Statement Of Financial Position
Statement Of Financial Position Classified (USD $) | ||
In Millions | Jun. 30, 2009
| Sep. 30, 2008
|
Assets | ||
Cash and cash equivalents | $4,200 | $4,979 |
Restricted cash-litigation escrow (Note 2) | 1,141 | 1,298 |
Investment securities | ||
Trading | 83 | 0 |
Available-for-sale | 47 | 355 |
Settlement receivable | 998 | 1,131 |
Accounts receivable | 419 | 342 |
Customer collateral (Note 6) | 739 | 679 |
Current portion of volume and support incentives | 217 | 256 |
Current portion of deferred tax assets | 484 | 944 |
Prepaid expenses and other current assets (Note 4) | 1,234 | 1,190 |
Total current assets | 9,562 | 11,174 |
Restricted cash-litigation escrow (Note 2) | 420 | 630 |
Investment securities, available-for-sale | 181 | 244 |
Volume and support incentives | 118 | 123 |
Property, equipment and technology, net | 1,170 | 1,080 |
Other assets (Note 4) | 77 | 634 |
Intangible assets | 10,883 | 10,883 |
Goodwill | 10,213 | 10,213 |
Total assets | 32,624 | 34,981 |
Liabilities | ||
Accounts payable | 106 | 159 |
Settlement payable | 979 | 1,095 |
Customer collateral (Note 6) | 739 | 679 |
Accrued compensation and benefits | 296 | 420 |
Volume and support incentives | 328 | 249 |
Accrued liabilities | 587 | 306 |
Current portion of long-term debt | 52 | 51 |
Current portion of accrued litigation (Note 12) | 1,348 | 2,698 |
Redeemable class C (series III) common stock, no shares and 35,263,585 shares issued and outstanding, respectively (Note 7) | 0 | 1,508 |
Total current liabilities | 4,435 | 7,165 |
Long-term debt | 46 | 55 |
Accrued litigation (Note 12) | 905 | 1,060 |
Deferred tax liabilities | 3,653 | 3,811 |
Other liabilities | 786 | 613 |
Total liabilities | 9,825 | 12,704 |
Temporary Equity and Minority Interest | ||
Minority interest | 5 | 0 |
Total temporary equity and minority interest | 5 | 1,136 |
Commitments and Contingencies (Note 10) | 0 | 0 |
Stockholders' Equity | ||
Additional paid-in capital | 21,115 | 21,060 |
Accumulated income | 1,783 | 186 |
Accumulated other comprehensive loss, net | (102) | (70) |
Total stockholders' equity and accumulated income | 22,794 | 21,141 |
Total liabilities, temporary equity and minority interest, and stockholders' equity | 32,624 | 34,981 |
Class C (series II) common stock | ||
Temporary Equity and Minority Interest | ||
Class C (series II) common stock, $0.0001 par value, no shares and 218,582,801 shares authorized, no shares and 79,748,857 shares issued and outstanding, net of subscription receivable, respectively (Note 7) | 0 | 1,136 |
Preferred stock | ||
Stockholders' Equity | ||
Preferred stock, $0.0001 par value, 25,000,000 shares authorized and none issued | 0 | 0 |
Class C common stock | ||
Stockholders' Equity | ||
Common stock | 0 | 0 |
Class C treasury stock, 24,449 shares and 525,443 shares, respectively (Note 7) | (2) | (35) |
Class C (series I) common stock | ||
Stockholders' Equity | ||
Common stock | 0 | 0 |
Class C (series III) common stock | ||
Stockholders' Equity | ||
Common stock | 0 | 0 |
Class C (series IV) common stock | ||
Stockholders' Equity | ||
Common stock | $0 | $0 |
1_Statement Of Financial Positi
Statement Of Financial Position Classified (Parenthetical) (USD $) | |||||||||
Sep. 30, 2008
| Sep. 30, 2008
Class C (series II) common stock | Jun. 30, 2009
Preferred stock | Sep. 30, 2008
Preferred stock | Jun. 30, 2009
Class C common stock | Sep. 30, 2008
Class C common stock | Sep. 30, 2008
Class C (series I) common stock | Sep. 30, 2008
Class C (series III) common stock | Sep. 30, 2008
Class C (series IV) common stock | |
Redeemable class C (series III) common stock, shares issued | 35,263,585 | ||||||||
Redeemable class C (series III) common stock, shares outstanding | 35,263,585 | ||||||||
Class C (series II) common stock, par value | 0.0001 | ||||||||
Class C (series II) common stock, shares authorized | 218,582,801 | ||||||||
Class C (series II) common stock, shares issued | 79,748,857 | ||||||||
Class C (series II) common stock, shares outstanding | 79,748,857 | ||||||||
Preferred stock, par value | 0.0001 | 0.0001 | |||||||
Preferred stock, shares authorized | 25,000,000 | 25,000,000 | |||||||
Preferred stock, shares issued | 0 | 0 | |||||||
Common stock, par value | 0.0001 | 0.0001 | 0.0001 | 0.0001 | |||||
Common stock, shares authorized | 1,097,165,602 | 813,582,801 | 64,000,000 | 1,000,000 | |||||
Common stock, issued | 151,605,798 | 124,622,548 | 26,949,616 | 549,587 | |||||
Common stock, outstanding | 151,581,349 | 124,097,105 | 26,949,616 | 549,587 | |||||
Class C treasury stock, shares | 24,449 | 525,443 |
Statement Of Income Alternative
Statement Of Income Alternative (USD $) | ||||
In Millions, except Per Share data | 3 Months Ended
Jun. 30, 2009 | 3 Months Ended
Jun. 30, 2008 | 9 Months Ended
Jun. 30, 2009 | 9 Months Ended
Jun. 30, 2008 |
Operating Revenues | ||||
Service revenues | $769 | $749 | $2,366 | $2,273 |
Data processing revenues | 605 | 539 | 1,703 | 1,525 |
International transaction revenues | 458 | 449 | 1,409 | 1,209 |
Other revenues | 158 | 150 | 462 | 409 |
Volume and support incentives | (344) | (274) | (908) | (862) |
Total operating revenues | 1,646 | 1,613 | 5,032 | 4,554 |
Operating Expenses | ||||
Personnel | 262 | 310 | 809 | 882 |
Network, EDP and communications | 97 | 84 | 282 | 245 |
Advertising, marketing and promotion | 229 | 271 | 635 | 696 |
Professional and consulting fees | 82 | 108 | 246 | 302 |
Depreciation and amortization | 57 | 57 | 165 | 178 |
Administrative and other | 96 | 85 | 225 | 234 |
Litigation provision | 1 | 50 | 1 | 342 |
Total operating expenses | 824 | 965 | 2,363 | 2,879 |
Operating income | 822 | 648 | 2,669 | 1,675 |
