Document and Entity Information
Document and Entity Information | ||||
6 Months Ended
Mar. 31, 2010 | Apr. 23, 2010
Class A | Apr. 23, 2010
Class B | Apr. 23, 2010
Class C | |
Document Type | 10-Q | |||
Amendment Flag | false | |||
Document Period End Date | 2010-03-31 | |||
Document Fiscal Year Focus | 2,010 | |||
Document Fiscal Period Focus | Q2 | |||
Trading Symbol | V | |||
Entity Registrant Name | VISA INC. | |||
Entity Central Index Key | 0001403161 | |||
Current Fiscal Year End Date | --09-30 | |||
Entity Filer Category | Large Accelerated Filer | |||
Entity Common Stock, Shares Outstanding | 494,994,456 | 245,513,385 | 99,255,836 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | ||
In Millions | Mar. 31, 2010
| Sep. 30, 2009
|
Assets | ||
Cash and cash equivalents | $4,560 | $4,617 |
Restricted cash-litigation escrow (Note 2) | 1,365 | 1,365 |
Investment securities | ||
Trading | 63 | 59 |
Available-for-sale | 22 | 56 |
Settlement receivable | 666 | 605 |
Accounts receivable | 502 | 444 |
Customer collateral (Note 5) | 842 | 812 |
Current portion of volume and support incentives | 212 | 214 |
Current portion of deferred tax assets | 470 | 703 |
Prepaid expenses and other current assets | 413 | 366 |
Total current assets | 9,115 | 9,241 |
Restricted cash-litigation escrow (Note 2) | 210 | 350 |
Investment securities, available-for-sale | 154 | 168 |
Volume and support incentives | 129 | 102 |
Property, equipment and technology, net | 1,183 | 1,204 |
Other assets | 186 | 125 |
Intangible assets | 10,883 | 10,883 |
Goodwill | 10,208 | 10,208 |
Total assets | 32,068 | 32,281 |
Liabilities | ||
Accounts payable | 78 | 156 |
Settlement payable | 618 | 634 |
Customer collateral (Note 5) | 842 | 812 |
Accrued compensation and benefits | 276 | 396 |
Volume and support incentives | 343 | 284 |
Accrued liabilities | 698 | 754 |
Current portion of long-term debt | 12 | 12 |
Current portion of accrued litigation (Note 10) | 670 | 1,394 |
Total current liabilities | 3,537 | 4,442 |
Long-term debt | 38 | 44 |
Accrued litigation (Note 10) | 196 | 323 |
Deferred tax liabilities | 3,808 | 3,807 |
Other liabilities | 502 | 472 |
Total liabilities | 8,081 | 9,088 |
Equity | ||
Additional paid-in capital | 20,883 | 21,160 |
Accumulated income | 3,199 | 2,219 |
Accumulated other comprehensive loss, net | ||
Investment securities, available-for-sale | 9 | 10 |
Defined benefit pension and other postretirement plans | (71) | (136) |
Derivative instruments | (39) | (58) |
Foreign currency translation gain (loss) | 2 | (4) |
Total accumulated other comprehensive loss, net | (99) | (188) |
Total Visa Inc. stockholders' equity | 23,983 | 23,189 |
Non-controlling interest | 4 | 4 |
Total equity | 23,987 | 23,193 |
Total liabilities and equity | 32,068 | 32,281 |
Class A | ||
Accumulated other comprehensive loss, net | ||
Common stock | ||
Class B | ||
Accumulated other comprehensive loss, net | ||
Common stock | ||
Class C | ||
Accumulated other comprehensive loss, net | ||
Common stock | ||
Class C treasury stock | (2) | |
Preferred stock | ||
Accumulated other comprehensive loss, net | ||
Preferred stock, $0.0001 par value, 25 shares authorized and none issued |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | ||
Share data in Millions | Mar. 31, 2010
Class A | Sep. 30, 2009
Class A |
Class A | ||
Common stock, par value | 0.0001 | 0.0001 |
Common stock, shares authorized | 2,001,622 | 2,001,622 |
Common stock, shares issued | 494 | 470 |
Common stock, shares outstanding | 494 | 470 |
Class B | ||
Common stock, par value | 0.0001 | 0.0001 |
Common stock, shares authorized | 622 | 622 |
Common stock, shares issued | 245 | 245 |
Common stock, shares outstanding | 245 | 245 |
Class C | ||
Common stock, par value | 0.0001 | 0.0001 |
Common stock, shares authorized | 1,097 | 1,097 |
Common stock, shares issued | 100 | 131 |
Common stock, shares outstanding | 100 | 131 |
Preferred stock | ||
Preferred stock, par value | 0.0001 | 0.0001 |
Preferred stock, shares authorized | 25 | 25 |
Preferred stock, shares issued | 0 | 0 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | ||||
In Millions, except Per Share data | 3 Months Ended
Mar. 31, 2010 | 3 Months Ended
Mar. 31, 2009 | 6 Months Ended
Mar. 31, 2010 | 6 Months Ended
Mar. 31, 2009 |
Operating Revenues | ||||
Service revenues | $885 | $804 | $1,712 | $1,597 |
Data processing revenues | 728 | 544 | 1,493 | 1,098 |
