What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2021-11-18 compared with 2020-11-19 · 362 added, 479 removed, 1586 unchanged (35% of the section changed)

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Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

To the Stockholders and the Board of Directors

Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting

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Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 30, 2021 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Changes in Accounting Principle

As discussed in Note 1 to the consolidated financial statements, the Company changed its method of accounting for revenue from contracts with customers in the year ended September 30, 2019 due to the adoption of Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2014-09 “Revenue from Contracts with Customers (Topic 606)”.

Basis for Opinions

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Assessment of the accrued litigation liability for class members opting out of the Damages Class settlement in the Interchange Multidistrict Litigation (MDL)

As discussed in Note 20 to the consolidated financial statements, the Company is involved in various legal proceedings including the Interchange Multidistrict Litigation (MDL) - Individual Merchant Actions , and has recorded an accrued litigation liability of $914 million as of September 30, 2020.

As discussed in Notes 5 and 20 to the consolidated financial statements, the Company is involved in various legal proceedings including the Interchange Multidistrict Litigation (MDL) – Individual Merchant Actions, and has recorded an accrued litigation liability of $881 million as of September 30, 2021.

In preparing its consolidated financial statements, the Company is required to assess the probability of loss associated with each legal proceeding and amount of such loss, if any.

The outcome of legal proceedings to which the Company is a party is not within the complete control of the Company or may not be known for prolonged periods of time.

We identified the assessment of the accrued liability for class matters opting out of the Damages Class settlement, also known as the MDL - Individual Merchant Actions, as a critical audit matter.

We identified the assessment of the accrued liability for class members opting out of the Damages Class settlement, also known as the MDL – Individual Merchant Actions , as a critical audit matter.

This proceeding involves complex claims that are subject to substantial uncertainties and unascertainable damages.

The assessment of the accrued litigation liability for the MDL - Individual Merchant Actions required especially challenging auditor judgment due to the assumptions and estimates associated with the consideration and evaluation of possible outcomes.

The assessment of the accrued litigation liability for the MDL – Individual Merchant Actions required especially challenging auditor judgment due to the assumptions and estimation associated with the consideration and evaluation of possible outcomes.

Changes to the outcome could have a significant effect on the estimated amount of the liability.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s litigation accrual process, including internal controls over the Company’s litigation accrual process for the MDL - Individual Merchant Actions .

We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s litigation accrual process for the MDL – Individual Merchant Actions .

We assessed the amounts accrued by reading letters received directly from the Company’s external legal counsel and in-house legal counsel that discussed the Company’s legal matters, including the MDL – Individual Merchant Actions .

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September 30,

(in millions, except par value data)

(in millions, except per share data)

Cash and cash equivalents $ 16,487 $ 16,289

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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 and no shares issued and outstanding at September 30, 2020 and 2019 (the “series A preferred stock”), respectively

Series B convertible participating preferred stock, 2 shares issued and outstanding at September 30, 2020 and 2019 (the “UK&I preferred stock”)

Series C convertible participating preferred stock, 3 shares issued and outstanding at September 30, 2020 and 2019 (the “Europe preferred stock”)

Series A convertible participating preferred stock, less than one shares issued and outstanding at September 30, 2021 and 2020 (the “series A preferred stock”) 486 2,437

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

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

Class A common stock, $ 0.0001 par value, 2,001,622 shares authorized, 1,677 and 1,683 shares issued and outstanding at September 30, 2021 and 2020, respectively

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

Class C common stock, $ 0.0001 par value, 1,097 shares authorized, 11 shares issued and outstanding at September 30, 2020 and 2019

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

Right to recover for covered losses ( 133 ) ( 39 )

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Income (Loss), Net Total

Series B Series C Class A Class B Class C

Series A Series B Series C Class

A Class B Class C

(in millions, except per share data)

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12,311 12,311

10,301 10,301

Other comprehensive income (loss), net of tax

( 331 ) ( 331 )

Comprehensive income

Adoption of new accounting standards 3 3

VE territory covered losses incurred ( 147 ) ( 147 )

Recovery through conversion rate adjustment ( 55 ) 53 ( 2 )

Conversion of series A preferred stock upon sales into public market

28 ( 1,951 ) 1,951 —

Conversion of class C common stock upon sales into public market

Vesting of restricted stock and performance-based shares

Share-based compensation, net of forfeitures 542 542

Vesting of restricted stock and performance-based shares

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

( 1 ) ( 144 ) ( 144 )

Cash proceeds from issuance of common stock under employee equity plans

Cash dividends declared and paid, at a quarterly amount of $ 0.195 per class A common stock in the first quarter and $ 0.210 per class A common stock for the rest of the fiscal year

Cash proceeds from issuance of class A common stock under employee equity plans 2 208 208

Cash dividends declared and paid, at a quarterly amount of $ 0.32 per class A common stock

( 2,798 ) ( 2,798 )

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2 3 1,677 245 10 $ 3,080 $ ( 133 ) $ 18,855 $ 15,351 $ 436 $ 37,589

(1) Decrease in Class A common stock related to forfeitures of restricted stock awards is less than one million shares.

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

See accompanying notes, which are an integral part of these consolidated financial statements.

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Income (Loss), Net Total

Series B Series C Class

Series A Series B Series C Class

A Class B Class C

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10,866 10,866

12,080 12,080

Other comprehensive income (loss), net of tax

( 1,204 ) ( 1,204 )

Comprehensive income

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Recovery through conversion rate adjustment ( 164 ) 169 5

Issuance of series A preferred stock — (1)

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

3 ( 207 ) 207 —

Conversion of class C common stock upon sales into public market

Vesting of restricted stock and performance-based shares

Share-based compensation, net of forfeitures 416 416

Vesting of restricted stock and performance-based shares

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

( 1 ) ( 160 ) ( 160 )

Cash proceeds from issuance of common stock under employee equity plans

Cash proceeds from issuance of class A common stock under employee equity plans 1 190 190

Cash dividends declared and paid, at a quarterly amount of $ 0.30 per class A common stock

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2 3 1,683 245 11 $ 5,086 $ ( 39 ) $ 16,721 $ 14,088 $ 354 $ 36,210

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

See accompanying notes, which are an integral part of these consolidated financial statements.

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Income (Loss), Net Total

Series A Series B Series C Class

A Class B Class C

Series B Series C Class A Class B Class C

(in millions, except per share data)

Balance as of September 30, 2018 2 3 1,768 245 12 $ 5,470 $ ( 7 ) $ 16,678 $ 11,318 $ 547 $ 34,006

— 2 3 1,718 245 11 $ 5,462 $ ( 171 ) $ 16,541 $ 13,502 $ ( 650 ) $ 34,684

10,866 10,866

Net income 12,080 12,080

Other comprehensive income (loss), net of tax

( 1,204 ) ( 1,204 )

Comprehensive income 10,876

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Recovery through conversion rate adjustment ( 8 ) 8 —

Issuance of series A preferred stock

Conversion of series A preferred stock upon sales into public market

3 ( 207 ) 207 —

Conversion of class C common stock upon sales into public market

Vesting of restricted stock and performance-based shares

Share-based compensation, net of forfeitures 407 407

Vesting of restricted stock and performance-based shares

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

( 1 ) ( 111 ) ( 111 )

Cash proceeds from issuance of common stock under employee equity plans

Cash proceeds from issuance of class A common stock under employee equity plans 2 162 162

Cash dividends declared and paid, at a quarterly amount of $ 0.25 per class A common stock

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Balance as of September 30, 2019 2 3 1,718 245 11 $ 5,462 $ ( 171 ) $ 16,541 $ 13,502 $ ( 650 ) $ 34,684

2 3 1,683 245 11 $ 5,086 $ ( 39 ) $ 16,721 $ 14,088 $ 354 $ 36,210

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

See accompanying notes, which are an integral part of these consolidated financial statements.

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VE territory covered losses incurred ( 147 ) ( 37 ) ( 172 )

(Gains) losses on equity investments, net ( 712 ) ( 101 ) ( 131 )

Other ( 109 ) ( 44 ) ( 140 )

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Repurchase of class A common stock ( 8,676 ) ( 8,114 ) ( 8,607 )

Proceeds from issuance of senior notes 7,212 — —

Repayments of debt ( 3,000 ) — —

Dividends paid ( 2,798 ) ( 2,664 ) ( 2,269 )

Proceeds from issuance of senior notes — 7,212 —

Payment of deferred purchase consideration related to the Visa Europe acquisition — — ( 1,236 )

Cash proceeds from issuance of common stock under employee equity plans 190 162 164

Cash proceeds from issuance of class A common stock under employee equity plans 208 190 162

Restricted stock and performance-based shares settled in cash for taxes ( 144 ) ( 160 ) ( 111 )

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Interest payments on debt $ 643 $ 537 $ 537

Charitable contribution of investment securities to Visa Foundation $ — $ — $ 195

Accruals related to purchases of property, equipment and technology $ 41 $ 38 $ 95

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Organization .

(“Visa” or the “Company”) is a global payments technology company that enables innovative, secure and reliable electronic payments across more than 200 countries and territories.

Visa and its wholly-owned consolidated subsidiaries, including Visa U.S.A.

(“Visa U.S.A.”), Visa International Service Association (“Visa International”), Visa Worldwide Pte.

Limited, Visa Europe Limited (“Visa Europe”), Visa Canada Corporation (“Visa Canada”), Visa Technology & Operations LLC and CyberSource Corporation, operate one of the world’s largest electronic payments network — VisaNet — which facilitates authorization, clearing and settlement of payment transactions and enables the Company to provide its financial institution and seller clients a wide range of products, platforms and value added services.

(“Visa” or the “Company”) is a global payments technology company that enables innovative, reliable and secure electronic payments across more than 200 countries and territories.

Visa and its wholly-owned consolidated subsidiaries operate one of the world’s largest electronic payments network — VisaNet — which facilitates authorization, clearing and settlement of payment transactions and enables the Company to offer products and solutions that facilitate secure, reliable and efficient money movement for all participants in the ecosystem.

Visa is not a financial institution and does not issue cards, extend credit or set rates and fees for account holders of Visa products.

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These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period.

These estimates may change as new events occur and additional information is obtained, and will be recognized in the consolidated financial statements in the period in which such changes occur.

Future actual results could differ materially from these estimates.

The worldwide spread of coronavirus (“COVID-19”) has created significant uncertainty in the global economy.

There have been no comparable recent events that provide guidance as to the effect COVID-19 as a global pandemic may have, and, as a result, the ultimate impact of COVID-19 and the extent to which COVID-19 continues to impact the Company’s business, results of operations and financial condition will depend on future developments, which are highly uncertain and difficult to predict.

As the effects of an evolving coronavirus (“COVID-19”) pandemic continues, much remains uncertain.

There have been no comparable recent events and as a result the ultimate impact of COVID-19 and the extent to which COVID-19 and new variants continue to impact the Company’s business, results of operations and financial condition will depend on future developments, which are highly uncertain and difficult to predict.

The use of estimates in specific accounting policies is described further below as appropriate.

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Interest earned on escrow funds is included in non-operating income (expense) on the consolidated statements of operations.

Investments and fair value.

The Company measures certain assets and liabilities at fair value.

The Company measures certain financial assets and liabilities at fair value on a recurring basis.

Certain non-financial assets such as goodwill, intangible assets and property, equipment and technology are measured at cost and only recognized at fair value if they are deemed to be impaired.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

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Trading activity in these investments is at the direction of the Company’s employees.

These investments are held in a trust and are not available for the Company’s operational or liquidity needs.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2021

dividend income as well as gains and losses, realized and unrealized, from changes in fair value are recorded in non-operating income (expense), and offset in personnel expense on the consolidated statements of operations.

investments are held in a trust and are not available for the Company’s operational or liquidity needs.

Interest and dividend income as well as gains and losses, realized and unrealized, from changes in fair value are recorded in non-operating income (expense), and offset in personnel expense on the consolidated statements of operations.

Available-for-sale debt securities.

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Investments with original maturities of greater than 90 days and stated maturities of less than one year from the balance sheet date, or investments that the Company intends to sell within one year, are classified as current assets, while all other securities are classified as non-current assets.

Unrealized gains and losses are reported in accumulated other comprehensive income (loss) on the consolidated balance sheets until realized.

Unrealized gains and losses are reported in accumulated other comprehensive income (loss) on the consolidated balance sheets.

The specific identification method is used to calculate realized gain or loss on the sale of securities, which is recorded in non-operating income (expense) on the consolidated statements of operations.

Interest income is recognized when earned and is included in non-operating income (expense) on the consolidated statements of operations.

The Company evaluates its debt securities for other-than-temporary impairment (“OTTI”) on an ongoing basis.

When there has been a decline in fair value of a debt security below the amortized cost basis, the Company recognizes OTTI if:

The Company evaluates its debt securities for impairment on an ongoing basis.