Other Income (Expense) | ||||
Equity in earnings of unconsolidated affiliates | 0 | 0 | 0 | 1 |
Interest expense | (30) | (30) | (90) | (116) |
Investment income, net (Note 4) | 504 | 97 | 557 | 172 |
Other | 1 | (1) | 1 | 35 |
Total other income | 475 | 66 | 468 | 92 |
Income before income taxes and minority interest | 1,297 | 714 | 3,137 | 1,767 |
Income tax expense | 568 | 292 | 1,299 | 607 |
Income before minority interest | 729 | 422 | 1,838 | 1,160 |
Minority interest | 0 | 0 | 1 | 0 |
Net income | $729 | $422 | $1,839 | $1,160 |
Class C (series II) common stock | ||||
Other Income (Expense) | ||||
Basic net income per share (Notes 7 and 8) | 0.12 | 0.75 | ||
Basic weighted average shares outstanding (Notes 7 and 8) | 80 | 48 | ||
Diluted net income per share (Notes 7 and 8) | 0.12 | 0.75 | ||
Diluted weighted average shares outstanding (Notes 7 and 8) | 80 | 48 | ||
Class A common stock | ||||
Other Income (Expense) | ||||
Basic net income per share (Notes 7 and 8) | 0.97 | 0.51 | 1.44 | |
Basic weighted average shares outstanding (Notes 7 and 8) | 448 | 447 | 170 | |
Diluted net income per share (Notes 7 and 8) | 0.97 | 0.51 | 1.44 | |
Diluted weighted average shares outstanding (Notes 7 and 8) | 756 | 776 | 767 | |
Class B Common Stock | ||||
Other Income (Expense) | ||||
Basic net income per share (Notes 7 and 8) | 0.61 | 0.36 | 1.58 | 1.33 |
Basic weighted average shares outstanding (Notes 7 and 8) | 246 | 246 | 246 | 363 |
Diluted net income per share (Notes 7 and 8) | 0.61 | 0.36 | 1.58 | 1.33 |
Diluted weighted average shares outstanding (Notes 7 and 8) | 246 | 246 | 246 | 363 |
Class C common stock | ||||
Other Income (Expense) | ||||
Basic net income per share (Notes 7 and 8) | 0.97 | |||
Basic weighted average shares outstanding (Notes 7 and 8) | 152 | |||
Diluted net income per share (Notes 7 and 8) | 0.97 | |||
Diluted weighted average shares outstanding (Notes 7 and 8) | 152 | |||
Class C (series I) common stock | ||||
Other Income (Expense) | ||||
Basic net income per share (Notes 7 and 8) | 0.51 | 1.44 | ||
Basic weighted average shares outstanding (Notes 7 and 8) | 125 | 213 | ||
Diluted net income per share (Notes 7 and 8) | 0.51 | 1.44 | ||
Diluted weighted average shares outstanding (Notes 7 and 8) | 125 | 213 | ||
Class C (series III and IV) common stock | ||||
Other Income (Expense) | ||||
Basic net income per share (Notes 7 and 8) | 0.51 | 1.44 | ||
Basic weighted average shares outstanding (Notes 7 and 8) | 27 | 49 | ||
Diluted net income per share (Notes 7 and 8) | 0.51 | 1.44 | ||
Diluted weighted average shares outstanding (Notes 7 and 8) | 27 | 49 |
Statement Of Other Comprehensiv
Statement Of Other Comprehensive Income (USD $) | ||||
In Millions | 3 Months Ended
Jun. 30, 2009 | 3 Months Ended
Jun. 30, 2008 | 9 Months Ended
Jun. 30, 2009 | 9 Months Ended
Jun. 30, 2008 |
Net income | $729 | $422 | $1,839 | $1,160 |
Investment securities, available-for-sale | ||||
Net unrealized gain (loss) | 1 | (16) | 9 | (16) |
Income tax effect | (1) | 6 | (4) | 7 |
Reclassification adjustment for net loss realized in net income | 0 | 4 | 0 | 3 |
Income tax effect | 0 | (1) | 0 | (1) |
Defined benefit pension and postretirement plans | 1 | 0 | 2 | 0 |
Derivative instruments | ||||
Net unrealized (loss) gain | (43) | 2 | (52) | 0 |
Income tax effect | 17 | 1 | 21 | 0 |
Reclassification adjustment for net (gain) loss realized in net income | (2) | 0 | 4 | 0 |
Income tax effect | 1 | 0 | (2) | 0 |
Foreign currency translation gain (loss) | 12 | 0 | (10) | (2) |
Other comprehensive loss, net of tax | (14) | (4) | (32) | (9) |
Comprehensive income | $715 | $418 | $1,807 | $1,151 |
Statement Of Shareholders Equit
Statement Of Shareholders Equity And Other Comprehensive Income (USD $) | ||||||||
In Millions | Class A common stock
| Class B Common Stock
| Additional Paid in Capital
| Accumulated Other Comprehensive Loss
| Class C (series III and IV) common stock
| Treasury Stock
| Retained Earnings [Member]
| Total
|
Beginning Balance at Sep. 30, 2008 | $21,060 | ($70) | ($35) | $186 | $21,141 | |||
Beginning Balance at Sep. 30, 2008 | 448 | 245 | 28 | |||||
Net income | 1,839 | 1,839 | ||||||
Other comprehensive loss, net of tax | (32) | (32) | ||||||
Issuance of restricted share awards and restricted stock units vested | 1 | |||||||
Conversion of class C (series III) and class C (series IV) into class C (series I) common stock (Note 7) | (28) | |||||||
Share-based compensation (Note 9) | 84 | 84 | ||||||
Tax benefit for share-based compensation | 6 | 6 | ||||||
Cash proceeds from exercise of stock options | 20 | 20 | ||||||
Restricted stock instruments settled in cash for taxes | (22) | (22) | ||||||
Accretion of class C (series II) common stock | (2) | (2) | ||||||
Cash dividends declared on class A, class B and class C common stock, at $0.105 per share (Note 7) | (240) | (240) | ||||||
Gain upon issuance of equity interest in joint venture (Note 1) | 6 | 6 | ||||||
Retirement of treasury stock | (39) | 34 | (5) | |||||
Special IPO dividends received from cost-method investees (Note 7) | (1) | (1) | ||||||
Ending Balance at Jun. 30, 2009 | 449 | 245 | ||||||
Ending Balance at Jun. 30, 2009 | $21,115 | ($102) | ($2) | $1,783 | $22,794 | |||
Beginning Balance at Mar. 31, 2009 | 245 | |||||||
Ending Balance at Jun. 30, 2009 | 245 |
2_Statement Of Shareholders Equ
Statement Of Shareholders Equity And Other Comprehensive Income (Parenthetical) (USD $) | ||
Retained Earnings [Member]
| Total
| |
Cash dividends declared on class A, class B and class C common stock, per share | 0.105 | 0.105 |
Statement Of Cash Flows Indirec
Statement Of Cash Flows Indirect (USD $) | ||
In Millions | 9 Months Ended
Jun. 30, 2009 | 9 Months Ended
