Visa Posts Q4 2009 Results and Authorizes $1B Share Repurchase Plan

Visa posts Q4, 2009 earnings results, authorizes $1B share repurchase plan



San Francisco, Oct. 27, 2009 -- Visa Inc. (NYSE:V) today announced financial results for the Company's fiscal fourth quarter and full-year 2009. For the fourth quarter ending September 30, 2009, on an adjusted basis (reflective of restructuring and purchase amortization), net income for the quarter was $552 million, or $0.74 per diluted class A common share. The weighted average number of diluted class A common shares was 747 million. The Company's adjusted net income and adjusted diluted net income per class A common share are non-GAAP financial measures that are reconciled to their most directly comparable GAAP measures in the accompanying financial tables.



GAAP net income for the quarter was $514 million, or $0.69 per diluted class A common share.



Net operating revenue in the fiscal fourth quarter of 2009 was $1.9 billion, an increase of 10% over the prior year's net operating revenue of $1.7 billion and driven primarily by strong contributions from data processing revenues as processed transactions grew 9%. Though slightly negative in the U.S. and Canada, payments volume continued to grow on a constant dollar basis in all other regions globally.



"Visa delivered another quarter and year of solid financial results during this challenging economic environment," said Joseph W. Saunders, Chairman and Chief Executive Officer. "Our strong returns are a reflection of consumers' continuing shift to electronic payments, the success of efficiency initiatives and importantly, continued support from our financial institution partners."



"As we enter our new fiscal year, we are beginning to see some very early signs of stabilization in our business," continued Saunders. "And, while we cannot predict the ultimate speed or size of any economic recovery, we are confident that Visa is well positioned for future growth based on the investments we continue to make in our processing infrastructure, products and brand."



Fiscal Fourth Quarter 2009 Financial Highlights:



Visa Inc.'s operational performance highlights for the fiscal fourth quarter, as measured by business activity through June 30, 2009, include:

• Payments volume growth, on a nominal basis, was a negative 2% over the
  
  prior year at $687 billion;
  
  


• Total volume, on a nominal basis and inclusive of cash volume, was
  
  $1.1 trillion, a 3% decline over the prior year; and
  
  


• Total cards carrying the Visa brands rose 5% worldwide over the prior
  
  year to over 1.7 billion.
  
  

Total processed transactions, which represent transactions processed by VisaNet for the three months ending September 30, 2009, totaled 10.5 billion, a 9% increase over the prior year.



For the fiscal fourth quarter 2009, service revenues were $808 million, an increase of 3% versus the prior year, and are recognized based on payments volume in the prior quarter. All other revenue categories are recognized based on current quarter activity. Data processing revenues rose 33% over the prior year to $727 million. International transaction revenues, which are driven by cross-border payments volume, declined 1% over the prior year to $507 million. Other revenues, which include the Visa Europe licensing fee, were $163 million, up 2% over the prior year. Volume and support incentives, which are a contra revenue item, were $326 million, an increase of 9% over the prior year.



Adjusted total operating expenses were $960 million for the fourth quarter, a 2% increase from the prior year's adjusted total operating expenses of $943 million. On a GAAP basis, total operating expenses were $1.0 billion for the quarter.



Cash, cash equivalents, restricted cash, and investment securities were $6.6 billion at September 30, 2009.



Fiscal Full-Year 2009 Financial Highlights:



On an adjusted basis (reflective of restructuring and purchase amortization), net income for the full-year ended September 30, 2009, was $2.4 billion, or $3.23 per diluted class A common share inclusive of the impact from the VisaNet do Brasil sale. Excluding the sale, net income for the full-year was $2.2 billion, or $2.92 per diluted class A common share. The weighted average number of diluted class A common shares outstanding was 758 million.



GAAP net income for the full-year was $2.4 billion, or $3.10 per diluted class A common share.



Net operating revenue for the full year was $6.9 billion, an increase of 10% over the prior year's operating revenue of $6.3 billion. Currency fluctuations contributed negatively 3% towards full-year net operating revenues.



