What changed in this filing

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Item 1. Financial Statements

2021-07-29 compared with 2021-04-29 · 129 added, 101 removed, 731 unchanged (24% of the section changed)

34 unchanged sentences

Preferred stock, $ 0.0001 par value, 25 shares authorized and 5 shares issued and outstanding as follows:

Series A convertible participating preferred stock, less than one shares issued and outstanding at March 31, 2021 and September 30, 2020 (the “series A preferred stock”) 713 2,437

Series B convertible participating preferred stock, 2 shares issued and outstanding at March 31, 2021 and September 30, 2020 (the “UK&I preferred stock”)

Series C convertible participating preferred stock, 3 shares issued and outstanding at March 31, 2021 and September 30, 2020 (the “Europe preferred stock”)

Class A common stock, $ 0.0001 par value, 2,001,622 shares authorized, 1,694 and 1,683 shares issued and outstanding at March 31, 2021 and September 30, 2020, respectively

Class B common stock, $ 0.0001 par value, 622 shares authorized, 245 shares issued and outstanding at March 31, 2021 and September 30, 2020

Class C common stock, $ 0.0001 par value, 1,097 shares authorized, 11 shares issued and outstanding at March 31, 2021 and September 30, 2020

Series A convertible participating preferred stock, less than one shares issued and outstanding at June 30, 2021 and September 30, 2020 (the “series A preferred stock”) 538 2,437

Series B convertible participating preferred stock, 2 shares issued and outstanding at June 30, 2021 and September 30, 2020 (the “UK&I preferred stock”)

Series C convertible participating preferred stock, 3 shares issued and outstanding at June 30, 2021 and September 30, 2020 (the “Europe preferred stock”)

Class A common stock, $ 0.0001 par value, 2,001,622 shares authorized, 1,689 and 1,683 shares issued and outstanding at June 30, 2021 and September 30, 2020, respectively

Class B common stock, $ 0.0001 par value, 622 shares authorized, 245 shares issued and outstanding at June 30, 2021 and September 30, 2020

Class C common stock, $ 0.0001 par value, 1,097 shares authorized, 10 and 11 shares issued and outstanding at June 30, 2021 and September 30, 2020, respectively

Right to recover for covered losses ( 24 ) ( 39 )

12 unchanged sentences

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2021 2020 2021 2020

37 unchanged sentences

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2021 2020 2021 2020

6 unchanged sentences

Reclassification adjustments ( 1 ) ( 1 ) ( 1 ) ( 3 )

Income tax effect — 1 — 1

Defined benefit pension and other postretirement plans:

Net unrealized actuarial gain (loss) and prior service credit (cost)

( 2 ) 3 ( 3 ) 2

Income tax effect — — 2 ( 1 )

11 unchanged sentences

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021

Preferred Stock Common Stock Preferred Stock Right to Recover for Covered Losses Additional

5 unchanged sentences

(in millions, except per share data)

Balance as of December 31, 2020 — (1)

Balance as of March 31, 2021 — (1)

2 3 1,694 245 11 $ 3,347 $ ( 41 ) $ 18,505 $ 15,513 $ 372 $ 37,696

1 unchanged sentence

Other comprehensive income (loss), net of tax

( 782 ) ( 782 )

Comprehensive income 2,804

VE territory covered losses incurred ( 21 ) ( 21 )

Recovery through conversion rate adjustment ( 40 ) 38 ( 2 )

Conversion of series A preferred stock upon sales into public market — (1)

8 unchanged sentences

Repurchase of class A common stock ( 10 ) ( 104 ) ( 2,096 ) ( 2,200 )

Balance as of March 31, 2021 — (1)

Balance as of June 30, 2021 — (1)

2 3 1,689 245 10 $ 3,132 $ ( 24 ) $ 18,787 $ 15,294 $ 601 $ 37,790

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY—(Continued)

Six Months Ended March 31, 2021

Nine Months Ended June 30, 2021

Preferred Stock Common Stock Preferred Stock Right to Recover for Covered Losses Additional

24 unchanged sentences

Repurchase of class A common stock ( 27 ) ( 287 ) ( 5,422 ) ( 5,709 )

Balance as of March 31, 2021 — (1)

