30,						Three Months Ended June 30,					Nine Months Ended June 30,						Three Months Ended December 31,						Three Months Ended December 31,
	2013			2012			2013			2012			2013			2012		2013			2012			2013			2012			2013			2012
	(in millions)																							(in millions)
Service cost	$	10		$	10		$	32		$	29		$	—		$	—	$	—		$	—		$	11		$	10		$	—		$	—
Interest cost	9			10			27			30			—			—		—			1			10			9			—			—
Expected return on assets	(16		)	(14		)	(47		)	(41		)	—			—		—			—			(17		)	(16		)	—			—
Amortization of:
Prior service credit	(2		)	(2		)	(7		)	(7		)	(1		)	—		(2		)	(2		)	(2		)	(2		)	(1		)	(1		)
Actuarial loss	8			8			22			24			—			—		—			—			—			7			—			—
Settlement loss	—			3			—			3			—			—		—			—			1			—			—			—
Total net periodic benefit cost	$	9		$	15		$	27		$	38		$	(1	)	$	—	$	(2	)	$	(1	)	$	3		$	8		$	(1	)	$	(1	)

Note 6—5—Settlement Guarantee Management

The indemnification for settlement losses that Visa provides to its financial institution clients creates settlement risk for the Company due to the difference in timing between the date of a payment transaction and the date of subsequent settlement. The exposure to settlement losses through ~~our~~Visa's settlement indemnification is accounted for as a settlement risk guarantee. The Company’s settlement exposure is limited to the amount of unsettled Visa payment transactions at any point in time. The Company requires certain financial institution clients that do not meet its credit standards to post collateral to offset potential loss from their estimated unsettled transactions. The Company’s estimated maximum settlement exposure was $~~52.1~~53.2 billion at ~~June 30,~~December 31, 2013, compared to $~~49.3~~53.8 billion at September 30, ~~2012~~2013. Of these

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~~VISA INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

settlement exposure amounts, $~~3.6~~3.0 billion at ~~June 30,~~December 31, 2013 and~~$3.5 billion~~at September 30, ~~2012~~2013, ~~were~~was covered by collateral.

The Company maintained collateral as follows:


	June 30, 2013		September 30, 2012		December 31, 2013		September 30, 2013
	(in millions)				(in millions)
Cash equivalents	$	817	$	823	$	886	$	866
Pledged securities at market value	264		307		233		256
Letters of credit	1,157		1,084		1,210		1,191
Guarantees	2,088		2,022		1,416		1,411
Total	$	4,326	$	4,236	$	3,745	$	3,724

The total available collateral balances presented in the table above were greater than the settlement exposure covered by customer collateral held due to instances in which the available collateral exceeded the total settlement exposure for certain financial institutions at each date presented.

The fair value of the settlement risk guarantee is estimated based on a proprietary probability-weighted model and was approximately $2 million at December 31, 2013 and $1 million at ~~June~~September 30, 2013 ~~and~~ ~~September 30, 2012~~. These amounts are reflected in accrued liabilities on the consolidated balance sheets.

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VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Note 6—Accrued and Other Liabilities

Accrued liabilities consisted of the following:



	December 31, 2013		September 30, 2013
	(in millions)
Accrued operating expenses	$	153	$	182
Visa Europe put option—(See Note 3—Fair Value Measurements and Investments)⁽¹⁾	145		145
Deferred revenue	72		60
Accrued marketing and product expenses	22		27
Accrued income taxes⁽²⁾	412		64
Other	143		135
Total	$	947	$	613

Other non-current liabilities consisted of the following:



	December 31, 2013		September 30, 2013
	(in millions)
Accrued income taxes⁽³⁾	$	539	$	453
Employee benefits	86		86
Other	64		63
Total	$	689	$	602


⁽¹⁾	The put option is exercisable at any time at the sole discretion of Visa Europe with payment required 285 days thereafter. Classification in current liabilities is not an indication of management’s expectation of exercise and simply reflects the fact that the obligation resulting from the exercise of the instrument could become payable within 12 months.


⁽²⁾	The increase in current accrued income taxes is primarily related to current income taxes accrued in the first quarter of fiscal 2014, but payable in the second quarter of fiscal 2014.


⁽³⁾	The increase in non-current accrued income taxes is due to an increase in liabilities for uncertain tax positions.

Note 7—Stockholders' Equity

The number of shares of each class and the number of shares of class A common stock on an as-converted basis at ~~June 30,~~December 31, 2013, are as follows:


(in millions, except conversion rate)	Shares Outstanding	Conversion Rate Into Class A Common Stock	As-converted Class A Common Stock⁽¹⁾	Shares Outstanding	Conversion Rate Into Class A Common Stock	As-converted Class A Common Stock⁽¹⁾
Class A common stock	515	—	515	505	—	505
Class B common stock	245	0.4206	103	245	0.4206	103
Class C common stock	27	1.0000	27	26	1.0000	26
Total			645			634


⁽¹⁾	Figures in the table may not recalculate exactly due to rounding. As-converted class A common stock is calculated based on whole numbers, not the rounded numbers presented.

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VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Reduction in as-converted class A common ~~stock~~

stock. The following table presents share repurchases in the open market.


(in millions, except per share data)	Three Months Ended June 30, 2013		Nine Months Ended June 30, 2013		Three Months Ended December 31, 2013
Shares repurchased in the open market ⁽¹⁾	6		26		5
Weighted-average repurchase price per share	$	176.75	$	157.48	$	199.56
Total cost	$	981	$	4,054	$	1,091


⁽¹⁾	All shares repurchased in the open market have been retired and constitute authorized but unissued shares.

At ~~June 30, 2013, the Company had~~ ~~$61 million~~ ~~of remaining funds available for share repurchases under the current program authorized by the board of directors.~~ In ~~July~~October 2013, the ~~Company's~~Company’s board of directors authorized a new ~~$1.5~~$5.0 billion share repurchase program. As of December 31, 2013, the program had remaining authorized funds of $4.2 billion. All share repurchase programs authorized prior to ~~be in effect through July 2014.~~October 2013 have been completed.

Dividends. On ~~July 16, 2013~~,In January 2014, the Company’s board of directors declared a quarterly cash dividend ~~in the amount~~ of $~~0.33~~0.40 per share of class A common stock (determined in the case of class B and class C common stock on an as-converted basis), which will be paid on ~~September~~March 4, ~~2013~~2014, to all holders of record of the Company's class A, ~~class~~ B and

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~~VISA INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~class~~ C common stock as of ~~August 16, 2013~~February 14, 2014. The Company declared and paid ~~$653~~$254 million in dividends during the ~~nine~~three months ended ~~June 30,~~December 31, 2013.

Note 8—Earnings Per Share

The following table presents earnings per share for the three months ended ~~June 30,~~December 31, 2013.⁽¹⁾


	Basic Earnings Per Share					Diluted Earnings Per Share						Basic Earnings Per Share					Diluted Earnings Per Share
	(in millions, except per share data)											(in millions, except per share data)
	Income Allocation (A)⁽²⁾		Weighted- Average Shares Outstanding (B)	Earnings per Share = (A)/(B)		Income Allocation (A)⁽²⁾		Weighted- Average Shares Outstanding (B)		Earnings per Share = (A)/(B)		Income Allocation (A)⁽²⁾		Weighted- Average Shares Outstanding (B)	Earnings per Share = (A)/(B)		Income Allocation (A)⁽²⁾		Weighted- Average Shares Outstanding (B)		Earnings per Share = (A)/(B)
Class A common stock	$	973	515	$	1.89	$	1,225	651	⁽³⁾	$	1.88	$	1,115	505	$	2.21	$	1,407	639	⁽³⁾	$	2.20
Class B common stock	194		245	0.79		194		245		0.79		228		245	$	0.93	$	228	245		$	0.93
Class C common stock	53		28	1.89		53		28		1.88		59		27	$	2.21	$	59	27		$	2.20
Participating securities⁽⁴⁾	5		Not presented	Not presented		5		Not presented		Not presented		5		Not presented	Not presented		$	5	Not presented		Not presented
Net income attributable to Visa Inc.	$	1,225
Net income												$	1,407

The following table presents earnings per share for the ~~nine~~three months ended ~~June 30, 2013~~December 31, 2012.⁽¹⁾

Basic Earnings Per Share Diluted Earnings Per Share
(in millions, except per share data)

Income
Allocation
(A)⁽²⁾

Weighted-
Average
Shares
Outstanding (B)

Earnings per
Share =
(A)/(B)

Income
Allocation
(A)⁽²⁾

Weighted-
Average
Shares
Outstanding (B)

Earnings per
Share =
(A)/(B)
Class A common stock $ 3,014
524
$ 5.76
$ 3,788
660
⁽³⁾
$ 5.74
Class B common stock 594
245
2.42
592
245
2.41
Class C common stock 166
29
5.76
165
29
5.74
Participating securities⁽⁴⁾
14
Not presented
Not presented
14
Not presented
Not presented
Net income attributable to Visa Inc. $ 3,788

~~The following table presents loss per share for the~~ ~~three~~ ~~months ended~~ ~~June 30, 2012~~.⁽¹⁾

Basic Earnings (Loss) Per Share Diluted Earnings (Loss) Per Share
(in millions, except per share data)

Loss
Allocation
(A)⁽²⁾

Weighted-
Average
Shares
Outstanding (B)

Earnings
(Loss) per
Share =
(A)/(B)

Loss
Allocation
(A)⁽²⁾

Weighted-
Average
Shares
Outstanding (B)

Earnings
(Loss) per
Share =
(A)/(B)
Class A common stock $ (1,437 ) 525
$ (2.74 ) $ (1,839 ) 672
⁽³⁾
$ (2.74 )
Class B common stock (286 )
245
(1.16 ) (286 )
245
(1.16 )
Class C common stock (109 ) 40
(2.74 ) (109 ) 40
(2.74 )
Participating securities⁽⁴⁾
(7 ) Not presented
Not presented
(7 ) Not presented
Not presented
Net loss attributable to Visa Inc. $ (1,839 )

~~Table of Contents~~

~~VISA INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~The following table presents earnings per share for the~~ ~~nine~~ ~~months ended~~ ~~June 30, 2012~~. ⁽¹⁾


	Basic Earnings Per Share					Diluted Earnings Per Share						Basic Earnings Per Share					Diluted Earnings Per Share
	(in millions, except per share data)											(in millions, except per share data)
	Income Allocation (A)⁽²⁾		Weighted- Average Shares Outstanding (B)	Earnings per Share = (A)/(B)		Income Allocation (A)⁽²⁾		Weighted- Average Shares Outstanding (B)		Earnings per Share = (A)/(B)		Income Allocation (A)⁽²⁾		Weighted- Average Shares Outstanding (B)	Earnings per Share = (A)/(B)		Income Allocation (A)⁽²⁾		Weighted- Average Shares Outstanding (B)		Earnings per Share = (A)/(B)
Class A common stock	$	372	523	$	0.71	$	482	681	⁽³⁾	$	0.71	$	1,031	531	$	1.94	$	1,293	669	⁽³⁾	$	1.93
Class B common stock	78		245	0.32		78		245		0.32		200		245	$	0.82	$	200	245		$	0.81
Class C common stock	30		43	0.71		30		43		0.71		57		30	$	1.94	$	57	30		$	1.93
Participating securities⁽⁴⁾	2		Not presented	Not presented		2		Not presented		Not presented		5		Not presented	Not presented		$	5	Not presented		Not presented
Net income attributable to Visa Inc.	$	482
Net income												$	1,293


⁽¹⁾	Figures in the table may not recalculate exactly due to rounding. Earnings ~~(loss)~~ per share is calculated based on whole numbers, not the rounded numbers presented.

