Visa Inc. Reports Fiscal First Quarter 2013 Net Income of $1.3 billion or $1.93 per diluted share and Authorizes New $1.75 Billion Share Repurchase Program

FOSTER CITY, Calif., Feb. 6, 2013 /PRNewswire/ --

  • Broad-based net revenue growth of 12%
  • Earnings per share of $1.93 includes a catch-up tax benefit effect of approximately $0.11 per share
  • New share repurchase authorization on top of remainder at December 31, 2012 brings outstanding authorization to about $2.9 billion

Visa Inc. (NYSE: V) today announced financial results for the Company's fiscal first quarter 2013 ended December 31, 2012. Net income for the quarter was $1.3 billion, an increase of 26% over the prior year, or $1.93 per share, an increase of 30% over the prior year. These results included a catch-up tax benefit effect resulting from new guidance on apportionment rules from the State of California, are consistent with our full-year tax and earnings per share guidance, and represent about 11 cents of earnings per share for the quarter.  All references to earnings per share assume fully diluted class A share count unless otherwise noted.

Net operating revenue in the first quarter of fiscal 2013 was $2.8 billion, an increase of 12% over the prior year, driven by strong growth in service revenues, data processing revenues and international transaction revenues. There was no significant impact on current quarter results related to the strengthening or weakening of the U.S. dollar over the prior year.

"Visa again delivered a strong quarter of revenue and earnings driven by success across our global franchise," said Charlie Scharf, Chief Executive Officer. "Our results include significant continued investments in our core business, accelerating international expansion and the deployment of next-generation payment solutions for the benefit of our financial institution and merchant partners." Added Scharf, "We have been committed to using our capital wisely and that includes returning capital to stockholders through dividends and share repurchases. The board's decision to increase Visa's repurchase authorization continues that commitment, supported by confidence we have in our future."

Fiscal First Quarter 2013 Financial Highlights:

Payments volume growth, on a constant dollar basis, for the three months ended September 30, 2012, on which fiscal first quarter service revenue is recognized, was 6% over the prior year at $1.0 trillion.

Payments volume growth, on a constant dollar basis, for the three months ended December 31, 2012, was 9% over the prior year at $1.1 trillion.

Cross-border volume growth, on a constant dollar basis, was 11% for the three months ended December 31, 2012.

Total processed transactions, which represent transactions processed by VisaNet, for the three months ended December 31, 2012, were 14.2 billion, a 4% increase over the prior year.

Fiscal first quarter 2013 service revenues were $1.3 billion, an increase of 13% 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 17% over the prior year to $1.1 billion. International transaction revenues, which are driven by cross-border activity, grew 8% over the prior year to $805 million. Other revenues, which include the Visa Europe licensing fee, were $179 million, a 1% increase over the prior year. Client incentives, which are a contra revenue item, were $553 million and represent 16% of gross revenues.

Total operating expenses were $1.0 billion for the quarter, a 13% increase over the prior year, primarily due to higher personnel and professional fees associated with investments in technology projects to support our growth initiatives.

The effective tax rate was 28.2% for the quarter ended December 31, 2012. This rate was positively impacted by a tax benefit recognized during the quarter as a result of new guidance issued by the State of California regarding apportionment rules for years prior to fiscal 2012.

Cash, cash equivalents, and available-for-sale investment securities were $6.1 billion at December 31, 2012.

The weighted-average number of diluted class A common stock outstanding was 669 million.

Notable Events:

Under the terms of the class settlement agreement in the Multidistrict Litigation Proceedings (MDL) 1720, in December 2012, the Company paid approximately $4.0 billion from the litigation escrow account into a settlement fund established pursuant to the definitive class settlement agreement. Additionally, in October 2012, the Company made a payment of $350 million to the individual plaintiffs' settlement fund.

During the three months ended December 31, 2012, the Company repurchased approximately 9 million shares of class A common stock, at an average price of $145.40 per share, using $1.3 billion of cash on hand.

The Company's Board of Directors has authorized a new $1.75 billion class A share repurchase program. The authorization will be in place through January 2014, and is subject to further change at the discretion of the Board.

As announced on January 30, 2013 the Board of Directors declared a quarterly dividend in the aggregate amount of $0.33 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 March 5, 2013, to all holders of record of the Company's class A, class B and class C common stock as of February 15, 2013.

On January 30, 2013, the Company held its 2013 annual meeting of stockholders during which holders of the Company's class A common stock at the close of business on December 4, 2012 voted on the four proposals enumerated in the Company's proxy statement. All of management's proposals were approved, but the single stockholder proposal failed to pass.

Financial Outlook:

Visa Inc. updates its financial outlook for the following metric for fiscal 2013:

  • Annual free cash flow: About $6 billion. This increase is attributable to tax benefits to be realized during fiscal 2013 related to non-recurring litigation escrow payments of approximately $4.4 billion made during the fiscal first quarter.

