Document and Entity Information

6 Months Ended

Mar. 31, 2014

Apr. 21, 2014

Class A

Apr. 21, 2014

Class B

Apr. 21, 2014

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

Mar. 31, 2014

Document Fiscal Year Focus

2014

Document Fiscal Period Focus

Q2

Amendment Flag

false

Entity Common Stock, Shares Outstanding

499,395,346

245,513,385

25,719,291

CONSOLIDATED BALANCE SHEETS (USD $)

In Millions, unless otherwise specified

Mar. 31, 2014

Sep. 30, 2013

Assets

Cash and cash equivalents

$ 1,820

$ 2,186

Restricted cash—litigation escrow (Note 2)

1,105

49

Investment securities:

Trading

82

75

Available-for-sale

1,592

1,994

Income tax receivable

33

142

Settlement receivable

752

799

Accounts receivable

832

761

Customer collateral (Note 6)

923

866

Current portion of client incentives

255

282

Deferred tax assets

850

481

Prepaid expenses and other current assets

263

187

Total current assets

8,507

7,822

Investment securities, available-for-sale

3,066

2,760

Client incentives

89

Property, equipment and technology, net

1,760

1,732

Other assets

843

521

Intangible assets, net

11,317

11,351

Goodwill

11,681

Total assets

37,263

35,956

Liabilities

Accounts payable

114

184

Settlement payable

1,099

1,225

Customer collateral (Note 6)

923

866

Accrued compensation and benefits

356

523

Client incentives

827

919

Accrued liabilities

582

613

Accrued litigation (Note 12)

1,060

5

Total current liabilities

4,961

4,335

Deferred tax liabilities

4,146

4,149

Other liabilities (Note 7)

861

602

Total liabilities

9,968

9,086

Equity

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

Additional paid-in capital

18,555

18,875

Accumulated income

8,714

7,974

Accumulated other comprehensive income (loss), net:

Investment securities, available-for-sale

77

59

Defined benefit pension and other postretirement plans

(68)

(60)

Derivative instruments classified as cash flow hedges

18

23

Foreign currency translation adjustments

(1)

Total accumulated other comprehensive income, net

26

21

Total equity

27,295

26,870

Total liabilities and equity

37,263

35,956

Class A common stock

Equity

Common stock

Class B common stock

Equity

Common stock

Class C common stock

Equity

Common stock

CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)

In Millions, except Per Share data, unless otherwise specified

Mar. 31, 2014

Sep. 30, 2013

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

500

508

Common stock, shares outstanding

500

508

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

26

27

Common stock, shares outstanding

26

27

CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)

In Millions, except Per Share data, unless otherwise specified

3 Months Ended

6 Months Ended

Mar. 31, 2014

Mar. 31, 2013

Mar. 31, 2014

Mar. 31, 2013

Operating Revenues

Service revenues

$ 1,462

$ 1,369

$ 2,881

$ 2,669

Data processing revenues

1,234

1,150

2,498

2,265

International transaction revenues

871

831

1,762

1,636

Other revenues

183

175

363

354

Client incentives

(587)

(567)

(1,186)

(1,120)

Total operating revenues

3,163

2,958

6,318

5,804

Operating Expenses

Personnel

446

486

916

940

Marketing

245

195

431

388

Network and processing

120

119

252

229

Professional fees

77

91

152

179

Depreciation and amortization

107

98

214

190

General and administrative

120

108

228

214

Litigation provision (Note 12)

1

4

Total operating expenses

1,115

1,098

2,193

2,144

Operating income

2,048

1,860

4,125

3,660

Non-operating income (expense)

13

(3)

19

(2)

Income before income taxes

2,061

1,857

4,144

3,658

Income tax provision

463

587

1,139

1,095

Net income

$ 1,598

$ 1,270

$ 3,005

$ 2,563

Class A common stock

Earnings Per Share

Basic earnings per share (Note 9)

$ 2.53 ¹

$ 1.93 ¹

$ 4.74

$ 3.87

Basic weighted-average shares outstanding (Note 9)

501 ¹

524 ¹

503

528

Diluted earnings per share (Note 9)

$ 2.52 ¹

$ 1.92 ¹

$ 4.72

$ 3.86

Diluted weighted-average shares outstanding (Note 9)

634 ¹ ²

660 ¹ ²

636

665

Class B common stock

Earnings Per Share

Basic earnings per share (Note 9)

$ 1.06 ¹

$ 0.81 ¹

$ 1.99

$ 1.63

Basic weighted-average shares outstanding (Note 9)

245 ¹

245

Diluted earnings per share (Note 9)

$ 1.06 ¹

$ 0.81 ¹

$ 1.99

$ 1.62

Diluted weighted-average shares outstanding (Note 9)

245 ¹

245

Class C common stock

Earnings Per Share

Basic earnings per share (Note 9)

$ 2.53 ¹

$ 1.93 ¹

$ 4.74

$ 3.87

Basic weighted-average shares outstanding (Note 9)

26 ¹

28 ¹

26

29

Diluted earnings per share (Note 9)

$ 2.52 ¹

$ 1.92 ¹

$ 4.72

$ 3.86

Diluted weighted-average shares outstanding (Note 9)

26 ¹

28 ¹

26

29

[1] Figures in the table may not recalculate exactly due to rounding. Earnings per share is calculated based on whole numbers, not the rounded numbers presented.

