Business Context and Reporting Period
This Form 8-K filing by Visa Inc. is dated November 15, 2010. The report addresses "Other Events" (Item 8.01) concerning changes in financial statement presentation and contractual arrangements effective for fiscal year 2011.
Key Financial Metrics
The filing details specific revenue and expense line items related to non-Visa transactions and the Visa Extras rewards platform for fiscal year 2010. These amounts are presented on a gross basis for historical context but are noted to offset completely, resulting in no impact on operating income or net income.
| Quarter Ended | Non-Visa Transactions ($ millions) | Visa Extras ($ millions) |
|---|---|---|
| Dec. 31, 2009 | 36 | 31 |
| Mar. 31, 2010 | 31 | 24 |
| Jun. 30, 2010 | 35 | 27 |
| Sept. 30, 2010 | 38 | 7 |
| Fiscal 2010 Total | 140 | 89 |
The filing does not provide total revenue, profit, cash flow, margins, debt, or liquidity figures for the company.
Material Changes Versus Prior Period
- Reporting Basis Change: Beginning in fiscal year 2011, the Company changed the presentation of non-Visa transaction pass-through revenues and expenses from a "gross" basis to a "net" basis. Previously, these were booked separately in data processing revenues and network/EDP expenses.
- Contractual Changes: During fiscal 2010, the Company transitioned issuers to direct billing for the Visa Extras rewards platform and lost a large issuer in June 2010.
- Non-Recurring Items: As a result of the contractual changes, $89 million of other revenues and advertising/marketing expenses recorded in fiscal 2010 will not recur in fiscal 2011.
Guidance, Outlook, and Management Commentary
Management commentary clarifies that the change in presentation for non-Visa transactions and the removal of Visa Extras gross amounts do not impact operating income or net income attributable to Visa Inc., as the revenue and expense amounts completely offset. The filing does not contain forward-looking guidance, risk factors, or contingencies beyond the described accounting and operational adjustments.
Important Facts for Investor Verification
- Verify that fiscal 2011 financial statements reflect the "net" reporting basis for non-Visa transactions, which will reduce reported top-line revenue and expenses compared to fiscal 2010.
- Confirm that the $89 million in Visa Extras revenue and expenses from fiscal 2010 are excluded from fiscal 2011 results due to the shift to direct billing and issuer attrition.
- Note that despite changes in gross revenue and expense line items, the net impact on operating income and net income is zero for both the accounting change and the Visa Extras transition.