EX-99.1 2 dex991.htm PRESS RELEASE OF VISA INC., DATED OCTOBER 29, 2008 Press release of Visa Inc., dated October 29, 2008

Exhibit 99.1

LOGO

 

 

Visa Inc. Posts Strong Fiscal Fourth Quarter and Full-Year 2008 Earnings Results on Higher Global Volumes and Strength of U.S. Debit

 

 

 

 

Adjusted quarterly net income of $448 million or $0.58 per diluted Class A common share

 

 

Adjusted full-year 2008 net income of $1.7 billion or $2.25 per diluted Class A common share

 

 

Inclusive of FAS 5 litigation reserves of $1.1 billion covered under the Company’s Retrospective Responsibility Plan, GAAP quarterly net loss of $356 million or $(0.45) per diluted Class A common share

 

 

Inclusive of FAS 5 litigation reserves, full-year 2008 GAAP net income of $804 million or $0.96 per diluted Class A common share

 

 

Fiscal fourth quarter payments volume growth of 15% over the prior year to $699 billion

 

 

Full-year 2008 payments volume growth of 17% over the prior year to $2.7 trillion

SAN FRANCISCO, CA, October 29, 2008 – Visa Inc. (NYSE: V) today announced financial results for the Company’s fiscal fourth quarter and full-year 2008. For the fourth quarter ending September 30, 2008, on an adjusted basis (reflective of a normalized tax rate and excluding certain litigation reserves, restructuring charges and purchase amortization), net income for the quarter was $448 million, or $0.58 per diluted Class A common share. Adjusted diluted Class A common shares outstanding were 776 million. The Company’s adjusted net income and adjusted diluted net income per Class A common share are non-GAAP financial measures that are reconciled to their most directly comparable GAAP measures in the accompanying financial tables.

On a GAAP basis, the Company reported a net loss of $356 million, or $(0.45) per diluted Class A common share, inclusive of a FAS 5 litigation reserve of approximately $1.1 billion related to the previously announced settlement of the Discover litigation. Since this litigation is covered by the Company’s Retrospective Responsibility Plan, responsibility for the settlement is allocated to the Company’s U.S. financial institution holders via an escrow account and other mechanisms previously established under the Plan.


Net operating revenue in the fiscal fourth quarter of 2008 was $1.7 billion, driven by strong contributions from service fees, data processing fees, and international transaction fees. Payments volume and processed transactions remained strong across all regions worldwide.

“Visa capped an historic fiscal 2008 with a strong fourth quarter. Despite increasing economic turbulence worldwide, Visa posted strong revenue and earnings gains while diligently taking steps to capitalize on the continuing secular trend toward electronic payments,” said Joe Saunders. “Although no company is immune to the challenges of this economic environment, we believe Visa’s network business model, the continuing secular shift to electronic payments and diversity across both products and geographies offer a degree of resilience to our organization.”

“Visa’s evolution from our credit roots into a multi-product payments company continues to benefit our business. Debit – which now represents more than 53% of Visa’s payments transactions worldwide – is particularly important to our results in the current environment, as that product is rooted in ‘everyday spend’ behavior which has proven to be less susceptible to economic fluctuations and continues to grow.”

“We remain intensely focused on helping our financial institution and retail clients through this difficult period, providing them with products and services that build deeper cardholder relationships and boost their own bottom line,” added Saunders.

Fiscal Fourth Quarter 2008 Financial Highlights:

Visa Inc.’s operational performance highlights for the fiscal fourth quarter, as measured by June 30, 2008 statistical data, include:

 

 

Payments volume grew 15% over the prior year to $699 billion;

 

 

Total volume, inclusive of cash volume was $1.1 trillion, an increase of 19% over the prior year;

 

 

Total cards carrying the Visa brands rose over 12% worldwide over the prior year to 1.6 billion; and

 

 

Total payment transactions increased by 14% over the prior year to 11.5 billion.

 

2


Total processed transactions, which represent fiscal fourth quarter transactions processed by VisaNet, were 9.6 billion, an 11% increase over the prior year.

For the fiscal fourth quarter 2008, service fees were $788 million, up 8% over the prior year on a pro forma basis, and are recognized based on payment volume in the prior quarter. All other fee categories are recognized based on current quarter activity and are compared on a pro forma basis. Data processing fees rose 18% over the prior year on a pro forma basis to $548 million. International transaction fees, which are driven by cross-border payments volume, grew 45% over the prior year on a pro forma basis to $512 million, as we continued to benefit from higher multi-currency payments volumes across all regions during the fiscal fourth quarter. Other revenue, which includes the Visa Europe licensing fee, was $160 million, up 20% over the prior year on a pro forma basis. Volume and support incentives, which are a contra revenue item, were $299 million.

Adjusted operating expenses were $943 million for the fiscal fourth quarter, a 20% decrease from the prior year on a pro forma basis. Operating expenses on a GAAP basis were $2.2 billion for the fiscal fourth quarter, a 44% decrease from the prior year on a pro forma basis.

Cash, cash equivalents, restricted cash, and available-for-sale investment securities were $7.5 billion at September 30, 2008. This amount does not include short-term investments of approximately $953 million which are classified as short-term other assets.

Fiscal Year 2008 Results:

On an adjusted basis (reflective of a normalized tax rate and excluding litigation reserves, restructuring charges and purchase amortization), net income for the full-year ended September 30, 2008, was $1.7 billion, or $2.25 per diluted Class A common share. Adjusted diluted Class A common shares outstanding were 776 million.

Reported GAAP net income of $804 million, or $0.96 per diluted Class A common share, inclusive of a FAS 5 litigation reserve of $1.4 billion, which is covered under the Company’s Retrospective Responsibility Plan.

Net operating revenue for the full-year was $6.3 billion, an increase of 21% over the prior year on a pro forma basis. Currency fluctuations contributed 2% of the increase in net operating revenues for the full-year.

 

3


Adjusted operating expenses were $3.4 billion for the full-year, a 4% decrease from the prior year on a pro forma basis. Operating expenses on a GAAP basis were $5.0 billion for the full-year, a 20% decrease from the prior year on a pro forma basis.

Visa’s GAAP effective tax rate was 40% for the twelve months ended September 30, 2008.

Management believes the presentation of adjusted operating income, adjusted operating expenses and adjusted net income provides a clearer understanding of the one-time items related to the Company’s reorganization and initial public offering. These measures also adjust for expenses related to covered litigation that will be funded by the litigation escrow account through the Retrospective Responsibility Plan and a $19 million and $51 million after-tax charge taken in the fourth quarter and full-year 2008 related to non-recurring legacy litigation items that were not funded by the litigation escrow account. These items have a significant impact on our financial results but are either non-recurring or have no operating cash impact. Recognizing that we have a very complex equity structure incorporating multiple classes and series of common stock, the Company has also presented adjusted diluted Class A earnings per share calculated based on adjusted net income and the adjusted diluted weighted average number of shares outstanding in the periods presented.

Subsequent Events:

On October 10, 2008, as planned, the Company completed the redemption of 79,748,857 shares of its Class C (Series II) Common Stock and 35,263,585 shares of its Class C (Series III) Common Stock held by Visa Europe Limited. The net cash amount that the Company paid to Visa Europe Limited in connection with the redemption of all its outstanding shares of Class C (Series II) Common Stock and 35,263,585 shares of its Class C (Series III) Common Stock was $2.65 billion. As planned, the Company used a portion of the net proceeds from its March 2008 initial public offering to fund these redemptions. In addition, immediately after the completion of the partial redemption of the Class C (Series III) Common Stock, each outstanding share of Class C (Series III) Common Stock and Class C (Series IV) Common Stock automatically and without further action converted into one share of Class C (Series I) Common Stock.

 

4


Financial Outlook:

Visa Inc. clarifies its financial outlook for the following metrics through 2010 with the caveat that revenue growth may be somewhat challenged in 2010 given the current economic environment in the U.S. and around the globe:

 

 

Annual net revenue growth at the lower end of the 11% to 15% range;

 

 

Annual adjusted operating margin in the mid-to-high 40% range;

 

 

Annual adjusted diluted Class A common earnings per share growth of 20% or greater;

 

 

Annual free cash flow in excess of $1 billion; and

 

 

Capital expenditures in the range of $300 to $350 million in 2009 and representing 3 to 4% of gross revenues in 2010.

This outlook reflects an assumed 40% percent GAAP tax rate for fiscal year 2009. The Company’s intent is to reduce this rate to a level around 35-36% over the next four years.

Fiscal Fourth Quarter and Full-Year 2008 Earnings Results Conference Call Details:

Visa’s executive management team will host a live audio webcast beginning at 5:00 p.m. EDT (2:00 p.m. PDT) today to discuss the financial results and business highlights.