Jun. 30, 2008 |
Operating Activities | ||
Net income | $1,839 | $1,160 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Gain on sale of other investments (Note 4) | (473) | 0 |
Depreciation and amortization of property, equipment and technology | 165 | 178 |
Share-based compensation | 84 | 47 |
Tax benefit for share-based compensation | (6) | 0 |
Restricted stock instruments settled in cash for taxes | (22) | 0 |
Fair value adjustment for liability under the framework agreement | 0 | (35) |
Interest earned on litigation escrow, net of tax | (14) | (6) |
Net recognized loss on investment securities, including other-than-temporary impairment | 8 | 12 |
Asset impairment on non-marketable equity investments | 7 | 0 |
Gain on disposal of property, equipment and technology | 0 | (1) |
Minority interest | (1) | 0 |
Amortization of volume and support incentives | 908 | 862 |
Accrued litigation and accretion | 72 | 447 |
Equity in earnings of unconsolidated affiliates | 0 | (1) |
Deferred income taxes | 316 | 136 |
Change in operating assets and liabilities: | ||
Trading securities | 10 | 0 |
Accounts receivable | (77) | (24) |
Settlement receivable | 133 | (642) |
Volume and support incentives | (785) | (980) |
Other assets | 84 | (76) |
Accounts payable | (53) | (60) |
Settlement payable | (116) | 510 |
Accrued compensation and benefits | (124) | (99) |
Accrued and other liabilities | 438 | 52 |
Accrued litigation | (1,626) | (1,220) |
Member deposits | 0 | (3) |
Net cash provided by operating activities | 767 | 257 |
Investment securities, available-for-sale: | ||
Purchases | 0 | (1,504) |
Proceeds from sales and maturities | 276 | 2,402 |
Distributions from money market investment (Note 4) | 884 | 0 |
Cash acquired through reorganization | 0 | 1,002 |
Purchases of /contributions to other investments | (1) | (24) |
Dividends/distributions from other investments | 1 | 22 |
Purchases of property, equipment and technology | (205) | (323) |
Proceeds from sale of property, equipment and technology | 0 | 4 |
Net cash provided by investing activities | 955 | 1,579 |
Financing Activities | ||
Proceeds from short-term borrowing | 0 | 2 |
Payments on short-term borrowing | 0 | (2) |
Proceeds from sale of common stock, net of issuance costs of $550 | 0 | 19,100 |
Tax benefit for share-based compensation | 6 | 0 |
Cash proceeds from exercise of stock options | 20 | 0 |
Funding of litigation escrow account-Retrospective Responsibility Plan | (1,100) | (3,000) |
Payments from litigation escrow account-Retrospective Responsibility Plan | 1,481 | 1,015 |
Funding of tax escrow account for income tax withheld on stock proceeds | 0 | (116) |
Payments from tax escrow account | 0 | 116 |
Payment for redemption of stock (Note 7) | (2,646) | (13,446) |
Dividends paid | (240) | 0 |
Principal payments on debt | (8) | (15) |
Principal payments on capital lease obligations | (4) | (3) |
Net cash (used in) provided by financing activities | (2,491) | 3,651 |
Effect of exchange rate translation on cash and cash equivalents | (10) | 0 |
(Decrease) increase in cash and cash equivalents | (779) | 5,487 |
Cash and cash equivalents at beginning of year | 4,979 | 275 |
Cash and cash equivalents at end of period | 4,200 | 5,762 |
Supplemental Disclosure of Cash Flow Information | ||
Income taxes paid, net of refunds | 528 | 563 |
Amounts included in accounts payable and accrued liabilities related to purchase of property, equipment and technology | 25 | 27 |
Interest payments on debt | 3 | 6 |
Common stock issued in acquisition | 0 | 17,935 |
Cash dividend declared but not paid | 0 | 93 |
Assets acquired in joint venture with note payable and equity interest issued | $22 | $0 |
3_Statement Of Cash Flows Indir
Statement Of Cash Flows Indirect (Parenthetical) (USD $) | ||
In Millions | 9 Months Ended
Jun. 30, 2009 | 9 Months Ended
Jun. 30, 2008 |
Proceeds from sale of common stock, issuance costs | $0 | $550 |
Notes to Financial Statements
Notes to Financial Statements | |
9 Months Ended
Jun. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
Note 1-Summary of Significant Accounting Policies | Note 1Summary of Significant Accounting Policies OrganizationVisa Inc. (Visa or the Company) is a stock corporation incorporated under the laws of the state of Delaware, United States of America. Visa and its consolidated subsidiaries, including Visa U.S.A. Inc. (Visa U.S.A.), Visa International Service Association (Visa International), Visa Canada Inc. (Visa Canada) and Inovant LLC (Inovant), operate the worlds largest retail electronic payments network. Visa facilitates global commerce through the transfer of value and information among financial institutions, merchants, consumers, businesses and government entities. Basis of presentationThe accompanying unaudited interim consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States of America and reflect all normal recurring adjustments that, in the opinion of management, are necessary to present fairly such financial statements for the interim periods. Certain information and footnote disclosures normally included in annual financial statements have been omitted. Accordingly these unaudited interim consolidated financial statements should be read in conjunction with the Visa Inc. Annual Report on Form 10-K for the year ended September30, 2008 for additional disclosures including a summary of the Companys significant accounting policies. Principles of consolidationThe Company consolidates all entities that are controlled by ownership of a majority voting interest as well as variable interest entities for which the Company is the primary beneficiary. All significant intercompany accounts and transactions