Visa 2015 Annual Report Download - page 12

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But we are evolving into a business
where software provides differentiation.
Having a solid network will not be
enough in the future. I have described
the capabilities that we are building
into our network and the ways
we are allowing people to access
those capabilities. To that end we
are increasing resources directed at
developing and enhancing our software-
based capabilities aggressively.
And while we believe organic
investment is the first call on our capital,
we have consistently said that the Visa
Europe acquisition is a perfect use as
well. Strengthening our global franchise
by reuniting our company with a
transaction structure that provides the
right protection as well as upside for
both sides based on net revenue targets
makes tremendous sense for us.
Dividend
Our recently announced 17% dividend
increase maintains the payout at our
stated target range of low 20s and
is the 7th dividend increase since
our IPO. Most importantly, we feel
it’s a strong statement that we are
increasing our dividend at the same
time we announced such a significant
transaction.
Excess Capital Return
In 2015 we repurchased $2.9 billion of
our stock. We have repurchased the
equivalent of almost 735 million shares
since our IPO and returned more than
$26 billion of capital to our shareholders
in the form of dividend payments and
share repurchases. And our board has
approved an increase in our buy back
authorization to bring the total available
to $7.8 billion as of September 30, 2015.
Capital Structure
Prior to the Visa Europe transaction, we
were limited in our ability to use our debt
capacity. Visa Europe held a put option
and we would have potentially needed to
finance an unknown purchase price within
285 days. We felt it was prudent to preserve
the flexibility in our capital structure for
this potential transaction. Now that we
have negotiated a transaction with VE, we
can implement a new capital structure for
the company. We intend to raise $15-$16
billion of debt in conjunction with the Visa
Europe Acquisition and establish a more
efficient long-term capital structure. Our
initial leverage will be between 1.4 and 1.5
times gross debt to EBITDA and we target
our long-term leverage at between 1.1
and 1.5 times gross debt to EBITDA. The
rating agencies reaffirmed our current
investment credit ratings of A + / A1
upon announcement of the transaction.
We believe this capital structure still
provides flexibility to pursue future growth
opportunities.