All interested parties are invited to listen to the live webcast at http://investor.visa.com. A replay of the webcast will be available on the Visa Investor Relations website for 30 days.

Investor information, including supplemental financial information, is available on Visa Inc’s Investor Relations website at http://investor.visa.com

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About Visa Inc.

Visa Inc. operates the world’s largest retail electronic payments network providing processing services and payment product platforms. This includes consumer credit, debit, prepaid and commercial payments, which are offered under the Visa, Visa Electron, Interlink and PLUS brands. Visa enjoys unsurpassed acceptance around the world, and Visa/PLUS is one of the world’s largest global ATM networks, offering cash access in local currency in more than 170 countries. For more information, visit www.corporate.visa.com.

 

5


Forward Looking Statements

Certain statements contained in this press release are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are subject to the “safe harbor” created by those sections. These statements can be identified by the terms “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “will” and similar expressions which are intended to identify forward-looking statements. In addition, any underlying assumptions are forward-looking statements. Such forward-looking statements include but are not limited to statements regarding certain of Visa’s goals and expectations with respect to adjusted earnings per share, revenue, adjusted operating margin, and free cash flow, and the growth rate in those items, as well as other measures of economic performance.

By their nature, forward-looking statements: (i) speak only as of the date they are made, (ii) are not guarantees of future performance or results and (iii) are subject to risks, uncertainties and assumptions that are difficult to predict or quantify. Therefore, actual results could differ materially and adversely from those forward-looking statements as a result of a variety of factors, including all the risks discussed under the heading “Risk Factors” in our Prospectus dated March 18, 2008, filed with the U.S. Securities and Exchange Commission pursuant to Rule 424(b)(4) on March 19, 2008. You are cautioned not to place undue reliance on such statements, which speak only as of the date of this press release. Unless required to do so under U.S. federal securities laws or other applicable laws, we do not intend to update or revise any forward-looking statements.

Contacts:

Investor Relations: Jack Carsky or Victoria Hyde-Dunn, 415-932-2213, ir@visa.com

Media Relations: Paul Cohen or Sandra Chu, 415-932-2564, globalmedia@visa.com

 

6


Visa Inc.

Selected Consolidated Statements of Operations

(unaudited)

 

     For the three months
ended September 30,
    For the twelve months
ended September 30,
 
     2008     2007
Pro forma
    2008     2007
Pro forma
 
     (in millions except per share data)  

Operating Revenues

        

Service fees

   $ 788     $ 730     $ 3,061     $ 2,582  

Data processing fees

     548       463       2,073       1,659  

International transaction fees

     512       354       1,721       1,193  

Other revenues

     160       133       569       473  

Volume and support incentives

     (299 )     (216 )     (1,161 )     (714 )
                                

Total operating revenues

     1,709       1,464       6,263       5,193  
                                

Operating Expenses

        

Personnel

     317       324       1,199       1,159  

Network, EDP and communications

     94       84       339       308  

Advertising, marketing and promotion

     320       444       1,016       1,075  

Professional and consulting fees

     136       156       438       552  

Depreciation and amortization

     59       64       237       228  

Administrative and other

     98       101       332       334  

Litigation provision

     1,128       2,638       1,470       2,653  
                                

Total operating expenses

     2,152       3,811       5,031       6,309  
                                

Operating (loss) income

     (443 )     (2,347 )     1,232       (1,116 )
                                

Other Income (Expense)

        

Equity in earnings of unconsolidated affiliates

     —         —         1       —    

Interest expense

     (27 )     (24 )     (143 )     (96 )

Investment income, net

     39       65       211       197  

Other

     —         —         35       8  
                                

Total other income

     12       41       104       109  
                                

(Loss) income before income taxes

     (431 )     (2,306 )     1,336       (1,007 )

Income tax (benefit) expense

     (75 )     (651 )     532       (146 )
                                

Net (loss) income

   $ (356 )   $ (1,655 )   $ 804     $ (861 )
                                

Basic net (loss) income per share(1)

        

Class A common stock

   $ (0.45 )     $ 0.96    
                    

Class B common stock

   $ (0.32 )     $ 0.85    
                    

Class C (series I) common stock

   $ (0.45 )     $ 0.96    
                    

Class C (series II) common stock

   $ 0.12       $ 0.79    
                    

Class C (series III and IV) common stock

   $ (0.45 )     $ 0.96    
                    

Basic weighted average shares outstanding, in thousands(1)

        

Class A common stock

     446,600         239,163    
                    

Class B common stock

     245,513         333,190    
                    

Class C (series I) common stock

     124,212         190,516    
                    

Class C (series II) common stock

     79,749         55,668    
                    

Class C (series III and IV) common stock

     27,499         43,878    
                    

Diluted net (loss) income per share(1)

        

Class A common stock

   $ (0.45 )     $ 0.96    
                    

Class B common stock

   $ (0.32 )     $ 0.85    
                    

Class C (series I) common stock

   $ (0.45 )     $ 0.96    
                    

Class C (series II) common stock

   $ 0.12       $ 0.79    
                    

Class C (series III and IV) common stock

   $ (0.45 )     $ 0.96    
                    

Diluted weighted average shares outstanding, in thousands(1)

        

Class A common stock

     773,679         769,195    
                    

Class B common stock

     245,513         333,190    
                    

Class C (series I) common stock

     124,212         190,518    
                    

Class C (series II) common stock

     79,749         55,668    
                    

Class C (series III and IV) common stock

     27,499         43,878    
                    

 

(1) There is no comparable earnings per share measure for 2007 as we were a non-stock company.

 

7


Visa Inc.

Selected Consolidated Balance Sheets

(unaudited)

 

     September 30,
2008
    October 1,
2007
 
     (in millions)  

Assets

    

Cash and cash equivalents

   $ 4,979     $ 1,278  

Restricted cash - litigation escrow

     1,298       —    

Investment securities, available-for-sale

     355       842  

Settlement receivable

     1,131       587  

Accounts receivable

     342       318  

Customer collateral

     679       389  

Current portion of volume and support incentives

     256       135  

Current portion of deferred tax assets

     944       771  

Prepaid and other current assets

     1,190       381  
                

Total current assets

     11,174       4,701  
                

Restricted cash - litigation escrow

     630       —    

Investment securities, available-for-sale

     244       743  

Volume and support incentives

     123       72  

Property, equipment and technology, net

     1,080       906  

Other assets

     634       625  

Intangible assets

     10,883       10,883  

Goodwill

     10,213       9,139  
                

Total assets

   $ 34,981     $ 27,069  
                

Liabilities

    

Accounts payable

   $ 159     $ 164  

Settlement payable

     1,095       644  

Customer collateral

     679       389  

Accrued compensation and benefits

     420       479  

Volume and support incentives

     249       294  

Accrued liabilities

     306       496  

Current portion of long-term debt

     51       84  

Current portion of accrued litigation

     2,698       2,236  

Redeemable class C (series III) common stock, 35,263,585 shares outstanding at September 30, 2008

     1,508       —    
                

Total current liabilities

     7,165       4,786  
                

Long-term debt

     55       40  

Accrued litigation

     1,060       1,446  

Deferred tax liabilities

     3,811       3,758  

Other liabilities

     613       754  
                

Total liabilities

     12,704       10,784  
                

Temporary Equity

    

Class C (series II) common stock, $0.0001 par value, 218,582,801 shares authorized, 79,748,857 shares issued and outstanding at September 30, 2008, net of subscription receivable

     1,136       —    
                

Total temporary equity

     1,136       —    
                

Stockholders’ Equity

    

Preferred stock, $0.0001 par value, 25,000,000 shares authorized and none issued

     —         —    

Class A common stock, $0.0001 par value, 2,001,622,245,209 shares authorized, 447,746,261 issued and outstanding

     —         —    

Class B common stock, $0.0001 par value, 622,245,209 shares authorized, 245,513,385 issued and outstanding

     —         —    

Class C (series I) common stock, $0.0001 par value, 813,582,801 shares authorized, 124,622,548 issued and 124,097,105 outstanding

     —         —    

Class C (series III) common stock, $0.0001 par value, 64,000,000 shares authorized, 26,949,616 issued and outstanding

     —         —    

Class C (series IV) common stock, $0.0001 par value, 1,000,000 shares authorized, 549,587 issued and outstanding

     —         —    

Additional paid-in capital

     21,060       16,785  

Class C (series I) treasury stock, 525,443 shares

     (35 )     —    

Accumulated income (deficit)

     186       (500 )

Accumulated other comprehensive loss, net

     (70 )     —    
                

Total stockholders’ equity and accumulated net income (deficit)

     21,141       16,285  
                

Total liabilities, temporary equity, and stockholders’ equity

   $ 34,981     $ 27,069  
                

 

8


Visa Inc.

