Mail Stop 4561
August 15, 2007
Joseph W. Saunders
Chief Executive Officer and Chairman of the Board of Directors
Visa Inc.
P.O. Box 8999
San Francisco, California 94128-8999
Re: Visa Inc.
Amendment No. 1 to Registration Statement on Form S-4
Filed August 2, 2007
File No. 333-143966
Dear Mr. Saunders:
We have reviewed your filing and have the following
comments.
Where indicated, we think you should revise your document in
response
to these comments. If you disagree, we will consider your
explanation as to why our comment is inapplicable or a revision is
unnecessary. Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
information so we may better understand your disclosure. After
reviewing this information, we may raise additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
General
1. We note your response to comment 3. Please file revised
consents
that eliminate any explicit disclaimer of a duty to file such
consent
in accordance with Section 7 of the Securities Act. In addition,
please confirm that you intend to file updated consents in the
final
pre-effective amendment for each consent for which reliance is
limited to amendment 2 of this registration statement.
2. It appears from disclosure on pages 14 and 152 that your
payment
system may be used for transactions in or involving Cuba, Iran,
and
Sudan. In addition, it appears from the "ATM locator" section of
the
VISA U.S.A. website that VISA offers ATM services in Cuba, Sudan,
and
Syria. Moreover, public media reports indicate that VISA offers
ATM
services in Iran. Cuba, Iran, Sudan, and Syria are identified by
the
State Department as state sponsors of terrorism, and are subject
to
U.S. economic sanctions and export controls. Your Form S-4 does
not
include any information regarding specific contacts with or
operations in those countries. Please describe to us the nature
and
extent of your past, current, and anticipated contacts with and
operations in those countries, if any, whether through
subsidiaries,
affiliates, or other direct or indirect arrangements. Your
response
should describe in reasonable detail the products and services you
have provided or anticipate providing, directly or indirectly,
into
the referenced countries, and any agreements, commercial
arrangements, or other contacts with the governments of those
countries or entities controlled by them.
Finally, please address the applicability to your Iran-related
activities, including any direct or indirect payments to the
Iranian
government, of Section 5(b) of the Iran Sanctions Act of 1996, as
modified by the Iran Freedom Support Act on September 30, 2006.
3. Please discuss the materiality of any operations or contacts
described in response to the foregoing comment, and whether they
would constitute a material investment risk for your security
holders. You should address materiality in quantitative terms,
including the approximate dollar amounts of any associated
revenues,
assets, and liabilities for the last three years concerning each
referenced country. Also, address materiality in terms of
qualitative factors that a reasonable investor would deem
important
in making an investment decision, including the potential impact
of
corporate activities upon a company`s reputation and share value.
We note, for example, that Arizona and Louisiana have adopted
legislation requiring their state retirement systems to prepare
reports regarding state pension fund assets invested in, and/or
permitting divestment of state pension fund assets from, companies
that do business with countries identified as state sponsors of
terrorism. The Missouri Investment Trust has established an
equity
fund for the investment of certain state-held monies that screens
out
stocks of companies that do business with U.S.-designated state
sponsors of terrorism. The Pennsylvania legislature has adopted a
resolution directing its Legislative Budget and Finance Committee
to
report annually to the General Assembly regarding state funds
invested in companies that have ties to terrorist-sponsoring
countries. Florida requires issuers to disclose in their
prospectuses any business contacts with Cuba or persons located in
Cuba. States including California, Connecticut, Maine, New
Jersey,
and Oregon have adopted, and other states are considering,
legislation prohibiting the investment of certain state assets in,
and/or requiring the divestment of certain state assets from,
companies that do business with Sudan. Harvard University,
Stanford
University, the University of California, and other academic
institutions have adopted policies prohibiting investment in,
and/or
requiring divestment from, companies that do business with Sudan.
Your materiality analysis should address the potential impact of
the
investor sentiment evidenced by such actions directed toward
companies that have operations associated with Cuba, Iran, Sudan,
and
Syria.
Your qualitative materiality analysis also should address whether,
and the extent to which, the governments of the referenced
countries,
or persons or entities controlled by those governments, receive
cash
or act as intermediaries in connection with the referenced
operations
and contacts.
