Document and Entity Information

9 Months Ended

Jun. 30, 2012

Jul. 19, 2012

Class A

Jul. 19, 2012

Class B

Jul. 19, 2012

Class C

Entity Registrant Name

VISA INC.

Entity Central Index Key

0001403161

Current Fiscal Year End Date

--09-30

Entity Filer Category

Large Accelerated Filer

Document Type

10-Q

Document Period End Date

Jun. 30, 2012

Document Fiscal Year Focus

2012

Document Fiscal Period Focus

Q3

Amendment Flag

false

Entity Common Stock, Shares Outstanding

527,426,677

245,513,385

38,225,522

CONSOLIDATED BALANCE SHEETS (USD $)

In Millions, unless otherwise specified

Jun. 30, 2012

Sep. 30, 2011

Assets

Cash and cash equivalents

$ 1,558

$ 2,127

Restricted cash-litigation escrow (Note 2)

4,282

2,857

Investment securities

Trading

63

57

Available-for-sale

682

1,214

Settlement receivable

443

412

Accounts receivable

793

560

Customer collateral (Note 5)

886

931

Current portion of client incentives

224

278

Deferred tax assets

1,645

489

Prepaid expenses and other current assets

323

265

Total current assets

10,899

9,190

Investment securities, available-for-sale

2,923

711

Client incentives

97

85

Property, equipment and technology, net

1,581

1,541

Other assets

123

129

Intangible assets, net

11,437

11,436

Goodwill

11,681

11,668

Total assets

38,741

34,760

Liabilities

Accounts payable

111

169

Settlement payable

747

449

Customer collateral (Note 5)

886

931

Accrued compensation and benefits

389

387

Client incentives

763

528

Accrued liabilities

574

562

Accrued litigation (Note 10)

4,384

425

Total current liabilities

7,854

3,451

Deferred tax liabilities

3,944

4,205

Other liabilities

785

667

Total liabilities

12,583

8,323

Equity

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

Additional paid-in capital

19,922

19,907

Accumulated income

6,411

6,706

Accumulated other comprehensive income (loss), net

Investment securities, available-for-sale

1

Defined benefit pension and other postretirement plans

(189)

(186)

Derivative instruments classified as cash flow hedges

25

18

Foreign currency translation adjustments

(12)

(8)

Total accumulated other comprehensive loss, net

(175)

(176)

Total equity

26,158

26,437

Total liabilities and equity

38,741

34,760

Class A

Equity

Common stock

Common Class B [Member]

Equity

Common stock

Common Class C [Member]

Equity

Common stock

CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)

In Millions, except Per Share data, unless otherwise specified

Jun. 30, 2012

Sep. 30, 2011

Preferred Stock

Preferred stock, par value

$ 0.0001

Preferred stock, shares authorized

25

Preferred stock, shares issued

0

Class A

Common stock, par value

$ 0.0001

Common stock, shares authorized

2,001,622

Common stock, shares issued

527

520

Common stock, shares outstanding

527

520

Class B

Common stock, par value

$ 0.0001

Common stock, shares authorized

622

Common stock, shares issued

245

Common stock, shares outstanding

245

Class C

Common stock, par value

$ 0.0001

Common stock, shares authorized

1,097

Common stock, shares issued

38

47

Common stock, shares outstanding

38

47

CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)

In Millions, except Per Share data, unless otherwise specified

3 Months Ended

9 Months Ended

Jun. 30, 2012

Jun. 30, 2011

Jun. 30, 2012

Jun. 30, 2011

Operating Revenues

Service revenues

$ 1,216

$ 1,055

$ 3,608

$ 3,156

Data processing revenues

1,040

886

2,913

2,553

International transaction revenues

748

662

2,229

1,916

Other revenues

175

167

532

484

Client incentives

(614)

(448)

(1,592)

(1,304)

Total operating revenues

2,565

2,322

7,690

6,805

Operating Expenses

Personnel

435

363

1,255

1,071

Network and processing

102

91

303

251

Marketing

242

251

602

631

Professional fees

99

84

251

222

Depreciation and amortization

84

74

244

211

General and administrative

112

114

320

319

Litigation provision (Note 10)

4,098

6

Total operating expenses

5,172

977

7,073

2,711

Operating (loss) income

(2,607)

1,345

617

4,094

Other Income (Expense)

Interest expense

(11)

(28)

(19)

Investment income, net

12

88

31

107

Other

(1)

121

(1)

120

Total other income

198

2

208

(Loss) income before income taxes

(2,607)

1,543

619

4,302

Income tax (benefit) provision

(768)

539

139

1,534

Net (loss) income including non-controlling interest

(1,839)

1,004

480

2,768

Loss attributable to non-controlling interest

1

2

Net (loss) income attributable to Visa Inc.

(1,839)

1,005

482

2,770

Class A common stock

Other Income (Expense)

Net (loss) income attributable to Visa Inc.

(1,437)

746

372

1,976

Earnings Per Share

Basic (loss) earnings per share (Note 7)

$ (2.74)

$ 1.43 ¹

$ 0.71 ¹

$ 3.90 ¹

Basic weighted-average shares outstanding (Note 7)

525

521

523

506

Diluted (loss) earnings per share (Note 7)

$ (2.74)

$ 1.43

$ 0.71

$ 3.89

Diluted weighted-average shares outstanding (Note 7)

672

704 ²

681 ²

712 ²

Class B common stock

Other Income (Expense)

Net (loss) income attributable to Visa Inc.

(286)

172 ³

78 ³

483 ³

Earnings Per Share

Basic (loss) earnings per share (Note 7)

$ (1.16)

$ 0.70 ¹

$ 0.32 ¹

$ 1.97 ¹

Basic weighted-average shares outstanding (Note 7)

245

Diluted (loss) earnings per share (Note 7)

$ (1.16)

$ 0.70

$ 0.32

$ 1.96

Diluted weighted-average shares outstanding (Note 7)

245

Class C common stock

Other Income (Expense)

Net (loss) income attributable to Visa Inc.

$ (109)

$ 84

$ 30

$ 302

Earnings Per Share

Basic (loss) earnings per share (Note 7)

$ (2.74)

$ 1.43 ¹

$ 0.71 ¹

$ 3.90 ¹

Basic weighted-average shares outstanding (Note 7)

40

59

43

78

Diluted (loss) earnings per share (Note 7)

$ (2.74)

$ 1.43

$ 0.71

$ 3.89

Diluted weighted-average shares outstanding (Note 7)

40

59

43

78

[1] Earnings (loss) per share calculated based on whole numbers, not rounded numbers.

[2] The computation of weighted-average dilutive shares outstanding included the effect of 3 million dilutive shares of outstanding stock awards for the nine months ended June 30, 2012 and 3 million and 2 million for the three and nine months ended June 30, 2011, respectively. As the Company had a net loss for the three months ended June 30, 2012, the computation excluded 7 million outstanding stock awards because their effect would have been anti-dilutive. The computation excluded stock options to purchase less than 1 million shares of common stock for the nine months ended June 30, 2012 and 2 million for the three and nine months ended June 30, 2011, respectively, because their effect would have been anti-dilutive.

[3] Net income (loss) attributable to Visa Inc. is allocated to each class of common stock on an as-converted basis. The weighted-average number of shares of as-converted class B common stock used in the (loss) income allocation were 104 million and 110 million for the three and nine months ended June 30, 2012 and 120 million and 124 million for the three and nine months ended June 30, 2011, respectively.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $)

In Millions, unless otherwise specified

3 Months Ended

9 Months Ended

Jun. 30, 2012

Jun. 30, 2011

Jun. 30, 2012

Jun. 30, 2011

Net (loss) income including non-controlling interest

$ (1,839)

$ 1,004

$ 480

$ 2,768

Investment securities, available-for-sale

Net unrealized (loss) gain

(6)

(2)

1

(5)

Income tax effect

2

1

0

2

Defined benefit pension and other postretirement plans

9

1

3

Income tax effect

(3)

(1)

Derivative instruments classified as cash flow hedges

Net unrealized gain (loss)

21

(15)

9

(38)

Income tax effect

(9)

4

(3)

9

Reclassification adjustment for net (income) loss realized in net income including non-controlling interest

(7)

21

(3)

48

Income tax effect

2

(4)

3

(11)

Foreign currency translation adjustments

(8)

(3)

(4)

8

Other comprehensive (loss) income, net of tax

1

3

1

15

Comprehensive (loss) income including non-controlling interest

(1,838)

1,007

481

2,783

Comprehensive loss attributable to non-controlling interest

1

2

Comprehensive (loss) income attributable to Visa Inc.