When there has been a decline in fair value of a debt security below the amortized cost basis, the Company recognizes an impairment if:

(1) it has the intent to sell the security;

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or (3) it does not expect to recover the entire amortized cost basis of the security.

If the Company identifies that the decline in fair value has resulted from credit losses, the credit loss component is recognized as an allowance on the balance sheet and in non-operating income (expense) on the consolidated statements of operations.

The non-credit loss component remains in accumulated other comprehensive income (loss) until realized from a sale or subsequent impairment.

Non-marketable equity securities.

The Company’s non-marketable equity securities, which are reported in other assets on the consolidated balance sheets, include investments in privately held companies without readily determinable market values.

The Company adjusts the carrying value of its non-marketable equity securities to fair value when transactions for identical or similar investments of the same issuer are observable.

All gains and losses on non-marketable equity securities, realized and unrealized, are recognized in non-operating income (expense).

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These investments consist of equity holdings in non-public companies and are recorded in other assets on the consolidated balance sheets.

The Company adjusts the carrying value of these equity securities to fair value when transactions for identical or similar investments of the same issuer are observable.

The Company regularly reviews investments accounted for under the equity method and the fair value measurement alternative for possible impairment, which generally involves an analysis of the facts and changes in circumstances influencing the investment, expectations of the entity’s cash flows and capital needs, and the viability of its business model.

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See Note 6—Fair Value Measurements and Investments.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2021

Settlement receivable and payable .

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These amounts are presented as settlement receivable and settlement payable on the consolidated balance sheets.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2020

Customer collateral .

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The Company indemnifies its financial institution clients for settlement losses suffered due to the failure of any other client to fund its settlement obligations in accordance with the Visa operating rules.

The Company estimates expected credit losses and recognizes an allowance for those credit losses related to its settlement indemnification obligations.

The estimated fair value of the liability for settlement indemnification is included in accrued liabilities on the consolidated balance sheets.

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Acquired technology assets are initially recorded at fair value and amortized on a straight-line basis over the estimated useful life.

The Company evaluates the recoverability of long-lived assets for impairment annually or more frequently if events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable.

The Company evaluates the recoverability of long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable.

If the sum of expected undiscounted net future cash flows is less than the carrying amount of an asset or asset group, an impairment loss is recognized to the extent that the carrying amount of the asset or asset group exceeds its fair value.

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The Company does not record a ROU asset and corresponding liability for leases with terms of 12 months or less.

The Company does not include renewals in the determination of the lease term unless the renewals are deemed to be reasonably assured at lease commencement.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2021

Lease agreements generally contain lease and non-lease components.

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The current portion of lease liabilities are included in accrued liabilities and the long-term portion is included in other liabilities on the consolidated balance sheets.

The Company’s lease cost consists of amounts recognized under lease agreements in the results of operations adjusted for impairment and sublease income.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2020

The Company’s lease cost is included in general and administrative expense in the consolidated statements of operations and consists of amounts recognized under lease agreements, adjusted for impairment and sublease income.

Intangible assets, net .

The Company records identifiable intangible assets at fair value on the date of acquisition and evaluates the useful life of each asset.

Finite-lived intangible assets primarily consist of customer relationships, reseller relationships and trade names obtained through acquisitions.

Finite-lived intangible assets primarily consist of customer relationships and trade names obtained through acquisitions.

Finite-lived intangible assets are amortized on a straight-line basis and are tested for recoverability if events or changes in circumstances indicate that their carrying amounts may not be recoverable.

These intangibles have useful lives ranging from 3 to 15 years.

No events or changes in circumstances indicate that impairment existed as of September 30, 2020.

See Note 8—Intangible Assets and Goodwill .

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The Company relies on a number of factors when completing impairment assessments, including a review of discounted net future cash flows, business plans and the use of present value techniques.

The Company completed its annual impairment review of indefinite-lived intangible assets as of February 1, 2020, and concluded there was no impairment as of that date.

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

No recent events or changes in circumstances indicate that impairment of the Company’s indefinite-lived intangible assets existed as of September 30, 2021.

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Goodwill is not amortized but is evaluated for impairment at the reporting unit level annually or more frequently if events or changes in circumstances indicate that impairment may exist.

The Company evaluated its goodwill for impairment as of February 1, 2020, and concluded there was no impairment as of that date.

The Company performed its annual impairment review of goodwill as of February 1, 2021, and concluded there was no impairment as of that date.

No recent events or changes in circumstances indicate that impairment existed as of September 30, 2021.

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Revenue recognition .

The Company adopted Accounting Standards Update (ASU) 2014-09 effective October 1, 2018 using the modified retrospective transition method.

Results for reporting periods beginning after October 1, 2018 are presented under the new revenue standard.

The comparative prior period amounts appearing on the financial statements have not been restated and continue to be reported under the prior revenue standard.

The Company’s net revenues are comprised principally of the following categories:

service revenues, data processing revenues, international transaction revenues and other revenues, reduced by client incentives.

As a payment network service provider, the Company’s obligation to the customer is to stand ready to provide continuous access to our payment network over the contractual term.

As a payments network service provider, the Company’s obligation to the customer is to stand ready to provide continuous access to our payments network over the contractual term.

Consideration is variable based primarily upon the amount and type of transactions and payments volume on Visa’s products.

The Company recognizes revenue, net of sales and other similar taxes, as the payment network services are performed in an amount that reflects the consideration the Company expects to receive in exchange for those services.

Fixed fees for payment network services are generally recognized ratably over the related service period.

The Company has elected the optional exemption to not disclose the remaining performance obligations related to payment network services and other performance obligations which are constrained by and dependent upon the future performance of its clients, which are variable in nature.

The Company also recognizes revenues, net of sales and other similar taxes, from other value added services, including issuer and consumer solutions, merchant and acquirer solutions, fraud

The Company recognizes revenue, net of sales and other similar taxes, as the payments network services are performed in an amount that reflects the consideration the Company expects to receive in exchange for those services.

Fixed fees for payments network services are generally recognized ratably over the related service period.

The Company has elected the optional exemption to not disclose the remaining performance obligations related to payments network services and other performance obligations which are constrained by and dependent upon the future performance of its clients, which are variable in nature.

The Company also recognizes revenues, net of sales and other similar

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2021

management and security services, data products, and consulting and analytics, as these value added services are performed.

taxes, from other value added services, including issuer solutions, acceptance solutions, risk and identity solutions and advisory services, as these value added services are performed.

Service revenues consist mainly of revenues earned for services provided in support of client usage of Visa payment services.

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International transaction revenues are recognized in the same period the cross-border transactions occur or services are performed.

Other revenues consist mainly of value added services, license fees for use of the Visa brand or technology, fees for account holder services, certification, licensing and product enhancements, such as extended account holder protection and concierge services.

Other revenues consist mainly of value added services, license fees for use of the Visa brand or technology, fees for account holder services, certification, licensing and card benefits, such as extended account holder protection and concierge services.

Other revenues are recognized in the same period the related transactions occur or services are performed.

Client incentives.

The Company enters into long-term contracts with financial institution clients, merchants and strategic partners for various programs designed to increase revenue by growing payments volume, increasing Visa product acceptance, winning merchant routing transactions over to Visa’s network and driving innovation.

These incentives are primarily accounted for as reductions to revenues.

Client incentives are accounted for as operating expenses if the payment is in exchange for a distinct good or service provided by the customer.

The Company enters into long-term contracts with financial institution clients, merchants and strategic partners for various programs that provide cash and other incentives designed to increase revenue by growing payments volume, increasing Visa product acceptance, winning merchant routing transactions over to Visa’s network and driving innovation.

Incentives are classified as reductions to revenues within client incentives, unless the incentive is a cash payment made in exchange for a distinct good or service provided by the customer, in which case the payment is classified as operating expense.

The Company generally capitalizes upfront and fixed incentive payments under these agreements and amortizes the amounts as a reduction to revenues ratably over the contractual term.

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The Company’s functional currency is the U.S.

dollar for the majority of its foreign operations except for Visa Europe whose functional currency is the euro.

dollar for the majority of its foreign operations except for Visa Europe Limited (“Visa Europe”) whose functional currency is the Euro.

Transactions denominated in currencies other than the applicable functional currency are converted to the functional currency at the exchange rate on the transaction date.

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The Company uses foreign exchange forward derivative contracts to reduce its exposure to foreign currency rate changes on forecasted non-functional currency denominated operational cash flows.

The terms of these derivative contracts designated as cash flow hedges are generally less than 12 months.

To qualify for cash flow hedge accounting treatment, the Company formally documents, at inception of the hedge, all relationships between the hedging transactions and the hedged items, as well as the Company’s risk management objective and strategy for undertaking various hedging transactions.

The Company also formally assesses whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in the cash flows of the hedged items and whether those derivatives may be expected to remain highly effective in future periods.

The terms of these derivative contracts designated as cash flow hedges are generally no more than 12 months.

The Company uses regression analysis to assess hedge effectiveness prospectively and retrospectively.

The effectiveness tests are performed on foreign exchange forward contracts based on changes in the spot rate of the derivative instrument compared to changes in the spot rate of the forecasted hedged transaction.

Derivatives are carried at fair value on a gross basis on the consolidated balance sheets.

Gains and losses resulting from changes in fair value of derivative instruments designated as cash flow hedges are accounted for either in accumulated other comprehensive income (loss) on the consolidated balance sheets, or in the consolidated statements of operations in the corresponding account where revenue or expense is recorded.

Gains and losses resulting from changes in fair value of derivative instruments not designated for hedge accounting are recorded in general and administrative expense for hedges of operating activity, or non-operating income (expense) for hedges of non-operating activity.

Gains and losses related to changes in fair value hedges are recognized in non-operating income (expense) along with a corresponding loss or gain related to the change in value of the underlying hedged item in the same line item in the consolidated statement of operations.

The change in value of net investment hedges are recorded in other comprehensive income (loss).

Amounts excluded from the effectiveness testing of net investment hedges are recognized in non-operating income (expense).

Cash flows associated with derivatives designated as a fair value hedge may be included in operating, investing or financing activities on the consolidated statement of cash flows, depending on the classification of the items being hedged.

Cash flows associated with financial instruments designated as net investment hedges are classified as an investing activity.

See Note 13—Derivative Financial Instruments .

Gains and losses resulting from changes in the fair value of cash flow hedges are accounted for in accumulated other comprehensive income (loss) on the consolidated balance sheets.

When the forecasted transaction occurs and is recognized in earnings, the amount in accumulated other comprehensive income (loss) related to that hedge is reclassified to the consolidated statements of operations in the corresponding account where revenue or expense is recorded.

Forward points are excluded from effectiveness testing and measurement purposes and are reported in earnings.

Cash flow hedges are subject to master netting agreements, which provide the Company with a legal right to net settle multiple payable and receivable positions with the same counterparty, in a single currency through a single payment.

However, the Company presents fair values on a gross basis on the consolidated balance sheets.

The Company holds foreign exchange forward contracts which were designated as a net investment hedge against a portion of the Company’s net investment in Visa Europe.

The Company also holds interest rate and cross-currency swap agreements on a portion of the outstanding senior notes that allows the Company to manage its interest rate exposure through a combination of fixed and floating rates and reduce the overall cost of borrowing.

The Company designated the interest rate swaps as a fair value hedge and the cross-currency swap as a net investment hedge.

Gains and losses related to changes in fair value hedges are recognized in non-operating income (expense) along with a corresponding loss or gain related to the change in fair value of the underlying hedged item in the same line item in the consolidated statements of operations.

Gains and losses related to changes in the fair value of net investment hedges are recorded in other comprehensive income (loss).

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2021

excluded from the effectiveness testing of net investment hedges are recognized in non-operating income (expense).

The Company utilizes foreign exchange derivative contracts to hedge against foreign currency exchange rate fluctuations related to certain monetary assets and liabilities denominated in foreign currency.

Gains and losses resulting from changes in the fair value of these derivative instruments not designated for hedge accounting are recorded in general and administrative expense for hedges of operating activity, or non-operating income (expense) for hedges of non-operating activity.

Cash flows associated with a cash flow hedge are classified as an operating activity on the consolidated statement of cash flows.

Cash flows associated with a fair value hedge may be included in operating, investing or financing activities depending on the classification of the items being hedged.

Cash flows associated with a net investment hedge are classified as an investing activity.

See Note 13—Derivative Financial Instruments .

Share-based compensation .

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See Note 16—Earnings Per Share.

Recently Issued Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, which requires the recognition of lease assets and lease liabilities arising from operating leases on the balance sheet.

Subsequently, the FASB also issued a series of amendments to this new lease standard that address the transition methods available and clarify the guidance for lessor costs and other aspects of the new lease standard.