Unaudited Pro Forma Condensed Combined Financial Information
6. Combination and Pro Forma Adjustments
Combination Adjustments - A, page 126
4. We have read and considered your response to our prior comment
28.
Revise your disclosure to provide more detail of the
reclassification
adjustments you are making. Specifically, separately disclose
each
material reclassification made and provide a description of the
adjustments.
Combination Adjustments - B, page 126
5. We have read and considered your response to our prior comment
29.
Revise your disclosure to provide more detail of elimination
adjustment you are making. Specifically, separately disclose each
material elimination entry and provide a description of the
adjustments.
Combination Adjustments - D, page 127
6. We have reviewed your response to comment number 30. Please
tell
us how management arrived at two different conclusions regarding
the
classification of the securities associated with essentially the
same
plans and whether it is appropriate to do so under the provisions
of
SFAS 115. Additionally, within your response please explain the
rationale under SFAS 115 for originally classifying the amounts as
trading securities and how the Company determined, in accordance
with
SFAS 115 and the related accounting literature, that it would be
appropriate to reclassify these amounts to available for sale
securities.
Management`s Discussion and Analysis of Financial Condition and
Results of Operations of Visa International
Results of Operations
Components of Operating Revenue, page 178
7. We have read your responses to our prior comments 38, 57 and
58.
Please provide to us, and disclose, a detailed rollforward of your
accrual related to volume and support agreements for both Visa
International and Visa U.S.A for all periods presented in your
financial statements. In your rollforward please include
following
information:
* the beginning balance
* the current provision related to current period transaction
volume
* the current provision related to transaction volume in prior
periods
* actual incentives provided to members during the current year on
current period transaction volume
* actual incentives provided to members during the current year on
prior period transaction volume and
* the ending balance
Additionally, revise your disclosure here and in the MD&A for Visa
U.S.A to include this information as well as the rationale for any
significant changes in current year estimates.
Fiscal Year Ended September 30, 2005 compared to Fiscal Year Ended
September 30, 2004
Settlement risk guarantee, page 195
8. We have considered your response to our prior comments 35 and
39.
Revise your disclosure to provide more robust discussion of your
settlement risk guarantee similar to that provided in your
response.
Please insure that you include a discussion of the formula used to
calculate the fair value of the settlement risk guarantee,
quantification of the significant assumptions used to determine
each
of the components of the formula, and the reasons for any changes
from year to year of the underlying assumptions. In addition,
include additional disclosure of the specific reasons for the $45
million decrease in your settlement risk guarantee during 2005.
In
your discussion include the events that lead to the initial
increase
in the settlement risk guarantee and the Company`s rationale for
decreasing the loss history used in calculating the settlement
risk
guarantee from 15 years to 10 years.
9. Explain to us how you determined that the reduction in your
settlement risk guarantee should be accounted for as a change in
estimate rather than a correction of an error in accordance with
SFAS
154. In your response tell us what new information was made
available to the Company in 2005 that was not available in prior
years. Additionally, given the loss history subsequent to the
BCCI
loss, explain to us why this outlier was not excluded from the
Company`s loss history prior to 2005 for purposes of calculating
the
settlement risk guarantee.
Contractual Obligations, page 203
10. We have considered your response to our prior comment 37. We
continue to believe that you should include volume and support
incentives in your table of contractual obligations. Revise your
table to include volume and support incentives consistent with
your
disclosure for Visa U.S.A.
Management`s Discussion and Analysis of Financial Condition and
Results of Operations of Visa U.S.A
Overview, page 215
11. We have read the revisions to your disclosure in response to
our
prior comment 41. We do not see how your revised disclosure
adequately addresses the disclosure requirements of question 8 of
the
Frequently Asked Questions Regarding the Use of Non-GAAP Financial
Measures. Specifically, it is unclear how each of the items
adjusted
for in your non-GAAP measures lead to an unclear representation of
the Company`s performance. Further we do not see how the Company
has
addressed all of the limitations of each of these measures
(including
the fact that the non-GAAP measures do not provide a complete
picture
of the Company`s performance as the items eliminated are recurring
in
nature and may have a significant impact on the Company`s
performance
now or in the future), nor does your disclosure address how
management compensates for these limitations. Please revise your
disclosures appropriately or remove the presentation of these non-
GAAP measures.
