UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended ~~June 30, 2018~~March 31, 2019

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

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, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 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 ~~July 20, 2018~~April 19, 2019 there were ~~1,776,658,361~~1,738,987,989 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 ~~12,079,719~~11,565,095 shares of class C common stock, par value $0.0001 per share, of Visa Inc. outstanding.

VISA INC.

TABLE OF CONTENTS




		Page
PART I.	Financial Information	3

Item 1.	Financial Statements (unaudited)	3
	Consolidated Balance Sheets—~~June 30, 2018~~March 31, 2019 and September 30, ~~2017~~2018	3
	Consolidated Statements of Operations—Three and ~~Nine~~Six Months Ended ~~June 30,~~March 31, 2019 and 2018 ~~and 2017~~	4
	Consolidated Statements of Comprehensive Income—Three and ~~Nine~~Six Months Ended ~~June 30,~~March 31, 2019 and 2018 ~~and 2017~~	5
	Consolidated Statements of ~~Cash Flows—Nine~~Changes in Equity—Three and Six Months Ended ~~June 30,~~March 31, 2019 and 2018 ~~and 2017~~	6
	Consolidated Statements of Cash Flows—Six Months Ended March 31, 2019 and 2018	10
	Notes to Consolidated Financial Statements (unaudited)	711
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2329
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3438
Item 4.	Controls and Procedures	3438

PART II.	Other Information	3539

Item 1.	Legal Proceedings	3539
Item 1A.	Risk Factors	3539
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3539
Item 3.	Defaults Upon Senior Securities	3539
Item 4.	Mine Safety Disclosures	3539
Item 5.	Other Information	3539
Item 6.	Exhibits	3640
	Signatures	3741

PART I. FINANCIAL INFORMATION



ITEM 1.	Financial Statements

VISA INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


	June 30, 2018			September 30, 2017			March 31, 2019			September 30, 2018
	(in millions, except par value data)						(in millions, except par value data)
Assets
Cash and cash equivalents	$	8,505		$	9,874		$	7,648		$	8,162
Restricted cash—U.S. litigation escrow (Note 2)	1,487			1,031
Investment securities (Note 3):
Trading	94			82
Available-for-sale	3,302			3,482
Restricted cash equivalents—U.S. litigation escrow (Note 3 and Note 4)							899			1,491
Investment securities (Note 5)							3,876			3,547
Settlement receivable	1,615			1,422			1,574			1,582
Accounts receivable	1,220			1,132			1,404			1,208
Customer collateral (Note 5)	1,346			1,106
Customer collateral (Note 3 and Note 7)							1,735			1,324
Current portion of client incentives	377			344			589			340
Prepaid expenses and other current assets	545			550			765			562
Total current assets	18,491			19,023			18,490			18,216
Investment securities, available-for-sale (Note 3)	2,835			1,926
Investment securities (Note 5)							3,506			4,082
Client incentives	545			591			1,664			538
Property, equipment and technology, net	2,387			2,253			2,456			2,472
Goodwill							15,088			15,194
Intangible assets, net							26,966			27,558
Other assets	1,085			1,226			1,695			1,165
Intangible assets, net	27,628			27,848
Goodwill	15,204			15,110
Total assets	$	68,175		$	67,977		$	69,865		$	69,225
Liabilities
Accounts payable	$	145		$	179		$	119		$	183
Settlement payable	2,310			2,003			2,081			2,168
Customer collateral (Note 5)	1,346			1,106
Customer collateral (Note 7)							1,735			1,325
Accrued compensation and benefits	729			757			578			901
Client incentives	2,577			2,089			3,484			2,834
Accrued liabilities	1,099			1,129			1,207			1,160
Deferred purchase consideration	1,300			—			1,262			1,300
Current maturities of long-term debt (Note 4)	—			1,749
Accrued litigation (Note 11)	1,428			982
Accrued litigation (Note 13)							914			1,434
Total current liabilities	10,934			9,994			11,380			11,305
Long-term debt (Note 4)	16,627			16,618
Long-term debt (Note 6)							16,630			16,630
Deferred tax liabilities	4,802			5,980			4,911			4,618
Deferred purchase consideration	—			1,304
Other liabilities	2,494			1,321			2,669			2,666
Total liabilities	34,857			35,217			35,590			35,219
Equity
Preferred stock, $0.0001 par value, 25 shares authorized and 5 shares issued and outstanding as follows:
Series A convertible participating preferred stock, none issued (Note 7)	—			—
Series B convertible participating preferred stock, 2 shares issued and outstanding at June 30, 2018 and September 30, 2017 (the “UK&I preferred stock”) (Note 7)	2,291			2,326
Series C convertible participating preferred stock, 3 shares issued and outstanding at June 30, 2018 and September 30, 2017 (the “Europe preferred stock”) (Note 7)	3,179			3,200
Class A common stock, $0.0001 par value, 2,001,622 shares authorized, 1,778 and 1,818 shares issued and outstanding at June 30, 2018 and September 30, 2017, respectively (Note 7)	—			—
Class B common stock, $0.0001 par value, 622 shares authorized, 245 shares issued and outstanding at June 30, 2018 and September 30, 2017 (Note 7)	—			—
Class C common stock, $0.0001 par value, 1,097 shares authorized, 12 and 13 shares issued and outstanding at June 30, 2018 and September 30, 2017, respectively (Note 7)	—			—
Right to recover for covered losses (Note 2)	(5		)	(52		)
Series A convertible participating preferred stock, none issued (the “class A equivalent preferred stock”) (Note 9)							—			—
Series B convertible participating preferred stock, 2 shares issued and outstanding at March 31, 2019 and September 30, 2018 (the “UK&I preferred stock”) (Note 9)							2,286			2,291
Series C convertible participating preferred stock, 3 shares issued and outstanding at March 31, 2019 and September 30, 2018 (the “Europe preferred stock”) (Note 9)							3,178			3,179
Class A common stock, $0.0001 par value, 2,001,622 shares authorized, 1,741 and 1,768 shares issued and outstanding at March 31, 2019 and September 30, 2018, respectively (Note 9)							—			—
Class B common stock, $0.0001 par value, 622 shares authorized, 245 shares issued and outstanding at March 31, 2019 and September 30, 2018 (Note 9)							—			—
Class C common stock, $0.0001 par value, 1,097 shares authorized, 12 shares issued and outstanding at March 31, 2019 and September 30, 2018 (Note 9)							—			—
Right to recover for covered losses (Note 4)							(163		)	(7		)
Additional paid-in capital	16,686			16,900			16,547			16,678
Accumulated income	10,426			9,508			12,513			11,318
Accumulated other comprehensive income (loss), net:
Investment securities, available-for-sale	110			73
Investment securities							1			(17		)
Defined benefit pension and other postretirement plans	(74		)	(76		)	(67		)	(61		)
Derivative instruments classified as cash flow hedges	54			(36		)
Derivative instruments							96			60
Foreign currency translation adjustments	651			917			(116		)	565
Total accumulated other comprehensive income, net	741			878
Total accumulated other comprehensive income (loss), net							(86		)	547
Total equity	33,318			32,760			34,275			34,006
Total liabilities and equity	$	68,175		$	67,977		$	69,865		$	69,225

VISA INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)


	Three Months Ended June 30,						Nine Months Ended June 30,						Three Months Ended March 31,						Six Months Ended March 31,
	2018			2017			2018			2017			2019			2018			2019			2018
	(in millions, except per share data)												(in millions, except per share data)
Operating Revenues
Service revenues	$	2,196		$	1,948		$	6,595		$	5,859
Data processing revenues	2,359			1,984			6,633			5,719
International transaction revenues	1,830			1,571			5,248			4,529
Other revenues	229			209			688			615
Client incentives	(1,374		)	(1,147		)	(3,989		)	(3,219		)
Net operating revenues	5,240			4,565			15,175			13,503
Net revenues													$	5,494		$	5,073		$	11,000		$	9,935

Operating Expenses
Personnel	852			698			2,355			1,973			894			824			1,701			1,503
Marketing	240			221			724			632			241			261			517			484
Network and processing	169			158			498			453			171			169			344			329
Professional fees	112			102			312			265			101			108			192			200
Depreciation and amortization	152			132			450			409			160			153			319			298
General and administrative	230			230			688			822			264			222			540			458
Litigation provision (Note 11)	600			—			600			17
Litigation provision (Note 13)													22			—			29			—
Total operating expenses	2,355			1,541			5,627			4,571			1,853			1,737			3,642			3,272
Operating income	2,885			3,024			9,548			8,932			3,641			3,336			7,358			6,663

Non-operating Income (Expense)
Interest expense	(155		)	(140		)	(462		)	(415		)
Other	82			30			182			78
Total non-operating expense	(73		)	(110		)	(280		)	(337		)
Interest expense, net													(140		)	(153		)	(285		)	(307		)
Investment income and other													176			34			234			100
Total non-operating income (expense)													36			(119		)	(51		)	(207		)
Income before income taxes	2,812			2,914			9,268			8,595			3,677			3,217			7,307			6,456
Income tax provision (Note 10)	483			855			1,812			4,036
Income tax provision (Note 12)													700			612			1,353			1,329
Net income	$	2,329		$	2,059		$	7,456		$	4,559		$	2,977		$	2,605		$	5,954		$	5,127

Basic earnings per share (Note 8)
Basic Earnings Per Share (Note 10)
Class A common stock	$	1.00		$	0.87		$	3.20		$	1.90		$	1.31		$	1.12		$	2.61		$	2.19
Class B common stock	$	1.66		$	1.43		$	5.27		$	3.13		$	2.13		$	1.84		$	4.25		$	3.61
Class C common stock	$	4.02		$	3.46		$	12.78		$	7.60		$	5.23		$	4.46		$	10.44		$	8.76

Basic weighted-average shares outstanding (Note 8)
Basic Weighted-average Shares Outstanding (Note 10)
Class A common stock	1,784			1,840			1,798			1,852			1,748			1,798			1,754			1,805
Class B common stock	245			245			245			245			245			245			245			245
Class C common stock	12			14			12			15			12			12			12			13

Diluted earnings per share (Note 8)
Diluted Earnings Per Share (Note 10)
Class A common stock	$	1.00		$	0.86		$	3.19		$	1.90		$	1.31		$	1.11		$	2.61		$	2.19
Class B common stock	$	1.65		$	1.42		$	5.26		$	3.13		$	2.13		$	1.84		$	4.25		$	3.60
Class C common stock	$	4.01		$	3.45		$	12.76		$	7.59		$	5.23		$	4.46		$	10.42		$	8.74

Diluted weighted-average shares outstanding (Note 8)
Diluted Weighted-average Shares Outstanding (Note 10)
Class A common stock	2,321			2,385			2,337			2,404			2,279			2,337			2,285			2,345
Class B common stock	245			245			245			245			245			245			245			245
Class C common stock	12			14			12			15			12			12			12			13

VISA INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)


	Three Months Ended June 30,						Nine Months Ended June 30,						Three Months Ended March 31,						Six Months Ended March 31,
	2018			2017			2018			2017			2019			2018			2019			2018
	(in millions)												(in millions)
Net income	$	2,329		$	2,059		$	7,456		$	4,559		$	2,977		$	2,605		$	5,954		$	5,127
Other comprehensive income (loss), net of tax:
Investment securities, available-for-sale:
Net unrealized gain	45			22			95			38
Investment securities:
Net unrealized gain (loss)													7			41			15			50
Income tax effect	(10		)	(9		)	(22		)	(17		)	(2		)	(9		)	(4		)	(12		)
Reclassification adjustment for net (gain) loss realized in net income	(24		)	—			(52		)	1			—			—			—			(28		)
Income tax effect	6			—			16			—			—			—			—			10
Defined benefit pension and other postretirement plans:
Net unrealized actuarial loss and prior service credit	—			—			(2		)	(5		)
Net unrealized actuarial gain (loss) and prior service credit (cost)													—			(2		)	(7		)	(2		)
Income tax effect	—			—			1			2			—			1			1			1
Reclassification adjustment for net loss realized in net income	4			12			4			33
Income tax effect	(1		)	(3		)	(1		)	(12		)
Derivative instruments classified as cash flow hedges:
Derivative instruments:
Net unrealized gain (loss)	114			(20		)	72			5			59			(41		)	97			(42		)
Income tax effect	(19		)	5			(22		)	9			(13		)	2			(23		)	(3		)
Reclassification adjustment for net loss realized in net income	10			11			45			31
Reclassification adjustment for net (gain) loss realized in net income													(22		)	24			(47		)	35
Income tax effect	—			(5		)	(5		)	(10		)	4			(3		)	9			(5		)
Foreign currency translation adjustments	(1,112		)	1,085			(266		)	501			(394		)	512			(681		)	846
Other comprehensive (loss) income, net of tax	(987		)	1,098			(137		)	576
Other comprehensive income (loss), net of tax													(361		)	525			(640		)	850
Comprehensive income	$	1,342		$	3,157		$	7,319		$	5,135		$	2,616		$	3,130		$	5,314		$	5,977

VISA INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(UNAUDITED)



	Three Months Ended March 31, 2019
	Preferred Stock		Common Stock						Preferred Stock		Right to Recover for Covered Losses			Additional Paid-In Capital			Accumulated Income			Accumulated Other Comprehensive Income			Total Equity
	UK&I	Europe	Class A			Class B	Class C
	(in millions, except per share data)
Balance as of December 31, 2018	2	3	1,754			245	12		$	5,464	$	(92	)	$	16,540		$	11,908		$	275		$	34,095
Net income																	2,977						2,977
Other comprehensive income (loss), net of tax																				(361		)	(361		)
Comprehensive income																							2,616
Adoption of new accounting standards (Note 1)																	(8		)	—			(8		)
VE territory covered losses incurred (Note 4)											(71		)										(71		)
Conversion of class C common stock upon sales into public market			1				—	⁽¹⁾															—
Vesting of restricted stock and performance-based shares			—		⁽¹⁾																		—
Share-based compensation, net of forfeitures (Note 11)														111									111
Restricted stock and performance-based shares settled in cash for taxes			—		⁽¹⁾									(2		)							(2		)
Cash proceeds from issuance of common stock under employee equity plans			—		⁽¹⁾									41									41
Cash dividends declared and paid, at a quarterly amount of $0.25 per Class A share (Note 9)																	(569		)				(569		)
Repurchase of class A common stock (Note 9)			(14	)										(143		)	(1,795		)				(1,938		)
Balance as of March 31, 2019	2	3	1,741			245	12		$	5,464	$	(163	)	$	16,547		$	12,513		$	(86	)	$	34,275


⁽¹⁾	Increase or decrease is less than one million shares.

VISA INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY—(Continued)

(UNAUDITED)



	Six Months Ended March 31, 2019
	Preferred Stock		Common Stock					Preferred Stock			Right to Recover for Covered Losses			Additional Paid-In Capital			Accumulated Income			Accumulated Other Comprehensive Income			Total Equity
	UK&I	Europe	Class A		Class B	Class C
	(in millions, except per share data)
Balance as of September 30, 2018	2	3	1,768		245	12		$	5,470		$	(7	)	$	16,678		$	11,318		$	547		$	34,006
Net income																	5,954						5,954
Other comprehensive income (loss), net of tax																				(640		)	(640		)
Comprehensive income																							5,314
Adoption of new accounting standards (Note 1)											��						385			7			392
VE territory covered losses incurred (Note 4)											(162		)										(162		)
Recovery through conversion rate adjustment (Note 4 and Note 9)								(6		)	6												—
Conversion of class C common stock upon sales into public market			1			—	⁽¹⁾																—
Vesting of restricted stock and performance-based shares			3																				—
Share-based compensation, net of forfeitures (Note 11)														211									211
Restricted stock and performance-based shares settled in cash for taxes			(1	)										(103		)							(103		)
Cash proceeds from issuance of common stock under employee equity plans			1											89									89
Cash dividends declared and paid, at a quarterly amount of $0.25 per Class A share (Note 9)																	(1,141		)				(1,141		)
Repurchase of class A common stock (Note 9)			(31	)										(328		)	(4,003		)				(4,331		)
Balance as of March 31, 2019	2	3	1,741		245	12		$	5,464		$	(163	)	$	16,547		$	12,513		$	(86	)	$	34,275


⁽¹⁾	Decrease is less than one million shares.

VISA INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY—(Continued)

(UNAUDITED)



	Three Months Ended March 31, 2018
	Preferred Stock		Common Stock						Preferred Stock		Right to Recover for Covered Losses			Additional Paid-In Capital			Accumulated Income			Accumulated Other Comprehensive Income		Total Equity
	UK&I	Europe	Class A			Class B	Class C
	(in millions, except per share data)
Balance as of December 31, 2017	2	3	1,805			245	12		$	5,476	$	(5	)	$	16,761		$	9,966		$	1,203	$	33,401
Net income																	2,605					2,605
Other comprehensive income (loss), net of tax																				525		525
Comprehensive income																						3,130
VE territory covered losses incurred (Note 4)											(1		)									(1		)
Conversion of class C common stock upon sales into public market			1				—	⁽¹⁾														—
Vesting of restricted stock and performance-based shares			—		⁽¹⁾																	—
Share-based compensation, net of forfeitures (Note 11)			—		⁽¹⁾									85								85
Restricted stock and performance-based shares settled in cash for taxes			—		⁽¹⁾									—								—
Cash proceeds from issuance of common stock under employee equity plans			1											50								50
Cash dividends declared and paid, at a quarterly amount of $0.210 per Class A share (Note 9)																	(490		)			(490		)
Repurchase of class A common stock (Note 9)			(17	)										(183		)	(1,889		)			(2,072		)
Balance as of March 31, 2018	2	3	1,790			245	12		$	5,476	$	(6	)	$	16,713		$	10,192		$	1,728	$	34,103


⁽¹⁾	Increase or decrease is less than one million shares.