Visa Inc. affirms its financial outlook for the following metrics for fiscal 2013:

  • Annual net revenue growth: Low double digits;
  • Client incentives as a percent of gross revenues: 18% to 18.5% range;
  • Marketing expenses: Under $1 billion
  • Annual operating margin: About 60%;
  • Tax rate: 30% to 32% range;
  • Adjusted annual diluted class A common stock earnings per share growth: High teens; and
  • Capital expenditures: $425 million to $475 million range.

Fiscal First Quarter 2013 Earnings Results Conference Call Details:
Visa's executive management team will host a live audio webcast beginning at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) 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

Visa Inc. is a global payments technology company that connects consumers, businesses, financial institutions and governments in more than 200 countries and territories to fast, secure and reliable digital currency. Underpinning digital currency is one of the world's most advanced processing networks-VisaNet-that is capable of handling more than 24,000 transaction messages a second, with fraud protection for consumers and guaranteed payment for merchants. Visa is not a bank, and does not issue cards, extend credit or set rates and fees for consumers. Visa's innovations, however, enable its financial institution customers to offer consumers more choices: pay now with debit, ahead of time with prepaid or later with credit products. For more information, visit http://www.corporate.visa.com.

Forward Looking Statements:

This press release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These statements can be identified by the terms "continue," "expect," "will," and similar references to the future. Examples of such forward-looking statements include, but are not limited to, statements we make about our revenue, earnings per share, incentive payments, expenses, operating margin, tax rate, capital expenditures and free cash flow and the growth of those items.

By their nature, forward-looking statements: (i) speak only as of the date they are made, (ii) are neither statements of historical fact nor guarantees of future performance and (iii) are subject to risks, uncertainties, assumptions and changes in circumstances that are difficult to predict or quantify.  Therefore, actual results could differ materially and adversely from those forward-looking statements because of a variety of factors, including the following:

  • the impact of laws, regulations and marketplace barriers, including:
    • rules capping debit interchange reimbursement fees promulgated under the U.S. Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act;
    • rules under the Dodd-Frank Act expanding issuers' and merchants' choice among debit payment networks;
    • increased regulation outside the United States and in other product categories;
    • increased government support of national payment networks outside the United States; and
    • rules about consumer privacy and data use and security;
  • developments in litigation and government enforcement, including:
    • those affecting interchange reimbursement fees, antitrust and tax; and
    • our failure to satisfy the conditions necessary to make the multidistrict litigation settlement effective;
  • economic factors, such as:
    • an increase or spread of the current European crisis involving sovereign debt and the euro;
    • the failure to raise the "debt ceiling" in the United States and its repercussions;
    • cross-border activity and currency exchange rates;
    • material changes in our clients' performance compared to our estimates; and
    • other global economic, political and health conditions.
  • industry developments, such as competitive pressure, rapid technological developments, and disintermediation from the payments value stream;
  • system developments, such as:
    • disruption of our transaction processing systems or the inability to process transactions efficiently;
    • account data breaches or increased fraudulent or other illegal activities involving our cards; and
    • issues arising at Visa Europe, including failure to maintain interoperability between our systems;
  • costs and liquidity needs arising if Visa Europe were to exercise its right to require us to acquire all of its outstanding stock;
  • loss of organizational effectiveness or key employees;
  • failure to integrate acquisitions successfully or to effectively launch new products and businesses; and

the other factors discussed under the heading "Risk Factors" in our most recent Annual Report on Form 10−K on file with the U.S. Securities and Exchange Commission. You should not place undue reliance on such statements. Unless required to do so by law, we do not intend to update or revise any forward−looking statement, because of new information or future developments or otherwise.

Contacts:

Investor Relations: Jack Carsky or Victoria Hyde-Dunn, 650-432-7644, ir@visa.com

Media Relations: Will Valentine, 650-432-2990, globalmedia@visa.com

  


VISA INC.




CONSOLIDATED BALANCE SHEETS




(UNAUDITED)





December 31,
2012


September 30,
2012






(in millions, except par value data)

Assets




Cash and cash equivalents

$             1,334


$               2,074

Restricted cash—litigation escrow

49


4,432

Investment securities




Trading

74


66

Available-for-sale

1,377


677

Income tax receivable

1,341


179

Settlement receivable

859


454

Accounts receivable

801


723

Customer collateral

819


823

Current portion of client incentives

168


209

Deferred tax assets

389


2,027

Prepaid expenses and other current assets

176


122





Total current assets

7,387


11,786





Investment securities, available-for-sale

3,401


3,283

Client incentives

40


58

Property, equipment and technology, net

1,641


1,634

Other assets

306


151

Intangible assets, net

11,403


11,420

Goodwill

11,681


11,681





Total assets

$           35,859


$            40,013





Liabilities




Accounts payable

$                114


$                  152

Settlement payable

1,072


719

Customer collateral

819


823

Accrued compensation and benefits

288


460

Client incentives

871


830

Accrued liabilities

578


584

Accrued litigation

5


4,386





Total current liabilities

3,747


7,954





Deferred tax liabilities

4,057


4,058

Other liabilities

467


371





Total liabilities

8,271


12,383





Equity




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


Class A common stock, $0.0001 par value, 2,001,622 shares authorized, 530 and 535 shares issued and outstanding at December 31, 2012, and September 30, 2012, respectively


