Document and Entity Information

9 Months Ended

Jun. 30, 2015

Jul. 17, 2015

Class A common stock

Jul. 17, 2015

Class B common stock

Jul. 17, 2015

Class C common stock

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, 2015

Document Fiscal Year Focus

2015

Document Fiscal Period Focus

Q3

Amendment Flag

false

Entity Common Stock, Shares Outstanding

1,951,387,285

245,513,385

19,208,816

CONSOLIDATED BALANCE SHEETS (USD $)

In Millions, unless otherwise specified

Jun. 30, 2015

Sep. 30, 2014

Assets

Cash and cash equivalents

$ 2,147

$ 1,971

Restricted cash—litigation escrow (Note 2)

1,143

1,498

Investment securities (Note 3):

Trading

71

69

Available-for-sale

2,504

1,910

Settlement receivable

704

786

Accounts receivable

892

822

Customer collateral (Note 6)

1,068

961

Current portion of client incentives

248

210

Deferred tax assets

834

1,028

Prepaid expenses and other current assets

457

307

Total current assets

10,068

9,562

Investment securities, available-for-sale (Note 3)

3,300

3,015

Client incentives

94

81

Property, equipment and technology, net

1,847

1,892

Other assets

920

855

Intangible assets, net (Note 7)

11,375

11,411

Goodwill (Note 7)

11,825

11,753

Total assets

39,429

38,569

Liabilities

Accounts payable

89

147

Settlement payable

1,237

1,332

Customer collateral (Note 6)

1,068

961

Accrued compensation and benefits

439

450

Client incentives

1,053

1,036

Accrued liabilities

806

624

Accrued litigation (Note 13)

1,097

1,456

Total current liabilities

5,789

6,006

Deferred tax liabilities

4,134

4,145

Other liabilities (Note 8)

879

1,005

Total liabilities

10,802

11,156

Equity

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

0

Additional paid-in capital

18,008

18,299

Accumulated income

10,623

9,131

Accumulated other comprehensive loss, net:

Investment securities, available-for-sale

5

31

Defined benefit pension and other postretirement plans

(86)

(84)

Derivative instruments classified as cash flow hedges

78

38

Foreign currency translation adjustments

(1)

(2)

Total accumulated other comprehensive loss, net

(4)

(17)

Total equity

28,627

27,413

Total liabilities and equity

39,429

38,569

Class A common stock

Equity

Common stock

0

Class B common stock

Equity

Common stock

0

Class C common stock

Equity

Common stock

$ 0

CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)

In Millions, except Per Share data, unless otherwise specified

Jun. 30, 2015

Sep. 30, 2014

Preferred Stock

Preferred stock, par value

$ 0.0001

Preferred stock, shares authorized

25

Preferred stock, shares issued

0

Class A common stock

Common stock, par value

$ 0.0001

Common stock, shares authorized

2,001,622

Common stock, shares issued

1,951

1,978

Common stock, shares outstanding

1,951

1,978

Class B common stock

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

Common stock, par value

$ 0.0001

Common stock, shares authorized

1,097

Common stock, shares issued

19

22

Common stock, shares outstanding

19

22

CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)

In Millions, except Per Share data, unless otherwise specified

3 Months Ended

9 Months Ended

Jun. 30, 2015

Jun. 30, 2014

Jun. 30, 2015

Jun. 30, 2014

Operating Revenues

Service revenues

$ 1,550

$ 1,417

$ 4,665

$ 4,298

Data processing revenues

1,400

1,321

4,123

3,819

International transaction revenues

1,039

860

2,973

2,622

Other revenues

199

195

607

558

Client incentives

(670)

(638)

(2,059)

(1,824)

Total operating revenues

3,518

3,155

10,309

9,473

Operating Expenses

Personnel

566

463

1,558

1,379

Marketing

224

228

619

659

Network and processing

117

127

340

379

Professional fees

82

229

234

Depreciation and amortization

130

109

375

323

General and administrative

137

126

404

354

Litigation provision (Note 13)

0

3

0

Total operating expenses

1,256

1,135

3,528

3,328

Operating income

2,262

2,020

6,781

6,145

Non-operating (expense) income

(94)

10

(69)

29

Income before income taxes

2,168

2,030

6,712

6,174

Income tax provision (Note 12)

471

670

1,896

1,809

Net income

$ 1,697

$ 1,360

$ 4,816

$ 4,365

Class A common stock

Earnings Per Share

Basic earnings per share (Note 10) (in dollars per share)

$ 0.69 ¹

$ 0.54 ¹

$ 1.96 ¹

$ 1.73 ¹

Basic weighted-average shares outstanding (Note 10) (in shares)

1,955

1,982

1,964

2,001

Diluted earnings per share (Note 10) (in dollars per share)

$ 0.69 ¹

$ 0.54 ¹

$ 1.96 ¹

$ 1.72 ¹

Diluted weighted-average shares outstanding (Note 10) (in shares)

2,448 ²

2,511 ²

2,462 ²

2,533 ²

Class B common stock

Earnings Per Share

Basic earnings per share (Note 10) (in dollars per share)

$ 1.14 ¹

$ 0.91 ¹

$ 3.23 ¹

$ 2.91 ¹

Basic weighted-average shares outstanding (Note 10) (in shares)

245 ³

Diluted earnings per share (Note 10) (in dollars per share)

$ 1.14 ¹

$ 0.91 ¹

$ 3.22 ¹

$ 2.90 ¹

Diluted weighted-average shares outstanding (Note 10) (in shares)

245 ³

Class C common stock

Earnings Per Share

Basic earnings per share (Note 10) (in dollars per share)

$ 2.78 ¹

$ 2.17 ¹

$ 7.84 ¹

$ 6.91 ¹

Basic weighted-average shares outstanding (Note 10) (in shares)

20 ³

26 ³

21 ³

26 ³

Diluted earnings per share (Note 10) (in dollars per share)

$ 2.77 ¹

$ 2.17 ¹

$ 7.82 ¹

$ 6.89 ¹

Diluted weighted-average shares outstanding (Note 10) (in shares)

20 ³

26 ³

21 ³

26 ³

[1] Figures in the table may not recalculate exactly due to rounding. Earnings per share is calculated based on unrounded numbers. The number of shares and per share amounts for the prior periods presented have been retroactively adjusted to reflect the four-for-one stock split effected in the fiscal second quarter of 2015. See Note 9—Stockholders' Equity.