⁽²⁾

Net income ~~(loss) attributable to Visa Inc.~~ is allocated based on proportional ownership on an as-converted basis. The weighted-average ~~numbers~~number of shares of as-converted class B common stock used in the income ~~(loss)~~ allocation ~~were~~was 103 ~~million~~ ~~for the~~ ~~three and nine~~ ~~months ended~~ ~~June 30, 2013, and~~ ~~104 million~~ ~~and~~ ~~110~~ million for the three ~~and nine~~ months ended ~~June 30, 2012~~, ~~respectively.~~December 31, 2013 and December 31, 2012.

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VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

⁽³⁾

Weighted-average diluted shares outstanding are calculated on an as-converted basis, and include incremental common stock equivalents, as calculated under the treasury stock method. The computation includes 2 million of common stock equivalents for the three months ended December 31, 2013 and ~~nine~~December 31, 2012, because their effect would be dilutive. The calculation excludes less than 1 million of common stock equivalents for the three months ended ~~June 30,~~December 31, 2013, and ~~3 million~~ ~~for the nine months ended~~ ~~June 30,~~December 31, 2012, because their effect would have been ~~dilutive. The computation excludes less than~~ ~~1 million~~ ~~common stock equivalents for the~~ ~~three and nine~~ ~~months ended~~ ~~June 30, 2013~~ ~~and the nine months ended~~ ~~June 30, 2012, because their effect would have been~~ anti-dilutive. ~~The computation also excludes~~ ~~7 million~~ ~~outstanding stock awards for the three months ended~~ ~~June 30, 2012, because their effect would have been anti-dilutive as the Company had a net loss.~~


⁽⁴⁾	Participating securities are unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents, such as the Company's restricted stock awards, restricted stock units and earned performance-based shares.

Note 9—Share-based Compensation

The Company granted the following equity awards to employees and non-employee directors under the 2007 Equity Incentive Compensation Plan during the ~~nine~~three months ended ~~June 30,~~December 31, 2013:


	Granted	Weighted-Average Grant Date Fair Value		Weighted-Average Exercise Price		Granted	Weighted-Average Grant Date Fair Value		Weighted-Average Exercise Price
Non-qualified stock options	579,318	$	39.03	$	147.37	315,226	$	43.41	$	197.39
Restricted stock awards ("RSAs")	891,360	146.96				494,621	$	197.39
Restricted stock units ("RSUs")	326,746	145.83				221,103	$	197.39
Performance-based shares⁽¹⁾	230,518	164.14				278,451	$	225.46


⁽¹⁾	Represents the maximum number of performance-based shares which could be earned.

The Company’s non-qualified stock options, RSAs and RSUs are equity awards with service-only conditions and are accordingly expensed on a straight-line basis over the vesting period. ~~For~~The Company's performance-based shares are equity awards with service, market and performance ~~and market~~ conditions ~~the Company uses~~that are accounted for using the graded-vesting ~~method of expense attribution.~~method. Compensation cost is recorded net of estimated forfeitures, which are adjusted as appropriate.

Note 10—Income Taxes

~~Table of Contents~~

~~VISA INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~rates~~ rate for the three ~~and nine~~ months ended ~~June 30,~~December 31, 2013 ~~differ~~differs from the effective tax ~~rates~~rate in the same ~~periods~~period in the previous fiscal ~~2012~~year mainly due ~~to:~~

~~certain foreign tax credit benefits related~~ to ~~prior years recognized in~~ the ~~second quarter~~absence of ~~fiscal 2013;~~

a ~~$76~~$76 million tax benefit recognized in the first quarter of fiscal 2013, as a result of new guidance issued by the state of California regarding apportionment rules for years prior to fiscal ~~2012; and~~

2012.

~~the absence of:~~

~~the tax benefit and the offsetting tax reserve associated with the covered litigation provision recorded in the third quarter of fiscal 2012;~~

~~a one-time foreign tax credit carryover benefit recognized in the third quarter of fiscal 2012; and~~

~~a one-time, non-cash benefit of~~ ~~$208 million~~ ~~from the remeasurement of existing net deferred tax liabilities in the second quarter of fiscal 2012, as a result of the California state apportionment rule changes adopted in that quarter.~~

During the three ~~and nine~~ months ended ~~June 30,~~December 31, 2013, the Company's gross unrecognized tax benefits increased by ~~$10~~$47 million, ~~and~~ ~~$231~~ $45 million~~, respectively,~~ ~~$8 million~~ ~~and~~ ~~$179 million~~ of which ~~respectively,~~ would favorably impact ~~the~~our effective income tax rate if recognized. The increase in gross unrecognized tax benefits is primarily due to ~~changes in judgments and estimates~~potential audit exposure related to various tax positions across several jurisdictions. During the three ~~and nine~~ months ended ~~June 30,~~December 31, 2013 and 2012, the Company accrued $4$2 million ~~and~~ ~~$9 million~~ of interest ~~respectively, compared to~~ ~~$1 million~~and ~~$15 million, respectively, in the prior-year comparable periods. During the three and nine months ended June 30, 2013, the Company accrued~~ no penalties ~~and~~ ~~$2 million~~ ~~of penalties, respectively,~~ related to uncertain tax positions.No ~~penalties related to uncertain tax positions were accrued for the same prior-year comparable periods.~~

~~The Company reclassified~~ ~~$1.6 billion~~ ~~from deferred tax assets to income tax receivable in the first quarter of the current fiscal year to reflect the current tax deduction related to the payments totaling~~ ~~$4.4 billion~~ ~~made in connection with the covered litigation. See~~ ~~Note 2—Retrospective Responsibility Plan~~ ~~and~~ ~~Note 11—Legal Matters. The income tax receivable has been applied and will continue to be applied to reduce income taxes payable throughout fiscal 2013.~~

Note 11—Legal Matters

The Company is party to various legal and regulatory proceedings. Some of these proceedings involve complex claims that are subject to substantial uncertainties and unascertainable damages. Accordingly, except as disclosed, the Company has not established reserves or ranges of possible loss related to these proceedings, as at this time in the proceedings, the matters do not relate to a probable loss and/or the amount or range of losses are not reasonably estimable. Although the Company believes that it has strong defenses for the litigation and regulatory proceedings described below, it could, in the future, incur judgments or fines or enter into settlements of claims that could have a material adverse effect on the Company's financial position, results of operations or cash flows. From time to time, the Company may engage in settlement discussions or mediations with respect to one or more of its outstanding litigation matters, either on its own behalf or collectively with other parties.

Table of Contents

VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The litigation accrual is an estimate and is based on management’s understanding of its litigation profile, the specifics of each case, advice of counsel to the extent appropriate and management’s best estimate of incurred loss as of the balance sheet date.

The following table summarizes activity related to accrued litigation.


	Fiscal 2013			Fiscal 2012			2013			2012
	(in millions)						(in millions)
Balance at October 1	$	4,386		$	425		$	5		$	4,386
Provision for unsettled matters	3			4,098			—			3
Interest accretion on settled matters	—			1
Payment on unsettled matters⁽¹⁾	(4,033		)	—			—			(4,033		)
Payment on settled matters	(351		)	(140		)	(1		)	(351		)
Balance at June 30	$	5		$	4,384
Balance at December 31							$	4		$	5

~~Table of Contents~~

~~VISA INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

⁽¹⁾

~~On December 10, 2012,~~In fiscal 2013, the Company paid approximately $4.0 billion from the litigation escrow account into a settlement fund established pursuant to the definitive class settlement agreement in the ~~Multidistrict Litigation Proceedings. The~~interchange multidistrict litigation. Under the settlement agreement, if class members opt-out (“opt-out merchants”) of the damages portion of the class settlement, the defendants are entitled to receive payments of no more than 25% of the original cash payments made into the settlement fund, based on the percentage of payment card sales volume for a defined period attributable to merchants who opted out (the "takedown payments"). On January 14, 2014, the court entered the final judgment order approving the settlement with the class plaintiffs in the interchange multidistrict litigation proceedings, which is subject ~~to final court approval, which the Company cannot assure will be received, and~~ to the adjudication of any appeals. Takedown payments of approximately $1.1 billion were received on January 27, 2014, and deposited into the Company’s litigation escrow account. The deposit into the litigation escrow account, and a related increase in accrued litigation to address opt-out claims will be recorded in the second quarter of fiscal 2014. See further discussion below.

Covered Litigation

Visa Inc., Visa U.S.A. and Visa International are parties to certain legal proceedings that are covered by the retrospective responsibility plan, which the Company refers to as the covered litigation. See Note 2—Retrospective Responsibility Plan. An accrual for the covered litigation and a charge to the litigation provision are recorded when loss is deemed to be probable and reasonably estimable. In making this determination, the Company evaluates available information, including but not limited to, actions taken by the litigation committee.

~~The Attridge Litigation.~~ ~~The parties in the~~ ~~Credit/Debit Card Tying Cases~~ subsequently agreed upon a revised written settlement agreement, which was submitted to the court for preliminary approval on August 20, 2012 and executed as of September 6, 2012. The court entered an order preliminarily approving the settlement on November 20, 2012. On April 11, 2013, the settlement in the ~~Credit/Debit Tying Cases~~ ~~was granted final approval, and objectors have filed notices of appeal in those cases and the~~ ~~Attridge~~ ~~case. On April 25, 2013, in light of the proceedings in the~~ ~~Credit/Debit Card Tying Cases, the~~ ~~Attridge~~ ~~case was stayed until September 20, 2013.~~

~~The~~ Interchange ~~Litigation~~

Multidistrict Litigation ~~Proceedings~~ (MDL). The district court entered the preliminary approval order on November 27, 2012. On November 27, 2012, certain objectors filed a notice of appeal from the preliminary approval order in the U.S. Court of Appeals for the Second Circuit. Objectors also moved to stay the preliminary approval order in the district court and moved for expedited briefing in the court of appeals. On December 10, 2012, the court of appeals entered an order deferring briefing for the appeal until after the district court enters an order of final approval and final judgment with respect to the settlement, or otherwise concludes the matters by entry of a final judgment. On December 17, 2012, certain objectors filed a motion asking the court of appeals to reconsider its decision, which was denied on January 31, 2013. On January 15, 2013, the district court denied as moot objectors' request to stay the preliminary approval order.

On December ~~10, 2012, Visa paid approximately~~ ~~$4.0 billion~~ ~~from the litigation escrow account into a settlement fund established pursuant to the definitive class settlement agreement.~~

Certain retailers in the proposed settlement classes thereafter objected to the settlement, opted out of the damages portion of the class settlement, and/or are seeking to opt out of the rules portion of the class settlement. Details of retailers who have filed an opt-out claim may be found below (see "~~Interchange Opt-out Litigation" below).~~

Certain competitors and other interested parties have also objected to the class settlement, including Discover, which filed a motion to intervene on May 28, 2013. Discover seeks, among other things, to object to the settlement agreement and to file a proposed complaint challenging certain aspects of the settlement agreement as a restraint of trade in violation of Section 1 of the Sherman Act. On June 13, 2013, the district court ~~ordered defendants to respond to Discover's objections by August 16, 2013.~~

~~On July 1, 2013, the class administrator filed an amended report stating that the administrator had received 7,953 requests to opt out of the settlement. Under~~issued a memorandum and order approving the Settlement Agreement ifwith the class ~~members opt out~~plaintiffs. On January 14, 2014, the court entered the final judgment order approving the settlement. A number of objectors to the ~~damages~~settlement have appealed from that order. Until the appeals are finally adjudicated, no assurance can be provided that the Company will be able to resolve the class plaintiffs' claims as contemplated by the Settlement Agreement. On January 27, 2014, Visa's portion of the ~~class settlement,~~takedown payments related to the ~~defendants are entitled~~opt-out merchants, which was calculated to ~~receive payments of no more than 25% of the original cash payments made~~be approximately $1.1 billion, was deposited into the ~~settlement fund, based on the percentage of payment card sales volume for a defined period attributable to merchants who opted out (the~~ “~~takedown payments~~”~~). By no later than August 16, 2013, the parties will submit to the court any disputes about the takedown payments.~~litigation escrow account.