are eliminated in consolidation. Certain reclassifications, not affecting net income, have been made to prior period information to conform to the current period presentation format. Formation and consolidation of new processing entityDuring the first fiscal quarter of 2009, the Company formed Visa Processing Services, Ltd. (VPS) and issued a 30% minority interest to and executed a joint venture agreement with Yalamanchili International Pte. Ltd., a payments processor and software company with operations in Asia. The Company retained the remaining 70% interest. VPS is expected to extend multi-currency and multi-language debit, credit and prepaid processing capabilities to financial institutions, processors and payment companies outside of the United States of America. VPS is consolidated in the Companys financial statements with net assets of $30 million at June30, 2009. Recently issued and/or adopted accounting pronouncementsIn February 2007, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No.159, The Fair Value Option for Financial Assets and Financial Liabilities, Including an Amendment to SFAS 115 (SFAS 159). SFAS 159 allows the measurement of many financial instruments and certain other assets and liabilities at fair value on an instrument-by-instrument basis under a fair value option. In addition, SFAS 159 includes an amendment of SFAS No.115, Accounting for Certain Investments in Debt and Equity Securities, and applies to all entities with ava |
Note 2-Retrospective Responsibility Plan | Note 2Retrospective Responsibility Plan The Company has several mechanisms, including a series of agreements designed to address potential liability under certain litigation referred to as the covered litigation. These mechanisms are included in and referred to as the Retrospective Responsibility Plan (the Plan). In accordance with the Plan, the Company established a litigation escrow account (the Escrow Account) from which settlements of, or judgments in, the covered litigation will be paid. Under the terms of the Plan, when the Company funds the Escrow Account, its U.S. financial institutions, the sole holders of classB common stock, bear the cost via a reduction in their class A as-converted common stock. On December16, 2008, upon the recommendation of the Companys board of directors, the Companys stockholders approved and adopted an amendment and restatement of the Companys Fourth Amended and Restated Certificate of Incorporation to permit the Company greater flexibility in funding the Escrow Account and made other clarifying modifications. As a result, the Company filed a Fifth Amended and Restated Certificate of Incorporation with the Secretary of State of Delaware on December16, 2008. On December19, 2008, the Company deposited $1.1 billion into the Escrow Account. The funding reduced the conversion rate applicable to the Companys class B common stock outstanding from 0.7143classA share to 0.6296classA share. The funding of the Escrow Account had the effect of a repurchase of 20,800,824 classA common stock equivalents from the Companys class B shareholders. The repurchase amount per share of $52.88 was calculated under the terms of the Fifth Amended and Restated Certificate of Incorporation, using the volume weighted average price of the Companys classA common shares for the 15-day pricing period from December1, 2008 to December19, 2008. On June30, 2009, the Companys Board of Directors approved an additional $700 million deposit into the Escrow Account, which was funded on July16, 2009, further reducing the conversion rate applicable to the Companys class B common stock outstanding from 0.6296class A share to 0.5824class A share. The additional funding had the effect of a repurchase of 11,578,878 class A common stock equivalents from the Companys class B shareholders. The repurchase amount per share of $60.45 was calculated under the terms of the Fifth Amended and Restated Certificate of Incorporation, using the volume weighted average price of the Companys class A common shares for the 11-day pricing period from June30, 2009 to July15, 2009. The following table sets forth the changes in the Escrow Account during the nine months ended June30, 2009. It therefore does not reflect the additional $700 million funding on July16, 2009: (inmillions) Balance at October1, 2008 $ 1,928 Additional funding under the Plan 1,100 American Express settlement payments (210 ) Discover settlement payments(1) (1,271 ) Interest earned, less applicable taxes 14 Balance at June30, 2009 $ 1,561 Less: Current portion of escrow account (1,141 ) |
Note 3-Fair Value Measurements | Note 3Fair Value Measurements Effective October1, 2008, the Company adopted SFAS No.157, Fair Value Measurements (SFAS 157), for assets and liabilities which are required to be measured at fair value. SFAS 157 establishes a framework for measuring fair value and related disclosures. SFAS 157 has the following key elements: Defines fair value as the exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; Establishes a three-level hierarchy (valuation hierarchy) for fair value measurements; Requires consideration of the Companys creditworthiness when valuing liabilities; and Expands disclosures about instruments measured at fair value. The valuation hierarchy considers the transparency of inputs used to value assets and liabilities as of the measurement date. The less transparent or observable the inputs used to value assets and liabilities, the lower the classification of the assets and liabilities in the valuation hierarchy. A financial instruments classification within the valuation hierarchy is based on the lowest level of input that is significant to its fair value