[2] Weighted-average diluted shares outstanding are calculated on an as-converted basis, and include incremental common stock equivalents, as calculated under the treasury stock method. The computation includes approximately 5 million common stock equivalents for the three and nine months ended June 30, 2015, and 6 million and 7 million common stock equivalents for the three and nine months ended June 30, 2014, respectively, because their effect would be dilutive. The calculation excludes 1 million of common stock equivalents for the three months ended June 30, 2015 and 2014, and 2 million of common stock equivalents for the nine months ended June 30, 2015 and 2014, because their effect would have been anti-dilutive.

[3] The outstanding number of shares of class B and C common stock were not impacted by the stock split as these stockholders received an adjustment to their respective conversion ratios instead of stock dividends. See Note 9—Stockholders' Equity. Weighted-average basic and diluted shares outstanding for class B and C common stock are calculated based on the common shares outstanding of each respective class rather than on an as-converted basis.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $)

In Millions, unless otherwise specified

3 Months Ended

9 Months Ended

Jun. 30, 2015

Jun. 30, 2014

Jun. 30, 2015

Jun. 30, 2014

Statement of Comprehensive Income [Abstract]

Net income

$ 1,697

$ 1,360

$ 4,816

$ 4,365

Investment securities, available-for-sale:

Net unrealized loss

(2)

(30)

(21)

(2)

Income tax effect

1

11

8

1

Reclassification adjustment for net gain realized in net income

0

(21)

0

Income tax effect

0

8

0

Defined benefit pension and other postretirement plans:

Net unrealized actuarial loss and prior service credit

0

(7)

Income tax effect

0

3

Amortization of actuarial gain and prior service credit realized in net income

(3)

0

(3)

(7)

Income tax effect

1

0

1

3

Derivative instruments classified as cash flow hedges:

Net unrealized (loss) gain

(10)

(14)

118

3

Income tax effect

4

3

(33)

0

Reclassification adjustment for net gain realized in net income

(35)

(16)

(61)

(39)

Income tax effect

9

4

16

8

Foreign currency translation adjustments

0

1

0

Other comprehensive (loss) income, net of tax

(35)

(42)

13

(37)

Comprehensive income

$ 1,662

$ 1,318

$ 4,829

$ 4,328

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (USD $)

In Millions, unless otherwise specified

Total

USD ($)

Additional Paid-in Capital

USD ($)

Accumulated Income

USD ($)

Accumulated Other Comprehensive Loss

USD ($)

Class A common stock

Common Stock

Class B common stock

Common Stock

Class C common stock

Common Stock

Beginning Balance at Sep. 30, 2014

$ 27,413

$ 18,299

$ 9,131

$ (17)

Beginning Balance (in shares) at Sep. 30, 2014

1,978

245

22

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

Net income

4,816 ¹

4,816

Other comprehensive income, net of tax

13

Comprehensive income

4,829

Issuance of restricted stock awards (in shares)

2

Issuance of restricted stock awards

0

Conversion of class C common stock upon sale into public market (in shares)

12

(3)

Share-based compensation

139

Excess tax benefit for share-based compensation

78

Cash proceeds from issuance of common stock under equity plans (in shares)

2

Cash proceeds from issuance of common stock under employee equity plans

68

Restricted stock and performance-based shares settled in cash for taxes (in shares)

1

Restricted stock and performance-based shares settled in cash for taxes

(105)

Cash dividends declared and paid, at a quarterly amount of $0.12 per as-converted share (Note 9)

(885)

Repurchase of class A common stock (Note 9) (in shares)

(44)²

(44)

Repurchase of class A common stock (Note 9)

(2,910)

(471)

(2,439)

Ending Balance at Jun. 30, 2015

$ 28,627

$ 18,008

$ 10,623

$ (4)

Ending Balance (in shares) at Jun. 30, 2015

1,951

245

19

[1] Net income is allocated based on proportional ownership on an as-converted basis. The weighted-average number of shares of as-converted class B common stock used in the income allocation was 405 million for the three and nine months ended June 30, 2015, and 413 million for the three and nine months ended June 30, 2014. The weighted-average number of shares of as-converted class C common stock used in the income allocation was 78 million and 82 million for the three and nine months ended June 30, 2015, respectively, and 103 million and 104 million for the three and nine months ended June 30, 2014, respectively.

