UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

xþ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March~~December 31, 2016

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-33977

VISA INC.

(Exact name of Registrant as specified in its charter)



Delaware		26-0267673
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

P.O. Box 8999 San Francisco, California		94128-8999
(Address of principal executive offices)		(Zip Code)

(650) 432-3200

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer þ	Accelerated filer o
Non-accelerated filer o (Do not check if a smaller reporting company.)	Smaller Reporting Company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

As of ~~April 21, 2016~~January 27, 2017 there were ~~1,904,791,047~~1,858,020,846 shares of class A common stock, par value $0.0001 per share, 245,513,385 shares of class B common stock, par value $0.0001 per share, and ~~18,859,025~~14,504,893 shares of class C common stock, par value $0.0001 per share, of Visa Inc. outstanding.

Table of Contents

VISA INC.

TABLE OF CONTENTS




		Page
PART I.	Financial Information	3

Item 1.	Financial Statements (unaudited)	3
	Consolidated Balance Sheets—~~March~~December 31, 2016 and September 30, ~~2015~~2016	3
	Consolidated Statements of Operations—Three ~~and Six~~ Months Ended ~~March~~December 31, 2016 and 2015	5
	Consolidated Statements of Comprehensive Income—Three ~~and Six~~ Months Ended ~~March~~December 31, 2016 and 2015	7
	Consolidated ~~Statement of Changes in Equity—Six Months Ended March 31, 2016~~	8
	~~Consolidated~~ Statements of Cash Flows—~~Six~~Three Months Ended ~~March~~December 31, 2016 and 2015	98
	Notes to Consolidated Financial Statements (unaudited)	1110
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2924
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4031
Item 4.	Controls and Procedures	4031

PART II.	Other Information	4132

Item 1.	Legal Proceedings	4132
Item 1A.	Risk Factors	4132
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4132
Item 3.	Defaults Upon Senior Securities	4132
Item 4.	Mine Safety Disclosures	4132
Item 5.	Other Information	4132
Item 6.	Exhibits	4232
	Signatures	4333
	Exhibit Index	4434

PART I. FINANCIAL INFORMATION



ITEM 1.	Financial Statements

VISA INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


	March 31, 2016		September 30, 2015		December 31, 2016		September 30, 2016
	(in millions, except par value data)				(in millions, except par value data)
Assets
Cash and cash equivalents	$	15,943	$	3,518	$	5,824	$	5,619
Restricted cash—litigation escrow (Note 3)	1,061		1,072
Restricted cash—U.S. litigation escrow (Note 3)					1,028		1,027
Investment securities (Note 4):
Trading	69		66		82		71
Available-for-sale	3,885		2,431		3,615		3,248
Settlement receivable	414		408		1,333		1,467
Accounts receivable	944		847		1,120		1,041
Customer collateral (Note 7)	1,050		1,023
Customer collateral (Note 6)					1,006		1,001
Current portion of client incentives	291		303		265		284
Prepaid expenses and other current assets	646		353		416		555
Total current assets	24,303		10,021		14,689		14,313
Investment securities, available-for-sale (Note 4)	3,577		3,384		3,802		3,931
Client incentives	540		110		484		448
Property, equipment and technology, net	1,883		1,888		2,201		2,150
Other assets	852		778		921		893
Intangible assets, net	11,335		11,361
Goodwill	11,836		11,825
Intangible assets, net (Note 2)					26,381		27,234
Goodwill (Note 2)					14,892		15,066
Total assets	$	54,326	$	39,367	$	63,370	$	64,035
Liabilities
Accounts payable	$	90	$	127	$	118	$	203
Settlement payable	723		780		2,059		2,084
Customer collateral (Note 7)	1,050		1,023
Customer collateral (Note 6)					1,006		1,001
Accrued compensation and benefits	376		503		433		673
Client incentives	1,132		1,049		1,872		1,976
Accrued liabilities	741		849		1,546		1,128
Accrued litigation (Note 13)	1,013		1,024
Current maturities of long-term debt and short-term debt (Note 5)					2,313		—
Accrued litigation (Note 12)					994		981
Total current liabilities	5,125		5,355		10,341		8,046
Long-term debt (Note 5)	15,876		—		14,138		15,882
Deferred tax liabilities	3,256		3,273		4,822		4,808
Deferred purchase consideration					1,164		1,225
Other liabilities	938		897		1,179		1,162
Total liabilities	25,195		9,525		31,644		31,123

See accompanying notes, which are an integral part of these unaudited consolidated financial statements.

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VISA INC.

CONSOLIDATED BALANCE SHEETS—(Continued)

(UNAUDITED)


	March 31, 2016			September 30, 2015			December 31, 2016			September 30, 2016
	(in millions, except par value data)						(in millions, except par value data)
Equity
Preferred stock, $0.0001 par value, 25 shares authorized and none issued	$	—		$	—
Class A common stock, $0.0001 par value, 2,001,622 shares authorized, 1,905 and 1,950 shares issued and outstanding at March 31, 2016 and September 30, 2015, respectively (Note 9)	—			—
Class B common stock, $0.0001 par value, 622 shares authorized, 245 shares issued and outstanding at March 31, 2016 and September 30, 2015 (Note 9)	—			—
Class C common stock, $0.0001 par value, 1,097 shares authorized, 19 and 20 shares issued and outstanding at March 31, 2016 and September 30, 2015, respectively (Note 9)	—			—
Preferred stock, $0.0001 par value, 25 shares authorized and 5 issued and outstanding as follows:
Series A convertible participating preferred stock, none issued (Note 2 and Note 8)							$	—		$	—
Series B convertible participating preferred stock, 2 shares issued and outstanding at December 31, 2016 and September 30, 2016 (Note 2 and Note 8)							2,516			2,516
Series C convertible participating preferred stock, 3 shares issued and outstanding at December 31, 2016 and September 30, 2016 (Note 2 and Note 8)							3,201			3,201
Class A common stock, $0.0001 par value, 2,001,622 shares authorized, 1,854 and 1,871 shares issued and outstanding at December 31, 2016 and September 30, 2016, respectively (Note 8)							—			—
Class B common stock, $0.0001 par value, 622 shares authorized, 245 shares issued and outstanding at December 31, 2016 and September 30, 2016 (Note 8)							—			—
Class C common stock, $0.0001 par value, 1,097 shares authorized, 16 and 17 shares issued and outstanding at December 31, 2016 and September 30, 2016, respectively (Note 8)							—			—
Treasury stock							(170		)	(170		)
Right to recover for covered losses (Note 3)							(128		)	(34		)
Additional paid-in capital	17,645			18,073			17,184			17,395
Accumulated income	11,582			11,843			10,492			10,462
Accumulated other comprehensive loss, net:
Investment securities, available-for-sale	40			5			32			36
Defined benefit pension and other postretirement plans	(126		)	(161		)	(221		)	(225		)
Derivative instruments classified as cash flow hedges	(9		)	83			27			(50		)
Foreign currency translation adjustments	(1		)	(1		)	(1,207		)	(219		)
Total accumulated other comprehensive loss, net	(96		)	(74		)	(1,369		)	(458		)
Total equity	29,131			29,842			31,726			32,912
Total liabilities and equity	$	54,326		$	39,367		$	63,370		$	64,035

See accompanying notes, which are an integral part of these unaudited consolidated financial statements.

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VISA INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)


	Three Months Ended March 31,						Six Months Ended March 31,						Three Months Ended December 31,
	2016			2015			2016			2015			2016			2015
	(in millions, except per share data)												(in millions, except per share data)
Operating Revenues
Service revenues	$	1,699		$	1,577		$	3,344		$	3,115		$	1,918		$	1,645
Data processing revenues	1,473			1,340			2,952			2,723			1,892			1,479
International transaction revenues	1,045			964			2,076			1,934			1,489			1,031
Other revenues	198			204			396			408			203			198
Client incentives	(789		)	(676		)	(1,577		)	(1,389		)	(1,041		)	(788		)
Total operating revenues	3,626			3,409			7,191			6,791
Net operating revenues													4,461			3,565
Operating Expenses
Personnel	528			483			1,027			992			571			499
Marketing	186			190			380			395			218			194
Network and processing	126			109			254			223			145			128
Professional fees	66			77			138			147			80			72
Depreciation and amortization	121			125			241			245			146			120
General and administrative	164			141			320			267			186			156
Litigation provision (Note 13)	1			3			1			3
Litigation provision (Note 12)													15			—
Total operating expenses	1,192			1,128			2,361			2,272			1,361			1,169
Operating income	2,434			2,281			4,830			4,519			3,100			2,396
Non-operating Income
Non-operating (Expense) Income
Interest expense	(132		)	(7		)	(161		)	(10		)	(140		)	(29		)
Other (Note 4 and Note 8)	139			8			411			35
Total non-operating income	7			1			250			25
Other													19			272
Non-operating (expense) income													(121		)	243
Income before income taxes	2,441			2,282			5,080			4,544			2,979			2,639
Income tax provision (Note 12)	734			732			1,432			1,425
Income tax provision (Note 11)													909			698
Net income	$	1,707		$	1,550		$	3,648		$	3,119		$	2,070		$	1,941

See accompanying notes, which are an integral part of these unaudited consolidated financial statements.

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VISA INC.

CONSOLIDATED STATEMENTS OF OPERATIONS—(Continued)

(UNAUDITED)


	Three Months Ended March 31,				Six Months Ended March 31,				Three Months Ended December 31,
	2016		2015		2016		2015		2016		2015
	(in millions, except per share data)								(in millions, except per share data)
Basic earnings per share (Note 10)
Basic earnings per share (Note 9)
Class A common stock	$	0.71	$	0.63	$	1.51	$	1.27	$	0.86	$	0.80
Class B common stock	$	1.17	$	1.04	$	2.49	$	2.09	$	1.41	$	1.32
Class C common stock	$	2.85	$	2.53	$	6.05	$	5.06	$	3.43	$	3.20
Basic weighted-average shares outstanding (Note 10)
Basic weighted-average shares outstanding (Note 9)
Class A common stock	1,909		1,963		1,923		1,969		1,860		1,937
Class B common stock	245		245		245		245		245		245
Class C common stock	19		20		19		21		17		20
Diluted earnings per share (Note 10)
Diluted earnings per share (Note 9)
Class A common stock	$	0.71	$	0.63	$	1.51	$	1.26	$	0.86	$	0.80
Class B common stock	$	1.17	$	1.04	$	2.49	$	2.08	$	1.41	$	1.32
Class C common stock	$	2.84	$	2.52	$	6.04	$	5.05	$	3.42	$	3.20
Diluted weighted-average shares outstanding (Note 10)
Diluted weighted-average shares outstanding (Note 9)
Class A common stock	2,401		2,460		2,416		2,469		2,421		2,430
Class B common stock	245		245		245		245		245		245
Class C common stock	19		20		19		21		17		20

See accompanying notes, which are an integral part of these unaudited consolidated financial statements.

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VISA INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)


	Three Months Ended March 31,						Six Months Ended March 31,						Three Months Ended December 31,
	2016			2015			2016			2015			2016			2015
	(in millions)												(in millions)
Net income	$	1,707		$	1,550		$	3,648		$	3,119		$	2,070		$	1,941
Other comprehensive income, net of tax:
Other comprehensive (loss) income, net of tax:
Investment securities, available-for-sale:
Net unrealized gain (loss)	26			(9		)	60			(19		)
Income tax effect	(7		)	4			(23		)	7
Reclassification adjustment for net gain realized in net income	(3		)	—			(3		)	(21		)
Net unrealized (loss) gain													(3		)	34
Income tax effect	1			—			1			8			(1		)	(16		)
Defined benefit pension and other postretirement plans:
Net unrealized actuarial gain (loss) and prior service credit	5			(6		)	61			—
Net unrealized actuarial gain and prior service credit													—			56
Income tax effect	(2		)	1			(23		)	—			—			(21		)
Amortization of actuarial loss (gain) and prior service credit realized in net income	2			1			(5		)	—
Amortization of actuarial loss and prior service credit realized in net income													6			(7		)
Income tax effect	—			—			2			—			(2		)	2
Derivative instruments classified as cash flow hedges:
Net unrealized (loss) gain	(54		)	65			(38		)	128
Net unrealized gain													74			16
Income tax effect	11			(20		)	6			(37		)	(7		)	(5		)
Reclassification adjustment for net gain realized in net income	(37		)	(20		)	(85		)	(26		)
Reclassification adjustment for net loss (gain) realized in net income													12			(48		)
Income tax effect	11			5			25			7			(2		)	14
Foreign currency translation adjustments	—			—			—			1			(988		)	—
Other comprehensive (loss) income, net of tax	(47		)	21			(22		)	48			(911		)	25
Comprehensive income	$	1,660		$	1,571		$	3,626		$	3,167		$	1,159		$	1,966

See accompanying notes, which are an integral part of these unaudited consolidated financial statements.

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VISA INC.

CONSOLIDATED ~~STATEMENT~~STATEMENTS OF ~~CHANGES IN EQUITY~~CASH FLOWS

(UNAUDITED)

Common Stock Additional Paid-in Capital Accumulated Income Accumulated
Other
Comprehensive
Loss Total
Equity
Class A Class B Class C
(in millions, except per share data)
Balance as of September 30, 2015 1,950
245
20
$ 18,073
$ 11,843
$ (74 ) $ 29,842
Net income 3,648
3,648
Other comprehensive loss, net of tax (22 ) (22 )
Comprehensive income 3,626
Conversion of class C common stock upon sale into public market 3
(1 ) —
Issuance and vesting of restricted stock and performance-based shares 2
—
Share-based compensation, net of forfeitures (Note 11) —
⁽¹⁾
97
97
Restricted stock and performance-based shares settled in cash for taxes (1 ) (85 ) (85 )
Excess tax benefit for share-based compensation 43
43
Cash proceeds from issuance of common stock under employee equity plans 1
49
49
Cash dividends declared and paid, at a quarterly amount of $0.14 per as-converted share (Note 9) (676 ) (676 )
Repurchase of class A common stock (Note 9) (50 ) (532 ) (3,233 ) (3,765 )
Balance as of March 31, 2016 1,905
245
19
$ 17,645
$ 11,582
$ (96 ) $ 29,131



	Three Months Ended December 31,
	2016			2015
	(in millions)
Operating Activities
Net income	$	2,070		$	1,941
Adjustments to reconcile net income to net cash provided by operating activities:
Client incentives	1,041			788
Fair value adjustment for the Visa Europe put option	—			(255		)
Share-based compensation (Note 10)	45			39
Excess tax benefit for share-based compensation	—			(36		)
Depreciation and amortization of property, equipment, technology and intangible assets	146			120
Deferred income taxes	77			45
Right to recover for covered losses recorded in equity	(94		)	—
Other	13			5
Change in operating assets and liabilities:
Settlement receivable	56			(35		)
Accounts receivable	(89		)	(75		)
Client incentives	(1,129		)	(850		)
Other assets	66			23
Accounts payable	(102		)	—
Settlement payable	79			(36		)
Accrued and other liabilities	316			317
Accrued litigation (Note 12)	13			(12		)
Net cash provided by operating activities	2,508			1,979
Investing Activities
Purchases of property, equipment, technology and intangible assets	(171		)	(126		)
Investment securities, available-for-sale:
Purchases	(1,032		)	(6,803		)
Proceeds from maturities and sales	788			739
Purchases of / contributions to other investments	(2		)	(8		)
Proceeds / distributions from other investments	—			4
Net cash used in investing activities	(417		)	(6,194		)


⁽¹⁾	~~Decrease in class A common stock related to forfeitures of restricted stock awards is less than 1 million shares.~~

See accompanying notes, which are an integral part of these unaudited consolidated financial statements.

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VISA INC.

CONSOLIDATED STATEMENTS OF CASH ~~FLOWS~~FLOWS—(Continued)

(UNAUDITED)

Six Months Ended
March 31,
2016 2015
(in millions)
Operating Activities
Net income $ 3,648
$ 3,119
Adjustments to reconcile net income to net cash provided by operating activities:
Client incentives 1,577
1,389
Fair value adjustment for the Visa Europe put option (255 ) —
Share-based compensation 97
93
Excess tax benefit for share-based compensation (43 ) (70 )
Depreciation and amortization of property, equipment, technology and intangible assets 241
245
Deferred income taxes (29 ) 173
Other 17
15
Change in operating assets and liabilities:
Settlement receivable (6 ) 107
Accounts receivable (97 ) (74 )
Client incentives (1,912 ) (1,479 )
Other assets (397 ) (467 )
Accounts payable (34 ) (44 )
Settlement payable (57 ) (206 )
Accrued and other liabilities 81
262
Accrued litigation (Note 13) (12 ) (324 )
Net cash provided by operating activities 2,819
2,739
Investing Activities
Purchases of property, equipment, technology and intangible assets (250 ) (202 )
Proceeds from sales of property, equipment and technology —
10
Investment securities, available-for-sale:

Purchases (17,437 ) (1,267 )
Proceeds from maturities and sales 15,860
895
Acquisition of business (14 ) —
Purchases of / contributions to other investments (9 ) (2 )
Proceeds / distributions from other investments 4
9
Net cash used in investing activities (1,846 ) (557 )



	Three Months Ended December 31,
	2016			2015
	(in millions)
Financing Activities
Repurchase of class A common stock (Note 8)	$	(1,893	)	$	(2,015	)
Dividends paid (Note 8)	(399		)	(340		)
Proceeds from issuance of senior notes (Note 5)	—			15,971
Debt issuance costs (Note 5)	—			(77		)
Proceeds from issuance of commercial paper (Note 5)	566			—
Payments from litigation escrow account—U.S. retrospective responsibility plan (Note 3 and Note 12)	—			11
Cash proceeds from issuance of common stock under employee equity plans	56			29
Restricted stock and performance-based shares settled in cash for taxes	(60		)	(81		)
Excess tax benefit for share-based compensation	—			36
Net cash (used in) provided by financing activities	(1,730		)	13,534
Effect of exchange rate changes on cash and cash equivalents	(156		)	—
Increase in cash and cash equivalents	205			9,319
Cash and cash equivalents at beginning of year	5,619			3,518
Cash and cash equivalents at end of period	$	5,824		$	12,837
Supplemental Disclosure
Income taxes paid, net of refunds	$	96		$	79
Interest payments on debt (Note 5)	$	244		$	—
Accruals related to purchases of property, equipment, technology and intangible assets	$	69		$	40

See accompanying notes, which are an integral part of these unaudited consolidated financial statements.

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VISA INC.