measurement. The three levels of the valuation hierarchy and the classification of the Companys financial assets and liabilities within the hierarchy are as follows: Level 1Inputs to the valuation methodology are unadjusted quoted prices in active markets for identical assets or liabilities. The fair value of the Companys cash equivalents (money market funds) and mutual fund equity securities are based on quoted prices and are therefore classified as Level 1. Level 2Inputs to the valuation methodology include: quoted prices in active markets for similar (not identical) assets or liabilities; quoted prices for identical or similar assets in markets with insufficient volume or infrequent transactions (less active markets); inputs other than quoted prices that are observable for the asset or liability (for example, interest rates or yield curves); and model-driven valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 assets include U.S. government-sponsored debt securities, tax-exempt municipal bonds issued in the U.S., Canadian government debt securities, and foreign exchange derivative instruments. The fair value of the Companys Level 2 assets is based on quoted prices in active markets for similar assets, and other observable inputs. Level 2 liabilities include foreign exchange derivative instruments in a liability position. Foreign exchange derivative instruments are valued using inputs that are observable in the market or can be derived principally from or corroborated with observable market data. Level 3Inputs to the valuation methodology are unobservable and significant to the fair value measurement. Inputs reflect the use of significant management judgment. These values are generally determined usin |
Note 4-Prepaid Expenses and Other Assets | Note 4Prepaid Expenses and Other Assets Prepaid expenses and other current assets consisted of the following: June30, 2009 September30, 2008 (in millions) Non-trade receivable $ 1,024 $ 15 Prepaid expenses and maintenance 100 91 Money market investmentReserve Primary Fund 70 953 Income tax receivable 90 Other 40 41 Total $ 1,234 $ 1,190 Other non-current assets consisted of the following: June30, 2009 September30, 2008 (in millions) Other investments $ 50 $ 592 Long-term prepaid expenses 13 29 Other 14 13 Total $ 77 $ 634 The non-trade receivable balance at June30, 2009 includes approximately $1.0 billion related to the sale of the Companys investment in VisaNet do Brasil on June29, 2009. The Company received the proceeds from the sale on July2, 2009, satisfying this non-trade receivable. Prior to the sale, the Company accounted for the investment under the cost method with a book value of approximately $535 million, reflected in other non-current assets on its balance sheet. The Company recognized a pre-tax gain of $473 million in investment income, net on its statement of operations as a result of the sale. The amount of the gain net of tax was $237 million. The non-trade receivable balance at June30, 2009 also includes a $16 million receivable from Morgan Stanley as part of the Discover settlement agreement. The Company initially recorded a $65 million receivable from Morgan Stanley during the first quarter of 2009, and has received three out of four equal quarterly payments. See Note12Legal Matters. The Reserve Primary Fund balance at September30, 2008 reflects a $30 million other-than-temporary impairment. During the first three quarters of fiscal 2009, the Company received distributions totaling $884 million. In February 2009, the Fund announced that $3.5 billion of the Fund assets would be set aside in a special reserve which will be used to satisfy pending or threatened claims against the Fund, its officers and Trustees and anticipated costs and expenses for the Fund, including legal and accounting fees. In May 2009, the SEC filed an action in the U.S. District Court for the Southern District of New York (the Action) asserting various allegations against the management of the Fund and requesting that the Fund distribute assets on a pro-rata basis. In June 2009, the Fund announced that the Court had issued an order (the Order) concerning the distribution of the Funds remaining assets. The Action proposes a plan to distribute the remaining assets of the Fund on a pro rata basis to shareholders whose shares have not been fully redeemed since September15, 2008. The Order states that if all remaining Fund assets were distributed on a pro rata basis to all unpaid shareholders, investors would recover approximately 98.4 cents per share. Applying this value to Visas unredeemed shares at June30, 2009 would result in an additional distribution of approximately $82 million. On July28, 2009, Visa U.S.A. fi |
Note 5-Pension, Postretirement and Other Benefits | Note 5Pension, Postretirement and Other Benefits The Company sponsors various qualified and non-qualified defined benefit pension and postretirement benefit plans which provide retirement and medical benefits for substantially all employees residing in the United States. The components of net periodic benefit cost are as follows: Pension Benefits Other Postretirement Benefits 3monthsended June 30, 9monthsended June 30, 3monthsended June 30, 9monthsended June 30, 2009 2008 2009 2008 2009 2008 2009 2008 (in millions) Service cost $ 13 $ 12 $ 38 $ 37 $ $ 1 $ $ 4 Interest cost 11 10 34 30 1 1 2 4 Expected return on assets (12 ) (11 ) (34 ) (32 ) Amortization of: Prior service cost (credit) (2 ) (3 ) (6 ) (10 ) (1 ) (1 ) (3 ) (4 ) Actuarial loss 4 2 11 6 1 1 Settlement loss 1 2 Total net periodic pension cost $ 14 $ 11 $ 43 $ 33 $ $ 2 $ (1 ) $ 5 Based on year to date plan asset performance and plan activity, the Company expects contributions from employer assets to the pension and other postretirement benefit plans for fiscal 2009 to be approximately $104 million compared to $190 million in the prior year. Recent market conditions have resulted in an unusually high degree of volatility associated with certain pension plan assets. Should deterioration in market conditions continue, the Companys pension asset portfolio could be adversely impacted, and the Company may be required to make additional contributions. The Company will continue to monitor the performance of pension plan assets and market conditions in evaluating its contribution to the qualified pension plan in fiscal 2009. |