Balance as of June 30, 2021 — (1)

2 3 1,689 245 10 $ 3,132 $ ( 24 ) $ 18,787 $ 15,294 $ 601 $ 37,790

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY—(Continued)

Three Months Ended March 31, 2020

Three Months Ended June 30, 2020

Preferred Stock Common Stock Preferred Stock Right to Recover for Covered Losses Additional

5 unchanged sentences

(in millions, except per share data)

Balance as of December 31, 2019 2 3 1,709 245 11 $ 5,462 $ ( 175 ) $ 16,424 $ 13,899 $ ( 340 ) $ 35,270

Balance as of March 31, 2020 2 3 1,693 245 11 $ 5,462 $ ( 184 ) $ 16,385 $ 13,366 $ ( 444 ) $ 34,585

Net income 2,373 2,373

Other comprehensive income (loss), net of tax

( 104 ) ( 104 )

Comprehensive income 2,538

VE territory covered losses incurred ( 9 ) ( 9 )

Conversion of class C common stock upon sales into public market

Recovery through conversion rate adjustment ( 164 ) 169 5

Vesting of restricted stock and performance-based shares

5 unchanged sentences

Repurchase of class A common stock ( 6 ) ( 65 ) ( 1,004 ) ( 1,069 )

Balance as of March 31, 2020 2 3 1,693 245 11 $ 5,462 $ ( 184 ) $ 16,385 $ 13,366 $ ( 444 ) $ 34,585

Balance as of June 30, 2020 2 3 1,687 245 11 $ 5,298 $ ( 24 ) $ 16,457 $ 14,072 $ ( 279 ) $ 35,524

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

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY—(Continued)

Six Months Ended March 31, 2020

Nine Months Ended June 30, 2020

Preferred Stock Common Stock Preferred Stock Right to Recover for Covered Losses Additional

11 unchanged sentences

VE territory covered losses incurred ( 22 ) ( 22 )

Recovery through conversion rate adjustment ( 164 ) 169 5

Conversion of class C common stock upon sales into public market

7 unchanged sentences

Repurchase of class A common stock ( 37 ) ( 390 ) ( 6,182 ) ( 6,572 )

Balance as of March 31, 2020 2 3 1,693 245 11 $ 5,462 $ ( 184 ) $ 16,385 $ 13,366 $ ( 444 ) $ 34,585

Balance as of June 30, 2020 2 3 1,687 245 11 $ 5,298 $ ( 24 ) $ 16,457 $ 14,072 $ ( 279 ) $ 35,524

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

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

Nine Months Ended

(in millions)

7 unchanged sentences

VE territory covered losses incurred ( 38 ) ( 22 )

(Gains) losses on equity investments, net ( 611 ) ( 62 )

Other ( 82 ) ( 87 )

22 unchanged sentences

Dividends paid ( 2,102 ) ( 2,002 )

Proceeds from issuance of commercial paper — 1,001

Proceeds from issuance of senior notes — 3,985

Cash proceeds from issuance of class A common stock under employee equity plans 162 142

Restricted stock and performance-based shares settled in cash for taxes ( 142 ) ( 158 )

Other financing activities — ( 118 )

Net cash provided by (used in) financing activities ( 10,791 ) ( 4,723 )

56 unchanged sentences

See Note 13—Legal Matters .

Pending Acquisitions

On June 24, 2021, Visa entered into a definitive agreement to acquire Tink AB (“Tink”) for € 1.8 billion, inclusive of cash and retention incentives.

Tink is a European open banking platform that enables financial institutions, fintechs and merchants to build tailored financial management tools, products and services for European consumers and businesses based on their financial data.

This acquisition is subject to customary closing conditions, including regulatory reviews and approvals.

On July 22, 2021, Visa entered into a definitive agreement to acquire The Currency Cloud Group Limited (“Currencycloud”), a UK-based global platform that enables banks and fintechs to provide innovative foreign exchange solutions for cross-border payments.

The acquisition values Currencycloud at £ 700 million, inclusive of cash and retention incentives.

The financial consideration will be reduced by the outstanding equity of Currencycloud that Visa already owns.

This acquisition is subject to customary closing conditions, including regulatory reviews and approvals.