~~CONSOLIDATED STATEMENTS OF CASH FLOWS—(Continued)~~

~~(UNAUDITED)~~

Six Months Ended
March 31,
2016 2015
(in millions)
Financing Activities
Repurchase of class A common stock (Note 9) $ (3,765 ) $ (1,855 )
Dividends paid (Note 9) (676 ) (591 )
Proceeds from issuance of senior notes (Note 5) 15,971
—
Debt issuance costs (Note 5) (96 ) —
Payments from litigation escrow account—U.S. retrospective responsibility plan (Note 3 and Note 13) 11
321
Cash proceeds from issuance of common stock under employee equity plans 49
46
Restricted stock and performance-based shares settled in cash for taxes (85 ) (106 )
Excess tax benefit for share-based compensation 43
70
Net cash provided by (used in) financing activities 11,452
(2,115 )
Effect of exchange rate changes on cash and cash equivalents —
1
Increase in cash and cash equivalents 12,425
68
Cash and cash equivalents at beginning of year 3,518
1,971
Cash and cash equivalents at end of period $ 15,943
$ 2,039
Supplemental Disclosure
Income taxes paid, net of refunds $ 1,501
$ 1,376
Net unrealized gains on currency forward contracts (Note 8) $ 116
$ —
Accruals related to purchases of property, equipment, technology and intangible assets $ 38
$ 26

~~See accompanying notes, which are an integral part of these unaudited consolidated financial statements.~~

~~Table of Contents~~

~~VISA INC.~~

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~March~~December 31, 2016

(UNAUDITED)

Note 1—Summary of Significant Accounting Policies

Organization. Visa Inc. ~~(“Visa”~~("Visa" or the ~~“Company”~~"Company") is a global payments technology company that connects consumers, ~~businesses,~~merchants, financial institutions, businesses, strategic partners and governments in more than 200 countries and territories to fast, secure and reliable electronic payments. Visa and its wholly-owned consolidated subsidiaries, including Visa U.S.A. Inc. (“("Visa U.S.A.”"), Visa International Service Association (“("Visa ~~International”~~International"), Visa Worldwide Pte. Limited, Visa Europe Limited ("Visa Europe"), Visa Canada Corporation, Inovant LLC and CyberSource Corporation ~~(“CyberSource”~~("CyberSource"), operate one of the world’s ~~most advanced processing~~largest retail electronic payments networks — VisaNet — which facilitates authorization, clearing and settlement of payment transactions ~~worldwide.~~and enables us to provide our financial institution and merchant clients a wide range of products, platforms and value-added services. VisaNet also offers fraud protection for account holders and assured payment for merchants. Visa is not a bank and does not issue cards, extend credit or set rates and fees for account holders on ~~Visa-branded cards and payment~~Visa products. In most cases, account holder and merchant relationships belong to, and are managed by, Visa's financial institution clients. Visa provides a wide variety of payment solutions that support payment products that issuers can offer to their account holders: pay now with debit, pay ahead with prepaid or pay later with credit products. Visa also offers a growing suite of innovative digital, eCommerce and mobile products and services. These services facilitate transactions on Visa's network among account holders, merchants, financial institutions and governments in mature and emerging markets globally.

Consolidation and basis of presentation. The accompanying unaudited consolidated financial statements include the accounts of Visa and its consolidated entities and are presented in accordance with accounting principles generally accepted in the United States of America (“("U.S. ~~GAAP”~~GAAP"). The Company consolidates its majority-owned and controlled entities, including variable interest entities ~~(“VIEs”~~("VIEs") for which the Company is the primary beneficiary. The Company’s investments in VIEs have not been material to its consolidated financial statements as of and for the periods presented. All significant intercompany accounts and transactions are eliminated in consolidation.

The accompanying unaudited consolidated financial statements are presented in accordance with the U.S. Securities and Exchange Commission ~~(“SEC”~~("SEC") requirements for Quarterly Reports on Form 10-Q and, consequently, do not include all of the annual disclosures required by U.S. GAAP. Reference should be made to the Visa Annual Report on Form 10-K for the year ended September 30, ~~2015~~2016 for additional disclosures, including a summary of the Company’s significant accounting policies.

In the opinion of management, the accompanying unaudited consolidated financial statements include all normal recurring adjustments necessary for a fair presentation of the Company's financial position, results of operations and cash flows for the interim periods presented.

Recently Issued and Adopted Accounting Pronouncements.

In ~~April 2015,~~May 2014, the Financial Accounting Standards Board ~~(“FASB”~~("FASB") issued Accounting Standards Update ~~(“ASU”~~("ASU") ~~2015-03,~~2014-09, which ~~simplifies~~requires an entity to recognize the ~~presentation of debt issuance costs by requiring that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying~~ amount of ~~debt liability, consistent with debt discounts~~revenue to which it expects to be entitled for the transfer of goods or ~~premiums.~~services to customers. The standard impacts presentation only. The Company elected to early adopt the standard effective October 1, 2015 and the carrying amount of the Company's debt liability is presented net of issuance costs on the consolidated financial statements. Also see ~~Note 5—Debt.~~

~~In September 2015,~~ASU will replace existing revenue recognition guidance in U.S. GAAP when it becomes effective. Subsequently, the FASB also issued ~~ASU No. 2015-16, which simplifies~~a series of amendments to the accounting for post-acquisition adjustments by eliminating the requirement to retrospectively account for the adjustments made to provisional amounts recognized in a business combination. The Company elected to early adopt this guidance on a prospective basis effective October 1, 2015. The adoption did not have a material impact on the consolidated financial statements.

In November 2015, the FASB issued ASU 2015-17, which simplifies the presentation of deferred income taxes by requiring that deferred tax assets and liabilities be presented as non-current. The standard impacts presentation only. The Company elected to early adopt the standard on a retrospective basis effective October 1, 2015 and all deferred tax assets and liabilities are classified as non-current. Previously, current deferred tax assets had been presented separately and current deferred tax liabilities had been included in accrued liabilities on the consolidated

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~~VISA INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

balance sheets. All prior period amounts within the consolidated financial statements have been reclassed to conform to current period presentation. The reclass did not affect the Company's total equity, operating revenues, net income, comprehensive income or cash flows as of and for the periods presented.

In January 2016, the FASB issued ASU 2016-01, which amends certain aspects of recognition, measurement, presentation and disclosure of financial instruments, including the requirement to measure certain equity investments at fair value with changes in fair value recognized in net income.new revenue standard. The Company will adopt the standard effective October 1, 2018. The ~~adoption is not expected to have a material impact on~~standard permits the ~~consolidated financial statements.~~

~~In February 2016,~~use of either the FASB issued ASU 2016-02, which requires the recognition of lease assets and lease liabilities arising from operating leases in the statement of financial position. The Company will adopt the standard effective October 1, 2019 and does not anticipate that this new accounting guidance will have a material impact on its consolidated statement of operations.retrospective or cumulative effect transition method. The Company has not yet ~~completed its evaluation of the impact on the consolidated balance sheet, but at this time estimates the value of leased assets~~selected a transition method and ~~liabilities that may be recognized could be in the hundreds of millions of dollars. The actual impact will depend on the Company's lease portfolio at the time of adoption.~~

In March 2016, the FASB issued ASU 2016-05, which clarifies that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument under Topic 815, Derivatives and Hedging, does not, in and of itself, require dedesignation of that hedging relationship provided that all other hedge accounting criteria continue to be met. The Company will adopt the standard effective October 1, 2017. The adoption is not expected to have a material impact on the consolidated financial statements.

In March 2016, the FASB issued ASU 2016-06, which clarifies the requirements for assessing whether contingent call/put options that can accelerate the payment of principal on debt instruments are clearly and closely related to their debt hosts. An entity performing the assessment is required to assess the embedded call/put options solely in accordance with a four-step decision sequence. The Company will adopt the standard effective October 1, 2017. The adoption is not expected to have a material impact on the consolidated financial statements.

In March 2016, the FASB issued ASU 2016-07, which eliminates the requirement that an entity retroactively adopt the equity method of accounting if an investment qualifies for use of the equity method as a result of an increase in the level of ownership or degree of influence. The equity method investor is required to add the cost of acquiring the additional interest in the investee to the current basis of the investor's previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. The Company will adopt the standard effective October 1, 2017. The adoption is not expected to have a material impact on the consolidated financial statements.

In March 2016, the FASB issued ASU 2016-08, which clarifies the implementation guidance on principal versus agent considerations under the new revenue recognition standard, ASU 2014-09, Revenue from Contracts with Customers. In April 2016, the FASB issued ASU 2016-10, which clarifies the implementation guidance on identifying promised goods or services and on determining whether an entity's promise to grant a license with either a right to use the entity's intellectual property (which is satisfied at a point in time) or a right to access the entity's intellectual property (which is satisfied over time). The Company will adopt the standard effective October 1, 2018. The Company is evaluating the full effect that ASU 2014-09 and all of its related subsequent updates will have on its consolidated financial statements and related disclosures.

In March 2016, the FASB issued ASU 2016-09, which simplifies several aspects of the accounting for share-based payments, including ~~immediate recognition of all~~the accounting for excess tax benefits and deficiencies, ~~in the income statement, changing the threshold to qualify for equity classification up to the employees' maximum~~forfeitures, and statutory tax ~~rates, allowing an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures~~withholding requirements, as ~~they occur, and clarifying the~~well as classification on the statement of cash flows ~~for the~~related to excess tax ~~benefit~~benefits and employee taxes paid when an employer withholds shares for tax-withholding purposes. The Company ~~is evaluating the full effect that ASU 2016-09 will have on its consolidated financial statements and will~~elected to early adopt ~~the standard~~this guidance effective October 1, ~~2017.~~2016. The adoption had the following impact on the consolidated financial statements:

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VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company recorded excess tax benefits of $26 million in our provision for income taxes rather than as an increase to additional paid-in capital for the three months ended December 31, 2016 on a prospective basis. Therefore, the prior period presented has not been adjusted.

The Company excluded the excess tax benefits from the assumed proceeds available to repurchase shares in the computation of diluted earnings per share for the quarter ended December 31, 2016, which increased diluted weighted average common shares outstanding by 1 million, which did not have a material impact on our diluted earnings per share.

The Company elected to apply the presentation requirement for cash flows related to excess tax benefits prospectively, and thus, the prior period presented has not been adjusted. This adoption resulted in an increase to both net cash provided by operating activities and net cash used in financing of $26 million for the three months ended December 31, 2016.

In October 2016, the FASB issued ASU 2016-16, which requires that entities recognize the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. The Company is evaluating the effect that ASU 2016-16 will have on its consolidated financial statements and is considering early adoption of the standard.

In November 2016, the FASB issued ASU 2016-18, which requires that a statement of cash flows should include the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents when reconciling the beginning-of-period and end-of-period total amounts. The Company is evaluating the effect that ASU 2016-18 will have on its consolidated financial statements and is considering early adoption of the standard.

In January 2017, the FASB issued ASU 2017-04, which eliminates Step 2 from the goodwill impairment test. Instead, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The Company will adopt the standard effective October 1, 2020. The adoption is not expected to have a material impact on the consolidated financial statements.

Note 2—Visa Europe

~~Acquisition of Visa Europe~~

On ~~November 2, 2015,~~June 21, 2016, the Company ~~and Visa Europe entered into a transaction agreement (the "Transaction Agreement"), pursuant to which the Company and Visa Europe agreed on the terms and conditions of the Company's acquisition of~~acquired 100% of the share capital of Visa Europe, ~~for~~ a ~~total purchase price~~payments technology business. The acquisition positions Visa to create additional value through increased scale, efficiencies realized by the integration of upboth businesses, and benefits related to ~~€21.2 billion. As originally agreed, the purchase price consisted of: (a) at~~Visa Europe's transition from an association to a for-profit enterprise. At the closing of the transaction (the "Closing"), the Company:

paid up-front cash consideration of ~~€11.5~~€12.2 billion ~~and~~($13.9 billion);

issued preferred stock of the Company convertible upon certain conditions into approximately 79 million shares of class A common ~~stock or class A equivalent preferred~~ stock of the Company, as described below, ~~valued~~equivalent to a value of €5.3 billion ($6.1 billion) at ~~approximately €5.0 billion,~~the closing stock price of $77.33 on June 21, 2016; and ~~(b) following the end of sixteen fiscal quarters post-closing, contingent cash consideration of up~~

agreed to ~~€4.0 billion (plus up to~~pay an additional ~~€0.7 billion in interest), determined based on the achievement of specified net revenue levels during such post-closing period (the "Earn-out").~~

On April 21, 2016, the Company and Visa Europe reached preliminary agreement to amend the Transaction Agreement to eliminate the Earn-out portion of the transaction consideration (the "Preliminary Agreement"). Instead of an earn-out, the cash consideration payable in the transaction would be increased by €1.75 billion: €750 million payable upon closing, and €1.0 billion, plus 4% compound annual interest, ~~payable~~ on the third anniversary of ~~closing. The terms of~~ the transaction otherwise remain unchanged. The transaction remains subject to the negotiation of definitive documentation of this amendment and to regulatory approval. While the parties continue to work toward closing as soon as possible, closing could extend beyond the end of the Company’s fiscal third quarter.

~~Transaction agreement and option amendment~~. The Transaction Agreement provides for the acquisition to be effected pursuant to the exercise of the amended Visa Europe put option (as it may be further amended, the "Amended Put Option"), as described further below. In connection with the execution of the Transaction Agreement, the Company and Visa Europe entered into an amendment (the "Put Option Amendment") to the Visa Europe put option (the "Put") to align certain terms of the Put with the terms of the Transaction Agreement. Under the terms and conditions of the Transaction Agreement, the Visa Europe board of directors is required to exercise the Amended Put Option on the closing date of the transaction to effect Visa's purchase of all of Visa Europe's share capital. If the Transaction Agreement is terminated for any reason prior to the completion of the transaction, the Put Option Amendment will also terminate and the Put will revert to its original, unamended form. The Transaction Agreement may be terminated by the Company or Visa Europe, subject to specified exceptions, if the transaction is not consummated by August 2, 2016, or if legal restraints that prohibit the closing have become final and non-appealable. On April 21, 2016, the Company and Visa Europe also agreed that the Amended Put Option will be further amended as needed to reflect the changes in transaction consideration under the Preliminary Agreement. The terms of the Amended Put Option will otherwise remain unchanged.Closing.

Preferred stock. In connection with the transaction, ~~the board of directors of the Company has authorized the creation of~~ three new series of preferred stock of the ~~Company:~~Company were created:

series A convertible participating preferred stock, par value $0.0001 per share, which is generally designed to be economically equivalent to the Company’s class A common stock (the “class A equivalent preferred stock”);

series B convertible participating preferred stock, par value $0.0001 per share (the “U.K.&I preferred stock”); and

series C convertible participating preferred stock, par value $0.0001 per share (the “Europe preferred stock”).

The ~~Transaction Agreement provides that, subject to the terms and conditions thereof, at closing, the~~ Company ~~will issue 2,480,500~~issued 2,480,466 shares of U.K.&I preferred stock to ~~those of~~ Visa Europe’s member financial institutions in the United Kingdom and Ireland ~~that are~~ entitled to receive preferred stock at ~~closing,~~the Closing, and ~~3,157,000~~3,156,823 shares of Europe preferred stock to ~~those of~~ Visa Europe’s other member financial institutions ~~that are~~ entitled to receive preferred stock at ~~closing. Subject to~~ the ~~reduction in conversion rates~~Closing. Under certain conditions described below, the U.K.&I preferred stock will be convertible into a number of shares of class A common stock or class A equivalent preferred stock valued at approximately €2.2 billion, and the Europe preferred stock will be convertible into a number of shares of class A common stock or class A equivalent preferred stock valued at approximately €2.8 billion. These approximate values of the UK&I and Europe preferred stock ~~to be issued at closing are based on the average price of the class A common stock of $71.68 per share, and the euro-dollar exchange rate of 1.12750 for the 30 trading days ended October 19, 2015.~~

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~~VISA INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~The UK&I and Europe preferred stock will be~~is convertible into shares of class A common stock or class A equivalent preferred stock, at an initial conversion rate of 13.952 shares of class A common stock for each share of U.K.&I preferred stock and Europe preferred stock. The conversion rates may be reduced from time to time to offset certain liabilities, ~~if any,~~ which may be incurred by the Company, Visa Europe or their affiliates as a result

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VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

of certain existing and potential litigation relating to the setting of multilateral interchange fee rates in the Visa Europe ~~territory. A reduction in~~territory, where, generally, the ~~conversion rates of~~relevant claims (and resultant liabilities and losses) relate to the ~~U.K.&I preferred stock and~~period before the Europe preferred stock have the same economic effect on earnings per share as repurchasing the Company's class A common stock because it reduces the as-converted class A common stock share count. Additionally, the shares of U.K.&I and Europe preferred stock will be subject to restrictions on transfer and may become convertible in stages based on developments in the existing and potential litigation. The shares of U.K.&I and Europe preferred stock will become fully convertible on the 12th anniversary of closing, subject only to a holdback to cover any then-pending claims.Closing. See Note 3—U.S. and Europe Retrospective Responsibility ~~Plan~~Plans.

Actual and ~~Potential~~pro forma impact of acquisition.

The following table presents unaudited supplemental pro forma information for the three months ended December 31, 2015, as if the acquisition and related issuance of senior notes had occurred on October 1, 2014. The pro forma financial information is not necessarily indicative of the Company's consolidated results of operations that would have been realized had the acquisition been completed on October 1, 2014, nor does it purport to project the future results of operations of the combined company or reflect any reorganizations, or cost or other operating synergies that may occur subsequent to the Closing. The actual results of operations of the combined company may differ significantly from the pro forma results presented here due to many factors.



	Consolidated Actual Results		Unaudited Pro Forma Consolidated Results
	Three Months Ended December 31,
	2016		2015
	(in millions, except per share data)
Net operating revenues	$	4,461	$	3,964
Net income	$	2,070	$	1,776
Diluted earnings per share	$	0.86	$	0.71

The unaudited pro forma financial information for the three months ended December 31, 2015 reflects the following material pro forma adjustments:

conversion of Visa Europe's historical results of operations from euro to U.S. dollar, and from International Financial Reporting Standards to U.S. GAAP;

elimination of transactions between Visa and Visa Europe ~~Liabilities.~~upon consolidation, primarily related to annual license and various other fees paid by Visa Europe to Visa in accordance with the Framework Agreement;

~~Upon~~an increase in non-operating expense for the three months ended December 31, 2015 for additional interest expense and amortization of debt issuance costs resulting from the issuance of the ~~preferred stock at closing,~~$16.0 billion senior notes;


•	exclusion of a $255 million gain related to the revaluation of the Visa Europe put option⁽¹⁾; and

elimination of acquisition-related costs incurred by Visa Europe.