Note 6-Settlement Guarantee Management | Note 6Settlement Guarantee Management The indemnification for settlement losses that the Company provides to its customers 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 between different customers. The term and amount of the indemnification are unlimited. Settlement at risk (or exposure) is estimated based on the sum of the following inputs: 1) average daily volumes during the quarter multiplied by the estimated number of days to settle plus a safety margin; 2) four months of rolling average chargebacks volume; and 3) the total balance for outstanding travelers cheques. During the first quarter of fiscal 2009, the Company updated its settlement risk policy and raised the safety margin from two days to three days, which increased the Companys estimated maximum settlement exposure amount to approximately $37.3 billion at June30, 2009 compared to $34.8 billion at September30, 2008. Of these amounts, $3.4 billion at June30, 2009 and $3.0 billion at September30, 2008, are covered by collateral held by the Company. The total available collateral balances presented below are greater than the settlement exposure covered by customer collateral held by the Company due to instances in which the available collateral exceeds the total settlement exposure for certain financial institutions at each period presented. The Company requires certain customers that do not meet its credit standards to post collateral in order to ensure their performance of settlement obligations arising from product clearings. At June30, 2009 and September30, 2008, the Company maintained collateral as follows: June30, 2009 September30, 2008 (in millions) Cash equivalents $ 739 $ 679 Pledged securities at market value 214 150 Letters of credit 712 720 Guarantees(1) 2,551 1,938 Total $ 4,216 $ 3,487 (1) Guarantees are provided primarily by financial institutions to secure the obligations of their subsidiaries. The Company routinely evaluates the financial viability of institutions providing the guarantees. The estimated probability-weighted value of the guarantee that the Company provides to its customers was less than $1 million at June30, 2009 and September30, 2008 and is reflected in accrued liabilities on the respective consolidated balance sheets. |
Note 7-Stockholders' Equity | Note 7Stockholders' Equity Class C Common Stock Redemptions and Conversions In October 2008, the Company used $1.508 billion of net proceeds from the initial public offering (IPO) for the required redemption of 35,263,585 shares of class C (series III) common stock at a redemption price of $42.77 per share as was required by the Companys Third Amended and Restated Certificate of Incorporation. Following the October 2008 redemption, the remaining 27,499,203 shares of class C (series III) and class C (series IV) common stock outstanding automatically converted into shares of class C (series I) common stock on a one-to-one basis. In December 2008, upon adoption of the Fifth Amended and Restated Certificate of Incorporation, shares of class C (series I) common stock were designated as class C common stock with no series designation. In October 2008, the Company also utilized net proceeds from the IPO to fund the redemption of all classC (series II) common stock. The classC (seriesII) common stock was purchased for a cash payment of $1.138 billion and the return to Visa Europe of the classC (series II) common stock subscription receivable outstanding. Funding of the Litigation Escrow Account On December16, 2008, the Companys stockholders approved and adopted the Companys Fifth Amended and Restated Certificate of Incorporation which permits the Company greater flexibility in funding the Escrow Account. On December19, 2008, the Company funded the Escrow Account with $1.1 billion which reduced the conversion rate applicable to Visas classB common stock outstanding from 0.7143classA share to 0.6296classA share, which had the effect of a repurchase of 20,800,824 classA common stock equivalents. See Note2Retrospective Responsibility Plan. On July16, 2009, the Company funded the Escrow Account with an additional $700 million which reduced the conversion rate applicable to Visas classB common stock outstanding from 0.6296 classA share to 0.5824classA share, which had the effect of a repurchase of 11,578,878 classA common stock equivalents. See Note2Retrospective Responsibility Plan. After giving effect to the July 2009 escrow funding and the corresponding reduction in the conversion rate applicable to classB common stock outstanding, the number of classA common shares outstanding on an as-converted basis at June30, 2009, is as follows: SharesOutstanding at June 30, 2009 ConversionRate Into Class A Common Stock As Converted (Giving Effect to July 2009 Escrow Account Funding) ClassA common stock 449,407,746 449,407,746 Class B common stock 245,513,385 0.5824 142,987,780 Class C common stock 151,581,349 1.0000 151,581,349 846,502,480 743,976,875 Special IPO Stock Dividends Received from Cost Method Investees, Net of Tax During the first half of fiscal 2009, the Company received 24,449 shares of its own classC common stock as dividends from cost method investees who were also shareholders and recorded approximately $1 million in treasury stock. These stock dividends are recorded as an increase in additional paid-in capital, net of tax, and are n |
