UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q



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

For the quarterly period ended ~~June 30, 2019~~March 31, 2020



☐	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		94128-8999
San Francisco,	California
(Address of principal executive offices)		(Zip Code)

(650) 432-3200

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol	Name of each exchange on which registered
Class A Common Stock, par value $0.0001 per share	V	New York Stock Exchange

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 ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☑ No ☐

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	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

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. ☐

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

As of ~~July 19, 2019~~April 30, 2020, there were ~~1,726,971,494~~1,687,112,437 shares outstanding of the registrant’s class A common stock, par value $0.0001 per share, 245,513,385 shares outstanding of the registrant’s class B common stock, par value $0.0001 per share, and ~~11,429,957~~10,871,873 shares outstanding of the registrant’s class C common stock, par value $0.0001 per ~~share, of Visa Inc. outstanding.~~share.

VISA INC.

TABLE OF CONTENTS




		Page
PART I.	Financial Information	4

Item 1.	Financial Statements ~~(unaudited)~~(Unaudited)	4
	Consolidated Balance Sheets—~~June 30, 2019~~March 31, 2020 and September 30, ~~2018~~2019	4
	Consolidated Statements of Operations—Three and ~~Nine~~Six Months Ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~	5
	Consolidated Statements of Comprehensive Income—Three and ~~Nine~~Six Months Ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~	6
	Consolidated Statements of Changes in Equity—Three and ~~Nine~~Six Months Ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~	7
	Consolidated Statements of Cash Flows—~~Nine~~Six Months Ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~	11
	Notes to Consolidated Financial Statements ~~(unaudited)~~(Unaudited)	12
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3127
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4035
Item 4.	Controls and Procedures	4036

PART II.	Other Information	4137

Item 1.	Legal Proceedings	4137
Item 1A.	Risk Factors	4137
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4138
Item 3.	Defaults Upon Senior Securities	4139
Item 4.	Mine Safety Disclosures	4139
Item 5.	Other Information	4139
Item 6.	Exhibits	4240
	Signatures	4341

PART I. FINANCIAL INFORMATION



ITEM 1.	Financial Statements (Unaudited)

VISA INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


	June 30, 2019			September 30, 2018			March 31, 2020			September 30, 2019
	(in millions, except par value data)						(in millions, except par value data)
Assets
Cash and cash equivalents	$	7,912		$	8,162		$	9,740		$	7,838
Restricted cash equivalents—U.S. litigation escrow (Note 3 and Note 4)	902			1,491
Investment securities (Note 5)	3,265			3,547
Restricted cash equivalents—U.S. litigation escrow (Note 4 and Note 5)							1,264			1,205
Investment securities (Note 6)							2,411			4,236
Settlement receivable	1,689			1,582			1,432			3,048
Accounts receivable	1,531			1,208			1,516			1,542
Customer collateral (Note 3 and Note 7)	1,668			1,324
Customer collateral (Note 4 and Note 9)							1,698			1,648
Current portion of client incentives	690			340			957			741
Prepaid expenses and other current assets	648			562			889			712
Total current assets	18,305			18,216			19,907			20,970
Investment securities (Note 5)	2,918			4,082
Investment securities (Note 6)							1,064			2,157
Client incentives	1,854			538			3,110			2,084
Property, equipment and technology, net	2,549			2,472			2,776			2,695
Goodwill	15,313			15,194			15,755			15,656
Intangible assets, net	27,272			27,558			27,011			26,780
Other assets	2,038			1,165			3,197			2,232
Total assets	$	70,249		$	69,225		$	72,820		$	72,574
Liabilities
Accounts payable	$	150		$	183		$	161		$	156
Settlement payable	2,420			2,168			1,869			3,990
Customer collateral (Note 3 and Note 7)	1,668			1,325
Customer collateral (Note 4 and Note 9)							1,698			1,648
Accrued compensation and benefits	687			901			573			796
Client incentives	3,690			2,834			4,376			3,997
Accrued liabilities	1,358			1,160			1,998			1,625
Deferred purchase consideration	0			1,300
Accrued litigation (Note 13)	856			1,434
Current maturities of debt (Note 8)							3,999			0
Accrued litigation (Note 14)							1,268			1,203
Total current liabilities	10,829			11,305			15,942			13,415
Long-term debt (Note 6)	16,694			16,630
Long-term debt (Note 8)							13,893			16,729
Deferred tax liabilities	4,930			4,618			4,796			4,807
Other liabilities	2,801			2,666			3,604			2,939
Total liabilities	35,254			35,219			38,235			37,890
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 (the “class A equivalent preferred stock”) (Note 9)	0			0
Series B convertible participating preferred stock, 2 shares issued and outstanding at June 30, 2019 and September 30, 2018 (the “UK&I preferred stock”) (Note 4 and Note 9)	2,285			2,291
Series C convertible participating preferred stock, 3 shares issued and outstanding at June 30, 2019 and September 30, 2018 (the “Europe preferred stock”) (Note 4 and Note 9)	3,177			3,179
Class A common stock, $0.0001 par value, 2,001,622 shares authorized, 1,729 and 1,768 shares issued and outstanding at June 30, 2019 and September 30, 2018, respectively (Note 9)	0			0
Class B common stock, $0.0001 par value, 622 shares authorized, 245 shares issued and outstanding at June 30, 2019 and September 30, 2018 (Note 9)	0			0
Class C common stock, $0.0001 par value, 1,097 shares authorized, 12 shares issued and outstanding at June 30, 2019 and September 30, 2018 (Note 9)	0			0
Right to recover for covered losses (Note 4)	(169		)	(7		)
Series A convertible participating preferred stock, none issued (the “class A equivalent preferred stock”) (Note 10)							0			0
Series B convertible participating preferred stock, 2 shares issued and outstanding at March 31, 2020 and September 30, 2019 (the “UK&I preferred stock”) (Note 5 and Note 10)							2,285			2,285
Series C convertible participating preferred stock, 3 shares issued and outstanding at March 31, 2020 and September 30, 2019 (the “Europe preferred stock”) (Note 5 and Note 10)							3,177			3,177
Class A common stock, $0.0001 par value, 2,001,622 shares authorized, 1,693 and 1,718 shares issued and outstanding at March 31, 2020 and September 30, 2019, respectively (Note 10)							0			0
Class B common stock, $0.0001 par value, 622 shares authorized, 245 shares issued and outstanding at March 31, 2020 and September 30, 2019 (Note 10)							0			0
Class C common stock, $0.0001 par value, 1,097 shares authorized, 11 shares issued and outstanding at March 31, 2020 and September 30, 2019 (Note 10)							0			0
Right to recover for covered losses (Note 5)							(184		)	(171		)
Additional paid-in capital	16,552			16,678			16,385			16,541
Accumulated income	13,040			11,318			13,366			13,502
Accumulated other comprehensive income (loss), net:
Investment securities	6			(17		)	6			6
Defined benefit pension and other postretirement plans	(66		)	(61		)	(199		)	(192		)
Derivative instruments	24			60			78			199
Foreign currency translation adjustments	146			565			(329		)	(663		)
Total accumulated other comprehensive income (loss), net	110			547			(444		)	(650		)
Total equity	34,995			34,006			34,585			34,684
Total liabilities and equity	$	70,249		$	69,225		$	72,820		$	72,574

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,
	2019			2018			2019			2018			2020			2019			2020			2019
	(in millions, except per share data)												(in millions, except per share data)
Net revenues	$	5,840		$	5,240		$	16,840		$	15,175		$	5,854		$	5,494		$	11,908		$	11,000

Operating Expenses
Personnel	872			852			2,573			2,355			940			894			1,922			1,701
Marketing	282			240			799			724			235			241			509			517
Network and processing	184			169			528			498			183			171			364			344
Professional fees	113			112			305			312			103			101			209			192
Depreciation and amortization	165			152			484			450			192			160			374			319
General and administrative	315			230			855			688			269			264			582			540
Litigation provision (Note 13)	1			600			30			600
Litigation provision (Note 14)													8			22			8			29
Total operating expenses	1,932			2,355			5,574			5,627			1,930			1,853			3,968			3,642
Operating income	3,908			2,885			11,266			9,548			3,924			3,641			7,940			7,358

Non-operating Income (Expense)
Interest expense, net	(128		)	(155		)	(413		)	(462		)	(118		)	(140		)	(229		)	(285		)
Investment income and other	86			82			320			182			23			176			92			234
Total non-operating income (expense)	(42		)	(73		)	(93		)	(280		)	(95		)	36			(137		)	(51		)
Income before income taxes	3,866			2,812			11,173			9,268			3,829			3,677			7,803			7,307
Income tax provision (Note 12)	765			483			2,118			1,812
Income tax provision (Note 13)													745			700			1,447			1,353
Net income	$	3,101		$	2,329		$	9,055		$	7,456		$	3,084		$	2,977		$	6,356		$	5,954

Basic Earnings Per Share (Note 10)
Basic Earnings Per Share (Note 11)
Class A common stock	$	1.37		$	1.00		$	3.98		$	3.20		$	1.39		$	1.31		$	2.85		$	2.61
Class B common stock	$	2.23		$	1.66		$	6.49		$	5.27		$	2.25		$	2.13		$	4.62		$	4.25
Class C common stock	$	5.48		$	4.02		$	15.92		$	12.78		$	5.54		$	5.23		$	11.40		$	10.44

Basic Weighted-average Shares Outstanding (Note 10)
Basic Weighted-average Shares Outstanding (Note 11)
Class A common stock	1,735			1,784			1,748			1,798			1,703			1,748			1,708			1,754
Class B common stock	245			245			245			245			245			245			245			245
Class C common stock	12			12			12			12			11			12			11			12

Diluted Earnings Per Share (Note 10)
Diluted Earnings Per Share (Note 11)
Class A common stock	$	1.37		$	1.00		$	3.97		$	3.19		$	1.38		$	1.31		$	2.85		$	2.61
Class B common stock	$	2.23		$	1.65		$	6.48		$	5.26		$	2.25		$	2.13		$	4.62		$	4.25
Class C common stock	$	5.48		$	4.01		$	15.90		$	12.76		$	5.54		$	5.23		$	11.38		$	10.42

Diluted Weighted-average Shares Outstanding (Note 10)
Diluted Weighted-average Shares Outstanding (Note 11)
Class A common stock	2,265			2,321			2,278			2,337			2,228			2,279			2,234			2,285
Class B common stock	245			245			245			245			245			245			245			245
Class C common stock	12			12			12			12			11			12			11			12

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,
	2019			2018			2019			2018			2020			2019			2020			2019
	(in millions)												(in millions)
Net income	$	3,101		$	2,329		$	9,055		$	7,456		$	3,084		$	2,977		$	6,356		$	5,954
Other comprehensive income (loss), net of tax:
Investment securities:
Net unrealized gain (loss)	5			45			20			95			5			7			5			15
Income tax effect	(1		)	(10		)	(5		)	(22		)	(1		)	(2		)	(1		)	(4		)
Reclassification adjustments	1			(24		)	1			(52		)	(2		)	0			(2		)	0
Income tax effect	0			6			0			16
Defined benefit pension and other postretirement plans:
Net unrealized actuarial gain (loss) and prior service credit (cost)	(1		)	0			(8		)	(2		)	3			0			2			(7		)
Income tax effect	0			0			1			1			(1		)	0			(1		)	1
Reclassification adjustments	2			4			2			4			2			0			6			0
Income tax effect	0			(1		)	0			(1		)	0			0			(1		)	0
Derivative instruments:
Net unrealized gain (loss)	(68		)	114			29			72			47			59			(141		)	97
Income tax effect	14			(19		)	(9		)	(22		)	(8		)	(13		)	31			(23		)
Reclassification adjustments	(22		)	10			(69		)	45			(13		)	(22		)	(15		)	(47		)
Income tax effect	4			0			13			(5		)	3			4			4			9
Foreign currency translation adjustments	262			(1,112		)	(419		)	(266		)	(139		)	(394		)	344			(681		)
Other comprehensive income (loss), net of tax	196			(987		)	(444		)	(137		)	(104		)	(361		)	231			(640		)
Comprehensive income	$	3,297		$	1,342		$	8,611		$	7,319		$	2,980		$	2,616		$	6,587		$	5,314

VISA INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(UNAUDITED)


	Three Months Ended June 30, 2019																										Three Months Ended March 31, 2020
	Preferred Stock		Common Stock						Preferred Stock			Right to Recover for Covered Losses			Additional Paid-In Capital			Accumulated Income			Accumulated Other Comprehensive Income			Total Equity			Preferred Stock		Common Stock						Preferred Stock		Right to Recover for Covered Losses			Additional Paid-In Capital			Accumulated Income			Accumulated Other Comprehensive Income (Loss), Net			Total Equity
	UK&I	Europe	Class A			Class B	Class C																				Series B	Series C	Class A			Class B	Class C
	(in millions, except per share data)																										(in millions, except per share data)
Balance as of March 31, 2019	2	3	1,741			245	12		$	5,464		$	(163	)	$	16,547		$	12,513		$	(86	)	$	34,275
Balance as of December 31, 2019																											2	3	1,709			245	11		$	5,462	$	(175	)	$	16,424		$	13,899		$	(340	)	$	35,270
Net income																		3,101						3,101																			3,084						3,084
Other comprehensive income (loss), net of tax																					196			196																						(104		)	(104		)
Comprehensive income																								3,297																									2,980
VE territory covered losses incurred (Note 4)												(8		)										(8		)
Recovery through conversion rate adjustment (Note 4 and Note 9)									(2		)	2												—
VE territory covered losses incurred (Note 5)																																					(9		)										(9		)
Conversion of class C common stock upon sales into public market			0		⁽¹⁾		0	⁽¹⁾																—					2				0	⁽¹⁾															—
Vesting of restricted stock and performance-based shares			0		⁽¹⁾																			—					0		⁽¹⁾																		—
Share-based compensation, net of forfeitures (Note 11)															110									110
Share-based compensation, net of forfeitures (Note 12)																																								99									99
Restricted stock and performance-based shares settled in cash for taxes			0		⁽¹⁾										(3		)							(3		)			0		⁽¹⁾									(8		)							(8		)
Cash proceeds from issuance of common stock under employee equity plans			1												38									38					0		⁽¹⁾									54									54
Cash dividends declared and paid, at a quarterly amount of $0.25 per Class A share (Note 9)																		(565		)				(565		)
Repurchase of class A common stock (Note 9)			(13	)											(140		)	(2,009		)				(2,149		)
Balance as of June 30, 2019	2	3	1,729			245	12		$	5,462		$	(169	)	$	16,552		$	13,040		$	110		$	34,995
Cash dividends declared and paid, at a quarterly amount of $0.30 per class A share (Note 10)																																											(668		)				(668		)
Repurchase of class A common stock (Note 10)																													(18	)										(184		)	(2,949		)				(3,133		)
Balance as of March 31, 2020																											2	3	1,693			245	11		$	5,462	$	(184	)	$	16,385		$	13,366		$	(444	)	$	34,585


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

~~VISA INC.~~

~~CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY—(Continued)~~

~~(UNAUDITED)~~

Nine Months Ended June 30, 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 9,055
9,055
Other comprehensive income (loss), net of tax (444 ) (444 )
Comprehensive income 8,611
Adoption of new accounting standards (Note 1) 385
7
392
VE territory covered losses incurred (Note 4) (170 ) (170 )
Recovery through conversion rate adjustment (Note 4 and Note 9) (8 ) 8
—
Conversion of class C common stock upon sales into public market 1
0
⁽¹⁾
—
Vesting of restricted stock and performance-based shares 3
—
Share-based compensation, net of forfeitures (Note 11) 321
321
Restricted stock and performance-based shares settled in cash for taxes (1 ) (106 ) (106 )
Cash proceeds from issuance of common stock under employee equity plans 2
127
127
Cash dividends declared and paid, at a quarterly amount of $0.25 per Class A share (Note 9) (1,706 ) (1,706 )
Repurchase of class A common stock (Note 9) (44 ) (468 ) (6,012 ) (6,480 )
Balance as of June 30, 2019 2
3
1,729
245
12
$ 5,462
$ (169 ) $ 16,552
$ 13,040
$ 110
$ 34,995