$ (1,838)

$ 1,008

$ 483

$ 2,785

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (USD $)

In Millions, unless otherwise specified

Total

USD ($)

Class A

Class B

Class C

Additional Paid In Capital

USD ($)

Accumulated Income

USD ($)

Accumulated Other Comprehensive Loss

USD ($)

Non-controlling Interests

USD ($)

Beginning Balance at Sep. 30, 2011

$ 26,437

$ 19,907

$ 6,706

$ (176)

Beginning Balance (in shares) at Sep. 30, 2011

520

245

47

Increase (Decrease) in Stockholders' Equity [Roll Forward]

Net income attributable to Visa Inc.

482

Loss attributable to non-controlling interest

(2)

Other comprehensive income, net of tax

1

Comprehensive (loss) income including non-controlling interest

481

Issuance of restricted share awards

1

Conversion of class C common stock upon sale into public market (Note 6)

9

(9)

Share-based compensation

112

Excess tax benefit for share-based compensation

42

Cash proceeds from exercise of stock options (in shares)

2

Cash proceeds from exercise of stock options

111

Restricted stock instruments settled in cash for taxes¹

(40)

Cash dividends declared and paid, at a quarterly amount of $0.22 per as-converted share (Note 6)

(448)

Repurchase of class A common stock (Note 6) (in shares)

(5.0)

Repurchase of class A common stock (Note 6)

(536)

(207)

(329)

Purchase of non-controlling interest in joint venture

(1)

(3)

2

Ending Balance at Jun. 30, 2012

$ 26,158

$ 19,922

$ 6,411

$ (175)

Ending Balance (in shares) at Jun. 30, 2012

527

245

38

[1] Decrease in class A common stock is less than 1 million shares.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Parenthetical) (USD $)

9 Months Ended

Jun. 30, 2012

Cash dividends declared and paid, quarterly, per as-converted share

$ 0.22

Class A common stock |
Maximum [Member]

Restricted stock instruments settled in cash for taxes shares

1,000,000

CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)

In Millions, unless otherwise specified

9 Months Ended

Jun. 30, 2012

Jun. 30, 2011

Operating Activities

Net income including non-controlling interest

$ 480

$ 2,768

Adjustments to reconcile net income including non-controlling interest to net cash provided by (used in) operating activities:

Amortization of client incentives

1,592

1,304

Fair value adjustment for the Visa Europe put option

(122)

Share-based compensation

112

122

Excess tax benefit for share-based compensation

(42)

(12)

Depreciation and amortization of intangible assets and property, equipment and technology

244

211

Accrued litigation and accretion (Note 10)

4,099

15

Deferred income taxes

(1,427)

169

Other

(34)

(107)

Change in operating assets and liabilities:

Trading securities

(6)

(5)

Settlement receivable

(31)

3

Accounts receivable

(231)

(70)

Client incentives

(1,315)

(1,144)

Other assets

(35)

30

Accounts payable

(58)

(47)

Settlement payable

298

52

Accrued compensation and benefits

(37)

Accrued and other liabilities

134

74

Accrued litigation (Note 10)

(140)

(200)

Net cash provided by operating activities

3,640

3,004

Investing Activities

Purchases of property, equipment and technology

(235)

(236)

Proceeds from disposal of property, equipment and technology

2

Purchases of intangible assets

(35)

Investment securities, available-for-sale:

Purchases

(3,326)

(50)

Proceeds from sales and maturities

1,640

35

Purchases of/contributions to other investments

(9)

(10)

Proceeds/distributions from other investments

23

104

Acquisition, net of cash received of $17 and $22, respectively

(3)

(268)

Net cash used in investing activities

(1,943)

(425)

Financing Activities

Repurchase of class A common stock (Note 6)

(536)

(1,600)

Dividends paid (Note 6)

(448)

(320)

Deposits into litigation escrow account-retrospective responsibility plan (Note 2)

(1,565)

(1,200)

Payment from litigation escrow account-retrospective responsibility plan (Note 2)

140

210

Cash proceeds from exercise of stock options

111

63

Excess tax benefit for share-based compensation

42

12

Principal payments on debt

(9)

Principal payments on capital lease obligations

(6)

(10)

Net cash used in financing activities

(2,262)

(2,854)

Effect of exchange rate changes on cash and cash equivalents

(4)

8

Decrease in cash and cash equivalents

(569)

(267)

Cash and cash equivalents at beginning of year

2,127

3,867

Cash and cash equivalents at end of period

1,558

3,600

Supplemental Disclosure of Cash Flow Information

Income taxes paid, net of refunds

1,575

1,251

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

85

17

Interest payments on debt

$ 2

CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) (USD $)

In Millions, unless otherwise specified

9 Months Ended

Jun. 30, 2012

Jun. 30, 2011

Statement of Cash Flows [Abstract]

Acquisition, cash received

$ 17

$ 22

Summary of Significant Accounting Policies

Note 1—Summary of Significant Accounting Policies

Organization. Visa Inc. (“Visa” or the “Company”) is a global payments technology company that connects consumers, businesses, banks and governments around the world, enabling them to use digital currency instead of cash and checks. 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 (“VWPL”), Visa Canada Corporation (“Visa Canada”), Inovant LLC (“Inovant”), and CyberSource Corporation (“CyberSource”), operate the world’s largest retail electronic payments network. The Company provides its clients with payment processing platforms that encompass consumer credit, debit, prepaid and commercial payments, and facilitates global commerce through the transfer of value and information among financial institutions, merchants, consumers, businesses and government entities. The Company does not issue cards, set fees, or determine the interest rates consumers will be charged on Visa-branded cards, which are the independent responsibility of the Company’s issuing clients.

Consolidation and basis of presentation. The accompanying unaudited consolidated financial statements include the accounts of Visa Inc. 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 VIEs have not been material to its consolidated financial statements as of and for the periods presented. Non-controlling interests are reported as a component of equity. All significant intercompany accounts and transactions are eliminated in consolidation.

The accompanying unaudited consolidated financial statements are presented in accordance with the U.S. Securities and Exchange Commission (“SEC”) requirements for Quarterly Reports on Form 10-Q and, consequently, do not include all of the annual disclosures required by U.S. GAAP. Reference should be made to the Visa Inc. Annual Report on Form 10-K for the year ended September 30, 2011, 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 operation and cash flows for the interim period presented.

Recently adopted accounting pronouncements. In September 2011, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2011-08, which allows an entity to first assess qualitative factors to determine when it is necessary to perform the two-step quantitative goodwill impairment test. This guidance impacts goodwill impairment testing only and does not impact impairment testing of indefinite-lived intangibles. The Company adopted ASU 2011-08 effective October 1, 2011, and applied the new guidance in its annual impairment review of goodwill as of February 1, 2012. See Note 3—Fair Value Measurements. The adoption did not have a material impact on the consolidated financial statements.

In May 2011, the FASB issued ASU 2011-04, which provides common fair value measurement and disclosure requirements in accordance with U.S. GAAP and International Financial Reporting Standards (“IFRS”). The Company adopted ASU 2011-04 effective January 1, 2012. The adoption did not have a material impact on the consolidated financial statements. See Note 3—Fair Value Measurements.