The Company adopted the standard effective October 1, 2019 using the modified retrospective transition method with comparative periods continuing to be reported using the prior leases standard.

The Company elected to apply the package of practical expedients permitted under the transition guidance, allowing the Company to carry forward the historical assessment of whether a contract was or contains a lease, lease classification and capitalization of initial direct costs.

Recently Adopted Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Board Update (“ASU”) 2016-13, which requires the measurement and recognition of expected credit losses for financial assets and certain other instruments held at amortized cost, replacing the incurred loss model.

Subsequently, the FASB also issued amendments to this standard.

The Company adopted the guidance effective October 1, 2020 using the modified retrospective transition method with comparative periods continuing to be reported using the previous applicable guidance.

The adoption did not have a material impact on the consolidated financial statements.

In February 2018, the FASB issued ASU 2018-02, which allows a reclassification from accumulated other comprehensive income to retained earnings for adjustments to tax effects that were originally recorded in other comprehensive income due to changes in the U.S.

federal corporate income tax rate resulting from the enactment of the U.S.

tax reform legislation on December 22, 2017, commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”).

The Company adopted the ASU effective October 1, 2019.

In January 2017, the FASB issued ASU 2017-04, which simplifies the accounting for goodwill impairments by eliminating Step 2 from the goodwill impairment test.

An entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of the reporting unit with its carrying amount, which is Step 1 of the goodwill impairment test.

An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value, not to exceed the total amount of goodwill allocated to that reporting unit.

The Company adopted the standard effective October 1, 2020 on a prospective basis.

The adoption had no impact on the consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, which modifies the disclosure requirements for fair value measurements by removing, modifying or adding certain disclosures.

The Company adopted this standard effective October 1, 2020.

The adoption did not have a material impact on the consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, and also issued subsequent amendments, which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost.

The amendments in the ASU are effective for the Company on October 1, 2020.

The Company is evaluating the impact ASU 2016-13 will have on its consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, which simplifies the accounting for income taxes by removing certain exceptions to the general principles in the existing guidance for income taxes and making other minor improvements.

The amendments in the ASU are effective for the Company on October 1, 2021.

The Company does not plan to early adopt the ASU at this time.

The adoption is not expected to have a material impact on the consolidated financial statements.

In January 2020, the FASB issued ASU 2020-01, which clarifies that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting for the purposes of applying the fair value measurement alternative.

The amendments in the ASU are effective for the Company on October 1, 2021.

The adoption is not expected to have a material impact on the consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, which provides optional expedients and exceptions for applying U.S.

GAAP to contracts, hedging relationships and other transactions that reference the London Interbank Offered Rate or another reference rate expected to be discontinued because of reference rate reform.

The amendments in the ASU are effective for the Company upon issuance through December 31, 2022.

The Company is evaluating the effect ASU 2020-04 will have on its consolidated financial statements.

In August 2018, the FASB issued ASU 2018-14, which modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans by removing, modifying or adding certain disclosures.

The Company adopted this standard effective October 1, 2020.

The adoption did not have a material impact on the consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

1 unchanged sentence

Note 2—Acquisitions

Pending Acquisition.

On January 13, 2020, the Company entered into a definitive agreement to acquire Plaid Inc.

for $ 5.3 billion.

The Company will pay approximately $ 4.9 billion of cash and $ 0.4 billion of retention equity and deferred equity consideration.

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 November 5, 2020, the U.S.

Department of Justice filed a complaint in the U.S.

District Court for the Northern District of California seeking a permanent injunction to prevent Visa from acquiring Plaid.

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.

Terminated Acquisition

On January 12, 2021, Visa and Plaid Inc.

mutually terminated their merger agreement announced on January 13, 2020.

See Note 20—Legal Matters .

Fiscal 2019 Acquisitions.

The Company acquired several businesses for a total purchase consideration of $ 942 million, which consisted of $ 888 million in cash and $ 54 million of deferred cash consideration.

The allocation of the purchase price to the tangible and intangible assets acquired and to liabilities have been completed as of September 30, 2020.

There were no material adjustments to the preliminary purchase price allocation as of September 30, 2019.

Goodwill was recorded to reflect the excess purchase consideration over net assets acquired, which represents the value that is expected from expanding the Company’s product offerings and other synergies.

Goodwill that is expected to be deductible for tax purposes amounts to approximately $ 360 million.

The following table summarizes the purchase price allocation in aggregate for the businesses acquired:

Purchase Price Allocation

(in millions)

Net tangible assets acquired (liabilities assumed) $ 23

Intangible assets 319

(1) Includes fair value of previously-held interest in the acquired entities of $ 47 million.

The following table summarizes the identified intangible assets acquired based on the purchase price allocations:

Acquisition Date Fair Value Weighted-Average Useful Life

(in millions) (in years)

Developed technologies $ 70 4

Customer relationships 249 12

Total $ 319 10

Pro forma information related to the acquisitions has not been presented as the impact was not material to the Company’s financial results.

Transaction costs incurred were not material and were included in the Company’s consolidated statements of operations.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2020

Note 3—Revenues

18 unchanged sentences

Net revenues $ 24,105 $ 21,846 $ 22,977

Remaining performance obligations are comprised of deferred revenue and unbilled contract revenues that will be invoiced and recognized as revenues in future periods primarily related to value added services.

Remaining performance obligations are comprised of deferred revenues and unbilled contract revenues that will be invoiced and recognized as revenues in future periods primarily related to value added services.

As of September 30, 2021, the remaining performance obligations were $ 1.7 billion.

1 unchanged sentence

However, the amount and timing of revenue recognition is affected by several factors, including contract modifications and terminations, which could impact the estimate of amounts allocated to remaining performance obligations and when such revenues could be recognized.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2021

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

1 unchanged sentence

September 30,

2020 2019 2018

(in millions)

3 unchanged sentences

Customer collateral

1,850 1,648 1,324

Prepaid expenses and other current assets

Cash, cash equivalents, restricted cash and restricted cash equivalents $ 19,799 $ 19,171

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2020

and Europe Retrospective Responsibility Plans

4 unchanged sentences

litigation escrow agreement, the conversion feature of the Company’s shares of class B common stock, the indemnification obligations of the Visa U.S.A.

members, an interchange judgment sharing agreement, a loss sharing agreement and an omnibus agreement, as amended.

(“Visa U.S.A.”) members, an interchange judgment sharing agreement, a loss sharing agreement and an omnibus agreement, as amended.

covered litigation consists of a number of matters that have been settled or otherwise fully or substantially resolved, as well as the following:

10 unchanged sentences

The amount of the escrow is determined by the board of directors and the Company’s litigation committee, all members of which are affiliated with, or act for, certain Visa U.S.A.

The escrow funds are held in money market investments along with the interest earned, less applicable taxes and are classified as restricted cash equivalents on the consolidated balance sheets.

The following table sets forth the changes in the restricted cash equivalents—U.S.

The accrual related to the U.S.

covered litigation could be either higher or lower than the U.S.

litigation escrow account balance.

See Note 20—Legal Matters .

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2021

The following table presents the changes in the restricted cash equivalents—U.S.

litigation escrow account by fiscal year:

2 unchanged sentences

Return of takedown payment to the litigation escrow account — 467

Deposits into the litigation escrow account — 300

Payments to class plaintiffs’ settlement fund (1)

Payments to opt-out merchants (1) and interest earned on escrow funds

( 7 ) ( 771 )

Balance at end of period $ 894 $ 901

1 unchanged sentence

See Note 20—Legal Matters .

The accrual related to the U.S.

covered litigation could be either higher or lower than the U.S.

litigation escrow account balance.

A takedown payment of approximately $ 467 million was received and deposited into the Company’s litigation escrow account.

The deposit into the litigation escrow account and reestablishment of a prior accrual to address opt-out claims was recorded during fiscal 2020.

The Company recorded an accrual of $ 370 million for the U.S.

covered litigation during fiscal 2019.

See Note 20—Legal Matters .

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2020

Conversion feature.

8 unchanged sentences

Interchange judgment sharing agreement.

and Visa International have entered into an interchange judgment sharing agreement with certain Visa U.S.A.

and Visa International Service Association (“Visa International”) have entered into an interchange judgment sharing agreement with certain Visa U.S.A.

members that have been named as defendants in the interchange multidistrict litigation, which is described in Note 20—Legal Matters .

20 unchanged sentences

In addition, the monetary portion of any judgment assigned to Visa-related claims in accordance with the omnibus agreement would be treated as a Visa portion.

Visa would have no liability for the monetary portion of any judgment assigned to Mastercard-related claims in accordance with the omnibus agreement, and if a judgment is not assigned to Visa-related claims or Mastercard-related claims in accordance with the omnibus agreement, then any monetary liability would be divided into a Mastercard portion at 33.3333 % and a Visa portion at 66.6667 %.

Visa would have no liability for the monetary portion of any judgment assigned to Mastercard-related claims in accordance with the

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2021

omnibus agreement, and if a judgment is not assigned to Visa-related claims or Mastercard-related claims in accordance with the omnibus agreement, then any monetary liability would be divided into a Mastercard portion at 33.3333 % and a Visa portion at 66.6667 %.

The Visa portion of a settlement or judgment covered by the omnibus agreement would be allocated in accordance with specified provisions of the Company’s U.S.

1 unchanged sentence

The litigation provision on the consolidated statements of operations was not impacted by the execution of the omnibus agreement.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2020

On August 26, 2014, Visa entered into an amendment to the omnibus agreement.

5 unchanged sentences

Each of the UK LSA members has agreed, on a several and not joint basis, to compensate the Company for certain losses which may be incurred by the Company, Visa Europe or their affiliates as a result of certain existing and potential litigation relating to the setting and implementation of domestic multilateral interchange fee rates in the United Kingdom prior to the closing of the Visa Europe acquisition (the “Closing”), subject to the terms and conditions set forth therein and, with respect to each UK LSA member, up to a maximum amount of the up-front cash consideration received by such UK LSA member.

The UK LSA members’ obligations under the UK loss sharing agreement are conditional upon, among other things, either (a) losses valued in excess of the sterling equivalent on June 21, 2016 of € 1.0 billion having arisen in UK covered claims (and such losses having reduced the conversion rate of the UK&I preferred stock accordingly), or (b) the conversion rate of the UK&I preferred stock having been reduced to zero pursuant to losses arising in claims relating to multilateral interchange fee rate setting in the Visa Europe territory.

The UK LSA members’ obligations under the UK loss sharing agreement are conditional upon, among other things, either (a) losses valued in excess of the sterling equivalent on June 21, 2016 of € 1.0 billion having arisen in UK covered claims (and such losses having reduced the conversion rate of the series B preferred stock accordingly), or (b) the conversion rate of the series B preferred stock having been reduced to zero pursuant to losses arising in claims relating to multilateral interchange fee rate setting in the Visa Europe territory.

Litigation management deed.

The Company has entered into a litigation management deed with Visa Europe which sets forth the agreed upon procedures for the management of the VE territory covered litigation, the allocation of losses resulting from this litigation (the “VE territory covered losses”) between the UK&I and Europe preferred stock, and any accelerated conversion or reduction in the conversion rate of the shares of UK&I and Europe preferred stock.

The Company has entered into a litigation management deed with Visa Europe which sets forth the agreed upon procedures for the management of the VE territory covered litigation, the allocation of losses resulting from this litigation (the “VE territory covered losses”) between the series B and C preferred stock, and any accelerated conversion or reduction in the conversion rate of the shares of series B and C preferred stock.

The litigation management deed applies only to VE territory covered litigation (and resultant losses and liabilities).

1 unchanged sentence

The VE territory litigation management committees, which are composed of representatives of certain Visa Europe members, have also been granted consent rights to approve certain material decisions in relation to the VE territory covered litigation.

The Company obtained certain protections for VE territory covered losses through the UK&I and Europe preferred stock, the UK loss sharing agreement, and the litigation management deed, referred to as the “Europe retrospective responsibility plan.” The plan covers VE territory covered litigation (and resultant liabilities and losses) relating to the covered period, which generally refers to the period before the Closing.

The Company obtained certain protections for VE territory covered losses through the series B and C preferred stock, the UK loss sharing agreement, and the litigation management deed, referred to as the “Europe retrospective responsibility plan.” The plan covers VE territory covered litigation (and resultant liabilities and losses) relating to the covered period, which generally refers to the period before the Closing.

Visa’s protection from the plan is further limited to 70 % of any liabilities where the claim relates to inter-regional multilateral interchange fee rates where the issuer is located outside the Visa Europe territory, and the merchant is located within the Visa Europe territory.

2 unchanged sentences

retrospective responsibility plan, the Europe retrospective responsibility plan does not have an escrow account that is used to fund settlements or judgments.