International transaction revenues | 545 | 446 | 1,097 | 951 |
Other revenues | 173 | 148 | 363 | 304 |
Volume and support incentives | (372) | (295) | (746) | (564) |
Total operating revenues | 1,959 | 1,647 | 3,919 | 3,386 |
Operating Expenses | ||||
Personnel | 310 | 292 | 584 | 591 |
Network, EDP and communications | 98 | 92 | 203 | 185 |
Advertising, marketing and promotion | 238 | 196 | 454 | 406 |
Professional and consulting fees | 50 | 64 | 101 | 120 |
Depreciation and amortization | 62 | 56 | 124 | 108 |
Administrative and other | 77 | 66 | 155 | 129 |
Litigation provision (Note 10) | 2 | (41) | ||
Total operating expenses | 837 | 766 | 1,580 | 1,539 |
Operating income | 1,122 | 881 | 2,339 | 1,847 |
Other Income (Expense) | ||||
Equity in earnings of unconsolidated affiliates | (2) | 1 | (2) | |
Interest expense | (28) | (30) | (44) | (60) |
Investment income, net | 23 | 34 | 28 | 53 |
Other | (2) | 1 | ||
Total other (expense) income | (9) | 6 | (18) | (7) |
Income before income taxes | 1,113 | 887 | 2,321 | 1,840 |
Income tax expense | 401 | 352 | 846 | 731 |
Net income including non-controlling interest | 712 | 535 | 1,475 | 1,109 |
Loss attributable to non-controlling interest | 1 | 1 | 1 | 1 |
Net income attributable to Visa Inc | $713 | $536 | $1,476 | $1,110 |
Class A | ||||
Other Income (Expense) | ||||
Basic earnings per share (Notes 6 and 7) | 0.97 | 0.71 | 1.99 | 1.45 |
Basic weighted average shares outstanding (Notes 6 and 7) | 472 | 447 | 470 | 447 |
Diluted earnings per share (Notes 6 and 7) | 0.96 | 0.71 | 1.99 | 1.45 |
Diluted weighted average shares outstanding (Notes 6 and 7) | 742 | 756 | 743 | 765 |
Class B | ||||
Other Income (Expense) | ||||
Basic earnings per share (Notes 6 and 7) | 0.56 | 0.45 | 1.16 | 0.96 |
Basic weighted average shares outstanding (Notes 6 and 7) | 245 | 246 | 245 | 246 |
Diluted earnings per share (Notes 6 and 7) | 0.56 | 0.45 | 1.16 | 0.96 |
Diluted weighted average shares outstanding (Notes 6 and 7) | 245 | 246 | 245 | 246 |
Class C | ||||
Other Income (Expense) | ||||
Basic earnings per share (Notes 6 and 7) | 0.97 | 0.71 | 1.99 | 1.45 |
Basic weighted average shares outstanding (Notes 6 and 7) | 122 | 152 | 125 | 152 |
Diluted earnings per share (Notes 6 and 7) | 0.96 | 0.71 | 1.99 | 1.45 |
Diluted weighted average shares outstanding (Notes 6 and 7) | 122 | 152 | 125 | 152 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) | ||||
In Millions | 3 Months Ended
Mar. 31, 2010 | 3 Months Ended
Mar. 31, 2009 | 6 Months Ended
Mar. 31, 2010 | 6 Months Ended
Mar. 31, 2009 |
Net income including non-controlling interest | $712 | $535 | $1,475 | $1,109 |
Investment securities, available-for-sale | ||||
Net unrealized (loss) gain | (5) | 1 | (4) | 8 |
Income tax effect | 2 | 2 | (3) | |
Reclassification adjustment for net loss realized in net income including non-controlling interest | 3 | 2 | ||
Income tax effect | (1) | (1) | ||
Defined benefit pension and other postretirement plans (Note 4) | 102 | 106 | 1 | |
Income tax effect | (40) | (41) | ||
Derivative instruments | ||||
Net unrealized (loss) gain | (5) | 6 | (8) | (9) |
Income tax effect | 2 | (2) | 3 | 4 |
Reclassification adjustment for net loss realized in net income including non-controlling interest | 21 | 6 | 36 | 6 |
Income tax effect | (7) | (3) | (12) | (3) |
Foreign currency translation gain (loss) | 4 | (2) | 6 | (22) |
Other comprehensive income (loss), net of tax | 76 | 6 | 89 | (18) |
Comprehensive income including non-controlling interest | 788 | 541 | 1,564 | 1,091 |
Comprehensive loss attributable to non-controlling interest | 1 | 1 | 1 | 1 |
Comprehensive income attributable to Visa Inc | $789 | $542 | $1,565 | $1,092 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (USD $) | |||||||||
In Millions | Class A
| Class B
| Class C
| Additional Paid In Capital
| Treasury Stock
| Accumulated Income
| Accumulated Other Comprehensive Loss
| Non-controlling Interests
| Total
|
Beginning Balance at Sep. 30, 2009 | $21,160 | ($2) | $2,219 | ($188) | $4 | $23,193 | |||
Beginning Balance (in shares) at Sep. 30, 2009 | 470 | 245 | 131 | ||||||
Net income attributable to Visa Inc | 1,476 | 1,476 | |||||||
Loss attributable to non-controlling interest | (1) | (1) | |||||||
Other comprehensive income, net of tax | 89 | 89 | |||||||
Issuance of restricted share awards (Note 8) (in shares) | 1 | ||||||||