Consolidated Statements Of Cash Flows

(unaudited)

 

     For the Twelve Months Ended September 30,  
     2008     2007(1)  
     (in millions)  

Operating Activities

    

Net income (loss)

   $ 804     $ (1,076 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

    

Depreciation and amortization of property, equipment and technology

     237       126  

Amortization of intangibles, investments, debt issuance cost, and accretion of member deposits

     —         11  

Share-based compensation

     74       —    

Fair value adjustment for liability under the framework agreement

     (35 )     —    

Interest earned on litigation escrow, net of tax

     (13 )     —    

Net recognized loss (gain) on investment securities, including other-than-temporary impairment

     34       (4 )

Asset impairment

     34       —    

Loss on disposal of property, equipment and technology

     —         2  

Minority interest

     —         5  

Amortization of volume and support incentives

     1,161       489  

Accrued litigation and accretion

     1,601       2,913  

Equity in earnings of unconsolidated affiliates

     (1 )     (40 )

Deferred income taxes

     (27 )     (874 )

Change in operating assets and liabilities:

    

Accounts receivable

     (24 )     (29 )

Settlement receivable

     (543 )     32  

Volume and support incentives

     (1,378 )     (507 )

Other assets

     (158 )     (172 )

Accounts payable

     (10 )     (20 )

Settlement payable

     451       (39 )

Accrued compensation and benefits

     (115 )     65  

Accrued and other liabilities

     (33 )     (3 )

Accrued litigation

     (1,525 )     (231 )

Member deposits

     (3 )     (143 )
                

Net cash provided by operating activities

     531       505  
                

Investing Activities

    

Investment securities, available-for-sale:

    

Purchases

     (1,509 )     (3,070 )

Proceeds from sales and maturities

     2,458       2,769  

Reclassification of money market investment

     (983 )     —    

Cash acquired through reorganization

     1,002       —    

Contributions to joint ventures

     —         (3 )

Purchases of/contributions to other investments

     (25 )     —    

Distributions from other investments

     22       1  

Purchases of property, equipment and technology

     (415 )     (160 )

Proceeds from sale of property, equipment and technology

     4       —    
                

Net cash provided by (used in) investing activities

     554       (463 )
                

Financing Activities

    

Proceeds from short-term borrowing

     2       —    

Payments on short-term borrowing

     (2 )     —    

Proceeds from sale of common stock, net of issuance costs of $550

     19,100       —    

Funding of litigation escrow account - Retrospective Responsibility Plan

     (3,000 )     —    

Funding from litigation escrow account - Retrospective Responsibility Plan

     1,085       —    

Funding of tax escrow account for income tax withheld on stock proceeds

     (116 )     —    

Funding from tax escrow account

     116       —    

Payment for redemption of stock

     (13,446 )     —    

Dividends paid

     (93 )  

Principal payments on debt

     (18 )     (33 )

Principal payments on capital lease obligations

     (4 )     (4 )
                

Net cash provided by (used in) financing activities

     3,624       (37 )
                

Effect of exchange rate changes on cash and cash equivalents

     (5 )     —    
                

Increase in cash and cash equivalents

     4,704       5  

Cash and cash equivalents at beginning of year

     275       270  
                

Cash and cash equivalents at end of year

   $ 4,979     $ 275  
                

Supplemental Disclosure of Cash Flow Information

    

Income taxes paid, net of refunds

   $ 678     $ 413  

Amounts included in accounts payable and accrued and other liabilities related to purchases of property, equipment and technology

   $ 32     $ 6  

Interest payments on debt

   $ 8     $ 4  

Common stock issued in reorganization

   $ 17,935       —    

 

(1) Historical balances for periods prior to October 1, 2007 represent balances for Visa U.S.A. Inc., deemed the accounting acquirer in the business combination.

 

9


Pro Forma Fiscal 2007 Quarterly Results of Operations

US$ in millions

 

     Pro Forma Fiscal 2007 Quarter Ended(1)        
     December 31,
2006  
    March 31,
2007  
    June 30,
2007(2)
    September 30,
2007(2)
    Pro Forma
Fiscal 2007(1)(2)
 

Operating Revenues

          

Service fees

   $ 577     $ 614     $ 661     $ 730     $ 2,582  

Data processing fees

     377       370       449       463       1,659  

International transaction fees

     247       281       311       354       1,193  

Other revenues

     108       113       119       133       473  

Volume and support incentives

     (136 )     (187 )     (175 )     (216 )     (714 )
                                        

Total operating revenues

     1,173       1,191       1,365       1,464       5,193  
                                        

Operating Expenses

          

Personnel

     273       269       293       324       1,159  

Network, EDP and communications

     68       69       87       84       308  

Advertising, marketing and promotion

     205       182       244       444       1,075  

Professional and consulting fees

     101       136       159       156       552  

Depreciation and amortization

     55       54       55       64       228  

Administrative and other

     76       74       83       101       334  

Litigation provision

     2       13       —         2,638       2,653  
                                        

Total operating expenses

     780       797       921       3,811       6,309  
                                        

Operating income (loss)

     393       394       444       (2,347 )     (1,116 )
                                        

Other Income (Expense)

          

Interest expense

     (23 )     (24 )     (25 )     (24 )     (96 )

Investment income, net

     40       36       56       65       197  

Other

     —         —         8       —         8  
                                        

Total other income

     17       12       39       41       109  
                                        

Income (loss) before income taxes

     410       406       483       (2,306 )     (1,007 )

Income tax expense/(benefit)

     161       160       184       (651 )     (146 )
                                        

Net income (loss)

   $ 249     $ 246     $ 299     $ (1,655 )   $ (861 )
                                        

 

(1) Visa Inc. had no operations prior to the reorganization on October 1, 2007. In order to provide insight into our operating results, the pro forma results of operations for the prior periods have been prepared for comparative purposes assuming that the reorganization had occurred on October 1, 2006. These pro forma statements of operations have been prepared in accordance with Statement of Financial Accounting Standards No. 141, “Business Combinations.”
(2) Certain immaterial reclassifications were made to the quarter ended June 30 and September 30, 2007 pro forma financial statements to conform to the current presentation.

 

10


Reconciliation of Non-GAAP Adjusted Operating Income and Net Income

US$ in millions

 

     For the Three
Months Ended

September 30,
2008
    For the Twelve
Months Ended

September 30,
2008
    Pro Forma
For the Three
Months ended
September 30,
2007
    Pro Forma
For the Twelve
Months ended
September 30,
2007
 

Net (loss) income (as reported)

   $ (356 )   $ 804     $ (1,655 )   $ (861 )

Addback: Income tax (benefit) expense (as reported)

     (75 )     532       (651 )     (146 )
                                

Net (loss) income before taxes (as reported)

   $ (431 )   $ 1,336     $ (2,306 )   $ (1,007 )

Adjustments:

        

Litigation reserve(1)

     1,122       1,457       2,576       2,576  

Restructuring(2)

     70       140       46       145  

Asset step-up amortization(3)

     17       68       17       68  
                                

Adjustments to operating income

     1,209       1,665       2,639       2,789  

Interest accretion on American Express settlement(4)

     11       68       —         —    

Investment income on Litigation Escrow and EU proceeds(5)

     (30 )     (70 )     —         —    

Underwater contract (LIBOR adjustment)(6)

     —         (35 )     —         —    
                                

Adjustments to non-operating income

     (19 )     (37 )     —         —    

Total adjustments

     1,190       1,628       2,639       2,789  

Adjusted net income before tax

     759       2,964       333       1,782  

Adjusted income tax expense(7)

     (311 )     (1,215 )     (137 )     (731 )
                                

Adjusted net income

   $ 448     $ 1,749     $ 196     $ 1,051  
                                

Operating (loss) income (as reported)

   $ (443 )   $ 1,232     $ (2,347 )   $ (1,116 )

Addback: Adjustments to operating (loss) income

     1,209       1,665       2,639       2,789  
                                

Adjusted operating income

   $ 766     $ 2,897     $ 292     $ 1,673  
                                

Operating revenues (as reported)

   $ 1,709     $ 6,263     $ 1,464     $ 5,193  

Adjusted operating margin

     45 %     46 %     20 %     32 %

Total operating expenses (as reported)

   $ 2,152     $ 5,031     $ 3,811     $ 6,309  

Less: Adjustments to operating expenses

     (1,209 )     (1,665 )     (2,639 )     (2,789 )
                                

Adjusted operating expenses

   $ 943     $ 3,366     $ 1,172     $ 3,520  
                                

 

(1) Litigation expense primarily related to covered litigation. Settlements of, or judgments in, covered litigation will be paid from the litigation escrow account. There is $30 million and $80 million of non-recurring legacy litigation expense for the quarter and year ended September 30, 2008, respectively, that management believes is not indicative of Visa’s future anticipated expenses. This expense is not covered under the Retrospective Responsibility Plan and will not be paid from the litigation escrow account.
(2) Restructuring costs, primarily severance in fiscal 2008, associated with workforce consolidation and elimination of overlapping functions.
(3) Non-cash amortization and depreciation of the incremental basis in technology and building assets acquired in the reorganization.
(4) Non-cash interest expense recorded on future payments to be made under the settlement agreement with American Express. These payments will be paid from the litigation escrow account.
(5) Investment income earned during the period on all IPO proceeds held, including amounts held in the litigation escrow and amounts the Company intends to use in October 2008 to redeem all class C (series II) common stock and a portion of the class C (series III) common stock held by Visa Europe.
(6) Other expense (income) recorded in the periods presented as a result of changes in the Company's estimated liability under the Framework Agreement, which governs its relationship with Visa Europe. The changes were primarily due to movement in the LIBOR rates in the periods presented. This liability will not continue after the October 2008 redemptions described above.
(7) Reflects a normalized tax rate of 41%.

