Visa 2015 Annual Report Download - page 51

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ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations
This management’s discussion and analysis provides a review of the results of operations,
financial condition and liquidity and capital resources of Visa Inc. and its subsidiaries (“Visa,” “we,”
“our” and the “Company”) on a historical basis and outlines the factors that have affected recent
earnings, as well as those factors that may affect future earnings. The following discussion and
analysis should be read in conjunction with the consolidated financial statements and related notes
included in Item 8 of this report.
Overview
Visa 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
electronic payments. We provide our financial institution clients with a global payments infrastructure
and support services for the delivery of Visa-branded payment products, including credit, debit and
prepaid. We facilitate global commerce through the transfer of value and information among financial
institutions, merchants, consumers, businesses and government entities. Each of these constituencies
has played a key role in the ongoing worldwide migration from paper-based to electronic forms of
payment, and we believe that this transformation continues to yield significant growth opportunities,
particularly outside the United States. We continue to explore additional opportunities to enhance our
competitive position by expanding the scope of payment solutions we provide.
Overall economic conditions. Our business is affected by overall economic conditions and
consumer spending. Our business performance during fiscal 2015 reflects the impacts of continued
uneven and tepid economic growth.
Visa Europe acquisition. On November 2, 2015, we entered into a transaction agreement with Visa
Europe, pursuant to which we agreed to acquire 100% of the share capital of Visa Europe for a total
purchase price of up to €21.2 billion. The purchase price consists of: (a) at the closing of the
transaction, up-front cash consideration of €11.5 billion and preferred stock convertible upon certain
conditions into class A common stock or class A equivalent preferred stock, valued at approximately
€5.0 billion, and (b) following the end of sixteen fiscal quarters post-closing, contingent cash
consideration of up to €4.0 billion (plus up to an additional €0.7 billion in interest), determined based on
the achievement of specified net revenue levels during such post-closing period. In conjunction with
the transaction agreement, the Visa Europe put option was amended to align the terms on which Visa
Europe may exercise its rights under the put option agreement with the terms of the transaction
agreement. The purchase of Visa Europe’s share capital will be effected through the exercise of the
amended Visa Europe put option. The preferred stock conversion rates may be reduced from time to
time to offset certain liabilities, if any, which may be incurred by us, Visa Europe or its affiliates as a
result of certain existing and potential litigation relating to the setting of multilateral interchange fee
rates in the Visa Europe territory. As part of the acquisition, we also entered into the U.K. loss sharing
agreement with Visa Europe and certain of Visa Europe’s members located in the United Kingdom to
compensate us for certain losses which may be incurred by us or Visa Europe as a result of certain
existing and potential litigation relating to the setting and implementation of domestic multilateral
interchange fee rates in the United Kingdom. See Note 2—Visa Europe,Note 3—U.S. Retrospective
Responsibility Plan and Potential Visa Europe Liabilities, and Note 20—Legal Matters to our
consolidated financial statements. The closing of our acquisition of Visa Europe is subject to regulatory
approvals and other customary conditions, and is currently expected to occur in our fiscal third quarter
of 2016.
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