Note 3—Revenues

The nature, amount, timing and uncertainty of the Company’s revenues and cash flows and how they are affected by economic factors are most appropriately depicted through the Company’s revenue categories and geographical markets.

The following tables disaggregate the Company’s net revenues by revenue category and by geography for the three and six months ended March 31, 2021 and 2020:

The following tables disaggregate the Company’s net revenues by revenue category and by geography for the three and nine months ended June 30, 2021 and 2020:

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2021 2020 2021 2020

6 unchanged sentences

Net revenues $ 6,130 $ 4,837 $ 17,546 $ 16,745

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

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2021 2020 2021 2020

3 unchanged sentences

Net revenues $ 6,130 $ 4,837 $ 17,546 $ 16,745

At March 31, 2021 and September 30, 2020, deferred revenue included in accrued liabilities on the consolidated balance sheets was $ 647 million and $ 533 million, respectively.

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

At June 30, 2021 and September 30, 2020, deferred revenue included in accrued liabilities on the consolidated balance sheets was $ 696 million and $ 533 million, respectively.

Note 4—Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents

21 unchanged sentences

litigation escrow account:

Six Months Ended

Nine Months Ended

(in millions)

6 unchanged sentences

See Note 13—Legal Matters .

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

Europe Retrospective Responsibility Plan

1 unchanged sentence

Under the terms of the Europe retrospective responsibility plan, the Company is entitled to recover certain losses resulting from VE territory covered litigation (the “VE territory covered losses”) through a periodic adjustment to the class A common stock conversion rates applicable to the UK&I and Europe preferred stock.

VE territory covered losses are recorded in “right to recover for covered losses” within equity before the corresponding adjustment to the applicable conversion rate is effected.

VE territory covered losses are recorded in “right to recover for covered losses” within stockholders’ equity before the corresponding adjustment to the applicable conversion rate is effected.

Adjustments to the conversion rate may be executed once in any six-month period unless a single, individual loss greater than € 20 million is incurred, in which case, the six-month limitation does not apply.

When the adjustment to the conversion rate is made, the amount previously recorded in “right to recover for covered losses” as contra-equity is then recorded against the book value of the preferred stock within stockholders’ equity.

During the six months ended March 31, 2021, the Company recovered $ 15 million of VE territory covered losses through adjustments to the class A common stock conversion rates applicable to the UK&I and Europe preferred stock.

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

The following table sets forth the activities related to VE territory covered losses in preferred stock and “right to recover for covered losses” within stockholders’ equity during the six months ended March 31, 2021.

During the three and nine months ended June 30, 2021, the Company recovered $ 40 million and $ 55 million, respectively, of VE territory covered losses through adjustments to the class A common stock conversion rates applicable to the UK&I and Europe preferred stock.

Preferred Stock Right to Recover for Covered Losses

3 unchanged sentences

Recovery through conversion rate adjustment (2)

Balance as of March 31, 2021 $ 1,097 $ 1,537 $ ( 41 )

( 35 ) ( 20 ) 53

Balance as of June 30, 2021 $ 1,071 $ 1,523 $ ( 24 )

(1) VE territory covered losses incurred reflect settlements with merchants and additional legal costs.

See Note 13—Legal Matters .

The following table sets forth the as-converted value of the preferred stock available to recover VE territory covered losses compared to the book value of preferred shares recorded in stockholders’ equity within the Company’s consolidated balance sheets as of March 31, 2021 and September 30, 2020:

March 31, 2021 September 30, 2020

(2) Adjustment to right to recover for covered losses for the conversion rate adjustment differs from the actual recovered amount due to differences in foreign exchange rates between the time the losses were incurred and the subsequent recovery through the conversion rate adjustment.

The following table sets forth the as-converted value of the preferred stock available to recover VE territory covered losses compared to the book value of preferred stock recorded in stockholders’ equity within the Company’s consolidated balance sheets as of June 30, 2021 and September 30, 2020:

June 30, 2021 September 30, 2020

As-converted Value of Preferred Stock (1),(2)

10 unchanged sentences

As-converted and book values are based on unrounded numbers.