 

11


Reconciliation of Non-GAAP Adjusted Operating Expenses

US$ in millions

 

     For the Three Months
Ended September 30, 2008
   Pro Forma For the Three Months
Ended September 30, 2007
     Actual    Adjustments     As Adjusted    Actual    Adjustments     As Adjusted

Personnel

   $ 317    $ (64 )(2)   $ 253    $ 324    $ (13 )(2)   $ 311

Network, EDP and communications

     94      (1 )(2)     93      84      —         84

Advertising, marketing and promotions

     320      —         320      444      —         444

Professional and consulting fees

     136      (1 )(2)     135      156      (32 )(2)     124

Depreciation and amortization

     59      (17 )(3)     42      64      (17 )(3)     47

Administrative and other

     98      (4 )(2)     94      101      (1 )(2)     100

Litigation provision

     1,128      (1,122 )(1)     6      2,638      (2,576 )(1)     62
                                           

Total operating expenses

   $ 2,152    $ (1,209 )   $ 943    $ 3,811    $ (2,639 )   $ 1,172
                                           
     For the Twelve Months
Ended September 30, 2008
   Pro Forma For the Twelve Months
Ended September 30, 2007
     Actual    Adjustments     As Adjusted    Actual    Adjustments     As Adjusted

Personnel

   $ 1,199    $ (121 )(2)   $ 1,078    $ 1,159    $ (13 )(2)   $ 1,146

Network, EDP and communications

     339      (1 )(2)     338      308      —         308

Advertising, marketing and promotions

     1,016      —         1,016      1,075      —         1,075

Professional and consulting fees

     438      (14 )(2)     424      552      (127 )(2)     425

Depreciation and amortization

     237      (68 )(3)     169      228      (68 )(3)     160

Administrative and other

     332      (4 )(2)     328      334      (5 )(2)     329

Litigation provision

     1,470      (1,457 )(1)     13      2,653      (2,576 )(1)     77
                                           

Total operating expenses

   $ 5,031    $ (1,665 )   $ 3,366    $ 6,309    $ (2,789 )   $ 3,520
                                           

 

(1) Litigation reserve
(2) Restructuring
(3) Asset step-up amortization

 

12


Reconciliation of Non-GAAP Adjusted Non-operating Income (Expenses)

US$ in millions

 

     For the Three Months
Ended September 30, 2008
    Pro Forma For the Three Months
Ended September 30, 2007
 
     Actual     Adjustments     As Adjusted     Actual     Adjustments    As Adjusted  

Equity in earnings of unconsolidated affiliates

   $ —       —       $ —       $ —       —      $ —    

Interest expense

     (27 )   11 (1)     (16 )     (24 )   —        (24 )

Investment income, net

     39     (30 )(2)     9       65     —        65  

Other

     —       —         —         —       —        —    
                                           

Total other income (expenses)

   $ 12     (19 )   $ (7 )   $ 41     —      $ 41  
                                           
     For the Twelve Months
Ended September 30, 2008
    Pro Forma For the Twelve Months
Ended September 30, 2007
 
     Actual     Adjustments     As Adjusted     Actual     Adjustments    As Adjusted  

Equity in earnings of unconsolidated affiliates

   $ 1     —       $ 1     $ —       —      $ —    

Interest expense

     (143 )   68 (1)     (75 )     (96 )   —        (96 )

Investment income, net

     211     (70 )(2)     141       197     —        197  

Other

     35     (35 )(3)     —         8     —        8  
                                           

Total other income (expenses)

   $ 104     (37 )   $ 67     $ 109     —      $ 109  
                                           

 

(1) Interest accretion on American Express Settlement
(2) Investment income on Litigation Escrow and EU proceeds
(3) Underwater contract (LIBOR adjustment)

 

13


Reconciliation of Non-GAAP Weighted Average Class A Common Stock Outstanding Used in the Calculation of Adjusted Diluted Class A Earnings Per Share

US$ in millions

 

     For the Three
Months Ended
September 30, 2008
   For the Twelve
Months Ended
September 30, 2008
 

Weighted Average Shares Outstanding - GAAP

   774    769  

Class A Shares(1)

   —      206  

Class B Shares(2)

   —      (119 )

Class C Shares(3)

   —      (83 )

Class A Share Equivalents(4)

   2    3  
           

Share Adjustments

   2    7  

Adjusted Weighted Average Shares Outstanding - Non GAAP

   776    776  

 

(1) For the twelve months ended September 30, 2008, for GAAP purposes, the number of class A common shares outstanding is weighted to reflect the issuance of 446,600,000 shares at the IPO date of March 19, 2008. In the calculation of the adjusted weighted average shares outstanding, these shares are assumed to have been issued at October 1, 2007 for the twelve months ended September 30, 2008.
(2) For the twelve months ended September 30, 2008, for GAAP purposes, the number of class B common shares outstanding is weighted to reflect the redemption of 154,738,487 shares on March 28, 2008 and the reduction of the conversion ratio applicable to remaining shares outstanding to 0.71 to 1. In the calculation of the adjusted weighted average shares outstanding, these shares are weighted to assume that the redemption and reduction in conversion ratio had occurred at October 1, 2007 for the twelve months ended September 30, 2008.
(3) For the twelve months ended September 30, 2008, for GAAP purposes, the number of class C (series I, II, III & IV) common shares is weighted to reflect the redemption of 159,657,751 shares of class C (series I) common stock on March 28, 2008, and the reclassification of all shares of class C (series II) common stock to temporary equity and 35,263,585 shares of class C (series III) common stock to liabilities on the IPO date of March 19, 2008. Upon reclassification of the class C (series II) and class C (series III) common stock these shares are no longer convertible into shares of class A common stock. In the calculation of adjusted weighted average shares outstanding, these shares are weighted to assume that the redemption and reclassifications occurred at October 1, 2007 for the twelve months ended September 30, 2008.
(4) For GAAP purposes, the number of class A common shares outstanding is weighted to reflect the assumed issuance of class A common stock underlying stock options, restricted stock and restricted stock units to employees and directors at the IPO date of March 19, 2008 and subsequent periods, by applying the treasury stock method. For the twelve months ended September 30, 2008, in the calculation of adjusted weighted shares outstanding, these shares are assumed to have been issued at October 1, 2007 and were outstanding for the entire period. The share adjustments also reflect the estimated number of stock options, restricted stock and restricted stock units estimated to be outstanding in October 2008 after the redemption of the class C (series II and series III) common shares held by Visa Europe.

 

14


Class A Common Stock Adjusted Diluted Earnings Per Share

 

 

Management believes the presentation of adjusted operating income and adjusted net income provides a clearer understanding of the one-time items related to the Company's reorganization, initial public offering and other non-recurring events. These measures also adjust for expenses related to covered litigation that will be funded by the litigation escrow account and a $19 million after-tax charge in the fourth quarter and a $51 million after-tax charge for the year ended September 30, 2008 related to non-recurring legacy litigation items that will not be funded by the litigation escrow account. These items have a significant impact on our financial results but are either non-recurring or have no operating cash impact.

 

 

Recognizing that we have a very complex equity structure incorporating multiple classes and series of common stock, the Company has also presented adjusted diluted class A earnings per share calculated below based on adjusted net income and the adjusted weighted average number of shares outstanding in the periods presented. This non-GAAP financial measure has been presented to illustrate our per share results reflecting our capital structure after the redemption of all class C (series II) common stock and a portion of class C (series III) common stock, which the Company redeemed in October 2008. The class C (series II) common stock is classified as temporary equity and the redeemable class C (series III) common stock is classified as a liability on the Company's consolidated balance sheet at September 30, 2008. Management believes this non-GAAP presentation provides the reader with a clearer understanding of our per share results by excluding these shares to be redeemed and allocating adjusted net income only to permanent equity.