⁽¹⁾	~~Decrease is less than one million shares.~~

VISA INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY—(Continued)

(UNAUDITED)


	Three Months Ended June 30, 2018																										Six Months Ended March 31, 2020
	Preferred Stock		Common Stock						Preferred Stock			Right to Recover for Covered Losses			Additional Paid-In Capital			Accumulated Income			Accumulated Other Comprehensive Income			Total Equity			Preferred Stock		Common Stock					Preferred Stock		Right to Recover for Covered Losses			Additional Paid-In Capital			Accumulated Income			Accumulated Other Comprehensive Income (Loss), Net			Total Equity
	UK&I	Europe	Class A			Class B	Class C																				Series B	Series C	Class A		Class B	Class C
	(in millions, except per share data)																										(in millions, except per share data)
Balance as of March 31, 2018	2	3	1,790			245	12		$	5,476		$	(6	)	$	16,713		$	10,192		$	1,728		$	34,103
Balance as of September 30, 2019																											2	3	1,718		245	11		$	5,462	$	(171	)	$	16,541		$	13,502		$	(650	)	$	34,684
Net income																		2,329						2,329																		6,356						6,356
Other comprehensive income (loss), net of tax																					(987		)	(987		)																			231			231
Comprehensive income																								1,342																								6,587
VE territory covered losses incurred (Note 4)												(5		)										(5		)
Recovery through conversion rate adjustment (Note 4 and Note 9)									(6		)	6												—
Adoption of new accounting standards (Note 1)																																										25			(25		)	0
VE territory covered losses incurred (Note 5)																																				(13		)										(13		)
Conversion of class C common stock upon sales into public market			1				0	⁽¹⁾																—					3			0	⁽¹⁾															—
Vesting of restricted stock and performance-based shares			0		⁽¹⁾																			—					3																			—
Share-based compensation, net of forfeitures (Note 11)			0		⁽¹⁾										89									89
Share-based compensation, net of forfeitures (Note 12)																																							215									215
Restricted stock and performance-based shares settled in cash for taxes			0		⁽¹⁾										(2		)							(2		)			(1	)									(155		)							(155		)
Cash proceeds from issuance of common stock under employee equity plans			1												32									32					1										109									109
Cash dividends declared and paid, at a quarterly amount of $0.210 per Class A share (Note 9)																		(487		)				(487		)
Repurchase of class A common stock (Note 9)			(14	)											(146		)	(1,608		)				(1,754		)
Balance as of June 30, 2018	2	3	1,778			245	12		$	5,470		$	(5	)	$	16,686		$	10,426		$	741		$	33,318
Cash dividends declared and paid, at a quarterly amount of $0.30 per class A share (Note 10)																																										(1,339		)				(1,339		)
Repurchase of class A common stock (Note 10)																													(31	)									(325		)	(5,178		)				(5,503		)
Balance as of March 31, 2020																											2	3	1,693		245	11		$	5,462	$	(184	)	$	16,385		$	13,366		$	(444	)	$	34,585


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

VISA INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY—(Continued)

(UNAUDITED)

Nine Months Ended June 30, 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 7,456
7,456
Other comprehensive income (loss), net of tax (137 ) (137 )
Comprehensive income 7,319
VE territory covered losses incurred (Note 4) (9 ) (9 )
Recovery through conversion rate adjustment (Note 4 and Note 9) (56 ) 56
—
Conversion of class C common stock upon sales into public market 3
(1 ) —
Vesting of restricted stock and performance-based shares 2
—
Share-based compensation, net of forfeitures (Note11) 0
⁽¹⁾
242
242
Restricted stock and performance-based shares settled in cash for taxes (1 ) (90 ) (90 )
Cash proceeds from issuance of common stock under employee equity plans 3
135
135
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 and third quarters (Note 9) (1,435 ) (1,435 )
Repurchase of class A common stock (Note 9) (47 ) (501 ) (5,103 ) (5,604 )
Balance as of June 30, 2018 2
3
1,778
245
12
$ 5,470
$ (5 ) $ 16,686
$ 10,426
$ 741
$ 33,318



	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 (Loss), Net			Total Equity
	Series B	Series C	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 5)											(71		)										(71		)
Conversion of class C common stock upon sales into public market			1				0	⁽¹⁾															—
Vesting of restricted stock and performance-based shares			0		⁽¹⁾																		—
Share-based compensation, net of forfeitures (Note 12)														111									111
Restricted stock and performance-based shares settled in cash for taxes			0		⁽¹⁾									(2		)							(2		)
Cash proceeds from issuance of common stock under employee equity plans			0		⁽¹⁾									41									41
Cash dividends declared and paid, at a quarterly amount of $0.25 per class A share (Note 10)																	(569		)				(569		)
Repurchase of class A common stock (Note 10)			(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 (Loss), Net			Total Equity
	Series B	Series C	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 5)											(162		)										(162		)
Recovery through conversion rate adjustment (Note 5 and Note 10)								(6		)	6												—
Conversion of class C common stock upon sales into public market			1			0	⁽¹⁾																—
Vesting of restricted stock and performance-based shares			3																				—
Share-based compensation, net of forfeitures (Note 12)														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 10)																	(1,141		)				(1,141		)
Repurchase of class A common stock (Note 10)			(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~~Increase or 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,
	2019			2018			2020			2019
	(in millions)						(in millions)
Operating Activities
Net income	$	9,055		$	7,456		$	6,356		$	5,954
Adjustments to reconcile net income to net cash provided by operating activities:
Client incentives (Note 2)	4,480			3,989
Share-based compensation (Note 11)	321			242
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Client incentives (Note 3)							3,453			2,934
Share-based compensation (Note 12)							215			211
Depreciation and amortization of property, equipment, technology and intangible assets	484			450			374			319
Deferred income taxes	234			(1,133		)	(37		)	256
VE territory covered losses incurred (Note 4)	(170		)	(9		)
VE territory covered losses incurred (Note 5)							(13		)	(162		)
Other	(204		)	(38		)	(84		)	(106		)
Change in operating assets and liabilities:
Settlement receivable	(127		)	(239		)	1,642			(23		)
Accounts receivable	(319		)	(82		)	38			(203		)
Client incentives	(4,778		)	(3,483		)	(4,323		)	(3,142		)
Other assets	(172		)	97			(496		)	(245		)
Accounts payable	(22		)	(18		)	14			(48		)
Settlement payable	280			379			(2,165		)	(38		)
Accrued and other liabilities	257			1,408			303			170
Accrued litigation (Note 13)	(577		)	446
Net cash provided by operating activities	8,742			9,465
Accrued litigation (Note 14)							65			(519		)
Net cash provided by (used in) operating activities							5,342			5,358
Investing Activities
Purchases of property, equipment and technology	(507		)	(523		)	(407		)	(313		)
Proceeds from sales of property, equipment and technology	0			14
Investment securities:
Purchases	(2,321		)	(3,354		)	(499		)	(1,806		)
Proceeds from maturities and sales	3,870			2,789			3,420			2,038
Acquisitions, net of cash and restricted cash acquired	(136		)	(196		)
Acquisitions, net of cash acquired							(77		)	0
Purchases of / contributions to other investments	(482		)	(35		)	(30		)	(236		)
Proceeds / distributions from other investments	10			0			2			10
Other investing activities	(21		)	0			32			(89		)
Net cash provided by (used in) investing activities	413			(1,305		)	2,441			(396		)
Financing Activities
Repurchase of class A common stock (Note 9)	(6,480		)	(5,604		)
Repayments of long-term debt	0			(1,750		)
Dividends paid (Note 9)	(1,706		)	(1,435		)
Payment of deferred purchase consideration related to Visa Europe acquisition	(1,236		)	0
Repurchase of class A common stock (Note 10)							(5,503		)	(4,331		)
Dividends paid (Note 10)							(1,339		)	(1,141		)
Proceeds from issuance of commercial paper (Note 8)							1,001			0
Cash proceeds from issuance of common stock under employee equity plans	127			135			109			89
Restricted stock and performance-based shares settled in cash for taxes	(106		)	(90		)	(155		)	(103		)
Net cash used in financing activities	(9,401		)	(8,744		)
Net cash provided by (used in) financing activities							(5,887		)	(5,486		)
Effect of exchange rate changes on cash and cash equivalents	(62		)	(89		)	88			(171		)
Decrease in cash, cash equivalents, restricted cash and restricted cash equivalents	(308		)	(673		)
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)	$	10,669		$	11,338
Increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents							1,984			(695		)
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period (Note 4)							10,832			10,977
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period (Note 4)							$	12,816		$	10,282
Supplemental Disclosure
Income taxes paid, net of refunds	$	1,992		$	1,649		$	1,691		$	1,381
Interest payments on debt (Note 6)	$	503		$	510
Interest payments on debt							$	269		$	269
Accruals related to purchases of property, equipment and technology	$	87		$	35		$	42		$	51

VISA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~June 30, 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~~financial institution 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 unaudited consolidated financial statements as of and for the periods presented. All significant intercompany accounts and transactions are eliminated in consolidation.

The accompanying unaudited consolidated financial statements are presented in accordance with the U.S. Securities and Exchange Commission ~~(SEC)~~(“SEC”) requirements for Quarterly Reports on Form 10-Q and, consequently, do not include all of the annual disclosures required by U.S. GAAP. Reference should be made to the Visa Annual Report on Form 10-K for the year ended September 30, ~~2018~~2019 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.

Use of estimates. The preparation of accompanying unaudited consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions about future events. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited consolidated financial statements and reported amounts of revenues and expenses during the reporting period. These estimates may change, as new events occur and additional information is obtained, and will be recognized in the consolidated financial statements in the period in which such changes occur. Future actual results could differ materially from these estimates. The worldwide spread of coronavirus (“COVID-19”) has created significant uncertainty in the global economy. There have been no comparable recent events that provide guidance as to the effect the spread of COVID-19 as a global pandemic may have, and, as a result, the ultimate impact of COVID-19 and the extent to which COVID-19 impacts the Company’s business, results of operations and financial condition will depend on future developments, which are highly uncertain and difficult to predict.

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. 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 new revenue standard changes the classification and timing of recognition of certain client incentives and marketing-related funds paid to customers, as well as revenues and expenses for market development funds and services provided to customers as an incentive. The Company adopted the standard effective October 1, 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 nine months ended June 30, 2019.~~

~~Table of Contents~~

~~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~~leases standard that address the transition methods available and clarify the guidance for lessor costs and other aspects of the new ~~lease~~leases standard. The Company ~~will adopt~~adopted the standard effective October 1, 2019 ~~and expects to adopt~~ using the modified retrospective transition method ~~without restating~~with comparative ~~periods.~~periods continuing to be reported using the prior leases standard. The Company elected to apply the package of practical expedients permitted under the transition guidance, allowing the Company to carry forward the historical assessment of whether a contract was or contains a lease, lease classification and capitalization of initial direct costs. The adoption did not have a material impact on the consolidated financial statements.

In accordance with ASU 2016-02, the Company determines if an arrangement is a lease at its inception. Right-of-use (“ROU”) assets, and corresponding lease liabilities, are recognized at the commencement date based on the

Table of Contents

VISA INC.

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

present value of remaining lease payments over the lease term. For this purpose, the Company considers only payments that are fixed and determinable at the time of commencement. As a majority of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The ROU asset also includes any lease payments made prior to commencement and is recorded net of any lease incentives received. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. The Company does not record a ROU asset and corresponding liability for leases with terms of 12 months or less.

The Company does not include renewals in the determination of the lease term unless the renewals are deemed to be reasonably assured at lease commencement. Lease agreements generally contain lease and non-lease components. Non-lease components primarily include payments for maintenance and utilities. The Company does not combine lease payments with non-lease components for any of its leases. Operating leases are recorded as ROU assets, which are included in other assets. The current portion of lease liabilities are included in accrued liabilities and the long-term portion is included in other liabilities on the consolidated balance sheet. The Company’s lease cost consists of amounts recognized under lease agreements in the results of operations adjusted for impairment and sublease income.

In February 2018, the FASB issued ASU 2018-02, which allows a reclassification from accumulated other comprehensive income to retained earnings for adjustments to tax effects that were originally recorded in other comprehensive income due to changes in the U.S. federal corporate income tax rate resulting from the enactment of the U.S. tax reform legislation, commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Company adopted the ASU effective October 1, 2019. The adoption did not have a material impact on the consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, which simplifies the accounting for income taxes by removing certain exceptions to the general principles in the existing guidance for income taxes and making other minor improvements. The amendments in the ASU are effective for the Company on October 1, 2021. The Company does not plan to early adopt the ASU at this time. The adoption is not expected to have a material impact on the consolidated financial statements.

In ~~October 2016,~~January 2020, the FASB issued ASU ~~2016-16,~~2020-01, which ~~requires~~clarifies that ~~entities recognize~~an entity should consider observable transactions that require it to either apply or discontinue the ~~income tax consequences~~equity method of ~~an intra-entity transfer~~accounting for the purposes of ~~an asset, other than inventory, when~~applying the ~~transfer occurs.~~fair value measurement alternative. The amendments in the ASU are effective for the Company ~~adopted the standard effective~~on October 1, ~~2018.~~2021. The adoption ~~did~~is not expected to have a material impact on the consolidated financial statements.

In ~~November 2016,~~March 2020, the FASB issued ASU ~~2016-18,~~2020-04, which ~~requires~~provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions that reference the London Interbank Offered Rate or another reference rate expected to be discontinued because of reference rate reform. The amendments in the ASU are effective for the Company upon issuance through December 31, 2022. The Company is evaluating the effect ASU 2020-04 will have on its consolidated financial statements.

Note 2—Acquisitions

Pending Acquisition. On January 13, 2020, the Company entered into a ~~statement~~definitive agreement to acquire Plaid, Inc. for $5.3 billion. The Company will pay approximately $4.9 billion of cash ~~flows includes~~and $0.4 billion of retention equity and deferred equity consideration. This acquisition is subject to customary closing conditions, including ongoing regulatory reviews and approvals, which are expected to be completed by the ~~total~~end 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.2020.

Table of Contents

VISA INC.

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

In March 2017, the FASB issued ASU 2017-07, which requires that the 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 capitalization, when applicable. Retrospective application is required for the change in income statement presentation while the change in capitalized benefit cost is required to be applied prospectively. The Company adopted the standard effective October 1, 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 August 2017, the FASB issued ASU 2017-12, which improves the financial reporting of hedging instruments to better portray the economic results of an entity’s risk management activities in its financial statements. Visa early adopted the 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 obtain internal-use software. The Company adopted the standard effective October 1, 2018. The adoption did not have a material impact on the consolidated financial statements.

