8-KOther Events

VISA INC. 8-K Report, Corporate Update (Nov 15, 2010)

Filed November 15, 2010For Securities:V

Summary

This Form 8-K filing from Visa Inc. on November 15, 2010, primarily details changes in accounting presentation and the non-recurrence of certain revenues and expenses, effective fiscal year 2011. The company is shifting its presentation of non-Visa transaction pass-through revenues and expenses from a 'gross' basis to a 'net' basis. This change in income statement presentation will not impact operating income or net income, as the related revenues and expenses fully offset each other. Furthermore, Visa is reporting that certain revenues and expenses associated with the Visa Extras rewards platform will not recur in fiscal year 2011 due to a transition to direct issuer billing by an outside service provider and a large issuer's departure from the platform. This will affect 'other revenues' and 'advertising, marketing and promotion expenses,' but again, these amounts are expected to fully offset each other and thus will not impact Visa's net income or operating income.

Key Highlights

  • 1Visa Inc. is changing its income statement presentation for non-Visa transaction pass-through revenues and expenses from 'gross' to 'net' starting fiscal year 2011.
  • 2This accounting presentation change is a reclassification and does not impact Visa's operating or net income as revenues and expenses fully offset.
  • 3The company reported $140 million in non-Visa transaction pass-through amounts in fiscal year 2010, spread across four quarters.
  • 4Certain Visa Extras rewards platform revenues and expenses totaling $89 million will not recur in fiscal year 2011.
  • 5The non-recurrence of Visa Extras related items is due to a transition to direct issuer billing and a large issuer leaving the platform.
  • 6These Visa Extras related changes are also expected to have no impact on Visa's operating or net income.
  • 7The filing clarifies that the core profitability of Visa remains unaffected by these presentation and contractual adjustments.

Frequently Asked Questions

The main purpose is to inform investors about two key changes: a change in how Visa presents certain revenues and expenses on its income statement (from gross to net) and the expected non-recurrence of specific revenues and expenses related to the Visa Extras rewards program in the upcoming fiscal year. Both changes are presented in a way that does not impact Visa's overall net income or operating income.

No, the change in presentation for non-Visa transaction pass-through revenues and expenses from a 'gross' to a 'net' basis will not affect Visa's operating income or net income. This is because the associated revenues and expenses completely offset each other.

The non-recurrence of $89 million in other revenues and advertising, marketing, and promotion expenses related to the Visa Extras rewards platform is due to two factors: a transition where issuers will be billed directly by an outside service provider for rewards and fulfillment, and a large issuer discontinuing its use of the rewards platform. Similar to the presentation change, these contractual adjustments are expected to not impact Visa's net income or operating income as they involve offsetting revenue and expense items.

In fiscal year 2010, Visa reported $140 million in non-Visa transaction pass-through amounts across its 'data processing revenues' and 'network, EDP and communications' expenses. For the Visa Extras rewards platform, $89 million in 'other revenues' and 'advertising, marketing and promotion expenses' were recorded. These figures are presented for context of the amounts that will be impacted by the upcoming changes.