In December 2010, the FASB issued ASU 2010-29, which provides requirements for pro forma revenue and earnings disclosures related to business combinations. The ASU requires disclosure of revenue and earnings of the combined business as if the combination occurred at the start of the prior annual reporting period only. The Company adopted ASU 2010-29 effective October 1, 2011. The adoption did not have an impact on the consolidated financial statements.

Recently issued accounting pronouncements. In June 2011, the FASB issued ASU 2011-05, which impacts the presentation of comprehensive income. The guidance requires components of other comprehensive income to be presented with net income to arrive at total comprehensive income. This ASU impacts presentation only and does not impact the underlying components of other comprehensive income or net income. In December 2011, the FASB issued ASU 2011-12, which defers a component of ASU 2011-05 that requires the presentation of reclassification adjustments for items that are reclassified from other comprehensive income to net income. All other components of ASU 2011-05 are effective October 1, 2012. Adoption is not expected to have a material impact on the consolidated financial statements.

Retrospective Responsibility Plan

Note 2—Retrospective Responsibility Plan

Under the terms of the retrospective responsibility plan, the Company maintains an escrow account from which settlements of, or judgments in, covered litigation are paid. See Note 10—Legal Matters. On December 29, 2011, using operating cash on hand, the Company made a deposit of $1.57 billion into the litigation escrow account. Subsequent to the fiscal third quarter-end, the Company's board of directors approved an additional deposit of $150 million into the litigation escrow account, which was funded on July 24, 2012. See Note 6—Stockholders' Equity.

The Company recorded an additional accrual of $4.1 billion for covered litigation during the three months ended June 30, 2012. The accrual related to covered litigation could be either higher or lower than the escrow account balance. See Note 10—Legal Matters. The following table sets forth the changes in the escrow account.



	(in millions)
Balance at October 1, 2011	$	2,857
Deposit into the litigation escrow account	1,565
American Express settlement payment	(140		)
Balance at June 30, 2012	$	4,282
Deposit into the litigation escrow account	150
Balance at July 24, 2012	$	4,432

Fair Value Measurements

Note 3—Fair Value Measurements

Assets and Liabilities Measured at Fair Value on a Recurring Basis.



	Fair Value Measurements Using Inputs Considered as
	Level 1				Level 2				Level 3
	June 30, 2012		September 30, 2011		June 30, 2012		September 30, 2011		June 30, 2012		September 30, 2011
	(in millions)
Assets
Cash equivalents and restricted cash
Money market funds and time deposits	$	5,121	$	4,225
U.S. government-sponsored debt securities					$	—	$	175
Investment securities
U.S. government-sponsored debt securities					2,777		1,568
U.S. Treasury securities	817		350
Equity securities	66		57
Auction rate securities									$	7	$	7
Prepaid and other current assets
Foreign exchange derivative instruments					23		30
	$	6,004	$	4,632	$	2,800	$	1,773	$	7	$	7
Liabilities
Accrued liabilities
Visa Europe put option									$	145	$	145
Earn-out related to PlaySpan acquisition									23		24
Foreign exchange derivative instruments					$	4	$	7

There were no transfers between Level 1 and Level 2 assets during the nine months ended June 30, 2012 and 2011.

Level 1 assets measured at fair value on a recurring basis. Cash equivalents (money market funds), mutual fund 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.

Level 2 assets and liabilities measured at fair value on a recurring basis. U.S. government-sponsored debt securities and foreign exchange derivative instruments are classified as Level 2 within the fair value hierarchy. The fair value of the government-sponsored debt securities provided by third-party pricing vendors is based on quoted prices in active markets for similar assets. The pricing data obtained from outside sources is reviewed internally for reasonableness and validated against benchmark quotes from additional pricing sources. If they appear unreasonable, the Company will assess the reasonableness of the pricing. Based on the review, the valuation is confirmed or revised. Foreign exchange derivative instruments are valued using inputs that are observable in the market or can be derived principally from or corroborated with observable market data. There were no changes to the valuation techniques and related inputs used to measure fair value during the nine months ended June 30, 2012.

Level 3 assets and liabilities measured at fair value on a recurring basis. Auction rate securities are classified as Level 3 due to a lack of trading in active markets and a lack of observable inputs in measuring fair value. There were no changes to the valuation techniques and related inputs used to measure fair value during the nine months ended June 30, 2012. The earn-out related to the PlaySpan acquisition is classified as Level 3 as inputs are unobservable, such as the likelihood of meeting certain future revenue targets and other milestones. There were no significant changes to the valuation techniques and inputs used to measure fair value during the nine months ended June 30, 2012.

Visa Europe put option agreement. The Company has granted Visa Europe a perpetual put option (the "put option") which, if exercised, will require Visa Inc. to purchase all of the outstanding shares of capital stock of Visa Europe from its members. The put option provides a formula for determining the purchase price of the Visa Europe shares, which, subject to certain adjustments, applies Visa Inc.’s forward price-to-earnings multiple, or the P/E ratio (as defined in the option agreement), at the time the option is exercised, to Visa Europe’s projected adjusted sustainable income for the forward 12-month period, or the adjusted sustainable income (as defined in the option agreement). The calculation of Visa Europe’s adjusted sustainable income under the terms of the put option agreement includes potentially material adjustments for cost synergies and other negotiated items. Upon exercise, the key inputs to this formula, including Visa Europe’s adjusted sustainable income, will be the result of negotiation between the Company and Visa Europe. The put option provides an arbitration mechanism in the event that the two parties are unable to agree on the ultimate purchase price.

The fair value of the put option represents the value of Visa Europe’s option, which under certain conditions could obligate the Company to purchase its member equity interest for an amount above fair value. While the put option is in fact non-transferable, its fair value represents the Company’s estimate of the amount the Company would be required to pay a third-party market participant to transfer the potential obligation in an orderly transaction at the measurement date. The liability is classified within Level 3, as the assumed probability that Visa Europe will elect to exercise its option, the estimated P/E differential, and other inputs used to value the put option are unobservable. At June 30, 2012 and September 30, 2011, the Company determined the fair value of the put option to be $145 million. While $145 million represents the fair value of the put option at June 30, 2012, it does not represent the actual purchase price that the Company may be required to pay if the option is exercised, which could be several billion dollars or more. During fiscal 2012, there were no changes to the valuation methodology used to estimate the fair value of the put option. At June 30, 2012, the key unobservable inputs include a 40% probability of exercise by Visa Europe at some point in the future and an estimated long-term P/E differential of 1.9x. At June 30, 2012, our spot P/E was 17.4x and there was a differential of 1.8x between this ratio and the estimated spot ratio applicable to Visa Europe. These ratios are for reference only and are not necessarily indicative of the ratio or differential that could be applicable if the put option were exercised at any point in the future.The use of an assumed probability of exercise that is 5% higher than the Company's estimate would have resulted in an increase of approximately $18 million in the value of the put option. An increase of 1.0x in the assumed P/E differential would have resulted in an increase of approximately $84 million in the value of the put option.

The put option is exercisable at any time at the sole discretion of Visa Europe. As such, the put option liability is included in accrued liabilities on the Company's consolidated balance sheet at June 30, 2012. Classification in current liabilities is not an indication of management’s expectation of exercise and simply reflects the fact that the obligation resulting from the exercise of the instrument could become payable within 12 months. Any non-cash changes in fair value are recorded in other income on the consolidated statements of operations.

A separate roll-forward of Level 3 assets and liabilities measured at fair value on a recurring basis is not presented because activity was immaterial during the nine months ended June 30, 2012. Activity in Level 3 liabilities measured at fair value on a recurring basis for the nine months ended June 30, 2011 was primarily related to the decrease of $122 million in the fair value of the Visa Europe put option.

Assets and Liabilities Measured at Fair Value on a Non-recurring Basis.

Non-marketable equity investments and investments accounted for under the equity method. These investments are classified as Level 3 due to the absence of quoted market prices, the inherent lack of liquidity, and the fact that inputs used to measure fair value are unobservable and require management's judgment. The Company applies fair value measurement to these investments when certain events or circumstances indicate that these investments may be impaired. The Company revalues the investments using various assumptions, including financial metrics and ratios of comparable public companies. There were no events or circumstances that indicated these investments became impaired during the nine months ended June 30, 2012 or 2011. At June 30, 2012, and September 30, 2011, these investments totaled $89 million and $100 million, respectively, and were classified as other assets on the consolidated balance sheets.