⁽¹⁾	For purposes of preparing this pro forma financial information, the fair value of the Visa Europe put option is presumed to have been reduced to zero prior to October 1, 2014. Therefore, the Company did not include any gains associated with a write-down in the fair value of the Visa Europe put option liability in the unaudited pro forma net income for the three months ended December 31, 2015.

The pro forma results also reflect the ~~holders~~applicable tax impact of the ~~U.K.&I~~pro forma adjustments. The taxes associated with the adjustments reflect the statutory tax rate in effect during the respective periods.

Goodwill and ~~Europe preferred stock will have no right to vote on any matters, except for certain defined matters, including, in specified circumstances, any consolidation, merger or combination of~~intangible assets.

Upon the Company. Holders of the class A equivalent preferred stock, upon issuance at conversion, will have similar voting rights to the rights of the holders of the U.K.&I and Europe preferred stock. With respect to those limited matters on which the holders of preferred stock may vote, approval by the holders of the preferred stock requires the affirmative vote of the outstanding voting power of each such series of preferred stock, each such series voting as a single class. Once issued, all three series of preferred stock will participate on an as-converted basis in regular quarterly cash dividends declared on the Company's class A common stock.

~~U.K. loss sharing agreement and litigation management deed. On November 2, 2015,~~Closing, the Company ~~Visa Europe~~recorded goodwill and certain of Visa Europe’s member financial institutions located in the United Kingdom (the “U.K. LSA members”) entered into a loss sharing agreement (the “U.K. loss sharing agreement”), pursuant to which each of the U.K. LSA members has agreed, on a several and not joint basis, to compensate the Company for certain losses which may be incurred by the Company, Visa Europe or their affiliatesindefinite-lived intangible assets as a result of ~~certain existing~~the acquisition. The decrease in goodwill and ~~potential litigation relating~~intangible assets at December 31, 2016 from September 30, 2016 is primarily due to ~~the setting and implementation~~foreign currency translation, which is recorded as a component of ~~domestic multilateral interchange fee rates~~accumulated other comprehensive loss in the United Kingdom, subject to the terms and conditions set forth therein and, with respect to each U.K. LSA member, up to a maximum amount of the up-front cash consideration to be received by such U.K. LSA member. The U.K. LSA members’ obligations under the U.K. loss sharing agreement are conditional upon, among other things, the acquisition closing, and additionally upon either (a) losses valued at in excess of the sterling equivalent at closing of €1.0 billion having arisen in claims relating to the U.K. domestic multilateral interchange fees (with such losses being recoverable through reductions in the conversion rate of the U.K.&I preferred stock), or (b) the conversion rate of the UK&I preferred stock having been reduced to zero pursuant to losses arising in claims relating to multilateral interchange fee rate setting in the Visa Europe territory, as described above. See ~~Note 3—U.S. Retrospective Responsibility Plan and Potential Visa Europe Liabilities.~~consolidated balance sheet.

Prior to closing, the Company and the other parties thereto will enter into a litigation management deed, which will set forth the agreed upon procedures for the management of the existing and potential litigation, as described above, relating to the setting and implementation of multilateral interchange fee rates in the Visa Europe territory (the "Europe covered claims"), the allocation of losses resulting from the Europe covered claims, and any accelerated conversion or reduction in the conversion rate of the shares of U.K.&I and Europe preferred stock. Subject to the terms and conditions set forth therein, the litigation management deed provides that the Company will generally control the conduct of the Europe covered claims, subject to certain obligations to report and consult with newly established Europe litigation management committees. The Europe litigation management committees, which will be composed of representatives of certain Visa Europe members, will also be granted consent rights to approve certain material decisions in relation to the Europe covered claims.

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~~VISA INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

Note 3—U.S. and Europe Retrospective Responsibility ~~Plan and Potential Visa Europe Liabilities~~Plans

U.S. Retrospective Responsibility Plan

Under the terms of the U.S. retrospective responsibility plan, the Company maintains an escrow account from which settlements of, or judgments in, the U.S. covered litigation are paid. The escrow funds are held in money market investments along with interest income earned, less applicable taxes, and are classified as restricted cash on the consolidated balance sheets. The balance of the escrow account was ~~$1.1~~$1.0 billion at ~~March~~December 31, 2016 and September 30, ~~2015.~~2016. The Company ~~paid $11 million~~did not make any payments to opt-out merchants from the litigation escrow account during the ~~six~~three months ended ~~March~~December 31, ~~2016 to settle their claims associated with the interchange multidistrict litigation.~~2016. See Note ~~13—~~12—Legal Matters.

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VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The accrual related to the covered litigation could be either higher or lower than the litigation escrow account balance. The Company did not record an additional accrual for the covered litigation during the ~~six~~three months ended ~~March~~December 31, 2016. See Note ~~13—~~12—Legal Matters.

~~Potential Visa~~ Europe ~~Liabilities~~Retrospective Responsibility Plan

~~On November 2, 2015,~~Under the terms of the Europe retrospective responsibility plan, the Company is entitled to recover VE territory covered losses through a periodic adjustment to the class A common stock conversion rates applicable to the U.K.&I. and ~~Visa~~ Europe ~~entered into~~preferred stock. VE territory covered losses may be recorded in "right to recover for covered losses" within equity before the ~~Transaction Agreement pursuant~~corresponding adjustment to the applicable conversion rate is effected. Adjustments to the conversion rate may be executed once in any six-month period unless a single, individual loss greater than €20 million is incurred, in which case, the six-month limitation does not apply. When the adjustment to the conversion rate is made, the amount previously recorded in "right to recover for covered losses" as contra-equity will then be recorded against the book value of the preferred stock within stockholders' equity. As of December 31, 2016, the Company ~~agreed~~had recorded $128 million in the "right to ~~acquire Visa Europe. On April 21,~~recover for covered losses" related to VE territory covered losses compared to $34 million at September 30, 2016 ~~the two parties reached the Preliminary Agreement, which would impact only transaction consideration. The transaction remains subject~~as a result of additional losses incurred, including settlements with several merchants and additional legal costs. See Note 12—Legal Matters. There were no adjustments to the negotiation of definitive documentation of the amendment and to regulatory approval. While the parties continue to work toward closing as soon as possible, closing could extend beyond the end of the Company's fiscal third quarter. Visa Inc., Visa Europe or their affiliates are, or may become, a party to certain existing and potential litigation relating to the setting of multilateral interchange feeconversion rates in the ~~Visa Europe territory.~~ three months ended December 31, 2016.

The ~~Company has obtained certain protection in respect~~following table sets forth the as-converted value of ~~losses resulting from existing and potential litigation through~~ the preferred stock ~~and~~available to recover VE territory covered losses compared to the ~~U.K. loss sharing agreement, and has agreed to certain terms regarding~~book value of preferred shares recorded in stockholders' equity within the ~~conduct~~Company's unaudited consolidated balance sheet as of ~~such litigation, all of which is conditioned on the closing of the acquisition of Visa Europe by the Company. See~~ December 31, 2016.~~Note 2—Visa Europe.~~⁽¹⁾



	December 31, 2016
	As-Converted Value of Preferred Stock⁽²⁾			Book Value of Preferred Stock
	(in millions)
U.K.&I preferred stock	$	2,700		$	2,516
Europe preferred stock	3,436			3,201
Total	$	6,136		$	5,717
Less: Right to recover for covered losses	(128		)	(128		)
Total recovery for covered losses available	$	6,008		$	5,589


⁽¹⁾	Figures in the table may not recalculate exactly due to rounding. As-converted and book values are based on unrounded numbers.

⁽²⁾

The as-converted value of preferred stock is calculated as the product of: (a) 2 million and 3 million shares of the U.K.&I and Europe preferred stock outstanding, respectively, as of December 31, 2016; (b) the 13.952 class A common stock conversion rate applicable to both the U.K.&I and Europe preferred stock as of December 31, 2016; and (c) $78.02, Visa's class A common stock closing stock price as of December 31, 2016.

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VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Note 4—Fair Value Measurements and Investments

Fair Value Measurements

Assets and Liabilities Measured at Fair Value on a Recurring Basis


	Fair Value Measurements Using Inputs Considered as												Fair Value Measurements Using Inputs Considered as
	Level 1				Level 2				Level 3				Level 1				Level 2
	March 31, 2016		September 30, 2015		March 31, 2016		September 30, 2015		March 31, 2016		September 30, 2015		December 31, 2016		September 30, 2016		December 31, 2016		September 30, 2016
	(in millions)												(in millions)
Assets
Cash equivalents and restricted cash:
Money market funds	$	6,765	$	3,051									$	4,819	$	4,537
U.S. Treasury securities	5,099		—
U.S. government-sponsored debt securities					$	3,328	$	280									$	—	$	196
Investment securities, trading:
Equity securities	69		66										82		71
Investment securities, available-for-sale:
U.S. government-sponsored debt securities																	4,671		4,699
U.S. Treasury securities	3,079		2,656										2,554		2,178
U.S. government-sponsored debt securities					4,043		2,615
Equity securities	67		4										62		53
Corporate debt securities					273		533										130		249
Auction rate securities									$	—	$	7
Prepaid and other current assets:
Foreign exchange derivative instruments																	88		50
Other assets:
Foreign exchange derivative instruments					188		76										2		6
Total	$	15,079	$	5,777	$	7,832	$	3,504	$	—	$	7	$	7,517	$	6,839	$	4,891	$	5,200
Liabilities
Accrued liabilities:
Visa Europe put option									$	—	$	255
Foreign exchange derivative instruments																	$	76	$	116
Other liabilities:
Foreign exchange derivative instruments					$	114	$	13									8		20
Total	$	—	$	—	$	114	$	13	$	—	$	255	$	—	$	—	$	84	$	136

There were no transfers between Level 1 and Level 2 assets during the ~~six~~three months ended ~~March~~December 31, ~~2016 and 2015.~~2016.

Level 1 assets measured at fair value on a recurring basis. Money market funds, publicly-traded equity securities and U.S. Treasury securities are classified as Level 1 within the fair value hierarchy, as fair value is based on quoted prices in active markets.

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~~VISA INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

Level 2 assets and liabilities measured at fair value on a recurring basis. The fair value of U.S. government-sponsored debt securities and corporate debt securities, as provided by third-party pricing vendors, is based on quoted prices in active markets for similar, not identical, assets. The pricing data obtained from outside sources is reviewed internally for reasonableness, compared against benchmark quotes from independent pricing sources, then confirmed or revised accordingly. Foreign exchange derivative instruments are valued using inputs that are observable in the market or can be derived principally from or corroborated by observable market data. There were no substantive changes to the valuation techniques and related inputs used to measure fair value during the ~~six~~three months ended ~~March~~December 31, 2016.

~~Level 3 assets and liabilities measured at fair value on a recurring basis.~~ Auction rate securities are classified as Level 3 due to a lack of trading in active markets and a lack of observable inputs in measuring fair value. There were no substantive changes to the valuation techniques and related inputs used to measure fair value during the six months ended March 31, 2016.

~~Visa Europe put option agreement.~~ On November 2, 2015, the Company and Visa Europe entered into the Put Option Amendment to align certain terms of the Put with the terms of the Visa Europe Transaction Agreement. Under the terms and conditions of the Transaction Agreement, the Visa Europe board of directors is required to exercise the Amended Put Option on the closing date of the transaction to effect Visa’s purchase of all of Visa Europe’s share capital. If the Transaction Agreement is terminated for any reason prior to the completion of the transaction, the Put Option Amendment will also terminate and the Put will revert to its original, unamended form. On April 21, 2016, the Company and Visa Europe agreed that the Amended Put Option will be further amended as needed to reflect the changes in transaction consideration under the Preliminary Agreement. The terms of the Amended Put Option will otherwise remain unchanged.

Exercise of the Amended Put Option by the Visa Europe board of directors is mandatory, subject to the satisfaction of the terms and conditions of the Transaction Agreement. As such, for accounting purposes, it is not treated as a written put option and is not required to be recorded at fair value. At March 31, 2016, Visa expected to complete the transaction through exercise of the Amended Put Option. Therefore, management concluded that it does not expect the Put to revert to its original, unamended form or to be unilaterally exercised by Visa Europe in the future. As a result, the value of the Put was estimated to be zero at March 31, 2016 and December 31, 2015. During the first quarter of fiscal 2016, the Company recorded a $255 million non-cash decrease in the fair value of the Put as non-operating income in the Company's consolidated statements of operations.

Assets Measured at Fair Value on a Non-recurring Basis

Non-marketable equity investments and investments accounted for under the equity method. These investments are classified as Level 3 due to the absence of quoted market prices, the inherent lack of liquidity, and the fact that inputs used to measure fair value are unobservable and require management's judgment. When certain events or

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VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

circumstances indicate that impairment may exist, the Company revalues the investments using various assumptions, including the financial metrics and ratios of comparable public companies. There were no

significant impairments during the ~~six~~three months ended ~~March~~December 31, 2016 or 2015. These investments totaled ~~$45~~$48 million and $46 million at ~~March~~December 31, 2016 and September 30, ~~2015~~2016, respectively, and are classified in other assets on the consolidated balance sheets.

Due to the completion of an initial public offering by one of the Company's investees during fiscal 2016, the Company reclassified equity securities previously accounted for as a cost method investment, with a carrying value of $4 million, to short-term available-for-sale investment securities. The fair value of this investment at March 31, 2016 was $64 million, resulting in the recognition of a pre-tax unrealized gain of $60 million in other comprehensive income.

Non-financial assets and liabilities. Long-lived assets such as goodwill, indefinite-lived intangible assets, finite-lived intangible assets, and property, equipment and technology are considered non-financial assets. The Company does not have any non-financial liabilities measured at fair value on a non-recurring basis. Finite-lived intangible assets primarily consist of customer relationships, trade names and reseller relationships, all of which were obtained through acquisitions.

If the Company were required to perform a quantitative assessment for impairment testing of goodwill and indefinite-lived intangible assets, the fair values would generally be estimated using an income approach. As the assumptions employed to measure these assets on a non-recurring basis are based on management's judgment

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~~VISA INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

using internal and external data, these fair value determinations are classified as Level 3 in the fair value hierarchy. ~~The Company completed its annual impairment review of its indefinite-lived intangible assets and goodwill as of February 1, 2016, and concluded that there was~~There were no ~~impairment. No recent~~ events or changes in circumstances that indicate ~~that~~ impairment ~~existed~~ at ~~March~~December 31, ~~2016~~.2016.

Other Fair Value Disclosures

Long-term debt. ~~In December 2015, the Company issued fixed-rate senior notes in an aggregate principal amount of $16.0 billion, with maturities ranging between 2 and 30 years. See~~ ~~Note 5—Debt.~~ ~~These debt~~Debt instruments are measured at amortized cost on the Company's unaudited consolidated balance sheet at ~~March~~December 31, 2016. The fair value of ~~these notes,~~the debt instruments, as provided by third-party pricing vendors, is based on quoted prices in active markets for similar, not identical, assets. The pricing data obtained from outside sources is reviewed internally for reasonableness, compared against benchmark quotes from independent pricing sources, then confirmed or revised accordingly. If measured at fair value in the financial statements, these instruments would be classified as Level 2 in the fair value hierarchy.

The following table presents the carrying amount and estimated fair value of the Company’s debt in order of ~~maturity:~~maturity.


	March 31, 2016				December 31, 2016				September 30, 2016
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
	(in millions)				(in millions)
1.20% Senior Notes due December 2017	$	1,745	$	1,760	$	1,747	$	1,750	$	1,746	$	1,754
2.20% Senior Notes due December 2020	2,986		3,075		2,988		3,009		2,988		3,077
2.80% Senior Notes due December 2022	2,237		2,346		2,239		2,263		2,238		2,359
3.15% Senior Notes due December 2025	3,962		4,176		3,965		4,018		3,964		4,225
4.15% Senior Notes due December 2035	1,485		1,612		1,485		1,570		1,485		1,698
4.30% Senior Notes due December 2045	3,461		3,829		3,461		3,694		3,461		4,045
	$	15,876	$	16,798
Total					$	15,885	$	16,304	$	15,882	$	17,158

Other financial instruments not measured at fair value. The following financial instruments are not measured at fair value on the Company's unaudited consolidated balance sheet at ~~March~~December 31, 2016,, but ~~require~~ disclosure of their fair ~~values:~~values is required: time deposits recorded in prepaid expenses and other current assets, settlement receivable and payable, commercial paper, and customer collateral. The estimated fair value of such instruments at ~~March~~December 31, 2016 approximates their carrying value due to their generally short maturities. If measured at fair value in the financial statements, these financial instruments would be classified as Level 2 in the fair value hierarchy.

Investments

Available-for-sale investment securities. The Company had ~~$65~~$59 million in gross unrealized gains and $2$7 million in gross unrealized losses at ~~March~~December 31, 2016. ~~The unrealized gains were primarily related to the Company's reclassified equity investment discussed above.~~ There were $7$55 million gross unrealized gains and no gross unrealized losses at September 30, ~~2015.~~2016. A majority of the Company's available-for-sale investment securities with stated maturities are due within one to two years.

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VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Note 5—Debt

The Company had outstanding debt as follows:


	March 31, 2016									December 31, 2016							September 30, 2016
	Principal Amount		Unamortized Discounts and Debt Issuance Costs			Carrying Amount		Effective Interest Rate		Principal Amount		Unamortized Discounts and Debt Issuance Costs			Carrying Amount		Principal Amount		Unamortized Discounts and Debt Issuance Costs			Carrying Amount		Effective Interest Rate
										(in millions, except percentages)
Commercial Paper										$	567	$	(1	)	$	566	$	—	$	—		$	—	0.79	%	⁽¹⁾
1.20% Senior Notes due December 2017 (the "2017 Notes")										1,750		(3		)	1,747		—		—			—		1.37	%
Total current maturities of long-term debt and short-term debt										2,317		(4		)	2,313		—		—			—
	(in millions, except percentages)
1.20% Senior Notes due December 2017 (the "2017 Notes")	$	1,750	$	(5	)	$	1,745	1.37	%	—		—			—		1,750		(4		)	1,746		1.37	%
2.20% Senior Notes due December 2020 (the "2020 Notes")	3,000		(14		)	2,986		2.30	%	3,000		(12		)	2,988		3,000		(12		)	2,988		2.30	%
2.80% Senior Notes due December 2022 (the "2022 Notes")	2,250		(13		)	2,237		2.89	%	2,250		(11		)	2,239		2,250		(12		)	2,238		2.89	%
3.15% Senior Notes due December 2025 (the "2025 Notes")	4,000		(38		)	3,962		3.26	%	4,000		(35		)	3,965		4,000		(36		)	3,964		3.26	%
4.15% Senior Notes due December 2035 (the "2035 Notes")	1,500		(15		)	1,485		4.23	%	1,500		(15		)	1,485		1,500		(15		)	1,485		4.23	%
4.30% Senior Notes due December 2045 (the "2045 Notes")	3,500		(39		)	3,461		4.37	%	3,500		(39		)	3,461		3,500		(39		)	3,461		4.37	%
Total long-term debt	$	16,000	$	(124	)	$	15,876			14,250		(112		)	14,138		16,000		(118		)	15,882

Total debt										$	16,567	$	(116	)	$	16,451	$	16,000	$	(118	)	$	15,882


⁽¹⁾	Represents the weighted-average interest rate for the commercial paper outstanding at December 31, 2016.