Interchange Opt-out Litigation

OnBeginning in May ~~24,~~ 2013, ~~CVS Pharmacy, Inc.~~more than 25 opt-out cases have been filed ~~suit~~by hundreds of merchants in various federal district courts, generally pursuing damages claims on allegations similar to those raised in MDL 1720. A similar case has been filed by a merchant in Texas state court. A number of the ~~Eastern District~~cases also include allegations that Visa has monopolized, attempted to monopolize, and/or conspired to monopolize debit card-related market segments, and one of ~~New York~~the cases seeks an injunction against the fixed acquirer network fee. The cases name as defendants Visa Inc., Visa U.S.A., Visa International, MasterCard Incorporated, and MasterCard International ~~Incorporated. The~~ ~~CVS~~ ~~case has been included~~Incorporated, although some also include certain U.S. financial institutions as ~~part~~defendants. All of ~~MDL 1720. On May 28 and 29, 2013, Buc-ee's Ltd. and Shop Rite Inc. (and two other plaintiffs), respectively,~~the cases originally filed ~~suit~~in federal court either were filed in the ~~Southern~~U.S. District Court for the Eastern District of New York ~~against Visa Inc., Visa U.S.A., Visa International, MasterCard Incorporated,~~ and ~~MasterCard International Incorporated. The~~ ~~Buc-ee's~~ ~~complaint also includes certain U.S. financial institution defendants~~have been assigned to the judge presiding over MDL 1720, or have been transferred by the Judicial Panel on Multidistrict Litigation for inclusion in MDL 1720. ~~On June 14, 2013,~~Visa removed the ~~Clerk of~~Texas state court case to federal court and sought to transfer it to MDL 1720, but the ~~Judicial Panel~~federal court remanded the case to Texas state court before the case could be transferred to

2221

Table of Contents

VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

~~on Multidistrict Litigation~~MDL 1720. Cases that are transferred ~~the~~ ~~Shop Rite~~ ~~and~~ ~~Buc-ee's~~ ~~cases~~ to ~~the Eastern District of New York for inclusion~~or otherwise included in MDL ~~1720. Plaintiffs in the~~ ~~CVS~~, ~~Shop Rite, and~~ ~~Buc-ee's~~ ~~cases are pursuing damages claims based upon allegations similar to those raised in MDL 1720. As part of MDL~~ 1720 ~~these cases are~~will be covered litigation for purposes of the retrospective responsibility plan. See Note 2—Retrospective Responsibility Plan.

On ~~May 24, 2013,~~January 14, 2014, Visa ~~MasterCard, and certain U.S. financial institution defendants in MDL 1720~~ filed a complaint in the U.S. District Court for the Eastern District of New York against certain named class representative plaintiffs who had opted out or stated their intention to opt out of the damages portion of the MDL class settlement. On June 10, 2013, Visa filed a similar complaint in the Eastern District of New York against Wal-Mart StoresThe Home Depot, Inc. ~~Both complaints seek~~and Home Depot U.S.A., Inc. seeking a declaration that, from January 1, 2004 to November 27, 2012, the time period for which opt-outs may seek damages under the MDL class settlement, Visa's conduct in, among other things, continuing to set default interchange rates, maintaining its ~~“honor~~"honor all ~~cards”~~cards" rule, enforcing certain rules relating to merchants, and restructuring itself, did not violate federal or state antitrust laws. ~~Both cases have~~The case has been assigned to the same district court judge presiding over MDL 1720.

Consumer Interchange Litigation

On ~~May 23,~~December 16, 2013, ~~Target Corporation~~a putative class action was filed in federal district court in California against certain financial institutions alleging that they conspired to fix interchange fees and ~~a number~~imposed other alleged restraints on competition.The complaint was filed on behalf of ~~other~~four named plaintiffs ~~filed suit~~and an alleged class of all Visa and MasterCard payment cardholders in the ~~Southern District of New York against~~United States since January 1, 2000. Although no Visa ~~Inc.,~~entity is named as a defendant, the complaint identifies Visa U.S.A., ~~Visa International,~~ MasterCard, ~~Incorporated,~~ and ~~MasterCard International Incorporated. The~~certain non-defendant financial institutions as co-conspirators, and plaintiffs ~~are former~~assert that they may seek leave to amend the complaint to add the co-conspirators as defendants.Plaintiffs seek injunctive relief, attorneys’ fees, and treble damages allegedly to compensate the purported class ~~members of~~for more than $54.0 billion dollars in purported overcharges imposed on them each year by defendants and their alleged co-conspirators.Defendants sought to transfer the ~~damages class in~~case to MDL 1720, ~~who opted out of the damages portion of the class settlement and are pursuing damages claims. Plaintiffs in the~~ ~~Target~~ ~~case are pursuing damages claims on allegations similar to those raised in MDL 1720. On June 6, 2013,~~but the Clerk of the Judicial Panel on Multidistrict Litigation ~~filed an order conditionally transferring~~declined to transfer the case to MDL 1720.

Other Litigation

Vale Canjeable

On December 9, 2013, the Constitutional Chamber reversed the Commercial Chamber’s judgment and issued a final decision. The Constitutional Chamber ruled that the ~~Target~~“Vale” ~~opt-out case to the Eastern District of New York for inclusion in MDL 1720 (see~~mark is distinctive and Visa’s mark, “~~Multidistrict Litigation Proceedings~~Visa Vale,” ~~above). On June 13, 2013, the~~ ~~Target~~ ~~plaintiffs filed a Notice of Opposition to the conditional transfer order, and on June 27, 2013, the~~ ~~Target~~ ~~plaintiffs~~infringed the plaintiff’s mark, but the plaintiff suffered no damages as a result of the infringement. The ruling permits the plaintiff to seek its costs from the defendants in relation to certain appeals filed ~~a motion to vacate~~by the ~~conditional transfer order. On June 26,~~defendants.

European Competition Proceedings

U.K. Merchant Litigation. Since November 2013, ~~a group of fifty-five merchants in a case known as~~ ~~7-Eleven~~ ~~filed suit in the Southern District of New York against~~ Visa Inc., Visa ~~U.S.A.,~~International, and Visa ~~International, MasterCard Incorporated, MasterCard International Incorporated, and certain U.S. financial institution defendants in MDL 1720. The allegations in the~~ ~~7-Eleven~~ ~~case are similar to those that~~Europe have been generally raised in MDL 1720, but also include allegations that Visa has monopolized, attempted to monopolize, and conspired to monopolize the debit card network services market in violation of Section 2 of the Sherman Act; and plaintiffs seek an injunction against the Fixed Acquirer Network Fee. On June 28, 2013, the defendants filed aput on notice of ~~a tag-along action and requested that the Clerk~~additional claims on behalf of ~~the Judicial Panel on Multidistrict Litigation transfer the~~ ~~7-Eleven~~ ~~opt-out case to the Eastern District of New York for inclusion in MDL 1720 (see~~“~~Multidistrict Litigation Proceedings,” above). On July~~approximately 12 ~~2013, the Clerk of the Judicial Panel on Multidistrict Litigation filed an order conditionally transferring the~~ ~~7-Eleven~~ ~~opt-out case to the Eastern District of New York for inclusion in MDL 1720. On July 12, 2013, the~~ ~~7-Eleven~~ ~~plaintiffs filed a Notice of Opposition to the conditional transfer order. The~~ ~~Target~~ ~~and~~ ~~7-Eleven~~ ~~opt-out cases will be covered litigation for purposes of the retrospective responsibility plan (see~~ ~~Note 2—Retrospective Responsibility Plan) if transferred to or otherwise included in MDL 1720.~~

~~Other Litigation~~

~~“Indirect Purchaser” Actions.~~ ~~In the~~ ~~Credit/Debit Card Tying Cases~~, the court entered an order preliminarily approving the settlement on November 20, 2012. On April 11, 2013, the court entered an order finally approving the settlement and entered judgment. Objectors to the settlementmerchants. Some merchants have filed ~~notices of appeal.~~

~~Vale Canjeable~~

~~In June 2013, the Venezuelan Supreme Court ruled in Visa and Todoticket's favor with respect to both appeals. The Supreme Court dismissed the plaintiff's~~ claims ~~of trademark infringement and damages in their entirety. The Supreme Court's decision furthermore invalidated the injunction ordered by the Fifth Municipal court effective immediately.~~

~~European Interchange Proceedings~~

~~European Commission.~~ On March 8, 2013, Visa Inc. and Visa International received a redacted copy of the supplementary Statement of Objections (“SSO”) that was previously announced by the European Commission (“EC”) on July 31, 2012. On April 24, 2013, Visa Inc. and Visa International received a less redacted version of the SSO from the EC, but to datewhile some merchants have not received a complete copy of the SSO without redactions. The SSO alleges a breach of Article 101 of the Treaty on the Functioning of the European Union and Article 53 of the European Economic Area Agreement. Among other things, the SSO asserts claims jointly againstyet filed; instead, those merchants have entered into standstill agreements with Visa Europe, Visa Inc., and

~~Table of Contents~~

~~VISA INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

Visa International ~~objecting to: (1)~~related to the ~~level of domestic credit~~claims. In general, the claims relate to interchange primarily in the following eight European Economic Area member states: Ireland, Luxembourg, Sweden, Italy, Malta, Netherlands, Belgium, and Hungary; (2) the level of cross-border credit interchange for transactions at European merchants with respect to cards issued bothrates in Europe, and ~~outside of Europe, and seeking the substantial reduction of both~~seek damages for alleged anti-competitive conduct relating to U.K. domestic, Irish domestic, and ~~such cross-border~~intra-European Economic Area (EEA) interchange fees for credit ~~interchange; (3) Visa Europe's rule prohibiting cross-border acquiring;~~ and ~~(4) other point-of-sale rules, such as the “Honor All Cards” and “no-surcharge” rules.~~debit cards. The ~~SSO also announces the EC's intention to impose fines. The potential~~ amount of ~~any fine resulting from the action~~interchange being challenged could be ~~substantial but cannot be~~substantial; among the remedies sought in one filed claim is a demand for compensatory damages estimated by the plaintiffs at ~~this time.~~ approximately $145 million. However, the full scope of the claims is not yet known because some claims remain unfiled.

Visa Europe is obligated to indemnify Visa Inc. and Visa International in connection with ~~this proceeding,~~the European Competition Proceedings, in our opinion, including payment of any fines that may be imposed. However, ~~on April 4, 2013,~~ Visa Europe has expressed an "initial" view that it is not obligated to indemnify Visa Inc. or Visa International for any claim in the ~~SSO.~~European Competition Proceedings, including claims asserted in both the European Commission matter and the U.K. Merchant Litigation. Visa Inc. continues to firmly believe that Visa Europe is obligated to indemnify for all such claims, ~~contained in the SSO,~~ and has been in discussions with Visa Europe to resolve this issue. ~~Both~~While the parties are not currently in non-binding arbitration, both parties have initiated athe executive engagement aspect of the dispute resolution procedure contemplated by the Framework Agreement to resolve their dispute regarding this indemnification issue.