[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 2 million of common stock equivalents for the three and six months ended March 31, 2014 and 2013, because their effect would be dilutive. The calculation excludes less than 1 million of common stock equivalents for the three and six months ended March 31, 2014 and 2013, because their effect would have been anti-dilutive.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $)

In Millions, unless otherwise specified

3 Months Ended

6 Months Ended

Mar. 31, 2014

Mar. 31, 2013

Mar. 31, 2014

Mar. 31, 2013

Net income

$ 1,598

$ 1,270

$ 3,005

$ 2,563

Investment securities, available-for-sale:

Net unrealized gain

11

2

28

50

Income tax effect

(4)

(10)

(17)

Reclassification adjustment for net gain realized in net income

(1)

Defined benefit pension and other postretirement plans:

Net unrealized actuarial loss and prior service credit

(8)

(3)

(7)

(3)

Income tax effect

3

1

3

1

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

(5)

5

(7)

8

Income tax effect

2

(2)

3

(3)

Derivative instruments classified as cash flow hedges:

Net unrealized (loss) gain

(7)

6

17

15

Income tax effect

1

(3)

Reclassification adjustment for net gain realized in net income

(12)

(6)

(23)

(17)

Income tax effect

2

4

5

Other comprehensive (loss) income, net of tax

(17)

4

5

38

Comprehensive income

$ 1,581

$ 1,274

$ 3,010

$ 2,601

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (USD $)

In Millions, unless otherwise specified

Total

USD ($)

Class A common stock

Class B common stock

Class C common stock

Additional Paid-in Capital

USD ($)

Accumulated Income

USD ($)

Accumulated Other Comprehensive Income

USD ($)

Beginning Balance at Sep. 30, 2013

$ 26,870

$ 18,875

$ 7,974

$ 21

Beginning Balance (in shares) at Sep. 30, 2013

508

245

27

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

Net income

3,005 ¹ ²

3,005

Other comprehensive income, net of tax

5

Comprehensive income

3,010

Issuance of restricted stock awards (in shares)³

1

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

1

(1)

Share-based compensation

89

Excess tax benefit for share-based compensation

68

Cash proceeds from exercise of stock options (in shares)

1

Cash proceeds from exercise of stock options

58

Restricted stock instruments settled in cash for taxes shares (in shares)⁴

0

Restricted stock and performance shares settled in cash for taxes⁴

(83)

Cash dividends declared and paid, at a quarterly amount of $0.40 per as-converted share (Note 8)

(507)

Repurchase of class A common stock (Note 8) (in shares)

(11)⁵

(11)

Repurchase of class A common stock (Note 8)

(2,210)

(452)

(1,758)

Ending Balance at Mar. 31, 2014

$ 27,295

$ 18,555

$ 8,714

$ 26

Ending Balance (in shares) at Mar. 31, 2014

500

245

26

[1] Figures in the table may not recalculate exactly due to rounding. Earnings per share is calculated based on whole numbers, not the rounded numbers presented.

[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 103 million for the three and six months ended March 31, 2014 and 2013.

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

[4] {F|ahBzfndlYmZpbGluZ3MtaHJkcmoLEgZYTUxEb2MiXlhCUkxEb2NHZW5JbmZvOjZiMWI0OTU2YjFlMDQ4MTA4OTEzY2JjZDcxNWM5YzY3fFRleHRTZWxlY3Rpb246NTA3NThDNDc2MzEyNTM3MDFEQkJFNDYxM0NENjcyMDcM}

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

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

In Millions, except Per Share data, unless otherwise specified

6 Months Ended

Mar. 31, 2014

Class A common stock

Maximum

Restricted stock instruments settled in cash for taxes shares (in shares)

1

CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)

In Millions, unless otherwise specified

6 Months Ended

Mar. 31, 2014

Mar. 31, 2013

Operating Activities

Net income

$ 3,005

$ 2,563

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Amortization of client incentives

1,186

1,120

Share-based compensation

89

98

Excess tax benefit for share-based compensation

(68)

(56)

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

214

190

Deferred income taxes

(375)

1,580

Other

12

35

Change in operating assets and liabilities:

Income tax receivable

109

(984)

Settlement receivable

47

(34)

Accounts receivable

(71)

(79)

Client incentives

(1,251)

(1,108)

Other assets

(459)

(327)

Accounts payable

(68)

(15)

Settlement payable

(126)

3

Accrued and other liabilities

171

218

Accrued litigation (Note 12)

1,055

(4,384)

Net cash provided by (used in) operating activities

3,470

(1,180)

Investing Activities

Purchases of property, equipment, technology and intangible assets

(217)

(211)

Investment securities, available-for-sale:

Purchases

(1,292)

(1,854)

Proceeds from sales and maturities

1,406

1,616

Purchases of / contributions to other investments

(3)

Proceeds / distributions from other investments

3

Net cash used in investing activities

(106)

(449)

Financing Activities

Repurchase of class A common stock (Note 8)

(2,210)

(3,073)

Dividends paid (Note 8)

(507)

(437)

(Return to) payments from litigation escrow account—retrospective responsibility plan (Note 2 and Note 12)

1,056

(4,383)

Cash proceeds from exercise of stock options

58

84

Restricted stock and performance shares settled in cash for taxes

(83)

(64)

Excess tax benefit for share-based compensation

68

56

Payment for earn-out related to PlaySpan acquisition

(12)

Principal payments on capital lease obligations

(5)

Net cash (used in) provided by financing activities

(3,730)

932

Decrease in cash and cash equivalents

(366)

(697)

Cash and cash equivalents at beginning of year

2,186

2,074

Cash and cash equivalents at end of period

1,820

1,377

Supplemental Disclosure

Income taxes paid, net of refunds

1,392

421

Non-cash accruals related to purchases of property, equipment, technology and intangible assets

$ 27

$ 41

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.

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, 2013 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 January 2013, the FASB issued Accounting Standards Update ("ASU") 2013-01, which clarifies the scope of ASU 2011-11. As amended, ASU 2011-11 requires disclosure of the effect or potential effect of offsetting arrangements on a Company's financial position as well as enhanced disclosure of the rights of offset associated with a Company's recognized derivative instruments, including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and lending transactions. The amended standard impacts presentation only. The Company adopted the standard effective October 1, 2013. The adoption did not have a material impact on the consolidated financial statements.