VISA INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY—(Continued)

(UNAUDITED)



	Six Months Ended March 31, 2018
	Preferred Stock		Common Stock						Preferred Stock			Right to Recover for Covered Losses			Additional Paid-In Capital			Accumulated Income			Accumulated Other Comprehensive Income		Total Equity
	UK&I	Europe	Class A			Class B	Class C
	(in millions, except per share data)
Balance as of September 30, 2017	2	3	1,818			245	13		$	5,526		$	(52	)	$	16,900		$	9,508		$	878	$	32,760
Net income																		5,127					5,127
Other comprehensive income (loss), net of tax																					850		850
Comprehensive income																							5,977
VE territory covered losses incurred (Note 4)												(4		)									(4		)
Recovery through conversion rate adjustment (Note 4 and Note 9)									(50		)	50											—
Conversion of class C common stock upon sales into public market			2				(1	)															—
Vesting of restricted stock and performance-based shares			2																				—
Share-based compensation, net of forfeitures (Note11)			—		⁽¹⁾										153								153
Restricted stock and performance-based shares settled in cash for taxes			(1	)											(88		)						(88		)
Cash proceeds from issuance of common stock under employee equity plans			2												103								103
Cash dividends declared and paid, at a quarterly amount of $0.195 per Class A share in the first quarter and $0.210 per Class A share in the second quarter (Note 9)																		(948		)			(948		)
Repurchase of class A common stock (Note 9)			(33	)											(355		)	(3,495		)			(3,850		)
Balance as of March 31, 2018	2	3	1,790			245	12		$	5,476		$	(6	)	$	16,713		$	10,192		$	1,728	$	34,103


⁽¹⁾	Decrease is less than one million shares.

VISA INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	Nine Months Ended June 30,						Six Months Ended March 31,
	2018			2017			2019			2018
	(in millions)						(in millions)
Operating Activities
Net income	$	7,456		$	4,559		$	5,954		$	5,127
Adjustments to reconcile net income to net cash provided by operating activities:
Client incentives	3,989			3,219
Share-based compensation (Note 9)	242			183
Client incentives (Note 2)							2,934			2,615
Share-based compensation (Note 11)							211			153
Depreciation and amortization of property, equipment, technology and intangible assets	450			409			319			298
Deferred income taxes	(1,133		)	1,715			256			(945		)
Right to recover for covered losses recorded in equity (Note 2)	(9		)	(165		)
Charitable contribution of Visa Inc. shares (Note 10)	—			192
Right to recover for covered losses recorded in equity (Note 4)							(162		)	(4		)
Other	(44		)	30			(106		)	(10		)
Change in operating assets and liabilities:
Settlement receivable	(239		)	42			(23		)	(1,039		)
Accounts receivable	(82		)	(34		)	(203		)	(113		)
Client incentives	(3,483		)	(3,376		)	(3,142		)	(2,177		)
Other assets	(143		)	(192		)	(245		)	41
Accounts payable	(18		)	(71		)	(48		)	(26		)
Settlement payable	379			(19		)	(38		)	986
Accrued and other liabilities	1,408			(65		)	170			975
Accrued litigation (Note 11)	446			14
Accrued litigation (Note 13)							(519		)	(152		)
Net cash provided by operating activities	9,219			6,441			5,358			5,729
Investing Activities
Purchases of property, equipment, technology and intangible assets	(523		)	(512		)
Proceeds from sales of property, equipment and technology	14			—
Investment securities, available-for-sale:
Purchases of property, equipment and technology							(313		)	(354		)
Investment securities:
Purchases	(3,354		)	(1,877		)	(1,806		)	(2,342		)
Proceeds from maturities and sales	2,789			4,296			2,038			1,771
Acquisition of business, net of cash received	(196		)	(302		)
Acquisitions, net of cash acquired							—			(196		)
Purchases of / contributions to other investments	(35		)	(18		)	(236		)	(16		)
Net cash (used in) provided by investing activities	(1,305		)	1,587
Proceeds / distributions from other investments							10			—
Other investing activities							(89		)	—
Net cash used in investing activities							(396		)	(1,137		)
Financing Activities
Repurchase of class A common stock (Note 7)	(5,604		)	(5,170		)
Repayments of long-term debt (Note 4)	(1,750		)	—
Dividends paid (Note 7)	(1,435		)	(1,189		)
Deposits into litigation escrow account—U.S. retrospective responsibility plan (Note 2 and Note 11)	(600		)	—
Payments from litigation escrow account—U.S. retrospective responsibility plan (Note 2 and Note 11)	150			—
Repurchase of class A common stock (Note 9)							(4,331		)	(3,850		)
Repayments of long-term debt							—			(1,750		)
Dividends paid (Note 9)							(1,141		)	(948		)
Cash proceeds from issuance of common stock under employee equity plans	135			128			89			103
Restricted stock and performance-based shares settled in cash for taxes	(90		)	(73		)	(103		)	(88		)
Net cash used in financing activities	(9,194		)	(6,304		)	(5,486		)	(6,533		)
Effect of exchange rate changes on cash and cash equivalents	(89		)	94			(171		)	206
(Decrease) increase in cash and cash equivalents	(1,369		)	1,818
Cash and cash equivalents at beginning of period	9,874			5,619
Cash and cash equivalents at end of period	$	8,505		$	7,437
Decrease in cash, cash equivalents, restricted cash and restricted cash equivalents							(695		)	(1,735		)
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period (Note 3)							10,977			12,011
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period (Note 3)							$	10,282		$	10,276
Supplemental Disclosure
Income taxes paid, net of refunds	$	1,649		$	2,239		$	1,381		$	1,197
Interest payments on debt (Note 4)	$	510		$	489
Accruals related to purchases of property, equipment, technology and intangible assets	$	35		$	35
Interest payments on debt (Note 6)							$	269		$	276
Accruals related to purchases of property, equipment and technology							$	51		$	21

VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~June 30, 2018~~March 31, 2019

(UNAUDITED)

Note 1—Summary of Significant Accounting Policies

Organization. Visa Inc. (“Visa” or the “Company”) is a global payments technology company that enables fast, secure and reliable electronic payments across more than 200 countries and territories. Visa and its wholly-owned consolidated subsidiaries, including Visa U.S.A. Inc. (“Visa U.S.A.”), Visa International Service Association (“Visa International”), Visa Worldwide Pte. Limited, Visa Europe Limited (“Visa Europe”), Visa Canada Corporation (“Visa Canada”), Visa Technology & Operations LLC and CyberSource Corporation, operate one of the world’s largest retail electronic payments networks — VisaNet — which facilitates authorization, clearing and settlement of payment transactions and enables the Company to provide its 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 products. In most cases, account holder and merchant relationships belong to, and are managed by, Visa’s financial institution clients.

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”). The Company consolidates its majority-owned and controlled entities, including variable interest entities (“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) 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, ~~2017~~2018 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 May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of goods or services to customers. ~~The ASU~~This new revenue standard replaces all existing revenue recognition guidance in U.S. GAAP. Subsequently, the FASB also issued a series of amendments to the new revenue standard. The ~~Company will adopt~~new revenue standard changes the ~~standard effective October 1, 2018,~~classification and ~~expects to adopt the standard using the modified retrospective transition method. The Company expects that the new standard will primarily impact~~timing of recognition ~~timing for certain fixed incentives and price discounts provided to clients, and the classification~~ of certain client incentives ~~between contra~~and marketing-related funds paid to customers, as well as revenues and ~~operating expenses. The impact of the new standard~~expenses for market development funds and services provided to ~~future financial results is unknowable~~customers as ~~it is not possible to estimate the impact to the recognition of new customer contracts which may be executed in future periods. The Company has completed~~ an assessment of its existing customer contracts through June 30, 2018. Application of the new standard to consolidated financial statements for the first three quarters of fiscal 2018 would not have resulted in a material impact. The Company will continue to assess the impact of the new standard as new customer contracts are executed going forward.

~~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.~~incentive. The Company adopted the standard effective October 1, ~~2017.~~2018 using the modified retrospective transition method applied to the aggregate of all modifications for contracts not completed as of October 1, 2018. Results for reporting periods beginning after October 1, 2018 are presented under the new revenue standard. The comparative prior period amounts appearing on the financial statements have not been restated and continue to be reported under the prior revenue standard. See Note 2—Revenues for the impact of the new revenue standard on the accompanying unaudited consolidated financial statements as of and for the three and six months ended March 31, 2019.

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VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table summarizes the cumulative transition adjustments for the adoption of the new revenue standard recorded on the October 1, 2018 consolidated balance sheet to reflect the aggregate impact to all contracts not completed as of October 1, 2018:



	Fiscal Year 2018 Closing Balance Sheet		Cumulative Transition Adjustment for New Revenue Standard		Fiscal Year 2019 Opening Balance Sheet
	(in millions)
Assets
Current portion of client incentives	$	340	$	199	$	539
Client incentives	538		614		1,152
Liabilities
Client incentives	2,834		241		3,075
Accrued liabilities	1,160		6		1,166
Deferred tax liabilities	4,618		108		4,726
Other liabilities	2,666		58		2,724
Equity
Accumulated income	11,318		400		11,718

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. The Company adopted the standard effective October 1, 2018, using the modified retrospective transition method for marketable equity securities and the prospective method for non-marketable equity securities. The Company has elected to use the measurement alternative for non-marketable equity securities, defined as cost adjusted for changes from observable transactions for identical or similar investments of the same issuer, less impairment. The adoption did not have a material impact on the consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, which requires the recognition of lease assets and lease liabilities arising from operating leases on the balance sheet. Subsequently, the FASB also issued a series of amendments to this new lease standard that address the transition methods available and clarify the guidance for lessor costs and other aspects of the new lease standard. The Company will adopt the standard effective October 1, 2019 and expects to adopt using the modified retrospective transition method without restating comparative periods. The adoption is not expected to have a material impact on the consolidated financial statements.

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 adopted the standard effective October 1, 2018. The adoption did not have a material impact on the consolidated financial statements.

In November 2016, the FASB issued ASU 2016-18, which requires that a statement of cash flows includes 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 adopted the standard effective October 1, 2018. The adoption impacted the presentation of transactions related to the U.S. litigation escrow account and customer collateral on the consolidated statements of cash flows. The prior period statement of cash flows have been retrospectively adjusted to reflect the impact of this ASU, which had no impact on the Company’s balance sheets, statements of operations or statements of comprehensive income for any period.

712

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VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

In March ~~2016,~~2017, the FASB issued ASU ~~2016-06,~~2017-07, which ~~clarifies~~requires that the ~~requirements~~service cost component of net periodic pension and postretirement benefit cost be presented in the same line item as other employee compensation costs, while the other components be presented separately as non-operating income (expense). In addition, only the service cost component is eligible for ~~assessing whether contingent call/put options that can accelerate~~capitalization, when applicable. Retrospective application is required for the ~~payment of principal on debt instruments are clearly and closely related to their debt hosts. An entity performing~~change in income statement presentation while the ~~assessment~~change in capitalized benefit cost is required to ~~assess the embedded call/put options solely in accordance with a four-step decision sequence.~~be applied prospectively. The Company adopted the standard effective October 1, ~~2017.~~2018, which did not have a material impact on the consolidated financial statements. The service cost component of net periodic pension and postretirement benefit cost is presented in personnel expenses while the other components are presented in other non-operating expense on the Company’s consolidated statement of operations. The Company did not apply the standard retrospectively for the change in income statement presentation as the impact would have been immaterial.

In May 2017, the FASB issued ASU 2017-09, which amends the scope of modification accounting for share-based payment arrangements. Specifically, an entity would not apply modification accounting if the fair value, vesting conditions, and classification of the awards are the same immediately before and after the modification. The Company adopted the standard effective October 1, 2018. The adoption did not have a material impact on the consolidated financial statements.

In ~~March 2016,~~August 2017, the FASB issued ASU ~~2016-07,~~2017-12, which ~~eliminates~~improves the ~~requirement that an entity retroactively adopt~~financial reporting of hedging instruments to better portray the ~~equity method of accounting if an investment qualifies for use of the equity method as a result~~economic results of an ~~increase~~entity’s risk management activities in its financial statements. Visa early adopted the ~~level of ownership~~standard effective January 1, 2019, which did not have a material impact on the consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop 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.obtain internal-use software. The Company adopted the standard effective October 1, ~~2017.~~2018. The adoption did not have a material impact on the consolidated financial statements.

~~In February 2018,~~

Note 2—Revenues

Impact of the ~~FASB issued ASU 2018-02,~~New Revenue Standard

The following tables summarize the impact of the new revenue standard on the Company’s consolidated statement of operations for the three and six months ended March 31, 2019 and the consolidated balance sheet as of March 31, 2019:



	For the Three Months Ended March 31, 2019							For the Six Months Ended March 31, 2019
	As Reported		Impact of the New Revenue Standard			Results Under Prior Revenue Standard		As Reported		Impact of the New Revenue Standard			Results Under Prior Revenue Standard
	(in millions)
Net revenues	$	5,494	$	(39	)	$	5,455	$	11,000	$	(91	)	$	10,909

Operating Expenses
Marketing	241		(39		)	202		517		(69		)	448
Professional fees	101		(3		)	98		192		(6		)	186
General and administrative	264		(7		)	257		540		(10		)	530
Total operating expenses	1,853		(49		)	1,804		3,642		(85		)	3,557
Operating income	3,641		10			3,651		7,358		(6		)	7,352

Income before income taxes	3,677		10			3,687		7,307		(6		)	7,301
Income tax provision	700		2			702		1,353		1			1,354
Net income	2,977		8			2,985		5,954		(7		)	5,947

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VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)



	March 31, 2019
	As Reported		Impact of the New Revenue Standard			Results Under Prior Revenue Standard
	(in millions)
Assets
Current portion of client incentives	$	589	$	(262	)	$	327
Client incentives	1,664		(725		)	939
Liabilities
Accounts payable	119		13			132
Client incentives	3,484		(401		)	3,083
Accrued liabilities	1,207		(8		)	1,199
Deferred tax liabilities	4,911		(105		)	4,806
Other liabilities	2,669		(79		)	2,590
Equity
Accumulated income	12,513		(407		)	12,106

Disaggregation of Revenues

The nature, amount, timing and uncertainty of the Company’s revenues and cash flows and how they are affected by economic factors are most appropriately depicted through the Company’s revenue categories and geographical markets. The following tables disaggregate the Company’s net revenues by revenue category and by geography for the three and six months endedMarch 31, 2019 and 2018:



	Three Months Ended March 31,						Six Months Ended March 31,
	2019			2018			2019			2018
	(in millions)
Service revenues	$	2,417		$	2,253		$	4,759		$	4,399
Data processing revenues	2,432			2,127			4,902			4,274
International transaction revenues	1,796			1,752			3,647			3,418
Other revenues	327			230			626			459
Client incentives	(1,478		)	(1,289		)	(2,934		)	(2,615		)
Net revenues	$	5,494		$	5,073		$	11,000		$	9,935



	Three Months Ended March 31,				Six Months Ended March 31,
	2019		2018		2019		2018
	(in millions)
U.S.	$	2,479	$	2,297	$	4,987	$	4,562
International	3,015		2,776		6,013		5,373
Net revenues	$	5,494	$	5,073	$	11,000	$	9,935

Revenue recognition. The Company's net revenues are comprised principally of the following categories: service revenues, data processing revenues, international transaction revenues, and other revenues, reduced by costs incurred under client incentives arrangements. As a payment network service provider, the Company’s obligation to the customer is to stand ready to provide continuous access to our payment network over the contractual term. Consideration is variable based primarily upon the amount and type of transactions and payments volume on Visa’s products. The Company recognizes revenues, net of sales and other similar taxes, as the payment network services are performed. Fixed fees for payment network services are generally recognized ratably over the related service period. The Company has elected the optional exemption to not disclose the remaining performance obligations related to payment network services.

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VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Service revenues consist of revenues earned for services provided in support of client usage of Visa products. Current quarter service revenues are primarily assessed using a calculation of current pricing applied to the prior quarter's payments volume. The Company also earns revenues from assessments designed to support ongoing acceptance and volume growth initiatives, which ~~allows~~are recognized in the same period the related volume is transacted.

Data processing revenues consist of revenues earned for authorization, clearing, settlement, network access and other maintenance and support services that facilitate transaction and information processing among the Company's clients globally. Data processing revenues are recognized in the same period the related transactions occur or services are performed.

International transaction revenues are earned for cross-border transaction processing and currency conversion activities. Cross-border transactions arise when the country of origin of the issuer is different from that of the merchant. International transaction revenues are primarily generated by cross-border payments and cash volume.

Other revenues consist mainly of license fees for use of the Visa brand, fees for account holder services, licensing and certification and other activities related to the Company's acquired entities. Other revenues also include optional services or product enhancements, such as extended account holder protection and concierge services. Other revenues are recognized in the same period the related transactions occur or services are performed.

Client incentives. The Company enters into long-term contracts with financial institution clients, merchants and strategic partners for various programs designed to increase revenues recognized by growing payments volume, increasing Visa product acceptance, winning merchant routing transactions over to Visa's network and driving innovation. These incentives are primarily accounted for as reductions to revenues or as operating expenses if the payment is in exchange for a ~~reclassification from accumulated other comprehensive income~~distinct good or service provided by the customer. The Company generally capitalizes upfront and fixed incentive payments under these agreements and amortizes the amounts as a reduction to ~~retained earnings for adjustments~~revenues ratably over the contractual term. Incentives that are earned by the customer based on performance targets are recorded as reductions to ~~tax effects that were originally recorded in other comprehensive income due to~~revenues based on management's estimate of each client's future performance. These accruals are regularly reviewed and estimates of performance are adjusted, as appropriate, based on changes in performance expectations, actual client performance, amendments to existing contracts or the ~~U.S. federal corporate income tax rate resulting from the enactment~~execution of the U.S. tax reform legislation, commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Company will adopt the standard effective October 1, 2019. The adoption is not expected to have a material impact on the consolidated financial statements.

In March 2018, the FASB issued ASU 2018-05 to insert the SEC’s interpretive guidance from Staff Accounting Bulletin No. 118 into the income tax accounting codification under U.S. GAAP. The ASU permits companies to use provisional amounts for certain income tax effects of the Tax Act during a one-year measurement period. The provisional accounting impacts for the Company may change in future reporting periods until the accounting analysis is finalized, which will occur no later than the first quarter of fiscal 2019.new contracts.

Note 2—3—Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents

The Company’s cash and cash equivalents include cash and certain highly liquid investments with original maturities of 90 days or less from the date of purchase. Cash equivalents are primarily recorded at cost, which approximates fair value due to their generally short maturities. The Company defines restricted cash and restricted cash equivalents as cash and cash equivalents that cannot be withdrawn or used for general operating activities.