Conversion of class C common stock upon sale into public market (Note 6) (in shares) | 31 | (31) | |||||||
Share-based compensation (Note 8) | 61 | 61 | |||||||
Tax benefit for share-based compensation | 8 | 8 | |||||||
Cash proceeds from exercise of stock options | 21 | 21 | |||||||
Restricted stock instruments settled in cash for taxes | (12) | (12) | |||||||
Cash dividends declared and paid, at a quarterly amount of $0.125 per as-converted share (Note 6) | (185) | (185) | |||||||
Retirement of treasury stock | (2) | 2 | |||||||
Repurchase of class A common stock (Note 6) (in shares) | (8) | ||||||||
Repurchase of class A common stock (Note 6) | (353) | (311) | (664) | ||||||
Special IPO dividends received from cost-method investee | 1 | 1 | |||||||
Investment in partially owned consolidated subsidiary | (1) | 1 | |||||||
Ending Balance (in shares) at Mar. 31, 2010 | 494 | 245 | 100 | ||||||
Ending Balance at Mar. 31, 2010 | $20,883 | $3,199 | ($99) | $4 | $23,987 |
1_CONSOLIDATED STATEMENTS OF CH
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Parenthetical) (USD $) | |
6 Months Ended
Mar. 31, 2010 | |
Cash dividends declared and paid quarterly, per as-converted share | 0.125 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | ||
In Millions | 6 Months Ended
Mar. 31, 2010 | 6 Months Ended
Mar. 31, 2009 |
Operating Activities | ||
Net income including non-controlling interest | $1,475 | $1,109 |
Adjustments to reconcile net income including non-controlling interest to net cash provided by operating activities: | ||
Depreciation and amortization of property, equipment and technology | 124 | 108 |
Share-based compensation | 61 | 64 |
Tax benefit for share-based compensation | (8) | (6) |
Restricted stock instruments settled in cash for taxes | (12) | (22) |
Interest earned on litigation escrow, net of tax | (12) | |
Net recognized (gain) loss on investment securities, including other-than-temporary impairment | (14) | 8 |
Asset impairment | 1 | 3 |
Gain on disposal of property, equipment, and technology | (1) | |
Amortization of volume and support incentives | 746 | 564 |
Accrued litigation and accretion | (25) | 48 |
Equity in earnings of unconsolidated affiliates | 2 | |
Deferred income taxes | 185 | 338 |
Change in operating assets and liabilities: | ||
Trading securities | (4) | 17 |
Accounts receivable | (58) | (30) |
Settlement receivable | (61) | 252 |
Volume and support incentives | (712) | (464) |
Other assets | (141) | (9) |
Accounts payable | (78) | (87) |
Settlement payable | (16) | (335) |
Accrued compensation and benefits | (120) | (146) |
Accrued and other liabilities | 62 | 80 |
Accrued litigation | (826) | (1,062) |
Net cash provided by operating activities | 580 | 418 |
Investment securities, available-for-sale: | ||
Purchases | (1) | |
Proceeds from sales and maturities | 45 | 252 |
Distributions from money market investment (Note 3) | 85 | 840 |
Purchases of /contributions to other investments | (1) | (1) |
Proceeds from sale of other investments | 1 | |
Dividends/distributions from other investments | 1 | 1 |
Proceeds from disposal of property, equipment and technology | 1 | |
Purchases of property, equipment and technology | (79) | (136) |
Net cash provided by investing activities | 52 | 956 |
Financing Activities | ||
Tax benefit for share-based compensation | 8 | 6 |
Cash proceeds from exercise of stock options | 21 | 2 |
Funding of litigation escrow account-Retrospective Responsibility Plan | (1,100) | |
Payments from litigation escrow account-Retrospective Responsibility Plan | 140 | 939 |
Payment for redemption of stock | (2,646) | |
Dividends paid | (185) | (161) |
Principal payments on debt | (6) | (4) |
Principal payments on capital lease obligations | (9) | (4) |
Repurchase of class A common stock | (664) | |
Net cash used in financing activities | (695) | (2,968) |
Effect of exchange rate changes on cash and cash equivalents | 6 | (22) |
Decrease in cash and cash equivalents | (57) | (1,616) |
Cash and cash equivalents at beginning of year | 4,617 | 4,979 |
Cash and cash equivalents at end of period | 4,560 | 3,363 |
Supplemental Disclosure of Cash Flow Information | ||
Income taxes paid, net of refunds | 759 | 324 |
Amounts included in accounts payable and accrued and other liabilities related to purchase of property, equipment and technology | 10 | 41 |
Interest payments on debt | 2 | 2 |