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

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Parenthetical)

9 Months Ended

Jun. 30, 2015

Dividends, Common Stock, Cash

$ 0.12

CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)

In Millions, unless otherwise specified

9 Months Ended

Jun. 30, 2015

Jun. 30, 2014

Operating Activities

Net income

$ 4,816

$ 4,365

Adjustments to reconcile net income to net cash provided by operating activities:

Amortization of client incentives

2,059

1,824

Fair value adjustment for the Visa Europe put option

110

0

Share-based compensation

139

130

Excess tax benefit for share-based compensation

(78)

(82)

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

375

323

Deferred income taxes

196

(358)

Other

18

10

Change in operating assets and liabilities:

Settlement receivable

82

24

Accounts receivable

(64)

(55)

Client incentives

(2,093)

(1,775)

Other assets

(342)

(318)

Accounts payable

(52)

(86)

Settlement payable

(95)

82

Accrued and other liabilities

141

273

Accrued litigation (Note 13)

(362)

1,055

Net cash provided by operating activities

4,850

5,412

Investing Activities

Purchases of property, equipment, technology and intangible assets

(276)

(326)

Proceeds from sales of property, equipment and technology

10

Investment securities, available-for-sale:

Purchases

(2,315)

(1,842)

Proceeds from sales and maturities

1,410

1,863

Acquisition, net of cash received (Note 7)

(93)

(134)

Purchases of / contributions to other investments

(22)

(3)

Proceeds / distributions from other investments

10

Net cash used in investing activities

(1,276)

(442)

Financing Activities

Repurchase of class A common stock (Note 9)

(2,910)

(3,362)

Dividends paid (Note 9)

(885)

(758)

Payments from (return to) litigation escrow account—retrospective responsibility plan (Note 2 and Note 13)

355

(1,056)

Cash proceeds from issuance of common stock under employee equity plans

68

81

Restricted stock and performance-based shares settled in cash for taxes

(105)

(85)

Excess tax benefit for share-based compensation

78

82

Net cash used in financing activities

(3,399)

(5,098)

Effect of exchange rate changes on cash and cash equivalents

1

0

Increase (decrease) in cash and cash equivalents

176

(128)

Cash and cash equivalents at beginning of year

1,971

2,186

Cash and cash equivalents at end of period

2,147

2,058

Supplemental Disclosure

Income taxes paid, net of refunds

1,892

1,943

Accruals related to purchases of property, equipment, technology and intangible assets

$ 67

$ 42

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

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

On March 18, 2015, the Company completed a four-for-one split of its class A common stock effected in the form of a stock dividend. All per share amounts and number of shares outstanding in these unaudited consolidated financial statements and accompanying notes are presented on a post-split basis. See Note 9—Stockholders' Equity.

Certain prior period amounts within the accompanying unaudited consolidated financial statements have been reclassified to conform to current period presentation. These reclassifications did not affect the Company's financial position, total operating revenues, net income, comprehensive income, or cash flows as of and for the periods presented.

The accompanying unaudited consolidated financial statements are presented in accordance with the U.S. Securities and Exchange Commission ("SEC") requirements for Quarterly Reports on Form 10-Q and, consequently, do not include all of the annual disclosures required by U.S. GAAP. Reference should be made to the Visa Annual Report on Form 10-K for the year ended September 30, 2014 for additional disclosures, including a summary of the Company’s significant accounting policies.

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

Recently Issued and Adopted Accounting Pronouncements.

In February 2013, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2013-04, which provides guidance for the recognition, measurement and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation is fixed at the reporting date. The Company adopted the standard effective October 1, 2014. The adoption did not have a material impact on the consolidated financial statements.

In March 2013, the FASB issued ASU 2013-05, which clarifies guidance for the release of the cumulative translation adjustment into net income when a parent either sells a part or all of its investment in a foreign entity, or no longer holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business within a foreign entity. The Company adopted the standard effective October 1, 2014. The adoption did not have a material impact on the consolidated financial statements.

In July 2013, the FASB issued ASU 2013-11, which provides guidance for the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The standard impacts presentation only. The Company adopted the standard effective October 1, 2014. The adoption did not have a material impact on the consolidated financial statements.

In November 2014, the FASB issued ASU 2014-17, which permits an acquired entity to elect the option to apply pushdown accounting in its separate financial statements upon occurrence of an event in which an acquirer obtained control of the acquired entity. The Company adopted the standard prospectively effective November 18, 2014. The adoption did not have a material impact on the consolidated financial statements.

In January 2015, the FASB issued ASU 2015-01, which simplifies the classification, presentation and disclosure requirements for extraordinary events and unusual transactions by eliminating the concept of extraordinary items from U.S. GAAP. The Company will adopt the standard effective October 1, 2016. The adoption is not expected to have a material impact on the consolidated financial statements.

In February 2015, the FASB issued ASU 2015-02, which amends guidance relating to the assessment for determining when an entity should consolidate variable interest entities and limited partnerships. The Company will adopt the standard effective October 1, 2016. The adoption is not expected to have a material impact on the consolidated financial statements.

In April 2015, the FASB issued ASU 2015-03, which simplifies the presentation of debt issuance costs by requiring that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of debt liability, consistent with debt discounts or premiums. The standard impacts presentation only. The Company will adopt the standard effective October 1, 2016. The adoption is not expected to have a material impact on the consolidated financial statements.

In April 2015, the FASB issued ASU 2015-05, which provides guidance about a customer’s accounting for fees paid in a cloud computing arrangement. The amendment will help entities evaluate whether such an arrangement includes a software license, which should be accounted for consistent with the acquisition of other software licenses; otherwise, it should be accounted for as a service contract. The Company will adopt the standard effective October 1, 2016. The 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, the covered litigation are paid. At June 30, 2015 and September 30, 2014, the balance of the escrow account was $1.1 billion and $1.5 billion, respectively. The Company paid $355 million to opt-out merchants from the litigation escrow account during the nine months ended June 30, 2015 to settle their claims associated with the interchange multidistrict litigation. See Note 13—Legal Matters.