The Company reconciles cash, cash equivalents, restricted cash and restricted cash equivalents reported in the consolidated balance sheets that aggregate to the beginning and ending balances shown in the consolidated statements of cash flows as follows:



	March 31,				September 30,
	2019		2018		2018		2017
	(in millions)
Cash and cash equivalents	$	7,648	$	8,142	$	8,162	$	9,874
Restricted cash and restricted cash equivalents:
U.S. litigation escrow	899		884		1,491		1,031
Customer collateral	1,735		1,250		1,324		1,106
Cash, cash equivalents, restricted cash and restricted cash equivalents	$	10,282	$	10,276	$	10,977	$	12,011

Table of Contents

VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Note 4—U.S. and Europe Retrospective Responsibility 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, certain litigation referred to as 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 equivalents on the consolidated balance sheets. ~~During the nine months ended June 30, 2018, the Company deposited $600 million into the litigation escrow account, and paid $150 million from the litigation escrow account.~~ The balance of the escrow account was $899 million at March 31, 2019 and $1.5 billion ~~at June 30, 2018 and $1.0 billion~~ at September 30, ~~2017.~~2018. The Company paid $600 million from the litigation escrow account during the three months ended March 31, 2019. See Note ~~11—~~13—Legal Matters.

The accrual related to the U.S. covered litigation could be either higher or lower than the litigation escrow account balance. ~~During the nine months ended June 30, 2018, the~~The Company ~~recorded~~did not record an additional accrual ~~of $600 million~~ for the U.S. covered litigation ~~to address claims associated with~~during the ~~interchange multidistrict litigation.~~six months ended March 31, 2019. See Note ~~11—~~13—Legal Matters.

Europe Retrospective Responsibility Plan

Visa Inc., Visa International and Visa Europe are parties to certain existing and potential litigation relating to the setting of multilateral interchange fee rates in the Visa Europe territory (the “VE territory covered litigation”). Under the terms of the Europe retrospective responsibility plan, the Company is entitled to recover certain losses resulting from VE territory covered litigation (the “VE territory covered losses”) through a periodic adjustment to the class A common stock conversion rates applicable to the UK&I and Europe preferred stock. VE territory covered losses are recorded in “right to recover for covered losses” within equity before the 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 is then recorded against the book value of the preferred stock within stockholders’ equity.

~~Table of Contents~~

~~VISA INC.~~

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

During the ~~three and nine~~six months ended ~~June 30, 2018,~~March 31, 2019, the Company recovered $6 million ~~and $56 million, respectively,~~ of VE territory covered losses through adjustments to the class A common stock conversion rates applicable to the UK&I and Europe preferred stock. The conversion rates applicable to the UK&I and Europe preferred stock were reduced from ~~13.077 and 13.948, respectively, at September 30, 2017 to~~ 12.955 and 13.888, respectively, ~~at June~~as of September 30, ~~2018.~~2018 to 12.939 and 13.886, respectively, as of March 31, 2019.

The following table sets forth the activities related to VE territory covered losses in preferred stock and “right to recover for covered losses” within equity during the ~~nine~~six months ended ~~June 30, 2018.~~March 31, 2019. VE territory covered losses incurred reflect settlements with merchants and additional legal costs. See Note ~~11—~~13—Legal ~~Matters.~~Matters.


	Preferred Stock						Right to Recover for Covered Losses			Preferred Stock						Right to Recover for Covered Losses
	UK&I			Europe			Right to Recover for Covered Losses			UK&I			Europe			Right to Recover for Covered Losses
	(in millions)									(in millions)
Balance as of September 30, 2017	$	2,326		$	3,200		$	(52	)
Balance as of September 30, 2018										$	2,291		$	3,179		$	(7	)
VE territory covered losses incurred	—			—			(9		)	—			—			(162		)
Recovery through conversion rate adjustment	(35		)	(21		)	56			(5		)	(1		)	6
Balance as of June 30, 2018	$	2,291		$	3,179		$	(5	)
Balance as of March 31, 2019										$	2,286		$	3,178		$	(163	)

Table of Contents

VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table⁽¹⁾ sets forth the as-converted value of the preferred stock available to recover VE territory covered losses compared to the book value of preferred shares recorded in stockholders’ equity within the Company’s ~~unaudited~~ consolidated balance ~~sheet~~sheets as of ~~June 30, 2018~~March 31, 2019 and September 30, ~~2017.~~⁽¹⁾2018:


	June 30, 2018						September 30, 2017						March 31, 2019						September 30, 2018
	As-Converted Value of Preferred Stock⁽²⁾			Book Value of Preferred Stock			As-Converted Value of Preferred Stock⁽³⁾			Book Value of Preferred Stock			As-Converted Value of Preferred Stock⁽²⁾			Book Value of Preferred Stock			As-Converted Value of Preferred Stock⁽³⁾			Book Value of Preferred Stock
	(in millions)												(in millions)
UK&I preferred stock	$	4,256		$	2,291		$	3,414		$	2,326		$	5,013		$	2,286		$	4,823		$	2,291
Europe preferred stock	5,807			3,179			4,634			3,200			6,847			3,178			6,580			3,179
Total	10,063			5,470			8,048			5,526			11,860			5,464			11,403			5,470
Less: right to recover for covered losses	(5		)	(5		)	(52		)	(52		)	(163		)	(163		)	(7		)	(7		)
Total recovery for covered losses available	$	10,058		$	5,465		$	7,996		$	5,474		$	11,697		$	5,301		$	11,396		$	5,463


⁽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 UK&I and Europe preferred stock outstanding, respectively, as of ~~June 30, 2018;~~March 31, 2019; (b)~~12.955~~ 12.939 and ~~13.888,~~13.886, the class A common stock conversion rate applicable to the UK&I and Europe preferred stock as of ~~June 30, 2018,~~March 31, 2019, respectively; and (c) ~~$132.45,~~$156.19, Visa’s class A common stock closing stock price as of ~~June 30, 2018.~~March 31, 2019.

⁽³⁾

The as-converted value of preferred stock is calculated as the product of: (a) 2 million and 3 million shares of the UK&I and Europe preferred stock outstanding, respectively, as of September 30, ~~2017;~~2018; (b)~~13.077~~ 12.955 and ~~13.948,~~13.888, the class A common stock conversion rate applicable to the UK&I and Europe preferred stock as of September 30, ~~2017,~~2018, respectively; and (c) ~~$105.24,~~$150.09, Visa’s class A common stock closing stock price as of September 30, ~~2017.~~2018.

~~Table of Contents~~

~~VISA INC.~~

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

Note 3—5—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
Level 1 Level 2
June 30,
2018 September 30,
2017 June 30,
2018 September 30,
2017
(in millions)
Assets
Cash equivalents and restricted cash:
Money market funds $ 7,341
$ 5,935

U.S. government-sponsored debt securities $ 282
$ 2,870
Investment securities, trading:
Equity securities 94
82

Investment securities, available-for-sale:
U.S. government-sponsored debt securities 3,895
3,663
U.S. Treasury securities 2,061
1,621

Equity securities 181
124

Prepaid and other current assets:
Foreign exchange derivative instruments 76
18
Total $ 9,677
$ 7,762
$ 4,253
$ 6,551
Liabilities
Accrued liabilities:
Foreign exchange derivative instruments $ 38
$ 98
Total $ —
$ —
$ 38
$ 98



	Fair Value Measurements Using Inputs Considered as
	Level 1				Level 2
	March 31, 2019		September 30, 2018		March 31, 2019		September 30, 2018
	(in millions)
Assets
Cash equivalents and restricted cash equivalents:
Money market funds	$	6,089	$	6,252
U.S. government-sponsored debt securities					$	200	$	1,048
Investment securities:
Marketable equity securities	157		113
U.S. government-sponsored debt securities					5,482		5,008
U.S. Treasury securities	1,743		2,508
Other current and non-current assets:
Derivative instruments					166		78
Total	$	7,989	$	8,873	$	5,848	$	6,134
Liabilities
Accrued and other liabilities:
Derivative instruments					$	44	$	22
Total	$	—	$	—	$	44	$	22

There were no transfers between Level 1 and Level 2 assets during the ~~nine~~six months ended ~~June 30, 2018.~~March 31, 2019.

Level 1 ~~assets measured at fair value on a recurring basis.~~assets. 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.

Table of Contents

VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Level 2 assets and ~~liabilities measured at fair value on a recurring basis.~~liabilities. The fair value of U.S. government-sponsored 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~~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 ~~nine~~six months ended ~~June~~March 31, 2019.

Marketable equity securities. Marketable equity securities are publicly traded and measured at fair value within Level 1 of the fair value hierarchy, as fair value is based on quoted prices in active markets. On October 1, 2018, the Company adopted ASU 2016-01 which changed the Company’s accounting for marketable equity securities. Beginning on October 1, 2018, unrealized gains and losses from changes in fair value of marketable equity securities are recognized in non-operating income (expense).

U.S. government-sponsored debt securities and U.S. Treasury securities. The Company considers U.S. government-sponsored debt securities and U.S. Treasury securities to be available-for-sale and held $7.2 billion and $7.5 billion of these investment securities as of March 31, 2019 and September 30, 2018, respectively. All of the Company’s long-term available-for-sale investment securities are due within one to five years.

Derivative instruments. During the three months ended March 31, 2019, the Company entered into interest rate and cross-currency swap agreements on a portion of the Company’s outstanding 3.15% Senior Notes due December 2025. The Company designated the interest rate swap as a fair value hedge and the cross-currency swap as a net investment hedge. Gains and losses related to changes in fair value hedges are recognized in non-operating income (expense) along with a corresponding loss or gain related to the change in value of the underlying hedged item in the same line in the consolidated statement of operations. The effective portions of net investment hedges are recorded in other comprehensive income. Amounts excluded from the effectiveness testing of net investment hedges are recognized in non-operating income (expense). Cash flows associated with derivatives designated as a fair value hedge may be included in operating, investing or financing activities on the consolidated statement of cash flows, depending on the classification of the items being hedged. Cash flows associated with financial instruments designated as net investment hedges are classified as an investing activity. There were no swap agreements outstanding as of September 30, 2018.

Assets Measured at Fair Value on a Non-recurring Basis

Non-marketable equity securities. The Company’s non-marketable equity securities are investments ~~and investments accounted for under the equity method~~.in privately held companies without readily determinable market values. 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 circumstances indicate that impairment may exist,~~On October 1, 2018, the Company ~~revalues~~adopted ASU 2016-01 which changed the Company’s accounting for non-marketable equity securities. Beginning on October 1, 2018, the Company’s policy is to adjust the carrying value of its non-marketable equity securities to fair value when transactions for identical or similar investments ~~using various assumptions, including~~of the ~~financial metrics~~same issuer are observable in the market. All gains and ~~ratios of comparable public companies. There were no significant impairments during the nine months ended June 30, 2018 or 2017. These investments~~losses on non-marketable equity securities, realized and unrealized, are recognized in non-operating income (expense).

Non-marketable equity securities totaled ~~$125~~$438 million and ~~$94~~$137 million at ~~June 30, 2018~~March 31, 2019 and September 30, ~~2017,~~2018, respectively, and are classified in other assets on the consolidated balance sheets.

~~Table~~ During the three and six months ended March 31, 2019, $66 million of ~~Contents~~

~~VISA INC.~~

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

upward adjustments and no downward adjustments were made to the carrying value of non-marketable equity securities. During the six months ended March 31, 2019 and 2018, there were no significant impairments of non-marketable equity securities.

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 using internal and external data, these fair value determinations are classified as Level 3 in the fair value hierarchy. The

Table of Contents

VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Company completed its annual impairment review of its indefinite-lived intangible assets and goodwill as of February 1, ~~2018,~~2019, and concluded that there was no impairment. No recent events or changes in circumstances indicate that impairment existed at ~~June 30, 2018.~~March 31, 2019.

Gains and Losses on Marketable and Non-marketable Equity Securities

The Company recognized net realized gains of $15 millionfor both the three and six months ended March 31, 2019 on its equity securities sold during the periods. The Company recognized net unrealized gains of $79 million and $59 million for the three and six months ended March 31, 2019, respectively, on equity securities held as of the end of the periods.

Other Fair Value Disclosures

Long-term debt. Debt instruments are measured at amortized cost on the Company’s ~~unaudited~~ consolidated balance ~~sheet at June 30, 2018.~~sheets. The fair value of 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~~value and estimated fair value of ~~the Company’s~~long-term debt ~~in order~~was $16.6 billion and $17.3 billion, respectively, as of ~~maturity:~~

June 30, 2018 September 30, 2017
Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value
(in millions)
1.20% Senior Notes due December 2017 $ —
$ —
$ 1,749
$ 1,751
2.20% Senior Notes due December 2020 2,993
2,951
2,990
3,031
2.15% Senior Notes due September 2022 994
959
993
997
2.80% Senior Notes due December 2022 2,241
2,209
2,240
2,301
3.15% Senior Notes due December 2025 3,969
3,869
3,967
4,098
2.75% Senior Notes due September 2027 741
697
740
737
4.15% Senior Notes due December 2035 1,486
1,554
1,485
1,637
4.30% Senior Notes due December 2045 3,463
3,637
3,463
3,873
3.65% Senior Notes due September 2047 740
701
740
746
Total $ 16,627
$ 16,577
$ 18,367
$ 19,171
March 31, 2019. The carrying value and estimated fair value of long-term debt were both $16.6 billion as of September 30, 2018.

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 ~~June 30, 2018,~~March 31, 2019, but disclosure of their fair values is required: time deposits recorded in prepaid expenses and other current assets, settlement receivable and payable and customer collateral. The estimated fair value of such instruments at ~~June 30, 2018~~March 31, 2019 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.~~ Note 6—Debt

The Company had ~~$175~~outstanding debt as follows:



	March 31, 2019			September 30, 2018			Effective Interest Rate
	(in millions, except percentages)
2.20% Senior Notes due December 2020	$	3,000		$	3,000		2.30	%
2.15% Senior Notes due September 2022	1,000			1,000			2.30	%
2.80% Senior Notes due December 2022	2,250			2,250			2.89	%
3.15% Senior Notes due December 2025	4,000			4,000			3.26	%
2.75% Senior Notes due September 2027	750			750			2.91	%
4.15% Senior Notes due December 2035	1,500			1,500			4.23	%
4.30% Senior Notes due December 2045	3,500			3,500			4.37	%
3.65% Senior Notes due September 2047	750			750			3.73	%
Total senior notes	16,750			16,750
Unamortized discounts and debt issuance costs	(114		)	(120		)
Hedge accounting fair value adjustments	(6		)	—
Total long-term debt	$	16,630		$	16,630

The Company recognized interest expense for its senior notes of $119 million ~~in gross unrealized gains~~ and ~~$16~~$137 million ~~in gross unrealized losses at June 30, 2018. There were $120~~for the three months ended March 31, 2019 and 2018, respectively, and$245 million ~~in gross unrealized gains~~ and $4$275 million ~~in gross unrealized losses at September 30, 2017. For~~for the six months ended March 31, 2019 and 2018, respectively. Interest expense for the three and ~~nine~~six months ended June 30, 2018, the Company recorded gross realized gains on the sale of investment securities of $32 million and $64 million, respectively. There were no gross realized gains on the sale of investment securities recognized during the same periods in 2017. A majority ofMarch 31, 2019 includes adjustments related to the Company’s ~~long-term available-for-sale investment securities have stated maturities between one to five years.~~hedging program. Effective interest rates disclosed in the table above do not reflect hedge accounting adjustments.

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VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Note ~~4—Debt~~

~~The Company had outstanding debt as follows:~~

June 30, 2018 September 30, 2017
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)
1.20% Senior Notes due December 2017 (the “2017 Notes”) $ —
$ —
$ —
$ 1,750
$ (1 ) $ 1,749
1.37 %
Total current maturities of long-term debt —
—
—
1,750
(1 ) 1,749

2.20% Senior Notes due December 2020 3,000
(7 ) 2,993
3,000
(10 ) 2,990
2.30 %
2.15% Senior Notes due September 2022 1,000
(6 ) 994
1,000
(7 ) 993
2.30 %
2.80% Senior Notes due December 2022 2,250
(9 ) 2,241
2,250
(10 ) 2,240
2.89 %
3.15% Senior Notes due December 2025 4,000
(31 ) 3,969
4,000
(33 ) 3,967
3.26 %
2.75% Senior Notes due September 2027 750
(9 ) 741
750
(10 ) 740
2.91 %
4.15% Senior Notes due December 2035 1,500
(14 ) 1,486
1,500
(15 ) 1,485
4.23 %
4.30% Senior Notes due December 2045 3,500
(37 ) 3,463
3,500
(37 ) 3,463
4.37 %
3.65% Senior Notes due September 2047 750
(10 ) 740
750
(10 ) 740
3.73 %
Total long-term debt 16,750
(123 ) 16,627
16,750
(132 ) 16,618

Total debt $ 16,750
$ (123 ) $ 16,627
$ 18,500
$ (133 ) $ 18,367

~~Senior Notes~~

On October 11, 2017, the Company redeemed all of the $1.75 billion principal amount outstanding of the 2017 Notes. The redemption was funded with net proceeds from new fixed-rate senior notes issued by the Company in September 2017. As a result of this redemption, the Company recorded a $1 million loss on extinguishment of debt during the nine months ended June 30, 2018.

The Company recognized interest expense, as non-operating expense, for the senior notes of $137 million and $413 million for the three and nine months ended June 30, 2018, respectively, as compared to $125 million and $376 million for the same periods in 2017.

~~Table of Contents~~

~~VISA INC.~~

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

~~Note 5—~~7—Settlement Guarantee Management

The Company indemnifies its clients for settlement losses suffered due to failure of any other ~~clients~~client to fund its settlement obligations in accordance with the Visa operating 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 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 losses from their estimated unsettled transactions. The Company’s estimated maximum settlement exposure was $73.2 billion during the three months ended June 30, 2018, compared to $67.7 billion during the three months ended September 30, 2017. Of these amounts, $2.8 billion was covered by collateral at June 30, 2018 and September 30, 2017. The total available collateral balances presented in the table below 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 Company maintained collateral as follows:~~

June 30,
2018 September 30,
2017
(in millions)
Cash equivalents⁽¹⁾
$ 1,746
$ 1,490
Pledged securities at market value 164
167
Letters of credit 1,349
1,316
Guarantees 677
941
Total $ 3,936
$ 3,914


⁽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.

Historically, the Company has experienced minimal losses as a result of its settlement risk guarantee. However, the Company’s future obligations, which could be material under its guarantees, are not determinable as they are dependent upon future events.

The Company’s settlement exposure is limited to the amount of unsettled Visa payment transactions at any point in time, which vary significantly day to day. The Company’s maximum settlement exposure was $92.0 billion and the average daily settlement exposure was $55.3 billion during the six months ended March 31, 2019.