Note 2—3—Revenues

~~Impact of the 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 nine months ended June 30, 2019 and the consolidated balance sheet as of June 30, 2019:

For the Three Months Ended
June 30, 2019

For the Nine Months Ended
June 30, 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 $ 5,840
$ (88 ) $ 5,752
$ 16,840
$ (179 ) $ 16,661

Operating Expenses
Marketing 282
(31 ) 251
799
(100 ) 699
Professional fees 113
(5 ) 108
305
(12 ) 293
General and administrative 315
(11 ) 304
855
(21 ) 834
Total operating expenses 1,932
(47 ) 1,885
5,574
(133 ) 5,441
Operating income 3,908
(41 ) 3,867
11,266
(46 ) 11,220

Income before income taxes 3,866
(41 ) 3,825
11,173
(46 ) 11,127
Income tax provision 765
(8 ) 757
2,118
(6 ) 2,112
Net income 3,101
(33 ) 3,068
9,055
(40 ) 9,015

~~Table of Contents~~

~~VISA INC.~~

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

June 30, 2019
As Reported Impact of the New Revenue Standard Results Under Prior Revenue Standard
(in millions)
Assets
Current portion of client incentives $ 690
$ (282 ) $ 408
Client incentives 1,854
(811 ) 1,043
Liabilities
Accounts payable 150
26
176
Client incentives 3,690
(439 ) 3,251
Accrued liabilities 1,358
(18 ) 1,340
Deferred tax liabilities 4,930
(112 ) 4,818
Other liabilities 2,801
(110 ) 2,691
Equity
Accumulated income 13,040
(440 ) 12,600

~~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 ~~nine~~six months ended~~June 30, 2019~~ March 31, 2020 and ~~2018:~~2019:


	Three Months Ended June 30,						Nine Months Ended June 30,						Three Months Ended March 31,						Six Months Ended March 31,
	2019			2018			2019			2018			2020			2019			2020			2019
	(in millions)												(in millions)
Service revenues	$	2,405		$	2,196		$	7,164		$	6,595		$	2,623		$	2,417		$	5,178		$	4,759
Data processing revenues	2,662			2,359			7,564			6,633			2,711			2,432			5,575			4,902
International transaction revenues	1,977			1,830			5,624			5,248			1,833			1,796			3,851			3,647
Other revenues	342			229			968			688			392			327			757			626
Client incentives	(1,546		)	(1,374		)	(4,480		)	(3,989		)	(1,705		)	(1,478		)	(3,453		)	(2,934		)
Net revenues	$	5,840		$	5,240		$	16,840		$	15,175		$	5,854		$	5,494		$	11,908		$	11,000


	Three Months Ended June 30,				Nine Months Ended June 30,				Three Months Ended March 31,				Six Months Ended March 31,
	2019		2018		2019		2018		2020		2019		2020		2019
	(in millions)								(in millions)
U.S.	$	2,587	$	2,334	$	7,573	$	6,896	$	2,650	$	2,479	$	5,367	$	4,987
International	3,253		2,906		9,267		8,279		3,204		3,015		6,541		6,013
Net revenues	$	5,840	$	5,240	$	16,840	$	15,175	$	5,854	$	5,494	$	11,908	$	11,000

~~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.

~~Table of Contents~~

~~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 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 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 revenues ratably over the contractual term. Incentives that are earned by the customer based on performance targets are recorded as reductions 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 execution of new contracts.

Note 3—4—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:


	June 30,				September 30,
	2019		2018		2018		2017		March 31, 2020		September 30, 2019
	(in millions)								(in millions)
Cash and cash equivalents	$	7,912	$	8,505	$	8,162	$	9,874	$	9,740	$	7,838
Restricted cash and restricted cash equivalents:
U.S. litigation escrow	902		1,487		1,491		1,031		1,264		1,205
Customer collateral	1,668		1,346		1,324		1,106		1,698		1,648
Prepaid expenses and other current assets	187		0		0		0		114		141
Cash, cash equivalents, restricted cash and restricted cash equivalents	$	10,669	$	11,338	$	10,977	$	12,011	$	12,816	$	10,832

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~~VISA INC.~~

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

Note 4—5—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. ~~The balance~~

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VISA INC.

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

On December 13, 2019, the ~~escrow account~~district court entered the final judgment order approving the Amended Settlement Agreement with the Damages Class plaintiffs in the Interchange Multidistrict Litigation proceedings. A takedown payment of approximately $467 million was ~~$902 million at June 30,~~received on December 27, 2019, and ~~$1.5 billionat September 30, 2018.~~deposited into the Company’s litigation escrow account. The ~~Company paid $600 million from~~deposit into the litigation escrow account and reestablishment of a prior accrual to address opt-out claims was recorded during the ~~nine~~six months ended ~~June 30, 2019. See~~ ~~Note 13—Legal Matters~~.

March 31, 2020. The accrual related to the U.S. covered litigation could be either higher or lower than the litigation escrow account balance. ~~The Company did not record an additional accrual for the U.S. covered litigation during the nine months ended June 30, 2019.~~ See Note ~~13—~~14—Legal Matters.

The following table sets forth the changes in the restricted cash equivalents—U.S. litigation escrow account:



	Six Months Ended March 31,
	2020			2019
	(in millions)
Balance at beginning of period	$	1,205		$	1,491
Return of takedown payment to the litigation escrow account	467			0
Payments to class plaintiffs’ settlement fund⁽¹⁾	0			(600		)
Payments to opt-out merchants⁽¹⁾ and interest earned on escrow funds	(408		)	8
Balance at end of period	$	1,264		$	899


⁽¹⁾	These payments are associated with the Interchange Multidistrict Litigation. See Note 14—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.

~~During the three and nine months ended June 30, 2019, the Company recovered $2 million and $8 million, respectively, of VE territory covered losses through~~ See Note 14—Legal Matters. There were no 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 12.955 and 13.888, respectively, as of September 30, 2018 to 12.936 and 13.884, respectively, as of June 30, 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, 2019. VE territory covered losses incurred reflect settlements with merchants and additional legal costs. See~~ ~~Note 13—Legal Matters~~March 31, 2020.

Preferred Stock Right to Recover for Covered Losses
UK&I Europe
(in millions)
Balance as of September 30, 2018 $ 2,291
$ 3,179
$ (7 )
VE territory covered losses incurred 0
0
(170 )
Recovery through conversion rate adjustment (6 ) (2 ) 8
Balance as of June 30, 2019 $ 2,285
$ 3,177
$ (169 )

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~~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 consolidated balance sheets as of ~~June 30, 2019~~March 31, 2020 and September 30, ~~2018:~~2019:


	June 30, 2019						September 30, 2018						March 31, 2020						September 30, 2019
	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^(1),(2)			Book Value of Preferred Stock⁽¹⁾			As-Converted Value of Preferred Stock^(1),(3)			Book Value of Preferred Stock⁽¹⁾
	(in millions)												(in millions)
UK&I preferred stock	$	5,569		$	2,285		$	4,823		$	2,291		$	5,170		$	2,285		$	5,519		$	2,285
Europe preferred stock	7,606			3,177			6,580			3,179			7,062			3,177			7,539			3,177
Total	13,175			5,462			11,403			5,470			12,232			5,462			13,058			5,462
Less: right to recover for covered losses	(169		)	(169		)	(7		)	(7		)	(184		)	(184		)	(171		)	(171		)
Total recovery for covered losses available	$	13,006		$	5,293		$	11,396		$	5,463		$	12,048		$	5,278		$	12,887		$	5,291


⁽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, 2019;~~March 31, 2020; (b) 12.936 and 13.884, the class A common stock conversion rate applicable to the UK&I and Europe preferred stock as of ~~June 30, 2019,~~March 31, 2020, respectively; and (c) ~~$173.55,~~$161.12, Visa’s class A common stock closing stock price as of ~~June 30, 2019.~~March 31, 2020.

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VISA INC.

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

⁽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, ~~2018;~~2019; (b) ~~12.955~~12.936 and ~~13.888,~~13.884, the class A common stock conversion rate applicable to the UK&I and Europe preferred stock as of September 30, ~~2018,~~2019, respectively; and (c) ~~$150.09,~~$172.01, Visa’s class A common stock closing stock price as of September 30, ~~2018.~~2019.

Note 5—6—Fair Value Measurements and Investments

Assets and Liabilities Measured at Fair Value on a Recurring Basis


	Fair Value Measurements Using Inputs Considered as								Fair Value Measurements Using Inputs Considered as
	Level 1				Level 2				Level 1				Level 2
	June 30, 2019		September 30, 2018		June 30, 2019		September 30, 2018		March 31, 2020		September 30, 2019		March 31, 2020		September 30, 2019
	(in millions)								(in millions)
Assets
Cash equivalents and restricted cash equivalents:
Money market funds	$	6,275	$	6,252					$	8,864	$	6,494
U.S. government-sponsored debt securities					$	50	$	1,048					$	0	$	150
Investment securities:
Marketable equity securities	125		113						121		126
U.S. government-sponsored debt securities					5,484		5,008						3,149		5,592
U.S. Treasury securities	574		2,508						205		675
Other current and non-current assets:
Derivative instruments					211		78						768		437
Total	$	6,974	$	8,873	$	5,745	$	6,134	$	9,190	$	7,295	$	3,917	$	6,179
Liabilities
Accrued compensation and benefits:
Deferred compensation liability									$	111	$	113
Accrued and other liabilities:
Derivative instruments					$	74	$	22					$	272	$	52
Total	$	0	$	0	$	74	$	22	$	111	$	113	$	272	$	52

There were 0 transfers between Level 1 and Level 2 assets during the ~~nine~~six months ended ~~June 30, 2019.~~March 31, 2020.

Level 1 assets. Money market funds, ~~publicly-traded~~marketable 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. The Company’s deferred compensation liability is measured at fair value based on marketable equity securities held under the deferred compensation plan.

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~~VISA INC.~~

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

Level 2 assets and 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. 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 30, 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).March 31, 2020.

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 ~~$6.1~~$3.4 billion and ~~$7.5~~$6.3 billion of these investment securities as of ~~June 30, 2019~~March 31, 2020 and September 30, ~~2018,~~2019, respectively. All of the Company’s long-term available-for-sale investment securities are due within one to five years.

~~Derivative instruments.~~ ~~In March 2019, the Company entered into interest rate and cross-currency swap agreements on a portion~~Table 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 change in value 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.Contents

VISA INC.

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

Assets Measured at Fair Value on a Non-recurring Basis

Non-marketable equity securities. The Company’s non-marketable equity securities are investments 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. On October 1, 2018, the Company 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 of the same issuer are observable in the market. All gains and losses on non-marketable equity securities, realized and unrealized, are recognized in non-operating income (expense).

~~Non-marketable equity securities totaled $679 million and $137 million at June 30, 2019 and September 30, 2018, respectively, and are classified in other assets on the consolidated balance sheets.~~ During the three ~~and nine~~ months ended ~~June 30, 2019,~~March 31, 2020, the Company recorded 0 material upward or downward adjustments. During the six months ended March 31, 2020, $9 million of upward adjustments ~~of $14 million~~ and ~~$80 million, respectively,~~0 material downward adjustments were ~~made to~~included in the carrying value of non-marketable equity ~~securities, and downward adjustments of $6 million were made during the same periods.~~securities. During the ~~nine~~three and six months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ there were ~~no significant impairments~~0 impairments. The following table summarizes the total carrying value of the Company’s non-marketable equity ~~securities.~~securities held as of March 31, 2020 including cumulative unrealized gains and losses:



	March 31, 2020
	(in millions)
Initial cost basis	$	611
Upward adjustments	119
Downward adjustments (including impairment)	(5		)
Carrying amount, end of period	$	725

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 and 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

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~~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, ~~2019,~~2020, and concluded that there was no0 impairment. No recent events or changes in circumstances indicate that impairment existed at ~~June 30, 2019.~~March 31, 2020.

Gains and Losses on Marketable and Non-marketable Equity Securities

~~The Company recognized net realized gains of $1 million~~Gains and ~~$16 millionfor~~losses on the ~~three and nine months ended June 30, 2019, respectively, on its~~Company’s equity securities sold during the periods. The Company recognized net unrealized gains of $10 million and $69 million for the three and nine months ended June 30, 2019, respectively, on equity securities held as of the end of the periods.are summarized below.



	Three Months Ended March 31,					Six Months Ended March 31,
	2020			2019		2020			2019
	(in millions)
Net gain (loss) on equity securities sold during the period	$	1		$	15	$	5		$	15
Unrealized gain (loss) on equity securities held as of the end of the period	(23		)	79		(9		)	59
Total gain (loss) recognized in non-operating income (expense), net	$	(22	)	$	94	$	(4	)	$	74

Other Fair Value Disclosures

Long-term debt. Debt instruments are measured at amortized cost on the Company’s consolidated balance 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 carrying value and estimated fair value of long-term debt was ~~$16.7~~$16.9 billion and ~~$18.0~~$18.6 billion,

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VISA INC.

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

respectively, as of ~~June 30, 2019.~~March 31, 2020. The carrying value and estimated fair value of long-term debt ~~were both $16.6~~was $16.7 billion and $18.4 billion, respectively, as of September 30, ~~2018.~~2019.

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, 2019,~~March 31, 2020, but disclosure of their fair values is required: ~~time deposits recorded in prepaid expenses and other current assets,~~ settlement receivable and payable, accounts receivable, commercial paper and customer collateral. The estimated fair value of such instruments at ~~June 30, 2019~~March 31, 2020 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.

Note ~~6—Debt~~7—Leases

The Company entered into various operating lease agreements primarily for real estate. The Company's leases have original lease periods expiring between fiscal 2020 and 2030. Many leases include 1 or more options to renew. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants. Payments under the Company’s lease arrangements are generally fixed. At March 31, 2020, the Company had ~~outstanding debt~~no finance leases.

During the three and six months ended March 31, 2020, total operating lease cost was $29 million and $55 million, respectively. At March 31, 2020, the weighted average remaining lease term for operating leases was approximately 7 years and the weighted average discount rate for operating leases was 2.28%.

At March 31, 2020, the present value of future minimum lease payments was as follows:

June 30, 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 (111 ) (120 )
Hedge accounting fair value adjustments 55
0

Total long-term debt $ 16,694
$ 16,630



	March 31, 2020
	(in millions)
Remainder of 2020	$	48
2021	112
2022	96
2023	89
2024	76
Thereafter	214
Total undiscounted lease payments	635
Less: imputed interest	(48		)
Present value of lease liabilities	$	587

At March 31, 2020, the Company had additional operating leases that had not yet commenced with lease obligations of $465 million. These operating leases will commence between fiscal 2020 and 2023 with non-cancellable lease terms of 3 to 15 years.

2018

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VISA INC.

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

Note 8—Debt

The Company ~~recognized interest expense~~had outstanding debt as follows:



	March 31, 2020			September 30, 2019			Effective Interest Rate⁽¹⁾
	(in millions, except percentages)
Commercial paper	$	1,002		$	0		1.55	%
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 debt	17,752			16,750
Unamortized discounts and debt issuance costs	(103		)	(108		)
Hedge accounting fair value adjustments⁽²⁾	243			87
Total carrying value of debt	$	17,892		$	16,729

Reported as:
Current maturities of debt	$	3,999		$	0
Long-term debt	13,893			16,729
Total carrying value of debt	$	17,892		$	16,729


⁽¹⁾	Effective interest rates disclosed do not reflect hedge accounting adjustments.


⁽²⁾	Represents the change in fair value of interest rate swap agreements entered into on a portion of certain outstanding senior notes.

Commercial Paper Program

Visa maintains a commercial paper program to support its working capital requirements and for ~~its~~other general corporate purposes. Under the program, the Company is authorized to issue up to $3.0 billion in outstanding notes, with maturities up to 397 days from the date of issuance. At March 31, 2020, the commercial paper outstanding had remaining maturities of less than 12 months.