The Company is entitled to recover VE territory covered losses through a periodic adjustment to the class A common stock conversion rates applicable to the UK&I and Europe preferred stock.

The Company is entitled to recover VE territory covered losses through a periodic adjustment to the class A common stock conversion rates applicable to the series B and C preferred stock.

The total amount of protection available through the preferred stock component of the Europe retrospective responsibility plan is equivalent to the as-converted value of the preferred stock, which can be calculated at any point in time as the product of:

(a) the outstanding number of shares of preferred stock;

(b) the current conversion rate applicable to each class of preferred stock;

and (c) Visa’s class A common stock price.

This amount differs from the value of the preferred stock recorded within stockholders’ equity on the Company’s consolidated balance sheets.

The book value of the preferred stock reflects its historical value recorded at the

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2021

Closing less VE territory covered losses recovered through a reduction of the applicable conversion rate.

current conversion rate applicable to each class of preferred stock;

and (c) Visa’s class A common stock price.

This amount differs from the value of the preferred stock recorded within stockholders’ equity on the Company’s consolidated balance sheets.

The book value of the preferred stock reflects its historical value recorded at the Closing less VE territory covered losses recovered through a reduction of the applicable conversion rate.

The book value does not reflect changes in the underlying class A common stock price subsequent to the Closing.

3 unchanged sentences

The reduction to stockholders’ equity is recorded in a contra-equity account referred to as “right to recover for covered losses.”

As required by the litigation management deed, at the fourth anniversary of the Visa Europe acquisition, Visa, in consultation with the VE territories litigation management committee, carried out a release assessment of the extent to which, if at all, it would be appropriate to effect a partial conversion of UK&I or Europe preferred stock into class A common stock or series A preferred stock.

After the completion of this assessment, in September 2020, the Company released $ 7.3 billion of the as-converted value from its UK&I and Europe preferred stock and issued 374,819 shares of series A preferred stock (the “Fourth anniversary release”).

Each holder of a share of UK&I and Europe preferred stock received a number of series A preferred stock equal to the applicable conversion adjustment divided by 100 .

As required by the litigation management deed, at the fourth anniversary of the Visa Europe acquisition, Visa, in consultation with the VE territories litigation management committee, carried out a release assessment of the extent to which, if at all, it would be appropriate to effect a partial conversion of series B or C preferred stock into class A common stock or series A preferred stock.

After the completion of this assessment, in September 2020, the Company released $ 7.3 billion of the as-converted value from its series B and C preferred stock and issued 374,819 shares of series A preferred stock (the “Fourth anniversary release”).

Each holder of a share of series B and C preferred stock received a number of series A preferred stock equal to the applicable conversion adjustment divided by 100 .

The Company paid $ 5 million in cash in lieu of issuing fractional shares of series A preferred stock.

The release resulted in a downward adjustment to the UK&I and Europe preferred stock conversion rates.

The release resulted in a downward adjustment to the series B and C preferred stock conversion rates.

See Note 15—Stockholders’ Equity.

2 unchanged sentences

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

During the year ended September 30, 2020, the Company recovered $ 164 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.

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 year ended September 30, 2020:

During the year ended September 30, 2021, the Company recovered $ 55 million of VE territory covered losses through adjustments to the class A common stock conversion rates applicable to the series B and C preferred stock.

The following table presents the activities related to VE territory covered losses in preferred stock and “right to recover for covered losses” within stockholders’ equity during the year ended September 30, 2021:

Preferred Stock Right to Recover for Covered Losses

Series B Series C

(in millions)

3 unchanged sentences

( 35 ) ( 20 ) 53

Fourth anniversary release ( 1,107 ) ( 1,542 ) —

Balance as of September 30, 2021 $ 1,071 $ 1,523 $ ( 133 )

4 unchanged sentences

September 30, 2021

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 September 30, 2020 and 2019:

The following table presents 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 September 30, 2021 and 2020:

September 30,

4 unchanged sentences

(in millions)

UK&I preferred stock $ 3,168 $ 1,106 $ 5,519 $ 2,285

Europe preferred stock 4,331 1,543 7,539 3,177

Series B preferred stock $ 3,493 $ 1,071 $ 3,168 $ 1,106

Series C preferred stock 4,806 1,523 4,331 1,543

Total 8,299 2,594 7,499 2,649

3 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 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 outstanding, respectively, as of September 30, 2020;

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

(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, 2019;

(b) 12.936 and 13.884 , the class A common stock conversion rate applicable to the UK&I and Europe preferred stock outstanding, respectively, as of September 30, 2019;

and (c) $ 172.01 , Visa’s class A common stock closing stock price as of September 30, 2019.

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

(a) 2 million and 3 million shares of the series B and C preferred stock outstanding, respectively;

(b) 6.321 and 6.834 , the class A common stock conversion rate applicable to the series B and C preferred stock outstanding, respectively;

and (c) $ 222.75 , 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 series B and C preferred stock outstanding, respectively;

(b) 6.387 and 6.861 , the class A common stock conversion rate applicable to the series B and C preferred stock outstanding, respectively;

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

18 unchanged sentences

Other current and non-current assets:

Money market funds 4 — — —

Derivative instruments — — 410 512

13 unchanged sentences

Derivative instruments are v alued using inputs that are observable in the market or can be derived principally from or corroborated by observable market data.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2020

government-sponsored debt securities and U.S.

Treasury securities.

The amortized cost, unrealized gains and losses and fair value of debt securities were as follows:

September 30,

Cost Gross Unrealized Fair

Value Amortized

Cost Gross Unrealized Fair

Gains Losses Gains Losses

(in millions)

government-sponsored debt securities

$ 2,581 $ 1 $ — $ 2,582 $ 5,590 $ 4 $ ( 2 ) $ 5,592

Treasury securities 1,251 2 — 1,253 672 3 — 675

Total $ 3,832 $ 3 $ — $ 3,835 $ 6,262 $ 7 $ ( 2 ) $ 6,267

current portion

$ ( 3,604 ) $ ( 4,110 )

Long-term debt securities

$ 231 $ 2,157

Debt securities are presented below in accordance with their stated maturities.

A portion of these investments are classified as non-current as they have stated maturities of more than one year from the balance sheet date.

However, these investments are generally available to meet short-term liquidity needs.

September 30,

(in millions)

Due within one year $ 3,604

Due after 1 year through 5 years 231

Total $ 3,835

As of September 30, 2021 and 2020, gross unrealized gains and losses were not material.

As of September 30, 2021, $ 4.0 billion of the Company’s debt securities are due within one year and $ 1.7 billion is due between one to five years.

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.

During fiscal 2020 and 2019, $ 102 million and $ 110 million of upward adjustments, and $ 6 million and $ 4 million of downward adjustments including impairment, respectively, were included in the carrying value of non-marketable equity securities accounted for under the fair value measurement alternative.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2021

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

5 unchanged sentences

Carrying amount, end of period $ 1,468

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, trade names and reseller relationships, all of which were obtained through acquisitions.

See Note 8—Intangible Assets and Goodwill.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Unrealized gains and losses included in the carrying value of the Company’s non-marketable equity securities still held as of September 30, 2021 and 2020 were as follows:

For the Years Ended

September 30,

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, 2020, and concluded that there was no impairment.

No recent events or changes in circumstances indicate that impairment existed at September 30, 2020.

See Note 1—Summary of Significant Accounting Policies .

(in millions)

Upward adjustments $ 484 $ 102

Downward adjustments (including impairment) $ ( 3 ) $ ( 6 )

Investment Income

8 unchanged sentences

Unrealized gains (losses), net 721 115 117

Realized gains (losses), net from donation — — 193

Realized gains (losses), net 26 1 18

7 unchanged sentences

Other financial instruments not measured at fair value.

The following financial i nstruments are not measured at fair value on the Company’s consolidated balance sheet at September 30, 2020, but require disclosure of their fair values:

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

se ttlement receivable and payabl e and customer collateral.

51 unchanged sentences

Estimated future amortization expense $ 78 $ 55 $ 53 $ 42 $ 27 $ 86 $ 341

The change in goodwill during the years ended September 30, 2020 and 2019 are as follows:

The changes in goodwill during the years ended September 30, 2021 and 2020 are as follows:

(in millions)

4 unchanged sentences

Goodwill, end of period $ 15,958 $ 15,910

For additional information on acquisitions, see Note 2—Acquisitions.

There was no impairment related to the Company’s finite-lived or indefinite-lived intangible assets (including goodwill) during fiscal 2020, 2019 or 2018.

During fiscal 2021, 2020 or 2019, there was no impairment related to the Company’s intangible assets and goodwill.

Note 9—Leases

7 unchanged sentences

September 30, 2021

During fiscal 2020, total operating lease cost was $ 114 million.

At September 30, 2020, the weighted-average remaining lease term for operating leases was approximately 6 years and the weighted-average discount rate for operating leases was 2.29 %.

At September 30, 2021 and 2020, ROU assets included in other assets on the consolidated balance sheets was $ 515 million and $ 508 million, respectively.

At September 30, 2021 and 2020, the current portion of lease liabilities included in accrued liabilities on the consolidated balance sheets was $ 103 million and $ 97 million, respectively, and the long-term portion included in other liabilities was $ 471 million and $ 473 million, respectively.

During fiscal 2021 and 2020, total operating lease cost was $ 111 million and $ 114 million, respectively.

At September 30, 2021 and 2020, the weighted-average remaining lease term for operating leases was approximately 6 years and the weighted-average discount rate for operating leases was 2.23 % and 2.29 %, respectively.

At September 30, 2021, the present value of future minimum lease payments was as follows:

5 unchanged sentences

Present value of lease liabilities $ 574

During fiscal 2021 and 2020, ROU assets obtained in exchange for lease liabilities was $ 96 million and $ 76 million, respectively.

At September 30, 2021, the Company had additional operating leases that had not yet commenced with lease obligations of $ 467 million.

17 unchanged sentences

0.75 % Senior Notes due August 2027

500 500 0.84 %

2.75 % Senior Notes due September 2027

26 unchanged sentences

The Notes are not secured by any assets of the Company and are not guaranteed by any of the Company’s subsidiaries.

The Company was in compliance with all related covenants as of September 30, 2020.

As of September 30, 2021, the Company was in compliance with all related covenants.

Each series of Notes may be redeemed as a whole or in part at the Company’s option at any time at specified redemption prices.

During the year ended September 30, 2021, the Company repaid $ 3.0 billion of principal upon maturity of its senior notes.

In August 2020, the Company issued fixed-rate senior notes in a public offering in an aggregate principal amount of $ 3.3 billion with maturities of 7 , 10 and a half and 30 years.

2 unchanged sentences

The net aggregate proceeds, after deducting discounts and debt issuance costs, were approximately $ 3.2 billion.

The net proceeds from the offering of the August 2027 Notes will be used to fund eligible green projects and the net proceeds from the offering of the 2031 Notes and 2050 Notes will be used for general corporate purposes.

The net proceeds from the offering of the August 2027 Notes will be used to

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2021

fund eligible green projects and the net proceeds from the offering of the 2031 Notes and 2050 Notes will be used for general corporate purposes.

In April 2020, the Company issued fixed-rate senior notes in a public offering in an aggregate principal amount of $ 4.0 billion with maturities of 7 , 10 and 20 years.

6 unchanged sentences

Under the program, the Company is authorized to issue up to $ 3.0 billion in outstanding notes, with maturities up to 397 days from the date of issuance.

The Company had no outstanding obligations under the program as of September 30, 2020 and 2019.

As of September 30, 2021 and 2020, the Company had no outstanding obligations under the program.

Credit Facility

4 unchanged sentences

The Company has agreed to pay a commitment fee which will fluctuate based on such applicable rating of the Company.

The Company had no amounts outstanding under the Credit Facility as of September 30, 2020 and 2019.

As of September 30, 2021 and 2020, the Company had no amounts outstanding under the Credit Facility.

At September 30, 2021, future principal payments on the Company’s outstanding debt were as follows:

23 unchanged sentences

However, future benefits continue to accrue for active participants.

The funding policy is to contribute in accordance with the appropriate funding requirements agreed with the trustees of the UK pension plans.

Additional funding amounts may be agreed to with the UK pension plan trustees.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2021

funding policy is to contribute in accordance with the appropriate funding requirements agreed with the trustees of the UK pension plans.

Additional funding amounts may be agreed to with the UK pension plan trustees.