The accrual related to the covered litigation could be either higher or lower than the litigation escrow account balance. The Company did not record an additional accrual for the covered litigation during the nine months ended June 30, 2015. See Note 13—Legal Matters.

Fair Value Measurements and Investments

Note 3—Fair Value Measurements and Investments

Fair Value Measurements

Assets and Liabilities Measured at Fair Value on a Recurring Basis



	Fair Value Measurements Using Inputs Considered as
	Level 1				Level 2				Level 3
	June 30, 2015		September 30, 2014		June 30, 2015		September 30, 2014		June 30, 2015		September 30, 2014
	(in millions)
Assets
Cash equivalents and restricted cash:
Money market funds	$	2,239	$	2,277
Commercial paper					$	45	$	37
Investment securities, trading:
Equity securities	71		69
Investment securities, available-for-sale:
U.S. government-sponsored debt securities					2,482		2,162
U.S. Treasury securities	2,756		2,176
Equity securities	12		58
Corporate debt securities					548		522
Auction rate securities									$	7	$	7
Prepaid and other current assets:
Foreign exchange derivative instruments					71		40
Total	$	5,078	$	4,580	$	3,146	$	2,761	$	7	$	7
Liabilities
Accrued liabilities:
Visa Europe put option									$	255	$	145
Foreign exchange derivative instruments					$	8	$	6
Total	$	—	$	—	$	8	$	6	$	255	$	145

There were no significant transfers between Level 1 and Level 2 assets during the nine months ended June 30, 2015 and 2014.

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

Level 2 assets and liabilities measured at fair value on a recurring basis. The fair value of U.S. government-sponsored debt securities and corporate debt securities, as provided by third-party pricing vendors, is based on quoted prices in active markets for similar, not identical, assets. The pricing data obtained from outside sources is reviewed internally for reasonableness, compared against benchmark quotes from independent pricing sources, then confirmed or revised accordingly. Commercial paper and foreign exchange derivative instruments are valued using inputs that are observable in the market or can be derived principally from or corroborated by observable market data. There were no substantive changes to the valuation techniques and related inputs used to measure fair value during the nine months ended June 30, 2015.

Level 3 assets and liabilities measured at fair value on a recurring basis. Auction rate securities are classified as Level 3 due to a lack of trading in active markets and a lack of observable inputs in measuring fair value. There were no substantive changes to the valuation techniques and related inputs used to measure fair value during the nine months ended June 30, 2015.

Visa Europe put option agreement. The Company has granted Visa Europe a perpetual put option, or 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 (as defined in the put option agreement), or the P/E ratio, at the time the option is exercised, to Visa Europe’s adjusted net income for the forward 12-month period (as defined in the put option agreement), or the adjusted sustainable income. 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 valuation of the put option therefore requires substantial judgment. The most subjective estimates applied in valuing the put option are the assumed probability that Visa Europe will elect to exercise its option and the estimated differential between the P/E ratio and the P/E ratio applicable to Visa Europe on a standalone basis at the time of exercise, or the P/E differential. 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, 2015, the Company determined the fair value of the put option to be $255 million compared to $145 million at September 30, 2014. While $255 million represents the fair value of the put option at June 30, 2015, it does not represent the actual purchase price that the Company may be required to pay if the option is exercised. Given current economic conditions, the purchase price under the terms of the put option would likely be in excess of $15 billion. During the nine months ended June 30, 2015, there were no changes to the valuation methodology used to estimate the fair value of the put option. The increase in value was primarily driven by an increase in estimated Visa Europe adjusted sustainable income partially offset by a decrease in the P/E differential. At June 30, 2015 and September 30, 2014, the key unobservable inputs included a 40% probability of exercise by Visa Europe at some point in the future and an estimated P/E differential of 1.4x and 1.9x, respectively. At June 30, 2015, the Company's spot P/E was 22.5x, and there was a differential of 1.6x 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 was 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 $32 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 $259 million in the value of the put option.

Both the Company's estimate of the probability of exercise and the option purchase price discussed above are based on Visa Europe's exercise of the put option on its existing terms. The Company and Visa Europe, however, remain free to structure a business combination on terms that could be substantially different from the existing terms of the put option. Therefore, the above estimates should not be understood to represent the Company's estimate of the overall likelihood of a business combination transaction with Visa Europe, or of the potential purchase price to be paid by the Company in any such transaction.

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, 2015. 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. Changes in fair value are recorded as non-cash, non-operating expense on the consolidated statements of operations.

We believe there is compelling logic for both Visa Inc. and Visa Europe to consummate a business combination and therefore regularly engage in such discussions and are currently in such discussions. There is no assurance, however, that any transaction will be ultimately agreed or implemented.

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

Non-marketable equity investments and investments accounted for under the equity method. These investments are classified as Level 3 due to the absence of quoted market prices, the inherent lack of liquidity, and the fact that inputs used to measure fair value are unobservable and require management's judgment. When certain events or circumstances indicate that impairment may exist, the Company revalues the investments using various assumptions, including the financial metrics and ratios of comparable public companies. There were no

events or circumstances that indicated these investments became impaired during the nine months ended June 30, 2015 or 2014. At June 30, 2015 and September 30, 2014, these investments totaled $43 million and $35 million, respectively. These assets are classified in 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 measured at fair value on a non-recurring basis. Finite-lived intangible assets primarily consist of customer relationships, tradenames 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 Company completed its annual impairment review of its indefinite-lived intangible assets and goodwill as of February 1, 2015, and concluded that there was no impairment. No recent events or changes in circumstances indicate that impairment existed at June 30, 2015.