(2) The as-converted value of preferred stock is calculated as the product of:

(a) 2 million and 3 million shares of the UK&I and Europe preferred stock outstanding, respectively, as of March 31, 2021;

(b) 6.368 and 6.853 , the class A common stock conversion rate applicable to the UK&I and Europe preferred stock as of March 31, 2021, respectively;

and (c) $ 211.73 , Visa’s class A common stock closing stock price as of March 31, 2021.

(3) The as-converted value of preferred stock is calculated as the product of:

(a) 2 million and 3 million shares of the UK&I and Europe preferred stock outstanding, respectively, as of September 30, 2020;

(b) 6.387 and 6.861 , the class A common stock conversion rate applicable to the UK&I and Europe preferred stock as of September 30, 2020, respectively;

and (c) $ 199.97 , Visa’s class A common stock closing stock price as of September 30, 2020.

(2) As of June 30, 2021, the as-converted value of preferred stock is calculated as the product of:

(a) 2 million and 3 million shares of the UK&I and Europe preferred stock outstanding, respectively;

(b) 6.321 and 6.834 , the class A common stock conversion rate applicable to the UK&I and Europe preferred stock, respectively;

and (c) $ 233.82 , Visa’s class A common stock closing stock price.

(3) As of September 30, 2020, the as-converted value of preferred stock is calculated as the product of:

(a) 2 million and 3 million shares of the UK&I and Europe preferred stock outstanding, respectively;

(b) 6.387 and 6.861 , the class A common stock conversion rate applicable to the UK&I and Europe preferred stock respectively;

and (c) $ 199.97 , Visa’s class A common stock closing stock price.

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

5 unchanged sentences

2021 September 30,

2020 March 31,

2020 June 30,

2021 September 30,

32 unchanged sentences

Treasury securities.

As of March 31, 2021 and September 30, 2020, the Company held $ 2.0 billion and $ 3.8 billion of these available-for-sale investment securities, respectively.

As of June 30, 2021 and September 30, 2020, the Company held $ 1.8 billion and $ 3.8 billion of these available-for-sale investment securities, respectively.

All of the Company’s long-term available-for-sale investment securities are due within one to five years .

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

Assets Measured at Fair Value on a Non-recurring Basis

2 unchanged sentences

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.

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

The following table summarizes the total carrying value of the Company’s non-marketable equity securities held as of March 31, 2021 including cumulative unrealized gains and losses:

The following table summarizes the total carrying value of the Company’s non-marketable equity securities held as of June 30, 2021 including cumulative unrealized gains and losses:

(in millions)

3 unchanged sentences

Carrying amount, end of period $ 1,290

During the three and six months ended March 31, 2021 and 2020, unrealized gains and losses included in the carrying value of the Company’s non-marketable equity securities were as follows:

During the three and nine months ended June 30, 2021 and 2020, unrealized gains and losses included in the carrying value of the Company’s non-marketable equity securities still held as of June 30, 2021 and 2020 were as follows:

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2021 2020 2021 2020

2 unchanged sentences

Downward adjustments (including impairment) $ — $ ( 6 ) $ ( 2 ) $ ( 6 )

The Company recognized net unrealized gains on marketable and non-marketable equity securities still held as of quarter end of $ 434 million and $ 68 million for the three months ended June 30, 2021 and 2020, respectively, and $ 610 million and $ 59 million for the nine months ended June 30, 2021 and 2020, respectively.

Non-financial assets and liabilities.

5 unchanged sentences

The Company completed its annual impairment review of its indefinite-lived intangible assets and goodwill as of February 1, 2021, and concluded that there was no impairment.

No recent events or changes in circumstances indicate that impairment existed at March 31, 2021.

No recent events or changes in circumstances indicate that impairment existed at June 30, 2021.

Other Fair Value Disclosures

2 unchanged sentences

If measured at fair value in the financial statements, these instruments would be classified as Level 2 in the fair value hierarchy.

As of March 31, 2021, the carrying value and estimated fair value of debt was $ 21.0 billion and $ 22.1 billion, respectively.

As of June 30, 2021, the carrying value and estimated fair value of debt was $ 21.0 billion and $ 22.9 billion, respectively.

As of September 30, 2020, the carrying value and estimated fair value of debt was $ 24.1 billion and $ 26.6 billion, respectively.