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. The Company measures the fair value of indefinite-lived intangible assets on a non-recurring basis for the purpose of initial recognition, and testing for and recording impairment, if any. Goodwill fair value measurements are only performed if an impairment test is required. Finite-lived intangible assets primarily consist of customer relationships, reseller relationships and trade names, all of which were obtained through acquisitions.

The Company primarily uses an income approach for estimating the fair value of goodwill and indefinite-lived intangible assets, if such measurement is required. 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 in Level 3 of the fair value hierarchy. The Company completed its annual impairment review of its indefinite-lived intangible assets and goodwill as of February 1, 2012, and concluded that there was no impairment. No recent events or changes in circumstances indicate that impairment existed at June 30, 2012.

Other Financial Instruments Not Measured at Fair Value

The following financial instruments are not measured at fair value on the Company's consolidated balance sheet at June 30, 2012, but require disclosure of their fair values: cash, accounts receivable, customer collateral, accounts payable, and settlement receivable and payable. The estimated fair value of such instruments at June 30, 2012 approximates their carrying value as reported on the consolidated balance sheets except as otherwise disclosed. The fair values of such financial instruments are determined using the income approach based on the present value of estimated future cash flows. There have been no changes in our valuation technique during the nine months ended June 30, 2012. The fair value of all of these instruments would be categorized as Level 2 of the fair value hierarchy, with the exception of cash, which would be categorized as Level 1.

Investments

Available-for-sale investments. The Company had $2 million in gross unrealized gains and $1 million in gross unrealized losses on available-for-sale investment securities at June 30, 2012. There were no gross unrealized gains or gross unrealized losses at September 30, 2011. Long-term available-for-sale securities are scheduled to mature by October 2014.

Pension and Other Postretirement Benefits

Note 4—Pension and Other Postretirement Benefits

The Company sponsors various qualified and non-qualified defined benefit pension and other postretirement benefit plans that provide for retirement and medical benefits for substantially all employees residing in the United States.

The components of net periodic benefit cost are as follows:



	Pension Benefits												Other Postretirement Benefits
	Three Months Ended June 30,						Nine Months Ended June 30,						Three Months Ended June 30,					Nine Months Ended June 30,
	2012			2011			2012			2011			2012		2011			2012			2011
	(in millions)
Service cost	$	10		$	10		$	29		$	30		$	—	$	—		$	—		$	—
Interest cost	10			10			30			29			—		—			1			1
Expected return on assets	(14		)	(13		)	(41		)	(40		)	—		—			—			—
Amortization of:
Prior service credit	(2		)	(3		)	(7		)	(7		)	—		—			(2		)	(2		)
Actuarial loss	8			5			24			14			—		(1		)	—			(1		)
Settlement loss	3			—			3			—			—		—			—			—
Total net periodic benefit cost	$	15		$	9		$	38		$	26		$	—	$	(1	)	$	(1	)	$	(2	)

Settlement Guarantee Management

Note 5—Settlement Guarantee Management

The indemnification for settlement losses that Visa provides to its customers creates settlement risk for the Company due to the difference in timing between the date of a payment transaction and the date of subsequent settlement. The Company’s settlement exposure is limited to the amount of unsettled Visa payment transactions at any point in time. The Company requires certain customers that do not meet its credit standards to post collateral to offset potential loss from their estimated unsettled transactions. The Company’s estimated maximum settlement exposure was $48.3 billion at June 30, 2012, compared to $47.5 billion at September 30, 2011. Of these settlement exposure amounts, $3.4 billion at June 30, 2012, and $3.2 billion at September 30, 2011, were covered by collateral.

The Company maintained collateral as follows:



	June 30, 2012		September 30, 2011
	(in millions)
Cash equivalents	$	886	$	931
Pledged securities at market value	284		296
Letters of credit	966		902
Guarantees	1,996		1,845
Total	$	4,132	$	3,974

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

The fair value of the settlement risk guarantee is estimated based on a proprietary probability-weighted model and was approximately $2 million at June 30, 2012 and $1 million at September 30, 2011. These amounts are reflected in accrued liabilities on the consolidated balance sheets.

Stockholders' Equity

Note 6—Stockholders' Equity

The number of shares of each class and the number of shares of class A common stock on an as-converted basis at June 30, 2012, are as follows:



(in millions, except conversion rate)	Shares Outstanding	Conversion Rate Into Class A Common Stock	As-converted Class A Common Stock⁽¹⁾
Class A common stock	527	—	527
Class B common stock	245	0.4254	104
Class C common stock	38	1.0000	38
Total			670


⁽¹⁾	Figures may not sum due to rounding. As-converted class A common stock count calculated based on whole numbers.

Reduction in as-converted shares. During the first nine months of fiscal 2012, the Company used $2.1 billion of its operating cash on hand to reduce total as-converted class A common stock by 20.2 million shares. Of the $2.1 billion, $536 million was used to repurchase class A common stock in the open market. In addition, the Company deposited $1.57 billion of operating cash into the litigation escrow account previously established under the retrospective responsibility plan. This deposit has the same economic effect on earnings per share as repurchasing the Company's class A common stock because it reduces the as-converted class B common stock share count. The December 29, 2011 deposit reduced funds previously allocated to the amended July 2011 share repurchase program. At June 30, 2012, the Company has completed the share repurchase program previously authorized by the board of directors in July 2011.

In February 2012, the Company announced a $500 million share repurchase program authorized by the board of directors. The authorization will be in effect through February 1, 2013, and the terms of the program are subject to change at the discretion of the board of directors. This share repurchase program had remaining authorized funds of $39 million at June 30, 2012. In July 2012, the Company announced a new $1 billion share repurchase program authorized by the board of directors. The authorization will be in effect through July 17, 2013, and the terms of the program are subject to change at the discretion of the board of directors.

The Company repurchased approximately 4 million and 0.8 million shares during the three months ended June 30, 2012 and December 31, 2011, respectively. There was no share repurchase activity during the three months ended March 31, 2012. The following table presents share repurchases in the open market for the three months ended:



(in millions, except per share data)	June 30, 2012		December 31, 2011
Shares repurchased in the open market ⁽¹⁾	4.0		0.8
Weighted-average repurchase price per share	$	115.51	$	89.81
Total cost	$	461	$	75


⁽¹⁾	All shares repurchased in the open market have been retired and constitute authorized but unissued shares.

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

The Company made deposits of $1.57 billion and $150 million into the litigation escrow account on December 29, 2011 and July 24, 2012, respectively. The following table presents as-converted class B common stock after these deposits:



(in millions, except per share data)	July 24, 2012		December 29, 2011
Deposit under the retrospective responsibility plan	$	150	$	1,565
Effective price per share⁽¹⁾	$	125.50	$	101.75
Reduction in equivalent number of shares of class A common stock	1.2		15.4
Conversion rate of class B common stock to class A common stock after deposit	0.4206		0.4254
As-converted class B common stock after deposit	103		104


⁽¹⁾	Effective price per share 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 amended and restated certificate of incorporation.

Class B common stock. Under the Company’s amended and restated certificate of incorporation, shares of class B common stock are subject to transfer restrictions until the date on which certain covered litigation has been finally resolved. See Note 10—Legal Matters.

Accelerated class C share release programs. Of the 152 million shares of class C common stock released from transfer restrictions under the Company’s 2009, 2010 and 2011 accelerated class C share release programs, 113 million shares have been converted from class C to class A common stock upon their sale into the public market through June 30, 2012. Approximately 3 million and 9 million of those shares were converted during the three and nine months ended June 30, 2012, respectively.