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, 2015, but require disclosure of their fair values: time deposits recorded in prepaid expenses and other current assets, settlement receivable and payable, and customer collateral. The estimated fair value of such instruments at June 30, 2015 approximates their carrying value due to their generally short maturities. If measured at fair value in the financial statements, these financial instruments would be classified as Level 2 in the fair value hierarchy.

Investments

Available-for-sale investment securities

The Company had $9 million in gross unrealized gains and $3 million in gross unrealized losses at June 30, 2015. There were $48 million gross unrealized gains and no gross unrealized losses at September 30, 2014. The gross unrealized gains at September 30, 2014 primarily relate to the Company's available-for-sale equity securities. A majority of the Company's available-for-sale investment securities with stated maturities are due within one to two years.

Debt

Note 4—Debt

Credit facility. On January 28, 2015, the Company entered into an unsecured $3.0 billion revolving credit facility (the “Credit Facility”). The Credit Facility, which expires on January 27, 2016, replaced the Company's previous $3.0 billion credit facility, which expired on January 28, 2015. The Credit Facility contains covenants and events of default customary for facilities of this type. The participating lenders in the Credit Facility include affiliates of certain holders of the Company's class B and class C common stock and some of the Company's clients or affiliates of its clients. This facility is maintained to provide liquidity in the event of settlement failures by the Company's clients, to back up the commercial paper program and for general corporate purposes.

Interest on borrowings under the Credit Facility would 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. Visa also agreed to pay a commitment fee, which will fluctuate based on the credit rating of the Company's senior unsecured long-term debt. Currently, the applicable margin is 0.00% to 0.75% depending on the type of the loan, and the commitment fee is 0.07%. There were no borrowings under either facility and the Company was in compliance with all related covenants during the nine months ended June 30, 2015.

Pension and Other Postretirement Benefits

Note 5—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 Company also sponsors other pension benefit plans that provide benefits for internationally-based employees at certain non-U.S. locations, which are not presented below as they are not material.

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,
	2015			2014			2015			2014			2015			2014			2015			2014
	(in millions)
Service cost	$	12		$	11		$	35		$	34		$	—		$	—		$	—		$	—
Interest cost	10			10			30			31			—			—			—			—
Expected return on assets	(18		)	(17		)	(54		)	(51		)	—			—			—			—
Amortization of:
Prior service credit	(2		)	(2		)	(5		)	(6		)	—			—			(2		)	(2		)
Actuarial loss (gain)	—			1			—			1			(1		)	(1		)	(1		)	(1		)
Curtailment gain	—			—			—			(3		)	—			—			—			—
Settlement loss	1			2			5			3			—			—			—			—
Total net periodic benefit cost	$	3		$	5		$	11		$	9		$	(1	)	$	(1	)	$	(3	)	$	(3	)

Settlement Guarantee Management

Note 6—Settlement Guarantee Management

The Company indemnifies its financial institution clients for settlement losses suffered due to failure of any other clients to fund its settlement obligations in accordance with Visa’s operating regulations. The indemnification creates settlement risk for the Company due to the difference in timing between the date of a payment transaction and the date of subsequent settlement. The exposure to settlement losses through Visa's settlement indemnification is accounted for as a settlement risk guarantee. The Company’s settlement exposure is limited to the amount of unsettled Visa payment transactions at any point in time. The Company requires certain financial institution clients that do not meet its credit standards to post collateral to offset potential loss from their estimated unsettled transactions. The Company’s estimated maximum settlement exposure was $43.9 billion for the quarter ended June 30, 2015, compared to $56.9 billion for the quarter ended September 30, 2014. The decrease in the Company's estimated maximum settlement exposure for the quarter ended June 30, 2015 is due to recent changes in Visa's operating regulations that reduced the number of transactions covered by its settlement indemnification. Of these settlement exposure amounts, $2.2 billion and $3.2 billion were covered by collateral at June 30, 2015 and September 30, 2014, respectively.

The Company maintained collateral as follows:



	June 30, 2015		September 30, 2014
	(in millions)
Cash equivalents	$	1,068	$	961
Pledged securities at market value	155		148
Letters of credit	1,165		1,242
Guarantees	1,213		1,554
Total	$	3,601	$	3,905

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

The fair value of the settlement risk guarantee is estimated based on a proprietary probability-weighted model and was approximately $2 million at June 30, 2015 and September 30, 2014. These amounts are reflected in accrued liabilities on the consolidated balance sheets.

Goodwill and Intangible Assets

Note 7—Goodwill and Intangible Assets

In April 2015, the Company acquired a business in which it previously held a minority interest. The total purchase consideration was approximately $116 million, excluding the Company's previously held minority interest, paid primarily with cash on hand. Total purchase consideration has been allocated to the tangible and identifiable intangible assets acquired, and to liabilities assumed based on their respective fair values on the acquisition date. Related finite-lived intangible assets recorded totaled $13 million with a weighted-average useful life of 6.7 years. Goodwill of $72 million was recorded to reflect the excess purchase consideration over net assets acquired.

The consolidated financial statements include the operating results of the acquired business from the date of acquisition. Pro forma information related to the acquisition has not been presented as the impact is not material to the Company's financial results.

Other Liabilities

Note 8—Other Liabilities

Other non-current liabilities consisted of the following:



	June 30, 2015		September 30, 2014
	(in millions)
Accrued income taxes ⁽¹⁾	$	716	$	855
Employee benefits	86		92
Other	77		58
Total	$	879	$	1,005


⁽¹⁾	The decrease in non-current accrued taxes is primarily due to a decrease in liabilities for uncertain tax positions. See Note 12—Income Taxes.