 

     For the Three
Months Ended
September 30, 2008
   For the Twelve
Months Ended
September 30, 2008
     (in millions, except per share data)

Adjusted net income

   $ 448    $ 1,749

Adjusted weighted average number of diluted shares outstanding

     776      776
             

Adjusted diluted earnings per share

   $ 0.58    $ 2.25
             

 

15


Calculation of Free Cash Flow

US$ in millions

 

     For the Twelve
Months Ended
September 30, 2008
 

Net income (as reported)

   $ 804  

Addback:    Depreciation and amortization

     237  

Equity compensation

     74  

Cash impact of litigation(1)

     1,193  

Less: Capital expenditure

     (415 )

Annual pension contribution

     (186 )
        

Total free cash flow

   $ 1,707  
        
 
  (1) Adjustment represents the net cash impact of all litigation matters, both covered and uncovered, during the fiscal year. This adjustment reflects (i) the cash benefit received resulting from tax deductions taken on actual payments made for both covered and uncovered matters; (ii) the use of cash to make payments for uncovered litigation matters, which will not be funded by the litigation escrow account; (iii) the add back of accretion, net of tax, recorded on all settled claims, both covered and uncovered; and (iv) the add back of litigation provision, net of tax, recorded for covered matters, which will be funded by the litigation escrow account, during the fiscal year.

 

16


LOGO

Operational Performance Data

The tables below provide information regarding the operational results for the 3 months ended June 30, 2008, as well as the prior ten quarterly reporting periods and the years ended December 31, 2005, 2006 and 2007, for cards carrying the Visa, Visa Electron and Interlink brands.

1. Branded Volume and Transactions

The tables present Payments Volume, Cash Volume, Total Volume, the number of payments transactions, cash transactions, accounts and cards for cards carrying the Visa, Visa Electron and Interlink brands. Card counts include PLUS proprietary cards. Nominal and constant dollar growth rates over prior periods are provided for volume-based data.

 

     For the 3 Months Ended June 30, 2008
     Total
Volume
($ billions)
   Growth
(Nominal
USD)
    Growth
(Constant
USD)
    Payments
Volume
($ billions)
   Growth
(Nominal
USD)
    Growth
(Constant
USD)
    Payments
Transactions
(millions)
   Cash
Volume
($ billions)
   Growth
(Nominal
USD)
    Growth
(Constant
USD)
    Cash
Transactions
(millions)
   Accounts
(millions)
   Cards
(millions)

All Visa Credit & Debit

                                

Asia Pacific

   249    24.0 %   20.9 %   162    22.3 %   18.9 %   2,032    88    27.3 %   24.7 %   498    387    472

Canada

   51    14.3 %   10.3 %   45    14.5 %   10.4 %   383    6    13.0 %   9.0 %   9    24    31

CEMEA

   131    45.8 %   40.7 %   19    37.8 %   38.1 %   255    112    47.2 %   41.2 %   640    159    168

LAC

   155    35.4 %   22.9 %   50    40.3 %   27.5 %   1,160    105    33.2 %   20.8 %   754    303    328

US

   526    8.8 %   8.8 %   423    9.8 %   9.8 %   7,658    103    4.9 %   4.9 %   736    469    646
                                              

Visa Inc.

   1,112    19.2 %   16.5 %   699    15.2 %   13.6 %   11,487    414    26.4 %   21.6 %   2,637    1,342    1,645

Visa Credit Programs

                                

US

   246    4.7 %   4.7 %   213    5.0 %   5.0 %   2,334    34    2.9 %   2.9 %   29    262    335

Rest of World

   278    21.7 %   17.9 %   238    22.6 %   18.3 %   2,969    40    16.4 %   15.3 %   146    404    464
                                              

Visa Inc.

   524    13.1 %   11.3 %   450    13.6 %   11.6 %   5,303    74    9.8 %   9.3 %   175    665    798

Visa Debit Programs

                                

US

   280    12.7 %   12.7 %   210    15.1 %   15.1 %   5,325    69    5.9 %   5.9 %   706    207    311

Rest of World

   308    39.2 %   30.7 %   38    40.2 %   31.8 %   860    270    39.0 %   30.6 %   1,756    469    535
                                              

Visa Inc.

   588    25.2 %   21.5 %   248    18.3 %   17.4 %   6,185    340    30.7 %   24.7 %   2,462    677    847
     For the 3 Months Ended March 31, 2008
     Total
Volume

($ billions)
   Growth
(Nominal
USD)
    Growth
(Constant
USD)
    Payments
Volume
($ billions)
   Growth
(Nominal
USD)
    Growth
(Constant
USD)
    Payments
Transactions
(millions)
   Cash
Volume

($ billions)
   Growth
(Nominal
USD)
    Growth
(Constant
USD)
    Cash
Transactions
(millions)
   Accounts
(millions)
   Cards
(millions)

All Visa Credit & Debit

                                

Asia Pacific

   245    29.4 %   21.2 %   159    26.5 %   18.1 %   1,913    85    35.2 %   27.4 %   458    376    457

Canada

   47    30.9 %   10.0 %   41    30.5 %   9.7 %   337    6    33.8 %   12.5 %   9    24    31

CEMEA

   114    40.8 %   36.6 %   17    40.4 %   38.9 %   236    96    40.9 %   36.2 %   584    148    156

LAC

   143    37.8 %   21.8 %   46    47.5 %   30.1 %   1,123    97    33.7 %   18.2 %   719    288    312

US

   488    10.9 %   10.9 %   388    12.0 %   12.0 %   7,077    100    6.6 %   6.6 %   691    457    665
                                              

Visa Inc.

   1,036    22.0 %   17.1 %   652    19.1 %   15.1 %   10,686    384    27.2 %   20.6 %   2,462    1,292    1,621

Visa Credit Programs

                                

US

   231    8.0 %   8.0 %   195    8.1 %   8.1 %   2,167    36    7.5 %   7.5 %   30    260    368

Rest of World

   268    28.5 %   17.9 %   229    29.5 %   18.2 %   2,798    39    23.0 %   16.1 %   134    387    446
                                              

Visa Inc.

   499    18.1 %   13.1 %   424    18.7 %   13.3 %   4,964    75    15.0 %   11.8 %   164    647    814

Visa Debit Programs

                                

US

   257    13.6 %   13.6 %   193    16.3 %   16.3 %   4,910    64    6.2 %   6.2 %   661    197    297

Rest of World

   280    39.6 %   28.7 %   35    44.1 %   31.7 %   812    245    38.9 %   28.3 %   1,636    448    510
                                              

Visa Inc.

   537    25.8 %   21.0 %   228    19.9 %   18.4 %   5,722    309    30.6 %   23.0 %   2,297    645    807

 

17


Operational Performance Data    June 30, 2008

 

     For the 3 Months Ended December 31, 2007
     Total
Volume
($ billions)
   Growth
(Nominal
USD)
    Growth
(Constant
USD)
    Payments
Volume

($ billions)
   Growth
(Nominal
USD)
    Growth
(Constant
USD)
    Payments
Transactions
(millions)
   Cash
Volume

($ billions)
   Growth
(Nominal
USD)
    Growth
(Constant
USD)
    Cash
Transactions
(millions)
   Accounts
(millions)
   Cards
(millions)

All Visa Credit & Debit

                                

Asia Pacific

   241    28.4 %   23.0 %   158    24.3 %   19.6 %   1,931    83    36.9 %   29.9 %   452    368    446

Canada

   51    29.3 %   13.6 %   45    28.5 %   12.8 %   382    6    36.5 %   19.9 %   9    23    31

CEMEA

   115    43.8 %   38.9 %   18    44.1 %   40.1 %   235    97    43.8 %   38.7 %   590    139    147

LAC

   145    33.3 %   21.3 %   47    44.1 %   30.5 %   1,132    99    28.8 %   17.4 %   757    284    307

US

   514    11.4 %   11.4 %   413    12.4 %   12.4 %   7,412    102    7.8 %   7.8 %   716    457    661
                                              

Visa Inc.

   1,067    21.5 %   17.9 %   680    18.5 %   15.7 %   11,092    387    27.3 %   21.8 %   2,524    1,270    1,592

Visa Credit Programs

                                

US

   253    9.1 %   9.1 %   218    9.7 %   9.7 %   2,462    36    5.9 %   5.9 %   33    259    365

Rest of World

   272    26.7 %   19.5 %   232    27.3 %   19.7 %   2,863    40    23.2 %   18.5 %   136    372    431
                                              

Visa Inc.

   525    17.6 %   14.3 %   450    18.1 %   14.6 %   5,325    75    14.4 %   12.2 %   169    630    796

Visa Debit Programs

                                

US

   261    13.7 %   13.7 %   195    15.5 %   15.5 %   4,950    66    8.8 %   8.8 %   683    198    297

Rest of World

   281    39.1 %   29.8 %   36    43.5 %   32.9 %   817    245    38.5 %   29.4 %   1,672    442    500
                                              

Visa Inc.