The Company maintains and regularly reviews global settlement risk policies and procedures to manage settlement exposure, which may require clients to post collateral if certain credit standards are not met. At March 31, 2019 and September 30, 2018, the Company held collateral as follows:



	March 31, 2019		September 30, 2018
	(in millions)
Cash equivalents	$	1,735	$	1,708
Pledged securities at market value	307		192
Letters of credit	1,337		1,382
Guarantees	574		860
Total	$	3,953	$	4,142

Note 6—8—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 all eligible employees residing in the United States. 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. pension plans, comprising only the Visa Europe plans. Disclosures relating to other U.S. postretirement benefit plans and other non-U.S. pension benefit plans are not included as they are immaterial, individually and in aggregate.


	Pension Benefits												Pension Benefits
	U.S. Plans						Non-U.S. Plans						U.S. Plans						Non-U.S. Plans
	Three Months Ended June 30,						Three Months Ended June 30,						Three Months Ended March 31,						Three Months Ended March 31,
	2018			2017			2018			2017			2019			2018			2019			2018
	(in millions)												(in millions)
Service cost	$	—		$	—		$	1		$	2		$	—		$	—		$	1		$	1
Interest cost	8			9			3			3			8			8			4			3
Expected return on plan assets	(17		)	(17		)	(5		)	(4		)	(18		)	(18		)	(5		)	(5		)
Amortization of actuarial loss	—			3			—			—
Settlement loss	3			9			—			—
Total net periodic benefit cost	$	(6	)	$	4		$	(1	)	$	1
Total net periodic benefit cost (income)													$	(10	)	$	(10	)	$	—		$	(1	)

1320

Table of Contents

VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)


	Pension Benefits												Pension Benefits
	U.S. Plans						Non-U.S. Plans						U.S. Plans						Non-U.S. Plans
	Nine Months Ended June 30,						Nine Months Ended June 30,						Six Months Ended March 31,						Six Months Ended March 31,
	2018			2017			2018			2017			2019			2018			2019			2018
	(in millions)												(in millions)
Service cost	$	—		$	—		$	3		$	5		$	—		$	—		$	2		$	2
Interest cost	24			27			9			8			16			16			7			6
Expected return on plan assets	(52		)	(52		)	(15		)	(12		)	(36		)	(35		)	(9		)	(10		)
Amortization of actuarial loss	—			11			—			1
Settlement loss	3			22			—			—
Total net periodic benefit cost	$	(25	)	$	8		$	(3	)	$	2
Total net periodic benefit cost (income)													$	(20	)	$	(19	)	$	—		$	(2	)

Note ~~7—Stockholders'~~9—Stockholders’ Equity

~~As-Converted Class~~As-converted class A ~~Common Stock.~~common stock. The following table⁽¹⁾ presents number of shares of each series and class and the number of shares of class A common stock on an as-converted ~~basis at June 30, 2018, are as follows:~~basis:


(in millions, except conversion rates)	Shares Outstanding	Conversion Rate Into Class A Common Stock		As-converted Class A Common Stock⁽¹⁾
					March 31, 2019					September 30, 2018
					Shares Outstanding	Conversion Rate Into Class A Common Stock		As-converted Class A Common Stock⁽²⁾		Shares Outstanding	Conversion Rate Into Class A Common Stock		As-converted Class A Common Stock⁽²⁾
					(in millions, except conversion rates)
UK&I preferred stock	2	12.9550		32	2	12.9390		32	⁽³⁾	2	12.9550		32	⁽³⁾
Europe preferred stock	3	13.8880		44	3	13.8860		44	⁽³⁾	3	13.8880		44	⁽³⁾
Class A common stock⁽²⁾	1,778	—		1,778
Class A common stock⁽⁴⁾					1,741	—		1,741		1,768	—		1,768
Class B common stock	245	1.6298	⁽³⁾	400	245	1.6298	⁽⁵⁾	400		245	1.6298	⁽⁵⁾	400
Class C common stock	12	4.0000		48	12	4.0000		46		12	4.0000		47
Total				2,302				2,263					2,291


⁽¹⁾	Figures in the table may not recalculate exactly due to rounding.


⁽²⁾	As-converted class A common stock is calculated based on unrounded numbers.


⁽²⁾⁽³⁾	The reduction in equivalent number of shares of class A common stock was less than one million shares during the six months ended March 31, 2019.


⁽⁴⁾	Class A common stock shares outstanding ~~exclude~~reflect repurchases ~~traded but not yet~~ settled on or before ~~June~~March 31, 2019 and September 30, 2018.


⁽³⁾⁽⁵⁾	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.

Reduction in as-converted shares.During the nine months ended June 30, 2018, total as-converted class A common stock was reduced by 52 million shares at an average price of $120.37 per share. Of the 52 million shares, 47 million were repurchased in the open market using $5.6 billion of operating cash on hand. Additionally, in June 2018, the Company deposited $600 million of operating cash into the litigation escrow account previously established under the U.S. retrospective responsibility plan. Also, the Company recovered $56 million of VE territory covered losses in accordance with the Europe retrospective responsibility plan during the nine months ended June 30, 2018. The deposit and recovery have the same economic effect on earnings per share as repurchasing the Company’s class A common stock, because they reduce the class B common stock conversion rate and the UK&I and Europe preferred stock conversion rates and consequently reduce the as-converted class A common stock share count. See ~~Note 2—U.S. and Europe Retrospective Responsibility Plans~~.

~~The following table presents share repurchases in the open market.~~⁽¹⁾

(in millions, except per share data) Three Months Ended
June 30, 2018 Nine Months Ended
June 30, 2018
Shares repurchased in the open market⁽²⁾
14
47
Average repurchase price per share⁽³⁾
$ 128.80
$ 119.29
Total cost $ 1,754
$ 5,604


⁽¹⁾	Shares repurchased in the open market reflect repurchases settled during the three and nine months ended June 30, 2018. These amounts include repurchases traded but not yet settled on or before September 30, 2017 for the nine months, or March 31, 2018 for the three months, and exclude repurchases traded but not yet settled on or before June 30, 2018.


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


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

~~Table of Contents~~

~~VISA INC.~~

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

In January 2018, the Company’s board of directors authorized an additional $7.5 billion share repurchase program. As of June 30, 2018, the Company’s January 2018 share repurchase program had remaining authorized funds of $5.8 billion for share repurchase. All share repurchase programs authorized prior to January 2018 have been completed.

Under the terms of the U.S. retrospective responsibility plan, when the Company makes a deposit into the litigation escrow account, the shares of class B common stock are subject to dilution through a reduction to the conversion rate of the shares of class B common stock to shares of class A common stock.

~~The following table presents as-converted class B common stock after deposits into the litigation escrow account for the three and ninemonths ended June 30, 2018.~~

(in millions, except per share data) Three and Nine Months Ended June 30, 2018
Reduction in equivalent number of as-converted shares of class A common stock 5
Effective price per share⁽¹⁾
$ 132.32
Deposits under the U.S. retrospective responsibility plan $ 600


⁽¹⁾	Effective price per share is calculated using the volume-weighted average price of the Company’s class A common stock over a pricing period in accordance with the Company’s current certificate of incorporation.

Under the terms of the Europe retrospective responsibility plan, the Company is entitled to recover VE territory covered losses through periodic adjustments to the class A common stock conversion rates applicable to the UK&I and Europe preferred stock. ~~See~~ ~~Note 2—U.S. and Europe Retrospective Responsibility Plans~~.

The ~~following table presents as-converted~~recovery has the same economic effect on earnings per share as repurchasing the Company’s class A common stock, because it reduces the UK&I and Europe preferred stock ~~after~~conversion rates and consequently, reduces the ~~Company recovered~~as-converted class A common stock share count.

Table of Contents

VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table presents effective price per share and recovery of VE territory covered losses through conversion rate ~~adjustments, for the three and ninemonths ended June 30, 2018.~~adjustments:

U.K.&I Preferred Stock Europe Preferred Stock
(in millions, except per share data) Three Months Ended
June 30, 2018 Nine Months Ended
June 30, 2018 Three Months Ended
June 30, 2018 Nine Months Ended
June 30, 2018
Reduction in equivalent number of as-converted shares of class A common stock⁽¹⁾
—
—
—
—
Effective price per share⁽²⁾
$ 130.50
$ 113.05
$ 130.50
$ 112.92
Recovery through conversion rate adjustment $ 4
$ 35
$ 2
$ 21



	Six Months Ended March 31, 2019				Twelve Months Ended September 30, 2018
	Preferred Stock
	UK&I		Europe		UK&I		Europe
	(in millions, except per share data)
Effective price per share⁽¹⁾	$	137.19	$	137.19	$	113.05	$	112.92
Recovery through conversion rate adjustment	$	5	$	1	$	35	$	21


⁽¹⁾	~~The reduction in equivalent number of shares of class A common stock was less than one million shares for both series of preferred stock.~~

⁽²⁾

Effective price per share for the ~~three months ended June 30, 2018~~quarter is calculated using the volume-weighted average price of the Company’s class A common stock over a pricing period in accordance with the Company’s current certificates of designations for its series B and C convertible participating preferred stock. Effective price per share for the ~~nine months ended June 30, 2018~~fiscal year is calculated using the weighted-average effective prices of the ~~November 2017 and May 2018 adjustments.~~respective adjustments made during the year.

Common stock repurchases. The following table⁽¹⁾ presents share repurchases in the open market for the following periods:



	Three Months Ended March 31,				Six Months Ended March 31,
	2019		2018		2019		2018
	(in millions, except per share data)
Shares repurchased in the open market⁽²⁾	14		17		31		33
Average repurchase price per share⁽³⁾	$	144.94	$	120.26	$	141.08	$	115.41
Total cost	$	1,938	$	2,072	$	4,331	$	3,850

⁽¹⁾

Figures in the table may not recalculate exactly due to rounding. Shares repurchased in the open market reflect repurchases settled during the three and six months ended March 31, 2019 and 2018. These amounts include repurchases traded but not yet settled on or before September 30, 2018 and 2017 for six months, respectively, and December 31, 2018 and 2017 for three months, respectively. Also, these amounts exclude repurchases traded but not yet settled on or before March 31, 2019 and 2018, respectively.


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


⁽³⁾	Average repurchase price per share is calculated based on unrounded numbers.

In January 2019, the Company’s board of directors authorized an additional $8.5 billion share repurchase program. As of March 31, 2019, the Company’s January 2019 share repurchase program had remaining authorized funds of $8.4 billion for share repurchase. All share repurchase programs authorized prior to January 2019 have been completed.

Dividends. O~~In July 2018,~~n April 16, 2019, the Company’s board of directors declared a quarterly cash dividend of ~~$0.21~~$0.25 per share of class A common stock (determined in the case of class B and C common stock and UK&I and Europe preferred stock on an as-converted basis). The cash dividend will be paid on ~~September~~June 4, ~~2018,~~2019, to all holders of record as of ~~August~~May 17, ~~2018.~~2019. The Company declared and paid ~~$487~~$569 million and ~~$1.4~~$490 million during the three months ended March 31, 2019 and 2018, respectively, and $1.1 billion and $948 million during the six months ended March 31, 2019 and 2018, respectively, in dividends to holders of the Company’s common ~~stock during the three~~ and ~~nine months ended June 30, 2018, respectively.~~preferred stocks.

Note 8—10—Earnings Per Share

Basic earnings per share is computed by dividing net income available to each class of shares by the weighted-average number of shares of common stock outstanding and participating securities during the period. Net income is allocated to each class of common stock and participating securities based on its proportional ownership on an as-converted basis. The weighted-average number of shares outstanding of each class of common stock ~~outstanding~~ reflects changes in ownership over the periods presented. See Note ~~7—Stockholders'~~9—Stockholders’ Equity.

1522

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VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Diluted earnings per share is computed by dividing net income available by the weighted-average number of shares of common stock outstanding, participating securities 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 UK&I and Europe preferred stock and class B and C common stock based on the conversion rates 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 Company’s Employee Stock Purchase Plan and the assumed vesting of unearned performance shares.

The following table⁽¹⁾ presents earnings per share for the three months ended ~~June 30, 2018.~~March 31, 2019:⁽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	$	1,793	1,784	$	1.00	$	2,329	2,321	⁽³⁾	$	1.00	$	2,287	1,748	$	1.31	$	2,977	2,279	⁽³⁾	$	1.31
Class B common stock	406		245	$	1.66	$	406	245		$	1.65	523		245	$	2.13	$	523	245		$	2.13
Class C common stock	49		12	$	4.02	$	49	12		$	4.01	61		12	$	5.23	$	61	12		$	5.23
Participating securities⁽⁴⁾	81		Not presented	Not presented		$	81	Not presented		Not presented		106		Not presented	Not presented		$	106	Not presented		Not presented
Net income	$	2,329										$	2,977

The following table⁽¹⁾ presents earnings per share for the ~~nine~~six months ended ~~June 30, 2018.~~March 31, 2019:⁽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	$	5,746	1,798	$	3.20	$	7,456	2,337	⁽³⁾	$	3.19	$	4,577	1,754	$	2.61	$	5,954	2,285	⁽³⁾	$	2.61
Class B common stock	1,293		245	$	5.27	$	1,291	245		$	5.26	1,044		245	$	4.25	$	1,043	245		$	4.25
Class C common stock	159		12	$	12.78	$	158	12		$	12.76	122		12	$	10.44	$	122	12		$	10.42
Participating securities⁽⁴⁾	258		Not presented	Not presented		$	259	Not presented		Not presented		211		Not presented	Not presented		$	211	Not presented		Not presented
Net income	$	7,456										$	5,954

The following table⁽¹⁾ presents earnings per share for the three months ended ~~June 30, 2017~~March 31, 2018.⁽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	$	1,591	1,840	$	0.87	$	2,059	2,385	⁽³⁾	$	0.86	$	2,007	1,798	$	1.12	$	2,605	2,337	⁽³⁾	$	1.11
Class B common stock	350		245	$	1.43	$	349	245		$	1.42	452		245	$	1.84	$	451	245		$	1.84
Class C common stock	47		14	$	3.46	$	47	14		$	3.45	55		12	$	4.46	$	55	12		$	4.46
Participating securities⁽⁴⁾	71		Not presented	Not presented		$	71	Not presented		Not presented		91		Not presented	Not presented		$	91	Not presented		Not presented
Net income	$	2,059										$	2,605

1623

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VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table⁽¹⁾ presents earnings per share for the ~~nine~~six months ended ~~June 30, 2017~~March 31, 2018.⁽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	$	3,518	1,852	$	1.90	$	4,559	2,404	⁽³⁾	$	1.90	$	3,952	1,805	$	2.19	$	5,127	2,345	⁽³⁾	$	2.19
Class B common stock	769		245	$	3.13	$	767	245		$	3.13	886		245	$	3.61	$	885	245		$	3.60
Class C common stock	114		15	$	7.60	$	114	15		$	7.59	110		13	$	8.76	$	109	13		$	8.74
Participating securities⁽⁴⁾	158		Not presented	Not presented		$	158	Not presented		Not presented		179		Not presented	Not presented		$	178	Not presented		Not presented
Net income	$	4,559										$	5,127


⁽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 400 million for the three and six months ended March 31, 2019, and 405 million for the three and ~~nine~~six months ended ~~June 30, 2018 and 2017.~~March 31, 2018. The weighted-average number of shares of as-converted class C common stock used in the income allocation was 47 million for the three and six months ended March 31, 2019, and 49 million and 50 million for the three and ~~nine~~six months ended ~~June 30,~~March 31, 2018, ~~respectively, and 54 million and 60 million for the three and nine months ended June 30, 2017,~~ respectively. The weighted-average number of shares of preferred stock included within participating securities was 32 million of as-converted UK&I preferred stock for the three and ~~nine~~six months ended ~~June 30,~~March 31, 2019 and 2018, and 33 million and 34 million of as-converted UK&I preferred stock for the three and nine months ended June 30, 2017, respectively. The weighted-average number of shares of preferred stock included within participating securities was 44 million of as-converted Europe preferred stock for the three and ~~nine~~six months ended ~~June 30, 2018~~March 31, 2019 and ~~2017.~~2018.

⁽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 3 million common stock equivalents for the three and ~~nine~~six months ended ~~June 30, 2018,~~March 31, 2019 and 4 ~~million and 5~~ million common stock equivalents for the three and ~~nine~~six months ended ~~June 30, 2017, respectively,~~March 31, 2018, because their effect would behave been dilutive. The computation excludes ~~less than 1 million and~~ 1 million of common stock equivalents for the three and ~~nine~~six months ended ~~June 30, 2018, respectively,~~March 31, 2019, and ~~less than 1 million and 3~~2 million of common stock equivalents for the three and ~~nine~~six months ended ~~June 30, 2017, respectively,~~March 31, 2018, because their effect would have been anti-dilutive.

⁽⁴⁾

Participating securities 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 UK&I and Europe preferred stock, restricted stock awards, restricted stock units and earned performance-based shares. Participating securities’ income is allocated based on the weighted-average number of shares of as-converted stock.

Note 9—11—Share-based Compensation

The Company granted the following equity awards to employees and non-employee directors under the 2007 Equity Incentive Compensation Plan, or the EIP, during the ~~nine~~six months ended ~~June 30, 2018~~March 31, 2019:


	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	1,622,760	$	17.88	$	109.82	1,109,645	$	25.89	$	134.76
Restricted stock units (“RSUs”)	2,776,303	$	110.57			2,616,550	$	135.19
Performance-based shares⁽¹⁾	641,498	$	120.11			540,538	$	153.42


⁽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. The Company recorded share-based compensation cost related to the EIP of ~~$242~~$106 million and $201 million for the ~~nine~~three and six months ended ~~June 30,~~March 31, 2019, respectively, and $82 million and $146 millionfor the three and six months ended March 31, 2018, respectively, net of estimated forfeitures, which are adjusted as appropriate.