Class B common stock, $0.0001 par value, 622 shares authorized, 245 shares issued and outstanding at December 31, 2012, and September 30, 2012 


Class C common stock, $0.0001 par value, 1,097 shares authorized, 29 and 31 shares issued and outstanding at December 31, 2012, and September 30, 2012, respectively


Additional paid-in capital

19,728


19,992

Accumulated income

7,997


7,809

Accumulated other comprehensive income (loss), net




Investment securities, available-for-sale

34


3

Defined benefit pension and other postretirement plans

(184)


(186)

Derivative instruments classified as cash flow hedges

14


13

Foreign currency translation adjustments

(1)


(1)





Total accumulated other comprehensive loss, net

(137)


(171)





Total equity

27,588


27,630





Total liabilities and equity

$           35,859


$            40,013





  


VISA INC.




CONSOLIDATED STATEMENTS OF OPERATIONS




(UNAUDITED)









Three Months Ended
December 31,


2012


2011






(in millions, except per share data)

Operating Revenues




Service revenues

$ 1,300


$ 1,151

Data processing revenues

1,115


951

International transaction revenues

805


748

Other revenues

179


178

Client incentives

(553)


(481)





Total operating revenues

2,846


2,547





Operating Expenses




Personnel

454


389

Marketing

193


190

Network and processing

110


98

Professional fees

88


70

Depreciation and amortization

92


80

General and administrative

106


102

Litigation provision

3


Total operating expenses

1,046


929

Operating income

1,800


1,618

Non-operating income (expense)

1


(1)

Income before income taxes

1,801


1,617

Income tax provision

508


590

Net income including non-controlling interest

1,293


1,027

Loss attributable to non-controlling interest


2

Net income attributable to Visa Inc.

$ 1,293


$ 1,029





Basic earnings per share




Class A common stock

$    1.94


$    1.50

Class B common stock

$    0.82


$    0.73

Class C common stock

$    1.94


$    1.50





Basic weighted-average shares outstanding




Class A common stock

531


520

Class B common stock

245


245

Class C common stock

30


46





Diluted earnings per share




Class A common stock

$    1.93


$    1.49

Class B common stock

$    0.81


$    0.73

Class C common stock

$    1.93


$    1.49





Diluted weighted-average shares outstanding




Class A common stock

669


690

Class B common stock

245


245

Class C common stock

30


46





  


VISA INC.




CONSOLIDATED STATEMENTS OF CASH FLOWS




(UNAUDITED)













Three Months Ended
December 31,


2012


2011


(in millions)

Operating Activities




Net income including non-controlling interest

$ 1,293


$ 1,027

Adjustments to reconcile net income including non-controlling interest to net cash provided by (used in) operating activities:




Amortization of client incentives

553


481

Share-based compensation

48


38

Excess tax benefit for share-based compensation

(50)


(18)

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

92


80

Deferred income taxes

1,622


34

Other

12


(37)

Change in operating assets and liabilities:




Income tax receivable

(1,162)


112

Settlement receivable

(405)


(97)

Accounts receivable

(78)


(69)

Client incentives

(453)


(343)

Other assets

(228)


2

Accounts payable

1


(82)

Settlement payable

353


(23)

Accrued and other liabilities

(38)


251

Accrued litigation

(4,384)


(70)





Net cash (used in) provided by operating activities

(2,824)


1,286





Investing Activities




Purchases of property, equipment, technology and intangible assets

(100)


(101)

Proceeds from disposal of property, equipment and technology


2

Investment securities, available-for-sale:




Purchases

(1,184)


(933)

Proceeds from sales and maturities

418


1,224

Net distributions from other investments

1


2





Net cash (used in) provided by investing activities

(865)


194





Financing Activities




Repurchase of class A common stock

(1,253)


(75)

Dividends paid

(220)


(152)

Deposits into litigation escrow account—retrospective responsibility plan


(1,565)

Payments from litigation escrow account—retrospective responsibility plan

4,383


70

Cash proceeds from exercise of stock options

70


44

Restricted stock and performance shares settled in cash for taxes

(64)


Excess tax benefit for share-based compensation

50


18

Payment for earn-out related to PlaySpan acquisition

(12)


Principal payments on capital lease obligations

(5)


(5)

Net cash provided by (used in) financing activities

2,949


(1,665)

Decrease in cash and cash equivalents

(740)


(185)

Cash and cash equivalents at beginning of year

2,074


2,127

Cash and cash equivalents at end of period

$ 1,334


$ 1,942





Supplemental Disclosure of Cash Flow Information




Income taxes paid, net of refunds

$       45


$       57

Amounts included in accounts payable and accrued and other liabilities related to purchases of property, equipment, technology and intangible assets

$       33


$       42





  


VISA INC.