   542    25.6 %   21.5 %   231    19.1 %   17.9 %   5,767    311    30.9 %   24.4 %   2,355    640    796
     For the 3 Months Ended September 30, 2007
     Total
Volume

($ billions)
   Growth
(Nominal
USD)
    Growth
(Constant
USD)
    Payments
Volume

($ billions)
   Growth
(Nominal
USD)
    Growth
(Constant
USD)
    Payments
Transactions
(millions)
   Cash
Volume

($ billions)
   Growth
(Nominal
USD)
    Growth
(Constant

USD)
    Cash
Transactions

(millions)
   Accounts
(millions)
   Cards
(millions)

All Visa Credit & Debit

                                

Asia Pacific

   215    25.6 %   19.6 %   140    22.1 %   16.8 %   1,796    74    32.8 %   25.1 %   417    348    427

Canada

   47    22.7 %   12.9 %   42    21.4 %   11.8 %   362    6    33.0 %   22.5 %   9    23    31

CEMEA

   101    43.0 %   38.4 %   15    39.0 %   35.1 %   211    85    43.8 %   39.0 %   545    125    136

LAC

   121    26.7 %   19.0 %   38    38.5 %   29.6 %   1,004    83    21.9 %   14.6 %   691    267    289

US

   489    9.6 %   9.6 %   388    10.7 %   10.7 %   7,032    101    5.6 %   5.6 %   730    440    642
                                              

Visa Inc.

   972    18.4 %   15.5 %   623    15.8 %   13.6 %   10,404    349    23.3 %   19.0 %   2,392    1,203    1,526

Visa Credit Programs

                                

US

   240    6.7 %   6.7 %   206    8.5 %   8.5 %   2,314    35    -2.9 %   -2.9 %   34    253    358

Rest of World

   243    22.5 %   16.4 %   206    23.6 %   17.2 %   2,654    37    16.4 %   12.0 %   128    353    410
                                              

Visa Inc.

   483    14.1 %   11.4 %   412    15.6 %   12.7 %   4,968    71    6.2 %   4.2 %   162    607    769

Visa Debit Programs

                                

US

   249    12.6 %   12.6 %   182    13.3 %   13.3 %   4,718    67    10.7 %   10.7 %   696    187    284

Rest of World

   241    36.0 %   28.5 %   29    39.6 %   31.1 %   718    211    35.5 %   28.2 %   1,534    409    473
                                              

Visa Inc.

   489    23.0 %   19.9 %   211    16.3 %   15.5 %   5,436    278    28.6 %   23.5 %   2,230    596    757
     For the 3 Months Ended June 30, 2007
     Total
Volume

($ billions)
   Growth
(Nominal
USD)
    Growth
(Constant
USD)
    Payments
Volume
($ billions)
   Growth
(Nominal
USD)
    Growth
(Constant
USD)
    Payments
Transactions
(millions)
   Cash
Volume

($ billions)
   Growth
(Nominal
USD)
    Growth
(Constant
USD)
    Cash
Transactions
(millions)
   Accounts
(millions)
   Cards
(millions)

All Visa Credit & Debit

                                

Asia Pacific

   201    20.6 %   16.6 %   132    19.9 %   16.8 %   1,708    69    21.9 %   16.1 %   373    336    412

Canada

   45    18.2 %   12.0 %   40    17.4 %   11.3 %   352    5    24.5 %   18.0 %   9    22    30

CEMEA

   90    38.7 %   37.3 %   14    32.4 %   32.8 %   197    76    39.9 %   38.1 %   508    121    124

LAC

   114    32.4 %   18.9 %   35    41.8 %   27.7 %   945    79    28.6 %   15.3 %   669    257    281

US

   483    9.5 %   9.5 %   385    10.4 %   10.4 %   6,901    98    6.3 %   6.3 %   721    418    616
                                              

Visa Inc.

   933    17.1 %   14.6 %   606    14.7 %   13.2 %   10,103    327    21.8 %   17.2 %   2,280    1,154    1,464

Visa Credit Programs

                                

US

   235    6.4 %   6.4 %   203    8.3 %   8.3 %   2,251    33    -4.3 %   -4.3 %   32    245    345

Rest of World

   228    19.8 %   16.1 %   194    21.2 %   17.0 %   2,519    35    12.6 %   11.1 %   120    339    394
                                              

Visa Inc.

   464    12.6 %   11.0 %   396    14.3 %   12.5 %   4,770    67    3.7 %   3.1 %   152    584    739

Visa Debit Programs

                                

US

   248    12.6 %   12.6 %   183    12.7 %   12.7 %   4,651    65    12.5 %   12.5 %   689    173    270

Rest of World

   222    34.2 %   24.9 %   27    39.1 %   28.9 %   682    195    33.5 %   24.4 %   1,439    397    454
                                              

Visa Inc.

   470    21.9 %   18.3 %   210    15.5 %   14.6 %   5,333    260    27.5 %   21.3 %   2,128    570    725

 

18


Operational Performance Data    June 30, 2008

 

     For the 3 Months Ended March 31, 2007
     Total
Volume
($ billions)
   Growth
(Nominal
USD)
    Growth
(Constant
USD)
    Payments
Volume
($ billions)
   Growth
(Nominal
USD)
    Growth
(Constant
USD)
    Payments
Transactions
(millions)
   Cash
Volume
($ billions)
   Growth
(Nominal
USD)
    Growth
(Constant
USD)
    Cash
Transactions
(millions)
   Accounts
(millions)
   Cards
(millions)

All Visa Credit & Debit

                                

Asia Pacific

   189    23.1 %   18.8 %   126    20.8 %   17.0 %   1,599    63    28.1 %   22.6 %   382    321    397

Canada

   36    10.3 %   11.8 %   31    9.2 %   10.7 %   309    4    19.1 %   20.7 %   9    22    30

CEMEA

   81    44.8 %   43.8 %   12    35.3 %   40.6 %   183    68    46.6 %   44.4 %   477    117    122

LAC

   104    19.4 %   19.6 %   31    25.9 %   25.4 %   904    72    16.8 %   17.2 %   658    251    271

US

   440    9.1 %   9.1 %   347    8.9 %   8.9 %   6,259    94    9.8 %   9.8 %   698    412    607
                                              

Visa Inc.

   849    16.1 %   15.4 %   548    12.9 %   12.4 %   9,254    302    22.3 %   21.1 %   2,224    1,123    1,426

Visa Credit Programs

                                

US

   214    7.8 %   7.8 %   181    8.0 %   8.0 %   2,021    33    7.0 %   7.0 %   30    243    341

Rest of World

   208    17.1 %   15.4 %   177    18.5 %   16.6 %   2,343    32    9.8 %   9.3 %   105    322    375
                                              

Visa Inc.

   423    12.2 %   11.6 %   357    13.0 %   12.3 %   4,364    65    8.3 %   8.1 %   135    565    716

Visa Debit Programs

                                

US

   226    10.4 %   10.4 %   166    10.0 %   10.0 %   4,238    60    11.4 %   11.4 %   668    169    266

Rest of World

   201    33.4 %   30.4 %   24    35.3 %   32.5 %   652    176    33.1 %   30.1 %   1,421    389    444
                                              

Visa Inc.

   427    20.1 %   19.3 %   190    12.7 %   12.6 %   4,889    237    26.8 %   25.0 %   2,089    558    710
     For the 3 Months Ended December 31, 2006
     Total
Volume

($ billions)
   Growth
(Nominal
USD)
    Growth
(Constant
USD)
    Payments
Volume

($ billions)
   Growth
(Nominal
USD)
    Growth
(Constant
USD)
    Payments
Transactions
(millions)
   Cash
Volume

($ billions)
   Growth
(Nominal
USD)
    Growth
(Constant
USD)
    Cash
Transactions
(millions)
   Accounts
(millions)
   Cards
(millions)

All Visa Credit & Debit

                                

Asia Pacific

   188    21.9 %   15.9 %   127    21.1 %   15.8 %   1,600    61    23.7 %   16.0 %   381    308    381

Canada

   40    11.1 %   11.3 %   35    10.1 %   10.3 %   344    4    19.8 %   20.0 %   9    22    30

CEMEA

   80    43.0 %   40.4 %   12    32.2 %   33.9 %   175    68    45.1 %   41.7 %   470    104    112

LAC

   109    22.2 %   17.5 %   33    30.4 %   25.3 %   911    77    19.0 %   14.5 %   687    241    262

US

   462    8.3 %   8.3 %   367    8.1 %   8.1 %   6,554    95    9.2 %   9.2 %   698    402    600
                                              

Visa Inc.