In February 2013, the FASB issued ASU 2013-02, which established the effective date for the requirement to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income. The standard impacts presentation only and does not impact the underlying components of other comprehensive income or net income. The Company adopted the standard effective October 1, 2013. Beginning with fiscal 2014, the components related to pension and postretirement benefit plans are presented on the consolidated statements of comprehensive income. All prior period information has been reclassified to conform to current period presentation. The adoption did not have a material impact on the consolidated financial statements.

In February 2013, the FASB issued 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 will adopt the standard effective October 1, 2014. The adoption is not expected to have a material impact on the consolidated financial statements.

In March 2013, the FASB issued ASU 2013-05, which clarifies the applicable 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 will adopt the standard effective October 1, 2014. The adoption is not expected to 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 Company will adopt the standard effective October 1, 2014. 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. See Note 12—Legal Matters.

On January 14, 2014, the court entered the final judgment order approving the settlement with the class plaintiffs in the interchange multidistrict litigation proceedings, which is subject to the adjudication of any appeals. Takedown payments of approximately $1.1 billion related to the opt-out merchants were received on January 27, 2014, and were deposited into the litigation escrow account. The deposit into the litigation escrow account and a related increase in accrued litigation to address opt-out claims were recorded during the three months ended March 31, 2014.



	Fiscal 2014		Fiscal 2013
	(in millions)
Balance at October 1	$	49	$	4,432
Return of takedown payments to the litigation escrow account	1,056		—
Payments to settlement funds⁽¹⁾
Class plaintiffs	—		(4,033		)
Individual plaintiffs	—		(350		)
Balance at March 31	$	1,105	$	49


⁽¹⁾	Payments made in fiscal 2013 are associated with the interchange multidistrict litigation. See Note 12—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 any additional accruals for the covered litigation during the six months ended March 31, 2014. See Note 12—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
	March 31, 2014		September 30, 2013		March 31, 2014		September 30, 2013		March 31, 2014		September 30, 2013
	(in millions)
Assets
Cash equivalents and restricted cash:
Money market funds	$	1,763	$	1,071
Commercial paper					$	43	$	51
Investment securities, trading:
Equity securities	82		75
Investment securities, available-for-sale:
U.S. government-sponsored debt securities					2,480		2,704
U.S. Treasury securities	1,552		1,673
Equity securities	131		101
Corporate debt securities					488		269
Auction rate securities									$	7	$	7
Prepaid and other current assets:
Foreign exchange derivative instruments					16		23
Total	$	3,528	$	2,920	$	3,027	$	3,047	$	7	$	7
Liabilities
Accrued liabilities:
Visa Europe put option									$	145	$	145
Foreign exchange derivative instruments					$	20	$	15
Total	$	—	$	—	$	20	$	15	$	145	$	145

There were no significant transfers between Level 1 and Level 2 assets during the six months ended March 31, 2014 and 2013.

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. The increase in the Company's level 1 assets primarily reflects the receipt of takedown payments related to the interchange multidistrict litigation, which were deposited into the Company's litigation escrow account. See Note 2—Retrospective Responsibility Plan and Note 12—Legal Matters.

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 six months ended March 31, 2014.

Level 3 assets and liabilities measured at fair value on a recurring basis. Auction rate securities are classified as Level 3 due to a lack of trading in active markets and a lack of observable inputs in measuring fair value. There were no substantive changes to the valuation techniques and related inputs used to measure fair value during the six months ended March 31, 2014.

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 March 31, 2014 and September 30, 2013, 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 March 31, 2014, 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 the six months ended March 31, 2014, there were no changes to the valuation methodology used to estimate the fair value of the put option. At March 31, 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 1.9x. At March 31, 2014, the Company's spot P/E was 20.8x, and there was a differential of 1.7x 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 March 31, 2014. 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 non-operating income (expense) on the consolidated statements of operations.

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

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

March 31, 2014. During the six months ended March 31, 2013, the Company recognized a $15 million other-than-temporary impairment loss. At March 31, 2014 and September 30, 2013, these investments totaled $32 million and $30 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, 2014, and concluded that there was no impairment. No recent events or changes in circumstances indicate that impairment existed at March 31, 2014.

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 March 31, 2014, 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 March 31, 2014, 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 $121 million in gross unrealized gains at March 31, 2014. There were $93 million gross unrealized gains and $1 million gross unrealized losses at September 30, 2013. The gross unrealized gains at March 31, 2014 and September 30, 2013 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 three years.

Debt

Note 4—Debt

Credit facility. On January 29, 2014, the Company entered into an unsecured $3.0 billion revolving credit facility (the “Credit Facility”). The Credit Facility, which expires on January 28, 2015, replaced the Company's previous $3.0 billion credit facility, which terminated on January 29, 2014. 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 ("LIBOR") 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 six months ended March 31, 2014.

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 components of net periodic benefit cost are as follows:



	Pension Benefits												Other Postretirement Benefits
	Three Months Ended March 31,						Six Months Ended March 31,						Three Months Ended March 31,					Six Months Ended March 31,
	2014			2013			2014			2013			2014			2013		2014			2013
	(in millions)
Service cost	$	12		$	12		$	23		$	22		$	—		$	—	$	—		$	—
Interest cost	11			9			21			18			—			—		—			—
Expected return on assets	(17		)	(15		)	(34		)	(31		)	—			—		—			—
Amortization of:
Prior service credit	(2		)	(3		)	(4		)	(5		)	(1		)	—		(2		)	(1		)
Actuarial loss	—			7			—			14			—			—		—			—
Net benefit cost	$	4		$	10		$	6		$	18		$	(1	)	$	—	$	(2	)	$	(1	)
Curtailment gain	(3		)	—			(3		)	—			—			—		—			—
Settlement loss	—			—			1			—			—			—		—			—
Total net periodic benefit cost	$	1		$	10		$	4		$	18		$	(1	)	$	—	$	(2	)	$	(1	)

Settlement Guarantee Management

Note 6—Settlement Guarantee Management

The indemnification for settlement losses that Visa provides to its financial institution clients 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 $56.2 billion at March 31, 2014, compared to $53.8 billion at September 30, 2013. Of these settlement exposure amounts, $3.1 billion and $3.0 billion were covered by collateral at March 31, 2014 and September 30, 2013, respectively.