Visa Europe has offered commitments addressing domestic interchange, cross-border interchange within Europe, cross-border acquiring within Europe, and other Visa Europe rules. The EC will consider whether to accept those commitments after a period of public comment.U.S. ATM Access Fee Litigation

~~Threatened Merchant Litigation.~~ On March 22, 2013, Visa Inc. learned that counsel for private merchant plaintiffs have threatened to file litigation against Visa Europe, Visa Inc., and Visa International with respect to interchange rates in Europe. While the amount of interchange being challenged could be substantial, the full scope of the claims is not known at this time. On March 28, 2013, Visa Europe, Visa Inc., Visa International and the plaintiffs entered into (1) a standstill agreement, which tolled any limitation periods that would have been applicable to the claims which had not yet expired; and (2) a costs agreement, which preserved the then-current recoverability rules in the United Kingdom which changed on April 1, 2013. Visa Europe is obligated to indemnify Visa Inc. and Visa International in connection with this proceeding, in our opinion, and Visa Europe has agreed to bear certain costs contemplated by the standstill agreement. However, on April 4, 2013, Visa Europe expressed an "initial" view that they are not obligated to indemnify Visa Inc. or Visa International for claims included within this threatened litigation. Visa Inc. continues to firmly believe that Visa Europe is obligated to indemnify for these claims, and has been in discussions with Visa Europe to resolve this issue. Both parties have initiated a dispute resolution procedure contemplated by the Framework Agreement to resolve their dispute regarding this indemnification issue.

~~Canadian Competition Proceedings~~

~~Competition Bureau~~. On July 23, 2013, the Competition Tribunal ruled in favor of Visa Canada and MasterCard, dismissing the Commissioner of Competition's challenges to Visa's "no-surcharge" and "honour all cards" policies. The Competition Tribunal found that the Commissioner failed to establish that either policy constituted resale price maintenance under Section 76 of the Competition Act.

~~Merchant Litigation. In the~~ ~~Watson~~ ~~case, the plaintiff's reply materials in support of class certification were received on November 30, 2012. The class certification hearing commenced on April 22, 2013 and concluded on May 1, 2013.~~

On December ~~3, 2012, plaintiff's counsel~~19, 2013, the U.S. District Court for the District of Columbia denied plaintiffs’ motions for leave to file amended complaints in the ~~1023926 Alberta Ltd.~~National ATM Council ~~action filed an application for certification of a class action. On December 14, 2012, the~~ ~~Watson~~ ~~plaintiff's counsel filed another merchant~~ class action ~~in Alberta (~~and the consumer class actions, and denied plaintiffs~~MacaroniesHair Club and Laser Centre Inc.) which effectively mirrors the claims in the~~ ~~Watson~~’ ~~case. Following a hearing on defendants' applications to stay~~motions for an order altering or amending the ~~Alberta actions, the court ordered that both Alberta actions be stayed pending the decision in the~~ ~~Watson~~ ~~case and on the condition that the~~ ~~Watson~~ ~~class definition be amended to include Alberta residents.~~

court's February 13, 2013 judgment. On January ~~4, 2013, plaintiff's counsel in the~~ ~~Canada Rent A Heater (2000) Ltd.~~ ~~action (now titled~~ ~~Crown and Hand Pub Ltd.) filed an application for certification of a class action. On January 23, 2013, the~~ ~~Watson~~ ~~plaintiff's counsel filed another action in Saskatchewan~~ ~~(Hello Baby Equipment Inc.) which effectively mirrors the claims in the~~ ~~Watson~~ ~~case.~~10, 2014,

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VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

~~Dynamic Currency Conversion (“DCC”)~~

On February 4, 2013, the Australian Competition and Consumer Commission (“ACCC”) commenced proceedings in the Federal Court of Australia against Visa Inc., Visa U.S.A., V.W.P.L., and Visa AP (Australia) Pty Limited alleging that certain Visa policies related to the provision of DCC services violated Australian competition law. Among other things, the ACCC alleges that: (1) from May 2010 to October 2010, Visa prohibited DCC services with respect to transactions on Visa international payment cards conducted at Australian merchant outlets that had not previously been conducting DCC transactions; and (2) from at least May 2007, Visa prohibited DCC services with respect to cash withdrawals at Australian ATMs on Visa international payment cards. The ACCC seeks declaratory relief and a monetary fine. The potential amount of any fine cannot be estimated at this time.

~~On June 6, 2013, Visa filed its response to the ACCC's allegations.~~

~~U.S. ATM Access Fee Litigation~~

~~On February 13, 2013, the court granted the motion to dismiss and dismissed the cases without prejudice. On March 12, 2013,~~ plaintiffs in the National ATM Council class action and the consumer class actions ~~moved for an order altering or amending the court's February 13, 2013 order to provide that (1) the complaints (as opposed~~filed notices of appeal to the ~~cases) are dismissed without prejudice, and (2) plaintiffs may move to amend their complaints.~~U.S. Court of Appeals for the District of Columbia Circuit.

Note 12—Subsequent Events

Interchange Multidistrict Litigation. On ~~April 15, 2013,~~January 14, 2014, the court entered the final judgment order approving the settlement with the class plaintiffs in the interchange multidistrict litigation proceedings, which is subject to the adjudication of any appeals. Takedown payments of approximately ~~National ATM Council~~ $1.1 billion~~class action~~ related to the opt-out merchants were received on January 27, 2014, and deposited into the Company’s litigation escrow account. The deposit into the litigation escrow account, and a related increase in accrued litigation to address opt-out claims will be recorded in the second quarter of fiscal 2014. See Note 11—Legal Matters.

Credit facility renewal. On January 29, 2014, the Company, Visa International Service Association and Visa U.S.A. Inc. (collectively, the "Borrowers") entered into a 364-day, unsecured $3.0 billion revolving credit facility (the “Credit Facility”) with Bank of America, N.A., as administrative agent and the lenders party thereto. JPMorgan Chase Bank, N.A., acted as syndication agent in connection with the Credit Facility; Bank of China, Los Angeles Branch, Barclays Bank plc, Citibank, N.A., Goldman Sachs Bank USA, Standard Chartered Bank, The Bank of Tokyo-Mitsubishi UFJ, Ltd., U.S. Bank National Association and Wells Fargo Bank, National Association, acted as Documentation Agents; and Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities LLC, Bank of China, Los Angeles Branch, Barclays Bank plc, Citibank, N.A., Goldman Sachs Bank USA, Standard Chartered Bank, The Bank of Tokyo-Mitsubishi UFJ, Ltd., U.S. Bank National Association and Wells Fargo Bank, National Association, acted as joint lead arrangers and joint book runners. The Credit Facility, which expires on ~~Stoumbos~~ January 28, 2015, replaced the Company’s prior $3.0 billion credit facility, which was to expire on January 30, 2014, and which the Borrowers terminated on January 29, 2014.

The Credit Facility provides the Borrowers with a borrowing capacity of up to $3.0 billion. Borrowings under the Credit Facility are available for general corporate purposes. Interest on the borrowings under the Credit Facility would be charged at the London Interbank Offered Rate (LIBOR) or an alternative base rate, in each case ~~moved for leave~~plus applicable margins that fluctuate based on the applicable rating of senior unsecured long-term debt securities of the Company. The Borrowers have agreed to ~~file amended complaints. On April 18, 2013, plaintiffs~~pay a commitment fee which will fluctuate based on such applicable rating of the Company.

Other material terms are:

a financial covenant which requires the Company to maintain a Consolidated Indebtedness to Consolidated EBITDA Ratio (as defined in the ~~Mackmin~~ Credit Facility) of not greater than 3.75 to 1.00;

customary restrictive covenants, which limit the Borrowers' ability to, among other things, create certain liens, effect fundamental changes to their business, or merge or dispose of substantially all of their assets, subject in each case ~~moved for leave~~ to ~~file an amended complaint. Defendants filed responses opposing~~customary exceptions and amounts;

customary events of default, upon the ~~motions on~~occurrence of which, after any applicable grace period, the ~~grounds that they are not procedurally proper~~requisite lenders will have the ability to accelerate all outstanding loans thereunder and ~~would be futile~~terminate the commitments; and

other customary and standard terms and conditions.

The Borrowers currently have no borrowings under the Credit Facility. The participating lenders in ~~any event. On April 24, 2013,~~ the ~~court ordered~~Credit Facility include certain holders of the ~~defendants to file further detailed responses, addressing futility in particular. Briefing on~~Company’s class B and class C common stock, certain of the ~~motions is complete.~~Borrowers' customers, and their affiliates.

~~Consumer Financial Protection Bureau.~~ On February 7, 2013, Visa received a letter from the Consumer Financial Protection Bureau (“CFPB”) seeking documents and information, on a voluntary basis, regarding Visa's practices with respect to the conversion of U.S. cardholder foreign transactions from foreign currency into U.S. dollars. On March 20, 2013, Visa met with the CFPB and provided information and materials in response to the requests. Visa is continuing to cooperate with the CFPB's inquiry.

2523



ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations

This management’s discussion and analysis provides a review of the results of operations, financial condition and the liquidity and capital resources of Visa Inc. and its subsidiaries (“Visa,” “we,” “our” or the “Company”) on a historical basis and outlines the factors that have affected recent earnings, as well as those factors that may affect future earnings. The following discussion and analysis should be read in conjunction with our unaudited consolidated financial statements and related notes included elsewhere in this report.

Forward-Looking Statements

This ~~quarterly report~~Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. ~~These~~Forward-looking statements ~~can be~~generally are identified by ~~the terms "believe,~~words such as "believes," ~~"continue,~~"estimates," ~~"could,~~"expects," ~~"estimate," "expect,~~"intends," "may," ~~"potential,~~"projects," ~~"project,~~"could," "should," "will," "will continue" and other similar ~~references to the future.~~

expressions. Examples of ~~such~~ forward-looking statements include, but are not limited to, statements we make about ~~the settlement of the multi-district interchange litigation;~~ our response to the U.S. Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act; the number of transactions we process; the shift to electronic payments and our growth in the category; the growth rate of consumer and commercial spending; our liquidity needs and our ability to meet them; dividend payments; andrevenue, client incentives, operating margin, earnings per share, free cash flow, ~~revenue, incentive payments, expenses, operating margin, tax rate and capital expenditures~~ and the growth of those items.