Summary of Plan Activities

9 unchanged sentences

Interest cost 25 28 10 10

Actuarial loss (gain) 37 95 11 109

Actuarial (gain) loss ( 8 ) 37 ( 53 ) 11

Benefit payments ( 60 ) ( 64 ) ( 28 ) ( 17 )

Plan amendment

Foreign currency exchange rate changes

— — 27 ( 29 )

Benefit obligation at end of period $ 877 $ 920 $ 520 $ 563

7 unchanged sentences

Foreign currency exchange rate changes

— — 25 ( 27 )

Fair value of plan assets at end of period

6 unchanged sentences

Funded status at end of period $ 411 $ 222 $ 28 $ ( 38 )

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2020

Amounts recognized in accumulated other comprehensive income (loss) before tax consist of the following:

3 unchanged sentences

(in millions)

Net actuarial loss $ 135 $ 154 $ 93 $ 70

Net actuarial (gain) loss $ ( 11 ) $ 135 $ 47 $ 93

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2021

Benefit obligations in excess of plan assets were as follows:

9 unchanged sentences

Fair value of plan assets at end of period $ — $ — $ 548 $ 525

Net periodic benefit cost consist of the following:

Net periodic benefit cost consists of the following:

Plans Non-U.S.

5 unchanged sentences

Expected return on assets ( 70 ) ( 72 ) ( 71 ) ( 17 ) ( 15 ) ( 18 )

Amortization of actuarial loss 6 — — 2 — —

Settlement loss 8 7 3 — — —

Amortization of actuarial (gain) loss 3 6 — 4 2 —

Settlement (gain) loss ( 1 ) 8 7 2 — —

Total net periodic benefit cost $ ( 43 ) $ ( 30 ) $ ( 32 ) $ 3 $ 1 $ ( 1 )

The service cost component of net periodic benefit cost is presented in personnel expenses while the other components are presented in other non-operating income (expense) on the Company’s consolidated statement of operations.

Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss) consist of the following:

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(in millions)

Current year actuarial loss (gain) $ ( 5 ) $ 114 $ ( 47 ) $ 21 $ 27 $ 30

Amortization of actuarial (loss) gain ( 14 ) ( 7 ) ( 3 ) ( 2 ) — —

Current year actuarial (gain) loss $ ( 143 ) $ ( 5 ) $ 114 $ ( 45 ) $ 21 $ 27

Amortization of actuarial gain (loss) ( 3 ) ( 14 ) ( 7 ) ( 6 ) ( 2 ) —

Current year prior service cost — — — — — 1

Total recognized in other comprehensive (income) loss $ ( 146 ) $ ( 19 ) $ 107 $ ( 51 ) $ 19 $ 28

$ ( 19 ) $ 107 $ ( 50 ) $ 19 $ 28 $ 30

Total recognized in net periodic benefit cost and other comprehensive (income) loss $ ( 189 ) $ ( 49 ) $ 75 $ ( 48 ) $ 20 $ 27

$ ( 49 ) $ 75 $ ( 85 ) $ 20 $ 27 $ 26

For the year ended September 30, 2021, the net gain was primarily attributable to market-driven increases in the fair value of plan assets combined with an increase in the discount rate.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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qualified defined benefit pension plan in October 2015, which discontinued the employer provided credits effective after December 31, 2015.

plans include a cash balance plan with promised interest crediting rates.

Under the plan rules, for fiscal 2021, 2020 and 2019, the weighted average interest crediting rates for the benefit obligation were 1.98 %, 1.88 %, 2.26 %, respectively, and the weighted average interest crediting rates for the benefit cost set at the beginning of the period were 1.88 %, 2.26 % and 3.23 % for fiscal 2021, 2020 and 2019, respectively.

Pension Plan Assets

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Cash and cash equivalents $ 18 $ 6 $ — $ — $ — $ — $ 18 $ 6

Equity securities — 66 — — — — — 66

Corporate debt securities — — 51 48 — — 51 48

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Level 1 assets.

Cash equivalents (money market funds and time deposits), U.S.

Cash equivalents, which comprise of money market funds, U.S.

Treasury securities and equity securities are classified as Level 1 within the fair value hierarchy, as fair value is based on unadjusted quoted prices in active markets for identical assets.

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2022 $ 122 $ 8

2023 $ 93 $ 8

2024 $ 84 $ 9

2025 $ 80 $ 9

2026 $ 72 $ 9

2027-2031 $ 278 $ 50

Other Benefits

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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 year ended September 30, 2020, the Company’s maximum settlement exposure was $ 97.3 billion and the average daily settlement exposure was $ 55.6 billion.

During the year ended September 30, 2021, the Company’s maximum daily settlement exposure was $ 105.0 billion and the average daily settlement exposure was $ 65.1 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.

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Note 13—Derivative Financial Instruments

Designated derivative financial instrument hedges.

At September 30, 2020 and 2019, the aggregate notional amount of the Company’s derivative contracts outstanding in its hedge program was $ 10.7 billion and $ 10.9 billion, respectively.

Cash Flow Hedges

As of September 30, 2020 and 2019, the Company’s cash flow hedges in an asset position totaled $ 71 million and $ 47 million, respectively, and were classified in prepaid expenses and other current assets on the consolidated balance sheets.

As of September 30, 2020 and 2019 cash flow hedges in a liability position totaled $ 39 million and $ 31 million, respectively, and were classified in accrued liabilities on the consolidated balance sheets.

These amounts are subject to master netting agreements, which provide the Company with a legal right to net settle multiple payable and receivable positions with the same counterparty, in a single currency through a single payment.

However, the Company presents fair values on a gross basis on the consolidated balance sheets .

See Note 1—Summary of Significant Accounting Policies.

The Company uses regression analysis to assess hedge effectiveness prospectively and retrospectively.

Forward points are excluded from effectiveness testing and measurement purposes.

Excluded forward points are reported in earnings.

For fiscal 2020, 2019 and 2018, the amounts by which earnings were reduced relating to excluded forward points from cash flow hedges were $ 9 million, $ 12 million and $ 9 million, respectively.

The effective portion of changes in the fair value of derivative contracts designated as cash flow hedges is recorded as a component of accumulated other comprehensive income or loss on the consolidated balance sheets.

When the forecasted transaction occurs and is recognized in earnings, the amount in accumulated other comprehensive income or loss related to that hedge is reclassified to operating revenue or expense.

During fiscal 2021, the Company expects to reclassify $ 40 million of pre-tax gains to earnings.

Net Investment and Fair Value Hedges

In fiscal 2019, the Company entered into foreign exchange forward contracts which were designated as a net investment hedge against a portion of the Company’s net investment in Visa Europe.

In fiscal 2019, the Company also entered into interest rate and cross-currency swap agreements on a portion of the Company’s outstanding 3.15 % Senior Notes due December 2025.

The Company designated the interest rate swap as a fair value hedge and the cross-currency swap as a net investment hedge.

As of September 30, 2020 and 2019, the Company’s net investment hedges in an asset position totaled $ 186 million and $ 298 million, respectively, and were classified in prepaid expenses and other current assets and other assets on the consolidated balance sheets.

As of September 30, 2020, the Company’s net investment hedges in a liability position was $ 137 million, and classified in other liabilities on the consolidated balance sheets.

As of September 30, 2020 and 2019, the Company’s fair value hedges in an asset position totaled $ 248 million and $ 89 million, respectively, and were classified in other assets on the consolidated balance sheets.

As of September 30, 2019, the Company’s fair value hedges in a liability position was $ 2 million and was classified in other liabilities on the consolidated balance sheets.

For fiscal 2020 and 2019, the Company recorded an increase in earnings of $ 150 million and $ 95 million, respectively, related to forward points and interest differentials from forward contracts and swap agreements, respectively, which are excluded from effectiveness testing.

Non-designated derivative financial instrument hedges

As of September 30, 2020 and 2019, the aggregate notional amount of these balance sheet hedges was $ 1.6 billion and $ 0.8 billion, respectively.

As of September 30, 2020 and 2019, the Company’s balance sheet hedges in an asset position totaled $ 7 million and $ 3 million, respectively, and were classified in other assets on the consolidated balance sheets, while

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

As of September 30, 2021 and 2020, the aggregate notional amount of the Company’s derivative contracts outstanding in its hedge program was $ 11.2 billion and $ 10.7 billion, respectively.

As of September 30, 2021 and 2020, the aggregate notional amount of the derivative contracts not designated as hedging instruments was $ 0.8 billion and $ 1.6 billion, respectively.

As of September 30, 2021 and 2020, the following table shows the Company’s derivative instruments at gross fair value:

September 30,

balance sheet hedges in a liability position totaled $ 5 million and $ 19 million, respectively, and were classified in accrued liabilities on the consolidated balance sheets.

Balance Sheet Location 2021 2020

(in millions)

Designated as Hedging Instrument:

Foreign exchange contracts Prepaid expenses and other current assets and other assets $ 270 $ 257

Interest rate swap Other assets $ 138 $ 248

Not Designated as Hedging Instrument:

Foreign exchange contracts Prepaid expenses and other current assets $ 2 $ 7

Designated as Hedging Instrument:

Foreign exchange contracts Accrued liabilities $ 13 $ 39

Cross-currency swap Other liabilities $ 90 $ 137

Not Designated as Hedging Instrument:

Foreign exchange contracts Accrued liabilities $ 6 $ 5

For fiscal 2021, 2020 and 2019, the Company recognized pre-tax net gains (losses) in other comprehensive income (loss) related to net investment hedges of $ 20 million, ($ 318 ) million and $ 234 million, respectively.

For fiscal 2021, 2020 and 2019, the Company recognized an increase in earnings of $ 156 million, $ 150 million and $ 95 million, respectively, related to excluded forward points and interest differentials from forward contracts and swap agreements.

Credit and market risks.

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Notwithstanding the Company’s efforts to manage foreign exchange risk, there can be no absolute assurance that its hedging activities will adequately protect against the risks associated with foreign currency fluctuations.

Credit and market risks related to derivative instruments were not considered significant as of September 30, 2020.

As of September 30, 2021, credit and market risks related to derivative instruments were not considered significant.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2021

Note 14—Enterprise-wide Disclosures and Concentration of Business

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September 30,

2020 2019 (1)

(in millions)

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Total $ 1,882 $ 1,908

(1) The fiscal 2019 amounts have been revised to conform to the fiscal 2020 presentation.

Revenues by geographic market is primarily based on the location of the issuing financial institution.

Net revenues earned in the U.S.

were approximately 46 % of total net revenues in fiscal 2020 and 45 % of total net revenues in each of fiscal 2019 and fiscal 2018.

were approximately 46 % of total net revenues in each of fiscal 2021 and fiscal 2020 and 45 % of total net revenues in fiscal 2019.

No individual country, other than the U.S., generated more than 10% of total net revenues in these years.

In fiscal 2021, the Company had one client that accounted for 11 % of its total net revenues.

In fiscal 2020, the Company had two clients that accounted for 11 % and 10 % of its total net revenues, respectively.

In fiscal 2019 and 2018, no clients generated greater than 10% of the Company’s total net revenues .

In fiscal 2019, no clients generated greater than 10% of the Company’s total net revenues .

Note 15—Stockholders’ Equity

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and Europe Retrospective Responsibility Plans .

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2020

As-converted class A common stock.

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100.0000 7 — (2)

UK&I preferred stock 2 6.3870 16 2 12.9360 32

Europe preferred stock 3 6.8610 22 3 13.8840 44

Series B preferred stock 2 6.3210 16 2 6.3870 16

Series C preferred stock 3 6.8340 22 3 6.8610 22

Class A common stock (3)

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

(3) Class A common stock shares outstanding reflect repurchases settled on or before September 30, 2020 and 2019.

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

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

Conversion calculations for dividend payments are based on a conversion rate rounded to the tenth decimal.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2021

Reduction in as-converted shares.

Under the terms of the Europe retrospective responsibility plan, the Company is entitled to recover VE territory covered losses through periodic adjustments to the class A common stock conversion rates applicable to the UK&I and Europe preferred stock.

The recovery has the same economic effect on earnings per share as repurchasing the Company’s class A common stock, because it reduces the UK&I and Europe preferred stock conversion rates and consequently, reduces the as-converted class A common stock share count.

The recovery has the same economic effect on earnings per share as repurchasing the Company’s class A common stock, because it reduces the series B and C preferred stock conversion rates and consequently, reduces the as-converted class A common stock share count.

See Note 5—U.S.

and Europe Retrospective Responsibility Plans .

The following table present s the reduction in as-converted UK&I and Europe preferred stock after the Company recovered V E territory covered losses recovered through conversion rate adjustments and the Fourth anniversary release:

The following table present s the reduction in as-converted series B and C preferred stock after the Company recovered V E territory covered losses through conversion rate adjustments and the Fourth anniversary release:

For the Years Ended September 30,

2021 2020 2019

UK&I Europe UK&I Europe UK&I Europe

Series B Series C Series B Series C Series B Series C

(in millions, except per share data)

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

(2) Effective price per share for each adjustment made during the year is calculated using the volume-weighted average price of the Company’s class A common stock over a pricing period in accordance with the Company’s current certificates of designations for its series B and C convertible participating preferred stock.