Stockholders' Equity

Note 9—Stockholders' Equity

Class A common stock split. In January 2015, Visa’s board of directors declared a four-for-one split of its class A common stock. Each class A common stockholder of record at the close of business on February 13, 2015 ("Record Date"), received a dividend of three additional shares on March 18, 2015 for every share held as of the Record Date. Trading began on a split-adjusted basis on March 19, 2015. Holders of class B and C common stock did not receive a stock dividend. Instead, the conversion rate for class B common stock increased to 1.6483 shares of class A common stock per share of class B common stock, and the conversion rate for class C common stock increased to 4.0 shares of class A common stock per share of class C common stock. Immediately following the split, the class A, B and C stockholders retained the same relative ownership percentages that they had prior to the stock split. All per share amounts and number of shares outstanding in these unaudited consolidated financial statements and accompanying notes are presented on a post-split basis. As a result of the stock split, all historical per share data and number of shares outstanding presented have been retroactively adjusted.

As-Converted Class A Common Stock. 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, 2015, are as follows:



(in millions, except conversion rates)	Shares Outstanding	Conversion Rate Into Class A Common Stock		As-converted Class A Common Stock⁽¹⁾
Class A common stock	1,951	—		1,951
Class B common stock	245	1.6483	⁽²⁾	405
Class C common stock	19	4.0000		77
Total				2,433


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


⁽²⁾	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 class A common stock. The following table presents share repurchases in the open market.



(in millions, except per share data)	Three Months Ended June 30, 2015		Nine Months Ended June 30, 2015
Shares repurchased in the open market ⁽¹⁾	15		44
Average repurchase price per share ⁽²⁾	$	68.05	$	65.98
Total cost	$	1,055	$	2,910


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


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

As of June 30, 2015, the October 2014 program had remaining authorized funds of $2.8 billion for share repurchase. All share repurchase programs authorized prior to October 2014 have been completed.

Dividends. In July 2015, the Company’s board of directors declared a quarterly cash dividend of $0.12 per share of class A common stock (determined in the case of class B and class C common stock on an as-converted basis). The cash dividend will be paid on September 1, 2015, to all holders of record of the Company's class A, B and C common stock as of August 14, 2015. The Company declared and paid $885 million in dividends during the nine months ended June 30, 2015.

Earnings Per Share

Note 10—Earnings Per Share

The following table presents earnings per share for the three months ended June 30, 2015.⁽¹⁾



	Basic Earnings Per Share					Diluted Earnings Per Share
	(in millions, except per share data)
	Income Allocation (A)⁽²⁾		Weighted- Average Shares Outstanding (B)	Earnings per Share = (A)/(B)		Income Allocation (A)⁽²⁾		Weighted- Average Shares Outstanding (B)		Earnings per Share = (A)/(B)
Class A common stock	$	1,358	1,955	$	0.69	$	1,697	2,448	⁽³⁾	$	0.69
Class B common stock⁽⁴⁾	281		245	$	1.14	$	281	245		$	1.14
Class C common stock⁽⁴⁾	54		20	$	2.78	$	54	20		$	2.77
Participating securities⁽⁵⁾	4		Not presented	Not presented		$	4	Not presented		Not presented
Net income	$	1,697

The following table presents earnings per share for the nine months ended June 30, 2015.⁽¹⁾



	Basic Earnings Per Share					Diluted Earnings Per Share
	(in millions, except per share data)
	Income Allocation (A)⁽²⁾		Weighted- Average Shares Outstanding (B)	Earnings per Share = (A)/(B)		Income Allocation (A)⁽²⁾		Weighted- Average Shares Outstanding (B)		Earnings per Share = (A)/(B)
Class A common stock	$	3,850	1,964	$	1.96	$	4,816	2,462	⁽³⁾	$	1.96
Class B common stock⁽⁴⁾	793		245	$	3.23	$	792	245		$	3.22
Class C common stock⁽⁴⁾	161		21	$	7.84	$	161	21		$	7.82
Participating securities⁽⁵⁾	12		Not presented	Not presented		$	12	Not presented		Not presented
Net income	$	4,816

The following table presents earnings per share for the three months ended June 30, 2014.⁽¹⁾



	Basic Earnings Per Share					Diluted Earnings Per Share
	(in millions, except per share data)
	Income Allocation (A)⁽²⁾		Weighted- Average Shares Outstanding (B)	Earnings per Share = (A)/(B)		Income Allocation (A)⁽²⁾		Weighted- Average Shares Outstanding (B)		Earnings per Share = (A)/(B)
Class A common stock	$	1,076	1,982	$	0.54	$	1,360	2,511	⁽³⁾	$	0.54
Class B common stock⁽⁴⁾	224		245	$	0.91	$	224	245		$	0.91
Class C common stock⁽⁴⁾	56		26	$	2.17	$	56	26		$	2.17
Participating securities⁽⁵⁾	4		Not presented	Not presented		$	4	Not presented		Not presented
Net income	$	1,360

The following table presents earnings per share for the nine months ended June 30, 2014.⁽¹⁾



	Basic Earnings Per Share					Diluted Earnings Per Share
	(in millions, except per share data)
	Income Allocation (A)⁽²⁾		Weighted- Average Shares Outstanding (B)	Earnings per Share = (A)/(B)		Income Allocation (A)⁽²⁾		Weighted- Average Shares Outstanding (B)		Earnings per Share = (A)/(B)
Class A common stock	$	3,458	2,001	$	1.73	$	4,365	2,533	⁽³⁾	$	1.72
Class B common stock⁽⁴⁾	714		245	$	2.91	$	712	245		$	2.90
Class C common stock⁽⁴⁾	180		26	$	6.91	$	180	26		$	6.89
Participating securities⁽⁵⁾	13		Not presented	Not presented		$	13	Not presented		Not presented
Net income	$	4,365


⁽¹⁾	Figures in the table may not recalculate exactly due to rounding. Earnings per share is calculated based on unrounded numbers. The number of shares and per share amounts for the prior periods presented have been retroactively adjusted to reflect the four-for-one stock split effected in the fiscal second quarter of 2015. See Note 9—Stockholders' Equity.