By their nature, forward-looking statements: (i) speak only as of the date they are ~~made,~~made; (ii) are ~~neither~~not statements of historical fact ~~nor~~or guarantees of future ~~performance~~performance; and (iii) are subject to risks, uncertainties, assumptions ~~and~~or changes in circumstances that are difficult to predict or quantify. Therefore, actual results could differ materially and adversely from ~~those~~our forward-looking statements ~~because of~~due to a variety of factors, including the following:

the impact of ~~new~~ laws, regulations and marketplace barriers, including:

rules capping debit interchange reimbursement ~~fees~~rates and expanding financial institutions' and merchants' choices among debit payment networks promulgated under the Dodd-Frank ~~Act;~~

~~rules under the Dodd-Frank~~Wall Street Reform and Consumer Protection Act ~~expanding issuers' and merchants' choice among debit payment networks;~~

increased regulation in jurisdictions outside of the United States and in other product categories;

increased government support of national payment networks outside the United States; and

~~rules about~~increased regulation on consumer privacy, ~~and~~ data use and security;

developments in ~~current or future~~ litigation orand government enforcement, ~~including:~~

including those affecting interchange reimbursement fees, antitrust and ~~tax disputes; and~~tax;

new lawsuits, investigations or proceedings, or changes to our ~~failure to satisfy the conditions necessary to make the multidistrict litigation settlement effective;~~potential exposure in connection with pending lawsuits, investigations or proceedings;

economic factors, such as:

~~an increase or spread of~~economic fragility in the ~~current European crisis involving sovereign debt~~Eurozone and ~~the euro;~~

~~a failure to resolve the current sequestration~~ in the United States;

general economic, political and social conditions in mature and emerging markets globally;

material changes in cross-border activity, foreign exchange controls and fluctuations in currency exchange rates; and

material changes in our financial institution clients' performance compared to our estimates; ~~and~~

~~other global economic, political and health conditions;~~

industry developments, such as competitive pressure, rapid technological developments and disintermediation from ~~the~~our payments ~~value stream;~~network;

system developments, such as:

disruption of our transaction processing systems or the inability to process transactions efficiently;

account data ~~compromises~~breaches or increased fraudulent or other illegal activities involving ~~our cards;~~Visa-branded cards or payment products; and

~~issues arising at Visa Europe, including~~ failure to maintain systems interoperability ~~between our systems;~~with Visa Europe;

costs ~~and liquidity needs~~ arising if Visa Europe were to exercise its right to require us to acquire all of its outstanding stock;

the loss of organizational effectiveness or key employees;

the failure to integrate ~~recent~~ acquisitions successfully or to effectively ~~launch~~develop new products and businesses;

natural disasters, terrorist attacks, military or political conflicts, and public health emergencies; and

~~the~~

various other factors, ~~discussed under the heading "Risk Factors"~~including those contained in our Annual Report on Form 10-K ~~on file~~for the year ended September 30, 2013 and our other filings with the U.S. Securities and Exchange Commission. You should not place undue reliance on such statements. ~~Unless~~Except as required ~~to do so~~ by law, we do not intend to update or revise any forward-looking ~~statement because~~statements as a result of new information, or future developments or otherwise.

Overview

Visa is a global payments technology company that connects consumers, businesses, financial institutions and governments around the world to fast, secure and reliable electronic payments. We provide our financial institution clients with a global payments infrastructure and support services for the delivery of Visa-branded payment ~~processing platforms that encompass consumer~~products, including credit, debit, ~~prepaid~~ and ~~commercial payments.~~prepaid. We facilitate global commerce through the transfer of value and information among financial institutions, merchants, consumers, businesses and government entities. Each of these constituencies has played a key role in the ongoing worldwide migration from paper-based to electronic forms of payment, and we believe that this transformation continues to yield significant growth opportunities, particularly outside the United States. We continue to explore additional opportunities to enhance our competitive position by expanding the scope of payment ~~services~~solutions we provide.

Overall economic conditions. Our business is affected by overall economic conditions and consumer spending. Our business performance during the ~~nine~~three months ended ~~June 30,~~December 31, 2013 reflects the impacts of a ~~tepid~~slow-moving global economic recovery.

~~Adjusted financial results.~~ Our financial results for fiscal 2012 reflect the impact of the following significant items that we believe are not indicative of our financial performance in the prior or future periods, as they either are related to amounts covered by the retrospective responsibility plan, or have no cash impact. As such, we believe the presentation of adjusted financial results excluding the following amounts provides a clearer understanding of our operating performance for the periods presented.

~~Litigation provision.~~ During the third quarter of fiscal 2012, we recorded a litigation provision of $4.1 billion and related tax benefits associated with the interchange MDL, which is covered by the retrospective responsibility plan. Monetary liabilities from settlements of, or judgments in, the covered litigation are paid from the litigation escrow account. See ~~Note 2—Retrospective Responsibility Plan~~ ~~and~~ ~~Note 11—Legal Matters~~ ~~to our unaudited consolidated financial statements.~~

~~Deferred tax adjustment.~~ During the second quarter of fiscal 2012, our reported financial results benefited from a one-time, non-cash adjustment of $208 million related to the remeasurement of our net deferred tax liabilities attributable to changes in the California state apportionment rules.

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~~The following tables present our financial results for the three and nine months ended June 30, 2013, as compared to our adjusted financial results for the three and nine months ended June 30, 2012.~~

Three Months Ended
June 30, 2013

Three Months Ended
June 30, 2012

(in millions, except margin ratio and per share data)

Operating
expenses

Operating
margin (1)
Net income attributable to Visa Inc.
Diluted earnings per share (2)

Operating
expenses

Operating
margin (1)
Net (loss) income attributable to Visa Inc.
Diluted (loss) earnings per share (2)
As reported $ 1,173
61 % $ 1,225
$ 1.88
$ 5,172
(102 )% $ (1,839 ) $ (2.74 )
Litigation provision —
—
—
—
(4,098 ) NM
2,894
(3 ) 4.30
Adjusted $ 1,173
61 % $ 1,225
$ 1.88
$ 1,074
58 % $ 1,055
$ 1.56
Weighted-average number of diluted shares outstanding (4)
651
675

Nine Months Ended
June 30, 2013

Nine Months Ended
June 30, 2012
(in millions, except margin ratio and per share data)

Operating
expenses

Operating
margin (1)
Net income attributable to Visa Inc.
Diluted earnings per share (2)

Operating
expenses

Operating
margin (1)
Net income attributable to Visa Inc.
Diluted earnings per share (2)
As reported $ 3,317
62 % $ 3,788
$ 5.74
$ 7,073
8 % $ 482
$ 0.71
Litigation provision —
—
—
—
(4,098 ) 53 % 2,894
(3 ) 4.25
Impact of deferred tax adjustment —
—
—
—
—
— % (208 ) (0.30 )
Adjusted $ 3,317
62 % $ 3,788
$ 5.74
$ 2,975
61 % $ 3,168
$ 4.66
Weighted-average number of diluted shares outstanding (as reported) 660
681


⁽¹⁾	~~Operating margin is calculated as operating income (loss) divided by total operating revenues.~~


⁽²⁾	~~Figures in the table may not recalculate exactly due to rounding. Diluted earnings (loss) per share is calculated based on whole numbers, not the rounded numbers presented.~~


⁽³⁾	The litigation provision adjustment to net (loss) income attributable to Visa Inc. is shown net of tax. The tax impact is determined by applying applicable federal and state tax rates to the litigation provision and applying related reserves for uncertain tax positions.


⁽⁴⁾	For the three months ended June 30, 2012, the computation of adjusted diluted earnings per share included the effect of 3 million incremental dilutive shares, which were excluded from the computation of reported diluted loss per share as they were considered anti-dilutive when applied to a net loss.

Interchange Multidistrict Litigation ~~Proceedings~~ (MDL). On ~~October 19, 2012, Visa, MasterCard, various U.S. financial institution defendants and~~January 14, 2014, the ~~class plaintiffs signed a settlement agreement to resolve the class plaintiffs' claims in the interchange MDL. The~~ court entered the ~~preliminary approval~~final judgment order ofapproving the ~~class plaintiffs' settlement agreement on November 27, 2012. On December 10, 2012, Visa paid approximately~~ ~~$4.0 billion~~ from the litigation escrow account into a settlement fund established pursuant to the definitive class settlement agreement. Certain retailers in the proposed settlement classes thereafter objected to the settlement or have opted-out or are seeking to opt-out of all or portions of the settlement. The settlement with the class plaintiffs in the interchange multidistrict litigation proceedings, which is subject ~~to final court approval, which we cannot assure will be received, and~~ to the adjudication of any appeals. ~~We also signed a settlement agreement to resolve the claims brought by a group~~Takedown payments of ~~individual merchants which were consolidated with the MDL for coordination of pre-trial proceedings. Pursuant~~approximately $1.1 billion related to the ~~settlement agreement, we paid~~ ~~$350 million~~ ~~from~~opt-out merchants were received on January 27, 2014, and were deposited into the litigation escrow account. The deposit into the litigation escrow account, and a related increase in accrued litigation to address opt-out claims will be recorded in the ~~individual merchants on October 29, 2012, and on November 6, 2012, the court entered an~~

~~Table~~second quarter of ~~Contents~~

~~order dismissing the individual merchants' claims with prejudice.~~fiscal 2014. See Note 2—Retrospective Responsibility Plan and Note 11—Legal Matters to our unaudited consolidated financial statements.

Reduction in as-converted class A common stock. ~~During the three and nine months ended June 30, 2013, we repurchased~~ ~~6 million~~ ~~and~~ ~~26 million~~ ~~shares, respectively, of our class A common stock using~~ ~~$1.0 billion~~ ~~and~~ ~~$4.1 billion, respectively, of cash on hand. At~~ ~~June 30, 2013, we had~~ ~~$61 million~~ ~~of remaining funds available for share repurchases under the current program authorized by the board of directors.~~ In ~~July~~October 2013, our board of directors authorized a new ~~$1.5~~$5.0 billion share repurchase program. During the three months ended December 31, 2013, we repurchased 5 million shares of our class A common stock using $1.1 billion of cash on hand. As of December 31, 2013, the October program had remaining authorized funds of $4.2 billion. All share repurchase programs authorized prior to ~~be in effect through July 2014.~~October 2013 have been completed. See Note 7—Stockholders' Equity to our unaudited consolidated financial statements.

Nominal payments volume and transaction counts. Payments volume is the primary driver for our service revenues, and the number of processed transactions is the primary driver for our data processing revenues. Compared to the prior year periods, overall payments volume grew in all categories ~~worldwide except U.S. consumer debit, which has been negatively impacted by the Dodd-Frank Act beginning April 1, 2012. Excluding U.S. debit transactions, the~~worldwide. The number of processed transactions continues to increase at a healthy rate, reflecting the continuing worldwide shift to electronic currency.

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The following tables present nominal payments volume.⁽¹⁾

U.S. Rest of World Visa Inc.

3 Months
Ended
March 31,
2013 (2)

3 Months
Ended
March 31,
2012 (2)

%
Change

3 Months
Ended
March 31,
2013 (2)

3 Months
Ended
March 31,
2012 (2)

%
Change

3 Months
Ended
March 31,
2013 (2)

3 Months
Ended
March 31,
2012 (2)

%
Change
(in billions, except percentages)
Nominal Payments Volume
Consumer credit $ 186
$ 168
10 % $ 363
$ 337
8 % $ 549
$ 505
9 %
Consumer debit⁽³⁾
264
264
— % 99
83
19 % 362
346
5 %
Commercial and other⁽³⁾
80
76
6 % 33
31
8 % 113
106
7 %
Total Nominal Payments Volume $ 530
$ 508
4 % $ 495
$ 450
10 % $ 1,025
$ 958
7 %
Cash volume 108
108
— % 514
476
8 % 621
584
6 %
Total Nominal Volume⁽⁴⁾
$ 637
$ 615
4 % $ 1,009
$ 926
9 % $ 1,646
$ 1,541
7 %


	U.S.						Rest of World						Visa Inc.						U.S.						International						Visa Inc.
	9 Months Ended March 31, 2013 (2)		9 Months Ended March 31, 2012 (2)		% Change		9 Months Ended March 31, 2013 (2)		9 Months Ended March 31, 2012 (2)		% Change		9 Months Ended March 31, 2013 (2)		9 Months Ended March 31, 2012 (2)		% Change		3 Months Ended September 30, 2013 ⁽²⁾		3 Months Ended September 30, 2012 ⁽²⁾		% Change		3 Months Ended September 30, 2013 ⁽²⁾		3 Months Ended September 30, 2012 ⁽²⁾		% Change		3 Months Ended September 30, 2013 ⁽²⁾		3 Months Ended September 30, 2012 ⁽²⁾		% Change
	(in billions, except percentages)																		(in billions, except percentages)
Nominal Payments Volume
Consumer credit	$	580	$	523	11	%	$	1,116	$	1,024	9	%	$	1,696	$	1,547	10	%	$	213	$	191	12	%	$	389	$	362	7	%	$	602	$	553	9	%
Consumer debit⁽³⁾	771		801		(4	)%	291		248		17	%	1,062		1,049		1	%	272		249		9	%	105		89		18	%	377		338		12	%
Commercial and other⁽³⁾	244		229		7	%	104		96		8	%	349		325		7	%
Commercial⁽⁴⁾																			90		82		9	%	35		34		2	%	125		117		7	%
Total Nominal Payments Volume	$	1,595	$	1,554	3	%	$	1,511	$	1,368	10	%	$	3,106	$	2,922	6	%	$	575	$	522	10	%	$	529	$	486	9	%	$	1,104	$	1,007	10	%
Cash volume	327		323		1	%	1,548		1,435		8	%	1,876		1,759		7	%	117		111		5	%	523		496		5	%	640		608		5	%
Total Nominal Volume⁽⁴⁾⁽⁵⁾	$	1,923	$	1,877	2	%	$	3,059	$	2,803	9	%	$	4,982	$	4,680	6	%	$	692	$	633	9	%	$	1,053	$	982	7	%	$	1,745	$	1,615	8	%


⁽¹⁾	Figures in the table may not recalculate exactly due to rounding. Percentage changes are calculated based on whole numbers, not the rounded numbers presented.