Senior Notes

In December 2015, the Company issued fixed-rate senior notes (the 2017 Notes, 2020 Notes, 2022 Notes, 2025 Notes, 2035 Notes and 2045 Notes, or collectively, the "Notes") in conjunction with the anticipated acquisition of Visa Europe, in an aggregate principal amount of $16.0 billion, with maturities ranging between 2 and 30 years. Interest on the Notes, at a rate ranging between 1.20% and 4.30%, is payable semi-annually on June 14 and December 14 of each year, commencing June 14, 2016. The Company recognized ~~related~~ interest expense for the senior notes, which were issued in December 2015, of $125 million and ~~$149~~$24 million for the three ~~and six~~ months ended ~~March~~December 31, 2016 and 2015, respectively, as non-operating expense. The ~~net aggregate proceeds~~Company paid $244 million in interest on the senior notes during the three months ended December 31, 2016.

Commercial Paper Program

The Company maintains a commercial paper program to support its working capital requirements and for other general corporate purposes. The carrying amount outstanding at December 31, 2016 was $566 million, with a weighted-average interest rate of 0.79% and remaining maturities ranging from ~~the issuance~~37 days to 66 days. As of the Notes, after deducting discounts and debt issuance costs, were $15.9 billion. The discounts and debt issuance costs will be amortized over the respective term of each note using the effective interest method. The indenture governing the Notes contains customary event of default provisions. The Notes are senior unsecured obligations ofSeptember 30, 2016, the Company ~~ranking equally and ratably among themselves and with~~had no outstanding obligations under the Company's existing and future unsecured and unsubordinated debt. The Notes are not secured by any assets of the Company and are not guaranteed by any of the Company's subsidiaries. The Company was in compliance with all related covenants as of March 31, 2016.

Each series of the Notes may be redeemed as a whole or in part, at the Company’s option at any time, prior to, with respect to the 2017 Notes, their maturity date, and with respect to the 2020 Notes, the 2022 Notes, the 2025program.

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VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

~~Notes, the 2035 Notes and the 2045 Notes, the applicable par call date (as set forth in the table below), at a price equal to the greater of:~~

~~100% of the principal amount of such Notes; and~~

the sum of the present value of the remaining scheduled payments of principal and interest through the maturity or par call date for each of the Notes below at the treasury rate defined under the terms of the Notes, plus the applicable spread for such Notes (as set forth in the table below),

~~plus, in each case, accrued and unpaid interest to, but excluding, the date of redemption.~~



~~Series~~	~~Maturity/Par Call Date~~	~~Spread~~
~~2017 Notes~~	~~December 14, 2017~~	~~5 bps~~
~~2020 Notes~~	~~November 14, 2020~~	~~10 bps~~
~~2022 Notes~~	~~October 14, 2022~~	~~12.5 bps~~
~~2025 Notes~~	~~September 14, 2025~~	~~15 bps~~
~~2035 Notes~~	~~June 14, 2035~~	~~20 bps~~
~~2045 Notes~~	~~June 14, 2045~~	~~20 bps~~

On or after the applicable par call date, the Notes, except the 2017 Notes, may be redeemed as a whole or in part, at the Company’s option at any time, at a redemption price equal to 100% of the principal amount of the Notes being redeemed plus accrued interest.

In the event that the Visa Europe acquisition has not been consummated on or prior to February 2, 2017 (which date may be extended in accordance with the terms of the Notes), the Company will be required to redeem all outstanding 2017 Notes, 2020 Notes, 2022 Notes and 2025 Notes on the special mandatory redemption date, as defined in the terms of the Notes, at a redemption price equal to 101% of the aggregate principal amount of such Notes plus accrued and unpaid interest. The 2035 Notes and 2045 Notes are not subject to the special mandatory redemption provision.

~~Future principal payments on the Company's outstanding debt are as follows:~~

Fiscal Year 2016 2017 2018 2019 2020 Thereafter Total
(in millions) $ —
$ —
$ 1,750
$ —
$ —
$ 14,250
$ 16,000

Credit Facility ~~Renewal.~~ Extension

On January 27, ~~2016,~~2017, the Company ~~Visa International Service Association and Visa U.S.A. Inc. (collectively,~~extended the ~~"Borrowers") entered into a 5-year, unsecured~~term of the $4.0 billion revolving credit facility (the "Credit Facility") with Bank of America, N.A., as administrative agent and the lenders party thereto. JP Morgan Chase Bank, N.A., acted as syndication agent in connection with the Credit Facility; Bank of China, Los Angeles Branch, Barclays Bank PLC, Citibank, N.A., HSBC Bank USA, N.A., Royal Bank of Canada, Standard Chartered Bank, The Bank of Tokyo-Mitsubishi UFJ, Ltd., U.S. Bank National Association, Wells Fargo Bank, National Association, Deutsche Bank Securities Inc. and Toronto Dominion (New York) LLC, acted as Documentation Agents; and J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Bank of China, Los Angeles Branch, Barclays Bank PLC, Citigroup Global Markets, Inc., HSBC Bank USA, N.A., RBC Capital Markets, Standard Chartered Bank, The Bank of Tokyo-Mitsubishi UFJ, Ltd., U.S. Bank National Association, Wells Fargo Securities, LLC, Deutsche Bank Securities Inc. and TD Securities (USA) LLC, acted as joint lead arrangers and joint book runners. The Credit Facility, which expires on January 27, 2021, replaced the Company's prior $3.0 billion credit facility ~~which expired~~that was entered into on January 27, 2016.

The ~~Credit Facility provides the Borrowers with a borrowing capacity of up to $4.0 billion. Borrowings under the Credit Facility are available for general corporate purposes. Interest~~credit facility will now expire on the borrowings under the Credit Facility would be charged at the London Interbank Offered Rate (LIBOR) or an alternative base rate, in each case plus applicable margins that fluctuate based on the applicable rating of senior unsecured long-term debt securitiesJanuary 27, 2022. No other terms were materially changed. A brief description of the

~~Table of Contents~~

~~VISA INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~Company. The Borrowers have agreed to pay a commitment fee which will fluctuate based on such applicable rating~~ material terms and conditions of the ~~Company.~~

~~Other material terms are:~~

~~a financial covenant which requires the Company to maintain a Consolidated Indebtedness to Consolidated EBITDA Ratio (as defined~~credit facility are described in the ~~Credit Facility) of not greater than 3.75 to 1.00;~~

~~customary restrictive covenants, which limit~~Company's Form 10-K, as filed with the Borrowers' ability to, among other things, create certain liens, effect fundamental changes to their business, or merge or dispose of substantially all of their assets, subject in each case to customary exceptions and amounts;

customary events of default, upon the occurrence of which, after any applicable grace period, the requisite lenders will have the ability to accelerate all outstanding loans thereunder and terminate the commitments; and

~~other customary and standard terms and conditions.~~

~~The Borrowers currently have no borrowings under the Credit Facility. The participating lenders in the Credit Facility include certain holders~~SEC on November 15, 2016. A copy of the credit facility is filed as Exhibit 10.1 to the Company's ~~class B~~Form 10-Q, as filed with the SEC on April 30, 2016 and ~~class C common stock, certain of the Borrowers' customers and their affiliates.~~is hereby incorporated by reference.

Note 6—~~Pension and Other Postretirement Benefits~~

In October 2015, the Company's board of directors approved an amendment of the qualified defined benefit pension plan such that the Company discontinued employer provided credits after December 31, 2015. Plan participants continue to earn interest credits on existing balances at the time of the freeze. As a result, a curtailment gain totaling $8 million was recognized as part of the Company's net periodic benefit cost. The Company also recorded a net unrealized actuarial gain of $56 million from the remeasurement of its pension plan in the first quarter of fiscal 2016 within other comprehensive income.

~~The components of net periodic benefit cost are as follows:~~

Pension Benefits Other Postretirement Benefits
Three Months Ended
March 31, Six Months Ended
March 31, Three Months Ended
March 31, Six Months Ended
March 31,
2016 2015 2016
2015 2016 2015 2016 2015
(in millions)
Service cost $ —
$ 11
$ 13
$ 23
$ —
$ —
$ —
$ —
Interest cost 10
10
21
20
—
—
—
—
Expected return on assets (18 ) (18 ) (35 ) (36 ) —
—
—
—
Amortization of:
Prior service credit —
(1 ) (1 ) (3 ) (1 ) (1 ) (2 ) (2 )
Actuarial loss 2
—
4
—
—
—
—
—
Curtailment gain —
—
(8 ) —
—
—
—
—
Settlement loss —
2
—
4
—
—
—
—
Total net periodic benefit cost $ (6 ) $ 4
$ (6 ) $ 8
$ (1 ) $ (1 ) $ (2 ) $ (2 )

~~Note 7—~~Settlement Guarantee Management

The Company indemnifies its clients for settlement losses suffered due to failure of any other clients to fund its settlement obligations in accordance with the Visa Rules. This indemnification creates settlement risk for the Company due to the difference in timing between the date of a payment transaction and the date of subsequent settlement. The exposure to settlement losses through Visa's settlement indemnification is accounted for as a

~~Table of Contents~~

~~VISA INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

settlement risk guarantee. The Company’s settlement exposure is limited to the amount of unsettled Visa payment transactions at any point in time. The Company requires certain clients that do not meet its credit standards to post collateral to offset potential loss from their estimated unsettled transactions. The Company’s estimated maximum settlement exposure was ~~$43.8~~$68.7 billion for the quarter ended ~~March~~December 31, 2016,, compared to ~~$43.5~~$67.8 billion for the quarter ended September 30, ~~2015~~.2016. Of these amounts, ~~$2.2~~$3.0 billion and $2.9 billion were covered by collateral at ~~March~~December 31, 2016 and September 30, ~~2015~~.2016, respectively.

The Company maintained collateral as follows:


	March 31, 2016		September 30, 2015		December 31, 2016		September 30, 2016
	(in millions)				(in millions)
Cash equivalents(1)	$	1,050	$	1,023	$	1,283	$	1,295
Pledged securities at market value	151		154		166		170
Letters of credit	1,103		1,178		1,328		1,311
Guarantees	961		971		1,443		1,418
Total	$	3,265	$	3,326	$	4,220	$	4,194


⁽¹⁾	Cash collateral held by Visa Europe is not included on the Company's consolidated balance sheets as its clients retain beneficial ownership and the cash is only accessible to the Company in the event of default by the client on its settlement obligations.

The total available collateral balances presented in the table above were greater than the settlement exposure covered by customer collateral held due to instances in which the available collateral exceeded the total settlement exposure for certain financial institutions at each date presented.

The fair value of the settlement risk guarantee is estimated based on a proprietary probability-weighted model and was approximately $1$2 million at ~~March~~December 31, 2016 and September 30, ~~2015~~.2016. These amounts are reflected in accrued liabilities on the Company's consolidated balance sheets.

~~Note 8—Derivative Financial Instruments~~

The Company entered into currency forward contracts during the second quarter of fiscal 2016 to mitigate a portion of the foreign currency exchange rate risk associated with the upfront cash consideration to be paid in the anticipated Visa Europe acquisition. Subsequently, prior to the end of the quarter, the Company entered into additional currency forward contracts to fully offset the original positions, eliminating its risk-mitigation position. All contracts are set to mature during the third quarter of fiscal 2016. As these contracts are not designated in hedging relationships, related gains and losses are recorded directly in earnings as part of non-operating income. The Company recorded net unrealized gains of $116 million related to these contracts during the three and six months ended March 31, 2016.

Note 9—7—Pension and Other Postretirement Benefits

The Company sponsors various qualified and non-qualified defined benefit pension and other postretirement benefit plans that provide for retirement and medical benefits for substantially all employees residing in the U.S. The Company also sponsors other pension benefit plans that provide benefits for internationally-based employees at certain non-U.S. locations. The components of net periodic benefit cost presented below include the U.S. pension plans and the non-U.S. plans, which represent Visa Europe funded and unfunded pension plans. Disclosures relating to other non-U.S. pension benefit plans are not included as they are immaterial, individually and in aggregate.

In October 2015, the U.S. qualified defined benefit pension plan was amended such that the Company discontinued employer provided credits after December 31, 2015, and that plan participants continue to earn interest credits on existing balances at the time of the freeze. The Visa Europe pension plans had been closed to new entrants prior to the Visa Europe acquisition.

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VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)



	U.S. Plans												Non-U.S. Plans
	Pension Benefits						Other Postretirement Benefits						Pension Benefits
	Three Months Ended December 31,						Three Months Ended December 31,						Three Months Ended December 31,
	2016			2015			2016			2015			2016
	(in millions)
Service cost	$	—		$	13		$	—		$	—		$	2
Interest cost	9			11			—			—			3
Expected return on assets	(18		)	(17		)	—			—			(4		)
Amortization of:
Prior service credit	—			(1		)	(1		)	(1		)	—
Actuarial loss	4			2			—			—			—
Curtailment gain	—			(8		)	—			—			—
Settlement loss	2			—			—			—			—
Total net periodic benefit cost	$	(3	)	$	—		$	(1	)	$	(1	)	$	1

Note 8—Stockholders' Equity

As-Converted Class A Common Stock.The number of shares of each series and class and the number of shares of class A common stock on an as-converted basis at ~~March~~December 31, 2016, are as follows:


(in millions, except conversion rates)	Shares Outstanding	Conversion Rate Into Class A Common Stock		As-converted Class A Common Stock⁽¹⁾	Shares Outstanding	Conversion Rate Into Class A Common Stock		As-converted Class A Common Stock⁽¹⁾
Class A common stock	1,905	—		1,905
U.K.&I preferred stock					2	13.9520		35
Europe preferred stock					3	13.9520		44
Class A common stock ⁽²⁾					1,854	—		1,854
Class B common stock	245	1.6483	⁽²⁾	405	245	1.6483	⁽³⁾	405
Class C common stock	19	4.0000		75	16	4.0000		62
Total				2,385				2,400


⁽¹⁾	Figures in the table may not recalculate exactly due to rounding. As-converted class A common stock is calculated based on unrounded numbers.


⁽²⁾	Class A common stock shares outstanding exclude repurchases traded but not yet settled on or before December 31, 2016.


⁽³⁾	The class B to class A common stock conversion rate is presented on a rounded basis. Conversion calculations for dividend payments are based on a conversion rate rounded to the tenth decimal.

~~Table of Contents~~

~~VISA INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~Reduction in as-converted class A common stock.~~Common stock repurchases. The following table presents share repurchases in the open market.⁽¹⁾


(in millions, except per share data)	Three Months Ended March 31, 2016		Six Months Ended March 31, 2016		Three Months Ended December 31, 2016
Shares repurchased in the open market ⁽¹⁾⁽²⁾	24		50		24
Average repurchase price per share ⁽²⁾⁽³⁾	$	72.23	$	75.47	$	79.94
Total cost	$	1,750	$	3,765	$	1,893


⁽¹⁾	Shares repurchased in the open market reflect repurchases settled during the three months ended December 31, 2016. These amounts include repurchases traded but not yet settled on or before September 30, 2016 and exclude repurchases traded but not yet settled on or before December 31, 2016.


⁽²⁾	All shares repurchased in the open market have been retired and constitute authorized but unissued shares.


⁽²⁾⁽³⁾	Figures in the table may not recalculate exactly due to rounding. Average repurchase price per share is calculated based on unrounded numbers.

As of ~~March~~December 31, 2016, the ~~October 2015~~Company's July 2016 program had remaining authorized funds of ~~$4.0~~$3.9 billion for share repurchase. All share repurchase programs authorized prior to ~~October 2015~~July 2016 have been completed.

Dividends.In ~~April 2016,~~January 2017, the Company’s board of directors declared a quarterly cash dividend of ~~$0.14~~$0.165 per share of class A common stock (determined in the case of class B and C common stock and U.K.&I and Europe

Table of Contents

VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

preferred stock on an as-converted basis). The cash dividend will be paid on ~~June~~March 7, ~~2016,~~2017, to all holders of record of the Company's common and preferred stock as of ~~May 13, 2016.~~February 17, 2017. The Company declared and paid ~~$336 million and $676~~$399 million in dividends to holders of the Company's common stock during the three ~~and six~~ months ended ~~March~~December 31, ~~2016, respectively.~~2016.

Note ~~10—~~9—Earnings Per Share

Basic earnings per share is computed by dividing net income available to each class ~~and series~~ by the weighted-average number of shares of common stock outstanding and participating securities ~~in the form of unvested restricted stock awards, unvested restricted stock units and unvested earned performance-based shares~~ during the period. Net income is allocated to each class ~~and series~~ of common stock and participating securities based on its proportional ownership on an as-converted basis. The ~~weighted~~weighted-average number of shares of each class ~~and series~~ of common stock outstanding reflects changes in ownership over the periods presented. See Note 9—8—Stockholders' Equity.

Diluted earnings per share is computed by dividing net income available by the weighted-average number of shares of common stock outstanding, participating securities ~~in the form of unvested restricted stock awards, unvested restricted stock units and unvested earned performance-based shares~~ and, if dilutive, potential class A common stock equivalent shares outstanding during the period. Dilutive class A common stock equivalents may consist of: (1) shares of class A common stock issuable upon the conversion of U.K.&I and Europe preferred stock and class B and ~~class~~ C common stock based on the conversion rate in effect through the period, and (2) incremental shares of class A common stock calculated by applying the treasury stock method to the assumed exercise of employee stock options, the assumed purchase of stock under the Employee Stock Purchase Plan and the assumed vesting of unearned performance shares.