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VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Note ~~10—~~12—Income Taxes

The effective income tax ~~rates were 17% and 20%~~rate was 19% for the three and ~~nine~~six months ended ~~June 30, 2018, respectively,~~March 31, 2019, and ~~29%~~19% and ~~47%~~21% for the three and ~~nine~~six months ended ~~June 30, 2017,~~March 31, 2018, respectively. The effective tax ~~rates~~rate for the ~~three and nine~~six months ended ~~June 30, 2018 differ~~March 31, 2019 differs from the effective tax ~~rates~~rate in the same prior-year ~~periods~~period primarily due ~~to:~~

~~an $81 million benefit due~~ to ~~a non-recurring audit settlement during the quarter ended June 30, 2018;~~

~~an $80 million benefit due to a non-recurring audit settlement during the quarter ended March 31, 2018;~~

the effects of U.S. tax reform legislation commonly referred to as the Tax Cuts and Jobs Act ~~enacted during the quarter ended December 31, 2017, as discussed below; and~~

~~the absence of the following items related to the Visa Europe reorganization recorded during the quarter ended March 31, 2017:~~


▪	~~a $1.5 billion non-recurring, non-cash income tax provision primarily related to the elimination of deferred tax balances originally recognized upon the acquisition of Visa Europe; and~~


▪	~~a $71 million one-time tax benefit related to the Visa Foundation’s receipt of Visa Inc. shares, previously recorded by Visa Europe as treasury stock.~~

~~The Tax Act,~~(the “Tax Act”), enacted on December 22, 2017, ~~transitions the U.S. tax system to a new territorial system and lowers~~as discussed below:

The Tax Act reduced the statutory federal corporate income tax rate from 35% to 21%~~. The reduction of the statutory federal corporate tax rate to 21% became~~ effective on January 1, 2018. In fiscal 2018, the Company’s statutory federal corporate rate iswas a blended rate of 24.5%~~, which will be reduced~~. Federal tax expense for the six months ended March 31, 2019 was determined at a 21% tax rate compared to ~~21%~~the 24.5% tax rate in ~~fiscal 2019~~the prior-year period;

The Tax Act enacted a new deduction for foreign-derived intangible income (“FDII”) and ~~thereafter.~~a new tax on global intangible low-tax income (“GILTI”). Both FDII and GILTI became effective for the Company on October 1, 2018; and

~~As a result~~The absence of the ~~reduction in~~following items recorded during the ~~federal corporate~~six months ended March 31, 2018:


▪	an $80 million benefit due to a non-recurring audit settlement during the three months ended March 31, 2018;


▪	a $1.1 billion non-recurring, non-cash benefit from the remeasurement of deferred tax balances recorded in the three months ended December 31, 2017, in connection with the reduction in U.S. federal tax rate enacted by the Tax Act; and


▪	a $1.1 billion one-time transition tax expense on certain untaxed foreign earnings recorded in the three months ended December 31, 2017, in connection with the requirement enacted by the Tax Act.

The Company previously recorded provisional amounts for the transition tax ~~rate,~~and the ~~Company remeasured its net deferred~~ tax ~~liabilities as~~effects of ~~the enactment date of~~various other tax provisions enacted by the Tax Act. ~~The deferred~~As permitted by ASU 2018-05, the Company completed the determination of the accounting impacts of the transition tax ~~remeasurement resulted in a one-time, non-cash~~and the tax ~~benefit estimated to be approximately $1.1 billion, recorded~~effects of these various tax provisions in the three months ended December 31, ~~2017.~~

~~In transitioning~~2018. The adjustments to the ~~new territorial tax system, the Tax Act requires~~provisional amounts were not material. In addition, the Company to include certain untaxed foreign earnings of non-U.S. subsidiaries in its fiscal 2018 taxable income. Such foreign earnings are subject to a one-time tax at 15.5% on the amount held in cash or cash equivalents, and at 8% on the remaining non-cash amount. The 15.5% and 8% tax, collectively referred to as the “transition tax”, was estimated to be $1.1 billion, and was recorded in the three months ended December 31, 2017. The Company intends to elect to pay the transition tax over a period of eight years as permitted by the Tax Act.

The above-mentioned accounting impacts of the deferred tax remeasurement and transition tax are provisional, based on currently available information and technical guidance on the interpretations of the new law. The Company continues to obtain and analyze additional information and guidance as they become available to completeadopted the accounting policy of accounting for the tax impacts of the Tax Act. Additional information currently unavailable that is needed to complete the analysis includes, but is not limited to, foreign tax returns and foreign tax documentation for the computation of foreign tax credits, the final determination of the untaxed foreign earnings subject to the transition tax, and the final determination of the net deferred tax liabilities subject to remeasurement. The provisional accounting impacts may change in future reporting periods until the accounting analysis is finalized, which will occur no later than the first quarter of fiscal 2019, as permitted by ASU 2018-05.

~~The Tax Act also introduces several tax provisions, including:~~

~~Tax~~taxes on global intangible low-tax income, which, in general, is determined annually based on the Company’s aggregate foreign subsidiaries’ income in excess of certain qualified business asset investment return. This provision is effective for the Company on October 1, 2018. The Company needs additional information to complete its analysis on whether to adopt an accounting policy to account for the tax effects of global intangible low-tax incomeGILTI in the period that it is subject to such ~~tax, or to provide deferred taxes for book and tax basis differences that, upon reversal, may be subject to such~~ tax. Hence, the Company has not recorded any tax on global intangible low-tax income in the nine months ended June 30, 2018. The Company will make an accounting policy election no later than the first quarter of fiscal 2019.

Base erosion and anti-abuse tax, which, in general, functions like a minimum tax that partially disallows deductions for certain related party transactions. This new minimum tax is determined on a year-by-year basis, and this provision is effective for the Company on October 1, 2018. Hence, no base erosion anti-abuse tax has been recorded in the nine months ended June 30, 2018.

~~Table of Contents~~

~~VISA INC.~~

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

Deduction for foreign-derived intangible income, which, in general, allows a deduction of certain intangible income derived from serving foreign markets. This provision is effective for the Company on October 1, 2018. Hence, the Company has not recorded the impact of this provision in the nine months ended June 30, 2018.

Other new tax provisions, which disallow certain deductions related to entertainment expenses, fringe benefits provided to employees, executive compensation, and fines or penalties or similar payments to governments. The Company has recorded provisional amounts for the tax effects of these new provisions in the nine months ended June 30, 2018, based on information currently available. The provisional amounts may change in future reporting periods when additional information is obtained and analyzed, which will occur no later than the first quarter of fiscal 2019.

During the three and ~~nine~~six months ended ~~June 30, 2018,~~March 31, 2019, the Company’s gross unrecognized tax benefits increased by ~~$244~~$108 million and ~~$237~~$146 million, respectively. The ~~Company’s net~~Company's unrecognized tax benefits that, if recognized, would favorably impact the effective tax rate increased by ~~$69~~$44 million and ~~$73~~$83 million, ~~during the three and nine months ended June 30, 2018,~~ respectively. The ~~changes~~change in unrecognized tax benefits ~~are~~is primarily related to various tax positions across several jurisdictions. During the three and ~~nine~~six months ended ~~June 30,~~March 31, 2019 and 2018, ~~and 2017,~~ there were no significant changes in interest and penalties related to uncertain tax positions.

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.

Note ~~11—~~13—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.

Table of Contents

VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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:

Nine Months Ended
June 30,
2018 2017
(in millions)
Balance at beginning of period $ 982
$ 981
Provision for uncovered legal matters —
17
Additional provision for legal matters 601
142
Payments on legal matters (155 ) (145 )
Balance at end of period $ 1,428
$ 995

~~Table of Contents~~

~~VISA INC.~~

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



	Six Months Ended March 31,
	2019			2018
	(in millions)
Balance at beginning of period	$	1,434		$	982
Provision for uncovered legal matters	35			—
Provision for covered legal matters	159			1
Payments for legal matters	(714		)	(153		)
Balance at end of period	$	914		$	830

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 further discussion below under U.S. Covered Litigation and Note 2—4—U.S. and Europe Retrospective Responsibility Plans. An accrual for the U.S. covered litigation and a charge to the litigation provision are recorded when a 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:


	Nine Months Ended June 30,					Six Months Ended March 31,
	2018			2017		2019			2018
	(in millions)					(in millions)
Balance at beginning of period	$	978		$	978	$	1,428		$	978
Additional provision for interchange multidistrict litigation	600			—
Payments on U.S. covered litigation	(150		)	—
Payments for U.S. covered litigation						(600		)	(150		)
Balance at end of period	$	1,428		$	978	$	828		$	828

Accrual Summary—VE Territory Covered Litigation

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 periodic adjustments to the conversion rates applicable to the UK&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 2—4—U.S. and Europe Retrospective Responsibility Plans.

~~The following table summarizes the activity related to VE territory covered litigation:~~

Nine Months Ended
June 30,
2018 2017
(in millions)
Balance at beginning of period $ 1
$ 2
Accrual for VE territory covered litigation 1
142
Payments on VE territory covered litigation (2 ) (144 )
Balance at end of period $ —
$ —

2026

Table of Contents

VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table summarizes the activity related to VE territory covered litigation:



	Six Months Ended March 31,
	2019			2018
	(in millions)
Balance at beginning of period	$	—		$	1
Accrual for VE territory covered litigation	159			1
Payments for VE territory covered litigation	(98		)	(2		)
Balance at end of period	$	61		$	—

U.S. Covered Litigation

Interchange Multidistrict Litigation (MDL) – Putative Class Actions

~~Defendants Visa, MasterCard,~~On December 6, 2018, the district court held a hearing on the Damages Class plaintiffs’ motion for preliminary approval of the Amended Settlement Agreement, and ~~certain U.S. financial institutions have reached an agreement in principle~~on January 24, 2019, the district court granted preliminary approval.

Settlement discussions with plaintiffs purporting to act on behalf of the putative ~~Damages~~Injunctive Relief Class ~~to resolve all Damages Class claims. The agreement to resolve these claims is subject to negotiation of a full written settlement agreement, and such negotiations~~ are ongoing. ~~Discussions with plaintiffs purporting~~On January 16, 2019, the bank defendants moved to ~~act on behalf of~~dismiss the claims brought against them by the Injunctive Relief Class, ~~are ongoing.~~

~~The Company believes at this stage~~on the grounds that ~~some loss resulting from~~plaintiffs lack standing and fail to state a claim against the Damages Class claims is probable and a range of loss is reasonably estimable. On June 28, 2018, the Company deposited an additional $600 million into its covered litigation escrow account. During the nine months ended June 30, 2018, the Company increased the U.S. covered litigation accrual to $1.43 billion. The balance of $1.43 billion is consistent with the Company’s estimate of its share of the lower end of a probable and reasonably estimable loss with respect to U.S. covered litigation. While this estimate is consistent with the Company’s view of the current status of discussions, the probable and reasonably estimable loss or range of such loss could materially vary if settlements cannot be reached. The Company will continue to consider and reevaluate this estimate in light of the substantial uncertainties and mediation obstacles that persist. The Company is unable to estimate a potential loss or range of loss, if any, at trial if negotiated resolutions cannot be reached.

~~Interchange Multidistrict Litigation (MDL) – Individual Merchant Actions~~

A number of individual merchant actions previously filed have been settled, and remain settled. As of the filing date, Visa has reached settlement agreements with individual merchants representing approximately 51% of the Visa-branded payment card sales volume of merchants who opted out of the 2012 Settlement Agreement.bank defendants.

VE Territory Covered Litigation

UK Merchant Litigation

Since July 2013, in excess of ~~400~~450 Merchants (the capitalized term “Merchant,” when used in this section, means a merchant together with subsidiary/affiliate companies that are party to the same claim) have commenced proceedings against Visa Europe, Visa Inc. and Visa International relating to interchange rates in ~~Europe. They seek damages for alleged anti-competitive conduct~~Europe, and in ~~relation~~some cases relating to ~~one or more of the following types of interchange~~ fees ~~for credit~~charged by Visa and ~~debit card transactions: UK domestic, Irish domestic, other European domestic, intra-European Economic Area and/or other inter-regional.~~certain Visa rules. As of the filing date, Visa Europe, Visa Inc. and Visa International have settled the claims asserted by over 75100 Merchants, leaving more than ~~300~~350 Merchants with outstanding claims.

In November 2016, a trial commenced relating to claims filed by a number of Merchants. All of these Merchants except one settled before the trial concluded in March 2017. On November 30, 2017, the court found that Visa’s UK domestic interchange was not restrictive of competition and dismissed the remaining claim. A further judgment was published on February 23, 2018, which did not change the court’s November 30, 2017 ruling but found that Visa’s UK domestic interchange would not have been exemptible under applicable law if it restricted competition. The remaining Merchant lodged an appeal and the matter was heard by the Court of Appeal in April 2018 in connection with two MasterCard cases. On July 4, 2018, the Court of Appeal overturned the lower court’s rulings of November 30, 2017 and February 23, 2018, finding that Visa’s UK domestic interchange restricted competition and the question of whether Visa’s UK domestic interchange was exempt from the finding of restriction under applicable law had been incorrectly decided. The Court of Appeal remitted the claim to the lower court to reconsider the exemption issue and the assessment of damages. Visa intends to seek permission to appeal aspects of the Court of Appeal’s judgment.

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. While~~threatened Merchant claims, several of which have been settled.

On November 29, 2018, Visa was granted permission to appeal aspects of the ~~amount~~Court of Appeal’s judgment to the Supreme Court of the United Kingdom, including the question of whether Visa’s UK interchange ~~being challenged could~~restricted competition.

Other Litigation

European Commission Proceedings

Inter-regional Interchange Investigation. On December 4, 2018, the European Commission (EC) announced formal public consultation (known as “market testing”) of commitments proposed by Visa pursuant to Article 9 of Council Regulation (EC) No 1/2003 in order for the EC to conclude its investigation. Subject to market testing, the EC intends to adopt a decision declaring the commitments to be ~~substantial, these claims have not yet been filed~~binding on Visa and ~~their full scope is not yet known.~~concluding that there are no longer grounds for action by the EC and without any finding of infringement of the law by Visa. If accepted by the EC, the proposed commitments require Visa to cap its inter-regional multilateral interchange rates at 1.50% credit and 1.15% debit for “Card-Not-Present” transactions and 0.30% credit and 0.20% debit for “Card Present” transactions on consumer debit and credit cards issued outside of the European Economic Area when used at merchants located inside of the European Economic Area. The ~~Company has learned that several additional European entities have indicated that they may also bring similar claims~~commitments would last for a period of five years following implementation. No fine will be imposed against Visa, and the ~~Company anticipates additional claims~~commitments are proposed without prejudice to Visa’s position that its conduct did not infringe any law. The EC’s market testing was completed in January 2019, and the EC is expected to decide whether to formally adopt the proposed commitments in the ~~future~~.first half of calendar year 2019.

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VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

~~Other~~Canadian Merchant Litigation

~~European Commission Proceedings~~

~~Inter-regional Interchange Investigation.~~ ~~Visa responded in writing to the revised Supplementary Statement~~Wal-Mart Canada and/or Home Depot of ~~Objections in November 2017 and an oral hearing was held in February 2018. Visa continues to cooperate with the European Commission (EC) in its investigation.~~

~~Further, the debit and credit commitments previously entered into to settle certain aspects~~Canada Inc. have filed notices of appeal of the ~~EC’s investigation have now both expired. However, the European Union rates on which those commitments were applied remain subject to limits imposed by the European Interchange Fee Regulation.~~

~~Canadian Competition Proceedings~~

~~Merchant Litigation.~~ ~~The court in Quebec held a class certification hearing in November 2017 and reserved decision.~~

Courts in all five Canadian provinces have preliminarily approved Visa’s settlement with merchant class plaintiffs, and hearings on final approval are scheduled from June through September 2018. On July 13, the court in British Columbia, ~~provided final approval of~~Ontario, Saskatchewan, Quebec and Alberta decisions approving the ~~settlement.~~

~~New Mexico Attorney General~~

~~The parties reached a settlement agreement and the case was dismissed on April 10, 2018.~~settlements.

EMV Chip Liability Shift

~~On March 11, 2018, the court denied the plaintiffs’ motion for class certification without prejudice.~~ Plaintiffs ~~subsequently~~ filed a renewed motion for class certification on July 16, ~~2018.~~2018, following an earlier denial of the motion without prejudice. Plaintiffs’ renewed motion was terminated without prejudice to reinstatement on October 17, 2018, but was subsequently reinstated and is currently pending.

Kroger

~~On February 6, 2018, Kroger sought leave to file a second amended complaint.~~ The ~~parties have stipulated that the~~ litigation ~~including consideration of that motion, be~~was stayed until ~~August 5, 2018.~~February 2, 2019. Visa and Kroger have reached an agreement in principle to resolve this lawsuit.

Nuts for Candy

On ~~March 6,~~October 18, 2018, the court ~~denied Visa’s motion for summary adjudication of Nuts for Candy’s California unfair business statute claims. On April 2, 2018, Visa filed a petition for writ of mandate to~~stayed the ~~California Court of Appeal seeking to overturn the lower court’s decision and stay the case, which was subsequently denied. On May 14, 2018,~~ Nuts for Candy ~~moved~~case pending the district court’s decision on preliminary approval of the Amended Settlement Agreement discussed above under Interchange Multidistrict Litigation (MDL) – Putative Class Actions, and pending final approval of that agreement if preliminary approval is granted. Preliminary approval was granted on January 24, 2019, which extended the stay in the Nuts for ~~class certification.~~Candy case pending final approval of the Amended Settlement Agreement.

~~Black Card~~Ohio Attorney General Civil Investigative Demand

On ~~December 28, 2017, Black Card LLC (“Black Card”) filed a lawsuit against Visa Inc., Visa U.S.A. Inc., and certain Visa member financial institutions in~~January 8, 2019, the ~~U.S. District Court for the Western District~~State of ~~Wisconsin. The complaint alleged that defendants conspired to impede Black Card’s business in violation of Section 1~~Ohio Office of the Sherman Act and fraudulently concealed their conduct. Black Card sought treble damages, post-judgment interest, and attorneys’ fees. On February 8, 2018, Black Card voluntarily dismissed its lawsuit inAttorney General informed Visa that the ~~U.S. District Court for the Western District of Wisconsin without prejudice.~~investigation has been terminated.

This action followed a lawsuit filed by Black Card in the U.S. District Court for the District of Wyoming in February 2015 relating to a contractual dispute. The District Court in Wyoming granted Visa’s motions for summary judgment and the matter was dismissed. Black Card appealed this decision to the U.S. Court of Appeals for the Tenth Circuit on May 10, 2017, and the appellate court held a hearing on March 22, 2018 and reserved decision.



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,” “us,” “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 that relate to, among other things, our future operations, prospects, developments, strategies and growth of our business; ~~integration of Visa Europe, including the migration of European activity to VisaNet and anticipated benefits for our European clients;~~ anticipated expansion of our products in certain countries; industry developments; expectations regarding litigation matters, investigations and proceedings; 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 ~~U.S.Tax Reform and~~ accounting pronouncements on our consolidated financial statements. Forward-looking statements generally are identified by words such as “believes,” “estimates,” “expects,” “intends,” “may,” “projects,” “could,” “should,” “will,” “continue” and other similar expressions. All statements other than statements of historical fact could be forward-looking statements, which speak only as of the date they are made, are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, many of which are beyond our control and are difficult to predict. We describe risks and uncertainties that could cause actual results to differ materially from those expressed in, or implied by, any of these forward-looking statements in our SEC filings, including our Annual Report on Form 10-K, for the year ended September 30, ~~2017~~2018 and our subsequent reports on Forms 10-Q and 8-K. Except as required by law, we do not intend to update or revise any forward-looking statements as a result of new information, future events or otherwise.