~~Table of Contents~~


⁽²⁾	Service revenues in a given quarter are assessed based on payments volume in the prior quarter. Therefore, service revenues reported for the three ~~and nine~~ months ended ~~June 30,~~December 31, 2013 and 2012, were based on payments volume reported by our financial institution clients for the three ~~and nine~~ months ended ~~March 31,~~September 30, 2013 and 2012, respectively.


⁽³⁾	Includes prepaid volume.


⁽⁴⁾	Includes large, middle and small business credit, and small business debit and prepaid volume.

⁽⁵⁾

Total nominal volume is the sum of total nominal payments volume and cash volume. Total nominal payments volume is the total monetary value of transactions for goods and services that are ~~purchased.~~purchased on Visa-branded cards and payment products. Cash volume generally consists of cash access transactions, balance access transactions, balance transfers and convenience checks. Total nominal volume is provided by our financial institution clients, subject to review by Visa. From time to time, previously presented volume information may be updated. Prior ~~year volume information presented in these tables has not been updated, as subsequent adjustments were~~period updates are not material.

The table below provides the number of transactions processed by our VisaNet system and billable transactions processed by CyberSource’s network.⁽¹⁾


	Three Months Ended June 30,				Nine Months Ended June 30,				Three Months Ended December 31,
	2013	2012	% Change		2013	2012	% Change		2013	2012	% Change
	(in millions, except percentages)
Visa processed transactions⁽²⁾	14,972	13,113	14	%	42,981	39,751	8	%	15,985	14,159	13	%
CyberSource billable transactions⁽³⁾	1,648	1,303	27	%	4,836	3,819	27	%	1,894	1,581	20	%


⁽¹⁾	Figures in the table may not recalculate exactly due to rounding. Percentage changes are calculated based on whole numbers, not the rounded numbers presented.


⁽²⁾	Represents transactions involving Visa, Visa Electron, Interlink and PLUS cards processed on Visa's networks.


⁽³⁾	Transactions include, but are not limited to, authorization, settlement payment network connectivity, fraud management, payment security management, tax services and delivery address verification.

Results of Operations

Operating Revenues

The following table sets forth our operating revenues earned in the United States, ~~in the rest of the world~~internationally and from Visa Europe. Revenues earned from Visa Europe are a result of our contractual arrangement with Visa Europe, as

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governed by the framework agreement that provides for trademark and technology licenses and bilateral services.


	Three Months Ended June 30,				2013 vs. 2012					Nine Months Ended June 30,				2013 vs. 2012					Three Months Ended December 31,				2013 vs. 2012
	2013		2012		$ Change			% Change⁽¹⁾		2013		2012		$ Change			% Change⁽¹⁾		2013		2012		$ Change			% Change⁽¹⁾
	(in millions, except percentages)																		(in millions, except percentages)
U.S.	$	1,632	$	1,449	$	183		13	%	$	4,756	$	4,199	$	557		13	%	$	1,690	$	1,527	$	163		11	%
Rest of world	1,314		1,058		256			24	%	3,883		3,323		560			17	%
International																			1,412		1,264		148			12	%
Visa Europe	55		58		(3		)	(5	)%	166		168		(2		)	(2	)%	53		55		(2		)	(5	)%
Total operating revenues	$	3,001	$	2,565	$	436		17	%	$	8,805	$	7,690	$	1,115		14	%	$	3,155	$	2,846	$	309		11	%


⁽¹⁾	Figures in the table may not recalculate exactly due to rounding. Percentage changes are calculated based on whole numbers, not the rounded numbers presented.

The increase in operating revenues ~~mainly~~primarily reflects continued growth in our underlying business drivers: nominal payments volume; processed transactions; and cross-border volume. ~~Operating revenue growth for the nine-month comparable period also benefited from pricing modifications implemented beginning in the third quarter of fiscal 2012,~~These benefits were partially offset by ~~volume loss and~~ increases toin client ~~incentives in the United States as part of our strategy to mitigate the impacts of the Dodd-Frank Act. We now expect our percentage growth in operating revenues for the full~~ ~~2013~~ ~~fiscal year to be around 13%.~~incentives.

~~Table of Contents~~

Our operating revenues, primarily service revenues and international transaction revenues, are impacted by the overall strengthening or weakening of the U.S. dollar as payments volume and related revenues denominated in local currencies are converted to U.S. dollars. ~~There was no significant impact on the year-over-year growth for the three or~~ ~~nine months ended June 30, 2013, as the~~The effect of exchange rate movements ~~was substantially~~in the three months ended December 31, 2013, as partially mitigated ~~through~~by our hedging ~~program. We~~program, resulted in a negative two percentage point impact to our total operating revenue growth compared to the prior year. While we expect ~~the impacts of~~ our hedging program to continue to ~~minimize~~mitigate this risk during fiscal 2014, a general strengthening of the ~~effect~~U.S. dollar is expected to reduce total operating revenue growth by about two percentage points for the full 2014 fiscal year, net of ~~exchange rate movements during the remainder of fiscal 2013.~~offsetting hedges.

The following table sets forth the components of our total operating revenues.


	Three Months Ended June 30,						2013 vs. 2012				Nine Months Ended June 30,						2013 vs. 2012					Three Months Ended December 31,						2013 vs. 2012
	2013			2012			$ Change		% Change⁽¹⁾		2013			2012			$ Change			% Change⁽¹⁾		2013			2012			$ Change			% Change⁽¹⁾
	(in millions, except percentages)																					(in millions, except percentages)
Service revenues	$	1,298		$	1,216		$	82	7	%	$	3,967		$	3,608		$	359		10	%	$	1,419		$	1,300		$	119		9	%
Data processing revenues	1,191			1,040			151		15	%	3,456			2,913			543			19	%	1,264			1,115			149			13	%
International transaction revenues	854			748			106		14	%	2,490			2,229			261			12	%	891			805			86			11	%
Other revenues	179			175			4		1	%	533			532			1			—	%	180			179			1			—	%
Client incentives	(521		)	(614		)	93		(15	)%	(1,641		)	(1,592		)	(49		)	3	%	(599		)	(553		)	(46		)	8	%
Total operating revenues	$	3,001		$	2,565		$	436	17	%	$	8,805		$	7,690		$	1,115		14	%	$	3,155		$	2,846		$	309		11	%


⁽¹⁾	Figures in the table may not recalculate exactly due to rounding. Percentage changes are calculated based on whole numbers, not the rounded numbers presented.

Service revenues increased during the ~~three- and nine-month~~three-month comparable ~~periods~~period primarily due to 7% ~~and~~ 6%10% growth in nominal payments volume, respectively; however, the growth in service revenues was greater than the growth in nominal payments volume for the nine-month comparable period. This reflects a shift in the mix of our payments volume, most notably a significant decline in volume related to Interlink, which is a debit product that does not generate any service revenues.volume.

Data processing revenues increased due to overall growth in processed transactions of ~~14%~~ ~~and~~ 8%13% during the ~~three- and nine-month~~three-month comparable ~~periods, respectively,~~period, and solid growth in CyberSource billable transactions. Growth in the number of processed transactions reflected growth in Visa transactions processed ~~outside of the United States, U.S. credit transactions~~internationally and U.S. debit transactions, excluding Interlink. Processed transaction growth from Interlink increased 25% during the three-month comparable period and decreased 24% during the nine-month comparable period. The decrease reflects an anticipated decline in U.S. debit processed transactions as a result of certain provisions of the Dodd-Frank Act, which became effective in the ~~third quarter of fiscal 2012.~~U.S.

Data processing revenues for the nine-month comparable period also benefited from the implementation of our strategy to mitigate, to some extent, the negative impacts from the Dodd-Frank Act through pricing modifications and collaborating with our clients and other business partners to win merchant and acquirer routing preference. This price restructuring became effective in the third quarter of fiscal 2012 and included the implementation of the Fixed Acquirer Network Fee, which was partially offset by reductions in certain variable fees. While data processing fees benefited from the price restructuring, increased merchant and acquirer incentives executed as part of this strategy resulted in higher client incentive levels, which partially offset this increase.

International transaction revenues increased during the ~~three- and nine-month~~three-month comparable ~~periods,~~period, primarily due to 11% ~~and 10%~~ growth in nominal cross-border payments ~~volume, respectively.~~volume.

Client incentives ~~decreased~~increased during the three-month comparable period mainly due to the absence of significant one-time incentives incurred in the prior year, combined with the impact of recently executed issuer contracts, offset by an increase due to overall growth in global payments volume. Additionally, the overall increase during the nine-month comparable period reflects incentives incurred on significant long-term ~~client~~customer contracts that were initiated or renewed after the ~~third~~first quarter of fiscal ~~2012. These included a number~~2013, as well as overall growth in global payments volume. The amount of client incentives we record in

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~~significant long-term merchant and acquirer contracts executed as part of our strategy to mitigate the impact of the Dodd-Frank Act. The amount of client incentives we record in~~ future periods will vary based on changes in performance expectations, actual client performance, amendments to existing contracts or the execution of new contracts. We expect incentives as a percentage of gross revenues to be in the range of ~~16%~~16.5% to ~~17%~~17.5% for the full ~~2013~~2014 fiscal year.

Operating Expenses

The following table sets forth components of our total operating expenses.


	Three Months Ended June 30,					2013 vs. 2012					Nine Months Ended June 30,				2013 vs. 2012					Three Months Ended December 31,				2013 vs. 2012
	2013			2012		$ Change			% Change⁽¹⁾		2013		2012		$ Change			% Change⁽¹⁾		2013		2012		$ Change			% Change⁽¹⁾
	(in millions, except percentages)																			(in millions, except percentages)
Personnel	493			$	435	$	58		13	%	1,433		$	1,255	$	178		14	%	$	470	$	454	$	16		4	%
Marketing	252			242		10			4	%	640		602		38			6	%	186		193		(7		)	(4	)%
Network and processing	117			102		15			14	%	346		303		43			14	%	132		110		22			20	%
Professional fees	103			99		4			5	%	282		251		31			12	%	75		88		(13		)	(15	)%
Depreciation and amortization	101			84		17			22	%	291		244		47			20	%	107		92		15			16	%
General and administrative	108			112		(4		)	(3	)%	322		320		2			1	%	108		106		2			2	%
Litigation provision	(1		)	4,098		(4,099		)	NM		3		4,098		(4,095		)	NM		—		3		(3		)	NM
Total Operating Expenses	$	1,173		$	5,172	$	(3,999	)	(77	)%	$	3,317	$	7,073	$	(3,756	)	(53	)%	$	1,078	$	1,046	$	32		3	%


⁽¹⁾	Figures in the table may not recalculate exactly due to rounding. Percentage changes are calculated based on

whole numbers, not the rounded numbers presented.