Dividends. On July 17, 2012, the Company’s board of directors declared a dividend in the amount of $0.22 per share of class A common stock (determined in the case of class B and class C common stock on an as-converted basis), which will be paid on September 4, 2012 to all holders of record of the Company's class A, class B and class C common stock as of August 17, 2012. The Company paid $448 million in dividends during the nine months ended June 30, 2012.

Earnings Per Share

Note 7—Earnings Per Share

The following table presents basic and diluted loss per share for the three months ended June 30, 2012.



	Basic Earnings (Loss) Per Share								Diluted Earnings (Loss) Per Share
	(in millions, except per share data)
	Loss Allocation (A)				Weighted Average Shares Outstanding (B)	Earnings (Loss) per Share = (A)/(B)⁽¹⁾			Loss Allocation (A)				Weighted Average Shares Outstanding (B)		Earnings (Loss) per Share = (A)/(B)⁽¹⁾

Class A common stock	$	(1,437	)		525	$	(2.74	)	$	(1,839	)		672	⁽²⁾	$	(2.74	)
Class B common stock	(286		)	⁽³⁾	245	(1.16		)	(286		)	⁽³⁾	245		(1.16		)
Class C common stock	(109		)		40	(2.74		)	(109		)		40		(2.74		)
Participating securities⁽⁴⁾	(7		)		Not presented	Not presented			(7		)		Not presented		Not presented
Net loss attributable to Visa Inc.	$	(1,839	)

The following table presents basic and diluted earnings per share for the nine months ended June 30, 2012.



	Basic Earnings Per Share						Diluted Earnings Per Share
	(in millions, except per share data)
	Income Allocation (A)			Weighted Average Shares Outstanding (B)	Earnings per Share = (A)/(B)⁽¹⁾		Income Allocation (A)			Weighted Average Shares Outstanding (B)		Earnings per Share = (A)/(B)⁽¹⁾

Class A common stock	$	372		523	$	0.71	$	482		681	⁽²⁾	$	0.71
Class B common stock	78		⁽³⁾	245	0.32		78		⁽³⁾	245		0.32
Class C common stock	30			43	0.71		30			43		0.71
Participating securities⁽⁴⁾	2			Not presented	Not presented		2			Not presented		Not presented
Net income attributable to Visa Inc.	$	482

The following table presents basic and diluted earnings per share for the three months ended June 30, 2011.



	Basic Earnings Per Share						Diluted Earnings Per Share
	(in millions, except per share data)
	Income Allocation (A)			Weighted Average Shares Outstanding (B)	Earnings per Share = (A)/(B)⁽¹⁾		Income Allocation (A)			Weighted Average Shares Outstanding (B)		Earnings per Share = (A)/(B)⁽¹⁾

Class A common stock	$	746		521	$	1.43	$	1,005		704	⁽²⁾	$	1.43
Class B common stock	172		⁽³⁾	245	0.70		171		⁽³⁾	245		0.70
Class C common stock	84			59	1.43		84			59		1.43
Participating securities⁽⁴⁾	3			Not presented	Not presented		3			Not presented		Not presented
Net income attributable to Visa Inc.	$	1,005

The following table presents basic and diluted earnings per share for the nine months ended June 30, 2011.



	Basic Earnings Per Share						Diluted Earnings Per Share
	(in millions, except per share data)
	Income Allocation (A)			Weighted Average Shares Outstanding (B)	Earnings per Share = (A)/(B)⁽¹⁾		Income Allocation (A)			Weighted Average Shares Outstanding (B)		Earnings per Share = (A)/(B)⁽¹⁾

Class A common stock	$	1,976		506	$	3.90	$	2,770		712	⁽²⁾	$	3.89
Class B common stock	483		⁽³⁾	245	1.97		481		⁽³⁾	245		1.96
Class C common stock	302			78	3.90		302			78		3.89
Participating securities⁽⁴⁾	9			Not presented	Not presented		9			Not presented		Not presented
Net income attributable to Visa Inc.	$	2,770


⁽¹⁾	Earnings (loss) per share calculated based on whole numbers, not rounded numbers.

⁽²⁾

The computation of weighted-average dilutive shares outstanding included the effect of 3 million dilutive shares of outstanding stock awards for the nine months ended June 30, 2012 and 3 million and 2 million for the three and nine months ended June 30, 2011, respectively. As the Company had a net loss for the three months ended June 30, 2012, the computation excluded 7 million outstanding stock awards because their effect would have been anti-dilutive. The computation excluded stock options to purchase less than 1 million shares of common stock for the nine months ended June 30, 2012 and 2 million for the three and nine months ended June 30, 2011, respectively, because their effect would have been anti-dilutive.

⁽³⁾

Net income (loss) attributable to Visa Inc. is allocated to each class of common stock on an as-converted basis. The weighted-average number of shares of as-converted class B common stock used in the (loss) income allocation were 104 million and 110 million for the three and nine months ended June 30, 2012 and 120 million and 124 million for the three and nine months ended June 30, 2011, respectively.


⁽⁴⁾	Participating securities are unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents, such as the Company's restricted stock awards, restricted stock units and earned performance-based shares.

Share-based Compensation

Note 8—Share-based Compensation

The Company granted the following awards to employees and non-employee directors under the 2007 Equity Incentive Compensation Plan during the nine months ended June 30, 2012:



	Granted	Weighted-Average Grant Date Fair Value		Weighted-Average Exercise Price
Non-qualified stock options	441,191	$	29.65	$	93.22
Restricted stock awards ("RSA")	937,422	95.10
Restricted stock units ("RSU")	426,653	96.51
Performance-based shares⁽¹⁾	66,114	97.84


⁽¹⁾	The ultimate number of performance shares to be earned will be between zero and 132,227, depending on a combination of service, performance and market conditions.

The Company’s non-qualified stock options, RSAs and RSUs are equity awards with service-only conditions and are accordingly expensed on a straight-line basis over the vesting period. For awards with performance conditions, the Company uses the graded-vesting method of expense attribution. Compensation expense is recorded net of estimated forfeitures, which are adjusted as appropriate.

Income Taxes

Note 9—Income Taxes

The effective income tax rates were 29% and 22% for the three and nine months ended June 30, 2012, respectively, and 35% and 36% for the three and nine months ended June 30, 2011, respectively. The effective tax rates for the three and nine months ended June 30, 2012 differ from the effective tax rates in the same periods in fiscal 2011 primarily due to the following:


•	the effective tax rates for the three and nine months ended June 30, 2012 included:


▪	the tax benefit and the offsetting tax reserve associated with the covered litigation provision recorded in the third quarter of fiscal 2012;


▪	a one-time foreign tax credit carryover benefit recognized in the third quarter of fiscal 2012 in conjunction with changes in the geographic mix of the Company's global income; and


▪	the state tax reduction attributable to the changes in California tax apportionment rules adopted in the second quarter of fiscal 2012;


•	the effective tax rate for the nine months ended June 30, 2012 included a one-time, non-cash benefit of $208 million from the remeasurement of existing net deferred tax liabilities in the second quarter of fiscal 2012 as a result of the California state apportionment rule changes adopted in that same quarter;


•	the effective tax rates for the three and nine months ended June 30, 2012 reflected the absence of the following items that occurred in the third quarter of fiscal 2011:


▪	the non-taxable revaluation of the Visa Europe put option; and


▪	the additional foreign tax on the sale of the Company's investment in Companhia Brasileira de Soluções e Serviços.

During the three and nine months ended June 30, 2012, the Company's unrecognized tax benefits increased by $195 million and $246 million, respectively, all of which would affect the effective tax rate if recognized. The increase is primarily due to the unrecognized tax benefit associated with the covered litigation provision in the current period, partially offset by the decrease attributable to the effective settlement of various tax examination issues. During the three and nine months ended June 30, 2012, the Company accrued $1 million and $15 million of interest, respectively, and no penalties related to uncertain tax positions.