The Company maintained collateral as follows:



	March 31, 2014		September 30, 2013
	(in millions)
Cash equivalents	$	923	$	866
Pledged securities at market value	191		256
Letters of credit	1,184		1,191
Guarantees	1,372		1,411
Total	$	3,670	$	3,724

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 March 31, 2014 and $1 million at September 30, 2013. These amounts are reflected in accrued liabilities on the consolidated balance sheets.

Other Liabilities

Note 7—Other Liabilities

Other non-current liabilities consisted of the following:



	March 31, 2014		September 30, 2013
	(in millions)
Accrued income taxes⁽¹⁾	$	741	$	453
Employee benefits	87		86
Other	33		63
Total	$	861	$	602


⁽¹⁾	The increase in non-current accrued income taxes is due to an increase in liabilities for uncertain tax positions.

Stockholders' Equity

Note 8—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 March 31, 2014, 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	500	—	500
Class B common stock	245	0.4206	103
Class C common stock	26	1.0000	26
Total			629


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

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 March 31, 2014		Six Months Ended March 31, 2014
Shares repurchased in the open market ⁽¹⁾	5		11
Weighted-average repurchase price per share	$	217.61	$	208.31
Total cost	$	1,119	$	2,210


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

As of March 31, 2014, the October 2013 program had remaining authorized funds of $3.0 billion for share repurchase. All share repurchase programs authorized prior to October 2013 have been completed.

Dividends. In April 2014, the Company’s board of directors declared a quarterly cash dividend of $0.40 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 June 3, 2014, to all holders of record of the Company's class A, B and C common stock as of May 16, 2014. The Company declared and paid $507 million in dividends during the six months ended March 31, 2014.

Earnings Per Share

Note 9—Earnings Per Share

The following table presents earnings per share for the three months ended March 31, 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	$	1,266	501	$	2.53	$	1,598	634	⁽³⁾	$	2.52
Class B common stock	261		245	$	1.06	$	260	245		$	1.06
Class C common stock	66		26	$	2.53	$	65	26		$	2.52
Participating securities⁽⁴⁾	5		Not presented	Not presented		$	5	Not presented		Not presented
Net income	$	1,598

The following table presents earnings per share for the six months ended March 31, 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	$	2,381	503	$	4.74	$	3,005	636	⁽³⁾	$	4.72
Class B common stock	489		245	$	1.99	$	488	245		$	1.99
Class C common stock	125		26	$	4.74	$	124	26		$	4.72
Participating securities⁽⁴⁾	10		Not presented	Not presented		$	10	Not presented		Not presented
Net income	$	3,005

The following table presents earnings per share for the three months ended March 31, 2013.⁽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	$	1,011	524	$	1.93	$	1,270	660	⁽³⁾	$	1.92
Class B common stock	199		245	$	0.81	$	199	245		$	0.81
Class C common stock	55		28	$	1.93	$	55	28		$	1.92
Participating securities⁽⁴⁾	5		Not presented	Not presented		$	5	Not presented		Not presented
Net income	$	1,270

The following table presents earnings per share for the six months ended March 31, 2013.⁽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	$	2,041	528	$	3.87	$	2,563	665	⁽³⁾	$	3.86
Class B common stock	399		245	$	1.63	$	398	245		$	1.62
Class C common stock	113		29	$	3.87	$	112	29		$	3.86
Participating securities⁽⁴⁾	10		Not presented	Not presented		$	10	Not presented		Not presented
Net income	$	2,563


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


⁽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 103 million for the three and six months ended March 31, 2014 and 2013.

⁽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 2 million of common stock equivalents for the three and six months ended March 31, 2014 and 2013, because their effect would be dilutive. The calculation excludes less than 1 million of common stock equivalents for the three and six months ended March 31, 2014 and 2013, because their effect would have been anti-dilutive.


⁽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 10—Share-based Compensation

The Company granted the following equity awards to employees and non-employee directors under the 2007 Equity Incentive Compensation Plan during the six months ended March 31, 2014:



	Granted	Weighted-Average Grant Date Fair Value		Weighted-Average Exercise Price
Non-qualified stock options	376,809	$	44.23	$	200.19
Restricted stock awards ("RSAs")	537,244	$	198.75
Restricted stock units ("RSUs")	224,838	$	197.67
Performance-based shares⁽¹⁾	278,451	$	225.46


⁽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.

Income Taxes

Note 11—Income Taxes

The effective income tax rates were 22% and 27% for the three and six months ended March 31, 2014, respectively, and 32% and 30% for the three and six months ended March 31, 2013, respectively. The effective tax rates for the three and six months ended March 31, 2014 differ from the effective tax rates in the same periods in fiscal 2013 primarily due to:


•	a $218 million tax benefit related to a deduction for U.S. domestic production activities, of which, $184 million related to prior fiscal years and $17 million related to the first quarter of fiscal 2014, as a result of the completion of a study during the three months ended March 31, 2014; and


•	the absence of a $76 million tax benefit recognized in the first quarter of fiscal 2013, as a result of new guidance issued by the state of California regarding apportionment rules for years prior to fiscal 2012.