Overview

Visa is a global payments technology company that enables fast, secure and reliable electronic payments across more than 200 countries and territories. We facilitate global commerce through the transfer of value and information among a global network of consumers, merchants, financial institutions, businesses, strategic partners and government entities. Our advanced transaction processing network, VisaNet, enables authorization, clearing and settlement of payment transactions and allows us to provide our financial institution and merchant clients a wide range of 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 nine months ended June 30, 2018 reflects continued economic growth around the world.~~

~~U.S. Tax Reform Legislation.~~ On December 22, 2017, the U.S. government enacted comprehensive tax reform legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act transitions the U.S. tax system to a new territorial system and lowers the statutory federal corporate income tax rate. As a result of the reduction in the federal corporate income tax rate, we remeasured our net deferred tax liabilities as of the enactment date and the remeasurement resulted in a one-time, non-cash tax benefit estimated to be approximately $1.1 billion and was recorded in the nine months ended June 30, 2018. In transitioning to the new territorial system, the Tax Act requires us to include certain untaxed foreign earnings of non-U.S. subsidiaries in our fiscal 2018 taxable income. This tax, referred to as the “transition tax”, was estimated to be $1.1 billion and was recorded in the nine months ended June 30, 2018. See ~~Note 10—Income Taxes~~ ~~to our unaudited consolidated financial statements~~.

Financial ~~highlights.~~overview. Our financial results for the ~~three and nine~~six months ended ~~June 30,~~March 31, 2018 ~~and the nine months ended June 30, 2017~~ reflected the impact of certain significant items that we believe were not indicative of our operating performance in these or future periods, as they were either non-recurring or had no cash impact. There were no comparable adjustments recorded for the three and six months ended ~~June 30, 2017.~~March 31, 2019 and the three months ended March 31, 2018. Our as-reported U.S. GAAP and adjusted non-GAAP net income and diluted earnings per share for these periods were as follows:


	Three Months Ended June 30,				2018 vs. 2017		Nine Months Ended June 30,				2018 vs. 2017		Three Months Ended March 31,				2019 vs. 2018		Six Months Ended March 31,				2019 vs. 2018
(in millions, except percentages and per share data)	2018		2017		% Change⁽¹⁾		2018		2017		% Change⁽¹⁾		2019		2018		% Change⁽¹⁾		2019		2018		% Change⁽¹⁾
Net income, as reported	$	2,329	$	2,059	13	%	$	7,456	$	4,559	64	%	$	2,977	$	2,605	14	%	$	5,954	$	5,127	16	%
Diluted earnings per share, as reported	$	1.00	$	0.86	16	%	$	3.19	$	1.90	68	%	$	1.31	$	1.11	17	%	$	2.61	$	2.19	19	%
Net income, as adjusted⁽²⁾	$	2,792	$	2,059	36	%	$	7,933	$	6,195	28	%	$	2,977	$	2,605	14	%	$	5,954	$	5,141	16	%
Diluted earnings per share, as adjusted⁽²⁾	$	1.20	$	0.86	39	%	$	3.39	$	2.58	32	%	$	1.31	$	1.11	17	%	$	2.61	$	2.19	19	%


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


⁽²⁾	For a full reconciliation of our adjusted financial results, see tables in Adjusted financial results below.

~~Net operating~~Highlights for the first half of fiscal 2019. Our business is affected by overall economic conditions and consumer spending. Our business performance during the six months ended March 31, 2019 reflects continued global consumer spending growth amidst uneven global economic conditions. We recorded net revenues of ~~$5.2~~$5.5 billion and ~~$15.2~~$11.0 billion for the three and ~~nine~~six months ended ~~June 30, 2018,~~March 31, 2019, respectively, ~~increased 15%~~an increase of 8% and ~~12%~~11%, respectively, over the prior-year comparable periods, reflecting continued growth in nominal payments ~~volume, nominal cross-border~~ volume and processed transactions. The effect of exchange rate movements in the three and ~~nine~~six months ended ~~June 30, 2018,~~March 31, 2019, as partially mitigated by our hedging program, resulted in an approximately negative one-and-a-half percentage point ~~positive~~and negative one percentage point impact to our net ~~operating revenue growth.~~revenues growth, respectively.

Total operating expenses ~~of $2.4~~were $1.9 billion and ~~$5.6~~$3.6 billion for the three and ~~nine~~six months ended ~~June 30, 2018,~~March 31, 2019, respectively, ~~increased 53%~~an increase of 7% and ~~23%~~11% over the prior-year comparable periods. Adjusted operating expenses, which excludes the non-cash operating expense for the litigation provision related to the interchange multidistrict litigation in the three and nine months ended June 30, 2018 and the non-recurring, non-cash operating expense related to Visa Inc. shares received by Visa Foundation in the nine months ended June 30, 2017, increased 14% and 15%, respectively, over prior-year comparable periods.period. The increase in ~~both periods~~the period was primarily ~~driven by continued investments~~due to higher personnel, marketing and general and administrative expenses, as we continue to invest to support our business growth.

Adjusted financial results. Our financial results for the ~~three and nine~~six months ended ~~June 30,~~March 31, 2018 ~~and the nine months ended June 30, 2017~~ reflected the impact of certain significant items that we believe were not indicative of our ongoing operating performance in these or future periods, as they were either non-recurring or had no cash impact. As such, we believe the presentation of adjusted financial results excluding the following items provides a clearer understanding of our operating performance for the periods presented. There were no comparable adjustments recorded for the three and six months ended ~~June 30, 2017.~~

~~Litigation provision.~~ ~~During~~March 31, 2019 and the three ~~and nine~~ months ended June 30, 2018, we recorded a litigation provision of $600 million and related tax benefits of $137 million associated with the interchange multidistrict litigation. The tax impact is determined by applying applicable federal and state tax rates to the litigation provision. Under the U.S. retrospective responsibility plan, we recover the monetary liabilities related to the U.S. covered litigation through a reduction to the conversion rate of our class B common stock to shares of class A common stock. See March 31, 2018.~~Note 2—U.S. and Europe Retrospective Responsibility Plans~~ ~~and~~ ~~Note 11—Legal Matters~~ ~~to our unaudited consolidated financial statements.~~

Remeasurement of deferred tax balances. During the ~~nine~~six months ended ~~June 30,~~March 31, 2018, in connection with the Tax Act’s reduction of the corporate income tax rate, we remeasured our net deferred tax liabilities as of the enactment date, resulting in the recognition of a non-recurring, non-cash income tax benefit ~~estimated to be approximately~~of $1.1 billion. See Note ~~10—~~12—Income Taxes to our unaudited consolidated financial statements.

Transition tax on foreign earnings. During the ~~nine~~six months ended ~~June 30,~~March 31, 2018, in connection with the Tax Act’s requirement that we include certain untaxed foreign earnings of non-U.S. subsidiaries in our fiscal 2018 taxable income, we recorded a one-time transition tax estimated to be approximately $1.1 billion. See Note ~~10—~~12—Income Taxes to our unaudited consolidated financial statements.

~~Elimination of deferred tax balances.~~ During the nine months ended June 30, 2017, in connection with our legal entity reorganization, we eliminated deferred tax balances originally recognized upon the acquisition of Visa Europe, resulting in the recognition of a non-recurring, non-cash income tax provision of $1.5 billion.

~~Charitable contribution.~~ During the nine months ended June 30, 2017, associated with our legal entity reorganization, we recognized a non-recurring, non-cash general and administrative expense of $192 million, before tax, related to the charitable donation of Visa Inc. shares that were acquired as part of the Visa Europe acquisition and held as treasury stock. Net of the related cash income tax benefit of $71 million, determined by applying applicable tax rates, adjusted net income increased by $121 million.

Adjusted financial results are non-GAAP financial measures and should not be relied upon as substitutes for measures calculated in accordance with U.S. GAAP. The following ~~tables reconcile~~table reconciles our as-reported financial measures, calculated in accordance with U.S. GAAP, to our respective non-GAAP adjusted financial measures for the ~~three and nine~~six months ended ~~June 30,~~March 31, 2018 ~~and the nine months ended June 30, 2017~~. There were no comparable adjustments recorded for the three and six months ended ~~June 30, 2017.~~March 31, 2019 and the three months ended March 31, 2018.

Three Months Ended June 30, 2018
(in millions, except percentages and per share data) Operating Expenses
Operating Margin
_(1),(2)
Income Tax Provision Net Income
Diluted Earnings Per Share⁽¹⁾
As reported $ 2,355
55 % $ 483
$ 2,329
$ 1.00
Litigation provision (600 ) 11 % 137
463
0.20
As adjusted $ 1,755
67 % $ 620
$ 2,792
$ 1.20

Nine Months Ended June 30, 2018
(in millions, except percentages and per share data) Operating Expenses
Operating Margin
_(1),(2)
Income Tax Provision Net Income
Diluted Earnings Per Share⁽¹⁾
As reported $ 5,627
63 % $ 1,812
$ 7,456
$ 3.19
Litigation provision (600 ) 4 % 137
463
0.20
Remeasurement of deferred tax balances —
— % 1,133
(1,133 ) (0.49 )
Transition tax on foreign earnings —
— % (1,147 ) 1,147
0.49
As adjusted $ 5,027
67 % $ 1,935
$ 7,933
$ 3.39

Nine Months Ended June 30, 2017
(in millions, except percentages and per share data) Operating Expenses
Operating Margin
_(1),(2)
Income Tax Provision Net Income
Diluted Earnings Per Share⁽¹⁾
As reported $ 4,571
66 % $ 4,036
$ 4,559
$ 1.90
Elimination of deferred tax balances —
— % (1,515 ) 1,515
0.63
Charitable contribution (192 ) 1 % 71
121
0.05
As adjusted $ 4,379
68 % $ 2,592
$ 6,195
$ 2.58



	Six Months Ended March 31, 2018
(in millions, except per share data)	Income Tax Provision			Net Income			Diluted Earnings Per Share⁽¹⁾
As reported	$	1,329		$	5,127		$	2.19
Remeasurement of deferred tax balances	1,133			(1,133		)	(0.48		)
Transition tax on foreign earnings	(1,147		)	1,147			0.49
As adjusted	$	1,315		$	5,141		$	2.19


⁽¹⁾	Figures in the table may not recalculate exactly due to rounding. ~~Operating margin, diluted~~Diluted earnings per share and ~~their~~its respective ~~totals~~total are calculated based on unrounded numbers.


⁽²⁾	~~Operating margin is calculated as operating income divided by net operating revenues.~~

~~Interchange multidistrict litigation~~. During the nine months ended June 30, 2018, we recorded an additional accrual of $600 million to address claims associated with the interchange multidistrict litigation, resulting in an accrued litigation balance related to U.S. covered litigation of $1.4 billion at June 30, 2018. We also deposited $600 million of operating cash into the U.S. litigation escrow account. See ~~Note 2—U.S. and Europe Retrospective Responsibility Plans~~ ~~and~~ ~~Note 11—Legal Matters~~ ~~to our unaudited consolidated financial statements.~~

~~Reduction in as-converted shares.~~Common stock repurchases. During the ~~nine~~three months ended ~~June 30, 2018, total as-converted~~March 31, 2019, we repurchased 14 million shares of our class A common stock ~~was reduced by 52 million shares at an average price of $120.37 per share. Of the 52 million shares, 47 million were repurchased~~ in the open market using ~~$5.6~~$1.9 billion of ~~operating~~ cash on hand. ~~Additionally in June 2018,~~In January 2019, our board of directors authorized an additional $8.5 billion share repurchase program. As of March 31, 2019, we ~~deposited $600 million~~had remaining authorized funds of operating cash into the litigation escrow account previously established under the U.S. retrospective responsibility plan. Also, we recovered $56 million of VE territory covered losses in accordance with the Europe retrospective responsibility plan during the nine months ended June 30, 2018. The deposit and the recovery have the same economic effect on earnings per$8.4 billion for share as repurchasing our class A common stock, because they reduce the class B common stock conversion rate and the UK&I and Europe preferred stock conversion rates, respectively, and consequently reduce the as-converted class A common stock share count.repurchase. See Note ~~2—U.S. and Europe Retrospective Responsibility Plans~~ ~~and~~ ~~Note 7—Stockholders'~~9—Stockholders’ Equity to our unaudited consolidated financial statements.

In January 2018, our board of directors authorized an additional $7.5 billion share repurchase program. As of June 30, 2018, the program had remaining authorized funds of $5.8 billion for share repurchase. All share repurchase programs authorized prior to January 2018 have been completed. See ~~Note 7—Stockholders' Equity~~ ~~to our unaudited consolidated financial statements.~~

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. During the three months ended December 31, 2018, we updated our definition of payments volume to now include all disbursement volume related to Visa Direct, in addition to the funding volume previously included. All prior periods presented have been adjusted accordingly. Please refer to the Operational Performance Data section of Exhibit 99.1 to our Current Report on Form 8-K filed on January 30, 2019 for more details on the impact from this update in payments volume definition.

Nominal payments volume in the United States posted low double-digit growth for the three and ~~nine~~six months ended ~~March~~December 31, 2018⁽¹⁾, driven mainly by consumer ~~credit~~debit and ~~debit.~~commercial. Nominal international payments volume growth was ~~positively~~negatively impacted by ~~the weakening of~~movements in the U.S. ~~dollar.~~dollar exchange rates. On a constant-dollar basis, which excludes the impact of exchange rate movements, our international payments volume growth rate for the three and ~~nine~~six months ended ~~March~~December 31, 2018⁽¹⁾ was 11%. Growth in processed transactions reflects the ongoing worldwide shift to electronic payments.

The following table⁽²⁾ presents nominal payments and cash ~~volume.~~⁽²⁾volume:

United States International Visa Inc.

Three Months Ended March 31,⁽¹⁾

Three Months Ended March 31,⁽¹⁾

Three Months Ended March 31,⁽¹⁾
2018 2017 %
Change 2018 2017 %
Change 2018 2017 %
Change
(in billions, except percentages)
Nominal payments volume
Consumer credit $ 342
$ 311
10 % $ 610
$ 524
16 % $ 952
$ 835
14 %
Consumer debit⁽⁴⁾
376
342
10 % 443
362
22 % 818
704
16 %
Commercial⁽⁵⁾
137
123
12 % 90
75
21 % 228
198
15 %
Total nominal payments volume $ 854
$ 776
10 % $ 1,143
$ 960
19 % $ 1,998
$ 1,736
15 %
Cash volume 139
133
5 % 584
551
6 % 724
684
6 %
Total nominal volume⁽⁶⁾
$ 993
$ 909
9 % $ 1,728
$ 1,512
14 % $ 2,721
$ 2,421
12 %


	United States						International⁽³⁾						Visa Inc.⁽³⁾						United States						International						Visa Inc.
	Nine Months Ended March 31,⁽¹⁾						Nine Months Ended March 31,⁽¹⁾						Nine Months Ended March 31,⁽¹⁾						Three Months Ended December 31,⁽¹⁾						Three Months Ended December 31,⁽¹⁾						Three Months Ended December 31,⁽¹⁾
	2018		2017		% Change		2018		2017		% Change		2018		2017		% Change		2018		2017		% Change		2018		2017		% Change		2018		2017		% Change
	(in billions, except percentages)																		(in billions, except percentages)
Nominal payments volume
Consumer credit	$	1,064	$	962	11	%	$	1,816	$	1,624	12	%	$	2,880	$	2,586	11	%	$	399	$	374	7	%	$	639	$	620	3	%	$	1,038	$	994	4	%
Consumer debit⁽⁴⁾	1,098		1,013		8	%	1,306		1,099		19	%	2,404		2,112		14	%
Commercial⁽⁵⁾	410		373		10	%	268		225		19	%	678		598		13	%
Consumer debit⁽³⁾																			422		374		13	%	480		452		6	%	902		826		9	%
Commercial⁽⁴⁾																			158		139		14	%	99		92		7	%	257		231		11	%
Total nominal payments volume	$	2,572	$	2,348	10	%	$	3,390	$	2,948	15	%	$	5,962	$	5,296	13	%	$	979	$	886	10	%	$	1,218	$	1,164	5	%	$	2,197	$	2,051	7	%
Cash volume	418		402		4	%	1,803		1,732		4	%	2,221		2,135		4	%	142		137		3	%	587		626		(6	)%	729		764		(5	)%
Total nominal volume⁽⁶⁾	$	2,990	$	2,750	9	%	$	5,193	$	4,681	11	%	$	8,183	$	7,431	10	%
Total nominal volume⁽⁵⁾																			$	1,121	$	1,024	10	%	$	1,805	$	1,791	1	%	$	2,926	$	2,814	4	%

																			United States						International						Visa Inc.
																			Six Months Ended December 31,⁽¹⁾						Six Months Ended December 31,⁽¹⁾						Six Months Ended December 31,⁽¹⁾
																			2018		2017		% Change		2018		2017		% Change		2018		2017		% Change
																			(in billions, except percentages)
Nominal payments volume
Consumer credit																			$	781	$	722	8	%	$	1,256	$	1,212	4	%	$	2,037	$	1,934	5	%
Consumer debit⁽³⁾																			830		731		14	%	939		879		7	%	1,769		1,610		10	%
Commercial⁽⁴⁾																			313		274		14	%	191		178		7	%	504		452		12	%
Total nominal payments volume																			$	1,924	$	1,726	11	%	$	2,386	$	2,269	5	%	$	4,310	$	3,996	8	%
Cash volume																			286		279		3	%	1,165		1,242		(6	)%	1,451		1,521		(5	)%
Total nominal volume⁽⁵⁾																			$	2,210	$	2,005	10	%	$	3,551	$	3,511	1	%	$	5,761	$	5,516	4	%

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


	International				Visa Inc.				International⁽³⁾				Visa Inc.⁽³⁾				International				Visa Inc.				International				Visa Inc.
	Three Months Ended March 31, 2018 vs. 2017⁽¹⁾				Three Months Ended March 31, 2018 vs. 2017⁽¹⁾				Nine Months Ended March 31, 2018 vs. 2017⁽¹⁾				Nine Months Ended March 31, 2018 vs. 2017⁽¹⁾				Three Months Ended December 31, 2018 vs. 2017⁽¹⁾				Three Months Ended December 31, 2018 vs. 2017⁽¹⁾				Six Months Ended December 31, 2018 vs. 2017⁽¹⁾				Six Months Ended December 31, 2018 vs. 2017⁽¹⁾
	Nominal		Constant⁽⁷⁾		Nominal		Constant⁽⁷⁾		Nominal		Constant⁽⁷⁾		Nominal		Constant⁽⁷⁾		Nominal		Constant⁽⁶⁾		Nominal		Constant⁽⁶⁾		Nominal		Constant⁽⁶⁾		Nominal		Constant⁽⁶⁾
Payments volume growth
Consumer credit growth	16	%	10	%	14	%	10	%	12	%	9	%	11	%	9	%	3	%	9	%	4	%	8	%	4	%	10	%	5	%	9	%
Consumer debit growth⁽⁴⁾⁽³⁾	22	%	12	%	16	%	11	%	19	%	12	%	14	%	10	%	6	%	12	%	9	%	13	%	7	%	12	%	10	%	13	%
Commercial growth⁽⁵⁾⁽⁴⁾	21	%	13	%	15	%	12	%	19	%	15	%	13	%	12	%	7	%	14	%	11	%	14	%	7	%	15	%	12	%	14	%
Total payments volume growth	19	%	11	%	15	%	11	%	15	%	11	%	13	%	10	%	5	%	11	%	7	%	11	%	5	%	11	%	8	%	11	%
Cash volume growth	6	%	2	%	6	%	2	%	4	%	1	%	4	%	2	%	(6	)%	2	%	(5	)%	2	%	(6	)%	2	%	(5	)%	2	%
Total volume growth	14	%	8	%	12	%	8	%	11	%	7	%	10	%	8	%	1	%	8	%	4	%	8	%	1	%	8	%	4	%	9	%

⁽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 ~~nine~~six months ended ~~June 30,~~March 31, 2019 and 2018 ~~and 2017~~ were based on nominal payments volume reported by our financial institution clients for the three and ~~nine~~six months ended ~~March~~December 31, 2018 and 2017, respectively.


