![]() Visa Inc. Financial Discussion Byron Pollitt Chief Financial Officer October 26, 2010 Exhibit 99.2 |
![]() Information Classification as Needed 2 Agenda Incorporating CyberSource Results Reporting of Non-Visa Transaction Pass-Through Revenue and Expense Adjusting for Visa Extras Revenue and Expense Revaluing the Visa Europe Put Option 2 |
![]() Information Classification as Needed Revenue – Pre-acquisition, CyberSource revenue included interchange passed through to issuers – Post-acquisition, will report net of interchange, primarily as data processing revenue – Will introduce “billable transactions” as an operating metric Intangible and Technology Assets – Transaction created $727 million in amortizable assets, of which $605 million were intangibles – For first 5 years, annual amortization rate is $76 million – Please note that $68 million of annual amortization related to the 2007 reorganization fully amortized in Q4 FY 2010 Year-Over-Year Comparables – FY 2010 included 2 months of results representing $41 million in net revenue – EPS dilution in FY 2011 expected to be slightly dilutive, about 4¢, compared to 2¢ in Q4 and 3¢ in total for FY 2010 Incorporating CyberSource Results 3 |
![]() Information Classification as Needed Historically, Visa has processed a modest number of non-Visa transactions whereby fees, primarily interchange, pass through Visa in the settlement process with minimal margin applied – Revenue booked to Data Processing – Expense booked to Network Given a substantial increase in pass-through volume expected in FY 2011, management revisited its income statement presentation of these transactions While the “gross” accounting treatment applied in FY 2010 is acceptable under GAAP, management believes a “net” presentation, which only reports Visa’s earned margin as revenue, is more conservative and better reflects the underlying economics Adopting the “net” presentation means that $140 million of pass-through revenue and expense booked in FY 2010 will not repeat in FY 2011 The earnings impact is neutral Beginning next quarter, we will footnote the corresponding pass-through revenue and expense for FY 2010 Reporting of Non-Visa Transaction Pass-Through Revenue and Expense 4 |
![]() Information Classification as Needed Visa Extras is a turnkey, full feature cardholder rewards program developed to support our issuers When a reward is redeemed, the service provider invoices Visa for the cost, and Visa passes through the expense to the client, no margin is applied – Revenue booked to Other – Expense booked to Marketing Two call outs for FY 2011 – Visa now moving to direct bill, where service provider bills issuer directly, not through Visa – Large issuer converted away from platform in June 2010 This means $89 million in revenue and expense booked in FY 2010 will not repeat in FY 2011 Since this revenue has no margin, earnings impact is neutral Beginning next quarter, we will footnote the corresponding Extras revenue and expense for FY 2010 Adjusting for Visa Extras Revenue and Expense 5 |
![]() Information Classification as Needed As part of the 2007 reorganization, Visa Europe received a Put option which gives it the perpetual right to sell its business to Visa Inc. Visa Inc. recorded a liability of $346 million related to the Put option to reflect that under certain circumstances, the Put could require Visa Inc. to purchase Visa Europe for an amount above fair value Under GAAP, Visa is required to revalue the Put option each quarter, with changes in value recorded as a non-operating gain or loss in the income statement. Through Q3, no such adjustments in value have been required In Q4, management’s evaluation indicated that the Put option decreased in value by $79 million, primarily due to the decline in Visa’s forward PE ratio, which, under the terms of the option, is applied to Visa Europe’s earnings to calculate the purchase price This change in the Put option value – Is recorded as a non-cash income statement event – Is not subject to tax – Does not reflect any change in Visa Europe’s intent to exercise Revaluing the Visa Europe Put Option 6 |