During the three and six months ended March 31, 2014, the Company's gross unrecognized tax benefits increased by $133 million and $180 million, respectively, $132 million and 177 million of which, respectively, would favorably impact our effective income tax rate if recognized. The increase in gross unrecognized tax benefits is primarily due to potential audit exposure related to various tax positions across several jurisdictions. During the three and six months ended March 31, 2014, the Company accrued $2 million and $4 million of interest, respectively, and released $1 million of penalties related to uncertain tax positions.

Legal Matters

Note 12—Legal Matters

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

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

The following table summarizes activity related to accrued litigation.



	Fiscal 2014			Fiscal 2013
	(in millions)
Balance at October 1	$	5		$	4,386
Provision for unsettled matters	—			4
Reestablishment of obligation related to interchange multidistrict litigation⁽¹⁾	1,056			—
Payment on unsettled matters⁽¹⁾	—			(4,033		)
Payment on settled matters	(1		)	(351		)
Balance at March 31	$	1,060		$	6

⁽¹⁾

In fiscal 2013, the Company paid approximately $4.0 billion from the litigation escrow account into a settlement fund established pursuant to the definitive class settlement agreement in the interchange multidistrict litigation. Under the settlement agreement, if class members opt-out (“opt-out merchants”) of the damages portion of the class settlement, the defendants are entitled to receive payments of no more than 25% of the original cash payments made into the settlement fund, based on the percentage of payment card sales volume for a defined period attributable to merchants who opted out (the "takedown payments"). On January 14, 2014, the court entered the final judgment order approving the settlement with the class plaintiffs in the interchange multidistrict litigation proceedings, which is subject to the adjudication of any appeals. Takedown payments of approximately $1.1 billion were received on January 27, 2014, and deposited into the Company’s litigation escrow account. The deposit into the litigation escrow account and a related increase in accrued litigation to address opt-out claims were recorded in the second quarter of fiscal 2014. See further discussion below.

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.

Interchange Multidistrict Litigation (MDL)

On December 13, 2013, the district court issued a memorandum and order approving the Settlement Agreement with the class plaintiffs. On January 14, 2014, the court entered the final judgment order approving the settlement. A number of objectors to the settlement have appealed from that order. Until the appeals are finally adjudicated, no assurance can be provided that the Company will be able to resolve the class plaintiffs' claims as contemplated by the Settlement Agreement. On January 27, 2014, Visa's portion of the takedown payments related to the opt-out merchants, which was calculated to be approximately $1.1 billion, was deposited into the litigation escrow account.

Interchange Opt-out Litigation

Beginning in May 2013, more than 30 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 similar case has been filed by merchants in Texas state court. 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. On March 25, 2014, Wal-Mart Stores Inc. and its subsidiaries filed an opt-out complaint against Visa Inc., Visa U.S.A., and Visa International in the U.S. District Court for the Western District of Arkansas alleging similar claims. All the cases originally filed in federal court either were filed in the U.S. District Court for the Eastern District of New York and have been assigned to the judge presiding over MDL 1720, or have been transferred by the Judicial Panel on Multidistrict Litigation for inclusion in MDL 1720. Visa removed the Texas state court case to federal court and sought to transfer it to MDL 1720, but the federal court remanded the case to Texas state court before the case could be transferred to MDL 1720. Cases that are transferred to or otherwise included in MDL 1720 will be covered litigation for purposes of the retrospective responsibility plan. See Note 2—Retrospective Responsibility Plan.

On January 14, 2014, Visa filed a complaint in the U.S. District Court for the Eastern District of New York against The Home Depot, Inc. and Home Depot U.S.A., Inc. seeking a declaration that, from January 1, 2004 to November 27, 2012, the time period for which opt-outs may seek damages under the MDL class settlement, Visa's conduct in, among other things, continuing to set default interchange rates, maintaining its "honor all cards" rule, enforcing certain rules relating to merchants, and restructuring itself, did not violate federal or state antitrust laws. The case has been assigned to the same district court judge presiding over MDL 1720.

On February 12, 2014, the court entered an order confirming that In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, 1:05-md-01720-JG-JO (E.D.N.Y.), includes all current and future actions transferred to MDL 1720 by the Judicial Panel on Multidistrict Litigation or other order of any court for inclusion in coordinated or pretrial proceedings, and all actions filed in the Eastern District of New York that arise out of operative facts as alleged in the cases subject to the transfer orders of the Judicial Panel on Multidistrict Litigation.

On March 13, 2014, Visa and the other defendants in the opt-out cases in MDL 1720 filed a motion to dismiss the opt-out complaints in MDL 1720. Also on March 13, 2014, Wal-Mart and the named class representatives that are defendants in the declaratory judgment cases in MDL 1720 filed motions to dismiss the declaratory judgment complaints. The court has scheduled a hearing on the motions to dismiss for July 11, 2014.

Consumer Interchange Litigation

On December 16, 2013, a putative class action was filed in federal district court in California against certain financial institutions alleging that they conspired to fix interchange fees and imposed other alleged restraints on competition. The complaint was filed on behalf of four named plaintiffs and an alleged class of all Visa and MasterCard payment cardholders in the United States since January 1, 2000. Although no Visa entity is named as a defendant, the complaint identifies Visa U.S.A., MasterCard, and certain non-defendant financial institutions as co-conspirators, and plaintiffs assert that they may seek leave to amend the complaint to add the co-conspirators as defendants. Plaintiffs seek injunctive relief, attorneys’ fees, and treble damages allegedly to compensate the purported class for more than $54.0 billion dollars in purported overcharges imposed on them each year by defendants and their alleged co-conspirators. After the Clerk of the Judicial Panel on Multidistrict Litigation declined to transfer the case to MDL 1720, defendants filed a motion with the Panel seeking transfer of the case to MDL 1720. That motion remains pending.