Grants of Plan-Based Awards, page 271
12. We note your response to comment 46. Please disclose the
specific 2006 performance metric targets, the actual performance
results and how those results impacted the amounts actually paid
to
each named executive officer pursuant to the plans.
13. We note your response to comment 46. Please confirm to us
that
the targets that make up the performance metrics for the 2007
awards
have not been publicly disclosed. If these targets have not been
disclosed, please disclose, if accurate, that the target levels
for
the 2007 awards have been established in a manner similar to the
2006
targets disclosed in response to our prior comment.
Financial Statements
Visa International and Subsidiaries
Consolidated Statements of Operations, page F-10
14. We have considered your response to our prior comment 52.
Tell
us the amount that was recorded as a reduction to service fee
revenue
as a result of volume and support agreements for all periods
presented. Tell us how you applied the guidance in Rule 5-03 of
Regulation S-X in determining that it was not necessary to
separately
disclose the impact of volume and support agreements on the face
of
your income statement. To the extent that you determine that such
disclosure on the face of your income statement is unnecessary,
revise your revenue recognition policy related to service fees to
indicate that services fees are recorded net of volume and support
agreements and the amounts recorded as a reduction of revenue for
each period presented.
15. Please reconcile the implicit representations made by
management
within their response to comment 52 in regards to the different
accounting policies for substantially similar contracts of Visa
International and Visa USA. Specifically, please tell us why
management believes that it is appropriate to "arbitrarily"
allocated
the incentives entirely to service fees of VISA International yet
is
unable to determine an allocation of these incentive fees for Visa
USA. Additionally, please tell us how management came to the two
different conclusions regarding the most appropriate presentation
of
the discounts within your Consolidated Statements of Operations
given
substantially similar contracts.
Note 2 - Significant Accounting Policies
Revenue recognition, page F-16
16. We have reviewed your response to our prior comment 53.
Explain
to us how you have applied the guidance in SAB 104 in determining
that current period revenue is recognized on the basis of prior
period payment volume. In addition provide us with an analysis
that
details the service fees recorded during the final quarter of each
period presented in your financial statements, the service fees
recorded in the subsequent quarter and the differences between the
two amounts.
Tax Opinion
17. Please direct counsel to revise its opinion to clarify that
reliance on the officer`s certificate is limited to factual
matters.
18. The limitation on reliance suggested by the term "solely" in
the
last paragraph of the opinion is not appropriate because members
receiving shares in the restructuring under this registration
statement must be able to rely on the opinions.
* * * *
As appropriate, please amend your registration statement in
response to these comments. You may wish to provide us with
marked
copies of the amendment to expedite our review. Please furnish a
cover letter with your amendment that keys your responses to our
comments and provides any requested information. Detailed cover
letters greatly facilitate our review. Please understand that we
may
have additional comments after reviewing your amendment and
responses
to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing to be certain that the
filing includes all information required under the Securities Act
of
1933 and that they have provided all information investors require
for an informed investment decision. Since the company and its
management are in possession of all facts relating to a company`s
disclosure, they are responsible for the accuracy and adequacy of
the
disclosures they have made.
We will consider a written request for acceleration of the
effective date of the registration statement as confirmation of
the
fact that those requesting acceleration are aware of their
respective
responsibilities under the Securities Act of 1933 and the
Securities
Exchange Act of 1934 as they relate to the proposed public
offering
of the securities specified in the above registration statement.
We
will act on the request and, pursuant to delegated authority,
grant
acceleration of the effective date.
We direct your attention to Rules 460 and 461 regarding
requesting acceleration of a registration statement. Please allow
adequate time after the filing of any amendment for further review
before submitting a request for acceleration. Please provide this
request at least two business days in advance of the requested
effective date.
You may contact Bob Telewicz at 202-551-3438 or Kevin Woody,
Accounting Branch Chief, at 202-551-3629 if you have questions
regarding comments on the financial statements and related
matters.
Please contact Michael McTiernan at 202-551-3852 or me at 202-551-
3495 with any other questions.
Sincerely,
Elaine Wolff
Branch Chief
cc: Kevin Keogh, Esq. (via facsimile)
Joseph W. Saunders
Visa Inc.
August 15, 2007
Page 1