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

⁽³⁾

~~As a result of European Union Interchange Fee regulation changes, effective with the quarter ended December 31, 2016, Europe co-badged payments~~Includes consumer prepaid volume ~~is no longer included in reported~~and Interlink volume. For comparative purposes, international volume for the nine months ended March 31, 2017 was adjusted to exclude co-badged volume. The associated growth rates for the nine months ended March 31, 2018 were calculated using these adjusted amounts.


⁽⁴⁾	~~Includes consumer prepaid volume and Interlink volume.~~


⁽⁵⁾	Includes large, middle and small business credit and debit, as well as commercial prepaid volume.

⁽⁶⁾⁽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 and other form factors carrying the Visa, Visa Electron, Interlink and 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, other than the change to the payments volume definition, are not material.


⁽⁷⁾⁽⁶⁾	Growth on a constant-dollar basis excludes the impact of foreign currency fluctuations against the U.S. dollar.

The following table⁽¹⁾ provides the number of transactions involving cards and other form factors carrying the Visa, Visa Electron, Interlink, V PAY and PLUS cards processed on Visa’s networks during the periods ~~presented.~~⁽¹⁾presented:


	Three Months Ended June 30,				Nine Months Ended June 30,				Three Months Ended March 31,				Six Months Ended March 31,
	2018	2017	% Change		2018	2017	% Change		2019	2018	% Change		2019	2018	% Change
	(in millions, except percentages)
Visa processed transactions	31,728	28,450	12	%	91,557	82,035	12	%	32,544	29,321	11	%	66,476	59,829	11	%


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

Results of Operations

~~Operating~~Net Revenues

The following table sets forth our ~~operating~~net revenues earned in the U.S. and ~~internationally.~~internationally:


	Three Months Ended June 30,				2018 vs. 2017				Nine Months Ended June 30,				2018 vs. 2017				Three Months Ended March 31,				2019 vs. 2018				Six Months Ended March 31,				2019 vs. 2018
	2018		2017		$ Change		% Change⁽¹⁾		2018		2017		$ Change		% Change⁽¹⁾		2019		2018		$ Change		% Change⁽¹⁾		2019		2018		$ Change		% Change⁽¹⁾
	(in millions, except percentages)																(in millions, except percentages)
U.S.	$	2,334	$	2,143	$	191	9	%	$	6,896	$	6,420	$	476	7	%	$	2,479	$	2,297	$	182	8	%	$	4,987	$	4,562	$	425	9	%
International	2,906		2,422		484		20	%	8,279		7,083		1,196		17	%	3,015		2,776		239		9	%	6,013		5,373		640		12	%
Net operating revenues	$	5,240	$	4,565	$	675	15	%	$	15,175	$	13,503	$	1,672	12	%
Net revenues																	$	5,494	$	5,073	$	421	8	%	$	11,000	$	9,935	$	1,065	11	%


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

The increase in ~~operating~~net revenues reflects the continued growth in nominal payments volume ~~nominal cross-border volume~~ and processed transactions.

Our ~~operating~~net 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 ~~nine~~six months ended ~~June 30, 2018,~~March 31, 2019, as partially mitigated by our hedging program, resulted in an approximately negative one-and-a-half percentage point ~~positive~~and negative one percentage point impact to our net ~~operating revenue growth.~~

revenues growth, respectively.

The following table sets forth the components of our net ~~operating revenues.~~revenues:


	Three Months Ended June 30,						2018 vs. 2017					Nine Months Ended June 30,						2018 vs. 2017					Three Months Ended March 31,						2019 vs. 2018					Six Months Ended March 31,						2019 vs. 2018
	2018			2017			$ Change			% Change⁽¹⁾		2018			2017			$ Change			% Change⁽¹⁾		2019			2018			$ Change			% Change⁽¹⁾		2019			2018			$ Change			% Change⁽¹⁾
	(in millions, except percentages)																						(in millions, except percentages)
Service revenues	$	2,196		$	1,948		$	248		13	%	$	6,595		$	5,859		$	736		13	%	$	2,417		$	2,253		$	164		7	%	$	4,759		$	4,399		$	360		8	%
Data processing revenues	2,359			1,984			375			19	%	6,633			5,719			914			16	%	2,432			2,127			305			14	%	4,902			4,274			628			15	%
International transaction revenues	1,830			1,571			259			16	%	5,248			4,529			719			16	%	1,796			1,752			44			3	%	3,647			3,418			229			7	%
Other revenues	229			209			20			9	%	688			615			73			12	%	327			230			97			42	%	626			459			167			36	%
Client incentives	(1,374		)	(1,147		)	(227		)	20	%	(3,989		)	(3,219		)	(770		)	24	%	(1,478		)	(1,289		)	(189		)	15	%	(2,934		)	(2,615		)	(319		)	12	%
Net operating revenues	$	5,240		$	4,565		$	675		15	%	$	15,175		$	13,503		$	1,672		12	%
Net revenues																							$	5,494		$	5,073		$	421		8	%	$	11,000		$	9,935		$	1,065		11	%


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

Service revenues increased primarily due to ~~15%~~7% and ~~13%~~8% growth in nominal payments volume during the three and ~~nine-month~~six-month comparable periods, respectively.

Data processing revenues increased mainly due to overall growth in processed transactions of ~~12%~~11% during the three and ~~nine-month~~six-month comparable periods as well as select pricing modifications effective after the ~~third~~second quarter of fiscal ~~2017.~~2018.

International transaction revenues increased ~~primarily due to nominal cross-border volume growth of 15% and 17%~~ during the three and ~~nine-month~~six-month comparable periods primarily due to select pricing modifications effective after the second quarter of fiscal 2018 as well as changes in the mix of our international transaction revenues. International transaction revenues also reflected a 2% decline and 1% growth in nominal cross-border volumes during the three and six-month comparable periods, respectively.

Other revenues increased during the three and six-month comparable periods primarily due to changes in the classification and timing of recognition of revenue as a result of the adoption of the new revenue standard as well as an increase in revenues from license fees and optional services.

Client incentives increased during the three and ~~nine-month~~six-month comparable periods mainly due to incentives recognized on long-term customer contracts that were initiated or renewed after the ~~third~~second quarter of fiscal ~~2017~~2018 and overall growth in global payments volume. Client incentives also increased due to changes in classification and timing of recognition as a result of the adoption of the new revenue standard. 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 execution of new contracts.

Operating Expenses

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


	Three Months Ended June 30,				2018 vs. 2017				Nine Months Ended June 30,				2018 vs. 2017					Three Months Ended March 31,				2019 vs. 2018					Six Months Ended March 31,				2019 vs. 2018
	2018		2017		$ Change		% Change⁽¹⁾		2018		2017		$ Change			% Change⁽¹⁾		2019		2018		$ Change			% Change⁽¹⁾		2019		2018		$ Change			% Change⁽¹⁾
	(in millions, except percentages)																	(in millions, except percentages)
Personnel	$	852	$	698	$	154	22	%	$	2,355	$	1,973	$	382		19	%	$	894	$	824	$	70		8	%	$	1,701	$	1,503	$	198		13	%
Marketing	240		221		19		8	%	724		632		92			14	%	241		261		(20		)	(8	)%	517		484		33			7	%
Network and processing	169		158		11		7	%	498		453		45			10	%	171		169		2			1	%	344		329		15			5	%
Professional fees	112		102		10		10	%	312		265		47			18	%	101		108		(7		)	(7	)%	192		200		(8		)	(4	)%
Depreciation and amortization	152		132		20		16	%	450		409		41			10	%	160		153		7			4	%	319		298		21			7	%
General and administrative	230		230		—		—	%	688		822		(134		)	(16	)%	264		222		42			19	%	540		458		82			18	%
Litigation provision	600		—		600		NM		600		17		583			NM		22		—		22			NM		29		—		29			NM
Total operating expenses	$	2,355	$	1,541	$	814	53	%	$	5,627	$	4,571	$	1,056		23	%	$	1,853	$	1,737	$	116		7	%	$	3,642	$	3,272	$	370		11	%


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

Personnel expenses increased primarily due to an increase in headcount ~~and higher incentive compensation,~~ reflecting our strategy to invest for future growth.

Marketing expenses ~~increased primarily due to~~in 2018 included spend for the ~~higher level~~Winter Olympics in PyeongChang, which did not recur in 2019. This decrease in 2019 was partially offset in the three-month comparable period and was more than offset in the six-month comparable period by changes in the classification and timing of ~~spending to support~~recognition of certain marketing expenses as a ~~number~~result of ~~campaigns, including~~ the ~~PyeongChang 2018 Olympic Winter Games and 2018 FIFA World Cup.~~

~~Network and processing expenses~~ ~~increased mainly due to continued technology and processing network investments to support growth.~~

~~Professional fees~~ ~~increased primarily due to consulting fees related to technology and other corporate projects.~~

~~Depreciation and amortization~~ ~~increased primarily due to additional depreciation from our ongoing investments, including acquisitions.~~adoption of the new revenue standard.

General and administrative expenses ~~decreased~~increased mainly due to ~~$192 million of non-recurring expense in the prior year related to the Visa Inc. shares held by Visa Europe that were received by the Visa Foundation, partially offset by~~ higher product enhancement costs in support of our business ~~growth.~~growth, changes in the classification and timing of recognition of certain general and administrative expenses as a result of the adoption of the new revenue standard and higher indirect taxes.

~~Litigation provisionreflects a $600 million accrual related to the U.S. covered litigation. See~~ ~~Note 2—U.S. and Europe Retrospective Responsibility Plans~~ ~~and~~ ~~Note 11—Legal Matters~~ ~~to our consolidated financial statements.~~

Non-operating Income (Expense)

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

Three Months Ended
June 30, 2018 vs. 2017 Nine Months Ended
June 30, 2018 vs. 2017
2018 2017
$
Change

%
Change⁽¹⁾
2018 2017
$
Change

%
Change⁽¹⁾
(in millions, except percentages)
Interest expense $ (155 ) $ (140 ) $ (15 ) 10 % $ (462 ) $ (415 ) $ (47 ) 11 %
Other 82
30
52
173 % 182
78
104
132 %
Total non-operating expense $ (73 ) $ (110 ) $ 37
(34 )% $ (280 ) $ (337 ) $ 57
(17 )%



	Three Months Ended March 31,						2019 vs. 2018				Six Months Ended March 31,						2019 vs. 2018
	2019			2018			$ Change		% Change⁽¹⁾		2019			2018			$ Change		% Change⁽¹⁾
	(in millions, except percentages)
Interest expense, net	$	(140	)	$	(153	)	$	13	(9	)%	$	(285	)	$	(307	)	$	22	(7	)%
Investment income and other	176			34			142		410	%	234			100			134		133	%
Total non-operating income (expense)	$	36		$	(119	)	$	155	(130	)%	$	(51	)	$	(207	)	$	156	(75	)%


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

Interest expense decreased in the three and six months ended March 31, 2019 primarily as a result of entering into derivative instruments in fiscal 2019 that lowered the cost of borrowing on a portion of our outstanding debt.

Investment income and other increased in the three and ~~nine~~six months ended ~~June 30, 2018~~March 31, 2019 primarily ~~due to the issuance of $2.5 billion fixed-rate senior notes in September 2017. See~~ ~~Note 4—Debt~~ ~~to our unaudited consolidated financial statements.~~

~~Other non-operating income~~ ~~increased in the three and nine months ended June 30, 2018~~ due to gains on ~~sales of~~our equity investments ~~and~~as well as higher interest income on our cash and investments.

Effective Income Tax Rate

~~an $81 million benefit due~~ to ~~a non-recurring audit settlement during the quarter ended June 30, 2018;~~

~~an $80 million benefit due to a non-recurring audit settlement during the quarter ended March 31, 2018;~~

the effects of the Tax Act enacted ~~during the quarter ended December 31, 2017, as discussed below; and~~

~~the absence of the following items related to the Visa Europe reorganization recorded during the quarter ended March 31, 2017:~~


▪	~~a $1.5 billion non-recurring, non-cash income tax provision primarily related to the elimination of deferred tax balances originally recognized upon the acquisition of Visa Europe; and~~


▪	~~a $71 million one-time tax benefit related to the Visa Foundation’s receipt of Visa Inc. shares, previously recorded by Visa Europe as treasury stock.~~

~~The Tax Act, enacted~~ on December 22, 2017, ~~transitions the U.S. tax system to a new territorial system and lowers~~as discussed below:

The Tax Act reduced the statutory federal corporate income tax rate from 35% to 21%~~. The reduction of the statutory federal corporate tax rate to 21% became~~ effective on January 1, 2018. In fiscal 2018, our statutory federal corporate rate iswas a blended rate of 24.5%~~, which will be reduced~~. Federal tax expense for the six months ended March 31, 2019 was determined at a 21% tax rate compared to ~~21%~~the 24.5% tax rate in ~~fiscal 2019~~the prior-year period;

~~As a result~~The absence of the ~~reduction in~~following items recorded during the ~~federal corporate~~six months ended March 31, 2018:


▪	an $80 million benefit due to a non-recurring audit settlement during the three months ended March 31, 2018;


▪	a $1.1 billion non-recurring, non-cash benefit from the remeasurement of deferred tax balances recorded in the three months ended December 31, 2017, in connection with the reduction in U.S. federal tax rate enacted by the Tax Act; and


▪	a $1.1 billion one-time transition tax expense on certain untaxed foreign earnings recorded in the three months ended December 31, 2017, in connection with the requirement enacted by the Tax Act.

We previously recorded provisional amounts for the transition tax ~~rate, we remeasured our net deferred~~and the tax ~~liabilities as~~effects of ~~the enactment date of~~various other tax provisions enacted by the Tax Act. ~~The deferred~~As permitted by ASU 2018-05, we completed the determination of the accounting impacts of the transition tax ~~remeasurement resulted in a one-time, non-cash~~and the tax ~~benefit estimated to be approximately $1.1 billion, recorded~~effects of these various tax provisions in the three months ended December 31, ~~2017.~~

~~In transitioning~~2018. The adjustments to the ~~new territorial tax system,~~provisional amounts were not material. In addition, we adopted the ~~Tax Act requires~~accounting policy of accounting for taxes on GILTI in the period that ~~we include certain untaxed foreign earnings of non-U.S. subsidiaries in our fiscal 2018 taxable income. Such foreign earnings are~~it is subject to a one-time tax at 15.5% on the amount held in cash or cash equivalents, and at 8% on the remaining non-cash amount. The 15.5% and 8% tax, collectively referred to as the “transition tax”, was estimated to be $1.1 billion, and was recorded in the three months ended December 31, 2017. We intend to elect to pay the transition tax over a period of eight years as permitted by the Tax Act.such tax.

During the three and nine months ended June 30, 2018, our gross unrecognized tax benefits increased by $244 million and $237 million, respectively. Our net unrecognized tax benefits that, if recognized, would favorably impact the effective tax rate increased by $69 million and $73 million during the three and nine months ended June 30, 2018. The changes in unrecognized tax benefits are primarily related to various tax positions across several jurisdictions. See ~~Note 10—Income Taxes~~ ~~to our unaudited consolidated financial statements~~.

Adjusted effective income tax rate. Our financial results for the ~~three and nine~~six months ended ~~June 30,~~March 31, 2018 ~~and nine months ended June 30, 2017~~ reflect the impact of certain significant items that we believe ~~are~~were not indicative of our operating performance ~~in these or future periods,~~during the period, as they were either non-recurring or had no cash impact. As such, we have presented our adjusted effective income tax ~~rates~~rate for ~~these periods~~the period in the ~~tables~~table below, which we believe provides a clearer understanding of our operating performance for the reported ~~periods.~~period. There were no comparable adjustments recorded for the three and six months ended ~~June 30, 2017.~~March 31, 2019 or the three months ended March 31, 2018. See Overview—Adjusted financial results within this Management’s Discussion and Analysis of Financial Condition and Results of Operations for descriptions of the adjustments in the tables below.

Three Months Ended
June 30, 2018 Nine Months Ended
June 30, 2018
(in millions, except percentages) Income Before Income Taxes Income Tax Provision
Effective Income Tax Rate⁽¹⁾
Income Before Income Taxes Income Tax Provision
Effective Income Tax Rate⁽¹⁾
As reported $ 2,812
$ 483
17.2 % $ 9,268
$ 1,812
19.5 %
Litigation provision 600
137
600
137

Remeasurement of deferred tax balances —
—
—
1,133

Transition tax on foreign earnings —
—
—
(1,147 )
As adjusted $ 3,412
$ 620
18.2 % $ 9,868
$ 1,935
19.6 %

Three Months Ended
June 30, 2017 Nine Months Ended
June 30, 2017
(in millions, except percentages) Income Before Income Taxes Income Tax Provision
Effective Income Tax Rate⁽¹⁾
Income Before Income Taxes Income Tax Provision
Effective Income Tax Rate⁽¹⁾
As reported $ 2,914
$ 855
29.3 % $ 8,595
$ 4,036
47.0 %
Elimination of deferred tax balances —
—
—
(1,515 )
Charitable contribution —
—
192
71

As adjusted $ 2,914
$ 855
29.3 % $ 8,787
$ 2,592
29.5 %



	Six Months Ended March 31, 2018
	Income Before Income Taxes		Income Tax Provision			Effective Income Tax Rate⁽¹⁾
	(in millions, except percentages)
As reported	$	6,456	$	1,329		20.6	%
Remeasurement of deferred tax balances	—		1,133
Transition tax on foreign earnings	—		(1,147		)
As adjusted	$	6,456	$	1,315		20.4	%


⁽¹⁾	Figures in the table may not recalculate exactly due to rounding. Effective income tax rate is calculated based on unrounded numbers.