The following table presents earnings per share for the three months ended ~~March~~December 31, 2016.⁽¹⁾

Basic Earnings Per Share Diluted Earnings Per Share
(in millions, except per share data)

Income
Allocation
(A)⁽²⁾

Weighted-
Average
Shares
Outstanding (B)

Earnings per
Share =
(A)/(B)

Income
Allocation
(A)⁽²⁾

Weighted-
Average
Shares
Outstanding (B)

Earnings per
Share =
(A)/(B)
Class A common stock $ 1,360
1,909
$ 0.71
$ 1,707
2,401
⁽³⁾
$ 0.71
Class B common stock 288
245
$ 1.17
$ 288
245
$ 1.17
Class C common stock 55
19
$ 2.85
$ 55
19
$ 2.84
Participating securities⁽⁴⁾
4
Not presented
Not presented
$ 4
Not presented
Not presented
Net income $ 1,707

~~Table of Contents~~

~~VISA INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~The following table presents earnings per share for the six months ended March 31, 2016.~~⁽¹⁾


	Basic Earnings Per Share					Diluted Earnings Per Share						Basic Earnings Per Share					Diluted Earnings Per Share
	(in millions, except per share data)											(in millions, except per share data)
	Income Allocation (A)⁽²⁾		Weighted- Average Shares Outstanding (B)	Earnings per Share = (A)/(B)		Income Allocation (A)⁽²⁾		Weighted- Average Shares Outstanding (B)		Earnings per Share = (A)/(B)		Income Allocation (A)⁽²⁾		Weighted- Average Shares Outstanding (B)	Earnings per Share = (A)/(B)		Income Allocation (A)⁽²⁾		Weighted- Average Shares Outstanding (B)		Earnings per Share = (A)/(B)
Class A common stock	$	2,910	1,923	$	1.51	$	3,648	2,416	⁽³⁾	$	1.51	$	1,594	1,860	$	0.86	$	2,070	2,421	⁽³⁾	$	0.86
Class B common stock	612		245	$	2.49	$	611	245		$	2.49	347		245	$	1.41	$	346	245		$	1.41
Class C common stock	118		19	$	6.05	$	117	19		$	6.04	57		17	$	3.43	$	57	17		$	3.42
Participating securities⁽⁴⁾	8		Not presented	Not presented		$	8	Not presented		Not presented		72		Not presented	Not presented		$	72	Not presented		Not presented
Net income	$	3,648										$	2,070

The following table presents earnings per share for the three months ended ~~March~~December 31, 2015.⁽¹⁾

Basic Earnings Per Share Diluted Earnings Per Share
(in millions, except per share data)

Income
Allocation
(A)⁽²⁾

Weighted-
Average
Shares
Outstanding (B)

Earnings per
Share =
(A)/(B)

Income
Allocation
(A)⁽²⁾

Weighted-
Average
Shares
Outstanding (B)

Earnings per
Share =
(A)/(B)
Class A common stock $ 1,240
1,963
$ 0.63
$ 1,550
2,460
⁽³⁾
$ 0.63
Class B common stock 255
245
$ 1.04
$ 255
245
$ 1.04
Class C common stock 51
20
$ 2.53
$ 51
20
$ 2.52
Participating securities⁽⁴⁾
4
Not presented
Not presented
$ 4
Not presented
Not presented
Net income $ 1,550

~~The following table presents earnings per share for the six months ended~~ ~~March 31, 2015~~.⁽¹⁾


	Basic Earnings Per Share					Diluted Earnings Per Share						Basic Earnings Per Share					Diluted Earnings Per Share
	(in millions, except per share data)											(in millions, except per share data)
	Income Allocation (A)⁽²⁾		Weighted- Average Shares Outstanding (B)	Earnings per Share = (A)/(B)		Income Allocation (A)⁽²⁾		Weighted- Average Shares Outstanding (B)		Earnings per Share = (A)/(B)		Income Allocation (A)⁽²⁾		Weighted- Average Shares Outstanding (B)	Earnings per Share = (A)/(B)		Income Allocation (A)⁽²⁾		Weighted- Average Shares Outstanding (B)		Earnings per Share = (A)/(B)
Class A common stock	$	2,492	1,969	$	1.27	$	3,119	2,469	⁽³⁾	$	1.26	$	1,550	1,937	$	0.80	$	1,941	2,430	⁽³⁾	$	0.80
Class B common stock	512		245	$	2.09	$	511	245		$	2.08	324		245	$	1.32	$	323	245		$	1.32
Class C common stock	107		21	$	5.06	$	106	21		$	5.05	63		20	$	3.20	$	63	20		$	3.20
Participating securities⁽⁴⁾	8		Not presented	Not presented		$	8	Not presented		Not presented		4		Not presented	Not presented		$	4	Not presented		Not presented
Net income	$	3,119										$	1,941


⁽¹⁾	Figures in the table may not recalculate exactly due to rounding. Earnings per share is calculated based on unrounded numbers.

⁽²⁾

Net income is allocated based on proportional ownership on an as-converted basis. The weighted-average number of shares of as-converted class B common stock used in the income allocation was 405 million for the three ~~and~~ ~~six~~months ended ~~March~~December 31, 2016 and 2015. The weighted-average number of shares of as-converted class C common stock used in the income allocation was 7767 million and 78 million for the three ~~and~~ ~~six~~months ended ~~March~~December 31, 2016 ~~respectively,~~ and 812015, respectively. The weighted-average number of shares of as-converted U.K.&I and Europe preferred stock, included within participating securities, used in the income allocation was 35 million and 8444 million, respectively, for the three ~~and~~ ~~six~~months ended ~~March~~December 31, ~~2015, respectively.~~ 2016.

⁽³⁾

Weighted-average diluted shares outstanding are calculated on an as-converted basis, and include incremental common stock equivalents, as calculated under the treasury stock method. The computation includes approximately 5 million common stock equivalents for the three ~~and~~ ~~six~~months ended ~~March~~December 31, 2016 and 2015 because their effect would be dilutive. The computation excludes 3 million and 1 millionof common stock equivalents for the three ~~and~~ ~~six~~months ended ~~March~~December 31, 2016 and 2015, respectively, because their effect would have been anti-dilutive.

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VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

⁽⁴⁾

Participating securities ~~are~~include preferred stock outstanding and unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents, such as the Company's U.K.&I and Europe preferred stock, restricted stock awards, restricted stock units and ~~unvested~~ earned performance-based shares. Participating securities' income is allocated based on the weighted-average number of shares of as-converted stock.

Note ~~11—~~10—Share-based Compensation

The Company granted the following equity awards to employees and non-employee directors under the 2007 Equity Incentive Compensation Plan during the ~~six~~three months ended ~~March~~December 31, 2016:


	Granted	Weighted-Average Grant Date Fair Value		Weighted-Average Exercise Price		Granted	Weighted-Average Grant Date Fair Value		Weighted-Average Exercise Price
Non-qualified stock options	1,393,565	$	15.06	$	80.02	1,671,344	$	13.90	$	80.82
Restricted stock units ("RSUs")	2,449,389	$	79.91			2,952,720	$	80.82
Performance-based shares⁽¹⁾	604,219	$	92.71			634,651	$	86.37


⁽¹⁾	Represents the maximum number of performance-based shares which could be earned.

The Company’s non-qualified stock options and RSUs are equity awards with service-only conditions and are accordingly expensed on a straight-line basis over the vesting period. The Company's performance-based shares are equity awards with service, market and performance conditions that are accounted for using the graded-vesting method. ~~Compensation~~The Company recorded share-based compensation cost ~~is recorded~~of $45 million for the three months ended December 31, 2016, net of estimated forfeitures, which are adjusted as appropriate.

Note ~~12—~~11—Income Taxes

The effective income tax rates were ~~30%~~31% and ~~28%~~26% for the three ~~and six~~ months ended ~~March~~December 31, 2016 ~~respectively,~~ and ~~32% and 31% for the three and six months ended March 31,~~ 2015, respectively. The effective tax ~~rates~~rate for the three ~~and six~~ months ended ~~March~~December 31, 2016 ~~differ~~differs from the effective tax ~~rates~~rate in the same ~~periods~~period in the prior fiscal ~~2015~~year primarily due to:

~~the reversal~~

$26 million of ~~prior years' accrued taxes on undistributed intercompany dividends in~~excess tax benefits related to share-based payments recorded during the quarter ended ~~March~~December 31, 2016 as a result of ~~revised intercompany dividend strategies between international subsidiaries;~~early adoption of new Accounting Standards Update 2016-09. See Note 1—Summary of Significant Accounting Policies;

the restrictions on U.S. foreign tax credits that can be claimed on Visa Europe's foreign taxes under the current tax structure;

the absence of the non-taxable $255 million revaluation of the Visa Europe put option recorded in the quarter ended December 31, 2015; and

the absence of foreign tax credit benefits related to prior fiscal years recognized during the quarter ended December 31, ~~2015; and~~

~~the absence of the reversal of previously established state tax reserves in the quarter ended December 31, 2014.~~2015.

During the three ~~and six~~ months ended ~~March~~December 31, 2016, the Company's gross unrecognized tax benefits increased by ~~$31~~$33 million, ~~and $51~~of which $28 million ~~respectively, which~~ would favorably impact the effective tax rate if recognized. The increase in gross unrecognized tax benefits is primarily related to various tax positions across several jurisdictions. During the three ~~and six~~ months ended ~~March~~December 31, 2016 and 2015, respectively, there were no significant changes in interest and penalties related to uncertain tax positions.

During fiscal 2013, the Canada Revenue Agency ("CRA") completed its examination of the Company's fiscal 2003 through 2009 Canadian tax returns and proposed certain assessments. Based on the findings of its examination, the CRA also proposed certain assessments to the Company's fiscal 2010 through 2014 Canadian tax returns. The Company filed notices of objection against these assessments and, in fiscal 2015, completed the appeals process without reaching a settlement with the CRA. In April 2016, the Company petitioned the Tax Court of Canada to overturn the CRA's assessments. The Company continues to believe that its income tax provision adequately reflects its obligations to the CRA.

The Company’s tax filings are subject to examination by the U.S. federal, state and foreign taxing authorities. The timing and outcome of the final resolutions of the various ongoing income tax examinations are highly uncertain. It is not reasonably possible to estimate the increase or decrease in unrecognized tax benefits within the next twelve months.

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VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

In November 2015, the FASB issued Accounting Standards Update 2015-17, which simplifies the presentation of deferred income taxes by requiring that deferred tax assets and liabilities be presented as non-current. The standard impacts presentation only. The Company elected to early adopt the standard on a retrospective basis effective October 1, 2015 and all deferred tax assets and liabilities are classified as non-current on the Company's consolidated balance sheets. All prior period amounts have been reclassified to conform with the current period presentation.

Note ~~13—~~12—Legal Matters

The Company is party to various legal and regulatory proceedings. Some of these proceedings involve complex claims that are subject to substantial uncertainties and unascertainable damages. Accordingly, except as disclosed, the Company has not established reserves or ranges of possible loss related to these proceedings, as at this time in the proceedings, the matters do not relate to a probable loss and/or the amount or range of losses are not reasonably estimable. Although the Company believes that it has strong defenses for the litigation and regulatory proceedings described below, it could, in the future, incur judgments or fines or enter into settlements of claims that could have a material adverse effect on the Company's financial position, results of operations or cash flows. From time to time, the Company may engage in settlement discussions or mediations with respect to one or more of its outstanding litigation matters, either on its own behalf or collectively with other parties.

The litigation accrual is an estimate and is based on management’s understanding of its litigation profile, the specifics of each case, advice of counsel to the extent appropriate and management’s best estimate of incurred loss as of the balance sheet date.

The following table summarizes the activity related to accrued litigation.


	Fiscal 2016			Fiscal 2015			Fiscal 2017			Fiscal 2016
	(in millions)						(in millions)
Balance at October 1	$	1,024		$	1,456		$	981		$	1,024
Provision for legal matters	1			3
Provision for uncovered legal matters							15			—
Accrual of VE territory covered litigation							86			—
Payments on legal matters	(12		)	(324		)	(88		)	(12		)
Balance at March 31	$	1,013		$	1,135
Balance at December 31							$	994		$	1,012

Accrual Summary—U.S. Covered Litigation

Visa Inc., Visa U.S.A. and Visa International are parties to certain legal proceedings that are covered by the U.S. retrospective responsibility plan, which the Company refers to as the U.S. covered litigation. See Note 3—U.S. and Europe Retrospective Responsibility ~~Plan and Potential Visa Europe Liabilities.~~Plans. An accrual for the U.S. covered litigation and a charge to the litigation provision are recorded when loss is deemed to be probable and reasonably estimable. In making this determination, the Company evaluates available information, including but not limited to actions taken by the litigation committee. The total accrual related to the U.S. covered litigation could be either higher or lower than the escrow account balance.

The following table summarizes the activity related to U.S. covered litigation.

Fiscal 2016 Fiscal 2015
(in millions)
Balance at October 1 $ 1,023
$ 1,449
Payments on covered litigation (11 ) (321 )
Balance at March 31 $ 1,012
$ 1,128



	Fiscal 2017		Fiscal 2016
	(in millions)
Balance at October 1	$	978	$	1,023
Payments on U.S. covered litigation	—		(11		)
Balance at December 31	$	978	$	1,012

Accrual Summary—VE Territory Covered Litigation

~~Consumer Interchange~~Visa Inc., Visa International and Visa Europe are parties to certain legal proceedings that are covered by the Europe retrospective responsibility plan. Unlike the U.S. retrospective responsibility plan, the Europe retrospective responsibility plan does not have an escrow account that is used to fund settlements or judgments. The Company is entitled to recover VE territory covered losses through a periodic adjustment to the conversion rates applicable to the U.K.&I preferred stock and Europe preferred stock. An accrual for the VE territory covered losses and a reduction to stockholders' equity will be recorded when the loss is deemed to be probable and reasonably estimable. See further discussion below under VE Territory Covered Litigation and Note 3—U.S. and Europe Retrospective Responsibility Plans. The following table summarizes the activity related to VE territory covered litigation.

2621

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VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)



	Fiscal 2017
	(in millions)
Balance at October 1	$	2
Accrual for VE territory covered litigation	86
Payments on VE territory covered litigation	(88		)
Balance at December 31	$	—

U.S. Covered Litigation

Interchange Multidistrict Litigation (MDL)

On ~~February 24,~~November 23, 2016, class plaintiffs that signed the ~~MDL court denied plaintiffs' motion~~2012 Settlement Agreement filed a petition for ~~reconsideration~~writ of certiorari with the U.S. Supreme Court seeking review of the ~~dismissal of plaintiffs' federal claim and dismissed plaintiffs' state law claim based on defendants' cross-motion for reconsideration. On March 4, 2016, plaintiffs filed a notice of appeal.~~

~~Interchange Opt-out Litigation~~

~~Beginning in May 2013, more than 60 opt-out cases have been filed by hundreds of merchants in various federal~~Second Circuit’s decision that vacated the district courts, generally pursuing damages claims on allegations similar to those raised in MDL 1720. A number of the cases also include allegations that Visa has monopolized, attempted to monopolize, and/or conspired to monopolize debit card-related market segments, and one of the cases seeks an injunction against the fixed acquirer network fee. The cases name as defendants Visa Inc., Visa U.S.A., Visa International, MasterCard Incorporated, and MasterCard International Incorporated, although some also include certain U.S. financial institutions as defendants. Wal-Mart Stores Inc. and its subsidiaries filed an opt-out complaint that also adds Visa Europe Limited and Visa Europe Services Inc. as defendants.

A settlement agreement regarding all claims was reached with Wal-Mart Stores Inc. and its subsidiaries, which will terminate if, following all appeals, the MDL class settlement is reversed or vacated with respect tocourt’s certification of the ~~Rule 23(b)(2) settlement~~merchant class orand reversed the ~~consideration provided to or release provided by that class. Including this settlement with Wal-Mart, as~~approval of the ~~date~~settlement. On November 30, 2016, the district court entered an order appointing interim counsel for the putative classes of ~~filing, Visa has reached settlement agreements with a number of merchants representing approximately 51% of~~plaintiffs.

Consumer Interchange Litigation

On December 9, 2016, the ~~Visa-branded payment card sales volume of merchants who opted out.~~Second Circuit denied plaintiffs’ petition for rehearing.

~~European Competition Proceedings~~VE Territory Covered Litigation

U.K. Merchant Litigation~~. A total~~

Since July 2013, in excess of ~~approximately 50 merchants (together~~100 Merchants (the capitalized term "Merchant," when used in this section, means a merchant together with subsidiary/affiliate ~~companies)~~companies who have ~~now~~issued claims jointly) have commenced proceedings against Visa Europe, Visa Inc. and Visa International relating to interchange rates in ~~Europe.~~Europe, and seek damages for alleged anti-competitive conduct primarily in relation to U.K. domestic and/or Irish domestic and/or intra-EEA interchange fees for credit and debit cards. As of the filing date, Visa Europe, Visa Inc. and Visa International have settled the claims asserted by four Merchants.

The trial in relation to claims filed by a number of Merchants in 2013 commenced in November 2016 and is expected to continue until February 2017.

In addition, over 30 additional Merchants have threatened to commence similar proceedings. Standstill agreements have been entered into with respect to some of those Merchants' claims.

Other Litigation

"Indirect Purchaser" Actions

On ~~December 1, 2015,~~January 12, 2017, the ~~objector's appeal from~~appeals court affirmed the trial court's order ~~regarding~~denying the ~~distribution~~objector's motion for attorneys' fees and costs.

Data Pass Litigation

On December 20, 2016, the U.S. Court of Appeals for the Second Circuit affirmed the dismissal as to certain ~~settlement funds was dismissed~~.

~~Canadian Competition Proceedings~~

~~Merchant Litigation.~~ ~~The~~claims against Gamestop Corporation, Webloyalty.com, Inc. and Visa, vacated the dismissal as to certain claims against Webloyalty and Gamestop, and remanded the case to the district court ~~approved~~for further proceedings on the ~~settlement agreements entered into by the three named financial institutions, which are not significant Canadian issuers. A settlement with another financial institution is pending court approval.~~remaining claims.

U.S. ATM Access Fee Litigation

On ~~January 27,~~November 17, 2016, ~~defendants filed petitions for writ of certiorari with~~ the U.S. Supreme Court ~~seeking review~~ordered that the writs of ~~the decisions of the U.S. Court of Appeals for the District of Columbia Circuit.~~ certiorari be dismissed as improvidently granted.