Assets acquired in joint venture with note payable and equity interest issued | $22 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | |
6 Months Ended
Mar. 31, 2010 | |
Summary of Significant Accounting Policies | Note 1Summary of Significant Accounting Policies Organization. Visa Inc. (Visa or the Company) is a global payments technology company that connects consumers, businesses, banks and governments around the world, enabling them to use digital currency instead of cash and checks. Visa and its consolidated subsidiaries, including Visa U.S.A. Inc. (Visa U.S.A.), Visa International Service Association (Visa International), Visa Worldwide Pte. Limited (VWPL), Visa Canada Corporation (Visa Canada) and Inovant LLC (Inovant), operate the worlds largest retail electronic payments network. The Company provides financial institutions with payment processing platforms that encompass consumer credit, debit, prepaid and commercial payments, and facilitate global commerce through the transfer of value and information among financial institutions, merchants, consumers, businesses and government entities. The Company does not issue cards, set fees, or determine the interest rates consumers will be charged on Visa-branded cards, which are the independent responsibility of the Companys issuing customers. Consolidation and basis of presentation. The accompanying unaudited consolidated financial statements include the accounts of Visa Inc. and its consolidated entities and are presented in accordance with accounting principles generally accepted in the United States of America (GAAP). The 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 attributable to Visa, have been made to prior period information to conform to the current period presentation format, including reclassification of $20 million and $44 million of contractor expense, which was previously reported in professional and consulting fees, to personnel for the three and six months ended March31, 2009, respectively. The Company began to report non-controlling interest (previously referred to as minority interest) as a component of equity in the first quarter of fiscal 2010 and for all comparable periods presented as required under Accounting Standards Codification (ASC) 810. The reporting of non-controlling interest has an impact on financial statement presentation only. The accompanying unaudited consolidated financial statements are presented in accordance with the U.S. Securities and Exchange Commission (SEC) requirements for Quarterly Reports on Form10-Q and, consequently, do not include all of the annual disclosures required by GAAP. Reference should be made to the Visa Inc. Annual Report on Form 10-K for the year ended September30, 2009 for additional disclosures, including a summary of the Companys significant accounting policies. Recently issued accounting pronouncements. In September 2009, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2009-12, Fair Value Measurements and Disclosures Investments in Certain Entities That Calculate Net Asset Value per Share. ASU 2009-12 |
Retrospective Responsibility Pl
Retrospective Responsibility Plan | |
6 Months Ended
Mar. 31, 2010 | |
Retrospective Responsibility Plan | Note 2Retrospective Responsibility Plan The Company has established several related mechanisms designed to address settled liability and potential liability under certain litigation referred to as the covered litigation, including the retrospective responsibility plan, or the plan. In accordance with the plan, the Company established a litigation escrow account, or 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, the shares of class B common stock are subject to dilution through an adjustment to the conversion rate of the shares of class B common stock to shares of class A common stock. There was no funding to the escrow account during the first half of fiscal 2010, and the conversion rate applicable to the Companys class B common stock remains at 0.5824classA share at March31, 2010. The following table sets forth the changes in the escrow account during the six months ended March31, 2010. (inmillions) Balance at October1, 2009 $ 1,715 American Express settlement payments (140 ) Balance at March31, 2010 $ 1,575 Less: Current portion of escrow account 1,365 Long-term portion of escrow account $ 210 An accrual for the covered litigation is recorded when loss is deemed to be probable and reasonably estimable. In making this determination, the Company evaluates available information, including funding decisions made by the litigation committee. The accrual related to the covered litigation could be either higher or lower than the escrow account. |