Senior Notes

In April 2020, the Company issued fixed-rate senior notes in a public offering in an aggregate principal amount of ~~$106 million~~$4.0 billion, with maturities ranging between 7 and ~~$137 million for~~20 years. The April 2027 Notes, 2030 Notes and 2040 Notes, or collectively, the ~~three months ended June 30, 2019~~"2020 Notes", have interest rates of 1.90%, 2.05% and ~~2018, respectively, and$350 million and $413 million for the nine months ended June 30, 2019 and 2018,~~2.70%, respectively. Interest ~~expense for~~on the ~~three~~2020 Notes is payable semi-annually on April 15 and ~~nine months ended June 30, 2019 includes adjustments related~~October 15 of each year, commencing October 15, 2020. The net aggregate proceeds, after deducting discounts and debt issuance costs, were approximately $4.0 billion. The Company plans to use the Company’s hedging program. Effective interest rates disclosed in the table above do not reflect hedge accounting adjustments. Hedge accounting adjustments impacting the carrying value of the Company’s long-term debt are a result of gains or losses related to fair value hedges. These gains or losses are recognized in earnings, along with a corresponding gain or loss related to the change in value of the underlying hedged item, within non-operating income (expense) in the Company’s consolidated statement of operations. See ~~Note 5—Fair Value Measurements and Investments~~ ~~for a description of the Company’s accounting treatment for fair value hedges.~~

~~Credit facility.~~ On July 25, 2019, the Company entered into an amended and restated credit agreement for a 5 year, unsecured $5.0 billion revolving credit facility (the "Credit Facility"), which will expire on July 25, 2024. The Credit Facility is no longer governed by any financial covenants. This facility is maintained to ensure the integrity of the payment card settlement process andnet proceeds for general corporate purposes. Interest on borrowings under the Credit Facility will be charged at the London Interbank Offered Rate or an alternative base rate, in each case plus applicable margins that fluctuate based on the applicable credit rating of the Company's senior unsecured long-term debt.

Note 7—9—Settlement Guarantee Management

The Company indemnifies its clients for settlement losses suffered due to failure of any other 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.

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.

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VISA INC.

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

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 daily settlement exposure was ~~$92.0~~$97.3 billion and the average daily settlement exposure was ~~$56.4~~$56.7 billion during the ~~nine~~six months ended ~~June 30, 2019~~.March 31, 2020.

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 ~~June 30, 2019~~March 31, 2020 and September 30, ~~2018,~~2019, the Company held collateral as follows:


	June 30, 2019		September 30, 2018		March 31, 2020		September 30, 2019
	(in millions)				(in millions)
Cash equivalents	$	1,668	$	1,708
Restricted cash and restricted cash equivalents					$	1,698	$	1,648
Pledged securities at market value	294		192		235		259
Letters of credit	1,447		1,382		1,300		1,293
Guarantees	582		860		508		477
Total	$	3,991	$	4,142	$	3,741	$	3,677

~~Table of Contents~~

~~VISA INC.~~

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

Note ~~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
U.S. Plans Non-U.S. Plans
Three Months Ended
June 30, Three Months Ended
June 30,
2019 2018 2019 2018
(in millions)
Service cost $ 0
$ 0
$ 1
$ 1
Interest cost 8
8
3
3
Expected return on plan assets (17 ) (17 ) (5 ) (5 )
Settlement loss 2
3
0
0
Total net periodic benefit cost (income) $ (7 ) $ (6 ) $ (1 ) $ (1 )

Pension Benefits
U.S. Plans Non-U.S. Plans
Nine Months Ended
June 30, Nine Months Ended
June 30,
2019 2018 2019 2018
(in millions)
Service cost $ 0
$ 0
$ 3
$ 3
Interest cost 24
24
10
9
Expected return on plan assets (53 ) (52 ) (14 ) (15 )
Settlement loss 2
3
0
0
Total net periodic benefit cost (income) $ (27 ) $ (25 ) $ (1 ) $ (3 )

~~Table of Contents~~

~~VISA INC.~~

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

~~Note 9—~~10—Stockholders’ Equity

As-converted class A common stock. The following table⁽¹⁾ presents the number of shares of each series and class of stock and the number of shares of class A common stock on an as-converted basis:


	June 30, 2019					September 30, 2018					March 31, 2020				September 30, 2019
	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⁾		Shares Outstanding	Conversion Rate Into Class A Common Stock		As-converted Class A Common Stock⁽¹⁾	Shares Outstanding	Conversion Rate Into Class A Common Stock		As-converted Class A Common Stock⁽¹⁾
	(in millions, except conversion rates)										(in millions, except conversion rates)
UK&I preferred stock	2	12.9360		32	⁽³⁾	2	12.9550		32	⁽³⁾	2	12.9360		32	2	12.9360		32
Europe preferred stock	3	13.8840		44	⁽³⁾	3	13.8880		44	⁽³⁾	3	13.8840		44	3	13.8840		44
Class A common stock⁽⁴⁾⁽²⁾	1,729	—		1,729		1,768	—		1,768		1,693	—		1,693	1,718	—		1,718
Class B common stock	245	1.6298	⁽⁵⁾	400		245	1.6298	⁽⁵⁾	400		245	1.6228	⁽³⁾	398	245	1.6228	⁽³⁾	398
Class C common stock	12	4.0000		46		12	4.0000		47		11	4.0000		43	11	4.0000		45
Total				2,251					2,291					2,210				2,237


⁽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.


⁽³⁾	~~The reduction in equivalent number of shares of class A common stock was less than one million shares during the nine months ended June 30, 2019.~~


⁽⁴⁾⁽²⁾	Class A common stock shares outstanding reflect repurchases that settled on or before ~~June 30, 2019~~March 31, 2020 and September 30, ~~2018.~~2019.


⁽⁵⁾⁽³⁾	The class B to class A common stock conversion rate is presented on a rounded basis. Conversion calculations for dividend payments are based on a conversion rate rounded to the tenth decimal.

Reduction in as-converted shares. 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. The 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 conversion rates and consequently, reduces the as-converted class A common stock share count.

~~The following table presents effective price per share and recovery of VE territory covered losses through~~ There were no conversion rate ~~adjustments:~~adjustments in the six months ended March 31, 2020. See Note 5—U.S. and Europe Retrospective Responsibility Plans.

Nine Months Ended
June 30, 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⁾
$ 141.32
$ 150.26
$ 113.05
$ 112.92
Recovery through conversion rate adjustment $ 6
$ 2
$ 35
$ 21



⁽¹⁾	Effective price per share for the 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, 2019 and fiscal 2018 is calculated using the weighted-average effective prices of the respective adjustments made during the year.

2320

Table of Contents

VISA INC.

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

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


	Three Months Ended June 30,				Nine Months Ended June 30,				Three Months Ended March 31,				Six Months Ended March 31,
	2019		2018		2019		2018		2020		2019		2020		2019
	(in millions, except per share data)								(in millions, except per share data)
Shares repurchased in the open market⁽²⁾⁽¹⁾	13		14		44		47		18		14		31		31
Average repurchase price per share⁽³⁾⁽²⁾	$	162.97	$	128.80	$	147.66	$	119.29	$	181.11	$	144.94	$	180.31	$	141.08
Total cost(2)	$	2,149	$	1,754	$	6,480	$	5,604	$	3,133	$	1,938	$	5,503	$	4,331

⁽¹⁾

~~Figures in the table may not recalculate exactly due to rounding.~~ Shares repurchased in the open market reflect repurchases that settled during the three and ~~nine~~six months ended ~~June 30, 2019 and 2018. These amounts include repurchases traded but not yet settled on or before September 30, 2018 and 2017 for nine months, respectively, and~~ March 31, ~~2019~~2020 and ~~2018 for three months, respectively. Also, these amounts exclude repurchases traded but not yet settled on or before June 30, 2019 and 2018, respectively.~~


⁽²⁾	2019. All shares repurchased in the open market have been retired and constitute authorized but unissued shares.


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

In January 2019,, the Company’s board of directors authorized an ~~additional~~ $8.5 billion share repurchase program and in January 2020, authorized an additional $9.5 billion share purchase program. These authorizations have no expiration date. As of ~~June 30, 2019,~~March 31, 2020, the Company’s January ~~2019~~2020 share repurchase program had remaining authorized funds of ~~$6.2~~$8.1 billion for share repurchase. All share repurchase programs authorized prior to January ~~2019~~2020 have been completed.

Dividends. On ~~July 15, 2019~~,April 21, 2020, the Company’s board of directors declared a quarterly cash dividend of ~~$0.25~~$0.30 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 3, 2019,~~June 2, 2020, to all holders of record as of ~~August 16, 2019.~~May 14, 2020. The Company declared and paid ~~$565~~$668 million and ~~$487~~$569 million during the three months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively and ~~$1.7~~$1.3 billion and ~~$1.4~~$1.1 billion during the ~~nine~~six months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively, in dividends to holders of the Company’s common and preferred stocks.

Note ~~10—~~11—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 reflects changes in ownership over the periods presented. See Note 9—10—Stockholders’ Equity.

Diluted earnings per share is computed by dividing net income available by the weighted-average number of shares of common stock outstanding, participating securities 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, 2019:~~

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

Income
Allocation
(A)⁽²⁾

Weighted-
Average
Shares
Outstanding (B)

Earnings per
Share =
(A)/(B)

Income
Allocation
(A)⁽²⁾

Weighted-
Average
Shares
Outstanding (B)

Earnings per
Share =
(A)/(B)
Class A common stock $ 2,379
1,735
$ 1.37
$ 3,101
2,265
⁽³⁾
$ 1.37
Class B common stock 549
245
$ 2.23
548
245
$ 2.23
Class C common stock 63
12
$ 5.48
63
12
$ 5.48
Participating securities⁽⁴⁾
110
Not presented
Not presented
110
Not presented
Not presented
Net income $ 3,101

2421

Table of Contents

VISA INC.

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

The following table⁽¹⁾ ~~presents earnings per share for the nine months ended June 30, 2019:~~

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

Income
Allocation
(A)⁽²⁾

Weighted-
Average
Shares
Outstanding (B)

Earnings per
Share =
(A)/(B)

Income
Allocation
(A)⁽²⁾

Weighted-
Average
Shares
Outstanding (B)

Earnings per
Share =
(A)/(B)
Class A common stock $ 6,956
1,748
$ 3.98
$ 9,055
2,278
⁽³⁾
$ 3.97
Class B common stock 1,592
245
$ 6.49
1,590
245
$ 6.48
Class C common stock 186
12
$ 15.92
185
12
$ 15.90
Participating securities⁽⁴⁾
321
Not presented
Not presented
321
Not presented
Not presented
Net income $ 9,055

~~The following table~~⁽¹⁾ presents earnings per share for the three months ended ~~June 30, 2018~~March 31, 2020::


	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)⁽¹⁾		Weighted- Average Shares Outstanding (B)	Earnings per Share = (A)/(B)⁽²⁾		Income Allocation (A)⁽¹⁾		Weighted- Average Shares Outstanding (B)		Earnings per Share = (A)/(B)⁽²⁾
Class A common stock	$	1,793	1,784	$	1.00	$	2,329	2,321	⁽³⁾	$	1.00	$	2,360	1,703	$	1.39	$	3,084	2,228	⁽³⁾	$	1.38
Class B common stock	406		245	$	1.66	406		245		$	1.65	552		245	$	2.25	$	551	245		$	2.25
Class C common stock	49		12	$	4.02	49		12		$	4.01	61		11	$	5.54	$	60	11		$	5.54
Participating securities⁽⁴⁾	81		Not presented	Not presented		81		Not presented		Not presented		111		Not presented	Not presented		$	111	Not presented		Not presented
Net income	$	2,329										$	3,084

The following table⁽¹⁾ presents earnings per share for the ~~nine~~six months ended ~~June 30, 2018~~:March 31, 2020:

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

Income
Allocation
(A)⁽²⁾

Weighted-
Average
Shares
Outstanding (B)

Earnings per
Share =
(A)/(B)

Income
Allocation
(A)⁽²⁾

Weighted-
Average
Shares
Outstanding (B)

Earnings per
Share =
(A)/(B)
Class A common stock $ 5,746
1,798
$ 3.20
$ 7,456
2,337
⁽³⁾
$ 3.19
Class B common stock 1,293
245
$ 5.27
1,291
245
$ 5.26
Class C common stock 159
12
$ 12.78
158
12
$ 12.76
Participating securities⁽⁴⁾
258
Not presented
Not presented
259
Not presented
Not presented
Net income $ 7,456



	Basic Earnings Per Share					Diluted Earnings Per Share
	(in millions, except per share data)
	Income Allocation (A)⁽¹⁾		Weighted- Average Shares Outstanding (B)	Earnings per Share = (A)/(B)⁽²⁾		Income Allocation (A)⁽¹⁾		Weighted- Average Shares Outstanding (B)		Earnings per Share = (A)/(B)⁽²⁾
Class A common stock	$	4,866	1,708	$	2.85	$	6,356	2,234	⁽³⁾	$	2.85
Class B common stock	1,135		245	$	4.62	$	1,134	245		$	4.62
Class C common stock	126		11	$	11.40	$	125	11		$	11.38
Participating securities⁽⁴⁾	229		Not presented	Not presented		$	229	Not presented		Not presented
Net income	$	6,356

The following table presents earnings per share for the three months ended March 31, 2019:



	Basic Earnings Per Share					Diluted Earnings Per Share
	(in millions, except per share data)
	Income Allocation (A)⁽¹⁾		Weighted- Average Shares Outstanding (B)	Earnings per Share = (A)/(B)⁽²⁾		Income Allocation (A)⁽¹⁾		Weighted- Average Shares Outstanding (B)		Earnings per Share = (A)/(B)⁽²⁾
Class A common stock	$	2,287	1,748	$	1.31	$	2,977	2,279	⁽³⁾	$	1.31
Class B common stock	523		245	$	2.13	$	523	245		$	2.13
Class C common stock	61		12	$	5.23	$	61	12		$	5.23
Participating securities⁽⁴⁾	106		Not presented	Not presented		$	106	Not presented		Not presented
Net income	$	2,977

The following table presents earnings per share for the six months ended March 31, 2019:



	Basic Earnings Per Share					Diluted Earnings Per Share
	(in millions, except per share data)
	Income Allocation (A)⁽¹⁾		Weighted- Average Shares Outstanding (B)	Earnings per Share = (A)/(B)⁽²⁾		Income Allocation (A)⁽¹⁾		Weighted- Average Shares Outstanding (B)		Earnings per Share = (A)/(B)⁽²⁾
Class A common stock	$	4,577	1,754	$	2.61	$	5,954	2,285	⁽³⁾	$	2.61
Class B common stock	1,044		245	$	4.25	$	1,043	245		$	4.25
Class C common stock	122		12	$	10.44	$	122	12		$	10.42
Participating securities⁽⁴⁾	211		Not presented	Not presented		$	211	Not presented		Not presented
Net income	$	5,954

Table of Contents

VISA INC.

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


⁽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 398 million for the three and six months ended March 31, 2020 and 400 million for the three and ~~nine~~six months ended ~~June 30, 2019, and 405 million for the three and nine months ended June 30, 2018.~~March 31, 2019. The weighted-average number of shares of as-converted class C common stock used in the income allocation was 4644 million for the three and six months ended March 31, 2020 and 47 million for the three and ~~nine~~six months ended ~~June 30, 2019, respectively, and 49 million and 50 million for the three and nine months ended June 30, 2018, respectively.~~March 31, 2019. 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, 2020 and 2019, and ~~2018. 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, 2019~~March 31, 2020 and ~~2018.~~2019.


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

⁽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 of 3 million for the three and ~~nine~~six months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ because their effect would have been dilutive. The computation excludes ~~less than~~common stock equivalents of 1 million ~~of common stock equivalents~~and 2 million for the three and ~~nine~~six months ended ~~June 30,~~March 31, 2020, respectively, and 1 million for the three and six months ended March 31, 2019, ~~and 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 and restricted stock ~~awards, restricted stock units and earned performance-based shares.~~units. Participating securities’ income is allocated based on the weighted-average number of shares of as-converted stock.