Other Litigation

Vale Canjeable

On December 9, 2013, the Constitutional Chamber reversed the Commercial Chamber’s judgment and issued a final decision. The Constitutional Chamber ruled that the “Vale” mark is distinctive and Visa’s mark, “Visa Vale” infringed the plaintiff’s mark, but the plaintiff suffered no damages as a result of the infringement. The ruling permits the plaintiff to seek its costs from the defendants in relation to certain appeals filed by the defendants.

European Competition Proceedings

European Commission. On February 26, 2014, after public consultation, the European Commission (EC) adopted a formal decision accepting Visa Europe’s commitments addressing domestic interchange, cross-border interchange for credit card transactions within Europe, and cross-border acquiring within Europe, and made the commitments legally binding on Visa Europe. The EC continues the proceedings in respect of inter-regional interchange fees that apply to transactions involving a Visa credit cardholder from outside the Visa Europe territory and a merchant in the European Economic Area (EEA). These interchange fees are set by Visa Inc.

U.K. Merchant Litigation. Since November 2013, Visa Inc., Visa International, and Visa Europe have been put on notice of additional claims on behalf of approximately 12 merchants, all of which have entered into standstill agreements with Visa Europe, Visa Inc., and Visa International. Additionally, to date, 17 total merchants (or groups of merchant companies) have filed claims against Visa Inc., Visa International, and Visa Europe relating to interchange rates in Europe, and seek damages for alleged anti-competitive conduct relating to U.K. domestic, Irish domestic, and intra-EEA interchange fees for credit and debit cards. The amount of interchange being challenged could be substantial. Although the full scope of the claims is not yet known, and Visa has substantial defenses to these claims, the total damages sought in the 17 existing claims may exceed $1.0 billion.

Visa Europe is obligated to indemnify Visa Inc. and Visa International in connection with the European Competition Proceedings, in our opinion, including payment of any fines that may be imposed. However, Visa Europe has expressed an "initial" view that it is not obligated to indemnify Visa Inc. or Visa International for any claim in the European Competition Proceedings, including claims asserted in both the European Commission matter and the U.K. Merchant Litigation. Visa Inc. continues to firmly believe that Visa Europe is obligated to indemnify for all such claims, and has been in discussions with Visa Europe to resolve this issue. While the parties are not currently in non-binding arbitration, both parties have initiated the executive engagement aspect of the dispute resolution procedure contemplated by the Framework Agreement to resolve their dispute regarding this indemnification issue.

Canadian Competition Proceedings

Merchant Litigation. On March 26, 2014, the British Columbia Supreme Court, in Watson v. Bank of America Corporation, et al., granted the plaintiffs' application for class certification in part, allowing plaintiffs to proceed as a class on, among other claims, claims for price fixing under Canada's Competition Act.

U.S. ATM Access Fee Litigation

On December 19, 2013, the U.S. District Court for the District of Columbia denied plaintiffs’ motions for leave to file amended complaints in the National ATM Council class action and the consumer class actions, and denied plaintiffs’ motions for an order altering or amending the court's February 13, 2013 judgment. On January 10, 2014, plaintiffs in the National ATM Council class action and the consumer class actions filed notices of appeal to the U.S. Court of Appeals for the District of Columbia Circuit.

Target Data Breach

On March 3, 2014, a purported class action was filed in U.S. District Court for the District of Utah against Target, Visa and MasterCard alleging, among other things, violations of Utah unfair competition law, invasion of privacy, negligence and breach of contract as a result of unauthorized access in November and December 2013 to certain personal information and payment card data stored by Target. The complaint also alleges that Visa and MasterCard unlawfully failed to implement chip technology in the United States. The complaint seeks damages, restitution, injunctive relief and attorneys’ fees.

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.

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, 2013 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

Recently Issued and Adopted Accounting Pronouncements.

In January 2013, the FASB issued Accounting Standards Update ("ASU") 2013-01, which clarifies the scope of ASU 2011-11. As amended, ASU 2011-11 requires disclosure of the effect or potential effect of offsetting arrangements on a Company's financial position as well as enhanced disclosure of the rights of offset associated with a Company's recognized derivative instruments, including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and lending transactions. The amended standard impacts presentation only. The Company adopted the standard effective October 1, 2013. The adoption did not have a material impact on the consolidated financial statements.

In February 2013, the FASB issued ASU 2013-02, which established the effective date for the requirement to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income. The standard impacts presentation only and does not impact the underlying components of other comprehensive income or net income. The Company adopted the standard effective October 1, 2013. Beginning with fiscal 2014, the components related to pension and postretirement benefit plans are presented on the consolidated statements of comprehensive income. All prior period information has been reclassified to conform to current period presentation. The adoption did not have a material impact on the consolidated financial statements.

In February 2013, the FASB issued 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 will adopt the standard effective October 1, 2014. The adoption is not expected to have a material impact on the consolidated financial statements.

In March 2013, the FASB issued ASU 2013-05, which clarifies the applicable 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 will adopt the standard effective October 1, 2014. The adoption is not expected to 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 Company will adopt the standard effective October 1, 2014. The adoption is not expected to have a material impact on the consolidated financial statements.

Retrospective Responsibility Plan Retrospective Responsibility Plan (Tables)

Schedule of Restricted Cash and Cash Equivalents



	Fiscal 2014		Fiscal 2013
	(in millions)
Balance at October 1	$	49	$	4,432
Return of takedown payments to the litigation escrow account	1,056		—
Payments to settlement funds⁽¹⁾
Class plaintiffs	—		(4,033		)
Individual plaintiffs	—		(350		)
Balance at March 31	$	1,105	$	49


⁽¹⁾	Payments made in fiscal 2013 are associated with the interchange multidistrict litigation. See Note 12—Legal Matters.