Fair Value Measurements
Fair Value Measurements | |
6 Months Ended
Mar. 31, 2010 | |
Fair Value Measurements | Note 3Fair Value Measurements Assets and Liabilities Measured at Fair Value on a Recurring Basis FairValueMeasurements UsingInputs Considered as Level1 Level2 Level3 March31, 2010 September30, 2009 March31, 2010 September30, 2009 March31, 2010 September30, 2009 (in millions) Assets Cash equivalents and restricted cash Money market funds and time deposits $ 5,837 $ 5,977 Investment securities U.S. government-sponsored agency debt securities $ 134 $ 169 Canadian government debt securities 7 Equity securities 79 73 Corporate debt securities $ 5 $ 10 Mortgage backed securities 4 6 Other asset backed securities 4 5 Auction rate securities 13 13 Derivative financial instruments Foreign exchange derivative instruments 8 16 5,916 $ 6,050 142 $ 192 26 $ 34 Liabilities Other liabilities Visa Europe put option $ 346 $ 346 Foreign exchange derivative instruments $ 60 $ 96 Level 2 assets and liabilities measured at fair value on a recurring basis. Government-sponsored debt securities and foreign exchange derivative instruments are classified as Level 2 within the fair value hierarchy. The fair value of the government-sponsored debt securities is based on quoted prices in active markets for similar assets. 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. There was no change to the valuation techniques and related inputs used to measure fair value during the first half of fiscal 2010. Level 3 assets and liabilities measured at fair value on a recurring basis. Corporate debt securities, mortgage backed securities, other asset backed securities and 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 was no change to the valuation techniques and related inputs used to measure fair value during the first half of fiscal 2010. Visa Europe put option agreement. The Company has granted Visa Europe a perpetual 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 purchase price of the Visa Europe shares under the put option is based upon a formula that, subject to certain adjustments, applies Visa Inc.s forward price-to-earnings multiple, or the P/E ratio (as defined in the option agreement), at the time the option is exercised to Visa Europes projected sustainable adjusted net ope |
Pension and Other Postretiremen
Pension and Other Postretirement Benefits | |
6 Months Ended
Mar. 31, 2010 | |
Pension and Other Postretirement Benefits | Note 4Pension and Other Postretirement Benefits The Company sponsors various qualified and non-qualified defined benefit pension and other postretirement benefit plans which provide retirement and health benefits for substantially all employees residing in the United States. On January12, 2010, the Company approved an amendment to the U.S. pension plan to conform the plan to the Pension Protection Act of 2006. A remeasurement of the U.S. pension plans funded position was performed in the second quarter of 2010. The remeasurement reduced accumulated other comprehensive loss, net, by $70 million pre-tax and reduces net periodic pension cost by $4 million in the three months ended March31, 2010 and $7 million for the remainder of fiscal 2010. Additionally, the completion of the annual census data update resulted in a reduction to our overall pension obligation. The census update reduced accumulated other comprehensive loss, net by $26 million pre-tax and reduces net periodic pension cost by $4 million in the three months ended March31, 2010 and $4 million for the remainder of fiscal 2010. The components of net periodic benefit cost are as follows: Pension Benefits Other Postretirement Benefits 3monthsended March31, 6monthsended March31, 3monthsended March31, 6monthsended March31, 2010 2009 2010 2009 2010 2009 2010 2009 (in millions) Service cost $ 10 $ 12 $ 23 $ 25 $ $ $ $ Interest cost 10 11 20 23 1 1 1 Expected return on assets (13 ) (11 ) (25 ) (22 ) Amortization of: Priorservicecost(credit) (2 ) (2 ) (4 ) (4 ) (2 ) (1 ) (2 ) (2 ) Actuarial loss 3 4 9 7 Total net periodic pension cost $ 8 $ 14 $ 23 $ 29 $ (1 ) $ (1 ) $ (1 ) $ (1 ) |