⁽²⁾

Net income is allocated based on proportional ownership on an as-converted basis. The weighted-average number of shares of as-converted class B common stock used in the income allocation was 405 million for the three and nine months ended June 30, 2015, and 413 million for the three and nine months ended June 30, 2014. The weighted-average number of shares of as-converted class C common stock used in the income allocation was 78 million and 82 million for the three and nine months ended June 30, 2015, respectively, and 103 million and 104 million for the three and nine months ended June 30, 2014, respectively.

⁽³⁾

Weighted-average diluted shares outstanding are calculated on an as-converted basis, and include incremental common stock equivalents, as calculated under the treasury stock method. The computation includes approximately 5 million common stock equivalents for the three and nine months ended June 30, 2015, and 6 million and 7 million common stock equivalents for the three and nine months ended June 30, 2014, respectively, because their effect would be dilutive. The calculation excludes 1 million of common stock equivalents for the three months ended June 30, 2015 and 2014, and 2 million of common stock equivalents for the nine months ended June 30, 2015 and 2014, because their effect would have been anti-dilutive.

⁽⁴⁾

The outstanding number of shares of class B and C common stock were not impacted by the stock split as these stockholders received an adjustment to their respective conversion ratios instead of stock dividends. See Note 9—Stockholders' Equity. Weighted-average basic and diluted shares outstanding for class B and C common stock are calculated based on the common shares outstanding of each respective class rather than on an as-converted basis.


⁽⁵⁾	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 11—Share-based Compensation

The Company granted the following equity awards to employees and non-employee directors under the 2007 Equity Incentive Compensation Plan during the nine months ended June 30, 2015. The amounts presented below reflect the four-for-one stock split that was effected in the second quarter of fiscal 2015. See Note 9—Stockholders' Equity.



	Granted	Weighted-Average Grant Date Fair Value		Weighted-Average Exercise Price
Non-qualified stock options	1,415,310	$	12.00	$	62.60
Restricted stock awards ("RSAs")	2,033,977	$	63.04
Restricted stock units ("RSUs")	736,702	$	62.58
Performance-based shares⁽¹⁾	785,884	$	69.78


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

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. The Company's performance-based shares are equity awards with service, market and performance conditions that are accounted for using the graded-vesting method. Compensation cost is recorded net of estimated forfeitures, which are adjusted as appropriate.

Employee Stock Purchase Plan. In January 2015, the Company's class A stockholders approved the Visa Inc. Employee Stock Purchase Plan (the “ESPP”), under which substantially all employees are eligible to participate. The ESPP permits eligible employees to purchase the Company’s class A common stock at a 15% discount of the stock price on the purchase date, subject to certain restrictions. A total of 20 million shares of class A common stock have been reserved for issuance under the ESPP. The first offering date was April 1, 2015. The ESPP does not have a material impact on the consolidated financial statements.

Income Taxes

Note 12—Income Taxes

The effective income tax rates were 22% and 28% for the three and nine months ended June 30, 2015, respectively, and 33% and 29% for the three and nine months ended June 30, 2014, respectively.

The effective tax rate for the three months ended June 30, 2015 differs from the effective tax rate in the same period in fiscal 2014 primarily due to a $280 million tax benefit resulting from the resolution of uncertain tax positions with taxing authorities in the third quarter of fiscal 2015. Of the $280 million, $239 million relates to prior fiscal years and $24 million relates to the first and second quarters of fiscal 2015.

The effective tax rate for the nine months ended June 30, 2015 differs from the effective tax rate in the same period in fiscal 2014 primarily due to:


•	the aforementioned $280 million tax benefit resulting from the resolution of uncertain tax positions with taxing authorities in the third quarter of fiscal 2015; and


•	the absence of a one-time $189 million tax benefit recorded in the second quarter of fiscal 2014 related to a deduction for U.S. domestic production activities for years prior to fiscal 2014.

During the three and nine months ended June 30, 2015, the Company's gross unrecognized tax benefits decreased by $245 million and $254 million, respectively. The decrease in gross unrecognized tax benefits is primarily due to the recognition of previously recorded unrecognized tax benefits as a result of the resolution of uncertain tax positions with taxing authorities in the third quarter of fiscal 2015. During the three and nine months ended June 30, 2015, the Company's accrued interest on unrecognized tax benefits decreased by $8 million and $4 million, respectively, as a result of the decrease in unrecognized tax benefits. During the three and nine months ended June 30, 2015, there were no significant changes in 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.

Legal Matters

Note 13—Legal Matters

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

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 activity related to accrued litigation.



	Fiscal 2015			Fiscal 2014
	(in millions)
Balance at October 1	$	1,456		$	5
Reestablishment of obligation related to interchange multidistrict litigation	—			1,056
Additional provision for legal matters	3			—
Payments on legal matters	(362		)	(1		)
Balance at June 30	$	1,097		$	1,060

Covered Litigation

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

The following table summarizes the activity related to covered litigation.