Federal Trade Commission

Notice Regarding EMV Chip Debit Cards. On ~~February 18,~~November 22, 2016, the ~~National ATM Council moved for a preliminary injunction to prohibit~~FTC's Bureau of Competition informed Visa ~~and MasterCard from imposing ATM access fee non-discrimination rules.~~

~~Pulse Network~~

~~On December 17, 2015, the court denied Visa's motion to dismiss the complaint.~~

~~EMV Chip Liability Shift~~

On March 8, 2016, B&R Supermarket, Inc., d/b/a Milam’s Market, and Grove Liquors LLC filed a purported class action lawsuit against Visa Inc., Visa U.S.A., MasterCard, Discover, American Express, EMVCo, JCB, UnionPay, and certain financial institutions in the U.S. District Court for the Northern District of California. The complaint asserts that defendants, through EMVCo, conspired to shift liability for fraudulent, faulty or otherwise rejected consumer credit card transactions from defendants to the purported class of merchants. Plaintiffs allege that the ~~class consists of merchants thatpurchased EMV-chip-compliant point-of-sale card readers, and otherwise~~Bureau had closed its investigation.

Table of Contents

VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

~~complied~~Korea Fair Trade Commission

Following complaints lodged by certain financial institutions in Korea, in November 2016, the Korea Fair Trade Commission (KFTC) initiated an investigation into certain pricing changes applicable to Visa financial institutions in Korea. Visa is cooperating with the defendants’ directives from October 1, 2015 to present. Plaintiffs claim that the so-called “Liability Shift” violates Section 1 and 3 of the Sherman Act and certain state laws, and seek treble damages, injunctive relief, and attorneys’ fees. On April 18, 2016, defendants filed motions to dismiss the complaint.

KFTC.



ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations

This management’s discussion and analysis provides a review of the results of operations, financial condition and the liquidity and capital resources of Visa Inc. and its subsidiaries (“Visa,” “we,” “our” or the “Company”) on a historical basis and outlines the factors that have affected recent earnings, as well as those factors that may affect future earnings. The following discussion and analysis should be read in conjunction with our unaudited consolidated financial statements and related notes included elsewhere in this report.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of ~~1995.~~1995 that relate to, among other things, our future operations, prospects, developments, strategies, growth of our business, expectations regarding client incentives, anticipated expansion of our products in certain countries, industry developments, expectations regarding litigation, timing and amount of stock repurchases, sufficiency of sources of liquidity and funding, effectiveness of our risk management programs and expectations regarding the impact of recent accounting pronouncements on our consolidated financial statements. Forward-looking statements generally are identified by words such as "believes," "estimates," "expects," "intends," "may," ~~"projected,~~"projects," ~~"could,~~“could," "should," "will," ~~"will continue"~~"continue" and other similar expressions. ~~Examples~~All statements other than statements of historical fact could be forward-looking statements, ~~include, but are not limited to, statements we make about our revenue, client incentives, operating margin, tax rate, earnings per share, free cash flow, and the growth of those items.~~

~~By their nature, forward-looking statements: (i)~~which speak only as of the date they are ~~made; (ii)~~made, are not ~~statements of historical fact or~~ guarantees of future ~~performance;~~performance and ~~(iii)~~ are subject to certain risks, uncertainties ~~assumptions or changes in circumstances that~~and other factors, many of which are beyond our control and are difficult to ~~predict or quantify. Therefore,~~predict. We describe risks and uncertainties that could cause actual results ~~could~~to differ materially ~~and adversely~~ from ~~our~~those expressed in, or implied by, any of these forward-looking statements ~~due to a variety of factors, including the following:~~

~~the impact of laws, regulations and marketplace barriers, including:~~

increased regulation of fees, transaction routing, payment card practices or other aspects of the payments industry in the U.S., including new or revised regulations issued under the Dodd-Frank Wall Street Reform and Consumer Protection Act;

~~increased regulation in jurisdictions outside of the U.S.;~~

~~increased government support of national payments networks outside the U.S.; and~~

~~increased regulation of consumer privacy, data use and security;~~

~~developments in litigation and government enforcement, including those affecting interchange reimbursement fees, antitrust and tax;~~

~~new lawsuits, investigations or proceedings, or changes to our potential exposure in connection with pending lawsuits, investigations or proceedings;~~

~~economic factors, such as:~~

~~economic fragility in the Eurozone, the U.S. and in other advanced and emerging markets;~~

~~general economic, political and social conditions in mature and emerging markets globally;~~

~~general stock market fluctuations which may impact consumer spending;~~

~~material changes in cross-border activity, foreign exchange controls and fluctuations in currency exchange rates; and~~

~~material changes~~ in our ~~financial institution clients' performance compared to our estimates;~~

~~industry developments, such as competitive pressure, rapid technological developments and disintermediation from our payments network;~~

~~system developments, such as:~~

~~disruption of our transaction processing systems or the inability to process transactions efficiently;~~

~~account data breaches or increased fraudulent or other illegal activities involving Visa-branded cards or payment products; and~~

~~failure to maintain systems interoperability with Visa Europe;~~

~~the transaction with Visa Europe may not be consummated on the terms currently contemplated or at all;~~

~~Visa Europe's business may not be successfully integrated with our business or we may not achieve the anticipated benefits of the transaction;~~

~~the costs and risks associated with the transaction with Visa Europe;~~

~~matters arising in connection with Visa Europe's or our efforts to comply with and satisfy applicable regulatory approvals and closing conditions relating to the transaction;~~

~~the loss of organizational effectiveness or key employees;~~

~~the failure to integrate acquisitions successfully or to effectively develop new products and businesses;~~

~~natural disasters, terrorist attacks, military or political conflicts, and public health emergencies; and~~

~~various other factors, including those more fully described in our~~SEC filings, ~~with the SEC,~~ including our Annual Report on Form 10-K for the year ended September 30, ~~2015,~~2016, and our subsequent reports on Forms 10-Q and 8-K.

~~You should not place undue reliance on such statements.~~ Except as required by law, we do not intend to update or revise any forward-looking statements as a result of new information, future ~~developments~~events or otherwise.

Overview

Visa is a global payments technology company that connects consumers, ~~businesses,~~merchants, financial institutions, businesses, strategic partners and ~~governments around the world~~government entities in more than 200 countries and territories to fast, secure and reliable electronic payments. We provide our financial institution clients with a global payments infrastructure and support services for the delivery of Visa-branded payment products, including credit, debit, and prepaid. We facilitateenable global commerce through the transfer of value and information among ~~financial institutions, merchants, consumers, businesses~~these participants. Our advanced transaction processing network facilitates authorization, clearing and ~~government entities. Each of these constituencies has played a key role in the ongoing worldwide migration from paper-based to electronic forms~~settlement of payment transactions and ~~we believe that this transformation continues~~enables us to ~~yield significant growth opportunities, particularly outside the U.S. We continue to explore additional opportunities to enhance~~provide our ~~competitive position by expanding the scope~~financial institution and merchant clients a wide range of ~~payment solutions we provide.~~products, platforms and value-added services.

Overall economic conditions. Our business is affected by overall economic conditions and consumer spending. Our business performance during the ~~first half of fiscal~~three months ended December 31, 2016 reflects ~~the impacts of~~ continued uneven ~~and tepid~~ economic ~~growth.~~

~~Visa Europe acquisition.~~ ~~On November 2, 2015, we entered into a Transaction Agreement with Visa Europe, pursuant to which we agreed to acquire 100% of~~growth around the share capital of Visa Europe for a total purchase price of up to €21.2 billion. As originally agreed, the purchase price consisted of: (a) at the closing of the transaction, up-front cash consideration of €11.5 billion and preferred stock convertible upon certain conditions into class A common stock or class A equivalent preferred stock, valued at approximately €5.0 billion, and (b) following the end of sixteen fiscal quarters post-closing, contingent cash consideration of up to €4.0 billion (plus up to an additional €0.7 billion in interest), determined based on the achievement of specified net revenue levels during such post-closing period. In connection with the execution of the Transaction Agreement, the Company and Visa Europe entered into the Put Option Amendment to align certain terms of the Put with the terms of the Visa Europe Transaction Agreement. Under the terms and conditions of the Transaction Agreement, the Visa Europe board of directors is required to exercise the Amended Put Option on the closing date of the transaction to effect Visa's purchase of all of Visa Europe's share capital. The preferred stock conversion rates may be reduced from time to time to offset certain liabilities, if any, which may be incurred by us, Visa Europe or its affiliates as a result of certain existing and potential litigation relating to the setting of multilateral interchange fee rates in the Visa Europe territory. As part of the acquisition, we also entered into the U.K. loss sharing agreement with Visa Europe and certain of Visa Europe’s members located in the United Kingdom to compensate us for certain losses which may be incurred by us or Visa Europe as a result of certain existing and potential litigation relating to the setting and implementation of domestic multilateral interchange fee rates in the United Kingdom.

On April 21, 2016, the Company and Visa Europe reached preliminary agreement to amend the Transaction Agreement to eliminate the Earn-out portion of the transaction consideration. Instead of an earn-out, the cash consideration payable in the transaction would be increased by €1.75 billion: €750 million payable upon closing, and €1.0 billion, plus 4% compound annual interest, payable on the third anniversary of closing. The terms of the transaction otherwise remain unchanged. The transaction remains subject to the negotiation of definitive documentation of this amendment and to regulatory approval. While the parties continue to work toward closing as soon as possible, closing could extend beyond the end of the Company’s fiscal third quarter. See ~~Note 2—Visa Europe, Note 3—U.S. Retrospective Responsibility Plan and Potential Visa Europe Liabilities~~ ~~and~~ ~~Note 13—Legal Mattersto our unaudited consolidated financial statements.~~

~~Debt issuance.~~ In December 2015, we issued fixed-rate senior notes in an aggregate principal amount of $16.0 billion, with maturities ranging between 2 and 30 years. Interest on these notes, at a rate ranging between 1.20% and 4.30%, is payable semi-annually on June 14 and December 14, commencing June 14, 2016. The net aggregate proceeds of $15.9 billion, after deducting discounts and debt issuance costs, will be used to fund a portion of the purchase price for the anticipated acquisition of Visa Europe, and the remainder will be used for general corporate purposes including share repurchases. See ~~Note 4—Fair Value Measurements and Investmentsand~~ ~~Note 5—Debt~~ ~~to our unaudited consolidated financial statements.~~world.

Financial highlights. During the three months ended ~~March~~December 31, 2016, we recorded net income of ~~$1.7~~$2.1 billion or diluted class A earnings per share of ~~$0.71, an increase~~$0.86, increases of ~~10% and 13%, respectively,~~7% over the prior year comparable period. ~~During the six months ended March 31, 2016, we recorded~~Our net income ~~of $3.6 billion or~~and diluted ~~class A~~ earnings per share ~~of $1.51, an increase of 17% and 20%, respectively, over~~for the ~~prior year comparable period. Our~~three months ended December 31, 2016 compared to our non-GAAP adjusted net income and diluted earnings per share for the three ~~and six~~ months ended ~~March~~December 31, ~~2016 and~~ 2015 are as follows:

Three Months Ended
March 31, Six Months Ended
March 31,
2016 2015
%
Change⁽¹⁾
2016 2015
%
Change⁽¹⁾
(in millions, except percentages and per share data)
Net income, as adjusted⁽²⁾
$ 1,626
$ 1,550
5 % $ 3,312
$ 3,119
6 %
Diluted earnings per share, as adjusted⁽²⁾
$ 0.68
$ 0.63
7 % $ 1.37
$ 1.26
9 %



	Three Months Ended December 31,
(in millions, except percentages and per share data)	2016		2015		% Change⁽¹⁾
Net income, as adjusted	$	2,070	$	1,686	23	%
Diluted earnings per share, as adjusted	$	0.86	$	0.69	23	%


⁽¹⁾	Figures in the table may not recalculate exactly due to rounding. Percentage changes are calculated based on unrounded numbers.


⁽²⁾	~~There were no comparable adjustments recorded during the three or six months ended March 31, 2015.~~

Our financial results during the first half of fiscal 2016 reflect the impact of significant non-operating items that we do not believe are indicative of our operating performance, as they are either non-recurring or have no cash impact. As such, we believe the presentation of adjusted financial results excluding the following two items provides a clearer understanding of our operating performance for the periods presented.

~~Net unrealized gains on currency forward contracts.~~ During the second quarter of fiscal 2016, we entered into currency forward contracts to mitigate a portion of our foreign currency exchange rate risk associated with the upfront cash consideration to be paid in the anticipated Visa Europe acquisition. As a result, we recorded non-recurring, net unrealized gains of $116 million, before tax, in non-operating income. Net of related tax expense, determined by applying applicable federal and state tax rates, the impact to net income was $81 million. See ~~Note 8—Derivative Financial Instruments~~ ~~to our unaudited consolidated financial statements.~~

~~Revaluation of Visa Europe put option.~~ During the first quarter of fiscal 2016, we recorded a decrease of $255 million in the fair value of the Put, resulting in the recognition of non-cash, non-operating income in our financial results. This amount is not subject to income tax and therefore has no impact on our reported income tax provision. See ~~Note 2—Visa Europe~~ ~~and~~ ~~Note 4—Fair Value Measurements and Investments~~ ~~to our unaudited consolidated financial statements.~~

Adjusted net income, effective income tax rate and diluted earnings per share are non-GAAP financial measures and should not be relied upon as substitutes for measures calculated in accordance with U.S. GAAP. During the three months ended December 31, 2015, we recorded a decrease of $255 million in the fair value of the Visa Europe put option, resulting in the recognition of non-cash, non-operating income that we do not believe is indicative of our operating performance. As such, we believe the presentation of adjusted financial results provides a clearer understanding of our operating performance for the prior period presented. This amount is not subject to income tax and therefore has no impact on our reported income tax provision. There was no comparable adjustment recorded for the three months ended December 31, 2016. The following table reconciles our as-reported net income, effective income tax rate and diluted earnings per share, which are calculated in accordance with U.S. GAAP, to our respective non-GAAP adjusted financial measures for the three ~~and six~~ months ended ~~March~~December 31, ~~2016:~~2015:


	Three Months Ended March 31, 2016								Six Months Ended March 31, 2016								Three Months Ended December 31, 2015
(in millions, except percentages and per share data)	Net Income			Effective Income Tax Rate ₍₁₎		Diluted Earnings Per Share ₍₁₎			Net Income			Effective Income Tax Rate ₍₁₎		Diluted Earnings Per Share ₍₁₎			Net Income			Effective Income Tax Rate⁽¹⁾		Diluted Earnings Per Share⁽¹⁾
As reported	$	1,707		30	%	$	0.71		$	3,648		28	%	$	1.51		$	1,941		26	%	$	0.80
Net unrealized gains on currency forward contracts	(81		)	—	%	(0.03		)	(81		)	—	%	(0.03		)
Revaluation of Visa Europe put option	—			—	%	—			(255		)	2	%	(0.11		)	(255		)	3	%	(0.10		)
As adjusted	$	1,626		30	%	$	0.68		$	3,312		30	%	$	1.37		$	1,686		29	%	$	0.69
Diluted weighted-average shares outstanding, as reported						2,401								2,416								2,430


⁽¹⁾	Figures in the table may not recalculate exactly due to rounding. Effective income tax rate and diluted earnings per share figures are calculated based on unrounded numbers.

We recorded ~~total~~net operating revenues of ~~$3.6~~$4.5 billion ~~and $7.2 billion,~~for the three months ended December 31, 2016, an increase of 6%25% over the prior year comparable ~~periods, for~~period, reflecting the ~~three and six months ended March 31, 2016, respectively. Increases in total~~ operating revenues ~~were driven by~~of Visa Europe and continued growth in processed transactions and nominal payments volume. The effect of exchange rate movements in the three ~~and six~~ months ended ~~March~~December 31, 2016, as partially mitigated by our hedging program, resulted in a negative three percentage point impact to our ~~total~~net operating revenue growth.

Total operating expenses for the three ~~and six~~ months ended ~~March~~December 31, 2016 were ~~$1.2 billion and $2.4~~$1.4 billion, a ~~6% and 4%~~16% increase over prior year comparable ~~periods, primarily due to increases in personnel, general and administrative, and network and processing expenses.~~period, resulting mainly from the inclusion of Visa Europe's operating expenses following the acquisition.

~~Reduction in as-converted class A common stock.~~Common stock repurchases. During the three months ended ~~March~~December 31, 2016, we repurchased 24 million shares of our class A common stock in the open market using ~~$1.8~~$1.9 billion of cash on hand. As of ~~March~~December 31, 2016, we had remaining authorized funds of ~~$4.0~~$3.9 billion for share repurchase. ~~All share repurchase programs authorized prior to October 2015 have been completed.~~ See Note 9—8—Stockholders' Equity to our unaudited consolidated financial statements.

Nominal payments volume and transaction counts. Payments volume is the primary driver for our service revenues, and the number of processed transactions is the primary driver for our data processing revenues. Nominal payments volume over the prior year posted double-digit growth in the U.S., driven mainly by consumer ~~debit and~~ credit. Nominal international payments volume growth was ~~negatively~~positively impacted ~~by movements in U.S. dollar exchange rates. On~~due to the inclusion of nominal payments volume related to Visa Europe for the three months ended September 30, 2016⁽¹⁾. Growth on a constant-dollar basis, which excludes the impact of exchange rate movements, ~~our international payments volume~~was not significantly different from growth ~~rate~~on a nominal-dollar basis for the three ~~and six~~ months ended ~~December 31, 2015~~September 30, 2016⁽¹⁾ ~~was 14%~~. Growth in processed transactions ~~reflect~~reflects the ~~ongoing worldwide shift to electronic payments.~~inclusion of Visa Europe's processed transactions for the three months ended December 31, 2016.

The following ~~tables present~~table presents nominal payments volume.⁽²⁾

United States International Visa Inc.