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

Other financial instruments not measured at fair value.

The following financial instruments are not measured at fair value on the Company’s unaudited consolidated balance sheet at March 31, 2021, but disclosure of their fair values is required:

The following financial instruments are not measured at fair value on the Company’s unaudited consolidated balance sheet at June 30, 2021, but disclosure of their fair values is required:

settlement receivable and payable and customer collateral.

The estimated fair value of such instruments at March 31, 2021 approximates their carrying value due to their generally short maturities.

The estimated fair value of such instruments at June 30, 2021 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.

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

The Company had outstanding debt as follows:

41 unchanged sentences

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

During the six months ended March 31, 2021, the Company repaid $ 3.0 billion of principal upon maturity of its senior notes due December 14, 2020.

During the nine months ended June 30, 2021, the Company repaid $ 3.0 billion of principal upon maturity of its senior notes due December 14, 2020.

Note 8—Settlement Guarantee Management

1 unchanged sentence

This indemnification creates settlement risk for the Company due to the difference in timing between the date of a payment transaction and the date of subsequent settlement.

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

Historically, the Company has experienced minimal losses as a result of its settlement risk guarantee.

1 unchanged sentence

The Company’s settlement exposure is limited to the amount of unsettled Visa payment transactions at any point in time, which vary significantly day to day.

During the six months ended March 31, 2021, the Company’s maximum daily settlement exposure was $ 99.3 billion and the average daily settlement exposure was $ 61.5 billion.

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

During the nine months ended June 30, 2021, the Company’s maximum daily settlement exposure was $ 104.1 billion and the average daily settlement exposure was $ 63.9 billion.

The Company maintains and regularly reviews global settlement risk policies and procedures to manage settlement exposure, which may require clients to post collateral if certain credit standards are not met.

At March 31, 2021 and September 30, 2020, the Company held the following collateral to manage settlement exposure:

At June 30, 2021 and September 30, 2020, the Company held the following collateral to manage settlement exposure:

2021 September 30,

8 unchanged sentences

The number of shares of each series and class, and the number of shares of class A common stock on an as-converted basis were as follows:

March 31, 2021 September 30, 2020

June 30, 2021 September 30, 2020

Outstanding Conversion Rate Into

16 unchanged sentences

(2) The number of shares outstanding was less than one million.

(3) Class A common stock shares outstanding reflect repurchases that settled on or before March 31, 2021 and September 30, 2020, respectively.

(3) Class A common stock shares outstanding reflect repurchases that settled on or before June 30, 2021 and September 30, 2020, respectively.

(4) The class B to class A common stock conversion rate is presented on a rounded basis.

4 unchanged sentences

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

The following table presents the reduction in as-converted UK&I and Europe preferred stock after the Company recovered VE territory covered losses through conversion rate adjustments in the six months ended March 31, 2021.

There were no conversion rate adjustments in the six months ended March 31, 2020.

Six Months Ended

March 31, 2021

Nine Months Ended

June 30, 2021 Nine Months Ended

June 30, 2020

UK&I Europe UK&I Europe

(in millions, except per share data)

3 unchanged sentences

Recovery through conversion rate adjustment

$ 35 $ 20 $ 72 $ 92

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

4 unchanged sentences

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2021 2020 2021 2020

5 unchanged sentences

$ 2,200 $ 1,069 $ 5,709 $ 6,572

(1) Shares repurchased in the open market reflect repurchases that settled during the three and six months ended March 31, 2021 and 2020, respectively.

(1) Shares repurchased in the open market reflect repurchases that settled during the three and nine months ended June 30, 2021 and 2020, respectively.

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

1 unchanged sentence

Average repurchase price per share and total cost is calculated based on unrounded numbers.

In January 2020, the Company’s board of directors authorized a $ 9.5 billion share repurchase program and in January 2021, authorized an additional $ 8.0 billion share purchase program.

In January 2020, the Company’s board of directors authorized a $ 9.5 billion share repurchase program and in January 2021, authorized an additional $ 8.0 billion share repurchase program (the “January 2021 Program”).

These authorizations have no expiration date.

As of March 31, 2021, the Company’s repurchase programs had remaining authorized funds of $ 10.0 billion.

