![]() Visa Inc. Fiscal Third Quarter 2009 Financial Results July 29, 2009 Exhibit 99.2 |
![]() Fiscal Q3 2009 Earnings Results 2 Safe Harbor Reminder • Certain statements contained in this press release are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are subject to the “safe harbor” created by those sections. These statements can be identified by the terms “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “will” and similar expressions which are intended to identify forward-looking statements. In addition, any underlying assumptions are forward-looking statements. Such forward-looking statements include but are not limited to statements regarding certain of Visa’s goals and expectations with respect to adjusted earnings per share, revenue, adjusted operating margin, and free cash flow, and the growth rate in those items, as well as other measures of economic performance. • By their nature, forward-looking statements: (i) speak only as of the date they are made, (ii) are not guarantees of future performance or results and (iii) are subject to risks, uncertainties and assumptions that are difficult to predict or quantify. Therefore, actual results could differ materially and adversely from those forward-looking statements as a result of a variety of factors, including all the risks discussed in Part 1, Item 1A – “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended September 30, 2008. You are cautioned not to place undue reliance on such statements, which speak only as of the date of this presentation. Unless required to do so under U.S. federal securities laws or other applicable laws, we do not intend to update or revise any forward-looking statements. |
![]() Fiscal Q3 2009 Earnings Results 3 Solid Fiscal Third Quarter Results Note: See appendix for reconciliation of adjusted non-GAAP measures to the closest comparable GAAP measures. • Adjusted quarterly net income of $744 million or adjusted diluted earnings of $0.98 per share • Sale of equity interest in VisaNet do Brasil resulting in a $237 million, after tax, gain contributing $0.31 to adjusted diluted earnings per share • Continued positive secular trends • Business model resilience despite economic slowdown with operating revenues of $1.6 billion • Adjusted quarterly net income, excluding VisaNet do Brasil gain, of $507 million or adjusted diluted earnings of $0.67 per share |
![]() Fiscal Q3 2009 Earnings Results 4 $652 $228 $424 $380 $236 $617 Total Visa Inc. Credit Debit 2008 2009 Quarter ended March US$ in billions, nominal Payments Volume – Q3 2009 YOY Change (nominal) -5% -10% 4% Note: Figures may not sum due to rounding. Growth rates calculated based on whole numbers, not rounded numbers. From time to time, previously submitted volume information may be updated. Prior year volume information presented have not been updated, as changes made are not material. 1 Constant dollar growth rates exclude the impact of foreign currency fluctuations against the U.S. dollar in measuring performance. ROW ROW $264 $204 U.S. $388 U.S. $379 U.S. ROW U.S. U.S. $238 $195 $229 ROW U.S. $176 $193 ROW $35 $202 ROW $34 2% -1% 7% YOY Change (constant) 1 |
![]() Fiscal Q3 2009 Earnings Results 5 $388 $159 $46 $41 $17 $147 $42 $32 $17 $379 United States Asia Pacific (AP) Latin America and Caribbean (LAC) Canada Central and Eastern Europe, Middle East and Africa (CEMEA) 2008 2009 Quarter ended March US$ in billions, nominal Payments Volume – Q3 2009 Regional Note: Growth rates calculated based on whole numbers, not rounded numbers. From time to time, previously submitted volume information may be updated. Prior year volume information presented have not been updated, as changes made are not material. 1 Constant dollar growth rates exclude the impact of foreign currency fluctuations against the U.S. dollar in measuring performance. -3% 10% 15% 1% 20% YOY Change (nominal) YOY Change (constant) -3% -8% -9% -22% - % 1 |
![]() Fiscal Q3 2009 Earnings Results 6 YOY Change 13,149 14,305 Total Transactions 2008 2009 Quarter ended March in millions Transactions – Q3 2009 9% 8% Note: Processed transactions represent transactions involving Visa, Visa Electron, Interlink and Plus cards processed on Visa’s networks. Total transactions represent payments and cash transactions as reported by Visa members on their operating certificates. Quarter ended June Debit Credit 63% 37% 9,473 10,266 Processed Transactions 2008 2009 |
![]() Fiscal Q3 2009 Earnings Results 7 814 806 1,620 925 1,723 798 Credit Debit Visa Inc. 2008 2009 Quarter ended March in millions YOY Change Total Cards -2% 15% 6% |