Personnel increased primarily due to increases in headcount throughout the organization reflecting our strategy to invest for future ~~growth, particularly in key product and geography-specific initiatives.~~growth.

Marketing ~~increased mainly reflecting strategies~~decreased compared to ~~promote~~the prior year primarily due to the planned timing of our ~~core products~~marketing spend for fiscal 2014. We anticipate an increase in spending during the second and third quarter of fiscal 2014 to support a number of ~~various~~ campaigns including the ~~2013 FIFA Confederation Cup~~2014 Sochi Winter Olympics and the 2014 ~~Winter Olympics. Total marketing spend is expected to be under $1 billion for fiscal 2013.~~FIFA World Cup.

Network and processing increased mainly due to greater investment in technology projects and costs incurred for the operation of our processing network.

Professional fees ~~increased~~decreased primarily ~~reflecting greater investment~~due to the absence of certain project costs incurred in ~~technology projects.~~fiscal 2013, partially offset by costs incurred to support our network applications.

Depreciation and amortization increased primarily due to additional depreciation from our ongoing investments in technology assets and infrastructure to support our core business ~~as well as our e-commerce~~ and ~~mobile~~eCommerce initiatives.

~~Litigation provision~~ ~~decrease reflects the absence of a $4.1 billion accrual recorded in the prior year related to the covered litigation. See~~ ~~Note 11—Legal Matters~~ ~~to our unaudited consolidated financial statements.~~

Effective Income Tax Rate

The effective income tax rates were ~~33%~~32% and ~~31%~~28% for the three ~~and nine~~ months ended ~~June 30,~~December 31, 2013 ~~respectively,~~ and~~29%~~ ~~and~~ ~~22%~~ ~~for the three and nine months ended June 30,~~ 2012, respectively. The effective tax ~~rates~~rate for the three ~~and nine~~ months ended ~~June 30,~~December 31, 2013 ~~differ~~differs from the effective tax ~~rates~~rate in the same ~~periods~~period in the previous fiscal ~~2012~~year mainly due ~~to:~~

~~certain foreign tax credit benefits related~~ to ~~prior years recognized in~~ the ~~second quarter~~absence of ~~fiscal 2013;~~

2012.

~~the absence of:~~

~~the tax benefit and the offsetting tax reserve associated with the covered litigation provision recorded in the third quarter of fiscal 2012;~~

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~~a one-time foreign tax credit carryover benefit recognized in the third quarter of fiscal 2012; and~~

Excluding the impact of the covered litigation provision recorded in the third quarter of fiscal 2012, and the one-time, non-cash benefit of $208 million from the remeasurement of existing net deferred tax liabilities in the second quarter of fiscal 2012, our effective tax rates for the three and nine months ended June 30, 2012 would have been 29% and 33%, respectively.

~~For the full year, we anticipate that our annual effective income tax rate will be between 30% and 32%.~~

During the three ~~and nine~~ months ended ~~June 30,~~December 31, 2013, our gross unrecognized tax benefits increased by ~~$10~~$47 million, ~~and~~ ~~$231~~ $45 million~~, respectively,~~ ~~$8 million~~ ~~and~~ ~~$179 million~~ of which ~~respectively,~~ would favorably impact our effective income tax rate if recognized. The increase in gross unrecognized tax benefits is primarily due to ~~changes in judgments and estimates~~potential audit exposure related to various tax positions across several jurisdictions.

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Liquidity and Capital Resources

Cash Flow Data

The following table summarizes our cash flow activity for the periods presented.


	Nine Months Ended June 30,						Three Months Ended December 31,
	2013			2012			2013			2012
	(in millions)						(in millions)
Total cash provided by (used in):
Operating activities	$	977		$	3,640		$	1,541		$	(2,824	)
Investing activities	(1,354		)	(1,943		)	(276		)	(865		)
Financing activities	(244		)	(2,262		)	(1,330		)	2,949
Effect of exchange rate changes on cash and cash equivalents	—			(4		)
Decrease in cash and cash equivalents	$	(621	)	$	(569	)	$	(65	)	$	(740	)

Operating activities. Cash provided by operating activities ~~during~~for the ~~nine~~three months ended ~~June 30,~~December 31, 2013,~~, reflects~~ was higher compared to the prior year, primarily reflecting the absence of payments made from the litigation escrow account totaling ~~$4.4~~$4.4 billion in connection with the covered ~~litigation. As these payments were~~litigation, and increases in net income. Payments made in the prior year from ~~our~~the litigation escrow account ~~they~~ are also reflected as a cash inflow under financing ~~activities.~~activities during the three months ended December 31, 2012. See Note 2—Retrospective Responsibility Plan and Note 11—Legal Matters to our unaudited consolidated financial statements. ~~The current tax deduction related to these payments contributed to the~~ ~~$1.1 billion~~ ~~decline in overall income taxes paid for the comparable year-over-year period. Absent the above impacts, cash provided by operating activities would have totaled~~ ~~$4.3 billion, an increase over the prior-year period. This increase reflects continued growth in net income.~~

Investing activities. Cash used in investing activities was lower compared to the prior year, primarily reflecting a decrease in purchases of available-for-sale ~~investment~~ securities ~~combined with greater~~and an increase in proceeds received from ~~maturities~~the sale and ~~sales~~maturity of available-for-sale ~~investment~~ securities.

Financing activities. Cash used in financing activities during the ~~nine~~three months ended ~~June 30,~~December 31, 2013,, reflects the use of $~~4.1~~1.1 billion to repurchase ~~class A common stock in the open market, combined with dividend payments of~~ ~~$653 million, offset by the funding of payments from the litigation escrow account totaling~~ ~~$4.4 billion~~ ~~in connection with the covered litigation. Activity in the prior year mainly reflected a deposit into the litigation escrow account totaling~~ ~~$1.6 billion~~, ~~$536 million~~ ~~in repurchases of our~~ class A common stock in the open market, and dividend payments of $~~448~~254 million. Activity in the prior year primarily reflected the funding of payments from the litigation escrow account totaling $4.4 billion in connection with the covered litigation, offset by $1.3 billion used to repurchase class A common stock in the open market.

Sources of Liquidity

Our primary sources of liquidity are cash on hand, cash flow from operations, our investment portfolio and access to various equity and borrowing arrangements. Funds from operations are maintained in cash and cash equivalents and short-term or long-term available-for-sale investment securities based upon our funding requirements, access to liquidity from these holdings, and the returns that these holdings provide. We believe that

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cash flow generated from operations, in conjunction with access to our other sources of liquidity, will be more than sufficient to meet our ongoing operational needs.

Cash and cash equivalents and short-term and long-term available-for-sale investment securities held by our foreign subsidiaries totaled $~~4.3~~4.6 billion at ~~June 30,~~December 31, 2013. If it were necessary to repatriate these funds for use in the United States, we would be required to pay U.S. income taxes on most of ~~these amounts.~~this amount. The amount of income taxes that would have resulted had these funds been repatriated is not practicably determinable. It is our intent to indefinitely reinvest the majority of these funds outside of the United States. As such, we have not accrued any U.S. income tax provision in our financial results related to the majority of these funds.

~~Commercial paper program.~~ ~~We maintain a commercial paper program to support our working capital requirements and for other general corporate purposes. On~~ ~~February 7, 2013, we replaced the existing~~ ~~$500 million~~ ~~program with a new commercial paper program. Under the new program, we are authorized to issue up to~~ ~~$3.0 billion~~ ~~in outstanding notes, with maturities up to~~ ~~397~~ ~~days from the date of issuance. We had no outstanding obligations under the new program at~~ ~~June 30, 2013. See~~ ~~Note 4—Debt~~ ~~to our unaudited consolidated financial statements.~~

~~Credit facility.~~ ~~On January 31, 2013, we entered into an unsecured~~ ~~$3.0 billion~~ ~~revolving credit facility. This credit facility, which expires on January 30, 2014, replaced our existing~~ ~~$3.0 billion~~ ~~credit facility, which would have expired on~~ ~~February 15, 2013~~. The new credit facility contains covenants and events of default customary for facilities of this type. There were no borrowings under the new credit facility and we were in compliance with all related covenants at June 30, 2013. See ~~Note 4—Debt~~ ~~to our unaudited consolidated financial statements.~~

Uses of Liquidity

There has been no significant change to our primary uses of liquidity since September 30, ~~2012~~2013, except as discussed below. Based on our current cash flow budgets and forecasts of our short-term and long-term liquidity needs, we believe that our projected sources of liquidity will be sufficient to meet our projected liquidity needs for more than the next 12 months. We will continue to assess our liquidity position and potential sources of supplemental liquidity in view of our operating performance, current economic and capital market conditions and other relevant circumstances.

~~MDL impact on free cash flow.~~Covered litigation. On ~~December 10, 2012, we paid~~January 14, 2014, the court entered the final judgment order approving the settlement with the class plaintiffs in the interchange multidistrict litigation proceedings, which is subject to the adjudication of

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any appeals. Our portion of the takedown payments of approximately ~~$4.0~~$1.1 billion ~~from~~related to the opt-out merchants was received on January 27, 2014, and deposited into the litigation escrow ~~account into a settlement fund established pursuant to the definitive MDL class settlement agreement. Under the settlement agreement, if class members opt out~~account. Receipt of the ~~damages portion of the class settlement, defendants are entitled to receive~~ takedown payments increases our current taxable income by $1.1 billion, and income tax payable by $387 million. This will negatively impact our free cash flow in the remaining quarters of ~~no more than 25% of~~fiscal 2014, beginning with the ~~original~~fiscal second quarter. We continue to expect annual free cash ~~payments made into~~flow to be about $5 billion for the ~~settlement fund, based on the percentage of payment card sales volume for a defined period attributable to merchants who opted out.~~full fiscal 2014 year. SeeNote 2—Retrospective Responsibility Plan and Note 11—Legal Matters to our unaudited consolidated financial statements. Upon final court approval of the settlement agreement, the Visa takedown payment, not to exceed $1.0 billion, will have the effect of reducing our current tax deduction for the $4.0 billion payment originally made into the settlement fund. The effective reduction in our current tax deduction will increase our deferred tax asset and decrease our income tax receivable, which will have a negative impact on our free cash flow in the year the final court approval is rendered. See ~~Note 10—Income Taxes~~ ~~to our unaudited consolidated financial statements. We continue to expect annual free cash flow to be about $6 billion for fiscal 2013.~~

Reduction in as-converted class A common stock. In October 2013, our board of directors authorized a new $5.0 billion share repurchase program. During the ~~three and~~ ~~nine~~three months ended ~~June 30,~~December 31, 2013, we repurchased 65 million ~~and~~ ~~26 million~~ shares ~~respectively,~~ of our class A common stock using ~~$1.0~~$1.1 billion ~~and~~ ~~$4.1 billion, respectively,~~ of cash on hand. AtAs of ~~June 30,~~December 31, 2013, wethe October program had remaining authorized funds of $~~61 million~~ ~~of remaining funds available for share repurchases under the current program authorized by the board of directors. Our board of directors authorized a new~~ ~~$1.5~~4.2 billion. All share repurchase ~~program~~programs authorized prior to ~~be in effect through July 2014.~~October 2013 have been completed. See Note 7—Stockholders' Equity to our unaudited consolidated financial statements.