Fair Value Measurements and Investments (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
	March 31, 2014		September 30, 2013		March 31, 2014		September 30, 2013		March 31, 2014		September 30, 2013
	(in millions)
Assets
Cash equivalents and restricted cash:
Money market funds	$	1,763	$	1,071
Commercial paper					$	43	$	51
Investment securities, trading:
Equity securities	82		75
Investment securities, available-for-sale:
U.S. government-sponsored debt securities					2,480		2,704
U.S. Treasury securities	1,552		1,673
Equity securities	131		101
Corporate debt securities					488		269
Auction rate securities									$	7	$	7
Prepaid and other current assets:
Foreign exchange derivative instruments					16		23
Total	$	3,528	$	2,920	$	3,027	$	3,047	$	7	$	7
Liabilities
Accrued liabilities:
Visa Europe put option									$	145	$	145
Foreign exchange derivative instruments					$	20	$	15
Total	$	—	$	—	$	20	$	15	$	145	$	145

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 March 31,						Six Months Ended March 31,						Three Months Ended March 31,					Six Months Ended March 31,
	2014			2013			2014			2013			2014			2013		2014			2013
	(in millions)
Service cost	$	12		$	12		$	23		$	22		$	—		$	—	$	—		$	—
Interest cost	11			9			21			18			—			—		—			—
Expected return on assets	(17		)	(15		)	(34		)	(31		)	—			—		—			—
Amortization of:
Prior service credit	(2		)	(3		)	(4		)	(5		)	(1		)	—		(2		)	(1		)
Actuarial loss	—			7			—			14			—			—		—			—
Net benefit cost	$	4		$	10		$	6		$	18		$	(1	)	$	—	$	(2	)	$	(1	)
Curtailment gain	(3		)	—			(3		)	—			—			—		—			—
Settlement loss	—			—			1			—			—			—		—			—
Total net periodic benefit cost	$	1		$	10		$	4		$	18		$	(1	)	$	—	$	(2	)	$	(1	)

Settlement Guarantee Management (Tables)

Schedule of Customer Collateral

The Company maintained collateral as follows:



	March 31, 2014		September 30, 2013
	(in millions)
Cash equivalents	$	923	$	866
Pledged securities at market value	191		256
Letters of credit	1,184		1,191
Guarantees	1,372		1,411
Total	$	3,670	$	3,724

Other Liabilities (Tables)

Other Liabilities, Table

Other non-current liabilities consisted of the following:



	March 31, 2014		September 30, 2013
	(in millions)
Accrued income taxes⁽¹⁾	$	741	$	453
Employee benefits	87		86
Other	33		63
Total	$	861	$	602


⁽¹⁾	The increase in non-current accrued income taxes is due to an increase in liabilities for uncertain tax positions.

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 March 31, 2014, 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	500	—	500
Class B common stock	245	0.4206	103
Class C common stock	26	1.0000	26
Total			629


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

Share Repurchase Program Disclosure

The following table presents share repurchases in the open market.



(in millions, except per share data)	Three Months Ended March 31, 2014		Six Months Ended March 31, 2014
Shares repurchased in the open market ⁽¹⁾	5		11
Weighted-average repurchase price per share	$	217.61	$	208.31
Total cost	$	1,119	$	2,210


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

Earnings Per Share (Tables)

Schedule of Earnings Per Share, Basic and Diluted

The following table presents earnings per share for the three months ended March 31, 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	$	1,266	501	$	2.53	$	1,598	634	⁽³⁾	$	2.52
Class B common stock	261		245	$	1.06	$	260	245		$	1.06
Class C common stock	66		26	$	2.53	$	65	26		$	2.52
Participating securities⁽⁴⁾	5		Not presented	Not presented		$	5	Not presented		Not presented
Net income	$	1,598

The following table presents earnings per share for the six months ended March 31, 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	$	2,381	503	$	4.74	$	3,005	636	⁽³⁾	$	4.72
Class B common stock	489		245	$	1.99	$	488	245		$	1.99
Class C common stock	125		26	$	4.74	$	124	26		$	4.72
Participating securities⁽⁴⁾	10		Not presented	Not presented		$	10	Not presented		Not presented
Net income	$	3,005

The following table presents earnings per share for the three months ended March 31, 2013.⁽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	$	1,011	524	$	1.93	$	1,270	660	⁽³⁾	$	1.92
Class B common stock	199		245	$	0.81	$	199	245		$	0.81
Class C common stock	55		28	$	1.93	$	55	28		$	1.92
Participating securities⁽⁴⁾	5		Not presented	Not presented		$	5	Not presented		Not presented
Net income	$	1,270

The following table presents earnings per share for the six months ended March 31, 2013.⁽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	$	2,041	528	$	3.87	$	2,563	665	⁽³⁾	$	3.86
Class B common stock	399		245	$	1.63	$	398	245		$	1.62
Class C common stock	113		29	$	3.87	$	112	29		$	3.86
Participating securities⁽⁴⁾	10		Not presented	Not presented		$	10	Not presented		Not presented
Net income	$	2,563


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


⁽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 103 million for the three and six months ended March 31, 2014 and 2013.

⁽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 2 million of common stock equivalents for the three and six months ended March 31, 2014 and 2013, because their effect would be dilutive. The calculation excludes less than 1 million of common stock equivalents for the three and six months ended March 31, 2014 and 2013, because their effect would have been anti-dilutive.


⁽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 equity awards to employees and non-employee directors under the 2007 Equity Incentive Compensation Plan during the six months ended March 31, 2014:



	Granted	Weighted-Average Grant Date Fair Value		Weighted-Average Exercise Price
Non-qualified stock options	376,809	$	44.23	$	200.19
Restricted stock awards ("RSAs")	537,244	$	198.75
Restricted stock units ("RSUs")	224,838	$	197.67
Performance-based shares⁽¹⁾	278,451	$	225.46


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

Legal Matters (Tables)

Schedule of Loss Contingencies by Contingency

The following table summarizes activity related to accrued litigation.