3 Months Ended December 31,⁽¹⁾

3 Months Ended December 31,⁽¹⁾

3 Months Ended December 31,⁽¹⁾
2015 2014
%
Change
2015 2014
%
Change
2015 2014
%
Change
(in billions, except percentages)
Nominal payments volume
Consumer credit $ 276
$ 253
9 % $ 438
$ 433
1 % $ 713
$ 686
4 %
Consumer debit⁽³⁾
327
296
10 % 116
121
(4 )% 443
417
6 %
Commercial⁽⁴⁾
111
102
9 % 37
39
(5 )% 149
142
5 %
Total nominal payments volume $ 714
$ 651
10 % $ 591
$ 593
— % $ 1,305
$ 1,244
5 %
Cash volume 128
121
6 % 456
533
(14 )% 584
654
(11 )%
Total nominal volume⁽⁵⁾
$ 842
$ 772
9 % $ 1,048
$ 1,126
(7 )% $ 1,890
$ 1,898
— %


	United States						International						Visa Inc.						United States						International						Visa Inc.
	6 Months Ended December 31,⁽¹⁾						6 Months Ended December 31,⁽¹⁾						6 Months Ended December 31,⁽¹⁾						3 Months Ended September 30,⁽¹⁾						3 Months Ended September 30,⁽¹⁾						3 Months Ended September 30,⁽¹⁾
	2015		2014		% Change		2015		2014		% Change		2015		2014		% Change		2016		2015		% Change		2016		2015		% Change		2016		2015		% Change
	(in billions, except percentages)																		(in billions, except percentages)
Nominal payments volume
Consumer credit	$	539	$	491	10	%	$	862	$	856	1	%	$	1,400	$	1,348	4	%	$	316	$	263	20	%	$	601	$	424	42	%	$	917	$	687	33	%
Consumer debit⁽³⁾	646		587		10	%	227		243		(7	)%	873		830		5	%	327		319		3	%	411		111		271	%	738		429		72	%
Commercial⁽⁴⁾	222		205		9	%	74		79		(6	)%	296		283		5	%	125		111		12	%	79		36		116	%	204		148		38	%
Total nominal payments volume	$	1,407	$	1,283	10	%	$	1,163	$	1,178	(1	)%	$	2,570	$	2,461	4	%	$	768	$	693	11	%	$	1,091	$	571	91	%	$	1,858	$	1,264	47	%
Cash volume	257		245		5	%	912		1,075		(15	)%	1,169		1,320		(11	)%	135		129		5	%	626		456		37	%	761		585		30	%
Total nominal volume⁽⁵⁾	$	1,664	$	1,528	9	%	$	2,075	$	2,254	(8	)%	$	3,739	$	3,781	(1	)%	$	903	$	822	10	%	$	1,716	$	1,027	67	%	$	2,619	$	1,849	42	%

The following table presents nominal and constant payments volume growth.⁽²⁾


	International				Visa Inc.				International				Visa Inc.				International				Visa Inc.
	3 Months Ended December 31, 2015 vs. 2014⁽¹⁾				3 Months Ended December 31, 2015 vs. 2014⁽¹⁾				6 Months Ended December 31, 2015 vs. 2014⁽¹⁾				6 Months Ended December 31, 2015 vs. 2014⁽¹⁾				3 Months Ended September 30, 2016 vs. 2015⁽¹⁾				3 Months Ended September 30, 2016 vs. 2015⁽¹⁾
	Nominal		Constant⁽⁶⁾		Nominal		Constant⁽⁶⁾		Nominal		Constant⁽⁶⁾		Nominal		Constant⁽⁶⁾		Nominal		Constant⁽⁶⁾		Nominal		Constant⁽⁶⁾
Payments volume growth
Consumer credit	1	%	14	%	4	%	12	%	1	%	15	%	4	%	13	%	42	%	42	%	33	%	33	%
Consumer debit⁽³⁾	(4	)%	15	%	6	%	12	%	(7	)%	13	%	5	%	11	%	271	%	282	%	72	%	73	%
Commercial⁽⁴⁾	(5	)%	12	%	5	%	9	%	(6	)%	12	%	5	%	10	%	116	%	112	%	38	%	37	%
Total payments volume growth	—	%	14	%	5	%	12	%	(1	)%	14	%	4	%	12	%	91	%	92	%	47	%	47	%
Cash volume growth	(14	)%	3	%	(11	)%	4	%	(15	)%	4	%	(11	)%	4	%	37	%	43	%	30	%	34	%
Total volume growth	(7	)%	9	%	—	%	9	%	(8	)%	10	%	(1	)%	9	%	67	%	70	%	42	%	43	%

⁽¹⁾

Service revenues in a given quarter are assessed based on nominal payments volume in the prior quarter. Therefore, service revenues reported for the three ~~and~~ ~~six~~months ended ~~March~~December 31, 2016 and 2015 were based on nominal payments volume reported by our financial institution clients for the three ~~and~~ ~~six~~months ended ~~December 31,~~September 30, 2016 and 2015, ~~and 2014,~~ respectively.


⁽²⁾	Figures in the table may not recalculate exactly due to rounding. Percentage changes are calculated based on unrounded numbers.


⁽³⁾	Includes consumer prepaid volume and Interlink volume.


⁽⁴⁾	Includes large, middle and small business credit and debit, as well as commercial prepaid volume.

⁽⁵⁾

Total nominal volume is the sum of total nominal payments volume and cash volume. Total nominal payments volume is the total monetary value of transactions for goods and services that are purchased on cards carrying the Visa, Visa Electron, Interlink and ~~Interlink~~V PAY brands. Cash volume generally consists of cash access transactions, balance access transactions, balance transfers and convenience checks. Total nominal volume is provided by our financial institution clients, subject to review by Visa. On occasion, previously presented volume information may be updated. Prior period updates are not material.


⁽⁶⁾	Growth on a constant-dollar basis excludes the impact of foreign currency fluctuations against ~~the~~ U.S. dollar.

The following table provides the number of transactions processed by our VisaNet system, including transactions involving Visa, Visa Electron, Interlink, V PAY and PLUS cards processed on Visa's networks.⁽¹⁾


	Three Months Ended March 31,				Six Months Ended March 31,				Three Months Ended December 31,
	2016	2015	% Change		2016	2015	% Change		2016	2015	% Change⁽²⁾
	(in millions, except percentages)
Visa processed transactions	18,475	16,980	9	%	37,461	34,579	8	%	27,329	18,986	44	%


⁽¹⁾	Figures in the table may not recalculate exactly due to rounding. Percentage changes are calculated based on unrounded numbers.


⁽²⁾	Visa processed transactions for the three months ended December 31, 2016 include transactions processed by Visa Europe.

Results of Operations

Operating Revenues

The following table sets forth our operating revenues earned in the U.S., internationally and ~~from Visa Europe. Revenues earned from~~in accordance with the Framework Agreement prior to the Visa Europe ~~are a result of our contractual arrangement with~~acquisition on June 21, 2016. Visa Europe ~~as governed by~~revenue earned for the ~~framework agreement that provides for trademark and technology licenses and bilateral services.~~

three months ended December 31, 2016 is included in International.

Three Months Ended March 31, 2016 vs. 2015 Six Months Ended
March 31, 2016 vs. 2015
2016 2015
$
Change

%
Change⁽¹⁾
2016 2015 $
Change
%
Change⁽¹⁾
(in millions, except percentages)
United States $ 1,924
$ 1,782
$ 142
8 % $ 3,865
$ 3,566
$ 299
8 %
International 1,640
1,572
68
4 % 3,199
3,115
84
3 %
Visa Europe 62
55
7
12 % 127
110
17
16 %
Total operating revenues $ 3,626
$ 3,409
$ 217
6 % $ 7,191
$ 6,791
$ 400
6 %



	Three Months Ended December 31,				2016 vs. 2015
	2016		2015		$ Change			% Change⁽¹⁾
	(in millions, except percentages)
U.S.	$	2,121	$	1,941	$	180		9	%
International	2,340		1,559		781			50	%
Revenues earned under the Framework Agreement⁽²⁾	—		65		(65		)	(100	)%
Net operating revenues	$	4,461	$	3,565	$	896		25	%


⁽¹⁾	Figures in the table may not recalculate exactly due to rounding. Percentage changes are calculated based on unrounded numbers.


⁽²⁾	Reflects revenues earned from Visa Europe prior to the acquisition, in accordance with the Framework Agreement that provided for trademark and technology licenses and bilateral services. The Framework Agreement was effectively settled upon the closing of the acquisition. See Note 2—Visa Europe to our unaudited consolidated financial statements.

The increase in operating revenues ~~primarily~~ reflects the operating revenues of Visa Europe and continued growth in processed transactions and nominal payments volume. These benefits were partially offset by increases in client incentives.

Our operating revenues, primarily service revenues, international transaction revenues, and client incentives, are impacted by the overall strengthening or weakening of the U.S. dollar as payments volume and related revenues denominated in local currencies are converted to U.S. dollars. The effect of exchange rate movements in the three ~~and six~~ months ended ~~March~~December 31, 2016, as partially mitigated by our hedging program, resulted in a negative three percentage point impact to our ~~total~~net operating revenue growth.

The following table sets forth the components of our ~~total~~net operating ~~revenues.~~revenues, including operating revenues earned by Visa Europe for the three months ended December 31, 2016. Other revenues for the three months ended December 31, 2015 also includes revenue earned from Visa Europe in accordance with the Framework Agreement prior to its acquisition on June 21, 2016.


	Three Months Ended March 31,						2016 vs. 2015					Six Months Ended March 31,						2016 vs. 2015					Three Months Ended December 31,						2016 vs. 2015
	2016			2015			$ Change			% Change⁽¹⁾		2016			2015			$ Change			% Change⁽¹⁾		2016			2015			$ Change			% Change⁽¹⁾
	(in millions, except percentages)																						(in millions, except percentages)
Service revenues	$	1,699		$	1,577		$	122		8	%	$	3,344		$	3,115		$	229		7	%	$	1,918		$	1,645		$	273		17	%
Data processing revenues	1,473			1,340			133			10	%	2,952			2,723			229			8	%	1,892			1,479			413			28	%
International transaction revenues	1,045			964			81			8	%	2,076			1,934			142			7	%	1,489			1,031			458			44	%
Other revenues	198			204			(6		)	(3	)%	396			408			(12		)	(3	)%	203			198			5			2	%
Client incentives	(789		)	(676		)	(113		)	17	%	(1,577		)	(1,389		)	(188		)	14	%	(1,041		)	(788		)	(253		)	32	%
Total operating revenues	$	3,626		$	3,409		$	217		6	%	$	7,191		$	6,791		$	400		6	%
Net operating revenues																							$	4,461		$	3,565		$	896		25	%


⁽¹⁾	Figures in the table may not recalculate exactly due to rounding. Percentage changes are calculated based on unrounded numbers.

Service revenues, which include revenues earned by Visa Europe in the three months ended December 31, 2016, increased primarily due to ~~5% and 4%~~47% growth in nominal payments volume during the three ~~and six~~ month comparable ~~periods, respectively. Service revenues also benefited from select pricing modifications which became effective~~period. The growth in the ~~third~~first quarter of fiscal ~~2015.~~2017 service revenues was slower than the growth in payments volume reflecting the inclusion of Visa Europe revenue and the resulting impact on our service revenue yield.

Data processing revenues increased mainly due to overall growth in processed transactions of ~~9% and 8%~~44% during the three ~~and six~~ month comparable ~~periods, respectively.~~period, which includes data processing revenues earned by Visa Europe in the first quarter of fiscal 2017, and the resulting impact on our data processing revenue yield.

International transaction revenues increased in the first quarter of fiscal 2017primarily due to ~~select pricing modifications that became effective in~~nominal cross-border volume growth of 135%, which includes revenues earned by Visa Europe during the ~~third quarter~~three months ended December 31, 2016. International transaction revenue growth also reflects the resulting impact of ~~fiscal 2015.~~Visa Europe revenues on our corresponding yield.

Client incentives increased during the three ~~and six~~ month comparable ~~periods~~period mainly due to Visa Europe's incentives for the three months ended December 31, 2016, overall growth in payments volume and incentives recognized on long-term customer contracts that were initiated or renewed after the ~~second~~first quarter of fiscal ~~2015.~~2016. The amount of client incentives we record in future periods will vary based on changes in performance expectations, actual client performance, amendments to existing contracts or the execution of new contracts.

Operating Expenses

The following table sets forth components of our total operating expenses.


	Three Months Ended March 31,				2016 vs. 2015					Six Months Ended March 31,				2016 vs. 2015					Three Months Ended December 31,				2016 vs. 2015
	2016		2015		$ Change			% Change⁽¹⁾		2016		2015		$ Change			% Change⁽¹⁾		2016		2015		$ Change		% Change⁽¹⁾
	(in millions, except percentages)																		(in millions, except percentages)
Personnel	$	528	$	483	$	45		9	%	$	1,027	$	992	$	35		4	%	$	571	$	499	$	72	14	%
Marketing	186		190		(4		)	(2	)%	380		395		(15		)	(4	)%	218		194		24		12	%
Network and processing	126		109		17			16	%	254		223		31			14	%	145		128		17		13	%
Professional fees	66		77		(11		)	(15	)%	138		147		(9		)	(7	)%	80		72		8		12	%
Depreciation and amortization	121		125		(4		)	(3	)%	241		245		(4		)	(2	)%	146		120		26		22	%
General and administrative	164		141		23			16	%	320		267		53			20	%	186		156		30		20	%
Litigation provision	1		3		(2		)	(82	)%	1		3		(2		)	NM		15		—		15		NM
Total operating expenses	$	1,192	$	1,128	$	64		6	%	$	2,361	$	2,272	$	89		4	%	$	1,361	$	1,169	$	192	16	%

NM — not meaningful


⁽¹⁾	Figures in the table may not recalculate exactly due to rounding. Percentage changes are calculated based on unrounded numbers.

Our overall operating expenses increased primarily due to the inclusion of Visa Europe expenses for the first quarter of fiscal 2017. Additional factors impacting our operating expenses for the three months ended December 31, 2016 are discussed below.

Personnel expenses increased ~~during the three and six months ended March 31, 2016 primarily due to an increase in headcount reflecting our strategy to invest for future growth, combined with~~driven by higher incentive compensation. These increases were partially offset by a decrease in contractor costs and an increase in personnel costs that were invested in and capitalized as part of technology development projects.employee compensation costs.

~~Network~~Marketing expenses increased to support our growth strategies and ~~processing~~ expenses increased during the three and six months ended March 31, 2016 primarily due to fees associated with the processing of Russian domestic transactions that were transitioned to the Russian National Payment Card system during the third quarter of fiscal 2015.

~~Professional fees~~ decreased during the three months ended March 31, 2016 primarily due to the absence of certain project costs incurred in fiscal 2015 as part of our effort to align resources with our strategic priorities.new product initiatives.

General and administrativeexpenses reflected an increase in expenses ~~increased during the three and six months ended March 31, 2016 mainly due~~ to provide product benefits to our cardholders as a result of business growth, offset by a decrease in net foreign exchange ~~losses~~impacts incurred as a result of changes in the U.S. dollar exchange rate against other currencies in which we ~~transact, combined with an increase in expenses to provide product enhancements to our cardholders in support of our business growth.~~transact.

Non-operating (Expense) Income

The following table sets forth components of our non-operating (expense) income.


	Three Months Ended March 31,						2016 vs. 2015				Six Months Ended March 31,						2016 vs. 2015				Three Months Ended December 31,						2016 vs. 2015
	2016			2015			$ Change			% Change	2016			2015			$ Change			% Change	2016			2015			$ Change			% Change⁽¹⁾
	(in millions, except percentages)																				(in millions, except percentages)
Interest expense	$	(132	)	$	(7	)	$	(125	)	NM	$	(161	)	$	(10	)	$	(151	)	NM	$	(140	)	$	(29	)	$	(111	)	NM
Other	139			8			131			NM	411			35			376			NM	19			272			(253		)	(93	)%
Total non-operating income	$	7		$	1		$	6		NM	$	250		$	25		$	225		NM
Non-operating (expense) income																					$	(121	)	$	243		$	(364	)	NM

NM — not meaningful


⁽¹⁾	Figures in the table may not recalculate exactly due to rounding. Percentage changes are calculated based on unrounded numbers.

Interest expense ~~increased during the three and~~ ~~six~~ ~~month comparable periods~~increased primarily due to the issuance of $16.0 billion fixed-rate senior notes in December 2015. See Note 5—Debt to our unaudited consolidated financial statements.

Other non-operating income ~~increased during~~in the ~~three and~~ ~~six~~ ~~months ended March 31, 2016 primarily due to $116 million of net unrealized gains recognized on currency forward contracts entered into during~~

~~the second~~first fiscal quarter of ~~fiscal~~ 2016 to mitigate a portion of our foreign currency exchange rate risk associated with the upfront cash consideration to be paid in the anticipated Visa Europe acquisition. Subsequently, prior to the end of the quarter, the Company entered into additional currency forward contracts to fully offset the original positions, eliminating its risk-mitigation position. As these contracts are not designated in hedging relationships, related gains and losses are recorded directly in earnings as part of non-operating income. See ~~Note 8—Derivative Financial Instruments~~ ~~to our unaudited consolidated financial statements~~. ~~Other non-operating income for the six month comparable period was also higher due to~~reflected a non-cash adjustment to the fair value of the ~~Put~~Visa Europe put option of $255 million, ~~during~~reducing the ~~first quarter of fiscal 2016, which is not subject to tax. The change in~~fair value ~~primarily reflects our expectation at March 31, 2016 and December 31, 2015 that we will complete the transaction through exercise~~ of the ~~Amended Put Option and the Put will not revert~~liability to ~~its original, unamended form or be unilaterally exercised by Visa Europe in the future.~~zero. See Note 2—Visa Europe~~andNote 4—Fair Value Measurements and Investments~~ to our unaudited consolidated financial statements.

Effective Income Tax Rate

~~the reversal~~$26 million of ~~prior years' accrued taxes on undistributed intercompany dividends in~~excess tax benefits related to share-based payments recorded during the quarter ended ~~March~~December 31, 2016 as a result of ~~revised intercompany dividend strategies between international subsidiaries;~~early adoption of new Accounting Standards Update 2016-09;

the restrictions on U.S. foreign tax credits that can be claimed on Visa Europe's foreign taxes under the current tax structure;

the absence of the non-taxable $255 million revaluation of the Visa Europe put option recorded in the quarter ended December 31, 2015; and

the absence of foreign tax credit benefits related to prior fiscal years recognized during the quarter ended December 31, ~~2015; and~~2015.

~~the absence of the reversal of previously established state tax reserves in the quarter ended December 31, 2014.~~

Excluding the non-recurring, non-operating $116 million net unrealized gains recorded in the second quarter of fiscal 2016 on currency forward contracts associated with the anticipated Visa Europe acquisition, and the non-cash, non-taxable $255 million gain recognized ~~in the first quarter of fiscal 2016~~as non-operating income upon the revaluation of the Visa Europe put option, the adjusted non-GAAP effective income tax rate was ~~30%~~29% for the three ~~and six~~ months ended ~~March~~December 31, ~~2016.~~2015. We believe the adjusted effective income tax rate provides a clearer understanding of our operating performance for the ~~current periods. See~~ ~~Overview — Financial highlights~~ ~~within this~~ ~~Management's Discussion and Analysis of Financial Condition and Results of Operations~~ ~~for a reconciliation to our reported GAAP effective tax rates.~~period in the prior fiscal year.