	Fiscal 2015			Fiscal 2014
	(in millions)
Balance at October 1	$	1,449		$	—
Payments on covered litigation	(355		)	—
Reestablishment of obligation related to interchange multidistrict litigation	—			1,056
Balance at June 30	$	1,094		$	1,056

The Attridge Litigation

At plaintiff's request, the court dismissed the case with prejudice on June 3, 2015.

Interchange Multidistrict Litigation (MDL)

On January 14, 2015, following a court-approved process to give class members who previously opted out of the damages portion of the class settlement an option to rejoin it, the class administrator submitted a report stating that it had received 1,179 requests by merchants to rejoin the cash settlement class, some of which may include multiple merchants.

Consumer Interchange Litigation

On November 26, 2014, in the putative class action filed on behalf of an alleged class of Visa and MasterCard payment cardholders, the court dismissed plaintiffs’ federal law claim and declined to exercise jurisdiction over plaintiffs’ state law claim. Both sides have asked the court to reconsider aspects of its decision, and have filed notices of appeal.

Interchange Opt-out Litigation

Beginning in May 2013, more than 45 opt-out cases have been filed by hundreds of merchants in various federal district courts, generally pursuing damages claims on allegations similar to those raised in MDL 1720. A number of the cases also include allegations that Visa has monopolized, attempted to monopolize, and/or conspired to monopolize debit card-related market segments, and one of the cases seeks an injunction against the fixed acquirer network fee. The cases name as defendants Visa Inc., Visa U.S.A., Visa International, MasterCard Incorporated, and MasterCard International Incorporated, although some also include certain U.S. financial institutions as defendants.

Wal-Mart Stores Inc. and its subsidiaries filed an opt-out complaint that also added Visa Europe Limited and Visa Europe Services Inc. as defendants. Visa Europe Limited and Visa Europe Services Inc. filed a motion to dismiss Wal-Mart’s claims against them.

As of the date of filing this quarterly report, Visa has reached settlement agreements with a number of merchants representing approximately 27% of the Visa-branded payment card sales volume of merchants who opted out.

On December 23, 2014, a similar case was filed in New Mexico state court by New Mexico’s attorney general on behalf of the state, state agencies, and citizens of the state, generally pursuing claims on allegations similar to those raised in MDL 1720. On May 15, 2015, defendants filed a partial motion to dismiss. If this case is transferred to or otherwise included in MDL 1720, it will be covered litigation for purposes of the retrospective responsibility plan. See Note 2—Retrospective Responsibility Plan.

In the Texas state court case filed by merchants, which generally pursues claims on allegations similar to those raised in MDL 1720, the parties entered into a settlement agreement, and, on May 19, 2015, the court entered an agreed final judgment.

Other Litigation

"Indirect Purchaser" Actions

In early December 2014, objectors to the settlement in the consolidated Credit/Debit Card Tying Cases petitioned for review by the California Supreme Court, which the court denied on February 11, 2015.

European Competition Proceedings

U.K. Merchant Litigation. On defendants’ application for summary judgment, the court has limited the potential damages of most merchants who have commenced proceedings to 6 years prior to the filing of their claims. The claimants have been granted permission to appeal the court’s ruling.

Visa Inc. and Visa International have learned that several additional European merchants have indicated that they may bring claims against Visa Europe, Visa Inc. and/or Visa International with respect to interchange rates in Europe. We anticipate that similar such claims may be asserted by additional merchants in the future.

Data Pass Litigation

On January 9, 2015, Webloyalty.com, GameStop, and Visa each filed motions to dismiss the second amended class action complaint.

Korean Fair Trade Commission

On March 13, 2015, the Korean Fair Trade Commission notified Visa that it is discontinuing the investigation into Visa’s requirements for processing of international transactions over VisaNet.

Target Data Breach

On December 30, 2014, the court granted plaintiffs’ notice of voluntary dismissal without prejudice of all claims against Visa and MasterCard.

Pulse Network

On November 25, 2014, Pulse Network LLC filed suit against Visa Inc. in federal district court in Texas. Pulse alleges that Visa has monopolized and attempted to monopolize debit card network services markets. Pulse also alleges that Visa has entered into agreements in restraint of trade, engaged in unlawful exclusive dealing and tying, violated the Texas Free Enterprise and Antitrust Act, and engaged in tortious interference with prospective business relationships. Pulse seeks unspecified treble damages, attorneys’ fees, and injunctive relief, including to enjoin the fixed acquirer network fee structure, Visa’s conduct regarding PIN-Authenticated Visa Debit, and Visa agreements with merchants and acquirers relating to debit acceptance. On January 23, 2015, Visa filed a motion to dismiss the complaint.

Summary of Significant Accounting Policies (Policies)

Organization

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

Consolidation and basis of presentation

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

On March 18, 2015, the Company completed a four-for-one split of its class A common stock effected in the form of a stock dividend. All per share amounts and number of shares outstanding in these unaudited consolidated financial statements and accompanying notes are presented on a post-split basis. See Note 9—Stockholders' Equity.

Certain prior period amounts within the accompanying unaudited consolidated financial statements have been reclassified to conform to current period presentation. These reclassifications did not affect the Company's financial position, total operating revenues, net income, comprehensive income, or cash flows as of and for the periods presented.

The accompanying unaudited consolidated financial statements are presented in accordance with the U.S. Securities and Exchange Commission ("SEC") requirements for Quarterly Reports on Form 10-Q and, consequently, do not include all of the annual disclosures required by U.S. GAAP. Reference should be made to the Visa Annual Report on Form 10-K for the year ended September 30, 2014 for additional disclosures, including a summary of the Company’s significant accounting policies.

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

Recently adopted accounting pronouncements