~~Table of Contents~~

~~VISA INC.~~

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

Note ~~11—~~12—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, 2019~~:March 31, 2020:


	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	1,109,645	$	25.89	$	134.76	1,247,982	$	29.37	$	182.50
Restricted stock units (“RSUs”)	2,706,680	$	136.21
Restricted stock units						2,264,886	$	183.27
Performance-based shares⁽¹⁾	540,538	$	153.42			470,128	$	211.08


⁽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 ~~$106~~$93 million and ~~$307~~$106 million for the three ~~and nine~~ months ended ~~June 30,~~March 31, 2020 and 2019, respectively, and ~~$85 million and $231~~$204 million and $201 million for the ~~three and nine~~six months ended ~~June 30, 2018,~~March 31, 2020 and 2019, respectively, net of estimated forfeitures, which are adjusted as appropriate.

Note ~~12—~~13—Income Taxes

The effective income tax rates were ~~20% and~~ 19% for the three and ~~nine~~six months ended ~~June 30, 2019, respectively,~~March 31, 2020 and 17% and 20% for the three and nine months ended June 30, 2018, respectively. The effective tax rates for the three and nine months ended June 30, 2019 differ from the effective tax rates in the same prior-year periods primarily due to the effects of U.S. tax reform legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”), enacted on December 22, 2017, as discussed below:

The Tax Act reduced the statutory federal corporate income tax rate from 35% to 21% effective January 1, 2018. In fiscal 2018, the Company’s statutory federal corporate rate was a blended rate of 24.5%. Federal tax expense for the nine months ended June 30, 2019 was determined at a 21% tax rate compared to the 24.5% tax rate in the prior-year period;

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

~~The absence of the following items recorded during the nine months ended June 30, 2018:~~


▪	~~$80 million and $81 million benefits due to non-recurring audit settlements during the three months ended March 31, 2018 and June 30, 2018, respectively;~~


▪	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 and the tax effects of various other tax provisions enacted by the Tax Act. As permitted by ASU 2018-05, the Company completed the determination of the accounting impacts of the transition tax and the tax effects of these various tax provisions in the three months ended December 31, 2018. The adjustments to the provisional amounts were not material. In addition, the Company adopted the accounting policy of accounting for taxes on GILTI in the period that it is subject to such tax.

~~Table of Contents~~

~~VISA INC.~~

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

2019.

During the three and ~~nine~~six months ended ~~June 30, 2019,~~March 31, 2020, the Company’s gross unrecognized tax benefits increased by ~~$241~~$112 million and ~~$387~~$175 million, respectively. The ~~Company's~~Company’s net unrecognized tax benefits that, if recognized, would favorably impact the effective tax rate, increased by ~~$51~~$26 million and ~~$134~~$39 million, respectively. The change in unrecognized tax benefits is primarily related to various tax positions across several jurisdictions. During the three and ~~nine~~six months ended ~~June 30,~~March 31, 2020 and 2019, the Company’s accrued interest related to uncertain tax positions increased by $19 million and $51 million, respectively, and there were no significant changes in penalties. During the three and nine months ended June 30, 2018, 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.

The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted in the U.S. on March 27, 2020. The CARES Act includes several U.S. income tax provisions related to, among other things, net operating loss carrybacks, alternative minimum tax credits, modifications to the net interest deduction limitations, and technical amendments regarding the income tax depreciation of qualified improvement property placed in service after December 31, 2017. The CARES Act is not expected to have a material impact on the Company’s financial results.

Table of Contents

VISA INC.

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

Note ~~13—~~14—Legal Matters

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

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

The following table summarizes the activity related to accrued litigation:


	Nine Months Ended June 30,						Six Months Ended March 31,
	2019			2018			2020			2019
	(in millions)						(in millions)
Balance at beginning of period	$	1,434		$	982		$	1,203		$	1,434
Provision for uncovered legal matters	37			0			7			35
Provision for covered legal matters	165			601			7			159
Reestablishment of prior accrual related to interchange multidistrict litigation							467			0
Payments for legal matters	(780		)	(155		)	(416		)	(714		)
Balance at end of period	$	856		$	1,428		$	1,268		$	914

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 4—5—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 accrual activity related to U.S. covered litigation:



	Six Months Ended March 31,
	2020			2019
	(in millions)
Balance at beginning of period	$	1,198		$	1,428
Reestablishment of prior accrual related to interchange multidistrict litigation	467			0
Payments for U.S. covered litigation	(414		)	(600		)
Balance at end of period	$	1,251		$	828

2724

Table of Contents

VISA INC.

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

In fiscal 2019, the Company paid $600 million from its litigation escrow account into a settlement fund established pursuant to the Amended Settlement Agreement with the Damages Class plaintiffs in the Interchange Multidistrict Litigation. Under the Amended Settlement Agreement, if class members opt out of the Damages Class, the defendants are entitled to receive takedown payments of up to $700 million (up to $467 million for Visa), based on the percentage of payment card sales volume attributable to merchants who have chosen to opt out. On December 13, 2019, the district court entered a final judgment order approving the Amended Settlement Agreement with the Damages Class plaintiffs. A takedown payment of approximately $467 million was received on December 27, 2019, and deposited into the Company’s litigation escrow account. The ~~following table summarizes~~deposit into the ~~activity related~~litigation escrow account and reestablishment of a prior accrual to address opt-out claims was recorded during the six months ended March 31, 2020. See further discussion below under U.S. ~~covered litigation:~~

Nine Months Ended
June 30,
2019 2018
(in millions)
Balance at beginning of period $ 1,428
$ 978
Provision for interchange multidistrict litigation 0
600
Payments for U.S. covered litigation (600 ) (150 )
Balance at end of period $ 828
$ 1,428

Covered Litigation
.

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 4—5—U.S. and Europe Retrospective Responsibility Plans.

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


	Nine Months Ended June 30,						Six Months Ended March 31,
	2019			2018			2020			2019
	(in millions)						(in millions)
Balance at beginning of period	$	0		$	1		$	5		$	0
Accrual for VE territory covered litigation	165			1
Provision for VE territory covered litigation							7			159
Payments for VE territory covered litigation	(156		)	(2		)	(1		)	(98		)
Balance at end of period	$	9		$	0		$	11		$	61

U.S. Covered Litigation

Interchange Multidistrict Litigation (MDL) – Putative Class Actions

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 on January 24,~~November 20, 2019, the district court granted preliminary approval. On June 7, 2019, the Damages Class plaintiffs moved for final approval of the Amended Settlement Agreement. Certain merchants in the proposed settlement class have objected to the settlement and/or submitted requests to opt out of the settlement class. Although the deadline to opt out of the settlement class was July 23, 2019, the class administrator has until August 7, 2019 to send the final report indicating the number of merchants that chose to opt out of the settlement class. The district court is scheduled to hold a final settlement approval hearing on November 7, 2019.

~~Settlement discussions with plaintiffs purporting to act on behalf of the putative Injunctive Relief Class are ongoing. On January 16, 2019,~~denied the bank ~~defendants moved~~defendants’ motion to dismiss the claims brought against them by the putative Injunctive Relief Class.

On December 13, 2019, the district court granted final approval of the 2018 Amended Settlement Agreement relating to claims by the Damages Class, onwhich was subsequently appealed.

Interchange Multidistrict Litigation (MDL) - Individual Merchant Actions

Visa has reached settlements with a number of merchants representing approximately 30% of the ~~grounds that plaintiffs lack standing and fail to state a claim against~~Visa-branded payment card sales volume of merchants who opted out of the ~~bank defendants.~~Amended Settlement Agreement with the Damages Class plaintiffs.

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Table of Contents

VISA INC.

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

VE Territory Covered Litigation

UKEurope Merchant Litigation

Since July 2013, in excess of 500 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 other Visa ~~International~~subsidiaries in the UK, ~~(and recently in Germany)~~Germany, Belgium and Poland primarily relating to interchange rates in Europe and in some cases relating to fees charged by Visa and certain Visa rules. As of the filing date, Visa Europe, Visa Inc. and other Visa ~~International~~subsidiaries have settled the claims asserted by over 100 Merchants, leaving more than ~~350~~400 Merchants with outstanding claims. In addition, over 30 additional Merchants have threatened to commence similar proceedings. Standstill agreements have been entered into with respect to some of those threatened Merchant claims, several of which have been settled.

~~On November 29, 2018, Visa was granted permission~~Other Litigation

Canadian Merchant Litigation

Between August 2019 and January 2020, the Courts of Appeal in British Columbia, Quebec, Ontario and Saskatchewan rejected the appeals filed by Wal-Mart Canada and Home Depot of Canada Inc. In January 2020, Wal-Mart Canada and Home Depot of Canada Inc. filed applications to appeal ~~aspects~~the decisions of the ~~Court of Appeal’s judgment~~British Columbia, Quebec and Ontario courts to the Supreme Court of ~~the United Kingdom, including the question of whether Visa’s UK interchange restricted competition. The Supreme Court is scheduled to hold a hearing~~Canada and those applications were denied on ~~the appeal in January~~March 26, 2020.

~~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 binding on Visa and 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 commitments would last for a period of five years following implementation. No fine will be imposed against Visa, and the 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.

On April 29, 2019, the EC adopted a decision making Visa’s commitments to limit interregional interchange rates in Europe binding from October 19, 2019. The commitments will remain in effect until November 1, 2024.

~~Canadian Merchant Litigation~~

Wal-Mart Canada ~~and/or~~and Home Depot of Canada Inc. ~~have~~also filed ~~notices of appeal~~an application seeking the Supreme Court’s review of the ~~British Columbia, Ontario,~~ Saskatchewan ~~Quebec~~court's decision. The application and ~~Alberta decisions approving~~an appeal to the ~~settlements. On June 13 and 14, 2019, the~~Alberta Court of ~~Appeals in British Columbia held a hearing to consider objections to the settlement approval decision and reserved decision.~~

~~EMV Chip Liability Shift~~

Plaintiffs filed a renewed motion for class certification on July 16, 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 currentlyAppeal remain pending.

~~Kroger~~

The litigation was stayed until February 2, 2019. Visa and Kroger reached an agreement in principle to resolve this lawsuit, and subsequently entered into a settlement agreement. The case was dismissed on July 24, 2019.

~~Table of Contents~~

~~VISA INC.~~

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

Nuts for Candy

On ~~October 18, 2018,~~December 31, 2019, plaintiff filed a motion to dismiss and for attorneys’ fees and costs based on the ~~court stayed~~settlement reached between the ~~Nuts for Candy case pending~~parties and the ~~district court’s decision on preliminary~~grant of final approval of the 2018 Amended Settlement Agreement as discussed above ~~under~~in Interchange Multidistrict Litigation (MDL) –- Putative Class Actions,.

On February 25, 2020, the court granted plaintiff’s motion to dismiss and ~~pending final approval of that agreement if preliminary approval is granted. Preliminary approval was granted on January 24,~~for attorneys’ fees and costs. The case has been dismissed with prejudice.

Euronet Litigation

On December 13, 2019, ~~which extended the stay~~Euronet 360 Finance Limited, Euronet Polska Spolka z.o.o. and Euronet Services spol. s.r.o. (“Euronet”) served a claim in the ~~Nuts for Candy case pending final approval~~UK alleging that certain rules affecting ATM access fees in Poland, the Czech Republic and Greece by Visa Inc. and Mastercard Incorporated, and certain of their subsidiaries, breach various competition laws. Euronet seeks damages, costs, and injunctive relief to prevent the ~~Amended Settlement Agreement.~~

~~Ohio Attorney General Civil Investigative Demand~~

~~On January 8, 2019,~~defendants from enforcing the ~~State of Ohio Office of the Attorney General informed Visa that the investigation has been terminated.~~

~~Australian Competition & Consumer Commission~~

On July 12, 2019, the Australian Competition & Consumer Commission (ACCC) informed Visa that the ACCC has commenced an investigation into certain agreements and interchange fees relating to Visa Debit. Visa is cooperating with the ACCC.

aforementioned rules.



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, the impact on our future financial position, results of operations and cash flows as a result of the coronavirus (“COVID-19”); our future operations, prospects, developments, strategies and growth of our business; anticipated expansion of our products in certain countries; industry developments; anticipated benefits of our acquisitions; 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 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, ~~2018~~2019 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.

Financial overview.~~Our~~financial results for the three and nine months ended June 30, 2018 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 nine months ended June 30, 2019. Our as-reported U.S. GAAP and ~~adjusted~~ non-GAAP net income and diluted earnings per share ~~for these periods were~~are as follows:

Three Months Ended
June 30, 2019
vs.
2018 Nine Months Ended
June 30, 2019
vs.
2018
(in millions, except percentages and per share data) 2019 2018
%
Change⁽¹⁾
2019 2018
%
Change⁽¹⁾
Net income, as reported $ 3,101
$ 2,329
33 % $ 9,055
$ 7,456
21 %
Diluted earnings per share, as reported $ 1.37
$ 1.00
36 % $ 3.97
$ 3.19
25 %
Net income, as adjusted⁽²⁾
$ 3,101
$ 2,792
11 % $ 9,055
$ 7,933
14 %
Diluted earnings per share, as adjusted⁽²⁾
$ 1.37
$ 1.20
14 % $ 3.97
$ 3.39
17 %



	Three Months Ended March 31,				2020 vs. 2019		Six Months Ended March 31,				2020 vs. 2019
	2020		2019		% Change⁽¹⁾		2020		2019		% Change⁽¹⁾
	(in millions, except percentages and per share data)
Net income, as reported	$	3,084	$	2,977	4	%	$	6,356	$	5,954	7	%
Diluted earnings per share, as reported	$	1.38	$	1.31	6	%	$	2.85	$	2.61	9	%
Non-GAAP net income⁽²⁾	$	3,098	$	2,912	6	%	$	6,370	$	5,892	8	%
Non-GAAP diluted earnings per share⁽²⁾	$	1.39	$	1.28	9	%	$	2.85	$	2.58	11	%


⁽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~~non-GAAP financial results, see tables in~~Adjusted~~ Non-GAAP financial results below.

Coronavirus. While we have been actively monitoring the worldwide spread of COVID-19, the extent to which COVID-19 will ultimately impact our business is difficult to predict. Our priority has been the safety of our employees, including comprehensive plans to support employee wellness, as well as support for our clients and the communities affected. Although most of our staff are now working remotely, our network infrastructure and application performance continue to perform well and our business operations have comprehensive and coordinated plans in place to address business continuity and recovery needs around the world. We are also in very close and regular contact with clients, partners and governments globally to help them navigate these challenging times.

In the month of March 2020, domestic spending, most notably in travel, restaurants, entertainment and fuel decreased as countries imposed social distancing, shelter-in-place or total lock-down orders. Declines in cross-border volume as well as processed transactions negatively impacted international transaction and data processing revenues for the three months ended March 31, 2020. Service revenues for the three months ended March 31, 2020 were not significantly impacted, as they were recognized on the payments volume for the three months ended December 31, 2019.

While we have not incurred operational disruptions thus far from the COVID-19 outbreak, the impact that COVID-19 will have on our business is difficult to predict due to numerous uncertainties, including the severity and duration of the outbreak, actions that may be taken by governmental authorities, the impact to the business of our clients and other factors identified in Part II, Item 1A “Risk Factors” in this Form 10-Q. We will continue to evaluate the nature and extent of the impact to our business.

Highlights for the first ~~nine months~~half of fiscal ~~2019~~2020.. Our business is affected by overall economic conditions and consumer spending. Our business performance during the nine months ended June 30, 2019 reflects continued global consumer spending growth amidst uneven global economic conditions. We recorded net revenues of ~~$5.8~~$5.9 billion and ~~$16.8~~$11.9 billion for the three and ~~nine~~six months ended ~~June 30, 2019,~~March 31, 2020, respectively, an increase of ~~11%~~7% and ~~11%~~8%, respectively, over the prior-year comparable periods, ~~reflecting continued growth~~driven by the year-over-year changes in nominal payments volume, nominal cross-border volume and processed ~~transactions.~~transactions, which were not significantly impacted by COVID-19 until the latter part of March 2020. Exchange rate movements in the three and ~~nine~~six months ended ~~June 30, 2019,~~March 31, 2020, as partially mitigated by our hedging program, negatively impacted our net revenues growth by approximately ~~two~~one percentage ~~points and one and a half percentage points, respectively.~~point.