Effective price per share for each fiscal year is calculated using the weighted-average effective prices of the respective adjustments made during the year.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2020

Under the terms of the U.S.

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(1) Effective price per share is calculated using the volume-weighted average price of the Company’s class A common stock over a pricing period in accordance with the Company’s current certificate of incorporation.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2021

Common stock repurchases.

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Total cost (2)

$ 8,676 $ 8,114 $ 8,607

(1) Shares repurchased in the open market reflect repurchases that settled during fiscal 2021, 2020 and 2019.

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

(2) Average repurchase price per share is calculated based on unrounded numbers.

In January 2019, the Company’s board of directors authorized an $ 8.5 billion share repurchase program and in January 2020, authorized an additional $ 9.5 billion share repurchase program (the “January 2020 Program”).

This authorization has no expiration date.

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

Average repurchase price per share and total cost are 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 repurchase program (the “January 2021 Program”).

These authorizations have no expiration date.

As of September 30, 2021, the Company’s January 2021 Program had remaining authorized funds of $ 4.8 billion.

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

Dividends declared.

In fiscal 2020, the Company declared and paid $ 2.7 billion in dividends at a quarterly rate of $ 0.30 per share.

On October 23, 2020, 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 December 1, 2020, to all holders of record of the Company’s common and preferred stock as of November 13, 2020.

In fiscal 2021, 2020 and 2019, the Company declared and paid dividends of $ 2.8 billion, $ 2.7 billion and $ 2.3 billion, respectively, at a quarterly rate of $ 0.32 , $ 0.30 and $ 0.25 per share, respectively.

On October 22, 2021, the Company’s board of directors declared a quarterly cash dividend of $ 0.375 per share of class A common stock (determined in the case of class B and C common stock and series A, B and C preferred stock on an as-converted basis), which will be paid on December 7, 2021, to all holders of record of the Company’s common and preferred stock as of November 12, 2021.

Class B common stock.

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and Europe Retrospective Responsibility Plans.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2020

Class C common stock.

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Preferred stock may be issued as redeemable or non-redeemable, and has preference over any class of common stock with respect to the payment of dividends and distribution of the Company’s assets in the event of a liquidation or dissolution.

The UK&I and Europe preferred stock is convertible upon certain conditions into shares of class A common stock or series A preferred stock.

The shares of UK&I and Europe preferred stock are subject to restrictions on transfer and may become convertible in stages based on developments in the VE territory covered litigation.

The shares of UK&I and Europe preferred stock will become fully convertible on the 12th anniversary of the closing of the Visa Europe acquisition, subject only to a holdback to cover any then-pending claims.

Upon any such conversion of the UK&I or Europe preferred stock (whether by such 12th anniversary, or thereafter with respect to claims pending on such anniversary), the conversion rate would be adjusted downward and the holder would receive either class A common stock or series A preferred stock (for those who are not eligible to hold class A common stock pursuant to the Company’s charter).

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2021

The series B and C preferred stock is convertible upon certain conditions into shares of class A common stock or series A preferred stock.

The shares of series B and C preferred stock are subject to restrictions on transfer and may become convertible in stages based on developments in the VE territory covered litigation.

The shares of series B and C preferred stock will become fully convertible on the 12th anniversary of the closing of the Visa Europe acquisition, subject only to a holdback to cover any then-pending claims.

Upon any such conversion of the series B and C preferred stock (whether by such 12th anniversary, or thereafter with respect to claims pending on such anniversary), the conversion rate would be adjusted downward and the holder would receive either class A common stock or series A preferred stock (for those who are not eligible to hold class A common stock pursuant to the Company’s charter).

The conversion rates may also be reduced from time to time to offset certain liabilities.

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Voting rights.

The holders of the UK&I and Europe preferred stock have no right to vote on any matters, except for certain defined matters, including, in specified circumstances, any consolidation, merger, combination or similar transaction of the Company in which the preferred stockholders would either (i) receive shares of common stock or other equity securities of the Company with preferences, rights and privileges that are not substantially identical to the preferences, rights and privileges of the applicable series of preferred stock or (ii) receive securities, cash or other property that is different from what the Company’s class A common stockholders would receive.

The holders of the series B and C preferred stock have no right to vote on any matters, except for certain defined matters, including, in specified circumstances, any consolidation, merger, combination or similar transaction of the Company in which the preferred stockholders would either (i) receive shares of common stock or other equity securities of the Company with preferences, rights and privileges that are not substantially identical to the preferences, rights and privileges of the applicable series of preferred stock or (ii) receive securities, cash or other property that is different from what the Company’s class A common stockholders would receive.

With respect to these limited matters on which the holders of preferred stock may vote, approval by the preferred stockholders requires the affirmative vote of the outstanding voting power of each such series of preferred stock, each such series voting as a single class.

In either case, the UK&I and Europe preferred stockholders are entitled to cast a number of votes equal to the number of shares held by each such holder.

Holders of the series A preferred stock, upon issuance at conversion, will have similar voting rights to the rights of the holders of the UK&I and Europe preferred stock.

In either case, the series B and C preferred stockholders are entitled to cast a number of votes equal to the number of shares held by each such holder.

Holders of the series A preferred stock, upon issuance at conversion, will have similar voting rights to the rights of the holders of the series B and C preferred stock.

Class A common stockholders have the right to vote on all matters on which stockholders generally are entitled to vote.

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Note 16—Earnings Per Share

Basic earnings per share is computed by dividing net income available to each class by the weighted-average number of shares of common stock outstanding and participating securities during the period.

Basic earnings per share is computed by dividing net income available to each class of shares by the weighted-average number of shares of common stock outstanding and participating securities during the period.

Participating securities include the Company’s series A, B and C preferred stock and restricted stock units (“RSUs”) that contain non-forfeitable rights to dividends or dividend equivalents.

Net income is allocated to each class of common stock and participating securities based on its proportional ownership on an as-converted basis.

The weighted-average number of shares of each class of common stock outstanding reflects changes in ownership over the periods presented.

The weighted-average number of shares outstanding of each class of common stock reflects changes in ownership over the periods presented.

See Note 15—Stockholders’ Equity .

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Dilutive class A common stock equivalents may consist of:

(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 Employee Stock Purchase Plan and the assumed vesting of unearned performance shares.

(1) shares of class A common stock issuable upon the conversion of series A, B and C 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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2021

The following table presents earnings per share for fiscal 2021:

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Class C common stock 237 10 $ 22.53 236 10 $ 22.51

Participating securities (4)

391 Not presented Not presented 391 Not presented Not presented

Participating securities 303 Not presented Not presented 303 Not presented Not presented

Net income $ 12,311

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Class C common stock 214 11 $ 19.58 214 11 $ 19.56

Participating securities (4)

430 Not presented Not presented 429 Not presented Not presented

Participating securities 391 Not presented Not presented 391 Not presented Not presented

Net income $ 10,866

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Class C common stock 247 12 $ 21.30 246 12 $ 21.26

Participating securities (4)

359 Not presented Not presented 358 Not presented Not presented

Participating securities 430 Not presented Not presented 429 Not presented Not presented

Net income $ 12,080

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2020

(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, 400 million and 403 million for fiscal 2020, 2019 and 2018, respectively.

The weighted-average number of shares of as-converted class B common stock used in the income allocation was 398 million for each of fiscal 2021 and 2020 and 400 million for fiscal 2019.

The weighted-average number of shares of as-converted class C common stock used in the income allocation was 42 million, 44 million and 46 million for fiscal 2021, 2020 and 2019, respectively.

The weighted-average number of shares of preferred stock included within participating securities was 1 million of as-converted series A preferred stock for fiscal 2020, 32 million of as-converted UK&I preferred stock for each of fiscal 2020, 2019 and 2018, and 43 million of as-converted Europe preferred stock for fiscal 2020 and 44 million of as-converted Europe preferred stock for each of fiscal 2019 and 2018.

The weighted-average number of shares of preferred stock included within participating securities was 12 million and 1 million of as-converted series A preferred stock for fiscal 2021 and 2020, respectively, 16 million of as-converted series B preferred stock for fiscal 2021 and 32 million of as-converted series B preferred stock for each of fiscal 2020 and 2019, and 22 million, 43 million, and 44 million of as-converted series C preferred stock for fiscal 2021, 2020 and 2019, respectively.

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

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(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 3 million common stock equivalents for each of fiscal 2020, 2019 and 2018 because their effect would have been dilutive.

The computation excludes 1 million of common stock equivalents for each of fiscal 2020, 2019 and 2018, because their effect would have been anti-dilutive.

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

Participating securities’ income is allocated based on the weighted-average number of shares of as-converted stock.

See Note 15—Stockholders’ Equity.

The common stock equivalents are not material for each of fiscal 2021, 2020 and 2019.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2021

Note 17—Share-based Compensation

2007 Equity Incentive Compensation Plan

The Company’s 2007 Equity Incentive Compensation Plan, or the EIP, authorizes the compensation committee of the board of directors to grant non-qualified stock options (“options”), restricted stock awards (“RSAs”), restricted stock units (“RSUs”) and performance-based shares to its employees and non-employee directors, for up to 236 million shares of class A common stock.

Shares available for award may be either authorized and unissued or previously issued shares subsequently acquired by the Company.

The Company’s 2007 Equity Incentive Compensation Plan, or the EIP, authorizes the compensation committee of the board of directors to grant non-qualified stock options (“options”), restricted stock awards, RSUs and performance-based shares to its employees and non-employee directors.

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 of class A common stock authorized for grant from 236 million to 198 million.

Shares available for grant may be either authorized and unissued or previously issued shares subsequently acquired by the Company.

Under the amended EIP, shares withheld for taxes, or shares used to pay the exercise or purchase price of an award, shall not again be available for future grant.

The EIP will continue to be in effect until all of the common stock available under the EIP is delivered and all restrictions on those shares have lapsed, unless the EIP is terminated earlier by the Company’s board of directors.

Awards may be granted under the plan until January 31, 2022.

For fiscal 2021, 2020 and 2019, the Company recorded share-based compensation cost related to the EIP of $ 518 million, $ 393 million and $ 388 million, respectively, in personnel expense on its consolidated statements of operations.

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Fair value per option granted $ 39.51 $ 29.37 $ 25.89

(1) Until March 2018, this assumption was based on the Company’s historical option exercises and those of a set of peer companies that management believed to be generally comparable to Visa.

The Company’s data was weighted based on the number of years between the measurement date and Visa’s IPO date as a percentage of the options’ contractual term.

The relative weighting placed on Visa’s data and peer data for stock options granted until March 2018 was approximately 97 % and 3 % in fiscal 2018, respectively.

The assumptions for stock options granted after March 2018 was based on Visa’s historical exercise experience as the passage of time since the Company’s IPO has exceeded 10 years.

(1) Based on Visa’s historical exercise experience.

(2) Based upon the zero coupon U.S.

treasury bond rate over the expected term of the awards.

(3) Based on the Company’s implied and historical volatility.

(3) Based on the Company’s implied and historical volatilities.

(4) Based on the Company’s annual dividend rate on the date of grant.

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(2) Applied a forfeiture rate to unvested options outstanding at September 30, 2021 to estimate the options expected to vest in the future.

For the options exercised during fiscal 2020, 2019 and 2018, the total intrinsic value was $ 146 million, $ 107 million and $ 249 million, respectively, and the tax benefit realized was $ 31 million, $ 23 million and $ 55 million, respectively.

During fiscal 2021, 2020 and 2019, the total intrinsic value of options exercised was $ 124 million, $ 146 million and $ 107 million, respectively, and the tax benefit realized was $ 23 million, $ 31 million and $ 23 million, respectively.

As of September 30, 2021, there was $ 23 million of total unrecognized compensation cost related to unvested options, which is expected to be recognized over a weighted-average period of approximately 0.42 years.

Restricted Stock Awards and Restricted Stock Units

RSAs and RSUs issued under the EIP primarily vest ratably over 3 years from the date of grant, subject to earlier vesting in full under certain conditions.

Upon vesting, the RSAs are settled in class A common stock on a one-for-one basis.

During the vesting period, RSA award recipients are eligible to receive dividends and participate in the same voting rights as those granted to the holders of the underlying class A common stock.

Restricted Stock Units

RSUs issued under the EIP primarily vest ratably over 3 years from the date of grant, subject to earlier vesting in full under certain conditions.

Upon vesting, RSUs can be settled in class A common stock on a one-for-one basis or in cash, or a combination thereof, at the Company’s option.

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During the vesting period, RSU award recipients are eligible to receive dividend equivalents, but do not participate in the voting rights granted to the holders of the underlying class A common stock.

The Company discontinued granting RSAs in fiscal 2016 but will continue to grant RSUs under the EIP.

As of September 30, 2018, there were no RSAs outstanding.

