Visa (NYSE: V) today announced financial results for the Company's fiscal third quarter 2009 ended June 30, 2009.
On an adjusted basis (reflective of restructuring and purchase amortization), net income for the quarter was $744 million, or $0.98 per diluted class A common share. Excluding the impact from the sale of the Company's equity interest in VisaNet do Brasil, adjusted quarterly net income was $507 million or $0.67 per diluted class A common share. GAAP net income for the quarter was $729 million, or $0.97 per diluted class A common share. The weighted average number of diluted class A common shares outstanding was 756 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.
Net operating revenue in the fiscal third quarter of 2009 was $1.6 billion, an increase of 2% over the prior year, driven by contributions across all revenue categories. Though slightly negative in the U.S., payments volume continued to grow on a constant dollar basis in all other regions globally. Processed transactions continued to post solid growth globally.
"With little real improvement in the economic backdrop, Visa still posted solid operational and financial performance results during the fiscal third quarter," said Joseph Saunders, Chairman and Chief Executive Officer of Visa Inc. "Throughout this challenging time, the resiliency of our debit products and our credit products overseas, continue to exemplify the resiliency and stability of our business model."
"While we cannot predict the specific timing of a global economic turnaround, we remain committed to doing our part in delivering balanced growth to our shareholders over the long term," added Saunders. "As we look forward to the remainder of our fiscal 2009 year and beyond, we will remain focused on leveraging our inherent operating scale, maintaining strong financial performance and expense control."
Fiscal Third Quarter 2009 Financial Highlights:
Visa Inc.'s operational performance highlights for the fiscal third quarter, as measured by business activity through March 31, 2009, include:
- Payments volume growth, on a nominal basis, was a negative 5% over the prior year at $617 billion;
- Total volume, on a nominal basis and inclusive of cash volume, was $969 billion, a 7% decline over the prior year; and
- Total cards carrying the Visa brands rose 6% worldwide over the prior year to over 1.7 billion.
Total processed transactions, which represent transactions processed by VisaNet through June 30, 2009, totaled 10.3 billion, an 8% increase over the prior year.
For the fiscal third quarter 2009, service revenues were $769 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 12% over the prior year to $605 million. International transaction revenues, which are driven by cross-border payments volume, grew 2% over the prior year to $458 million. Other revenues, which include the Visa Europe licensing fee, were $158 million, up 6% over the prior year. Volume and support incentives, which are a contra revenue item, were $344 million, an increase of 25% over the prior year.
Adjusted total operating expenses were $804 million for the fiscal third quarter, a 9% decrease from the prior year's adjusted total operating expenses of $883 million. Total operating expenses on a GAAP basis were $824 million for the quarter, a 15% decrease from the prior year.
Cash, cash equivalents, restricted cash, and investment securities were $6.1 billion at June 30, 2009.
On June 30, 2009, Visa Inc. entered into a strategic alliance with Monitise plc, a UK based firm, to facilitate the delivery of Visa mobile payments and related services to consumers around the world. Concurrent with the strategic alliance, Visa has agreed to make a minority equity investment in Monitise. Monitise is a recognized expert in mobile financial services that operates payments and mobile banking services for some of the world's leading financial institutions.
On July 1, 2009, Visa Inc. announced that Visa International, its wholly-owned subsidiary, sold 136,478,372 shares of Companhia Brasileira de Meios de Pagamento ("VisaNet do Brasil"), in connection with VisaNet do Brasil's June IPO. Visa's proceeds from the sale, net of underwriter discounts and fees, are approximately US$1 billion based on the then current exchange rates. Visa recorded a GAAP gain from the sale in the quarter ended June 30, 2009, net of tax, of $237 million. The gain reflects net proceeds received in July 2009, in excess of Visa International's recorded book value of $535 million.
As previously announced, Visa has 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. The remaining class C shares will continue to be subject to the general transfer restrictions that expire on March 25, 2011 under Visa's Certificate of Incorporation. Class C shares sold under this program will automatically convert to class A shares, tradable in the public market. The release of the class C shares does not increase the number of outstanding shares of the Company and there is no dilutive effect to the outstanding share count from these transactions.
On July 16, 2009, as planned, the Company deposited $700 million ("Loss Funds") into the litigation escrow account previously established under the Company's Retrospective Responsibility Plan. The deposit of the Loss Funds into the escrow account reduced the conversion rate applicable to the Company's class B common stock outstanding from 0.6296 per class A share to 0.5824 per class A share. The deposit of Loss Funds has the effect of a repurchase of approximately 11.6 million class A common stock equivalents from the Company's class B shareholders.
On July 22, 2009, the Board of Directors declared a quarterly divided in the aggregate amount of $0.105 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 September 1, 2009 to all holders of record of Visa's class A, class B and class C common stock as of August 14, 2009.
Visa Inc. updates its financial outlook for the following metrics through 2010:
- Annual adjusted operating margin in the low 50% range.
- Capital expenditures around $300 million in 2009 while still representing 3 to 4% of gross revenues in 2010.
Visa Inc. affirms its financial outlook for the following metrics through 2010:
- Annual net revenue growth of high single digits in 2009 and at the lower end of the 11% to 15% range in 2010, given certain economic recovery assumptions;
* Annual adjusted diluted class A common stock earnings per share growth of greater than 20%;
- Annual free cash flow in excess of $1 billion.
This outlook reflects an assumed 41% GAAP tax rate for fiscal year 2009, which reflects the tax impact of the Company's sale of its equity interest in VisaNet do Brasil. The Company's intent is to reduce this rate to a level around 35-36% over the next four years.
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