Total operating expenses were $1.9 billion and ~~$5.6~~$4.0 billion for the three and ~~nine~~six months ended ~~June 30, 2019,~~March 31, 2020, respectively, an increase of 4% and 9% on a ~~decrease~~GAAP and an increase of ~~18%~~3% and 1%8% on a non-GAAP basis, respectively, over the prior-year comparable period. 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, increased 10% and 11%, respectively, over prior-year comparable periods. The increase ~~in both periods~~ was primarily due to higher personnel, ~~marketing~~depreciation and amortization, general and administrative, and networking related expenses, as we continue to invest in our business growth.

~~Adjusted~~Non-GAAP financial results. ~~Our~~We use non-GAAP financial ~~results for the three and nine months ended June 30, 2018 reflected the impact~~measures of our performance which exclude certain ~~significant~~ items ~~that~~which we believe ~~were~~are not ~~indicative~~representative of our continuing operations and may distort our longer-term operating trends. We consider non-GAAP measures useful to investors because they provide greater transparency into management’s view and assessment of our ongoing operating ~~performance~~performance. Starting in ~~these or future periods, as they were either non-recurring or had no cash impact. As such,~~fiscal 2020, we ~~believe~~revised our non-GAAP methodology to exclude the ~~presentation~~impact of ~~adjusted financial results excluding the following items provides a clearer understanding~~gains and losses on our equity investments, amortization of acquired intangible assets and acquisition-related costs for acquisitions that closed in fiscal 2019 and subsequent periods. Prior year amounts have been restated to conform to our ~~operating performance for the periods presented. There were no comparable adjustments recorded for the three and nine months ended June 30, 2019.~~current presentation.

•

~~Litigation provision.~~Gains and losses on equity investments. Gains and losses on equity investments include periodic non-cash fair value adjustments and gains and losses upon sale of an investment.These long-term investments are strategic in nature and are primarily private company investments. Gains and losses and the related tax impacts associated with these investments are tied to the performance of thecompanies that we invest inand therefore do not correlate to the underlying performance of our business. During the three ~~and nine~~ months ended ~~June 30, 2018,~~March 31, 2020, we recorded ~~a litigation provision~~net realized and unrealized losses of ~~$600~~$2 million. During the six months ended March 31, 2020, we recorded net realized and unrealized gains of $11 million and related tax ~~benefits~~expense of ~~$137~~$3 million. For the same prior-year comparable periods, we recorded net realized and unrealized gains of $84 million ~~associated with the interchange multidistrict litigation. The~~and $80 million, respectively, and related tax ~~impact is determined by applying applicable federal~~expense of $19 million 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 ~~Note 4—U.S. and Europe Retrospective Responsibility Plans~~ ~~and~~ ~~Note 13—Legal Matters~~ ~~to our unaudited consolidated financial statements.~~

•

~~Remeasurement of deferred tax balances.~~ During the nine months ended June 30, 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 of $1.1 billion. See ~~Note 12—Income Taxes~~ ~~to our unaudited consolidated financial statements.~~$18 million, respectively.

•

~~Transition tax on foreign earnings.~~Amortization of acquired intangible assets. ~~During the nine months ended June 30, 2018,~~Amortization of acquired intangible assets consists of amortization of intangible assets such as developed technology, customer relationships and brands acquired in connection with business combinations executed beginning in fiscal 2019. Amortization charges for our acquired intangible assets are non-cash and are significantly affected by the ~~Tax Act’s requirement that~~timing, frequency and size of our acquisitions, rather than our core operations. As such, we ~~include certain untaxed foreign earnings~~have excluded this amount and the related tax impact to facilitate an evaluation of ~~non-U.S. subsidiaries in~~ our ~~fiscal 2018 taxable income,~~current operating performance and comparison to our past operating performance. During the three and six months ended March 31, 2020, we recorded aamortization of acquired intangible assets of $11 million and $22 million, respectively, and related tax benefit of $2 million and $5 million, respectively. There were no comparable amounts during the three and six months ended March 31, 2019 since we are only adjusting for transactions that closed in fiscal 2019 and subsequent periods.

•

Acquisition-related costs. Acquisition-related costs consist primarily of one-time ~~transition tax estimated~~transaction and integration costs associated with our business combinations. These costs include professional fees, technology integration fees, restructuring activities and other direct costs related to the purchase and integration of acquired entities. It also includes retention equity and deferred equity compensation when they are agreed upon as part of the purchase price of the transaction but are required to be ~~approximately $1.1 billion. See~~ ~~Note 12—Income Taxes~~ torecognized as expense post-combination. We have excluded these amounts and the related tax impacts as the expenses are recognized for a limited duration and do not reflect the underlying performance of our ~~unaudited consolidated financial statements.~~business. During the three and six months ended March 31, 2020, we recorded acquisition-related costs of $5 million and $7 million, respectively, and related tax benefit of $2 million during both the three and six months ended March 31, 2020. There were no comparable amounts during the three and six months ended March 31, 2019 since we are only adjusting for transactions that closed in fiscal 2019 and subsequent periods.

~~Adjusted financial results are non-GAAP financial measures~~Non-GAAP operating expense, non-operating income (expense), income tax provision, effective income tax rate, net income and diluted earnings per share should not be relied upon as substitutes for, or considered in isolation from, measures calculated in accordance with U.S. GAAP. The following ~~table reconciles~~tables reconcile 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, 2018~~. ~~There were no comparable adjustments recorded for the three~~March 31, 2020 and ~~nine months ended June 30,~~ 2019.

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



	Three Months Ended March 31, 2020
	Operating Expenses			Non-operating Income (Expense)			Income Tax Provision		Effective Income Tax Rate⁽¹⁾		Net Income		Diluted Earnings Per Share⁽¹⁾
	(in millions, except percentages and per share data)
As reported	$	1,930		$	(95	)	$	745	19.4	%	$	3,084	$	1.38
(Gains) Losses on equity investments, net	—			2			—				2		—
Amortization of acquired intangible assets	(11		)	—			2				9		—
Acquisition-related costs	(5		)	—			2				3		—
Non-GAAP	$	1,914		$	(93	)	$	749	19.5	%	$	3,098	$	1.39

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



	Six Months Ended March 31, 2020
	Operating Expenses			Non-operating Income (Expense)			Income Tax Provision			Effective Income Tax Rate⁽¹⁾		Net Income			Diluted Earnings Per Share⁽¹⁾
	(in millions, except percentages and per share data)
As reported	$	3,968		$	(137	)	$	1,447		18.5	%	$	6,356		$	2.85
(Gains) Losses on equity investments, net	—			(11		)	(3		)			(8		)	—
Amortization of acquired intangible assets	(22		)	—			5					17			0.01
Acquisition-related costs	(7		)	—			2					5			—
Non-GAAP	$	3,939		$	(148	)	$	1,451		18.6	%	$	6,370		$	2.85



	Three Months Ended March 31, 2019
	Operating Expenses		Non-operating Income (Expense)			Income Tax Provision			Effective Income Tax Rate⁽¹⁾		Net Income			Diluted Earnings Per Share⁽¹⁾
	(in millions, except percentages and per share data)
As reported	$	1,853	$	36		$	700		19.0	%	$	2,977		$	1.31
(Gains) Losses on equity investments, net	—		(84		)	(19		)			(65		)	(0.03		)
Non-GAAP	$	1,853	$	(48	)	$	681		18.9	%	$	2,912		$	1.28



	Six Months Ended March 31, 2019
	Operating Expenses		Non-operating Income (Expense)			Income Tax Provision			Effective Income Tax Rate⁽¹⁾		Net Income			Diluted Earnings Per Share⁽¹⁾
	(in millions, except percentages and per share data)
As reported	$	3,642	$	(51	)	$	1,353		18.5	%	$	5,954		$	2.61
(Gains) Losses on equity investments, net	—		(80		)	(18		)			(62		)	(0.03		)
Non-GAAP	$	3,642	$	(131	)	$	1,335		18.5	%	$	5,892		$	2.58


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


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

Common stock repurchases. In January 2019, our board of directors authorized an $8.5 billion share repurchase program and in January 2020, authorized an additional $9.5 billion share repurchase program. During the three months ended ~~June 30, 2019,~~March 31, 2020, we repurchased 1318 million shares of our class A common stock in the open market ~~using $2.1 billion~~for $3.1 billion. As of ~~cash on hand. In~~March 31, 2020, our January ~~2019, our board of directors authorized an additional $8.5 billion~~2020 share repurchase ~~program. As of June 30, 2019, we~~program had remaining authorized funds of ~~$6.2~~$8.1 billion for share repurchase. All share repurchase programs authorized prior to January 2020 have been completed. See Note 9—10—Stockholders’ Equity to our unaudited consolidated financial statements.

Acquisition. On January 13, 2020, we entered into a definitive agreement to acquire Plaid, Inc. for $5.3 billion. We will pay approximately $4.9 billion of cash and $0.4 billion of retention equity and deferred equity consideration.This acquisition is subject to customary closing conditions, including ongoing regulatory reviews and approvals, which are expected to be completed by the end of 2020.

Senior notes. In April 2020, we issued fixed-rate senior notes in an aggregate principal amount of $4.0 billion, with maturities ranging between 7 and 20 years. See Note 8—Debt 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 high single-digit growth for the three ~~months~~ and ~~low double-digit growth for the nine~~six months ended ~~March~~December 31, 2019⁽¹⁾, driven mainly by consumer debit and commercial. Nominal international payments volume growth was negatively impacted by movements in ~~the~~ U.S. 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, 2019 was 8% and ~~10%~~9%, respectively. Growth in processed transactions reflects the ongoing worldwide shift to electronic ~~payments.~~payments, even with the decrease in processed transactions the latter part of March 2020 as COVID-19 spread throughout the world.

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


	United States						International						Visa Inc.						United States						International						Visa Inc.
	Three Months Ended March 31,⁽¹⁾						Three Months Ended March 31,⁽¹⁾						Three Months Ended March 31,⁽¹⁾						Three Months Ended December 31,⁽¹⁾						Three Months Ended December 31,⁽¹⁾						Three Months Ended December 31,⁽¹⁾
	2019		2018		% Change		2019		2018		% Change		2019		2018		% Change		2019		2018		% Change⁽²⁾		2019		2018		% Change⁽²⁾		2019		2018		% Change⁽²⁾
	(in billions, except percentages)																		(in billions, except percentages)
Nominal payments volume
Consumer credit	$	357	$	341	5	%	$	608	$	614	(1	)%	$	965	$	955	1	%	$	424	$	399	6	%	$	662	$	637	4	%	$	1,086	$	1,036	5	%
Consumer debit⁽³⁾	420		383		10	%	455		452		1	%	875		835		5	%	461		422		9	%	536		479		12	%	997		902		11	%
Commercial⁽⁴⁾	153		138		11	%	92		90		2	%	245		228		7	%	171		158		8	%	107		99		8	%	278		257		8	%
Total nominal payments volume	$	930	$	862	8	%	$	1,155	$	1,156	—	%	$	2,085	$	2,018	3	%
Total nominal payments volume⁽²⁾																			$	1,057	$	980	8	%	$	1,304	$	1,215	7	%	$	2,361	$	2,194	8	%
Cash volume	141		139		1	%	540		598		(10	)%	680		737		(8	)%	145		142		2	%	575		587		(2	)%	719		729		(1	)%
Total nominal volume⁽⁵⁾	$	1,071	$	1,001	7	%	$	1,694	$	1,753	(3	)%	$	2,765	$	2,755	—	%
Total nominal volume^(2),(5)																			$	1,201	$	1,121	7	%	$	1,879	$	1,802	4	%	$	3,080	$	2,923	5	%

	United States						International						Visa Inc.						United States						International						Visa Inc.
	Nine Months Ended March 31,⁽¹⁾						Nine Months Ended March 31,⁽¹⁾						Nine Months Ended March 31,⁽¹⁾						Six Months Ended December 31,⁽¹⁾						Six Months Ended December 31,⁽¹⁾						Six Months Ended December 31,⁽¹⁾
	2019		2018		% Change		2019		2018		% Change		2019		2018		% Change		2019		2018		% Change⁽²⁾		2019		2018		% Change⁽²⁾		2019		2018		% Change⁽²⁾
	(in billions, except percentages)																		(in billions, except percentages)
Nominal payments volume
Consumer credit	$	1,139	$	1,063	7	%	$	1,860	$	1,826	2	%	$	2,998	$	2,889	4	%	$	829	$	781	6	%	$	1,308	$	1,251	5	%	$	2,137	$	2,032	5	%
Consumer debit⁽³⁾	1,250		1,114		12	%	1,393		1,331		5	%	2,643		2,445		8	%	908		830		9	%	1,036		938		10	%	1,944		1,768		10	%
Commercial⁽⁴⁾	466		411		13	%	283		269		6	%	749		680		10	%	342		313		9	%	208		191		9	%	549		505		9	%
Total nominal payments volume	$	2,855	$	2,588	10	%	$	3,536	$	3,425	3	%	$	6,391	$	6,013	6	%
Total nominal payments volume⁽²⁾																			$	2,079	$	1,925	8	%	$	2,552	$	2,380	7	%	$	4,631	$	4,305	8	%
Cash volume	427		418		2	%	1,705		1,839		(7	)%	2,132		2,258		(6	)%	292		286		2	%	1,140		1,166		(2	)%	1,432		1,452		(1	)%
Total nominal volume⁽⁵⁾	$	3,281	$	3,007	9	%	$	5,241	$	5,264	—	%	$	8,522	$	8,271	3	%
Total nominal volume^(2),(5)																			$	2,371	$	2,211	7	%	$	3,692	$	3,546	4	%	$	6,063	$	5,757	5	%

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


	International				Visa Inc.				International				Visa Inc.				International				Visa Inc.				International				Visa Inc.
	Three Months Ended March 31, 2019 vs. 2018⁽¹⁾				Three Months Ended March 31, 2019 vs. 2018⁽¹⁾				Nine Months Ended March 31, 2019 vs. 2018⁽¹⁾				Nine Months Ended March 31, 2019 vs. 2018⁽¹⁾				Three Months Ended December 31, 2019 vs. 2018^(1),(2)				Three Months Ended December 31, 2019 vs. 2018^(1),(2)				Six Months Ended December 31, 2019 vs. 2018^(1),(2)				Six Months Ended December 31, 2019 vs. 2018^(1),(2)
	Nominal		Constant⁽⁶⁾		Nominal		Constant⁽⁶⁾		Nominal		Constant⁽⁶⁾		Nominal		Constant⁽⁶⁾		Nominal		Constant⁽⁶⁾		Nominal		Constant⁽⁶⁾		Nominal		Constant⁽⁶⁾		Nominal		Constant⁽⁶⁾
Payments volume growth
Consumer credit growth	(1	)%	7	%	1	%	6	%	2	%	8	%	4	%	8	%	4	%	5	%	5	%	6	%	5	%	6	%	5	%	6	%
Consumer debit growth⁽³⁾	1	%	10	%	5	%	10	%	5	%	11	%	8	%	12	%	12	%	12	%	11	%	11	%	10	%	13	%	10	%	11	%
Commercial growth⁽⁴⁾	2	%	11	%	7	%	11	%	6	%	14	%	10	%	13	%	8	%	10	%	8	%	9	%	9	%	11	%	9	%	10	%
Total payments volume growth(2)	—	%	8	%	3	%	8	%	3	%	10	%	6	%	10	%	7	%	8	%	8	%	8	%	7	%	9	%	8	%	9	%
Cash volume growth	(10	)%	(1	)%	(8	)%	(1	)%	(7	)%	1	%	(6	)%	1	%	(2	)%	(1	)%	(1	)%	(1	)%	(2	)%	(1	)%	(1	)%	—	%
Total volume growth(2)	(3	)%	5	%	—	%	6	%	—	%	7	%	3	%	8	%	4	%	5	%	5	%	6	%	4	%	6	%	5	%	6	%

⁽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, 2020 and 2019 ~~and 2018~~ were based on nominal payments volume reported by our financial institution clients for the three and ~~nine~~six months ended ~~March~~December 31, 2019 and 2018, respectively.