The fair value and compensation cost before estimated forfeitures for RSAs and RSUs is calculated using the closing price of class A common stock on the date of grant.

The weighted-average grant date fair value of RSUs granted during fiscal 2020, 2019 and 2018 was $ 183.61 , $ 137.38 and $ 111.11 , respectively.

The total grant date fair value of RSAs and RSUs vested during fiscal 2020, 2019 and 2018 was $ 284 million , $ 228 million and $ 183 million, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2020

The fair value and compensation cost before estimated forfeitures for RSUs is calculated using the closing price of class A common stock on the date of grant.

During fiscal 2021, 2020 and 2019, the weighted-average grant date fair value of RSUs granted was $ 209.00 , $ 183.61 and $ 137.38 , respectively.

During fiscal 2021, 2020 and 2019, the total grant date fair value of RSUs vested was $ 331 million , $ 284 million and $ 228 million, respectively.

The following table summarizes the Company’s RSU activity for fiscal 2021:

Restricted Stock Units Weighted-

Units Weighted-

Fair Value Weighted-

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At September 30, 2021, there was $ 452 million of total unrecognized compensation cost related to unvested RSUs, which is expected to be recognized over a weighted-average period of approximately 0.87 years.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2021

Performance-based Shares

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The market condition is based on the Company’s total shareholder return ranked against that of other companies that are included in the Standard & Poor’s 500 Index.

The fair value of the performance-based shares for fiscal 2020, incorporating the market condition, is estimated on the grant date using a Monte Carlo simulation model with the following weighted-average assumptions:

For fiscal 2021, the fair value of the performance-based shares incorporating the market condition is estimated on the grant date using a Monte Carlo simulation model with the following weighted-average assumptions:

risk-free rate of return of 0.2 %, expected term of 2 years, expected volatility of 27.2 % and expected dividend yield of 0.6 %.

The grant-date fair value of performance-based shares granted in fiscal 2020, 2019 and 2018 was $ 211.08 , $ 153.42 and $ 120.11 per share, respectively.

In fiscal 2021, 2020 and 2019, the weighted-average grant date fair value of performance-based shares granted was $ 229.81 , $ 211.08 and $ 153.42 per share, respectively.

Performance-based shares vest over three years and are subject to earlier vesting in full under certain conditions.

The total grant date fair value of performance-based shares vested and earned during fiscal 2020, 2019 and 2018 was $ 65 million , $ 41 million and $ 31 million, respectively.

During fiscal 2021, 2020 and 2019, the total grant date fair value of performance-based shares vested and earned was $ 47 million , $ 65 million and $ 41 million, respectively.

Compensation cost for performance-based shares is initially estimated based on target performance.

12 unchanged sentences

At September 30, 2021, there was $ 40 million of total unrecognized compensation cost related to unvested performance-based shares, which is expected to be recognized over a weighted-average period of approximately 0.82 years.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2020

Employee Stock Purchase Plan

10 unchanged sentences

Software licenses $ 97 $ 35 $ 7 $ 6 $ — $ — $ 145

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2021

Note 19—Income Taxes

6 unchanged sentences

Total income before taxes $ 16,063 $ 13,790 $ 14,884

For fiscal 2020 and 2019, U.S.

income before taxes included $ 3.0 billion, and for fiscal 2018 included $ 2.7 billion, of the Company’s U.S.

For fiscal 2021, U.S.

income before taxes included $ 3.1 billion, and for fiscal 2020 and 2019 included $ 3.0 billion, of the Company’s U.S.

entities’ income from operations outside of the U.S.

12 unchanged sentences

September 30, 2021

The tax effect of temporary differences that give rise to significant portions of deferred tax assets and liabilities at September 30, 2020 and 2019, are presented below:

At September 30, 2021 and 2020, the tax effect of temporary differences that give rise to significant portions of deferred tax assets and liabilities, are presented below:

September 30,

12 unchanged sentences

Intangible assets ( 6,452 ) ( 5,492 )

Unrealized gains on equity securities ( 203 ) ( 48 )

Foreign taxes ( 93 ) ( 137 )

1 unchanged sentence

Net deferred tax liabilities $ ( 6,048 ) $ ( 5,174 )

On July 22, 2020, UK enacted legislation that repealed the previous tax rate reduction from 19% to 17% that was effective on April 1, 2020.

As a result, the Company recorded a $ 329 million 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.

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

As a result, the Company recorded a $ 1.0 billion non-recurring, non-cash tax expense related to the remeasurement of its UK deferred tax liabilities, primarily related to intangibles recorded upon the acquisition of Visa Europe in fiscal 2016.

The increase in deferred tax liabilities reflects the remeasurement of UK deferred tax liabilities.

The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted in the U.S.

The American Rescue Plan Act of 2021 (the “ARP Act”) was enacted in the U.S.

on March 11, 2021.

The CARES Act includes several U.S.

income tax provisions related to, among other things, net operating loss carrybacks, alternative minimum tax credits, modifications to the net interest deduction limitations, and technical amendments regarding the income tax depreciation of qualified improvement property placed in service after December 31, 2017.

The CARES Act does not have a material impact on the Company’s financial results.

The ARP Act did not have a material impact on the Company’s financial results.

At September 30, 2021 and 2020, net deferred tax assets of $ 80 million and $ 63 million, respectively, are reflected in other assets on the consolidated balance sheets.

3 unchanged sentences

As of September 30, 2021, the Company had $ 42 million federal, $ 15 million state and $ 390 million foreign net operating loss carryforwards from acquired subsidiaries.

Federal and state net operating loss carryforwards generated in years prior to fiscal 2018 will expire in fiscal 2028 through 2037.

Federal net operating losses generated after fiscal 2017 may be carried forward indefinitely.

Foreign net operating losses may be carried forward indefinitely, except for certain foreign losses that expire in fiscal 2025 through 2027.

Federal net operating loss carryforwards generated in years prior to fiscal 2018 will expire in fiscal 2034 through 2037.

State net operating loss carryforwards will expire in fiscal 2028 through 2035.

Federal net operating losses generated after fiscal 2017 and foreign net operating losses may be carried forward indefinitely.

The Company expects to fully utilize the state net operating loss carryforwards in future years.

9 unchanged sentences

tax effect, net of federal benefit ( 505 ) ( 3 %) ( 483 ) ( 4 %) ( 527 ) ( 4 %)

Transition tax on foreign earnings — — % — — % 1,147 9 %

Remeasurement of deferred tax balances 1,007 6 % 329 2 % — — %

Conclusion of audits ( 255 ) ( 2 %) — — % — — %

Other, net ( 90 ) — % ( 17 ) — % ( 18 ) — %

1 unchanged sentence

In fiscal 2021 and fiscal 2020, the effective income tax rate was 23 % and 21 %, respectively.

The effective tax rate in fiscal 2021 differs from the effective tax rate in fiscal 2020 primarily due to the following:

• during fiscal 2021, a $ 1.0 billion non-recurring non-cash tax expense related to the remeasurement of UK deferred tax liabilities, as discussed above;

• during fiscal 2021, $ 255 million of tax benefits recognized as a result of the conclusion of audits by taxing authorities;

• during fiscal 2020, a $ 329 million non-recurring, non-cash tax expense related to the remeasurement of UK deferred tax liabilities, as discussed below.

In fiscal 2020 and fiscal 2019, the effective income tax rate was 21 % and 19 %, respectively.

The effective tax rate in fiscal 2019 differs from the effective tax rate in fiscal 2018 primarily due to:

• a decrease in federal statutory rate, from a blended rate of 24.5 % in fiscal 2018 to a rate of 21% in fiscal 2019, resulting from the Tax Act,

• new provisions enacted as part of the Tax Act, including the deduction for foreign-derived intangible income (“FDII”) and tax on global intangible low-tax income (“GILTI”), effective for the Company on October 1, 2018;

and the absence of the following items recorded in fiscal 2018:

• a $ 1.1 billion one-time transition tax expense on certain untaxed foreign earnings in accordance with the Tax Act;

• a $ 1.1 billion non-recurring, non-cash benefit from the remeasurement of deferred tax balances due to the reduction in U.S.

federal tax rate enacted by the Tax Act;

• $ 161 million of tax benefits due to various non-recurring audit settlements.

The effective tax rate in fiscal 2020 differs from the effective tax rate in fiscal 2019 mainly due to a $ 329 million non-recurring, non-cash tax expense related to the remeasurement of UK deferred tax liabilities, as a result of the enactment of UK legislation on July 22, 2020 that repealed the previous tax rate reduction from 19% to 17% that was effective April 1, 2020.

Current income taxes receivable at September 30, 2021 and 2020 of $ 83 million and $ 93 million, respectively, were included in prepaid expenses and other current assets.

4 unchanged sentences

Effective October 1, 2008 through September 30, 2023, it is subject to a tax incentive which is conditional upon meeting certain business operations and employment thresholds in Singapore.

The tax incentive decreased Singapore tax by $ 280 million , $ 324 million and $ 295 million, and the benefit of the tax incentive on diluted earnings per share was $ 0.13 , $ 0.14 and $ 0.13 in fiscal 2020, 2019 and 2018, respectively.

The tax incentive decreased Singapore tax by $ 273 million , $ 280 million and $ 324 million, and the gross benefit of the tax incentive on diluted earnings per share was $ 0.12 , $ 0.13 and $ 0.14 in fiscal 2021, 2020 and 2019, respectively.

In accordance with Accounting Standards Codification 740—Income Taxes , the Company is required to inventory, evaluate and measure all uncertain tax positions taken or to be taken on tax returns, and to record liabilities for the amount of such positions that may not be sustained, or may only partially be sustained, upon examination by the relevant taxing authorities.

13 unchanged sentences

Balance at end of period $ 2,488 $ 2,579 $ 2,234

In fiscal 2020, 2019 and 2018, the Company recognized $ 68 million, $ 66 million and $ 15 million of interest expense, respectively, related to uncertain tax positions.

In fiscal 2020, 2019 and 2018, the Company accrued penalties related to uncertain tax positions of $ 4 million, $ 5 million and no ne, respectively.

At September 30, 2020 and 2019, the Company had accrued interest of $ 233 million and $ 165 million, respectively, and accrued penalties of $ 31 million and $ 26 million, respectively, related to uncertain tax positions included in other long-term liabilities in its consolidated balance sheets.

The Company’s fiscal 2012 through 2015 U.S.

federal and California income tax returns are currently under examination.

The Company has filed federal refund claims for fiscal 2008 through 2011, and California refund claims for fiscal 2006 through 2011, which are also currently under examination.

In fiscal 2021, 2020 and 2019, the Company recognized $ 1 million, $ 68 million and $ 66 million of net interest expense, respectively, related to uncertain tax positions.

In fiscal 2021, 2020 and 2019, the Company accrued penalties related to uncertain tax positions of $ 3 million, $ 4 million and $ 5 million, respectively.

At September 30, 2021 and 2020, the Company had accrued interest of $ 233 million, and accrued penalties of $ 34 million and $ 31 million, respectively, related to uncertain tax positions included in other long-term liabilities in its consolidated balance sheets.

The Company’s U.S.

federal income tax returns for fiscal 2013 through 2018 and refund claims filed for fiscal 2008 through 2012 are currently under examination.

The Company’s California income tax returns for fiscal 2012 through 2015 and refund claims filed for fiscal 2006 through 2011 are currently under examination.

Except for the refund claims, the federal and California statutes of limitations have expired for fiscal years prior to 2012.

During fiscal 2013, the Canada Revenue Agency (CRA) completed its examination of the Company’s fiscal 2003 through 2009 Canadian tax returns and proposed certain assessments.

Based on the findings of its examination, the CRA also proposed certain assessments to the Company’s fiscal 2010 through 2017 Canadian tax returns.

The Company filed notices of objection against these assessments and, in fiscal 2015, completed the appeals process without reaching a settlement with the CRA.

In April 2016, the Company petitioned the Tax Court of Canada to overturn the CRA’s assessments.

In September 2020, the Company decided to accept a settlement offer provided by the CRA.

The settlement agreement is subject to approval by the Tax Court of Canada.

The Company’s income tax provision has been adjusted accordingly.

The India tax authorities completed the first level examination of the Company’s income tax returns for the taxable years falling within the period from fiscal 2010 to 2016, and proposed certain assessments.

The Company objected to these proposed assessments and filed appeals to the appellate authorities.

In September 2020, the Company accepted a settlement offer related to the examination of Canadian tax returns dating back to fiscal 2003, which was subject to approval by the Tax Court of Canada.

On January 21, 2021, the Tax Court of Canada approved the settlement agreement related to the examination.

The Company’s income tax provision was adjusted to reflect the estimated impact of the settlement in fiscal 2020.