FISCAL 2013 AND 2012 QUARTERLY RESULTS OF OPERATIONS

(UNAUDITED)





















Fiscal 2013
Quarter Ended


Fiscal 2012 Quarter Ended


December 31,
2012


September 30,
2012


June 30,
2012


March 31,
2012


December 31,
2011


(in millions)

Operating Revenues










Service revenues

$                       1,300


$              1,264


$   1,216


$     1,241


$             1,151

Data processing revenues

1,115


1,062


1,040


922


951

International transaction revenues

805


796


748


733


748

Other revenues

179


172


175


179


178

Client incentives

(553)


(563)


(614)


(497)


(481)

Total operating revenues

2,846


2,731


2,565


2,578


2,547











Operating Expenses










Personnel

454


471


435


431


389

Marketing

193


271


242


170


190

Network and processing

110


111


102


103


98

Professional fees

88


134


99


82


70

Depreciation and amortization

92


89


84


80


80

General and administrative

106


131


112


106


102

Litigation provision

3


2


4,098



Total operating expenses

1,046


1,209


5,172


972


929

Operating income (loss)

1,800


1,522


(2,607)


1,606


1,618

Non-operating income (expense)

1


66



3


(1)

Income (loss) before income taxes

1,801


1,588


(2,607)


1,609


1,617

Income tax provision (benefit)

508


(74)


(768)


317


590

Net income (loss) including non-controlling interest

1,293


1,662


(1,839)


1,292


1,027

Loss attributable to non-controlling interest





2

Net income (loss) attributable to Visa Inc.

$                       1,293


$              1,662


$ (1,839)


$     1,292


$             1,029





















 

Operational Performance Data

The tables below provide information regarding the available operational results for the 3 months ended December 31, 2012, as well as the prior four quarterly reporting periods and the 12 months ended December 31, 2012 and 2011, for cards carrying the Visa, Visa Electron and Interlink brands.  Also included is a table with information on the number of billable transactions processed on Visa Inc.'s CyberSource network. 

1. Branded Volume and Transactions

The tables present total volume, payments volume, and cash volume, and the number of payments transactions, cash transactions, accounts and cards for cards carrying the Visa, Visa Electron and Interlink brands. Card counts include PLUS proprietary cards. Nominal and constant dollar growth rates over prior years are provided for volume-based data.





For the 3 Months Ended December 31, 2012





Total
Volume
($ billions)

Growth
(Nominal
USD)

Growth
(Constant
USD)

 Payments
Volume
($ billions)

Growth
(Nominal
USD)

Growth
(Constant
USD)

Payments
Transactions
(millions)

Cash
Volume
($ billions)

Growth
(Nominal
USD)

Growth
(Constant
USD)

Cash
Transactions
(millions)













All Visa Credit & Debit












Asia Pacific

$458

11.9%

11.5%

$313

13.4%

12.5%

3,269

$145

8.8%

9.2%

764

Canada

66

10.3%

6.5%

62

11.0%

7.1%

559

5

2.2%

-1.3%

11

CEMEA

265

20.1%

21.6%

52

34.1%

36.7%

930

213

17.1%

18.4%

1,164

LAC

256

-2.7%

4.9%

104

11.7%

21.8%

2,393

152

-10.6%

-4.2%

973

US         

652

2.7%

2.7%

544

2.8%

2.8%

10,630

108

2.2%

2.2%

861

Visa Inc.

1,697

6.9%

8.1%

1,075

8.2%

8.7%

17,781

623

4.6%

7.0%

3,772













Visa Credit Programs












US

$274

10.4%

10.4%

$262

10.7%

10.7%

3,124

$12

4.4%

4.4%

16

Rest of World

478

11.0%

11.2%

425

12.2%

12.6%

4,862

53

2.3%

1.0%

201

Visa Inc.

752

10.8%

10.9%

687

11.6%

11.9%

7,985

64

2.7%

1.6%

217













Visa Debit Programs












US

$378

-2.3%

-2.3%

$282

-3.6%

-3.6%

7,506

$97

1.9%

1.9%

845

Rest of World

568

8.6%

12.3%

106

24.7%

29.1%

2,290

462

5.5%

9.0%

2,710

Visa Inc.

946

4.0%

6.0%

388

2.8%

3.6%

9,796

558

4.8%

7.7%

3,555