![]() Fiscal Q3 2009 Earnings Results 8 $1,887 ($274) $1,613 ($344) $1,990 $1,646 2008 2009 Revenue Detail – Q3 2009 US$ in millions Gross Revenues Incentives Net Operating Revenues 5% 25% 2% YOY Change Note: Percentage change calculated based on whole numbers, not rounded numbers. |
![]() Fiscal Q3 2009 Earnings Results 9 3% 12% 2% 6% $749 $539 $449 $150 $158 $458 $769 $605 2008 2009 Revenue Detail – Q3 2009 US$ in millions Service Revenues Data Processing Revenues International Transaction Revenues Other Revenues YOY Change Note: Percentage change calculated based on whole numbers, not rounded numbers. |
![]() Fiscal Q3 2009 Earnings Results 10 6 ppts 2% -9% 15% $1,613 $883 $730 $842 $1,646 $804 Net Operating Revenues Total Operating Expenses Operating Income Adjusted Operating Margin – Q3 2009 US$ in millions YOY Change 45% 51% Operating Margin 2008 2009 |
![]() Fiscal Q3 2009 Earnings Results 11 Adjusted Operating Expenses – Q3 2009 US$ in millions -12% 15% -15% -24% - % 13% N/A YOY Change $295 $84 $271 $85 $108 $0 $40 $96 $97 $259 $229 $82 $40 $1 2008 2009 Personnel Network, EDP and Communications Advertising, Marketing and Promotion Professional and Consulting Fees Depreciation and Amortization Administrative and Other Litigation Provision |
![]() Fiscal Q3 2009 Earnings Results 12 Other Financial Results • Capital expenditures during the fiscal third quarter were $69 million • Cash, cash equivalents, restricted cash and investment securities of $6.1 billion at the end of the third quarter – $1.6 billion of restricted cash for litigation escrow – $700 million additional funding to litigation escrow in July 2009 • Free cash flow of $1.6 billion generated in the year-to-date |
![]() Fiscal Q3 2009 Earnings Results 13 Financial Metrics through Fiscal Year 2010 20% + $1 billion + FY 2009: Around $300M FY 2010: 3 - 4% of gross revenue FY 2009: Low 50% range FY 2010: Low 50% range Annual net revenue growth Annual adjusted operating margin Annual adjusted diluted class A common earnings per share growth Annual free cash flow Capital expenditures FY 2009: High single digits FY 2010: 11-15% |
![]() Appendix – Reconciliation of Non-GAAP Measures |
![]() Fiscal Q3 2009 Earnings Results 15 Adjusted Operating Income and Net Income US$ in millions Three Months Ended June 30, 2009 Three Months Ended June 30, 2008 Net income (as reported) 729 $ 422 $ Addback: Income tax expense (as reported) 568 292 Net Income before taxes and minority interest (as reported) 1,297 $ 714 $ Adjustments: Litigation reserve (1) 50 Restructuring (2) 3 15 Asset step-up amortization (3) 17 17 Adjustments to operating income 20 82 Interest accretion on American Express settlement (4) 8 11 Interest expense on Discover settlement (5) 1 — Investment income on Litigation Escrow and EU proceeds (6) (3) (33) Underwater contract (LIBOR adjustment) (7) — 1 Adjustments to non-operating income 6 (21) Total adjustments 26 61 Adjusted income before taxes and minority interest 1,323 775 Adjusted income tax expense (8) (579) (318) Adjusted net income 744 $ 457 $ Operating income (as reported) 822 $ 648 $ Addback: Adjustments to operating income 20 82 Adjusted operating income 842 $ 730 $ Operating revenues (as reported) 1,646 $ 1,613 $ Adjusted operating margin 51% 45% Total operating expenses (as reported) 824 $ 965 $ Less: Adjustments to operating expenses (20) (82) Adjusted operating expenses 804 $ 883 $ (1) Litigation reserve related to the covered litigation. Settlements of, or judgments in, covered litigation will be paid from the litigation escrow account. (2) Restructuring costs associated with workforce consolidation and elimination of overlapping functions. (3) Non-cash amortization and depreciation of the incremental basis in technology and building assets acquired in the reorganization. (4) Non-cash interest expense recorded on future payments to be made under the settlement agreement with American Express. These payments will be paid from the litigation escrow account. (5) Interest expense recorded on future payments to be made under the settlement agreement with Discover. These payments will be paid from the litigation escrow account. (6) Investment income earned during the period on all IPO proceeds and amounts held in the litigation escrow, including amounts the Company used in October 2008 to redeem all class C (series II) common stock and a portion of the class C (series III) common stock held by Visa Europe. (7) Other expense recorded in the periods presented as a result of changes in the Company's estimated liability under the Framework Agreement, which governs its relationship with Visa Europe. The changes were primarily due to movement in the LIBOR rates in the periods presented. This liability was satisfied as part of the October 2008 redemptions described above. (8) Adjusted income tax expense for the three months ended June 30, 2009 reflects the GAAP effective tax rate for the current quarter, which is impacted by the sale of the equity interest in VisaNet do Brasil. Adjusted income tax expense for the three months ended June 30, 2008 reflects the normalized tax rate for fiscal 2008. — |