   878    15.4 %   13.6 %   574    12.4 %   11.3 %   9,583    304    21.4 %   18.2 %   2,245    1,077    1,384

Visa Credit Programs

                                

US

   232    7.7 %   7.7 %   199    7.7 %   7.7 %   2,281    34    7.7 %   7.7 %   32    240    345

Rest of World

   214    17.9 %   14.1 %   182    19.2 %   15.4 %   2,371    32    11.4 %   7.2 %   107    314    363
                                              

Visa Inc.

   447    12.4 %   10.8 %   381    12.9 %   11.4 %   4,651    66    9.5 %   7.5 %   140    554    709

Visa Debit Programs

                                

US

   230    8.9 %   8.9 %   169    8.5 %   8.5 %   4,274    61    10.0 %   10.0 %   666    162    255

Rest of World

   202    32.0 %   26.2 %   25    36.0 %   30.5 %   658    177    31.4 %   25.6 %   1,440    361    421
                                              

Visa Inc.

   431    18.6 %   16.7 %   194    11.4 %   11.1 %   4,932    238    25.2 %   21.4 %   2,105    523    676
     For the 3 Months Ended September 30, 2006
     Total
Volume

($ billions)
   Growth
(Nominal
USD)
    Growth
(Constant
USD)
    Payments
Volume

($ billions)
   Growth
(Nominal
USD)
    Growth
(Constant
USD)
    Payments
Transactions
(millions)
   Cash
Volume

($ billions)
   Growth
(Nominal
USD)
    Growth
(Constant
USD)
    Cash
Transactions
(millions)
   Accounts
(millions)
   Cards
(millions)

All Visa Credit & Debit

                                

Asia Pacific

   171    16.8 %   15.0 %   115    17.5 %   16.3 %   1,508    56    15.4 %   12.3 %   360    298    367

Canada

   38    17.1 %   11.0 %   34    16.4 %   10.4 %   330    4    23.4 %   17.0 %   9    22    29

CEMEA

   70    38.9 %   40.0 %   11    29.6 %   35.1 %   157    59    40.8 %   41.0 %   424    94    104

LAC

   95    20.7 %   18.1 %   27    27.9 %   25.0 %   810    68    18.0 %   15.5 %   643    228    248

US

   446    11.6 %   11.6 %   350    11.1 %   11.1 %   6,229    96    13.6 %   13.6 %   733    398    599
                                              

Visa Inc.

   821    15.9 %   15.1 %   538    13.9 %   13.3 %   9,035    283    20.0 %   18.7 %   2,169    1,041    1,347

Visa Credit Programs

                                

US

   225    9.6 %   9.6 %   190    9.0 %   9.0 %   2,149    36    13.1 %   13.1 %   34    242    351

Rest of World

   198    16.6 %   14.4 %   167    17.9 %   15.8 %   2,243    31    10.0 %   7.5 %   102    297    346
                                              

Visa Inc.

   423    12.8 %   11.9 %   356    13.0 %   12.2 %   4,392    67    11.6 %   10.3 %   136    539    696

Visa Debit Programs

                                

US

   221    13.8 %   13.8 %   161    13.7 %   13.7 %   4,080    60    14.0 %   14.0 %   699    156    249

Rest of World

   177    27.4 %   25.2 %   21    32.2 %   30.7 %   563    156    26.8 %   24.4 %   1,334    346    402
                                              

Visa Inc.

   398    19.5 %   18.7 %   182    15.6 %   15.5 %   4,643    216    22.9 %   21.5 %   2,033    502    651

 

19


Operational Performance Data    June 30, 2008

 

     For the 3 Months Ended June 30, 2006
     Total
Volume
($ billions)
   Growth
(Nominal
USD)
    Growth
(Constant
USD)
    Payments
Volume

($ billions)
   Growth
(Nominal
USD)
    Growth
(Constant
USD)
    Payments
Transactions
(millions)
   Cash
Volume
($ billions)
   Growth
(Nominal
USD)
    Growth
(Constant
USD)
    Cash
Transactions
(millions)
   Accounts
(millions)
   Cards
(millions)

All Visa Credit & Debit

                                

Asia Pacific

   167    17.9 %   18.2 %   110    15.9 %   16.5 %   1,416    56    22.0 %   21.4 %   353    287    354

Canada

   38    23.5 %   12.3 %   34    23.0 %   11.8 %   322    4    27.4 %   15.8 %   9    21    28

CEMEA

   65    43.5 %   43.7 %   10    35.5 %   37.1 %   147    55    45.2 %   44.9 %   407    86    95

LAC

   86    21.4 %   20.6 %   25    29.3 %   27.6 %   769    61    18.5 %   18.0 %   620    219    236

US

   441    14.8 %   14.8 %   349    15.7 %   15.7 %   6,157    92    11.4 %   11.4 %   710    390    611
                                              

Visa Inc.

   797    18.5 %   18.0 %   528    17.1 %   16.6 %   8,811    269    21.2 %   20.9 %   2,098    1,003    1,324

Visa Credit Programs

                                

US

   221    11.5 %   11.5 %   187    12.1 %   12.1 %   2,091    34    8.3 %   8.3 %   32    236    344

Rest of World

   191    16.7 %   15.0 %   160    18.4 %   16.5 %   2,126    31    8.5 %   7.5 %   97    283    329
                                              

Visa Inc.

   412    13.8 %   13.1 %   347    14.9 %   14.2 %   4,216    65    8.4 %   7.9 %   129    519    672

Visa Debit Programs

                                

US

   220    18.3 %   18.3 %   162    20.2 %   20.2 %   4,067    58    13.3 %   13.3 %   677    153    268

Rest of World

   165    32.1 %   30.3 %   19    33.9 %   32.1 %   528    146    31.9 %   30.0 %   1,291    330    384
                                              

Visa Inc.

   386    23.8 %   23.5 %   182    21.5 %   21.5 %   4,595    204    26.0 %   25.2 %   1,969    484    652
     For the 3 Months Ended March 31, 2006
     Total
Volume

($ billions)
   Growth
(Nominal
USD)
    Growth
(Constant
USD)
    Payments
Volume

($ billions)
   Growth
(Nominal
USD)
    Growth
(Constant
USD)
    Payments
Transactions
(millions)
   Cash
Volume

($ billions)
   Growth
(Nominal
USD)
    Growth
(Constant
USD)
    Cash
Transactions
(millions)
   Accounts
(millions)
   Cards
(millions)

All Visa Credit & Debit

                                

Asia Pacific

   154    12.2 %   15.8 %   104    11.9 %   16.1 %   1,302    49    12.7 %   15.2 %   327    276    341

Canada

   32    18.0 %   13.5 %   29    18.4 %   13.8 %   282    4    15.4 %   10.9 %   9    21    27

CEMEA

   56    38.8 %   42.6 %   9    28.8 %   32.5 %   126    47    41.0 %   44.6 %   357    82    89

LAC

   87    37.6 %   21.0 %   25    45.7 %   28.3 %   742    62    34.5 %   18.3 %   600    204    225

US

   403    16.1 %   16.1 %   318    17.6 %   17.6 %   5,686    85    11.0 %   11.0 %   662    383    606
                                              

Visa Inc.

   732    19.0 %   18.2 %   485    17.7 %   17.8 %   8,139    247    21.7 %   19.0 %   1,955    966    1,288

Visa Credit Programs

                                

US

   199    11.7 %   11.7 %   167    12.7 %   12.7 %   1,884    31    6.7 %   6.7 %   30    232    338

Rest of World

   178    14.1 %   15.0 %   149    16.0 %   16.7 %   1,962    29    5.3 %   6.5 %   88    273    315
                                              

Visa Inc.

   376    12.8 %   13.3 %   316    14.2 %   14.6 %   3,847    60    6.1 %   6.6 %   118    505    653

Visa Debit Programs

                                

US

   205    20.8 %   20.8 %   151    23.6 %   23.6 %   3,801    54    13.6 %   13.6 %   632    151    268

Rest of World

   151    34.8 %   27.8 %   18    37.2 %   30.2 %   491    133    34.5 %   27.4 %   1,205    311    367
                                              

Visa Inc.

   355    26.4 %   23.8 %   169    24.9 %   24.3 %   4,292    187    27.7 %   23.4 %   1,837    462    635
     For the 3 Months Ended December 31, 2005
     Total
Volume

($ billions)
   Growth
(Nominal
USD)
    Growth
(Constant
USD)
    Payments
Volume
($ billions)
   Growth
(Nominal
USD)
    Growth
(Constant
USD)
    Payments
Transactions
(millions)
   Cash
Volume

($ billions)
   Growth
(Nominal
USD)
    Growth
(Constant
USD)
    Cash
Transactions
(millions)
   Accounts
(millions)
   Cards
(millions)

All Visa Credit & Debit

                                

Asia Pacific

   154    12.9 %   15.3 %   105    12.0 %   14.4 %   1,290    49    14.8 %   17.3 %   329    266    328

Canada

   36    17.9 %   10.7 %   32    17.8 %   10.6 %   316    4    19.1 %   11.8 %   9    21    27

CEMEA

   56    37.7 %   43.7 %   9    31.2 %   38.8 %   127    47    39.1 %   44.6 %   358    75    83

LAC

   89    31.1 %   20.1 %   25    38.9 %   28.3 %   758    64    28.3 %   17.2 %   632    194    214

US

   426    16.1 %   16.1 %   340    17.4 %   17.4 %   5,982    87    11.3 %   11.3 %   674    373    584
                                              

Visa Inc.