O n April 23, 2021, the Company’s board of directors declared a quarterly cash dividend of $ 0.32 per share of class A common stock (determined in the case of class B and C common stock and series A, UK&I and Europe preferred stock on an as-converted basis), which will be paid on June 1, 2021, to all holders of record as of May 14, 2021.

The Company declared and paid dividends of $ 701 million and $ 668 million during the three months ended March 31, 2021 and 2020, respectively, and $ 1.4 billion and $ 1.3 billion during the six months ended March 31, 2021 and 2020, respectively.

As of June 30, 2021, the Company’s repurchase program had remaining authorized funds of $ 7.8 billion.

All share repurchase programs authorized prior to the January 2021 Program have been completed.

On July 23, 2021, the Company’s board of directors declared a quarterly cash dividend of $ 0.32 per share of class A common stock (determined in the case of class B and C common stock and series A, UK&I and Europe preferred stock on an as-converted basis), which will be paid on September 1, 2021, to all holders of record as of August 13, 2021.

The Company declared and paid dividends of $ 698 million and $ 663 million during the three months ended June 30, 2021 and 2020, respectively, and $ 2.1 billion and $ 2.0 billion during the nine months ended June 30, 2021 and 2020, respectively.

Note 10—Earnings Per Share

7 unchanged sentences

(1) shares of class A common stock issuable upon the conversion of series A, UK&I and Europe preferred stock and class B and C common stock based on the conversion rates in effect through the period, and (2) incremental shares of class A common stock calculated by applying the treasury stock method to the assumed exercise of employee stock options, the assumed purchase of stock under the Company’s Employee Stock Purchase Plan and the assumed vesting of unearned performance shares.

The following table presents earnings per share for the three months ended March 31, 2021:

The following table presents earnings per share for the three months ended June 30, 2021:

Basic Earnings Per Share Diluted Earnings Per Share

8 unchanged sentences

Net income $ 2,575

The following table presents earnings per share for the six months ended March 31, 2021:

The following table presents earnings per share for the nine months ended June 30, 2021:

Basic Earnings Per Share Diluted Earnings Per Share

8 unchanged sentences

Net income $ 8,727

The following table presents earnings per share for the three months ended March 31, 2020:

The following table presents earnings per share for the three months ended June 30, 2020:

Basic Earnings Per Share Diluted Earnings Per Share

9 unchanged sentences

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

The following table presents earnings per share for the six months ended March 31, 2020:

The following table presents earnings per share for the nine months ended June 30, 2020:

Basic Earnings Per Share Diluted Earnings Per Share

9 unchanged sentences

(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 398 million for the three and six months ended March 31, 2021 and 2020.

The weighted-average number of shares of as-converted class C common stock used in the income allocation was 43 million for the three and six months ended March 31, 2021 and 44 million for the three and six months ended March 31, 2020.

The weighted-average number of shares of preferred stock included within participating securities was 12 million and 17 million of as-converted series A preferred stock for the three and six months ended March 31, 2021, respectively, 16 million and 32 million of as-converted UK&I preferred stock for the three and six months ended March 31, 2021 and 2020, respectively, and 22 million and 44 million of as-converted Europe preferred stock for the three and six months ended March 31, 2021 and 2020, respectively.

The weighted-average number of shares of as-converted class B common stock used in the income allocation was 398 million for the three and nine months ended June 30, 2021 and 2020.

The weighted-average number of shares of as-converted class C common stock used in the income allocation was 42 million for the three and nine months ended June 30, 2021 and 43 million and 44 million for the three and nine months ended June 30, 2020, respectively.

The weighted-average number of shares of preferred stock included within participating securities was 9 million and 14 million of as-converted series A preferred stock for the three and nine months ended June 30, 2021, respectively, 16 million and 32 million of as-converted UK&I preferred stock for the three and nine months ended June 30, 2021 and 2020, respectively, and 22 million and 44 million of as-converted Europe preferred stock for the three and nine months ended June 30, 2021 and 2020, respectively.

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

1 unchanged sentence

(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 common stock equivalents of 2 million and 3 million for the three and six months ended March 31, 2021, respectively, and 3 million for the three and six months ended March 31, 2020, because their effect would have been dilutive.