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


⁽³⁾	Includes consumer prepaid volume and Interlink volume.


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

⁽⁵⁾

Total nominal volume is the sum of total nominal payments volume and cash volume. Total nominal payments volume is the total monetary value of transactions for goods and services that are purchased on cards 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.


⁽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:


	Three Months Ended June 30,				Nine Months Ended June 30,				Three Months Ended March 31,				Six Months Ended March 31,
	2019	2018	% Change		2019	2018	% Change		2020	2019	% Change⁽¹⁾		2020	2019	% Change⁽¹⁾
	(in millions, except percentages)
Visa processed transactions	35,428	31,728	12	%	101,904	91,557	11	%	34,941	32,544	7	%	72,716	66,476	9	%


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

Results of Operations

Net Revenues

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


	Three Months Ended June 30,				2019 vs. 2018				Nine Months Ended June 30,				2019 vs. 2018				Three Months Ended March 31,				2020 vs. 2019				Six Months Ended March 31,				2020 vs. 2019
	2019		2018		$ Change		% Change⁽¹⁾		2019		2018		$ Change		% Change⁽¹⁾		2020		2019		$ Change		% Change⁽¹⁾		2020		2019		$ Change		% Change⁽¹⁾
	(in millions, except percentages)																(in millions, except percentages)
U.S.	$	2,587	$	2,334	$	253	11	%	$	7,573	$	6,896	$	677	10	%	$	2,650	$	2,479	$	171	7	%	$	5,367	$	4,987	$	380	8	%
International	3,253		2,906		347		12	%	9,267		8,279		988		12	%	3,204		3,015		189		6	%	6,541		6,013		528		9	%
Net revenues	$	5,840	$	5,240	$	600	11	%	$	16,840	$	15,175	$	1,665	11	%	$	5,854	$	5,494	$	360	7	%	$	11,908	$	11,000	$	908	8	%


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

~~The increase~~Net revenues increased primarily due to the year-over-year changes in ~~net revenues reflects the continued growth in nominal~~ payments volume, ~~nominal~~ cross-border volume and processed ~~transactions.~~transactions, which were not significantly impacted by COVID-19 until the latter part of March 2020. The increase in revenues was also partially offset by the increase in client incentives.

Our net revenues 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. Exchange rate movements in the three and ~~nine~~six months ended ~~June 30, 2019,~~March 31, 2020, as partially mitigated by our hedging program, negatively impacted our net revenues growth by approximately ~~two~~ one percentage ~~points and one and a half percentage points, respectively.~~point.

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


	Three Months Ended June 30,						2019 vs. 2018					Nine Months Ended June 30,						2019 vs. 2018					Three Months Ended March 31,						2020 vs. 2019					Six Months Ended March 31,						2020 vs. 2019
	2019			2018			$ Change			% Change⁽¹⁾		2019			2018			$ Change			% Change⁽¹⁾		2020			2019			$ Change			% Change⁽¹⁾		2020			2019			$ Change			% Change⁽¹⁾
	(in millions, except percentages)																						(in millions, except percentages)
Service revenues	$	2,405		$	2,196		$	209		10	%	$	7,164		$	6,595		$	569		9	%	$	2,623		$	2,417		$	206		9	%	$	5,178		$	4,759		$	419		9	%
Data processing revenues	2,662			2,359			303			13	%	7,564			6,633			931			14	%	2,711			2,432			279			11	%	5,575			4,902			673			14	%
International transaction revenues	1,977			1,830			147			8	%	5,624			5,248			376			7	%	1,833			1,796			37			2	%	3,851			3,647			204			6	%
Other revenues	342			229			113			49	%	968			688			280			41	%	392			327			65			20	%	757			626			131			21	%
Client incentives	(1,546		)	(1,374		)	(172		)	13	%	(4,480		)	(3,989		)	(491		)	12	%	(1,705		)	(1,478		)	(227		)	15	%	(3,453		)	(2,934		)	(519		)	18	%
Net revenues	$	5,840		$	5,240		$	600		11	%	$	16,840		$	15,175		$	1,665		11	%	$	5,854		$	5,494		$	360		7	%	$	11,908		$	11,000		$	908		8	%


⁽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 ~~3% and 6%~~8% growth in nominal payments volume during the three and ~~nine-month~~six month comparable periods ~~respectively,~~ as well as select pricing modifications effective in 2019, partially offset by unfavorable business mix. Service revenues for the ~~third quarter of fiscal~~three months ended March 31, 2020 were not significantly impacted by COVID-19 as they were recognized on the payments volume for the three months ended December 31, 2019.

•

Data processing revenues increased mainly due to overall growth in processed transactions of ~~12%~~7% and ~~11%~~9% during the three and ~~nine-month~~six month comparable periods, respectively,select pricing modifications effective in 2019, as well as ~~select pricing modifications impacting revenue~~faster growth of our value-added services and acquisition-related revenue. The growth of our data processing revenues was negatively impacted in the ~~first and second quarter~~latter part of ~~fiscal 2019.~~March 2020 by the decrease in processed transactions as COVID-19 spread throughout the world.

•

International transaction revenues increased primarily due to select pricing modifications effective in 2019. International transaction revenues also reflected fluctuations in the volatility of a 2%broad range of currencies as well as a 4% decline and 1%2% growth in nominal cross-border volumes during the three and ~~nine-month~~six month comparable periods, respectively, ~~select pricing modifications effective after~~due to the ~~third~~decrease in cross-border volume through the quarter ~~of fiscal 2018 and changes in~~as COVID-19 spread throughout the ~~mix of our international transaction revenues. These increases were partially offset by lower volatility in a broad range of currencies.~~world.


•	Other revenues increased ~~during the three and nine-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~~higher revenues from ~~license fees and optional~~value-added services.

•

Client incentives increased ~~during the three and nine-month comparable periods~~ mainly due to incentives recognized on long-term customer contracts that were initiated or renewed ~~after~~in the ~~third quarter of fiscal 2018~~past 12 months 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:


	Three Months Ended June 30,				2019 vs. 2018					Nine Months Ended June 30,				2019 vs. 2018					Three Months Ended March 31,				2020 vs. 2019					Six Months Ended March 31,				2020 vs. 2019
	2019		2018		$ Change			% Change⁽¹⁾		2019		2018		$ Change			% Change⁽¹⁾		2020		2019		$ Change			% Change⁽¹⁾		2020		2019		$ Change			% Change⁽¹⁾
	(in millions, except percentages)																		(in millions, except percentages)
Personnel	$	872	$	852	$	20		2	%	$	2,573	$	2,355	$	218		9	%	$	940	$	894	$	46		5	%	$	1,922	$	1,701	$	221		13	%
Marketing	282		240		42			18	%	799		724		75			10	%	235		241		(6		)	(3	)%	509		517		(8		)	(1	)%
Network and processing	184		169		15			9	%	528		498		30			6	%	183		171		12			7	%	364		344		20			6	%
Professional fees	113		112		1			1	%	305		312		(7		)	(2	)%	103		101		2			2	%	209		192		17			9	%
Depreciation and amortization	165		152		13			9	%	484		450		34			8	%	192		160		32			20	%	374		319		55			17	%
General and administrative	315		230		85			37	%	855		688		167			24	%	269		264		5			2	%	582		540		42			8	%
Litigation provision	1		600		(599		)	(100	)%	30		600		(570		)	(95	)%	8		22		(14		)	(67	)%	8		29		(21		)	(73	)%
Total operating expenses	$	1,932	$	2,355	$	(423	)	(18	)%	$	5,574	$	5,627	$	(53	)	(1	)%	$	1,930	$	1,853	$	77		4	%	$	3,968	$	3,642	$	326		9	%


⁽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 ancontinued increase in headcount ~~reflecting~~offset by lower incentive compensation for the three-month comparable period. For the six-month comparable period, expenses increased due to continued headcount growth in support of our investment strategy ~~to invest~~ for future growth.


•	~~Marketing~~Network and processing expenses increased ~~in the three~~mainly due to continued technology and ~~nine month comparable periods~~processing network investments to support growth.

•

Depreciation and amortization expenses increased primarily due to ~~changes in the classification~~additional depreciation and timing of recognition of certain marketing expenses as a result of the adoption of the new revenue standard. The increase was partially offset in the nine month comparable period by spend for the Winter Olympics in PyeongChang in 2018, which did not recur in 2019.amortization from our on-going investments, including acquisitions.

•

General and administrativeexpenses increased ~~primarily as a result~~mainly due to reclassification of ~~unfavorable foreign currency fluctuations, changes in the classification and timing of recognition of~~ certain expenses to general and administrative, ~~expenses as a result of the adoption of the new revenue standard, higher indirect taxes, and~~ higher product ~~enhancement~~enhancements costs in support of our business ~~growth.~~growth and higher indirect taxes, offset by favorable currency fluctuations.


•	Litigation provision ~~in 2018 reflects a $600 million accrual related~~decreased primarily due to ~~the U.S. covered~~lower accruals for uncovered litigation. ~~See~~ ~~Note 4—U.S. and Europe Retrospective Responsibility Plans~~ ~~and~~ ~~Note 13—Legal Matters~~ ~~to our unaudited 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,						2019 vs. 2018				Nine Months Ended June 30,						2019 vs. 2018				Three Months Ended March 31,						2020 vs. 2019					Six Months Ended March 31,						2020 vs. 2019
	2019			2018			$ Change		% Change⁽¹⁾		2019			2018			$ Change		% Change⁽¹⁾		2020			2019			$ Change			% Change⁽¹⁾		2020			2019			$ Change			% Change⁽¹⁾
	(in millions, except percentages)																				(in millions, except percentages)
Interest expense, net	$	(128	)	$	(155	)	$	27	(17	)%	$	(413	)	$	(462	)	$	49	(10	)%	$	(118	)	$	(140	)	$	22		(16	)%	$	(229	)	$	(285	)	$	56		(20	)%
Investment income and other	86			82			4		7	%	320			182			138		77	%	23			176			(153		)	(87	)%	92			234			(142		)	(61	)%
Total non-operating income (expense)	$	(42	)	$	(73	)	$	31	(43	)%	$	(93	)	$	(280	)	$	187	(67	)%	$	(95	)	$	36		$	(131	)	(367	)%	$	(137	)	$	(51	)	$	(86	)	170	%


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


•	Interest expense, net decreased ~~in the three and nine months ended June 30, 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 months ended June 30, 2019~~decreased primarily due to ~~higher~~lower gains on our equity investments and lower interest income on our cash and ~~investments as well as gains on our equity~~ investments.

~~Effective Income Tax Rate~~

The effective income tax rates were 20% and 19% for the three and nine months ended June 30, 2019, respectively, and 17% and 20% for the three and nine months ended June 30, 2018, respectively. The effective tax rates for the three and nine months ended June 30, 2019 differ from the effective tax rates in the same prior-year periods primarily due to the effects of the Tax Act enacted on December 22, 2017, as discussed below:

The Tax Act reduced the statutory federal corporate income tax rate from 35% to 21% effective January 1, 2018. In fiscal 2018, our statutory federal corporate rate was a blended rate of 24.5%. Federal tax expense for the nine months ended June 30, 2019 was determined at a 21% tax rate compared to the 24.5% tax rate in the prior-year period;

~~The absence of the following items recorded during the nine months ended June 30, 2018:~~


▪	~~$80 million and $81 million benefits due to non-recurring audit settlements during the three months ended March 31, 2018 and June 30, 2018, respectively;~~


▪	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 and the tax effects of various other tax provisions enacted by the Tax Act. As permitted by ASU 2018-05, we completed the determination of the accounting impacts of the transition tax and the tax effects of these various tax provisions in the three months ended December 31, 2018. The adjustments to the provisional amounts were not material. In addition, we adopted the accounting policy of accounting for taxes on GILTI in the period that it is subject to such tax.

~~Adjusted effective income tax rate.~~ Our financial results for the three and nine months ended June 30, 2018 reflect the impact of certain significant items that we believe were not indicative of our operating performance during these periods, as they were either non-recurring or had no cash impact. As such, we have presented our adjusted effective income tax rates for these periods in the table below, which we believe provides a clearer understanding of our operating performance for the reported periods. There were no comparable adjustments recorded for the three and nine months ended June 30, 2019. 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 table 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 %


⁽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,
	2019			2018			2020			2019
	(in millions)						(in millions)
Total cash provided by (used in):
Operating activities	$	8,742		$	9,465		$	5,342		$	5,358
Investing activities	413			(1,305		)	2,441			(396		)
Financing activities	(9,401		)	(8,744		)	(5,887		)	(5,486		)
Effect of exchange rate changes on cash and cash equivalents	(62		)	(89		)	88			(171		)
Decrease in cash, cash equivalents, restricted cash and restricted cash equivalents	$	(308	)	$	(673	)
Increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents							$	1,984		$	(695	)

Operating activities. Cash provided by operating activities for the ~~nine~~six months ended ~~June 30, 2019~~March 31, 2020 was slightly lower than the prior-year comparable period ~~primarily~~ due to higher ~~payments from the litigation escrow account in the current year~~client incentives and ~~the first installment payment~~timing of ~~the transition tax in connection with the Tax Act, partially~~settlement. Partially offset by continued growth in our underlying ~~business.~~business and receipt of the $467 million takedown payment associated with the Interchange Multidistrict Litigation. See Note 14—Legal Matters to our unaudited consolidated financial statements.

Investing activities. Cash provided by investing activities for the ~~nine~~six months ended ~~June 30, 2019~~March 31, 2020 increased primarily ~~included~~due to higher ~~proceeds from the~~ sales ~~and maturities~~ of investment securities ~~combined with~~and fewer purchases of investment securities as compared to the prior-year period.

Financing activities. Cash used in financing activities for the ~~nine~~six months ended ~~June 30, 2019~~March 31, 2020 was slightly higher than the prior-year comparable period primarily due to ~~the payment of the deferred purchase consideration, increase in the repurchases of our class A common stock~~higher share repurchase and higher dividends ~~paid in the current year. This increase was partially~~paid. Partially offset by proceeds received from the ~~redemption~~issuance of ~~the Senior Notes due December 2017 in the prior year.~~commercial paper. See Note 9—8—Debt and Note 10—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. Based on our current cash flow forecasts of our short-term and long-term liquidity needs, we believe that our current and projected sources of liquidity will be sufficient to meet our projected liquidity needs for more than the next 12 months. Our ability to access cost-effective capital could be impacted by global credit market conditions. 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.

~~Credit facility extension.~~Commercial paper program. ~~On July 25, 2019, we extended the term~~We maintain a commercial paper program to support our working capital requirements and for other general corporate purposes. The carrying amount outstanding at March 31, 2020 was $1.0 billion, with a weighted-average interest rate of ~~our 5-year, unsecured revolving credit facility~~1.55% and increased the amount from $4.0 billion to $5.0 billion. The credit facility will expire on July 25, 2024. The credit facility is no longer governed by any financial covenants. No other material terms were changed.remaining maturities of less than 12 months. See Note 6—8—Debt to our unaudited consolidated financial statements.