Settlement Guarantee Management
Settlement Guarantee Management | |
6 Months Ended
Mar. 31, 2010 | |
Settlement Guarantee Management | Note 5Settlement Guarantee Management The indemnification for settlement losses that Visa 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. The term and amount of the indemnification are unlimited. The Company requires certain customers that do not meet its credit standards to post collateral. The Companys estimated maximum settlement exposure was approximately $46.1 billion at March31, 2010 compared to $41.8 billion at September30, 2009. Of these amounts, $4.0 billion at March31, 2010 and $3.7 billion at September30, 2009, were covered by collateral. The total available collateral balances presented below are greater than the settlement exposure covered by customer collateral held due to instances in which the available collateral exceeds the total settlement exposure for certain financial institutions at each date presented. Cash equivalents collateral is reflected in customer collateral as both an asset and an offsetting liability on the consolidated balance sheet, as it is held in escrow in the Companys name. All other collateral is excluded from the consolidated balance sheet. Pledged securities are held by third parties in trust for the Company and its customers. Guarantees are provided primarily by parent financial institutions to secure the obligations of their subsidiaries, and the Company routinely evaluates the financial viability of institutions providing the guarantees. The Company maintained collateral as follows: March31, 2010 September30, 2009 (in millions) Cash equivalents $ 842 $ 812 Pledged securities at market value 464 243 Letters of credit 823 703 Guarantees 2,675 2,644 Total $ 4,804 $ 4,402 The fair value of the settlement risk guarantee is estimated based on a proprietary probability-weighted model and was less than $1 million at March31, 2010 and September30, 2009. These amounts are reflected in accrued liabilities on the consolidated balance sheets. |
Stockholders' Equity
Stockholders' Equity | |
6 Months Ended
Mar. 31, 2010 | |
Stockholders' Equity | Note 6Stockholders Equity The number of shares of class A common stock outstanding on an as-converted basis at March31, 2010 is as follows: (in millions) SharesOutstanding atMarch31, 2010 ConversionRate IntoClassA Common Stock As-Converted ClassA common stock 494 494 Class B common stock 245 0.5824 143 Class C common stock 100 1.0000 100 Total class A common stock as-converted 737 Accelerated class C share release programs. On January21, 2010, the Company announced a second program to accelerate the share release of class C common stock. Under this program, the number of shares released from transfer restrictions for any classC shareholder was the greater of (a)50% (fifty percent) of the restricted shares of class C common stock held by that shareholder as of March1, 2010, and (b)5,000 (five thousand) shares of class C common stock (or in the case of shareholders with fewer than 5,000 shares of class C common stock, all of their shares). Shareholder application was not required. Under this program, 56million shares of class C common stock were released from transfer restrictions during the second quarter of fiscal 2010. In fiscal 2009, the Company released 40million shares of class C common stock as part of the 2009 accelerated release program. The release of the shares of class C common stock did not increase the number of outstanding shares on an as-converted basis, and there were no dilutive effects to the outstanding class A common stock share count on an as-converted basis from these transactions. Of the 96million shares of class C common stock released from transfer restrictions, 51million shares have been converted from class C common stock to class A common stock upon the sale or transfer by the class C shareholders into the public market through March 31, 2010. Approximately 28million and 31 million of those shares were converted during the three and six months ended March31, 2010, respectively. Additionally, 55million shares of class C common stock continue to be subject to the general transfer restrictions that expire on March25, 2011, under Visas certificate of incorporation. Share repurchase plan. In October2009, the Companys board of directors authorized a $1 billion share