The computation excludes common stock equivalents of 1 million for the three and six months ended March 31, 2021 and 1 million and 2 million for the three and six months ended March 31, 2020, respectively, because their effect would have been anti-dilutive.

The computation includes common stock equivalents of 3 million for the three and nine months ended June 30, 2021 and 2020 because their effect would have been dilutive.

The computation excludes common stock equivalents of less than 1 million for the three and nine months ended June 30, 2021 and 1 million for the three and nine months ended June 30, 2020, because their effect would have been anti-dilutive.

(4) Participating securities include preferred stock outstanding and unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents, such as the Company’s series A preferred stock, UK&I and Europe preferred stock and restricted stock units.

1 unchanged sentence

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, or the EIP, during the six months ended March 31, 2021:

Granted Weighted-Average

Grant Date Fair

Value Weighted-Average

Exercise Price

The Company granted the following equity awards to employees and non-employee directors under the 2007 Equity Incentive Compensation Plan, or the EIP, during the nine months ended June 30, 2021:

Granted Weighted-Average Grant Date Fair Value Weighted-Average Exercise Price

Non-qualified stock options 1,022,430 $ 39.51 $ 207.57

3 unchanged sentences

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

Related to the EIP, the Company recorded share-based compensation cost, net of estimated forfeitures, of $ 148 million and $ 93 million for the three months ended March 31, 2021 and 2020, respectively, and $ 264 million and $ 204 million for the six months ended March 31, 2021 and 2020, respectively.

Related to the EIP, the Company recorded share-based compensation cost, net of estimated forfeitures, of $ 153 million and $ 102 million for the three months ended June 30, 2021 and 2020, respectively, and $ 417 million and $ 306 million for the nine months ended June 30, 2021 and 2020, respectively.

On January 26, 2021, the EIP was amended to extend the termination date from January 31, 2022 to January 26, 2031 and reduce the number of shares authorized for grant from 236 million to 198 million.

2 unchanged sentences

Note 12—Income Taxes

The effective income tax rates were 17 % for the three and six months ended March 31, 2021, and 19 % for the three and six months ended March 31, 2020.

The decrease in the effective tax rate was primarily due to $ 66 million and $ 147 million of tax benefits recognized during the three and six months ended March 31, 2021, respectively, as a result of the conclusion of audits by taxing authorities.

During the three and six months ended March 31, 2021, the Company’s gross unrecognized tax benefits decreased by $ 111 million and $ 117 million, respectively, and the Company’s net unrecognized tax benefits decreased by $ 127 million and $ 176 million, respectively.

The decrease in unrecognized tax benefits is primarily due to the recognition of previously unrecognized tax benefits as a result of the conclusion of audits by taxing authorities, partially offset by increases in gross timing differences as well as various tax positions across several jurisdictions.

During the three and six months ended March 31, 2021 and 2020, there were no significant changes in accrued interest and penalties related to uncertain tax positions.

The effective income tax rates were 41 % and 26 % for the three and nine months ended June 30, 2021, respectively, and 19 % for the three and nine months ended June 30, 2020.

The effective tax rates for the three and nine months ended June 30, 2021 differ from the effective tax rates for the same periods in the prior year primarily due to the following:

• during the three months ended June 30, 2021, a $ 1.0 billion non-recurring, non-cash tax expense related to the remeasurement of UK deferred tax liabilities, as discussed below;

• during the three months ended June 30, 2021, a $ 51 million tax benefit as a result of a tax position taken on certain expenses;

• during the nine months ended June 30, 2021, $ 147 million of tax benefits as a result of the conclusion of audits by taxing authorities.

On June 10, 2021, the UK enacted legislation that will increase the tax rate from 19% to 25%, effective April 1, 2023.

As a result, the Company recorded a non-recurring, non-cash tax expense related to the remeasurement of its net UK deferred tax liabilities, primarily related to intangibles recorded upon the acquisition of Visa Europe in fiscal 2016.

During the three months ended June 30, 2021, the Company’s gross and net unrecognized tax benefits increased by $ 80 million and $ 39 million, respectively.

During the nine months ended June 30, 2021, the Company’s gross and net unrecognized tax benefits decreased by $ 37 million and $ 137 million, respectively.