For the fiscal full-year, service revenues were $3.2 billion, an increase of 4% versus the prior year. Data processing revenues rose 17% over the prior year to $2.4 billion. International transaction revenues, which are driven by cross-border payments volume, grew 11% over the prior year to $1.9 billion. Other revenues, which include the Visa Europe licensing fee, were $625 million, up 10% over the prior year. Volume and support incentives, which are a contra revenue item, were $1.2 billion, an increase of 6% over the prior year.



Total processed transactions, which represent transactions processed by VisaNet for the 12 months ended September 30, 2009, totaled 39.9 billion, an 8% increase over the prior year.



Adjusted operating expenses were $3.2 billion for the full-year, a 4% decrease from the prior year's adjusted total operating expenses of $3.4 billion. Operating expenses on a GAAP basis were $3.4 billion for the full year.



Visa's GAAP effective tax rate was 41% for the twelve months ended September 30, 2009.



Notable Events:



As previously announced, Visa initiated a program to allow its class C stockholders to apply (prior to September 30, 2009) for an early termination of the transfer restrictions applicable to class C shares, for up to 30% of the class C shares held by each such stockholder as of July 1, 2009, subject to certain terms and conditions. As of September 30, 2009, 89% of the potentially available shares requested were unlocked. The remaining class C shares continue to be subject to the general transfer restrictions that expire on March 25, 2011 under Visa's Certificate of Incorporation.



As previously disclosed, Visa U.S.A. Inc. entered into an agreement to modify its payment obligations under a settlement agreement, dated as of June 4, 2003, with plaintiffs in a class action lawsuit challenging certain aspects of the payment card industry under U.S. federal antitrust law. On October 2, 2009, the court in the class action lawsuit entered a final order approving the agreement, subject to a 30 day appeals period. The Company made a prepayment of its remaining $800 million in payment obligations at a discounted amount of $682 million on October 5, 2009.



On October 21, 2009, the Company announced that its Board of Directors had declared a quarterly dividend in the aggregate amount of $0.125 per share of class A common stock (determined in the case of class B and class C common stock on an as-converted basis) payable on December 1, 2009 to all holders of record of Visa's class A, class B and class C common stock as of November 16, 2009.



Today, the Company announces that its Board of Directors has authorized a $1 billion share repurchase plan. The authorization will be in place through September 30, 2010, and is subject to extension or expansion at the determination of Visa's Board of Directors.

Financial Outlook:

Visa Inc. affirms its financial outlook for the following metrics for 2010:

• Annual net revenue growth at the lower end of the 11% to 15% range,
  
  given certain economic recovery assumptions; and
  
  


• Annual diluted class A common stock earnings per share growth of
  
  greater than 20%.
  
  

Visa Inc. updates its financial outlook for the following metrics for 2010:

• Volume and support incentives in the range of 16-17% of gross revenue;
  
  


• Advertising, marketing and promotion expenses less than $1 billion;
  
  


• Annual operating margin in the mid 50% range;
  
  


• GAAP tax rate in the range of 38 to 39%;
  
  


• Capital expenditures in the $200-250 million range; and
  
  


• Annual free cash flow in excess of $2 billion.
  
  

Visa Inc. provides its financial outlook for the following metric for 2011:

• Annual diluted class A common stock earnings per share growth of
  
  greater than 20%.
  
  

Fiscal Fourth Quarter and Full-Year 2009 Earnings Results Conference Call Details:



Visa's executive management team will host a live audio webcast beginning at 2:00 p.m. PT (5:00 p.m. ET) today to discuss the financial results and business highlights.



All interested parties are invited to listen to the live webcast at http://investor.visa.com/. A replay of the webcast will be available on the Visa Investor Relations website for 30 days.



Investor information, including supplemental financial information, is available on Visa Inc.'s Investor Relations website at http://investor.visa.com/.



About Visa Inc.



Visa Inc. operates the world's largest retail electronic payments network providing processing services and payment product platforms. This includes consumer credit, debit, prepaid and commercial payments, which are offered under the Visa, Visa Electron, Interlink and PLUS brands. Visa enjoys unsurpassed acceptance around the world, and Visa/PLUS is one of the world's largest global ATM networks, offering cash access in local currency in more than 170 countries. For more information, visit www.corporate.visa.com .