On May 23, 2012, the IRS issued a Notice of Proposed Adjustment to the Company's fiscal 2008 U.S. federal income tax return which would disallow the deduction or otherwise eliminate the tax benefit associated with the settlement of the American Express litigation for that fiscal year. On July 16, 2012, the IRS issued a Revenue Agent's Report to the Company regarding the same. The Company disagrees with the IRS' position and is preparing to appeal the proposed adjustment. The Company estimates that it would owe approximately $396 million in additional federal and state income tax, excluding interest and penalties, if any, related to fiscal 2008 if the IRS' position is sustained. Based on the Company's assessment of the IRS' position outlined in this Notice of Proposed Adjustment, no changes have been made to any of the Company's tax estimates under U.S. GAAP relating to this deduction or any similar deductions for covered litigation in subsequent fiscal years.

Legal Matters

Note 10—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 amounts 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 results of operations, financial position 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.

For the quarter ended June 30, 2012, the Company recorded a litigation provision of $4.1 billion, related to litigation subject to the retrospective responsibility plan. 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 at the balance sheet date.

The following table summarizes the activity related to accrued litigation for the nine months ended June 30, 2012 and 2011:



	2012			2011
	(in millions)
Balance at October 1	$	425		$	697
Provision for settled matters	—			6
Provision for unsettled matters	4,098			—
Reclassification of settled matters ⁽¹⁾	—			12
Interest accretion on settled matters	1			9
Payments on settled matters	(140		)	(212		)
Balance at June 30	$	4,384		$	512

⁽¹⁾ Reclassification of amount previously recorded in accrued liabilities.

Visa Inc., Visa U.S.A. and Visa International are parties to certain legal proceedings that are subject to the retrospective responsibility plan, which the Company refers to as the covered litigation. See Note 2—Retrospective Responsibility Plan. An accrual for covered litigation and a charge to the litigation provision are recorded when loss is deemed to be probable and reasonably estimable. In making this determination, the Company evaluates available information, including but not limited to actions taken by the litigation committee.

The American Express Litigation. Visa's settlement obligations were fully satisfied with the January 2012 payment to American Express.

The Interchange Litigation

Multidistrict Litigation Proceedings (MDL). On July 13, 2012, the Company, its wholly-owned subsidiaries Visa U.S.A. and Visa International, MasterCard Incorporated, MasterCard International Incorporated, various U.S. financial institution defendants, and the class plaintiffs signed a memorandum of understanding (the “MOU”) which obligates the parties to enter into a settlement agreement in the form attached to the MOU (together with the MOU, the “Settlement Agreement”) to resolve the class plaintiffs' claims. A final settlement agreement is subject to conditions, including (a) requisite corporate approvals; (b) reaching agreement on certain appendices to the Settlement Agreement regarding class notice, claims, and other procedures; (c) reaching negotiated settlements with the individual plaintiffs whose claims were consolidated with the MDL for coordination of pre-trial proceedings (the “Individual Plaintiffs”); and (d) court approval. There can be no assurances that these conditions will be satisfied.

The terms of the Settlement Agreement include, among other terms:


•	A comprehensive release from participating class members for liability arising out of claims asserted in the litigation, and a further release to protect against future litigation regarding interchange and the other U.S. rules at issue in the MDL;


•	Settlement payments from the Company of approximately $4.0 billion, to be paid from the Company's previously funded litigation escrow account established under the retrospective responsibility plan, see Note 2—Retrospective Responsibility Plan;

•

Distribution to class merchants of an amount equal to 10 basis points of default interchange across all credit rate categories for a period of eight consecutive months, which otherwise would have been paid to issuers and which effectively reduces credit interchange for that period of time. The eight month period for the reduction would begin within 60 days after completion of the court-ordered period during which individual class members may opt out of this settlement;


•	Certain modifications to the Company's rules, including modifications to permit surcharging on credit transactions under certain circumstances, subject to a cap and a level playing field with other general purpose card competitors; and


•	Agreement that the Company will meet with merchant buying groups that seek to negotiate interchange rates collectively.

In addition, the Company and the Individual Plaintiffs have reached an agreement in principle to resolve the Individual Plaintiffs' claims against the Company for approximately $350 million. The agreement in principle must be reduced to a written settlement agreement that is agreeable to all parties, and that settlement agreement will be subject to customary conditions, including all requisite corporate approvals. Until this agreement in principle is reduced to a written settlement agreement and the appropriate conditions are satisfied, no assurance can be provided that the Company will be able to resolve the Individual Plaintiffs' claims as contemplated by the agreement in principle.

For the quarter ended June 30, 2012, the Company recorded a litigation provision of $4.1 billion, which increased its total reserve for litigation subject to the retrospective responsibility plan from $285 million to approximately $4.4 billion, to reflect the class plaintiffs' Settlement Agreement and management's current estimate of the resolution of the Individual Plaintiffs' claims.

Other Litigation

“Indirect Purchaser” Actions. On January 9, 2012, the Court of Appeal of the State of California reversed the judgment approving the settlement agreement in the Credit/Debit Tying Cases. The case was remanded to the trial court for reconsideration of the fairness and adequacy of the settlement in light of the inclusion of the Attridge claims in the release. Attridge filed a motion to disqualify the trial judge, which was granted. On June 4, 2012, the court issued an order reassigning the case to the Honorable John E. Munter.

In New Mexico, on April 18, 2012, the state appellate court affirmed the trial court's dismissal of the case.

Vale Canjeable. Visa filed extraordinary appeals of the two August 10 rulings with the Supreme Court.

Canadian Competition Proceedings

Competition Bureau. Document production and examinations for discovery are complete. The hearing before the Competition Tribunal on the merits of the case was held from May 8, 2012 through June 21, 2012.

Merchant Litigation. On April 10, 2012, the court permitted the plaintiff to revise its complaint to effectively mirror the Watson case, and to add the same ten financial institutions as co-defendants. On June 13, 2012, at plaintiff's request and in light of the proceedings in the Watson case, the court entered an order staying the case until June 21, 2013.

As a result of plaintiff's unopposed request on January 10, 2012, the Bancroft-Snell case is being held in abeyance pending further proceedings in the Watson case.

Call Center Litigation. On November 30, 2011, the court entered a final order approving the settlement and entering judgment in the case.

U.S. ATM Access Fee Litigation.

National ATM Council class action. On January 10, 2012, plaintiffs filed an amended class action complaint against the same defendants. Like the original complaint, the amended complaint alleges that the ATM access fee rule prevents non-bank ATM operators from attracting customers to use other networks in violation of Section 1 of the Sherman Act. The amended complaint also alleges that Visa's rule has enabled Visa to charge artificially high network fees for ATM transactions, to compensate ATM operators inadequately, and to compensate member banks excessively. Plaintiffs request injunctive relief, attorneys' fees, and treble damages.

Consumer class actions. On December 1, 2011, the plaintiff in the Stoumbos case filed a corrected complaint, asserting the same claims as in the original complaint.

On January 10, 2012, the Bartron and Genese complaints were combined into a single amended complaint, now captioned Mackmin. The amended complaint challenges the same ATM access fee rules and names Visa, MasterCard, and three financial institutions as defendants, but the putative class representatives are different from those in the original Bartron and Genese complaints. Mackmin purports to represent classes and sub-classes of consumers in claims brought under Section 1 of the Sherman Act and the antitrust and/or consumer protection statutes in certain states and the District of Columbia. The amended complaint seeks injunctive relief, attorneys' fees, treble damages, and restitution where available under state law.

On January 30, 2012, Visa, MasterCard, and the defendant financial institutions filed motions to dismiss the complaints in the National ATM Council class action and the consumer class actions.

U.S. Department of Justice Civil Investigative Demand. On March 13, 2012, the Antitrust Division of the United States Department of Justice (the “Division”) issued a Civil Investigative Demand, or “CID,” to Visa Inc. seeking documents and information regarding a potential violation of Section 1 or 2 of the Sherman Act, 15 U.S.C. §§ 1, 2. The CID focuses on PIN-Authenticated Visa Debit and Visa's competitive responses to the Reform Act, including Visa's Fixed Acquirer Network Fee. In March, Visa met with the Division twice and provided materials in response to the CID. Visa is continuing to provide materials and cooperate with the Division in connection with the CID.