The India tax authorities completed the assessment of the Company’s income tax returns for the taxable years falling within the period from fiscal 2010 to 2018, and made certain adjustments.

The Company objected to these adjustments and filed appeals to the appellate authorities.

While the timing and outcome of the final resolution of these appeals are uncertain, the Company believes that its income tax provision adequately reflects its income tax obligations in India.

9 unchanged sentences

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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2021

The following table summarizes the activity related to accrued litigation by fiscal year:

23 unchanged sentences

Balance at beginning of period $ 888 $ 1,198

Provision for interchange multidistrict litigation — 370

Reestablishment of prior accrual related to interchange multidistrict litigation — 467

6 unchanged sentences

retrospective responsibility plan, the Europe retrospective responsibility plan does not have an escrow account that is used to fund settlements or judgments.

The Company is entitled to recover VE territory covered losses through periodic adjustments to the conversion rates applicable to the UK&I preferred stock and Europe preferred stock.

The Company is entitled to recover VE territory covered losses through periodic adjustments to the conversion rates applicable to the series B and C preferred stock.

An accrual for the VE territory covered losses and a reduction to stockholders’ equity will be recorded when the loss is deemed to be probable and reasonably estimable.

46 unchanged sentences

September 30, 2021

Settlement discussions with plaintiffs purporting to act on behalf of the putative Injunctive Relief Class are ongoing.

On January 16, 2019, the bank defendants moved to dismiss the claims brought against them by the Injunctive Relief Class on the grounds that plaintiffs lack standing and failed to state a claim against the bank defendants.

On November 20, 2019, the district court denied the bank defendants’ motion to dismiss the claims brought against them by the putative Injunctive Relief Class.

On May 29, 2020, a complaint was filed by Old Jericho Enterprise, Inc.

against Visa and Mastercard on behalf of a purported class of gasoline retailers operating in 24 states and the District of Columbia.

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.

Each of these complaints alleges violations of the antitrust laws of those jurisdictions and seeks recovery for plaintiffs as indirect purchasers.

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

Retrospective Responsibility Plan.

1 unchanged sentence

The putative Injunctive Relief Class plaintiffs served a motion for partial summary judgment.

On September 27, 2021, the district court certified without opt out rights an Injunctive Relief Class consisting of all merchants that accept Visa or Mastercard credit or debit cards in the United States at any time between December 18, 2020 and entry of final judgment.

Interchange Multidistrict Litigation (MDL) – Individual Merchant Actions

31 unchanged sentences

Since July 2013, in excess of 750 Merchants (the capitalized term “Merchant,” when used in this section, means a merchant together with subsidiary/affiliate companies that are party to the same claim) have commenced proceedings against Visa Europe, Visa Inc.

and other Visa subsidiaries in the UK, Germany, Belgium and Poland primarily relating to interchange rates in Europe and in some cases relating to fees charged by Visa and certain Visa rules.

and other Visa subsidiaries in the UK, Belgium and Poland primarily relating to interchange rates in Europe and in some cases relating to fees charged by Visa and certain Visa rules.

They seek damages for alleged anti-competitive conduct in relation to one or more of the following types of interchange fees for credit and debit card transactions:

8 unchanged sentences

In judgments published in November 2017 and February 2018, the court found as to that Merchant that Visa’s UK domestic interchange did not restrict competition, but that if it had been found to be restrictive it would not be exemptible under applicable law.

In April 2018, the Court of Appeal heard the Merchant’s appeal of the decision alongside two separate Mastercard cases also involving interchange claims.

On July 4, 2018, the Court of Appeal overturned the lower court’s rulings, finding that Visa’s UK domestic interchange restricted competition and the question of whether Visa’s UK domestic interchange was exempt from the finding of restriction under applicable law had been incorrectly decided.

The Court of Appeal remitted the claim to the lower court to reconsider the exemption issue and the assessment of damages.

On November 29, 2018, Visa was granted permission to appeal aspects of the Court of Appeal’s judgment to the Supreme Court of the United Kingdom, including the question of whether Visa’s UK interchange restricted competition.

On June 17, 2020, the Supreme Court of the United Kingdom found that Visa’s UK domestic interchange restricted competition under applicable competition law.

The case will now continue before the UK Competition Appeals Tribunal to determine the lawful level of interchange and the amount, if any, the plaintiff may be entitled to recover.

Following an appeal to the Supreme Court of the United Kingdom, on June 17, 2020, the Supreme Court found that Visa’s UK domestic interchange restricted competition under applicable competition law.

On September 30, 2021, Visa reached a confidential settlement agreement resolving the plaintiff’s claims.

Certain 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.

The full scope of potential damages is not yet known because not all Merchant claims have been served and Visa has substantial defenses.

1 unchanged sentence

Other Litigation

European Commission DCC Investigation

In 2013, the European Commission (EC) opened an investigation against Visa Europe, based on a complaint alleging that Visa Europe’s pricing of and rules relating to Dynamic Currency Conversion (DCC) transactions infringe EU competition rules.

On October 16, 2020, the EC informed Visa that it has closed the investigation.

On November 14, 2021, a motion to certify a class action was filed against Visa and Mastercard in the Israel Central District Court.

The motion asserts that interchange fees on cross-border transactions in Israel and the Honor All Cards rule are anti-competitive and seeks damages and injunctive relief.

Other Litigation

Canadian Merchant Litigation

Beginning in December 2010, a number of class action lawsuits were filed in Quebec, British Columbia, Ontario, Saskatchewan and Alberta against Visa Canada, Mastercard and ten financial institutions on behalf of merchants that accept payment by Visa and/or Mastercard credit cards.

The actions allege a violation of Canada’s price-fixing law and various common law claims based on separate Visa and Mastercard conspiracies in respect of default interchange and certain of the networks’ rules.

To date, five financial institutions have settled with the plaintiffs.

In June 2017, Visa and Mastercard also reached settlements with the plaintiffs.

Courts in each of the five provinces approved the settlements and Wal-Mart Canada and/or Home Depot of Canada Inc.

filed notices of appeal of the decisions approving the settlements.

The Courts of Appeal in British Columbia, Quebec, Ontario and Saskatchewan rejected the appeals filed by Wal-Mart Canada and Home Depot of Canada Inc.

Wal-Mart Canada and Home Depot of Canada Inc.

sought leave to appeal those decisions and the Supreme Court of Canada denied

The actions alleged a violation of Canada’s price-fixing law and various common law claims based on separate Visa and Mastercard conspiracies in respect of default interchange and certain of the networks’ rules.

In June 2017, Visa and Mastercard reached settlements with the plaintiffs.

Courts in each of the five provinces approved the settlements and appeals of the decisions approving the settlements were rejected.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2021

those applications on March 26, 2020 (British Columbia, Quebec and Ontario) and October 29, 2020 (Saskatchewan).

An appeal to the Alberta Court of Appeal remains pending.

ATM Access Fee Litigation

5 unchanged sentences

Plaintiffs claim that the rule violates Section 1 of the Sherman Act, and seek treble damages, injunctive relief, and attorneys’ fees.

On September 20, 2019, plaintiffs filed a motion for class certification.

On August 4, 2021, the district court granted plaintiffs’ motion for class certification, and on October 1, 2021, the U.S.

Court of Appeals for the District of Columbia Circuit granted defendants’ motion for leave to appeal the district court’s decision.

Consumer Class Actions .

3 unchanged sentences

On September 20, 2019, plaintiffs in both cases filed motions for class certification.

On October 5, 2020, plaintiffs in the case naming three financial institutions as defendants filed a motion for preliminary approval of a class action settlement reached with those financial institution defendants.

On August 4, 2021, the district court granted plaintiffs’ motion for class certification in each case, and on October 1, 2021, the U.S.

Court of Appeals for the District of Columbia Circuit granted defendants’ motion for leave to appeal the district court’s decision.

On November 12, 2021, in the case in which the three financial institutions were named, the district court granted plaintiffs’ motion for preliminary approval of a class action settlement with those institutions.

Department of Justice Civil Investigative Demand

10 unchanged sentences

Pulse appealed the district court’s summary judgment decision to the U.S.

Court of Appeals for the Fifth Circuit, which held oral argument on October 9, 2019.

On June 5, 2020, the U.S.

Court of Appeals for the Fifth Circuit set the case for re-argument.

Court of Appeals for the Fifth Circuit.

EMV Chip Liability Shift

6 unchanged sentences

District Court for the Eastern District of New York, which has clarified that this case is not part of MDL 1720.

On August 28, 2020, the district court granted plaintiffs’ motion for class certification, and on September 11, 2020, defendants sought permission from the U.S.

Court of Appeals for the Second Circuit to appeal the decision.

On August 28, 2020, the district court granted plaintiffs’ motion for class certification.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

1 unchanged sentence

Australian Competition & Consumer Commission

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

Visa is cooperating with the ACCC.

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

On March 9, 2021, the ACCC accepted an undertaking by Visa to resolve the investigation.

The investigation is closed.

Federal Trade Commission Civil Investigative Demand (Formerly Voluntary Access Letter)

7 unchanged sentences

Euronet seeks damages, costs, and injunctive relief to prevent the defendants from enforcing the aforementioned rules.

Trial has been scheduled for a date on or after October 2, 2023.

European Commission Staged Digital Wallets Investigation

4 unchanged sentences

District Court for the Northern District of California seeking a permanent injunction to prevent Visa from acquiring Plaid Inc., alleging that the proposed acquisition would substantially lessen competition in violation of Section 7 of the Clayton Act and would constitute monopolization under Section 2 of the Sherman Act.

Visa intends to vigorously defend the lawsuit.

Selected Quarterly Financial Data (Unaudited)

The following tables show selected quarterly operating results for each quarter and full year of fiscal 2020 and 2019 for the Company:

Quarter Ended (unaudited) Fiscal Year

September 30,

2020 March 31,

2020 December 31,

(in millions, except per share data)

$ 5,101 $ 4,837 $ 5,854 $ 6,054 $ 21,846

Operating income

$ 3,142 $ 2,999 $ 3,924 $ 4,016 $ 14,081

$ 2,137 $ 2,373 $ 3,084 $ 3,272 $ 10,866

Basic earnings per share

Class A common stock $ 0.97 $ 1.07 $ 1.39 $ 1.46 $ 4.90

Class B common stock $ 1.57 $ 1.74 $ 2.25 $ 2.37 $ 7.94

Class C common stock $ 3.88 $ 4.29 $ 5.54 $ 5.85 $ 19.58

Diluted earnings per share

Class A common stock $ 0.97 $ 1.07 $ 1.38 $ 1.46 $ 4.89

Class B common stock $ 1.57 $ 1.74 $ 2.25 $ 2.37 $ 7.93

Class C common stock $ 3.87 $ 4.29 $ 5.54 $ 5.84 $ 19.56

Quarter Ended (unaudited) Fiscal Year

September 30,

2019 March 31,

2019 December 31,

(in millions, except per share data)

$ 6,137 $ 5,840 $ 5,494 $ 5,506 $ 22,977

Operating income

$ 3,735 $ 3,908 $ 3,641 $ 3,717 $ 15,001

$ 3,025 $ 3,101 $ 2,977 $ 2,977 $ 12,080

Basic earnings per share

Class A common stock $ 1.34 $ 1.37 $ 1.31 $ 1.30 $ 5.32

Class B common stock $ 2.19 $ 2.23 $ 2.13 $ 2.12 $ 8.68

Class C common stock $ 5.38 $ 5.48 $ 5.23 $ 5.20 $ 21.30

Diluted earnings per share

Class A common stock $ 1.34 $ 1.37 $ 1.31 $ 1.30 $ 5.32

Class B common stock $ 2.19 $ 2.23 $ 2.13 $ 2.12 $ 8.66

Class C common stock $ 5.37 $ 5.48 $ 5.23 $ 5.20 $ 21.26

(1) The Company’s unaudited consolidated statement of operations include the impact of several significant one-time items.

See Overview within Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations of this report.

The case was dismissed on January 12, 2021.

German ATM Litigation

In December 2020 and January 2021, six savings banks and cooperative banks filed claims in Germany against Visa Europe challenging Visa’s ATM rules prohibiting the charging of access fees on domestic cash withdrawals with a credit card as anti-competitive.

No damages were sought.

The claims were withdrawn in August 2021.

Department of Justice Civil Investigative Demand (2021)

On March 26, 2021, the Antitrust Division of the U.S.

Department of Justice (the “Division”) issued a Civil Investigative Demand (“CID”) to Visa seeking documents and information regarding a potential violation of Section 1 or 2 of the Sherman Act, 15 U.S.C.

The CID focuses on U.S.

debit and competition with other payment methods and networks.

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.

On October 18, 2021, Visa filed a motion to dismiss the complaint.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosures

1 unchanged sentence

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-K

Item 8. Financial Statements and Supplementary Data