repurchase plan. The authorization will be in place through September30, 2010, and is subject to extension or expansion at the determination of the Companys board of directors. Under this plan, during the three and six months ended March31, 2010, the Company repurchased 2.8million and 8.3million shares of its classA common stock at an average price of $83.61 and $80.40 per share for a total cost of $231 million and $664 million, respectively. Repurchased shares have been retired and constitute authorized but unissued shares. At March31, 2010, the share repurchase plan has remaining authorized funds of $336 million. Dividends. On April 20, 2010, the Companys board of directors declared a dividend in the amount of $0.125 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 pai |
Earnings Per Share
Earnings Per Share | |
6 Months Ended
Mar. 31, 2010 | |
Earnings Per Share | Note 7Earnings Per Share During the first quarter of fiscal 2010, the Company adopted a new accounting standard which defines unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents as participating securities and requires these securities to be included in computing earnings per share under the two-class method. The Companys unvested restricted stock awards and unvested restricted stock units are considered participating securities and have been included in the computation of earnings per share under the two-class method. Comparable prior period earnings per share data have been recomputed to conform to current period presentation. As a result of this adoption, class B common stock basic and diluted earnings per share for the six months ended March31, 2009 declined from $0.97 (previously reported) to $0.96. There was no other change to previously reported basic or diluted earnings per share for the three and six months ended March31, 2009 as a result of this adoption. The following table presents basic and diluted earnings per share for the three months ended March31, 2010. Basic Earnings Per Share Diluted Earnings Per Share (in millions, except per share data) Income Allocation ($) (A) Weighted Average Shares Outstanding(B) Earningsper Share($)= (A)/(B) (1) Income Allocation ($) (A) Weighted Average Shares Outstanding(B) Earningsper Share ($)= (A)/(B) (1) Class A(2) 456 472 0.97 713 742 0.96 Class B 138 (3) 245 0.56 138 (3) 245 0.56 Class C 117 122 0.97 117 122 0.96 Participating Securities 2 Notpresented Notpresented 2 Notpresented Notpresented Net income attributable to Visa Inc. $ 713 The following table presents basic and diluted earnings per share for the six months ended March31, 2010. Basic Earnings Per Share Diluted Earnings Per Share (in millions, except per share data) Income Allocation ($) (A) Weighted Average Shares Outstanding(B) Earningsper Share($)= (A)/(B) (1) Income Allocation ($) (A) Weighted Average Shares Outstanding(B) Earningsper Share ($)= (A)/(B) (1) Class A(2) 937 470 1.99 1,476 743 1.99 Class B 285 (3) 245 1.16 284 (3) 245 1.16 Class C 250 125 1.99 249 125 1.99 Participating Securities 4 Notpresented Notpresented 4 Notpresented Notpresented Net income attributable to Visa Inc. $ 1,476 The following table presents basic and diluted earnings per share for the three months ended March31, 2009. Basic Earnings Per Share Diluted Earnings Per Share (in millions, except per share data) Income Allocation ($) (A) Weighted Average Shares Outstanding(B) Earningsper Share ($) = (A)/(B) (1) Inco |
Share-based Compensation
Share-based Compensation | |
6 Months Ended
Mar. 31, 2010 | |
Share-based Compensation | Note 8Share-based Compensation During the six months ended March31, 2010, the Company granted 965,199 non-qualified stock options, or options, 848,191 restricted stock awards, or RSAs, and 242,291 restricted stock units, or RSUs, to Company employees and non-employee directors under the 2007 Equity Incentive Compensation Plan. The options had a weighted average exercise price per share of $79.60 and a weighted average grant-date fair value per share of $29.49. The RSAs and RSUs had weighted average grant-date fair values per share of $79.60. The Company accounted for these awards using the straight-line method of attribution for expensing equity awards with only service conditions. Compensation expense is recorded net of estimated forfeitures, which are adjusted as appropriate. The Company also granted performance-based shares during the