![]() Fiscal Q3 2009 Earnings Results 16 Reconciliation of Non-GAAP Adjusted Operating Expenses US$ in millions (1) Restructuring (2) Asset step-up amortization (3) Litigation reserve Three Months Ended June 30, 2009 Three Months Ended June 30, 2008 Actual Adjustments As Adjusted Actual Adjustments As Adjusted Personnel 262 $ (3) $ (1) 259 $ 310 $ (15) $ (1) 295 $ Network, EDP and communications 97 97 84 84 Advertising, marketing and promotion 229 229 271 271 Professional and consulting fees 82 82 108 108 Depreciation and amortization 57 (17) (2) 40 57 (17) (2) 40 Administrative and other 96 96 85 85 Litigation provision 1 1 50 (50) (3) Total operating expenses 824 $ (20) $ 804 $ 965 $ (82) $ 883 $ — — — — — — — — — — |
![]() Fiscal Q3 2009 Earnings Results 17 Reconciliation of Non-GAAP Adjusted Non-operating Income US$ in millions (1) Interest accretion on American Express Settlement and interest expense on Discover Settlement (2) Investment income on Litigation Escrow funds and funds used in October 2008 for the repurchase of shares from Visa Europe (3) Underwater contract (LIBOR adjustment) Three Months Ended June 30, 2009 Three Months Ended June 30, 2008 Actual Adjustments As Adjusted Actual Adjustments As Adjusted Equity in earnings of unconsolidated affiliates — $ — $ — $ $ $ — $ Interest expense (30) 9 (1) (21) (30) 11 (1) (19) Investment income, net 504 (3) (2) 501 97 (33) (2) 64 Other 1 — 1 (1) 1 (3) Total other income 475 $ 6 $ 481 $ 66 $ (21) $ 45 $ — — — |
![]() Fiscal Q3 2009 Earnings Results 18 Adjusted Diluted Earnings per Share Class A Common Stock • Management believes the presentation of adjusted operating income and adjusted net income provides a clearer understanding of the one-time items related to the Company's reorganization, initial public offering and other non-recurring events. These measures also adjust for expenses related to covered litigation that will be funded by the litigation escrow account. These items have an impact on our financial results but are either non-recurring or have no operating cash impact. • Recognizing that we have a very complex equity structure incorporating multiple classes and series of common stock, the Company has also presented adjusted diluted class A earnings per share calculated below based on adjusted net income and the weighted average number of diluted class A shares outstanding in the periods presented (adjusted in the prior period presented). This non-GAAP financial measure has been presented to illustrate our per share results reflecting our capital structure after the redemption of all class C (series II) common stock and a portion of class C (series III) common stock, which the Company redeemed in October 2008. Management believes this non-GAAP presentation provides the reader with a clearer understanding of our per share results by excluding these redeemed shares and allocating adjusted net income only to permanent equity. Adjusted net income $ 744 $ 457 Weighted average number of diluted shares outstanding 756 779 Adjusted diluted earnings per share $ 0.98 $ 0.59 June 30, 2009 June 30, 2008 (in millions, except per share data) Three Months Ended Three Months Ended |
![]() Fiscal Q3 2009 Earnings Results 19 Calculation of Free Cash Flow US$ in millions Additions (+) / Reductions (-) to Net income Net income (as reported) 1,839 $ Recurring Items: + Depreciation and amortization 165 - Capital expenditures (205) Share-based Compensation + Share-based compensation 84 + Litigation provision 1 + Accretion expense 71 - Settlement payments (1,642) + Pension expense 43 - Pension contribution (8) VisaNet do Brasil (1) - Gain on sale of investment, pre-tax (473) + Income tax expense 1,299 - Income taxes paid (528) Non-recurring Items (2) : + Settlement payments funded by litigation escrow 1,481 - Tax benefit on settlement payments (540) + Settlement payments funded by Morgan Stanley 49 Total Free Cash Flow 1,636 $ Taxes Covered Litigation For the Nine Months Ended June 30, 2009 Capital Assets Litigation Pension (1) In July 2009, Visa received total proceeds from the sale of its equity investment in VisaNet do Brasil of approximately $1 billion. Free cash flow for the quarter ended September 30, 2009 will reflect receipt of these proceeds, as well as the payment of associated taxes estimated to be approximately half this amount. (2) Adjustments to eliminate the cash impact of non-recurring items. |