Note 8-Net Income Per Share | Note 8Net Income Per Share The Company calculated net income per share using the two-class method under the guidelines of SFAS No.128, Earnings Per Share (SFAS 128), to reflect the different rights of each class and series of outstanding common stock. Under the provisions of SFAS128, basic net income per share is computed for each class and series of common stock outstanding during the period by dividing net income available to each class and series by the weighted average number of common stock outstanding during the period. Diluted net income per share for each class and series of common stock is computed by dividing net income available by the weighted average number of common stock and, if dilutive, potential class A common stock equivalent shares outstanding during the period. The following tables present basic and diluted earnings per share for the three and nine months ended June30, 2009. Three months ended June30, 2009 Basic Earnings Per Share Diluted Earnings Per Share (in millions, except per share data) Classes of Common Stock Income Allocation ($) (A) Weighted Average Shares Outstanding(B) Earningsper Share($)= (A)/(B) Income Allocation ($) (A) Weighted Average Shares Outstanding(B) Earningsper Share ($)= (A)/(B) Class A(1) 433 448 0.97 729 756 0.97 Class B 149 (2) 246 0.61 149 (2) 246 0.61 Class C(3) 147 152 0.97 146 152 0.97 Net income $ 729 Nine months ended June30, 2009 Basic Earnings Per Share Diluted Earnings Per Share (in millions, except per share data) Classesof Common Stock Income Allocation ($) (A) Weighted Average Shares Outstanding(B) Earningsper Share ($) = (A)/(B) Income Allocation ($) (A) Weighted Average Shares Outstanding(B) Earningsper Share ($)= (A)/(B) Common Stock Redeemed October10, 2008 Class C (series II) and class C (series III)(3) 4 Notpresented Notpresented 4 Notpresented Notpresented Common Stock: Class A(1) 1,081 447 2.42 1,836 761 2.41 Class B 388 (2) 246 1.58 387 (2) 246 1.58 Class C(3) 366 152 2.42 365 152 2.41 Net income $ 1,839 (1) The calculation of class A common stock diluted earnings per share assumes potential class A common stock equivalent shares outstanding. The computation of average dilutive shares outstanding excluded stock options to purchase 1,409,323 and 1,446,229 shares of common stock, 16,014 and 13,964 restricted stock awards and 5,117 and 17,110 restricted stock units for the three and nine months ended June30, 2009, respectively. These amounts were excluded because their effect would be antidilutive. (2) Net income is attributed to each class and series of common stock on an as-converted basis. On an as-converted basis and for the purpose of cal |
Note 9-Share-based Compensation | Note 9Share-based Compensation During the nine months ended June30, 2009, the Company granted 1,288,807 non-qualified stock options (Options), 1,266,721 restricted stock awards (RSAs), and 293,953 restricted stock units (RSUs) to Company employees under the 2007 Equity Incentive Compensation Plan. The Options had a weighted average exercise price per share of $56.49, and a weighted average grant date fair value per share of $23.54. The RSAs and RSUs had weighted average grant date fair values per share of $56.45 and $56.51, respectively. The Company also made an award of performance-based shares during the period. The ultimate number of performance shares that are earned will be between zero and 300,960 depending on the Companys achievement of specified adjusted net income performance targets during the one-year period commencing October1, 2008. Compensation expense for the performance awards is initially estimated based on target performance and is adjusted as appropriate throughout the performance period. The performance shares vest in two equal installments on the second and the third anniversary from the date of grant, subject to earlier vesting in full under certain conditions including death, disability or retirement. The Company accounted for these awards under the guidance of SFAS No.123R, Share-Based Payment (SFAS 123R). The Company uses the straight-line method of attribution for expensing equity awards with only service conditions. For awards with both service and performance conditions, the Company uses the graded-vesting method of expense attribution. Compensation expense is recorded net of estimated forfeitures, which are adjusted as appropriate. |
Note 10-Commitments and Contingencies | Note 10Commitments and Contingencies Volume and Support Incentives The Company entered into new volume and support incentive agreements during the nine months ended June30, 2009, increasing the Companys total volume and support incentive commitment. The Companys obligation under these customer agreements is generally amortized as a reduction to revenue based on managements estimate of and actual customer performance under the terms of the incentive agreement. Excluding anticipated revenue to be earned from higher payments and transaction volumes in connection with these agreements, the Companys potential reduction to revenue related to these agreements is estimated as follows: Fiscal Volumeand SupportIncentives (in millions) 2009 (remaining three months) $ 241 2010 1,144 2011 1,111 2012 1,031 2013 857 Thereafter 1,007 Total $ 5,391 The ultimate amounts to be paid under these agreements may be greater than or less than the estimates above. Based on these agreements, increases in the incentive payments are generally driven by increased payment and transaction volume, and as a result, in the event incentive payments exceed this estimate such payments are not expected to have a material negative effect on the Companys financial condition, results of operations or cash flows. Funding of the Litigation Escrow Account On June30, 2009, the Companys board of directors approved a $700 million funding of the Escrow Account. The amount was funded on July16, 2009. See Note 2Retrospective Responsibility Plan. |