first fiscal quarter of 2010. The ultimate number of performance shares to be earned will be between zero and 203,006, depending on the Companys achievement of specified cumulative net income performance targets, and the Companys stock price ranked against the total shareholder return of companies that are included in the Standard Poors 500 Index during the approximate two-year period beginning October28, 2009. These earned performance shares vest in two equal installments on November30, 2011 and 2012, subject to earlier vesting in full under certain conditions. The grant-date fair value of the performance-based shares, incorporating the market condition by using a Monte Carlo simulation model, was $88.06 per share. Compensation expense for the performance awards is initially estimated based on target performance and is adjusted as appropriate throughout the performance period. For awards with 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. |
Income Taxes
Income Taxes | |
6 Months Ended
Mar. 31, 2010 | |
Income Taxes | Note 9Income Taxes The effective income tax rates were 36% and 40% for the three and six months ended March31, 2010 and 2009, respectively. The rates for the three and six months ended March31, 2010 were lower than the rates for the comparable periods in the prior year primarily due to changes in the geographic mix of the Companys global income and the benefit of Singapore tax incentives. |
Legal Matters
Legal Matters | |
6 Months Ended
Mar. 31, 2010 | |
Legal Matters | Note 10Legal 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 consolidated results of operations, financial position 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. The Companys litigation provision was approximately $2 million and ($41 million) for the three and six months ended March31, 2010, respectively, and less than $1 million for the three and six months ended March31, 2009. The credit to the provision in the six months ended March31, 2010 was primarily the result of a $41 million pre-tax gain recognized related to the prepayment of the remaining obligations under the Retailers litigation (discussed in Other Litigation below). 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 following table summarizes the activity related to accrued litigation for both covered and other non-covered litigation for the six months ended March31: Fiscal 2010 Fiscal 2009 (in millions) Balance at October1 $ 1,717 $ 3,758 Provision for settled legal matters(1) (41 ) Settlement obligation refunded by Morgan Stanley(2) 65 Interest accretion on settled matters 16 49 Payments on settled matters(3) (826 ) (1,095 ) Balance at March31 $ 866 $ 2,777 (1) This amount includes the reduction to the provision for the $41 million pre-tax gain recognized related to the prepayment of the remaining obligations under the Retailers litigation. There was no other significant provision activity during the three and six months ended March31, 2010. (2) This balance represents the amount of a settlement refunded to the Company during fiscal 2009 by Morgan Stanley under a separate agreement. (3) This amount includes the Companys October 2009 prepayment of its remaining $800 million in payment obligations in the Retailers litigation at a discounted amount of $682 million. 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 C |
Subsequent Events
Subsequent Events | |
6 Months Ended
Mar. 31, 2010 | |
Subsequent Events | Note 11Subsequent Events On April 20, 2010, Visa entered into a definitive agreement to purchase CyberSource Corporation, a leading provider of electronic payment, risk management and payment security solutions to online merchants, at a price of $26.00 per share in cash, or a total of approximately $2.0 billion, to be paid with cash on hand. The merger is subject to the satisfaction or waiver of customary closing conditions, including CyberSource stockholder approval and the receipt of required regulatory approvals. On April29, 2010, a putative class action lawsuit was filed against CyberSource, certain of its directors, and Visa (erroneously named as Visa Company) in California Superior Court in connection with the proposed merger. The complaint asserts claims of breach of fiduciary duty against the CyberSource directors and aiding and abetting breaches of fiduciary duty against CyberSource and Visa. For more information, see Note 10Legal Matters. |