	Fiscal 2014			Fiscal 2013
	(in millions)
Balance at October 1	$	5		$	4,386
Provision for unsettled matters	—			4
Reestablishment of obligation related to interchange multidistrict litigation⁽¹⁾	1,056			—
Payment on unsettled matters⁽¹⁾	—			(4,033		)
Payment on settled matters	(1		)	(351		)
Balance at March 31	$	1,060		$	6

⁽¹⁾

In fiscal 2013, the Company paid approximately $4.0 billion from the litigation escrow account into a settlement fund established pursuant to the definitive class settlement agreement in the interchange multidistrict litigation. Under the settlement agreement, if class members opt-out (“opt-out merchants”) of the damages portion of the class settlement, the defendants are entitled to receive payments of no more than 25% of the original cash payments made into the settlement fund, based on the percentage of payment card sales volume for a defined period attributable to merchants who opted out (the "takedown payments"). On January 14, 2014, the court entered the final judgment order approving the settlement with the class plaintiffs in the interchange multidistrict litigation proceedings, which is subject to the adjudication of any appeals. Takedown payments of approximately $1.1 billion were received on January 27, 2014, and deposited into the Company’s litigation escrow account. The deposit into the litigation escrow account and a related increase in accrued litigation to address opt-out claims were recorded in the second quarter of fiscal 2014. See further discussion below.

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

In Millions, unless otherwise specified

0 Months Ended

6 Months Ended

12 Months Ended

Jan. 27, 2014

Mar. 31, 2014

Mar. 31, 2013

Sep. 30, 2013

Escrow Account [Roll Forward]

Litigation Escrow Account Balance, Beginning of Period

$ 49

$ 4,432

Return of takedown payments to the litigation escrow account

1,056

0

Litigation Escrow Account Balance, End of Period

1,105

49

Class plaintiffs

Restricted Cash and Cash Equivalents Items [Line Items]

Adjustment to payments for litigation

1,056

Escrow Account [Roll Forward]

Payments to Settlement Funds

0

(4,033)

Individual Plaintiffs

Escrow Account [Roll Forward]

Payments to Settlement Funds

$ 0

$ (350)

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

In Millions, unless otherwise specified

6 Months Ended

Mar. 31, 2014

Sep. 30, 2013

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

20.8x

Spot price to earnings, ratio

2,080.00%

Incremental price to earnings differential compared to estimate

1.7x

Incremental price to earnings differential compared to estimate, ratio

170.00%

Incremental probability of exercise by Visa Europe

5.00%

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

$ 18

Incremental assumed price to earnings 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

Other than temporary impairment loss

15

Available-for-sale securities, gross unrealized gains

121

93

Available-for-sale securities, gross unrealized losses

1

Fair Value, Measurements, Recurring

Fair Value, Measurement Inputs, Disclosure [Line Items]

Visa Europe put option

145

Non Marketable Equity Investments

Fair Value, Measurement Inputs, Disclosure [Line Items]

Non-marketable equity investments

$ 32

$ 30

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

In Millions, unless otherwise specified

Mar. 31, 2014

Sep. 30, 2013

Accrued liabilities

Visa Europe put option

$ 145

Level 1

Prepaid and other current assets:

Fair value, total assets

3,528

2,920

Accrued liabilities

Fair value, total liabilities

0

Level 2

Prepaid and other current assets:

Fair value, total assets

3,027

3,047

Accrued liabilities

Fair value, total liabilities

20

15

Level 3

Prepaid and other current assets:

Fair value, total assets

7

Accrued liabilities

Fair value, total liabilities

145

Visa Europe put option |
Level 3

Accrued liabilities

Visa Europe put option

145

Foreign exchange derivative instruments |
Level 2

Accrued liabilities

Foreign exchange derivative instruments

20

15

Money market funds |
Level 1

Cash equivalents and restricted cash:

1,763

1,071

Commercial paper |
Level 2

Cash equivalents and restricted cash:

43

51

Equity securities |
Level 1

Investment securities:

Trading securities

82

75

Available-for-sale securities

131

101

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

Investment securities:

Available-for-sale securities

2,480

2,704

U.S. Treasury securities |
Level 1

Investment securities:

Available-for-sale securities

1,552

1,673

Corporate Debt Securities |
Level 2

Investment securities:

Available-for-sale securities

488

269

Auction rate securities |
Level 3

Investment securities:

Available-for-sale securities

7

Foreign exchange derivative instruments |
Level 2

Prepaid and other current assets:

$ 16

$ 23

Debt (Details) (Revolving Credit Facility, USD $)

6 Months Ended

Mar. 31, 2014

Jan. 29, 2014

Jan. 28, 2014

Line of Credit Facility [Line Items]

Credit facility maximum borrowing capacity

$ 3,000,000,000

Commitment fee percentage

0.07%

Minimum |
LIBOR or Alternative Base Rate

Line of Credit Facility [Line Items]

Spread on variable interest rate

0.00%

Maximum |
LIBOR or Alternative Base Rate

Line of Credit Facility [Line Items]

Spread on variable interest rate

0.75%

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

In Millions, unless otherwise specified

3 Months Ended

6 Months Ended

Mar. 31, 2014

Mar. 31, 2013

Mar. 31, 2014

Mar. 31, 2013

Pension Benefits

Defined Benefit Plan Disclosure [Line Items]

Service cost

$ 12

$ 23

$ 22

Interest cost

11

9

21

18

Expected return on assets

(17)

(15)

(34)

(31)

Amortization of:

Prior service credit

(2)

(3)

(4)

(5)

Actuarial loss

7

14

Net benefit cost

4

10

6

18

Curtailment gain

(3)

Settlement loss

1

Total net periodic benefit cost

1

10

4

18