Note 11-Income Taxes | Note 11Income Taxes The effective income tax rates were 44% and 41% for the three months ended June30, 2009 and 2008, respectively, and 41% and 34% for the nine months ended June30, 2009 and 2008, respectively. The rate for the three months ended June30, 2009 was higher than the rate for the same period in the prior year primarily due to the additional foreign tax attributable to the sale of the Companys investment in VisaNet do Brasil. The increase in the rate for the nine months ended June30, 2009, compared to the rate for the same period in fiscal 2008, was primarily due to the additional foreign tax on the sale of the investment in VisaNet do Brasil, and a one-time rate reduction in fiscal 2008 from the combined effect of the loss of a California special deduction upon IPO and the deferred tax remeasurement benefit due to the change in state tax apportionment. Beginning October1, 2008, the Companys subsidiary in Singapore operates under a tax incentive agreement which is effective through September30, 2014, and may be extended through September30, 2023, if certain additional requirements are satisfied. The tax incentive agreement is conditional upon certain employment and investment thresholds being met by the Company. The Company anticipates the impact in fiscal 2009 to be less than one percent of the Companys effective tax rate. During the three and nine months ended June30, 2009, the Companys unrecognized tax benefits related to tax positions taken in the current period increased by $10 million and $19 million, respectively, all of which would affect the effective tax rate if recognized. During the three and nine months ended June30, 2009, the Company accrued $6 million and $14 million of interest, respectively, and $1 and $4 million of penalties, respectively, related to uncertain tax positions. |
Note 12-Legal Matters | Note 12Legal 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 amounts 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 Companys results of operations, financial position or cash flows. The Companys litigation provision includes provisions of approximately $1 million for the three and nine months ended June30, 2009, and $50 million and $342 million for the three and nine months ended June30, 2008, respectively. The litigation accrual is an estimate and is based on managements understanding of its litigation profile, the specifics of each case, advice of counsel to the extent appropriate and managements best estimate of incurred loss at the balance sheet date. The Company is presently involved in the matters described below and other legal actions, except for those disclosed below as resolved or settled. 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. The Company will continue to review the litigation accrual and, if necessary, future refinements to the accrual will be made. The following table summarizes the activity related to accrued litigation for the nine months ended June30, 2009 and 2008: 2009 2008 (in millions) Balance at October1 $ 3,758 $ 3,682 Provision for settled legal matters (1 ) 4 Provision for unsettled legal matters 2 338 Settlement obligation to be refunded by Morgan Stanley(1) 65 Interest accretion on settled matters 71 105 Payments on settled matters (1,642 ) (1,220 ) Balance at June30 $ 2,253 $ 2,909 (1) This balance represents the amount of the Discover settlement to be refunded to the Company by Morgan Stanley under a separate agreement. The Company recorded a corresponding receivable in prepaid and other current assets on the Companys consolidated balance sheets at June30, 2009. Covered Litigation Visa Inc., Visa U.S.A. and Visa International are parties to certain legal proceedings discussed below that are subject to the Retrospective Responsibility Plan, which the Company refers to as the covered litigation. For a description of the Retrospective Responsibility Plan, see Note 2Retrospective Responsibility Plan. The Discover Litigation The Company made its scheduled payments in each of the first three fiscal quarters of 2009 to Discover pursuant to the terms of the settlement ag |
Document Information
Document Information | |
9 Months Ended
Jun. 30, 2009 USD / shares | |
Document Information [Text Block] | |
Document Type | 10-Q |
Amendment Flag | false |
Amendment Description | N.A. |
Document Period End Date | 2009-06-30 |
Entity Information
Entity Information (USD $) | |||||
9 Months Ended
Jun. 30, 2009 | Mar. 31, 2008
| Jul. 27, 2009
Class A common stock | Jul. 27, 2009
Class B Common Stock | Jul. 27, 2009
Class C common stock | |
Entity [Text Block] | |||||
Trading Symbol | V | ||||
Entity Registrant Name | VISA INC. | ||||
Entity Central Index Key | 0001403161 | ||||
Current Fiscal Year End Date | --09-30 | ||||
Entity Well-known Seasoned Issuer | Yes | ||||
Entity Current Reporting Status | Yes | ||||
Entity Voluntary Filers | No | ||||
Entity Filer Category | Large Accelerated Filer | ||||
Entity Public Float | $27,900,000,000 | ||||
Entity Common Stock, Shares Outstanding | 460,127,255 | 245,513,385 | 140,874,096 |