Summary of Significant Accounting Policies (Policies)

Organization

Organization. Visa Inc. (“Visa” or the “Company”) is a global payments technology company that connects consumers, businesses, banks and governments around the world, enabling them to use digital currency instead of cash and checks. 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 (“VWPL”), Visa Canada Corporation (“Visa Canada”), Inovant LLC (“Inovant”), and CyberSource Corporation (“CyberSource”), operate the world’s largest retail electronic payments network. The Company provides its clients with payment processing platforms that encompass consumer credit, debit, prepaid and commercial payments, and facilitates global commerce through the transfer of value and information among financial institutions, merchants, consumers, businesses and government entities. The Company does not issue cards, set fees, or determine the interest rates consumers will be charged on Visa-branded cards, which are the independent responsibility of the Company’s issuing clients.

Consolidation and basis of presentation

Consolidation and basis of presentation. The accompanying unaudited consolidated financial statements include the accounts of Visa Inc. 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 VIEs have not been material to its consolidated financial statements as of and for the periods presented. Non-controlling interests are reported as a component of equity. All significant intercompany accounts and transactions are eliminated in consolidation.

The accompanying unaudited consolidated financial statements are presented in accordance with the U.S. Securities and Exchange Commission (“SEC”) requirements for Quarterly Reports on Form 10-Q and, consequently, do not include all of the annual disclosures required by U.S. GAAP. Reference should be made to the Visa Inc. Annual Report on Form 10-K for the year ended September 30, 2011, 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 operation and cash flows for the interim period presented.

Retrospective Responsibility Plan (Tables)

Schedule of Restricted Cash and Cash Equivalents

The following table sets forth the changes in the escrow account.



	(in millions)
Balance at October 1, 2011	$	2,857
Deposit into the litigation escrow account	1,565
American Express settlement payment	(140		)
Balance at June 30, 2012	$	4,282
Deposit into the litigation escrow account	150
Balance at July 24, 2012	$	4,432

Fair Value Measurements (Tables)

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

Assets and Liabilities Measured at Fair Value on a Recurring Basis.



	Fair Value Measurements Using Inputs Considered as
	Level 1				Level 2				Level 3
	June 30, 2012		September 30, 2011		June 30, 2012		September 30, 2011		June 30, 2012		September 30, 2011
	(in millions)
Assets
Cash equivalents and restricted cash
Money market funds and time deposits	$	5,121	$	4,225
U.S. government-sponsored debt securities					$	—	$	175
Investment securities
U.S. government-sponsored debt securities					2,777		1,568
U.S. Treasury securities	817		350
Equity securities	66		57
Auction rate securities									$	7	$	7
Prepaid and other current assets
Foreign exchange derivative instruments					23		30
	$	6,004	$	4,632	$	2,800	$	1,773	$	7	$	7
Liabilities
Accrued liabilities
Visa Europe put option									$	145	$	145
Earn-out related to PlaySpan acquisition									23		24
Foreign exchange derivative instruments					$	4	$	7

Pension and Other Postretirement Benefits (Tables)

Schedule of Defined Benefit Plans Disclosures

The components of net periodic benefit cost are as follows:



	Pension Benefits												Other Postretirement Benefits
	Three Months Ended June 30,						Nine Months Ended June 30,						Three Months Ended June 30,					Nine Months Ended June 30,
	2012			2011			2012			2011			2012		2011			2012			2011
	(in millions)
Service cost	$	10		$	10		$	29		$	30		$	—	$	—		$	—		$	—
Interest cost	10			10			30			29			—		—			1			1
Expected return on assets	(14		)	(13		)	(41		)	(40		)	—		—			—			—
Amortization of:
Prior service credit	(2		)	(3		)	(7		)	(7		)	—		—			(2		)	(2		)
Actuarial loss	8			5			24			14			—		(1		)	—			(1		)
Settlement loss	3			—			3			—			—		—			—			—
Total net periodic benefit cost	$	15		$	9		$	38		$	26		$	—	$	(1	)	$	(1	)	$	(2	)

Settlement Guarantee Management (Tables)

Schedule of Customer Collateral

The Company maintained collateral as follows:



	June 30, 2012		September 30, 2011
	(in millions)
Cash equivalents	$	886	$	931
Pledged securities at market value	284		296
Letters of credit	966		902
Guarantees	1,996		1,845
Total	$	4,132	$	3,974

Stockholders' Equity (Tables)

Schedule of Stock by Class

The number of shares of each class and the number of shares of class A common stock on an as-converted basis at June 30, 2012, are as follows:



(in millions, except conversion rate)	Shares Outstanding	Conversion Rate Into Class A Common Stock	As-converted Class A Common Stock⁽¹⁾
Class A common stock	527	—	527
Class B common stock	245	0.4254	104
Class C common stock	38	1.0000	38
Total			670


⁽¹⁾	Figures may not sum due to rounding. As-converted class A common stock count calculated based on whole numbers.

Share Repurchase Program Disclosure

The following table presents share repurchases in the open market for the three months ended:



(in millions, except per share data)	June 30, 2012		December 31, 2011
Shares repurchased in the open market ⁽¹⁾	4.0		0.8
Weighted-average repurchase price per share	$	115.51	$	89.81
Total cost	$	461	$	75


⁽¹⁾	All shares repurchased in the open market have been retired and constitute authorized but unissued shares.

Schedule of Conversions of Stock

The following table presents as-converted class B common stock after these deposits:



(in millions, except per share data)	July 24, 2012		December 29, 2011
Deposit under the retrospective responsibility plan	$	150	$	1,565
Effective price per share⁽¹⁾	$	125.50	$	101.75
Reduction in equivalent number of shares of class A common stock	1.2		15.4
Conversion rate of class B common stock to class A common stock after deposit	0.4206		0.4254
As-converted class B common stock after deposit	103		104


⁽¹⁾	Effective price per share 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 amended and restated certificate of incorporation.

Earnings Per Share (Tables)

Schedule of Earnings Per Share, Basic and Diluted

The following table presents basic and diluted loss per share for the three months ended June 30, 2012.



	Basic Earnings (Loss) Per Share								Diluted Earnings (Loss) Per Share
	(in millions, except per share data)
	Loss Allocation (A)				Weighted Average Shares Outstanding (B)	Earnings (Loss) per Share = (A)/(B)⁽¹⁾			Loss Allocation (A)				Weighted Average Shares Outstanding (B)		Earnings (Loss) per Share = (A)/(B)⁽¹⁾

Class A common stock	$	(1,437	)		525	$	(2.74	)	$	(1,839	)		672	⁽²⁾	$	(2.74	)
Class B common stock	(286		)	⁽³⁾	245	(1.16		)	(286		)	⁽³⁾	245		(1.16		)
Class C common stock	(109		)		40	(2.74		)	(109		)		40		(2.74		)
Participating securities⁽⁴⁾	(7		)		Not presented	Not presented			(7		)		Not presented		Not presented
Net loss attributable to Visa Inc.	$	(1,839	)

The following table presents basic and diluted earnings per share for the nine months ended June 30, 2012.



	Basic Earnings Per Share						Diluted Earnings Per Share
	(in millions, except per share data)
	Income Allocation (A)			Weighted Average Shares Outstanding (B)	Earnings per Share = (A)/(B)⁽¹⁾		Income Allocation (A)			Weighted Average Shares Outstanding (B)		Earnings per Share = (A)/(B)⁽¹⁾

Class A common stock	$	372		523	$	0.71	$	482		681	⁽²⁾	$	0.71
Class B common stock	78		⁽³⁾	245	0.32		78		⁽³⁾	245		0.32
Class C common stock	30			43	0.71		30			43		0.71
Participating securities⁽⁴⁾	2			Not presented	Not presented		2			Not presented		Not presented
Net income attributable to Visa Inc.	$	482

The following table presents basic and diluted earnings per share for the three months ended June 30, 2011.