During the three ~~and six~~ months ended ~~March~~December 31, 2016, our gross unrecognized tax benefits increased by ~~$31~~$33 million, ~~and $51~~of which $28 million ~~respectively, which~~ would favorably impact our effective tax rate if recognized. The increase in gross unrecognized tax benefits is primarily related to various tax positions across several jurisdictions.

Our tax filings are subject to examination by the U.S. federal, state and foreign taxing authorities. The timing and outcome of the final resolutions of the various ongoing income tax examinations are highly uncertain. It is not reasonably possible to estimate the increase or decrease in unrecognized tax benefits within the next twelve months.

Liquidity and Capital Resources

Cash Flow Data

The following table summarizes our cash flow activity for the periods presented:


	Six Months Ended March 31,						Three Months Ended December 31,
	2016			2015			2016			2015
	(in millions)						(in millions)
Total cash provided by (used in):
Operating activities	$	2,819		$	2,739		$	2,508		$	1,979
Investing activities	(1,846		)	(557		)	(417		)	(6,194		)
Financing activities	11,452			(2,115		)	(1,730		)	13,534
Effect of exchange rate changes on cash and cash equivalents	—			1			(156		)	—
Increase in cash and cash equivalents	$	12,425		$	68		$	205		$	9,319

Operating activities. Cash provided by operating activities for the ~~six~~three months ended ~~March~~December 31, 2016 was higher than prior year comparable period, reflecting continued growth in our underlying ~~business.~~business, including Visa Europe.

Investing activities. Cash used in investing activities was ~~higher~~lower compared to the prior year comparable period as ~~we invested a portion~~purchases of available-for-sale investment securities during the three months ended December 31, 2015 reflected additional investment of proceeds received from the issuance of our ~~debt issuance in available-for-sale securities.~~Senior Notes. See Note 5—DebtandNote 4—Fair Value Measurements and Investments~~and~~ ~~Note 5—Debt~~ to our unaudited consolidated financial statements.

Financing activities. Financing activities for the ~~six~~three months ended ~~March~~December 31, 2016 reflect net aggregate proceeds of ~~$15.9 billion~~$566 million received from our ~~debt issuance completed~~commercial paper program in December ~~2015, $3.8~~2016 and $1.9 billion used to repurchase class A common stock in the open ~~market, and $676 million of dividend payments. See~~ ~~Note 5—Debt~~ ~~and~~ ~~Note 9—Stockholders' Equity~~ ~~to our unaudited consolidated financial statements~~. market. Activity in the prior year comparable period primarily reflected ~~$1.9~~$15.9 billion net aggregate proceeds received from our debt issuance completed in December 2015 and $2.0 billion of cash used to repurchase class A common stock in the open ~~market, dividend payments of $591 million,~~market. See Note 5—Debt and ~~$321 million of payments from~~Note 8—Stockholders' Equity to our ~~litigation escrow account in connection with the interchange multidistrict litigation.~~unaudited consolidated financial statements.

Sources of Liquidity

Our primary sources of liquidity are cash on hand, cash flow from operations, our investment portfolio and access to various equity and borrowing arrangements. Funds from operations are maintained in cash and cash equivalents and short-term or long-term available-for-sale investment securities based upon our funding requirements, access to liquidity from these holdings, and the returns that these holdings provide. We believe that cash flow generated from operations, in conjunction with access to our other sources of liquidity, will be more than sufficient to meet our ongoing operational needs.

Cash and cash equivalents and short-term and long-term available-for-sale investment securities held by our foreign subsidiaries, primarily attributable to undistributed earnings, totaled ~~$7.7~~$9.0 billion at ~~March~~December 31, ~~2016~~.2016. If it were necessary to repatriate these ~~funds~~undistributed earnings for use in the U.S., we would be required to pay U.S. income taxes on most of this amount. The amount of income taxes that would have resulted had these ~~funds~~undistributed earnings been repatriated is not practicably determinable. It is our intent to indefinitely reinvest the majority of these ~~funds~~undistributed earnings outside of the U.S. As such, we have not accrued any U.S. income tax provision in our financial results related to the majority of these funds.

~~Long-term debt~~Commercial Paper Program. We maintain a commercial paper program to support our working capital requirements and ~~change in capital structure.~~ ~~In conjunction~~for other general corporate purposes. The carrying amount outstanding at December 31, 2016 was $566 million, with ~~the anticipated Visa Europe acquisition, we have evolved our long-term capital structure. In December 2015, we issued fixed-rate senior notes in an aggregate principal amount~~a weighted-average interest rate of ~~$16.0 billion, with~~0.79% and remaining maturities ranging between 2 and 30 years. Our first principal payment of $1.8 billion is due on December 14, 2017. Interest on the Notes, at a rate ranging between 1.20% and 4.30%, is payable semi-annually on June 14 and December 14 of each year, commencing June 14, 2016. The Notes may be redeemed as a whole or in part, at our option at any time priorfrom 37 days to maturity, at a specified redemption price. In the event that the Visa Europe acquisition is not completed on or prior to February 2, 2017 (which date may be extended), we will be required to redeem all Notes except for the 2035 Notes and the 2045 Notes, at a specified redemption price. The net aggregate proceeds of $15.9 billion, after deducting underwriting discounts and debt issuance costs of $127 million will be used to fund a portion of the purchase price for the anticipated acquisition of Visa Europe, and the remainder will be used for general corporate purposes including share repurchases. We are not subject to any financial covenants and did not experience any changes to our investment credit ratings as a result of this debt issuance.66 days. See Note 5—Debt to our unaudited consolidated financial statements.

Credit ~~Facility.~~Facility Extension. On January 27, ~~2016,~~2017, we ~~entered into an unsecured~~extended the term of the $4.0 ~~billion revolving credit facility. The credit facility, which expires on January 27, 2021, replaced our previous $3.0~~ billion credit facility ~~which expired~~that was entered into on January 27, 2016. The ~~new~~ credit facility ~~contains covenants and events of default customary for facilities of this type.~~will now expire on January 27, 2022. No other material terms were changed. See Note 5—Debt to our unaudited consolidated financial statements.

Uses of Liquidity

There has been no significant change to our primary uses of liquidity since September 30, ~~2015~~,2016, except as discussed below. Based on our current cash flow budgets and forecasts of our short-term and long-term liquidity needs, we believe that our projected sources of liquidity will be sufficient to meet our projected liquidity needs for more than the next 12 months. We will continue to assess our liquidity position and potential sources of supplemental liquidity in view of our operating performance, current economic and capital market conditions and other relevant circumstances.

~~Visa Europe acquisition.~~Senior Notes. ~~On November 2,~~In December 2015, we ~~entered into a transaction agreement~~issued fixed-rate senior notes in an aggregate principal amount of $16.0 billion, with maturities ranging between 2 and 30 years. Our first principal payment of $1.8 billion is due on December 14, 2017. However, we intend to ~~acquire Visa Europe for a total purchase price~~refinance this current portion of up to €21.2 billion. As originally agreed, the purchase price consisted of: (a) at the closing of the transaction, up-front cash consideration of €11.5 billion and preferred stock convertible upon certain conditions into class A common stock or class A equivalent preferred stock, valued at approximately €5.0 billion, and (b) following the end of sixteen fiscal quarters post-closing, contingent cash consideration of up to €4.0 billion (plus up to an additional €0.7 billion in interest), determined based on the achievement of specified net revenue levels during such post-closing period.

We also entered into the Put Option Amendment with Visa Europe to align certain terms of the Put with the terms of the Visa Europe Transaction Agreement. Under the terms and conditions of the Transaction Agreement, the Visa Europe board of directors is required to exercise the Amended Put Option on the closing date of the transaction to effect our purchase of all Visa Europe's share capital. If the Transaction Agreement is terminated for any reasondebt prior to ~~the completion~~its maturity, market conditions permitting. An interest payment of ~~the transaction, the Put Option Amendment will also terminate and the Put will revert to its original, unamended form.~~

On April 21, 2016, we reached preliminary agreement with Visa Europe to amend the Transaction Agreement to eliminate the Earn-out portion of the transaction consideration. Instead of an earn-out, the cash consideration payable in the transaction would be increased by €1.75 billion: €750$244 million ~~payable upon closing, and €1.0 billion, plus 4% compound annual interest, payable~~was made on the third anniversary of closing. The terms of the transaction otherwise remain unchanged. The transaction remains subject to the negotiation of definitive documentation of this amendment and to regulatory approval. While the parties continue to work toward closing as soon as possible, closing could extend beyond the end of our fiscal third quarter. We also agreed with Visa Europe that the Amended Put Option will be further amended as needed to reflect the changes in transaction consideration under the Preliminary Agreement. The terms of the Amended Put Option will otherwise remain unchanged.December 14, 2016. See Note ~~2—Visa Europe~~5—Debt to our unaudited consolidated financial statements.

~~Reduction in as-converted class A common stock.~~Common stock repurchases. ~~In October 2015, our board of directors authorized a new $5.0 billion share repurchase program, in addition to the existing October 2014 program.~~ During the ~~six~~three months ended ~~March~~December 31, 2016, we repurchased 5024 million shares of our class A common stock using ~~$3.8~~$1.9 billion of cash on hand. As of ~~March~~December 31, 2016, wethe July 2016 program had remaining authorized funds of ~~$4.0~~$3.9 billion for share repurchase. All share repurchase programs authorized prior to July 2016 have been completed. See Note 9—8—Stockholders' Equity to our unaudited consolidated financial statements.

Dividends. During the ~~six~~three months ended ~~March~~December 31, 2016, we declared and paid ~~$676~~$399 million in ~~dividends.~~dividends to holders of our common stock. In ~~April 2016,~~January 2017, our board of directors declared a cash dividend in the amount of ~~$0.14~~$0.165 per share of class A common stock (determined in the case of class B and C common stock and U.K.&I and Europe preferred stock on an as-converted basis), which will be paid on ~~June~~March 7, ~~2016,~~2017, to all holders of record of our common and preferred stock as of ~~May 13, 2016.~~February 17, 2017. See Note 9—8—Stockholders' Equity to our unaudited consolidated financial statements. We expect to continue paying quarterly dividends in cash, subject to approval by the board of directors. ~~Class~~All three series of preferred stock and class B and ~~class~~ C common stock will share ratably on an as-converted basis in such future dividends.

Fair Value Measurements—Financial Instruments

As of ~~March~~December 31, 2016,, our financial instruments measured at fair value on a recurring basis included ~~$22.9~~$12.4 billion of assets and ~~$114~~$84 million of liabilities. See Note 4—Fair Value Measurements and Investments to our unaudited consolidated financial statements.



ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk

On November 2, 2015, we entered into the Transaction Agreement with Visa Europe. On April 21, 2016, we reached preliminary agreement with Visa Europe to amend the Transaction Agreement to eliminate the Earn-out portion of the transaction consideration. Under the terms of the Preliminary Agreement, cash consideration would total €13.25 billion: €12.25 billion payable upon closing, and €1.0 billion, plus 4% compound annual interest, payable on the third anniversary of closing. The terms of the transaction otherwise remain unchanged. See ~~Note 2—Visa Europe~~ to our unaudited consolidated financial statements. As the total purchase price includes cash consideration to be paid in euros, we are exposed to foreign currency exchange rate risk with respect to fluctuations of the U.S. dollar against the euro. A hypothetical 10% decline in the value of the U.S. dollar against the euro, compared to the exchange rate at March 31, 2016, would increase the anticipated cash consideration by $1.5 billion, including interest. See ~~Note 8—Derivative Financial Instruments~~ ~~to our unaudited consolidated financial statements.~~

~~Other than the foreign currency exchange rate risk described above, there~~There have been no significant changes to our market risks during the ~~six~~three months ended ~~March~~December 31, 2016, compared to September 30, ~~2015.~~2016.



ITEM 4.	Controls and Procedures

Disclosure controls and procedures. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) of Visa Inc. at the end of the period covered by this report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures of Visa Inc. were effective at the reasonable assurance level as of the end of the period covered by this report.

Changes in internal control over financial reporting. There has been no change in the internal control over financial reporting of Visa Inc. that occurred during the fiscal period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION



ITEM 1.	Legal Proceedings.

Refer to Note ~~13—~~12—Legal Matters to the unaudited consolidated financial statements included in this Form 10-Q for a description of the Company’s current material legal proceedings.



ITEM 1A.	Risk Factors.

For a discussion of the Company’s risk factors, see the information under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended September 30, ~~2015~~,2016, filed with the SEC on November ~~19, 2015~~.15, 2016.



ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds.

ISSUER PURCHASES OF EQUITY SECURITIES

The table below sets forth ~~information with respect to~~the Company’s purchases of ~~the Company’s~~ common stock ~~made by or on behalf of the Company~~ during the quarter ended ~~March~~December 31, 2016.

Period
Total
Number of
Shares
Purchased ⁽¹⁾

Average
Price Paid
per Share

Total
Number of
Shares
Purchased
as Part of
Publicly
Announced
Plans or
Programs ^(2),(3)

Approximate
Dollar Value
of Shares that
May Yet Be Purchased
Under the Plans or
Programs ^(2),(3)
January 1-31, 2016 8,965,454
$ 73.46
8,963,960
$ 5,098,695,765
February 1-29, 2016 13,145,621
$ 71.11
13,089,725
$ 4,167,694,153
March 1-31, 2016 2,162,399
$ 73.97
2,162,399
$ 4,007,694,462
Total 24,273,474
$ 72.23
24,216,084



Period	Total Number of Shares Purchased ⁽¹⁾	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs ^(2),(3)	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs ^(2),(3)
October 1-31, 2016	2,430,349	$	82.27	2,430,349	$	5,465,815,734
November 1-30, 2016	14,388,292	$	80.41	14,063,092	$	4,334,852,579
December 1-31, 2016	5,759,268	$	77.19	5,759,268	$	3,890,166,593
Total	22,577,909	$	79.79	22,252,709


⁽¹⁾	Includes ~~57,390~~325,200 shares of class A common stock withheld at an average price of ~~$71.74~~$80.82 per share (per the terms of grants under our 2007 Equity Incentive Compensation Plan) to offset tax withholding obligations that occur upon vesting and release of restricted shares.


⁽²⁾	The figures in the table reflect transactions according to trade dates. For purposes of our unaudited consolidated financial statements included in this Form 10-Q, the impact of these repurchases is recorded according to settlement dates.

⁽³⁾

Our board of directors from time to time authorizes the repurchase of shares of our common stock up to a certain monetary limit. In October 2015 and July 2016, our board of directors authorized ~~a new~~share repurchase programs for $5.0 billion ~~share repurchase program. This authorization has~~each. These authorizations have no expiration date. All share repurchase programs authorized prior to ~~October 2015~~July 2016 have been completed.



ITEM 3.	Defaults Upon Senior Securities.

None.



ITEM 4.	Mine Safety Disclosures.

Not applicable.



ITEM 5.	Other Information.

None.



ITEM 6.	Exhibits.

The list of exhibits required to be filed as exhibits to this report is listed in the “Exhibit Index,” which is incorporated herein by reference.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



		VISA INC.

Date:	~~April 25, 2016~~February 2, 2017	By:	/s/ ~~Charles W. Scharf~~Alfred F. Kelly, Jr.
		Name:	~~Charles W. Scharf~~Alfred F. Kelly, Jr.
		Title:	Chief Executive Officer (Principal Executive Officer)

Date:	~~April 25, 2016~~February 2, 2017	By:	/s/ Vasant M. Prabhu
		Name:	Vasant M. Prabhu
		Title:	Chief Financial Officer (Principal Financial Officer)

Date:	February 2, 2017	By:	/s/ James H. Hoffmeister
		Name:	James H. Hoffmeister
		Title:	Global Corporate Controller and Chief Accounting Officer (Principal Accounting Officer)

EXHIBIT INDEX



		Incorporated by Reference
Exhibit Number	Description of Documents	Schedule/ Form	File Number	Exhibit	Filing Date

~~10.1+~~	Five Year Revolving Credit Agreement, dated January 27, 2016, by and among Visa Inc., Visa International Service Association, Visa U.S.A. Inc., as borrowers, Bank of America, N.A., as administrative agent, JPMorgan Chase Bank N.A., as syndication agent, and the lenders referred to therein #

31.1+	Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2+	Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1+	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2+	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

~~101.INS~~101.INS+	XBRL Instance Document

~~101.SCH~~101.SCH+	XBRL Taxonomy Extension Schema Document

~~101.CAL~~101.CAL+	XBRL Taxonomy Extension Calculation Linkbase Document

~~101.DEF~~101.DEF+	XBRL Taxonomy Extension Definition Linkbase Document

~~101.LAB~~101.LAB+	XBRL Taxonomy Extension Label Linkbase Document

~~101.PRE~~101.PRE+	XBRL Taxonomy Extension Presentation Linkbase Document



+	Filed or furnished herewith.
#	Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule will be furnished supplementally to the SEC upon request; provided, however, that the parties may request confidential treatment pursuant to Rule 24b-2 of the Exchange Act for any document so furnished.

4434



	Common Stock						Additional Paid-in Capital			Accumulated Income			Accumulated Other Comprehensive Loss			Total Equity
	Class A			Class B	Class C		Additional Paid-in Capital			Accumulated Income			Accumulated Other Comprehensive Loss			Total Equity
	(in millions, except per share data)
Balance as of September 30, 2015	1,950			245	20		$	18,073		$	11,843		$	(74	)	$	29,842
Net income										3,648						3,648
Other comprehensive loss, net of tax													(22		)	(22		)
Comprehensive income																3,626
Conversion of class C common stock upon sale into public market	3				(1	)										—
Issuance and vesting of restricted stock and performance-based shares	2															—
Share-based compensation, net of forfeitures (Note 11)	—		⁽¹⁾				97									97
Restricted stock and performance-based shares settled in cash for taxes	(1	)					(85		)							(85		)
Excess tax benefit for share-based compensation							43									43
Cash proceeds from issuance of common stock under employee equity plans	1						49									49
Cash dividends declared and paid, at a quarterly amount of $0.14 per as-converted share (Note 9)										(676		)				(676		)
Repurchase of class A common stock (Note 9)	(50	)					(532		)	(3,233		)				(3,765		)
Balance as of March 31, 2016	1,905			245	19		$	17,645		$	11,582		$	(96	)	$	29,131



Fiscal Year	2016		2017		2018		2019		2020		Thereafter		Total
(in millions)	$	—	$	—	$	1,750	$	—	$	—	$	14,250	$	16,000