Liquidity and Capital Resources

Cash Flow Data

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


	Nine Months Ended June 30,						Six Months Ended March 31,
	2018			2017			2019			2018
	(in millions)						(in millions)
Total cash and cash equivalents provided by (used in):
Total cash provided by (used in):
Operating activities	$	9,219		$	6,441		$	5,358		$	5,729
Investing activities	(1,305		)	1,587			(396		)	(1,137		)
Financing activities	(9,194		)	(6,304		)	(5,486		)	(6,533		)
Effect of exchange rate changes on cash and cash equivalents	(89		)	94			(171		)	206
(Decrease) increase in cash and cash equivalents	$	(1,369	)	$	1,818
Decrease in cash, cash equivalents, restricted cash and restricted cash equivalents							$	(695	)	$	(1,735	)

Operating activities. Cash provided by operating activities for the ~~nine~~six months ended ~~June 30, 2018~~March 31, 2019 was ~~higher~~lower than the prior-year comparable period ~~reflecting~~primarily due to higher payments from the litigation escrow account in the current year and the first installment payment of the transition tax in connection with the Tax Act, partially offset by continued growth in our underlying business.

Investing activities. Cash used in investing activities for the ~~nine~~six months ended ~~June 30, 2018~~March 31, 2019 was ~~higher~~lower than the prior-year comparable period as prior-year purchases of ~~available-for-sale~~ investment securities reflected additional investment of net proceeds received from ~~new~~ fixed-rate senior notes issued in September 2017.

Financing activities. Cash used in financing activities for the ~~nine~~six months ended ~~June 30, 2018~~March 31, 2019 was ~~higher~~lower than the prior-year comparable period primarily due to the repayment of the Senior Notes due 2017 ~~Notes, deposits into~~in the ~~U.S. litigation escrow account,~~prior year. This decrease was partially offset by an increase in the repurchases of our class A common stock and higher dividends paid in the current year. ~~This increase was partially offset by payments from our litigation escrow account.~~ See Note ~~2—U.S. and Europe Retrospective Responsibility Plans~~, ~~Note 4—Debt~~ ~~and~~ ~~Note 7—Stockholders'~~9—Stockholders’ Equity to our 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 $7.8 billion at June 30, 2018. This excludes $2.1 billion of cash and cash equivalents and available-for-sale investment securities we returned during the nine months ended June 30, 2018 from our foreign subsidiaries to the United States. This transaction did not constitute a return of undistributed earnings. Pursuant to the Tax Act, we are required to pay U.S. tax on most of the undistributed and untaxed foreign earnings of non-U.S. subsidiaries accumulated as of December 31, 2017. After December 31, 2017, if it were necessary to repatriate the undistributed earnings of our foreign subsidiaries for use in the United States, the repatriated earnings would not be subject to further U.S. federal tax.

~~U.S. Litigation escrow account.~~ In June 2018, we deposited $600 million into the U.S. litigation escrow account to address claims associated with the interchange multidistrict litigation. The balance of this account as of June 30, 2018 and September 30, 2017 was $1.5 billion and $1.0 billion, respectively, and is reflected as restricted cash in our consolidated balance sheet. See ~~Note 2—U.S. and Europe Retrospective Responsibility Plans.~~

~~Uses of Liquidity~~

~~There has been no significant change to our primary uses of liquidity since September 30, 2017, except as discussed below.~~ Based on our current cash flow 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.

~~Senior Notes.~~ ~~In October 2017, we redeemed all~~Credit Ratings

During the six months ended March 31, 2019, our credit ratings by Standard and Poor’s were upgraded to the following as compared to September 30, 2018:



	Standard and Poor’s
	March 31, 2019		September 30, 2018
Debt type	Rating	Outlook	Rating	Outlook
Short-term unsecured debt	A-1+	Stable	A-1	Positive
Long-term unsecured debt	AA-	Stable	A+	Positive

Various factors affect our credit ratings, including changes in our operating performance, the economic environment, conditions in the electronic payment industry, our financial position and changes in our business strategy. We do not currently foresee any reasonable circumstances under which our credit ratings would be significantly downgraded. If a significant downgrade were to occur, it could adversely impact, among other things, our future borrowing costs and access to capital markets.

Uses of the $1.75 billion principal amount outstanding of the 2017 Notes. The redemption was funded with the net proceeds from the new fixed-rate senior notes issued in September 2017. Interest payments of $510 million were made in fiscal 2018. See ~~Note 4—Debt~~Liquidity

There has been no significant change to our ~~unaudited consolidated financial statements.~~primary uses of liquidity since September 30, 2018, except as discussed below.

~~U.S. Covered Litigation.~~ ~~We paid $150 million from the litigation escrow account during the nine months ended June 30, 2018. See~~ ~~Note 2—U.S. and Europe Retrospective Responsibility Plans~~ ~~and~~ ~~Note 11—Legal Matters.~~

~~Reduction in as-converted shares.~~Common stock repurchases. During the ~~nine~~six months ended ~~June 30, 2018, share repurchases and escrow deposits reduced as-converted class A common stock by 52~~March 31, 2019, we repurchased 31 million shares ~~at an average price~~ of $120.44 per share. Of the 52 million shares, 47 million was repurchased in the open market using $5.6 billion of operating cash on hand. Additionally, we deposited $600 million of operating cash into the U.S. litigation escrow account previously established under the U.S. retrospective responsibility plan. The deposit has the same economic effect on earnings per share as repurchasing our class A common stock ~~because it reduces the class B conversion rate and consequently the as-converted class A common stock share count. See~~ ~~Note 2—U.S. and Europe Retrospective Responsibility Plans~~ ~~and~~ ~~Note 7—Stockholders' Equity.~~

using $4.3 billion of cash on hand. In January ~~2018,~~2019, our board of directors authorized an additional ~~$7.5~~$8.5 billion share repurchase program. As of ~~June 30, 2018,~~March 31, 2019, we had remaining authorized funds of ~~$5.8~~$8.4 billion for share repurchase. All share repurchase programs authorized prior to January ~~2018~~2019 have been completed. See Note ~~7—Stockholders'~~9—Stockholders’ Equity to our unaudited consolidated financial statements.

Dividends. During the ~~nine~~six months ended ~~June 30, 2018,~~March 31, 2019, we declared and paid ~~$1.4~~$1.1 billion in dividends to holders of our common and preferred stock. ~~In July 2018,~~On April 16, 2019, our board of directors declared a cash dividend in the amount of ~~$0.21~~$0.25 per share of class A common stock (determined in the case of class B and C common stock and UK&I and Europe preferred stock on an as-converted basis), which will be paid on ~~September~~June 4, ~~2018,~~2019, to all holders of record as of ~~August~~May 17, ~~2018.~~2019. See Note ~~7—Stockholders'~~9—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. All three series of preferred stock and class B and C common stock will share ratably on an as-converted basis in such future dividends.

Deferred purchase consideration. On June 21, 2016, we acquired 100% of the share capital of Visa Europe. In connection with the purchase, we will pay an additional €1.0 billion, plus 4% compound annual interest, on the third anniversary of the closing of Visa Europe acquisition.

~~Fair Value Measurements—~~Derivative Financial Instruments

~~As of June 30, 2018, our financial instruments measured at fair value~~In March 2019, we entered into interest rate and cross-currency swap agreements on a ~~recurring basis included $13.9 billion~~portion of ~~assets~~our outstanding 3.15% Senior Notes due December 2025 that allows us to manage our interest rate exposure through a combination of fixed and ~~$38 million~~floating rates and reduce our overall cost of ~~liabilities.~~borrowing on our debt. Together these swap agreements effectively convert a portion of our U.S. dollar denominated fixed-rate payments into euro denominated floating-rate payments. See Note 3—5—Fair Value Measurements and Investments to our unaudited consolidated financial statements.

Fair Value Measurements—Financial Instruments

As of March 31, 2019, our financial instruments measured at fair value on a recurring basis included $13.8 billion of assets and $44 million of liabilities. See Note 5—Fair Value Measurements and Investments to our unaudited consolidated financial statements.



ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk

There ~~have~~has been no significant ~~changes~~change to our market risks ~~during the nine months ended June~~since September 30, 2018, ~~compared~~except as discussed below.

In March 2019, we entered into interest rate and cross-currency swap agreements on a portion of our outstanding senior notes that allows us to ~~September 30, 2017.~~manage our interest rate exposure through a combination of fixed and floating rates and reduce our overall cost of borrowing. Together these swap agreements effectively convert a portion of our U.S. dollar denominated fixed-rate payments into euro denominated floating-rate payments. By entering into interest rate swaps, we have assumed risks associated with market interest rate fluctuations. See Note 5—Fair Value Measurements and Investments to our unaudited consolidated financial statements.



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 design and operation of the disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) of Visa Inc. at the end of the period covered by this report and, based on such evaluation, have concluded that the disclosure controls and procedures of Visa Inc. were effective at the reasonable assurance level as of such date.

Changes in internal control over financial reporting. During the six months ended March 31, 2019, the Company implemented a new client incentives accounting system along with enhancements and modifications to existing internal controls and procedures to comply with the new revenue standard. There ~~has~~have been no ~~change~~other changes 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 ~~11—~~13—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, ~~2017,~~2018, filed with the SEC on November ~~17, 2017.~~

16, 2018.



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

ISSUER PURCHASES OF EQUITY SECURITIES

The table below sets forth ~~the Company’s~~our purchases of common stock during the ~~three months~~quarter ended ~~June 30, 2018~~March 31, 2019.:

Period
Total Number
of Shares
Purchased⁽¹⁾

Average Price
Paid per Share⁽¹⁾

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)
April 1-30, 2018 4,173,945
$ 119.77
4,173,945
$ 7,044,292,324
May 1-31, 2018 3,914,053
$ 130.11
3,912,115
$ 6,535,207,476
June 1-30, 2018 5,531,189
$ 134.69
5,531,189
$ 5,790,088,600
Total 13,619,187
$ 128.80
13,617,249



Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs^(1),(2)	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs^(1),(2)
January 1-31, 2019	3,695,067	$	135.30	3,695,067	$	9,810,395,582
February 1-28, 2019	3,985,003	$	143.38	3,985,003	$	9,238,959,974
March 1-31, 2019	6,335,657	$	152.57	6,335,657	$	8,272,205,975
Total	14,015,727	$	145.40	14,015,727


⁽¹⁾	Includes 1,938 shares of class A common stock withheld at an average price of $128.16 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 the trade dates. For purposes of ~~the Company’s~~our unaudited consolidated financial statements included in this Form 10-Q, the impact of these repurchases is recorded according to settlement dates.

⁽³⁾⁽²⁾

~~The Company’s~~Our board of directors from time to time authorizes the repurchase of shares of ~~its~~our common stock up to a certain monetary limit. In January ~~2018, the~~2019, our board of directors authorized a share repurchase program for ~~$7.5~~$8.5 billion. ~~This authorization has~~These authorizations have no expiration date. All share repurchase programs authorized prior to January ~~2018~~2019 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.

EXHIBIT INDEX



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

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+	XBRL Instance Document

101.SCH+	XBRL Taxonomy Extension Schema Document

101.CAL+	XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF+	XBRL Taxonomy Extension Definition Linkbase Document

101.LAB+	XBRL Taxonomy Extension Label Linkbase Document

101.PRE+	XBRL Taxonomy Extension Presentation Linkbase Document



+	Filed or furnished herewith.

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:	~~July 27, 2018~~April 26, 2019	By:	/s/ Alfred F. Kelly, Jr.
		Name:	Alfred F. Kelly, Jr.
		Title:	Chairman and Chief Executive Officer (Principal Executive Officer)

Date:	~~July 27, 2018~~April 26, 2019	By:	/s/ Vasant M. Prabhu
		Name:	Vasant M. Prabhu
		Title:	Chief Financial Officer (Principal Financial Officer)

Date:	~~July 27, 2018~~April 26, 2019	By:	/s/ James H. Hoffmeister
		Name:	James H. Hoffmeister
		Title:	Global Corporate Controller and Chief Accounting Officer (Principal Accounting Officer)

3741



	June 30, 2018				September 30, 2017
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
	(in millions)
1.20% Senior Notes due December 2017	$	—	$	—	$	1,749	$	1,751
2.20% Senior Notes due December 2020	2,993		2,951		2,990		3,031
2.15% Senior Notes due September 2022	994		959		993		997
2.80% Senior Notes due December 2022	2,241		2,209		2,240		2,301
3.15% Senior Notes due December 2025	3,969		3,869		3,967		4,098
2.75% Senior Notes due September 2027	741		697		740		737
4.15% Senior Notes due December 2035	1,486		1,554		1,485		1,637
4.30% Senior Notes due December 2045	3,463		3,637		3,463		3,873
3.65% Senior Notes due September 2047	740		701		740		746
Total	$	16,627	$	16,577	$	18,367	$	19,171



	June 30, 2018							September 30, 2017
	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)
1.20% Senior Notes due December 2017 (the “2017 Notes”)	$	—	$	—		$	—	$	1,750	$	(1	)	$	1,749	1.37	%
Total current maturities of long-term debt	—		—			—		1,750		(1		)	1,749

2.20% Senior Notes due December 2020	3,000		(7		)	2,993		3,000		(10		)	2,990		2.30	%
2.15% Senior Notes due September 2022	1,000		(6		)	994		1,000		(7		)	993		2.30	%
2.80% Senior Notes due December 2022	2,250		(9		)	2,241		2,250		(10		)	2,240		2.89	%
3.15% Senior Notes due December 2025	4,000		(31		)	3,969		4,000		(33		)	3,967		3.26	%
2.75% Senior Notes due September 2027	750		(9		)	741		750		(10		)	740		2.91	%
4.15% Senior Notes due December 2035	1,500		(14		)	1,486		1,500		(15		)	1,485		4.23	%
4.30% Senior Notes due December 2045	3,500		(37		)	3,463		3,500		(37		)	3,463		4.37	%
3.65% Senior Notes due September 2047	750		(10		)	740		750		(10		)	740		3.73	%
Total long-term debt	16,750		(123		)	16,627		16,750		(132		)	16,618

Total debt	$	16,750	$	(123	)	$	16,627	$	18,500	$	(133	)	$	18,367



(in millions, except per share data)	Three Months Ended June 30, 2018		Nine Months Ended June 30, 2018
Shares repurchased in the open market⁽²⁾	14		47
Average repurchase price per share⁽³⁾	$	128.80	$	119.29
Total cost	$	1,754	$	5,604



(in millions, except per share data)	Three and Nine Months Ended June 30, 2018
Reduction in equivalent number of as-converted shares of class A common stock	5
Effective price per share⁽¹⁾	$	132.32
Deposits under the U.S. retrospective responsibility plan	$	600



	U.K.&I Preferred Stock				Europe Preferred Stock
(in millions, except per share data)	Three Months Ended June 30, 2018		Nine Months Ended June 30, 2018		Three Months Ended June 30, 2018		Nine Months Ended June 30, 2018
Reduction in equivalent number of as-converted shares of class A common stock⁽¹⁾	—		—		—		—
Effective price per share⁽²⁾	$	130.50	$	113.05	$	130.50	$	112.92
Recovery through conversion rate adjustment	$	4	$	35	$	2	$	21



	Three Months Ended June 30, 2018
(in millions, except percentages and per share data)	Operating Expenses			Operating Margin _(1),(2)		Income Tax Provision		Net Income		Diluted Earnings Per Share⁽¹⁾
As reported	$	2,355		55	%	$	483	$	2,329	$	1.00
Litigation provision	(600		)	11	%	137		463		0.20
As adjusted	$	1,755		67	%	$	620	$	2,792	$	1.20



	Nine Months Ended June 30, 2018
(in millions, except percentages and per share data)	Operating Expenses			Operating Margin _(1),(2)		Income Tax Provision			Net Income			Diluted Earnings Per Share⁽¹⁾
As reported	$	5,627		63	%	$	1,812		$	7,456		$	3.19
Litigation provision	(600		)	4	%	137			463			0.20
Remeasurement of deferred tax balances	—			—	%	1,133			(1,133		)	(0.49		)
Transition tax on foreign earnings	—			—	%	(1,147		)	1,147			0.49
As adjusted	$	5,027		67	%	$	1,935		$	7,933		$	3.39



	Nine Months Ended June 30, 2017
(in millions, except percentages and per share data)	Operating Expenses			Operating Margin _(1),(2)		Income Tax Provision			Net Income		Diluted Earnings Per Share⁽¹⁾
As reported	$	4,571		66	%	$	4,036		$	4,559	$	1.90
Elimination of deferred tax balances	—			—	%	(1,515		)	1,515		0.63
Charitable contribution	(192		)	1	%	71			121		0.05
As adjusted	$	4,379		68	%	$	2,592		$	6,195	$	2.58



	Three Months Ended June 30, 2017						Nine Months Ended June 30, 2017
(in millions, except percentages)	Income Before Income Taxes		Income Tax Provision		Effective Income Tax Rate⁽¹⁾		Income Before Income Taxes		Income Tax Provision			Effective Income Tax Rate⁽¹⁾
As reported	$	2,914	$	855	29.3	%	$	8,595	$	4,036		47.0	%
Elimination of deferred tax balances	—		—				—		(1,515		)
Charitable contribution	—		—				192		71
As adjusted	$	2,914	$	855	29.3	%	$	8,787	$	2,592		29.5	%



Period	Total Number of Shares Purchased⁽¹⁾	Average Price Paid per Share⁽¹⁾		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)
April 1-30, 2018	4,173,945	$	119.77	4,173,945	$	7,044,292,324
May 1-31, 2018	3,914,053	$	130.11	3,912,115	$	6,535,207,476
June 1-30, 2018	5,531,189	$	134.69	5,531,189	$	5,790,088,600
Total	13,619,187	$	128.80	13,617,249