	Basic Earnings Per Share						Diluted Earnings Per Share
	(in millions, except per share data)
	Income Allocation (A)			Weighted Average Shares Outstanding (B)	Earnings per Share = (A)/(B)⁽¹⁾		Income Allocation (A)			Weighted Average Shares Outstanding (B)		Earnings per Share = (A)/(B)⁽¹⁾

Class A common stock	$	746		521	$	1.43	$	1,005		704	⁽²⁾	$	1.43
Class B common stock	172		⁽³⁾	245	0.70		171		⁽³⁾	245		0.70
Class C common stock	84			59	1.43		84			59		1.43
Participating securities⁽⁴⁾	3			Not presented	Not presented		3			Not presented		Not presented
Net income attributable to Visa Inc.	$	1,005

The following table presents basic and diluted earnings per share for the nine months ended June 30, 2011.



	Basic Earnings Per Share						Diluted Earnings Per Share
	(in millions, except per share data)
	Income Allocation (A)			Weighted Average Shares Outstanding (B)	Earnings per Share = (A)/(B)⁽¹⁾		Income Allocation (A)			Weighted Average Shares Outstanding (B)		Earnings per Share = (A)/(B)⁽¹⁾

Class A common stock	$	1,976		506	$	3.90	$	2,770		712	⁽²⁾	$	3.89
Class B common stock	483		⁽³⁾	245	1.97		481		⁽³⁾	245		1.96
Class C common stock	302			78	3.90		302			78		3.89
Participating securities⁽⁴⁾	9			Not presented	Not presented		9			Not presented		Not presented
Net income attributable to Visa Inc.	$	2,770


⁽¹⁾	Earnings (loss) per share calculated based on whole numbers, not rounded numbers.

⁽²⁾

The computation of weighted-average dilutive shares outstanding included the effect of 3 million dilutive shares of outstanding stock awards for the nine months ended June 30, 2012 and 3 million and 2 million for the three and nine months ended June 30, 2011, respectively. As the Company had a net loss for the three months ended June 30, 2012, the computation excluded 7 million outstanding stock awards because their effect would have been anti-dilutive. The computation excluded stock options to purchase less than 1 million shares of common stock for the nine months ended June 30, 2012 and 2 million for the three and nine months ended June 30, 2011, respectively, because their effect would have been anti-dilutive.

⁽³⁾

Net income (loss) attributable to Visa Inc. is allocated to each class of common stock on an as-converted basis. The weighted-average number of shares of as-converted class B common stock used in the (loss) income allocation were 104 million and 110 million for the three and nine months ended June 30, 2012 and 120 million and 124 million for the three and nine months ended June 30, 2011, respectively.


⁽⁴⁾	Participating securities are unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents, such as the Company's restricted stock awards, restricted stock units and earned performance-based shares.

Share-based Compensation (Tables)

Disclosure of Share-based Compensation Arrangements by Share-based Payment Award

The Company granted the following awards to employees and non-employee directors under the 2007 Equity Incentive Compensation Plan during the nine months ended June 30, 2012:



	Granted	Weighted-Average Grant Date Fair Value		Weighted-Average Exercise Price
Non-qualified stock options	441,191	$	29.65	$	93.22
Restricted stock awards ("RSA")	937,422	95.10
Restricted stock units ("RSU")	426,653	96.51
Performance-based shares⁽¹⁾	66,114	97.84


⁽¹⁾	The ultimate number of performance shares to be earned will be between zero and 132,227, depending on a combination of service, performance and market conditions.

Legal Matters (Tables)

Schedule of Loss Contingencies by Contingency

The following table summarizes the activity related to accrued litigation for the nine months ended June 30, 2012 and 2011:



	2012			2011
	(in millions)
Balance at October 1	$	425		$	697
Provision for settled matters	—			6
Provision for unsettled matters	4,098			—
Reclassification of settled matters ⁽¹⁾	—			12
Interest accretion on settled matters	1			9
Payments on settled matters	(140		)	(212		)
Balance at June 30	$	4,384		$	512

⁽¹⁾ Reclassification of amount previously recorded in accrued liabilities.

Retrospective Responsibility Plan Changes in the Escrow Account (Details) (USD $)

In Millions, unless otherwise specified

9 Months Ended

Jun. 30, 2012

Jun. 30, 2011

Dec. 29, 2011

Jul. 24, 2012

Additional Deposit

Restricted Cash and Cash Equivalents Items [Line Items]

Deposits To Litigation Escrow Account

$ 1,565

$ 150

Loss Contingency Accrual, Carrying Value, Provision

(4,098)

Escrow Account [Roll Forward]

Beginning balance

2,857

4,432

American Express settlement payments

(140)

(212)

Ending balance

$ 4,282

$ 4,432

Fair Value Measurements - Additional Information (Detail) (USD $)

In Millions, unless otherwise specified

9 Months Ended

Jun. 30, 2012

Jun. 30, 2011

Sep. 30, 2011

Fair Value, Measurement Inputs, Disclosure [Line Items]

Probability of exercise by Visa Europe

40.00%

P/E differential at the time of exercise

1.9x

P/E differential at the time of exercise, ratio

190.00%

Spot price to earnings

17.4x

Spot price to earnings, ratio

1,740.00%

Incremental price to earnings differential compared to estimate

1.8x

Incremental price to earnings differential compared to estimate, ratio

180.00%

Incremental probability of exercise by Visa Europe

5.00%

Increase in put option value due to increase in probability of exercise

$ 18

Incremental P/E differential at time of exercise

1.0x

Incremental P/E differential at time of exercise, ratio

100.00%

Increase in put option value due to increase in price to earnings differential

84

Fair value adjustment for the Visa Europe put option

122

Available-for-sale gross unrealized gains

2

0

Available-for-sale gross unrealized losses

1

0

Fair Value, Measurements, Recurring

Fair Value, Measurement Inputs, Disclosure [Line Items]

Put option, fair value

145

Non Marketable Equity Investments

Fair Value, Measurement Inputs, Disclosure [Line Items]

Non-marketable equity investments

$ 89

$ 100

Fair Value Measurements Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details) (Fair Value, Measurements, Recurring, USD $)

In Millions, unless otherwise specified

Jun. 30, 2012

Sep. 30, 2011

Accrued liabilities

Visa Europe put option

$ 145

Level 1

Prepaid and other current assets

Fair value, total assets

6,004

4,632

Level 1 |
US Treasury Securities [Member]

Investment securities

817

350

Level 1 |
Equity securities

Investment securities

66

57

Level 1 |
Money Market Funds [Member]

Cash equivalents and restricted cash

5,121

4,225

Level 2

Prepaid and other current assets

Fair value, total assets

2,800

1,773

Level 2 |
U.S. government-sponsored agency debt securities

Investment securities

2,777

1,568

Level 2 |
Foreign exchange derivative instruments

Prepaid and other current assets

Foreign exchange derivative instruments

23

30

Accrued liabilities

Foreign exchange derivative instruments

4

7

Level 2 |
U.S. government-sponsored agency debt securities

Cash equivalents and restricted cash

175

Level 3

Prepaid and other current assets

Fair value, total assets

7

Accrued liabilities

Earn-out related to PlaySpan acquisition

23

24

Level 3 |
Auction rate securities

Investment securities

7

Level 3 |
Visa Europe put option

Accrued liabilities

Visa Europe put option

$ 145

Components of Net Periodic Benefit Cost (Detail) (USD $)

In Millions, unless otherwise specified

3 Months Ended

9 Months Ended

Jun. 30, 2012

Jun. 30, 2011

Jun. 30, 2012

Jun. 30, 2011

Pension Benefits

Defined Benefit Plan Disclosure [Line Items]

Service cost

$ 10

$ 29

$ 30

Interest cost

10

30

29

Expected return on assets

(14)

(13)

(41)

(40)

Amortization of:

Prior service credit

(2)

(3)

(7)

Actuarial loss

8

5

24

14

Settlement loss

3

Total net periodic benefit cost

15

9

38

26