   761    18.4 %   17.8 %   511    17.3 %   17.1 %   8,474    250    20.7 %   19.3 %   2,002    929    1,236

Visa Credit Programs

                                

US

   215    10.5 %   10.5 %   184    11.2 %   11.2 %   2,128    31    6.7 %   6.7 %   32    228    327

Rest of World

   182    13.1 %   12.7 %   153    15.1 %   14.6 %   1,991    29    3.5 %   3.2 %   90    264    304
                                              

Visa Inc.

   397    11.7 %   11.5 %   337    12.9 %   12.8 %   4,119    60    5.1 %   4.9 %   121    492    631

Visa Debit Programs

                                

US

   211    22.3 %   22.3 %   155    25.6 %   25.6 %   3,855    55    14.0 %   14.0 %   642    144    257

Rest of World

   153    33.6 %   29.5 %   18    39.7 %   35.2 %   500    135    32.8 %   28.7 %   1,239    293    348
                                              

Visa Inc.

   364    26.8 %   25.4 %   174    27.0 %   26.7 %   4,355    190    26.7 %   24.4 %   1,881    437    605

 

20


Operational Performance Data    June 30, 2008

 

     For the 12 Months Ended December 31, 2007
     Total
Volume
($ billions)
   Growth
(Nominal
USD)
    Growth
(Constant
USD)
    Payments
Volume

($ billions)
   Growth
(Nominal
USD)
    Growth
(Constant
USD)
    Payments
Transactions
(millions)
   Cash
Volume

($ billions)
   Growth
(Nominal
USD)
    Growth
(Constant
USD)
    Cash
Transactions
(millions)
   Accounts
(millions)
   Cards
(millions)

All Visa Credit & Debit

                                

Asia Pacific

   846    24.6 %   19.6 %   556    21.9 %   17.6 %   7,034    289    30.1 %   23.5 %   1,624    368    446

Canada

   179    20.6 %   12.6 %   158    19.6 %   11.7 %   1,404    21    28.6 %   20.2 %   37    23    31

CEMEA

   386    42.6 %   39.4 %   59    38.1 %   37.1 %   827    327    43.4 %   39.8 %   2,120    139    147

LAC

   484    28.2 %   19.8 %   152    38.0 %   28.4 %   3,984    333    24.2 %   16.2 %   2,775    284    307

US

   1,927    9.9 %   9.9 %   1,532    10.7 %   10.7 %   27,604    395    7.3 %   7.3 %   2,864    457    661
                                              

Visa Inc.

   3,822    18.4 %   15.9 %   2,457    15.6 %   13.8 %   40,853    1,365    23.8 %   19.8 %   9,420    1,270    1,592

Visa Credit Programs

                                

US

   943    7.5 %   7.5 %   807    8.7 %   8.7 %   9,048    136    1.2 %   1.2 %   129    259    365

Rest of World

   951    21.8 %   16.9 %   808    22.9 %   17.7 %   10,379    143    15.7 %   12.8 %   490    372    431
                                              

Visa Inc.

   1,894    14.2 %   12.1 %   1,615    15.4 %   13.1 %   19,427    279    8.1 %   6.9 %   619    630    796

Visa Debit Programs

                                

US

   984    12.4 %   12.4 %   725    12.9 %   12.9 %   18,556    259    10.8 %   10.8 %   2,735    198    297

Rest of World

   944    35.9 %   28.4 %   117    39.7 %   31.4 %   2,869    827    35.4 %   28.0 %   6,066    442    500
                                              

Visa Inc.

   1,928    22.8 %   19.8 %   842    16.0 %   15.3 %   21,426    1,086    28.6 %   23.5 %   8,801    640    796
     For the 12 Months Ended December 31, 2006
     Total
Volume

($ billions)
   Growth
(Nominal
USD)
    Growth
(Constant
USD)
    Payments
Volume

($ billions)
   Growth
(Nominal
USD)
    Growth
(Constant
USD)
    Payments
Transactions
(millions)
   Cash
Volume

($ billions)
   Growth
(Nominal
USD)
    Growth
(Constant
USD)
    Cash
Transactions
(millions)
   Accounts
(millions)
   Cards
(millions)

All Visa Credit & Debit

                                

Asia Pacific

   679    17.3 %   16.2 %   457    16.7 %   16.2 %   5,827    222    18.6 %   16.2 %   1,421    308    381

Canada

   148    17.1 %   12.0 %   132    16.6 %   11.5 %   1,278    16    21.5 %   16.0 %   36    22    30

CEMEA

   271    41.2 %   41.5 %   43    31.5 %   34.7 %   605    228    43.1 %   42.8 %   1,657    104    112

LAC

   378    24.8 %   19.2 %   110    32.7 %   26.4 %   3,233    268    21.9 %   16.5 %   2,550    241    262

US

   1,753    12.5 %   12.5 %   1,385    12.8 %   12.8 %   24,626    368    11.3 %   11.3 %   2,803    402    600
                                              

Visa Inc.

   3,228    17.1 %   16.1 %   2,126    15.1 %   14.5 %   35,569    1,102    21.1 %   19.1 %   8,468    1,077    1,384

Visa Credit Programs

                                

US

   877    10.0 %   10.0 %   742    10.2 %   10.2 %   8,405    135    9.0 %   9.0 %   129    240    345

Rest of World

   781    16.4 %   14.6 %   658    17.9 %   16.1 %   8,702    123    8.9 %   7.2 %   394    314    363
                                              

Visa Inc.

   1,658    12.9 %   12.2 %   1,400    13.7 %   13.0 %   17,107    258    8.9 %   8.1 %   523    554    709

Visa Debit Programs

                                

US

   876    15.1 %   15.1 %   642    16.0 %   16.0 %   16,221    233    12.7 %   12.7 %   2,674    162    255

Rest of World

   695    31.4 %   27.3 %   84    34.8 %   30.8 %   2,240    611    31.0 %   26.8 %   5,270    361    421
                                              

Visa Inc.

   1,570    21.8 %   20.4 %   726    17.9 %   17.7 %   18,462    844    25.3 %   22.8 %   7,945    523    676
     For the 12 Months Ended December 31, 2005
     Total
Volume

($ billions)
   Growth
(Nominal
USD)
    Growth
(Constant
USD)
    Payments
Volume
($ billions)
   Growth
(Nominal
USD)
    Growth
(Constant
USD)
    Payments
Transactions
(millions)
   Cash
Volume

($ billions)
   Growth
(Nominal
USD)
    Growth
(Constant
USD)
    Cash
Transactions
(millions)
   Accounts
(millions)
   Cards
(millions)

All Visa Credit & Debit

                                

Asia Pacific

   579    21.3 %   15.9 %   391    19.8 %   14.2 %   4,713    188    24.7 %   19.6 %   1,190    266    328

Canada

   126    21.3 %   10.8 %   113    21.2 %   10.8 %   1,176    13    21.7 %   11.0 %   36    21    27

CEMEA

   192    17.3 %   9.0 %   33    15.7 %   7.0 %   432    159    17.6 %   9.4 %   1,234    75    83

LAC

   303    34.4 %   21.4 %   83    42.6 %   29.4 %   2,625    220    31.5 %   18.6 %   2,343    194    214

US

   1,558    16.1 %   16.1 %   1,227    17.5 %   17.5 %   21,749    331    11.0 %   11.0 %   2,588    373    584
                                              

Visa Inc.

   2,757    19.3 %   15.9 %   1,847    19.1 %   16.6 %   30,695    911    19.5 %   14.4 %   7,392    929    1,236

Visa Credit Programs

                                

US

   797    10.6 %   10.6 %   674    10.5 %   10.5 %   7,757    123    10.8 %   10.8 %   126    228    327

Rest of World

   671    18.4 %   11.5 %   558    21.0 %   14.0 %   7,254    113    7.3 %   0.4 %   339    264    304
                                              

Visa Inc.

   1,468    14.0 %   11.0 %   1,231    15.0 %   12.1 %   15,011    237    9.1 %   5.4 %   465    492    631

Visa Debit Programs

                                

US

   761    22.5 %   22.5 %   554    27.3 %   27.3 %   13,992    207    11.2 %   11.2 %   2,462    144    257

Rest of World

   529    31.0 %   21.1 %   62    37.5 %   25.9 %   1,692    467    30.2 %