Dividends. During the ~~nine~~three months ended ~~June 30,~~December 31, 2013, we declared and paid $~~653~~254 million in dividends. On ~~July 16, 2013~~,In January 2014, our board of directors declared a cash dividend in the amount of $~~0.33~~0.40 per share of class A common stock (determined in the case of class B and class C common stock on an as-converted basis), which will be paid on ~~September~~March 4, ~~2013~~2014, to all holders of record as of ~~August 16, 2013~~February 14, 2014. See Note 7—Stockholders' Equity to our unaudited consolidated financial statements. We expect to continue paying quarterly dividends in cash, subject to approval by the board of directors. Class B and class C common stock will share ratably on an as-converted basis in such future dividends.

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Visa Europe put option agreement. We have granted Visa Europe a perpetual put option which, if exercised, will require us to purchase all of the outstanding shares of capital stock of Visa Europe from its members. Visa Europe may exercise the put option at any time. At ~~June 30,~~December 31, 2013, we determined the fair value of the put option liability to be approximately $145 million. While this amount represents the fair value of the put option at ~~June 30,~~December 31, 2013, it does not represent the actual purchase price that we may be required to pay if the option is exercised. The purchase price we could be obligated to pay 285 days after exercise will represent a substantial financial obligation, which could be several billion dollars or more. We may need to obtain third-party financing, either by borrowing funds or by undertaking a subsequent equity offering in order to fund this payment. The amount of this potential obligation could vary dramatically based on, among other things, Visa Europe’s adjusted sustainable income and our P/E ratio, in each case, as negotiated at the ~~date of exercise.~~time the put option is exercised.

Fair Value Measurements—Financial Instruments

As of ~~June 30,~~December 31, 2013, our financial instruments measured at fair value on a recurring basis included ~~$5.8~~$6.1 billion of assets and $~~151~~158 million of liabilities. Of these instruments, $152 million, or ~~less than~~ 3%2%, had significant unobservable inputs, with the Visa Europe put option liability constituting $145 million of this amount. See Note 3—Fair Value Measurements and Investments to our unaudited consolidated financial statements.



ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk

There have been no significant changes to our market risks during the ~~nine~~three months ended ~~June 30,~~December 31, 2013, compared to September 30, ~~2012~~2013.



ITEM 4.	Controls and Procedures

Disclosure controls and procedures. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) of Visa Inc. at the end of the period covered by this report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures of Visa Inc. were effective at the reasonable assurance level as of the end of the period covered by this report.

Changes in internal control over financial reporting. There has been no change in the internal control over financial reporting of Visa Inc. that occurred during the fiscal period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION



ITEM 1.	Legal Proceedings.

Refer to Note 11—Legal Matters to the unaudited consolidated financial statements included in this Form 10-Q for a description of the Company’s current material legal proceedings.



ITEM 1A.	Risk Factors.

For a discussion of the Company’s risk factors, see the information under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended September 30, ~~2012~~2013, filed with the SEC on November ~~15, 2012~~22, 2013.



ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds.

ISSUER PURCHASES OF EQUITY SECURITIES

The table below sets forth information with respect to purchases of the Company’s common stock made by or on behalf of the Company during the quarter ended ~~June 30,~~December 31, 2013.

Period
(a)
Total
Number of
Shares
Purchased (1)

(b)
Average
Price Paid
per Share

(c)
Total
Number of
Shares
Purchased
as Part of
Publicly
Announced
Plans or
Programs (2)

(d)
Approximate
Dollar Value
of Shares that
May Yet Be Purchased
Under the Plans or
Programs (2)
April 1-30, 2013 825,429
$ 162.71
825,429
$ 907,840,727
May 1-31, 2013 1,767,608
$ 179.93
1,758,753
$ 591,372,019
June 1-30, 2013 2,966,303
$ 178.77
2,966,303
$ 61,028,535
Total 5,559,340
$ 176.75
5,550,485



Period	(a) Total Number of Shares Purchased ⁽¹⁾	(b) Average Price Paid per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs ⁽²⁾	(d) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs ⁽²⁾
October 1-31, 2013	—	$	—	—	$	5,250,658,812
November 1-30, 2013	3,654,494	$	198.33	3,376,303	$	4,580,712,323
December 1-31, 2013	2,089,544	$	201.43	2,089,539	$	4,159,771,842
Total	5,744,038	$	199.46	5,465,842


⁽¹⁾	Includes ~~8,855~~278,196 shares of class A common stock withheld at an average price of ~~$181.73~~$197.38 per share (per the terms of grants under our 2007 Equity Incentive Compensation Plan) to offset tax withholding obligations that occur upon vesting and release of restricted shares.

⁽²⁾

The figures in the table reflect transactions according to trade dates. For purposes of the Company's consolidated financial statements included in this Form 10-Q, the impact of these repurchases is recorded according to settlement dates. In ~~July~~October 2013, the ~~Company's~~Company’s board of directors authorized ~~an additional~~ ~~$1.5~~a new $5.0 billion share repurchase ~~program to be in effect through July 2014.~~

program.



ITEM 3.	Defaults Upon Senior Securities.

None.



ITEM 4.	Mine Safety Disclosures.

Not applicable.



ITEM 5.	Other Information.

None.

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ITEM 6.	Exhibits.

~~Table of Contents~~

The list of exhibits required to be filed as exhibits to this report is listed in the “Exhibit Index,” which is incorporated herein by reference.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



		VISA INC.

Date:	~~July 24, 2013~~January 30, 2014	By:	/s/ Charles W. Scharf
		Name:	Charles W. Scharf
		Title:	Chief Executive Officer (Principal Executive Officer)

Date:	~~July 24, 2013~~January 30, 2014	By:	/s/ Byron H. Pollitt
		Name:	Byron H. Pollitt
		Title:	Chief Financial Officer (Principal ~~Accounting~~Financial Officer)

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EXHIBIT INDEX

Incorporated by Reference
Exhibit
Number
Description of Documents Schedule/ Form File Number Exhibit Filing Date

10.1 Confirmation Letter by John M. Partridge, dated March 29, 2013 8-K 001-33977 10.1 4/1/2013

10.2 Offer Letter dated May 20, 2013, between Visa Inc. and Ryan McInerney 8-K 001-33977 99.2 5/23/2013

31.1* Certification of Charles W. Scharf, Chief Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2* Certification of Byron H. Pollitt, Chief Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1* Certification of Charles W. Scharf, Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2* Certification of Byron H. Pollitt, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS* XBRL Instance Document

101.SCH* XBRL Taxonomy Extension Schema Document

101.CAL* XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF* XBRL Taxonomy Extension Definition Linkbase Document

101.LAB* XBRL Taxonomy Extension Label Linkbase Document

101.PRE* XBRL Taxonomy Extension Presentation Linkbase Document



		Incorporated by Reference
Exhibit Number	Description of Documents	Schedule/ Form	File Number	Exhibit	Filing Date

10.1*	Form of Visa Inc. 2007 Equity Incentive Compensation Plan Stock Option Award Agreement for awards granted after November 18, 2013

10.2*	Form of Visa Inc. 2007 Equity Incentive Compensation Plan Restricted Stock Award Agreement for awards granted after November 18, 2013

10.3*	Form of Visa Inc. 2007 Equity Incentive Compensation Plan Restricted Stock Unit Award Agreement for awards granted after November 18, 2013

10.4*	Form of Visa Inc. 2007 Equity Incentive Compensation Plan Performance Share Award Agreement for awards granted after November 18, 2013

10.5*	Form of Alternate Visa Inc. 2007 Equity Incentive Compensation Plan Stock Option Award Agreement for awards granted after November 18, 2013

10.6*	Form of Alternate Visa Inc. 2007 Equity Incentive Compensation Plan Restricted Stock Award Agreement for awards granted after November 18, 2013

10.7*	Form of Alternate Visa Inc. 2007 Equity Incentive Compensation Plan Restricted Stock Unit Award Agreement for awards granted after November 18, 2013

10.8*	Form of Visa Inc. 2007 Equity Incentive Compensation Plan Director Restricted Stock Unit Award Agreement for awards granted after November 18, 2013

31.1*	Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*	Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1*	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2*	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Table of Contents



101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document



*	Filed or furnished herewith.

3935



	(in millions)
Balance at October 1, 2012	$	4,432
Payments to settlement funds⁽¹⁾:
Class plaintiffs	(4,033		)
Individual plaintiffs	(350		)
Balance at June 30, 2013	$	49



	Basic Earnings (Loss) Per Share							Diluted Earnings (Loss) Per Share
	(in millions, except per share data)
	Loss Allocation (A)⁽²⁾			Weighted- Average Shares Outstanding (B)	Earnings (Loss) per Share = (A)/(B)			Loss Allocation (A)⁽²⁾			Weighted- Average Shares Outstanding (B)		Earnings (Loss) per Share = (A)/(B)
Class A common stock	$	(1,437	)	525	$	(2.74	)	$	(1,839	)	672	⁽³⁾	$	(2.74	)
Class B common stock	(286		)	245	(1.16		)	(286		)	245		(1.16		)
Class C common stock	(109		)	40	(2.74		)	(109		)	40		(2.74		)
Participating securities⁽⁴⁾	(7		)	Not presented	Not presented			(7		)	Not presented		Not presented
Net loss attributable to Visa Inc.	$	(1,839	)



	Three Months Ended June 30, 2013								Three Months Ended June 30, 2012
	(in millions, except margin ratio and per share data)
	Operating expenses		Operating margin (1)		Net income attributable to Visa Inc.		Diluted earnings per share (2)		Operating expenses			Operating margin (1)		Net (loss) income attributable to Visa Inc.					Diluted (loss) earnings per share (2)
As reported	$	1,173	61	%	$	1,225	$	1.88	$	5,172		(102	)%	$	(1,839	)			$	(2.74	)
Litigation provision	—		—		—		—		(4,098		)	NM		2,894			(3	)	4.30
Adjusted	$	1,173	61	%	$	1,225	$	1.88	$	1,074		58	%	$	1,055				$	1.56
Weighted-average number of diluted shares outstanding (4)							651												675



	Nine Months Ended June 30, 2013								Nine Months Ended June 30, 2012
	(in millions, except margin ratio and per share data)
	Operating expenses		Operating margin (1)		Net income attributable to Visa Inc.		Diluted earnings per share (2)		Operating expenses			Operating margin (1)		Net income attributable to Visa Inc.					Diluted earnings per share (2)
As reported	$	3,317	62	%	$	3,788	$	5.74	$	7,073		8	%	$	482				$	0.71
Litigation provision	—		—		—		—		(4,098		)	53	%	2,894			(3	)	4.25
Impact of deferred tax adjustment	—		—		—		—		—			—	%	(208		)			(0.30		)
Adjusted	$	3,317	62	%	$	3,788	$	5.74	$	2,975		61	%	$	3,168				$	4.66
Weighted-average number of diluted shares outstanding (as reported)							660												681



Period	(a) Total Number of Shares Purchased (1)	(b) Average Price Paid per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)	(d) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2)
April 1-30, 2013	825,429	$	162.71	825,429	$	907,840,727
May 1-31, 2013	1,767,608	$	179.93	1,758,753	$	591,372,019
June 1-30, 2013	2,966,303	$	178.77	2,966,303	$	61,028,535
Total	5,559,340	$	176.75	5,550,485