~~Credit Ratings~~

~~During the nine months ended June 30, 2019,~~Senior notes. In April 2020, we issued fixed-rate senior notes in an aggregate principal amount of $4.0 billion, with maturities ranging between 7 and 20 years. See Note 8—Debt to our ~~credit ratings by Standard and Poor’s and Moody’s were upgraded to the following as compared to September 30, 2018:~~



	~~June 30, 2019~~		~~September 30, 2018~~
~~Rating Agency and Debt type~~	~~Rating~~	~~Outlook~~	~~Rating~~	~~Outlook~~
~~Standard and Poor’s~~
~~Short-term unsecured debt~~	~~A-1+~~	~~Stable~~	~~A-1~~	~~Positive~~
~~Long-term unsecured debt~~	~~AA-~~	~~Stable~~	A+	~~Positive~~
~~Moody’s~~
~~Long-term unsecured debt~~	~~Aa3~~	~~Stable~~	A1	~~Stable~~

~~Various factors affect our credit ratings, including changes in our operating performance, the economic environment, conditions in the electronic payment industry, our~~unaudited consolidated 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.statements.

Uses of Liquidity

There has been no significant change to our primary uses of liquidity since September 30, ~~2018,~~2019, except as discussed below.

Common stock repurchases. In January 2020, our board of directors authorized a $9.5 billion share repurchase program. During the ~~nine~~six months ended ~~June 30, 2019,~~March 31, 2020, we repurchased 4431 million shares of our class A common stock ~~using $6.5 billion~~for $5.5 billion. As of ~~cash on hand. In~~March 31, 2020, our January ~~2019, our board of directors authorized an additional $8.5 billion~~2020 share repurchase ~~program. As of June 30, 2019, we~~program had remaining authorized funds of ~~$6.2~~$8.1 billion for share repurchase. ~~All share repurchase programs authorized prior to January 2019 have been completed.~~ See Note 9—10—Stockholders’ Equity to our unaudited consolidated financial statements.

Dividends. During the ~~nine~~six months ended ~~June 30, 2019,~~March 31, 2020, we declared and paid ~~$1.7~~$1.3 billion in dividends to holders of our common and preferred stock. On ~~July 15, 2019,~~April 21, 2020, our board of directors declared a cash dividend in the amount of ~~$0.25~~$0.30 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 3, 2019,~~June 2, 2020, to all holders of record as of ~~August 16, 2019.~~May 14, 2020. See Note 9—10—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.~~ Senior notes. In ~~connection~~December 2015, we issued fixed-rate senior notes in an aggregate principal amount of $16.0 billion, with ~~our purchase~~maturities ranging between 2 and 30 years. A principal payment of ~~Visa Europe in June 2016,~~$3.0 billion is due on December 14, 2020, for which we were required to pay an additional €1.0 billion, plus 4% compound annual interest, on the third anniversary of the closing of the acquisition. In June 2019, we paid €1.1 billion in fulfillment of this obligation.

~~Derivative Financial Instruments~~

In March 2019, we entered into interest rate and cross-currency swap agreements on a portion of our outstanding 3.15% Senior Notes due December 2025 that allows us to 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.have sufficient liquidity. See Note ~~5—Fair Value Measurements and Investments~~8—Debt to our unaudited consolidated financial statements.

~~Fair Value Measurements—Financial Instruments~~

~~As of June 30, 2019, our financial instruments measured at fair value on~~Acquisition. On January 13, 2020, we entered into a ~~recurring basis included $12.7~~definitive agreement to acquire Plaid, Inc. for $5.3 billion. We will pay approximately $4.9 billion of ~~assets~~cash and ~~$74 million~~$0.4 billion of ~~liabilities. See~~retention equity and deferred equity consideration. This acquisition is subject to customary closing conditions, ~~Note 5—Fair Value Measurements~~including ongoing regulatory reviews and ~~Investments~~approvals, which are expected to be completed by the end of 2020. We intend to ~~our unaudited consolidated financial statements.~~fund the acquisition with cash, cash equivalents and investments, as well as through the issuance of new indebtedness.



ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk

There ~~has~~have been no significant ~~change~~changes to our market risks since September 30, ~~2018, except as discussed below.~~2019.

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 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 nine months ended June 30, 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 have been no ~~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. We have not experienced any material impact to our internal controls over financial reporting although most of our staff are now working remotely due to the COVID-19 pandemic. We are continually monitoring and assessing the COVID-19 situation on our internal controls to address impacts to their design, implementation and operating effectiveness.

PART II. OTHER INFORMATION



ITEM 1.	Legal Proceedings.

Refer to Note ~~13—~~14—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~~There have been no material updates to 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, ~~2018,~~2019, filed with the SEC on November ~~16, 2018.~~14, 2019, other than as set forth below.

Business Risks

The extent to which the coronavirus (“COVID-19”) outbreak and measures taken in response thereto impact our business, results of operations and financial condition will depend on future developments, which are highly uncertain and are difficult to predict.

The global impacts of the COVID-19 outbreak and related government actions taken to reduce the spread of the virus have been weighing on the macroeconomic environment, and have significantly increased economic uncertainty and reduced economic activity. Risks related to consumers and businesses changing spending habits, which affect domestic and cross-border activity, are described in our risk factor titled “Global economic, political, market, and social events or conditions may harm our business” under “Risk Factors-Business Risks” in our Annual Report on Form 10-K for the year ended September 30, 2019.

The outbreak has resulted in authorities implementing numerous measures to try to contain the virus, such as travel bans and restrictions, quarantines, shelter-in-place or total lock-down orders and business limitations and shutdowns. Such measures have significantly caused rising unemployment in many countries, affected our cross-border and domestic payment activity and negatively impacted consumer and business spending. Governments around the globe have taken steps to mitigate some of the more severe economic effects of the virus, but there can be no assurance that such steps will be effective or achieve their desired results in a timely fashion.

The outbreak has adversely impacted and is likely to further adversely impact our workforce and operations and the operations of our clients, customers, suppliers and business partners. COVID-19 impacted both card present and card not present cross-border travel related spending, initially in Asia during February, and then globally and more significantly in March as the outbreak spread to the rest of the world. In addition, as countries imposed social distancing, shelter-in-place or total lock-down orders, domestic spending, most notably in travel, restaurants, entertainment and fuel, sharply declined in the latter part of March.

In particular, we may experience financial losses due to a number of operational factors, including:

merchant, acquirer and issuer failures and credit settlement risk, particularly with respect to the retail, travel and hospitality industries, including airlines, cruise ships, hotels, restaurants and entertainment events;

third party disruptions, including potential outages at network providers, call centers and other suppliers;

increased cyber and payment fraud risk related to COVID-19, as cybercriminals attempt to profit from the disruption, given increased online banking, e-commerce and other online activity;

challenges to the availability and reliability of our network due to changes to normal operations, including the possibility of one or more clusters of COVID-19 cases occurring at our data centers, affecting our employees, or affecting the systems or employees of our issuers, acquirers or merchants; and

additional regulatory requirements, including, for example, government initiatives or requests to reduce or eliminate payments fees or other costs.

These factors may remain prevalent for a significant period of time and may continue to adversely affect our business, results of operations and financial condition even after the COVID-19 outbreak has subsided.

The spread of COVID-19 has caused us to modify our business practices (including restricting employee travel, developing social distancing plans for our employees and cancelling physical participation in meetings, events and conferences), and we may take further actions as may be required by government authorities or as we determine are in the best interests of our employees, customers and business partners. There is no certainty that such measures will be sufficient to mitigate the risks posed by the virus or will otherwise be satisfactory to government authorities.

The extent to which the COVID-19 outbreak impacts our business, results of operations and financial condition in the longer term will depend on future developments, which are highly uncertain and are difficult to predict, including, but not limited to, the duration and spread of the outbreak, its severity, the actions to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions broadly resume. Even after the COVID-19 outbreak has subsided, we may continue to experience materially adverse impacts to our business as a result of the virus’s global economic impact, including lower domestic and cross border spending trends, the availability of credit, adverse impacts on our liquidity and any recessionary conditions that occur and persist.

There are no comparable recent events that provide guidance as to the effect the spread of COVID-19 may have on our business, and, as a result, the ultimate impact of the outbreak is highly uncertain and subject to change. We do not yet know the full extent of the impacts on our business or the global economy as a whole. However, the effects could have a material impact on our results of operations and heighten many of our known risks described in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended September 30, 2019, including, but not limited to:

“Increased scrutiny and regulation of the global payments industry, including with respect to interchange reimbursement fees, merchant discount rates, operating rules, risk management protocols and other related practices, could harm our business;”

“We depend on relationships with financial institutions, acquirers, processors, merchants, and other third parties;”


•	“A disruption, failure or breach of our networks or systems, including as a result of cyber-attacks, could harm our business;” and

“Our indemnification obligation to fund settlement losses of our clients exposes us to significant risk of loss and may reduce our liquidity.”



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

ISSUER PURCHASES OF EQUITY SECURITIES

The table below sets forth our purchases of common stock during the quarter ended ~~June 30, 2019~~:March 31, 2020:

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)
April 1-30, 2019 3,562,393
$ 159.94
3,562,393
$ 7,702,361,318
May 1-31, 2019 5,429,064
$ 162.06
5,429,064
$ 6,822,392,402
June 1-30, 2019 3,903,940
$ 169.03
3,903,940
$ 6,162,429,687
Total 12,895,397
$ 163.59
12,895,397



Period	Total Number of Shares Purchased	Average Purchase Price 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)
	(in millions, except per share data)
January 1-31, 2020	4	$	198.53	4	$	10,357
February 1-29, 2020	4	$	202.86	4	$	9,582
March 1-31, 2020	10	$	164.01	10	$	7,942
Total	18	$	180.10	18


⁽¹⁾	The figures in the table reflect transactions according to the trade dates. For purposes of our unaudited consolidated financial statements included in this Form 10-Q, the impact of these repurchases is recorded according to settlement dates.

⁽²⁾

Our board of directors from time to time authorizes the repurchase of shares of our common stock up to a certain monetary limit. In January 2020 and 2019, our board of directors authorized a share repurchase ~~program~~programs for $9.5 billion and $8.5 ~~billion.~~billion, respectively. These authorizations have no expiration date. All share ~~repurchase programs~~repurchases authorized prior to January ~~2019~~2020 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~~



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

4.1	Form of 1.900% Senior Note due 2027	8-K	001-33977	4.1	4/2/2020

4.2	Form of 2.050% Senior Note due 2030	8-K	001-33977	4.2	4/2/2020

4.3	Form of 2.700% Senior Note due 2040	8-K	001-33977	4.3	4/2/2020

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 26, 2019~~May 4, 2020	By:	/s/ Alfred F. Kelly, Jr.
		Name:	Alfred F. Kelly, Jr.
		Title:	Chairman and Chief Executive Officer (Principal Executive Officer)

Date:	~~July 26, 2019~~May 4, 2020	By:	/s/ Vasant M. Prabhu
		Name:	Vasant M. Prabhu
		Title:	Vice Chairman and Chief Financial Officer (Principal Financial Officer)

Date:	~~July 26, 2019~~May 4, 2020	By:	/s/ James H. Hoffmeister
		Name:	James H. Hoffmeister
		Title:	Global Corporate Controller and Chief Accounting Officer (Principal Accounting Officer)

4341



	Nine Months Ended June 30, 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																	9,055						9,055
Other comprehensive income (loss), net of tax																				(444		)	(444		)
Comprehensive income																							8,611
Adoption of new accounting standards (Note 1)																	385			7			392
VE territory covered losses incurred (Note 4)											(170		)										(170		)
Recovery through conversion rate adjustment (Note 4 and Note 9)								(8		)	8												—
Conversion of class C common stock upon sales into public market			1			0	⁽¹⁾																—
Vesting of restricted stock and performance-based shares			3																				—
Share-based compensation, net of forfeitures (Note 11)														321									321
Restricted stock and performance-based shares settled in cash for taxes			(1	)										(106		)							(106		)
Cash proceeds from issuance of common stock under employee equity plans			2											127									127
Cash dividends declared and paid, at a quarterly amount of $0.25 per Class A share (Note 9)																	(1,706		)				(1,706		)
Repurchase of class A common stock (Note 9)			(44	)										(468		)	(6,012		)				(6,480		)
Balance as of June 30, 2019	2	3	1,729		245	12		$	5,462		$	(169	)	$	16,552		$	13,040		$	110		$	34,995



	Nine Months Ended June 30, 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																		7,456						7,456
Other comprehensive income (loss), net of tax																					(137		)	(137		)
Comprehensive income																								7,319
VE territory covered losses incurred (Note 4)												(9		)										(9		)
Recovery through conversion rate adjustment (Note 4 and Note 9)									(56		)	56												—
Conversion of class C common stock upon sales into public market			3				(1	)																—
Vesting of restricted stock and performance-based shares			2																					—
Share-based compensation, net of forfeitures (Note11)			0		⁽¹⁾										242									242
Restricted stock and performance-based shares settled in cash for taxes			(1	)											(90		)							(90		)
Cash proceeds from issuance of common stock under employee equity plans			3												135									135
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 and third quarters (Note 9)																		(1,435		)				(1,435		)
Repurchase of class A common stock (Note 9)			(47	)											(501		)	(5,103		)				(5,604		)
Balance as of June 30, 2018	2	3	1,778			245	12		$	5,470		$	(5	)	$	16,686		$	10,426		$	741		$	33,318



	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



	For the Three Months Ended June 30, 2019							For the Nine Months Ended June 30, 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	$	5,840	$	(88	)	$	5,752	$	16,840	$	(179	)	$	16,661

Operating Expenses
Marketing	282		(31		)	251		799		(100		)	699
Professional fees	113		(5		)	108		305		(12		)	293
General and administrative	315		(11		)	304		855		(21		)	834
Total operating expenses	1,932		(47		)	1,885		5,574		(133		)	5,441
Operating income	3,908		(41		)	3,867		11,266		(46		)	11,220

Income before income taxes	3,866		(41		)	3,825		11,173		(46		)	11,127
Income tax provision	765		(8		)	757		2,118		(6		)	2,112
Net income	3,101		(33		)	3,068		9,055		(40		)	9,015



	June 30, 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	(111		)	(120		)
Hedge accounting fair value adjustments	55			0
Total long-term debt	$	16,694		$	16,630



	Pension Benefits
	U.S. Plans						Non-U.S. Plans
	Three Months Ended June 30,						Three Months Ended June 30,
	2019			2018			2019			2018
	(in millions)
Service cost	$	0		$	0		$	1		$	1
Interest cost	8			8			3			3
Expected return on plan assets	(17		)	(17		)	(5		)	(5		)
Settlement loss	2			3			0			0
Total net periodic benefit cost (income)	$	(7	)	$	(6	)	$	(1	)	$	(1	)



	Nine Months Ended June 30, 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⁾	$	141.32	$	150.26	$	113.05	$	112.92
Recovery through conversion rate adjustment	$	6	$	2	$	35	$	21



	Three Months Ended June 30,				2019 vs. 2018		Nine Months Ended June 30,				2019 vs. 2018
(in millions, except percentages and per share data)	2019		2018		% Change⁽¹⁾		2019		2018		% Change⁽¹⁾
Net income, as reported	$	3,101	$	2,329	33	%	$	9,055	$	7,456	21	%
Diluted earnings per share, as reported	$	1.37	$	1.00	36	%	$	3.97	$	3.19	25	%
Net income, as adjusted⁽²⁾	$	3,101	$	2,792	11	%	$	9,055	$	7,933	14	%
Diluted earnings per share, as adjusted⁽²⁾	$	1.37	$	1.20	14	%	$	3.97	$	3.39	17	%



	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	%



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)
April 1-30, 2019	3,562,393	$	159.94	3,562,393	$	7,702,361,318
May 1-31, 2019	5,429,064	$	162.06	5,429,064	$	6,822,392,402
June 1-30, 2019	3,903,940	$	169.03	3,903,940	$	6,162,429,687
Total	12,895,397	$	163.59	12,895,397