The change in unrecognized tax benefits is related to various tax positions across several jurisdictions.

Additionally, for the nine month period, the decrease in unrecognized tax benefits is primarily due to the recognition of previously unrecognized tax benefits as a result of the conclusion of audits by taxing authorities, partially offset by increases in gross timing differences.

During the three and nine months ended June 30, 2021, there were no significant changes in accrued interest related to uncertain tax positions.

During the three and nine months ended June 30, 2020, the Company’s accrued interest related to uncertain tax positions increased by $ 18 million and $ 56 million, respectively.

The Company’s tax filings are subject to examination by U.S.

17 unchanged sentences

The following table summarizes the activity related to accrued litigation:

Six Months Ended

Nine Months Ended

(in millions)

21 unchanged sentences

covered litigation:

Six Months Ended

Nine Months Ended

(in millions)

14 unchanged sentences

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

Six Months Ended

Nine Months Ended

(in millions)

6 unchanged sentences

On December 18, 2020, the plaintiffs purporting to act on behalf of the putative Injunctive Relief Class moved for class certification.

On April 28, 2021, a complaint was filed by Hayley Lanning, SBG Designs, LLC and others against Visa and Mastercard on behalf of a purported class of merchants located in 25 states and the District of Columbia who have taken payment using the Square card acceptance service.

The complaint alleges violations of the antitrust laws of those jurisdictions and seeks recovery for plaintiffs as indirect purchasers.

To the extent that Plaintiffs’ claims are not released by the Amended Settlement Agreement, Visa believes they are covered by the U.S.

On April 28, 2021, a complaint was filed by Hayley Lanning and others, and on June 16, 2021, a complaint was filed by Camp Grounds Coffee and others, each against Visa and Mastercard on behalf of a purported class of merchants located in 25 states and the District of Columbia who have taken payment using the Square card acceptance service.

The complaints allege violations of the antitrust laws of those jurisdictions and seek recovery for plaintiffs as indirect purchasers.

To the extent that those plaintiffs’ claims are not released by the Amended Settlement Agreement, Visa believes they are covered by the U.S.

Retrospective Responsibility Plan.

10 unchanged sentences

With regard to the claim asserted by one Merchant, trial before the UK Competition Appeal Tribunal to determine the lawful amount, if any, the plaintiff may be entitled to recover is set for June 2022.

Other plaintiffs, whose claims were stayed pending the Supreme Court of the United Kingdom's judgment, are moving their claims forward, mostly before the UK Competition Appeal Tribunal.

Other plaintiffs, whose claims were effectively stayed pending the Supreme Court of the United Kingdom's judgment, are moving their claims forward, mostly before the UK Competition Appeal Tribunal.

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

Other Litigation

7 unchanged sentences

chose not to appeal the Alberta Court of Appeal decision to the Supreme Court of Canada, and the Visa and Mastercard settlements are now final.

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

EMV Chip Liability Shift

7 unchanged sentences

and Euronet Services spol.

s.r.o., trial has been set for January 2023.

s.r.o., trial has been scheduled for a date on or after October 2, 2023.

On January 12, 2021, the case filed by the U.S.

6 unchanged sentences

Visa declined participation in these proceedings on March 22, 2021.

On April 30, 2021, Visa filed defenses challenging the jurisdiction of the German courts to hear claims brought by certain banks.

Department of Justice Civil Investigative Demand (2021)

4 unchanged sentences

Visa is cooperating with the Division in connection with the CID.

On June 11, 2021, the Division issued a further CID seeking additional documents and information on the same subjects.

Foreign Currency Exchange Rate Litigation

On July 9, 2021, a class action complaint was filed against Visa in the U.S.

District Court for the Northern District of California by several individuals on behalf of a nationwide class, and/or California, Washington, or Illinois subclasses, of cardholders who made a transaction in a foreign currency.

The complaint alleges that Visa sets foreign exchange rates in violation of Visa’s rules and bank cardholder agreements, and asserts claims for unjust enrichment and restitution as well as violations of the California Unfair Competition Law, the Washington Consumer Protection Act, and the Illinois Consumer Fraud Act.

Plaintiffs seek an injunction, damages, disgorgement, and attorneys’ fees among other relief.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements