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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2020

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 001-33977
v-20201231_g1.gif
VISA INC.
(Exact name of Registrant as specified in its charter)
Delaware 26-0267673
(State or other jurisdiction
of incorporation or organization)
 (IRS Employer
Identification No.)
P.O. Box 8999 94128-8999
San Francisco,
California
(Address of principal executive offices) (Zip Code)
(650) 432-3200
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol Name of each exchange on which registered
Class A Common Stock, par value $0.0001 per shareVNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes   No  
As of January 22, 2021, there were 1,696,113,603 shares outstanding of the registrant’s class A common stock, par value $0.0001 per share, 245,513,385 shares outstanding of the registrant’s class B common stock, par value $0.0001 per share, and 10,685,736 shares outstanding of the registrant’s class C common stock, par value $0.0001 per share.


Table of Contents
VISA INC.
TABLE OF CONTENTS
 
  Page
PART I.
Item 1.
Item 2.
Item 3.
Item 4.
PART II.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
3

Table of Contents
PART I. FINANCIAL INFORMATION
ITEM 1.Financial Statements (Unaudited)
VISA INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
December 31,
2020
September 30,
2020
 (in millions, except par value data)
Assets
Cash and cash equivalents$15,032 $16,289 
Restricted cash equivalents—U.S. litigation escrow894 901 
Investment securities3,009 3,752 
Settlement receivable1,596 1,264 
Accounts receivable1,746 1,618 
Customer collateral1,993 1,850 
Current portion of client incentives1,281 1,214 
Prepaid expenses and other current assets729 757 
Total current assets26,280 27,645 
Investment securities161 231 
Client incentives3,192 3,175 
Property, equipment and technology, net2,713 2,737 
Goodwill16,121 15,910 
Intangible assets, net28,593 27,808 
Other assets3,366 3,413 
Total assets$80,426 $80,919 
Liabilities
Accounts payable$131 $174 
Settlement payable2,048 1,736 
Customer collateral1,993 1,850 
Accrued compensation and benefits600 821 
Client incentives4,479 4,176 
Accrued liabilities2,230 1,840 
Current maturities of debt 2,999 
Accrued litigation909 914 
Total current liabilities12,390 14,510 
Long-term debt21,055 21,071 
Deferred tax liabilities5,343 5,237 
Other liabilities3,959 3,891 
Total liabilities42,747 44,709 
Equity
Preferred stock, $0.0001 par value, 25 shares authorized and 5 shares issued and outstanding as follows:
Series A convertible participating preferred stock, less than one shares issued and outstanding at December 31, 2020 and September 30, 2020 (the “series A preferred stock”)1,049 2,437 
Series B convertible participating preferred stock, 2 shares issued and outstanding at December 31, 2020 and September 30, 2020 (the “UK&I preferred stock”)
1,097 1,106 
Series C convertible participating preferred stock, 3 shares issued and outstanding at December 31, 2020 and September 30, 2020 (the “Europe preferred stock”)
1,537 1,543 
Class A common stock, $0.0001 par value, 2,001,622 shares authorized, 1,696 and 1,683 shares issued and outstanding at December 31, 2020 and September 30, 2020, respectively
  
Class B common stock, $0.0001 par value, 622 shares authorized, 245 shares issued and outstanding at December 31, 2020 and September 30, 2020
  
Class C common stock, $0.0001 par value, 1,097 shares authorized, 11 shares issued and outstanding at December 31, 2020 and September 30, 2020
  
Right to recover for covered losses(34)(39)
Additional paid-in capital18,063 16,721 
Accumulated income14,813 14,088 
Accumulated other comprehensive income (loss), net:
Investment securities2 3 
Defined benefit pension and other postretirement plans(194)(196)
Derivative instruments(538)(291)
Foreign currency translation adjustments1,884 838 
Total accumulated other comprehensive income (loss), net1,154 354 
Total equity37,679 36,210 
Total liabilities and equity$80,426 $80,919 
See accompanying notes, which are an integral part of these unaudited consolidated financial statements.
4

Table of Contents
VISA INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
 Three Months Ended
December 31,
 20202019
 (in millions, except per share data)
Net revenues $5,687 $6,054 
Operating Expenses
Personnel 981 982 
Marketing 205 274 
Network and processing 173 181 
Professional fees 83 106 
Depreciation and amortization 197 182 
General and administrative 203 313 
Litigation provision1  
Total operating expenses 1,843 2,038 
Operating income 3,844 4,016 
Non-operating Income (Expense)
Interest expense, net (136)(111)
Investment income and other 40 69 
Total non-operating income (expense)(96)(42)
Income before income taxes 3,748 3,974 
Income tax provision622 702 
Net income $3,126 $3,272 
Basic Earnings Per Share
Class A common stock $1.42 $1.46 
Class B common stock $2.31 $2.37 
Class C common stock $5.69 $5.85 
Basic Weighted-average Shares Outstanding
Class A common stock 1,694 1,713 
Class B common stock 245 245 
Class C common stock 11 11 
Diluted Earnings Per Share
Class A common stock $1.42 $1.46 
Class B common stock $2.31 $2.37 
Class C common stock $5.68 $5.84 
Diluted Weighted-average Shares Outstanding
Class A common stock 2,200 2,240 
Class B common stock 245 245 
Class C common stock 11 11 
See accompanying notes, which are an integral part of these unaudited consolidated financial statements.
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VISA INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
 Three Months Ended
December 31,
 20202019
 (in millions)
Net income$3,126 $3,272 
Other comprehensive income (loss), net of tax:
Investment securities:
Net unrealized gain (loss)(1) 
Defined benefit pension and other postretirement plans:
Net unrealized actuarial gain (loss) and prior service credit (cost)
(1)(1)
Income tax effect1  
Reclassification adjustments3 4 
Income tax effect(1)(1)
Derivative instruments:
Net unrealized gain (loss)(297)(188)
Income tax effect63 39 
Reclassification adjustments(18)(2)
Income tax effect5 1 
Foreign currency translation adjustments1,046 483 
Other comprehensive income (loss), net of tax800 335 
Comprehensive income$3,926 $3,607 

See accompanying notes, which are an integral part of these unaudited consolidated financial statements.
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VISA INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(UNAUDITED)
Three Months Ended December 31, 2020
 Preferred StockCommon StockPreferred StockRight to Recover for Covered LossesAdditional
Paid-In Capital
Accumulated
Income
Accumulated
Other
Comprehensive
Income (Loss), Net
Total
Equity
 Series ASeries BSeries CClass AClass BClass C
 (in millions, except per share data)
Balance as of September 30, 2020 
(1)
2 3 1,683 245 11 $5,086 $(39)$16,721 $14,088 $354 $36,210 
Net income3,126 3,126 
Other comprehensive income (loss), net of tax
800 800 
Comprehensive income3,926 
Adoption of new accounting standards3 3 
VE territory covered losses incurred(10)(10)
Recovery through conversion rate adjustment(15)15 — 
Conversion of series A preferred stock upon sales into public market 
(1)
20 (1,388)1,388 — 
Conversion of class C common stock upon sales into public market
 
(1)
 
(1)
— 
Vesting of restricted stock and performance-based shares
3 — 
Share-based compensation, net of forfeitures122 122 
Restricted stock and performance-based shares settled in cash for taxes
(1)(134)(134)
Cash proceeds from issuance of class A common stock under employee equity plans 
(1)
61 61 
Cash dividends declared and paid, at a quarterly amount of $0.32 per class A common stock
(703)(703)
Repurchase of class A common stock(9)(95)(1,701)(1,796)
Balance as of December 31, 2020 
(1)
2 3 1,696 245 11 $3,683 $(34)$18,063 $14,813 $1,154 $37,679 
(1)Increase, decrease or balance is less than one million shares.

See accompanying notes, which are an integral part of these unaudited consolidated financial statements.
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VISA INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY—(Continued)
(UNAUDITED)
Three Months Ended December 31, 2019
 Preferred StockCommon StockPreferred StockRight to Recover for Covered LossesAdditional
Paid-In Capital
Accumulated
Income
Accumulated
Other
Comprehensive
Income (Loss), Net
Total
Equity
 Series BSeries CClass AClass BClass C
 (in millions, except per share data)
Balance as of September 30, 20192 3 1,718 245 11 $5,462 $(171)$16,541 $13,502 $(650)$34,684 
Net income3,272 3,272 
Other comprehensive income (loss), net of tax
335 335 
Comprehensive income3,607 
Adoption of new accounting standards25 (25)— 
VE territory covered losses incurred(4)(4)
Conversion of class C common stock upon sales into public market
1  
(1)
— 
Vesting of restricted stock and performance-based shares
3 — 
Share-based compensation, net of forfeitures116 116 
Restricted stock and performance-based shares settled in cash for taxes
(1)(147)(147)
Cash proceeds from issuance of class A common stock under employee equity plans1 55 55 
Cash dividends declared and paid, at a quarterly amount of $0.30 per class A common stock
(671)(671)
Repurchase of class A common stock(13)(141)(2,229)(2,370)
Balance as of December 31, 20192 3 1,709 245 11 $5,462 $(175)$16,424 $13,899 $(340)$35,270 
(1)Increase or decrease is less than one million shares.



See accompanying notes, which are an integral part of these unaudited consolidated financial statements.
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VISA INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
 Three Months Ended
December 31,
 20202019
 (in millions)
Operating Activities
Net income $3,126 $3,272 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Client incentives 1,858 1,748 
Share-based compensation 122 116 
Depreciation and amortization of property, equipment, technology and intangible assets 197 182 
Deferred income taxes 5 (47)
VE territory covered losses incurred (10)(4)
Other 25 (50)
Change in operating assets and liabilities:
Settlement receivable (244)(183)
Accounts receivable (108)(107)
Client incentives (1,485)(1,943)
Other assets 235 123 
Accounts payable (39)(12)
Settlement payable 194 218 
Accrued and other liabilities (357)136 
Accrued litigation (6)426 
Net cash provided by (used in) operating activities 3,513 3,875 
Investing Activities
Purchases of property, equipment and technology (160)(191)
Investment securities:
Purchases (1,315)(400)
Proceeds from maturities and sales 2,163 1,202 
Acquisitions, net of cash acquired (75)(77)
Purchases of / contributions to other investments (18)(9)
Other investing activities 44 37 
Net cash provided by (used in) investing activities 639 562 
Financing Activities
Repurchase of class A common stock (1,796)(2,370)
Repayments of debt (3,000) 
Dividends paid (703)(671)
Cash proceeds from issuance of class A common stock under employee equity plans 61 55 
Restricted stock and performance-based shares settled in cash for taxes(134)(147)
Net cash provided by (used in) financing activities (5,572)(3,133)
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents
304 127 
Increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents
(1,116)1,431 
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period19,171 10,832 
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period$18,055 $12,263 
Supplemental Disclosure
Cash paid for income taxes, net $252 $345 
Interest payments on debt $281 $234 
Accruals related to purchases of property, equipment and technology $13 $66 
 
See accompanying notes, which are an integral part of these unaudited consolidated financial statements.
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VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1—Summary of Significant Accounting Policies
Organization. Visa Inc. (“Visa” or the “Company”) is a global payments technology company that enables innovative, secure and reliable electronic payments across more than 200 countries and territories. Visa and its wholly-owned consolidated subsidiaries, including Visa U.S.A. Inc. (“Visa U.S.A.”), Visa International Service Association (“Visa International”), Visa Worldwide Pte. Limited, Visa Europe Limited (“Visa Europe”), Visa Canada Corporation (“Visa Canada”), Visa Technology & Operations LLC and CyberSource Corporation, operate one of the world’s largest electronic payments network — VisaNet — which facilitates authorization, clearing and settlement of payment transactions and enables the Company to provide its financial institution and seller clients a wide range of products, platforms and value added services. Visa is not a financial institution and does not issue cards, extend credit or set rates and fees for account holders of Visa products. In most cases, account holder and merchant relationships belong to, and are managed by, Visa’s financial institution clients.
Consolidation and basis of presentation. The accompanying unaudited consolidated financial statements include the accounts of Visa and its consolidated entities and are presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The Company consolidates its majority-owned and controlled entities, including variable interest entities (“VIEs”) for which the Company is the primary beneficiary. The Company’s investments in VIEs have not been material to its unaudited consolidated financial statements as of and for the periods presented. All significant intercompany accounts and transactions are eliminated in consolidation.
The accompanying unaudited consolidated financial statements are presented in accordance with the U.S. Securities and Exchange Commission (“SEC”) requirements for Quarterly Reports on Form 10-Q and, consequently, do not include all of the annual disclosures required by U.S. GAAP. Reference should be made to the Visa Annual Report on Form 10-K for the year ended September 30, 2020 for additional disclosures, including a summary of the Company’s significant accounting policies.
In the opinion of management, the accompanying unaudited consolidated financial statements include all normal recurring adjustments necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the interim periods presented.
Use of estimates. The preparation of the accompanying unaudited consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions about future events. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited consolidated financial statements and reported amounts of revenues and expenses during the reporting period. These estimates may change, as new events occur and additional information is obtained, and will be recognized in the unaudited consolidated financial statements in the period in which such changes occur. Future actual results could differ materially from these estimates. The worldwide spread of coronavirus (“COVID-19”) has created significant uncertainty in the global economy. There have been no comparable recent events that provide guidance as to the effect COVID-19 as a global pandemic may have, and, as a result, the ultimate impact of COVID-19 and the extent to which COVID-19 continues to impact the Company’s business, results of operations and financial condition will depend on future developments, which are highly uncertain and difficult to predict.
Recently Adopted Accounting Pronouncements
In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Board Update (“ASU”) 2016-13, which requires the measurement and recognition of expected credit losses for financial assets and certain other instruments held at amortized cost. The Company adopted the standard effective October 1, 2020 using the modified retrospective transition method with comparative periods continuing to be reported using the previous applicable guidance. The adoption did not have a material impact on the consolidated financial statements.
In accordance with ASU 2016-13, the Company uses a forward-looking expected credit loss model for financial instruments measured at amortized cost. For available-for-sale debt securities, when credit loss indicators exist and a discounted cash flow approach results in a credit loss, the credit loss will be recorded through an allowance rather
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VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)
than through an other-than-temporary impairment. In addition to recording the fair value of its settlement indemnification liability, under the new standard, the Company estimates expected credit losses and recognizes an allowance for those credit losses related to its settlement indemnification obligations.
In January 2017, the FASB issued ASU 2017-04, which simplifies the accounting for goodwill impairments by eliminating Step 2 from the goodwill impairment test. Under the amendments in ASU 2017-04, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of the reporting unit with its carrying amount, which is Step 1 of the goodwill impairment test. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value, not to exceed the total amount of goodwill allocated to that reporting unit. The Company adopted the standard effective October 1, 2020. The adoption had no impact on the consolidated financial statements.
In August 2018, the FASB issued ASU 2018-13, which modifies the disclosure requirements for fair value measurements by removing, modifying or adding certain disclosures. The Company adopted this standard effective October 1, 2020. The adoption did not have a material impact on the consolidated financial statements.
Note 2—Acquisitions
Terminated Acquisition. On January 12, 2021, Visa and Plaid Inc. mutually terminated their merger agreement announced on January 13, 2020. See Note 13—Legal Matters.
Note 3—Revenues
The nature, amount, timing and uncertainty of the Company’s revenues and cash flows and how they are affected by economic factors are most appropriately depicted through the Company’s revenue categories and geographical markets. The following tables disaggregate the Company’s net revenues by revenue category and by geography for the three months ended December 31, 2020 and 2019:
Three Months Ended
December 31,
20202019
(in millions)
Service revenues$2,677 $2,555 
Data processing revenues3,033 2,864 
International transaction revenues1,451 2,018 
Other revenues384 365 
Client incentives(1,858)(1,748)
Net revenues $5,687 $6,054 

Three Months Ended
December 31,
20202019
(in millions)
U.S.$2,667 $2,717 
International3,020 3,337 
Net revenues$5,687 $6,054 
At December 31, 2020 and September 30, 2020, deferred revenue included in accrued liabilities on the consolidated balance sheets was $668 million and $533 million, respectively.
Note 4—Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents
The Company’s cash and cash equivalents include cash and certain highly liquid investments with original maturities of 90 days or less from the date of purchase. Cash equivalents are primarily recorded at cost, which approximates fair value due to their generally short maturities. The Company defines restricted cash and restricted cash equivalents as cash and cash equivalents that cannot be withdrawn or used for general operating activities.
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VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)
The Company reconciles cash, cash equivalents, restricted cash and restricted cash equivalents reported in the consolidated balance sheets that aggregate to the beginning and ending balances shown in the consolidated statements of cash flows as follows:
December 31,
2020
September 30,
2020
(in millions)
Cash and cash equivalents$15,032 $16,289 
Restricted cash and restricted cash equivalents:
U.S. litigation escrow894 901 
Customer collateral1,993 1,850 
Prepaid expenses and other current assets 136 131 
Cash, cash equivalents, restricted cash and restricted cash equivalents
$18,055 $19,171 
Note 5—U.S. and Europe Retrospective Responsibility Plans
U.S. Retrospective Responsibility Plan
Under the terms of the U.S. retrospective responsibility plan, the Company maintains an escrow account from which settlements of, or judgments in, certain litigation referred to as the “U.S. covered litigation” are paid. The escrow funds are held in money market investments along with interest income earned, less applicable taxes, and are classified as restricted cash equivalents on the consolidated balance sheets. The accrual related to the U.S. covered litigation could be either higher or lower than the U.S. litigation escrow account balance. See Note 13—Legal Matters.
The following table sets forth the changes in the restricted cash equivalents—U.S. litigation escrow account:
Three Months Ended
December 31,
20202019
 (in millions)
Balance at beginning of period$901 $1,205 
Return of takedown payment to the litigation escrow account 467 
Payments to opt-out merchants(1) and interest earned on escrow funds
(7)(38)
Balance at end of period$894 $1,634 
(1)These payments are associated with the Interchange Multidistrict Litigation. See Note 13—Legal Matters.
Europe Retrospective Responsibility Plan
Visa Inc., Visa International and Visa Europe are parties to certain existing and potential litigation relating to the setting of multilateral interchange fee rates in the Visa Europe territory (the “VE territory covered litigation”). Under the terms of the Europe retrospective responsibility plan, the Company is entitled to recover certain losses resulting from VE territory covered litigation (the “VE territory covered losses”) through a periodic adjustment to the class A common stock conversion rates applicable to the UK&I and Europe preferred stock. VE territory covered losses are recorded in “right to recover for covered losses” within equity before the corresponding adjustment to the applicable conversion rate is effected. Adjustments to the conversion rate may be executed once in any six-month period unless a single, individual loss greater than €20 million is incurred, in which case, the six-month limitation does not apply. When the adjustment to the conversion rate is made, the amount previously recorded in “right to recover for covered losses” as contra-equity is then recorded against the book value of the preferred stock within stockholders’ equity. During the three months ended December 31, 2020, the Company recovered $15 million of VE territory covered losses through adjustments to the class A common stock conversion rates applicable to the UK&I and Europe preferred stock.
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VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)
The following table sets forth the activities related to VE territory covered losses in preferred stock and “right to recover for covered losses” within stockholders’ equity during the three months ended December 31, 2020.
Preferred StockRight to Recover for Covered Losses
UK&IEurope
(in millions)
Balance as of September 30, 2020$1,106 $1,543 $(39)
VE territory covered losses incurred(1)
  (10)
Recovery through conversion rate adjustment(9)(6)15 
Balance as of December 31, 2020$1,097 $1,537 $(34)
(1)VE territory covered losses incurred reflect settlements with merchants and additional legal costs. See Note 13—Legal Matters.
The following table sets forth the as-converted value of the preferred stock available to recover VE territory covered losses compared to the book value of preferred shares recorded in stockholders’ equity within the Company’s consolidated balance sheets as of December 31, 2020 and September 30, 2020:
December 31, 2020September 30, 2020
As-converted Value of Preferred Stock(1),(2)
Book Value of Preferred Stock(1)
As-converted Value of Preferred Stock(1),(3)
Book Value of Preferred Stock(1)
(in millions)
UK&I preferred stock$3,455 $1,097 $3,168 $1,106 
Europe preferred stock4,732 1,537 4,331 1,543 
Total8,187 2,634 7,499 2,649 
Less: right to recover for covered losses(34)(34)(39)(39)
Total recovery for covered losses available$8,153 $2,600 $7,460 $2,610 
(1)Figures in the table may not recalculate exactly due to rounding. As-converted and book values are based on unrounded numbers.
(2)The as-converted value of preferred stock is calculated as the product of: (a) 2 million and 3 million shares of the UK&I and Europe preferred stock outstanding, respectively, as of December 31, 2020; (b) 6.368 and 6.853, the class A common stock conversion rate applicable to the UK&I and Europe preferred stock as of December 31, 2020, respectively; and (c) $218.73, Visa’s class A common stock closing stock price as of December 31, 2020.
(3)The as-converted value of preferred stock is calculated as the product of: (a) 2 million and 3 million shares of the UK&I and Europe preferred stock outstanding, respectively, as of September 30, 2020; (b) 6.387 and 6.861, the class A common stock conversion rate applicable to the UK&I and Europe preferred stock as of September 30, 2020, respectively; and (c) $199.97, Visa’s class A common stock closing stock price as of September 30, 2020.
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VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)
Note 6—Fair Value Measurements and Investments
Assets and Liabilities Measured at Fair Value on a Recurring Basis
 Fair Value Measurements
Using Inputs Considered as
 Level 1Level 2
 December 31,
2020
September 30,
2020
December 31,
2020
September 30,
2020
 (in millions)
Assets
Cash equivalents and restricted cash equivalents:
Money market funds
$10,512 $12,522 $ $ 
U.S. government-sponsored debt securities
  8501,469 
U.S. Treasury securities
2,050 650   
Investment securities:
Marketable equity securities
184 148   
U.S. government-sponsored debt securities
  1,684 2,582 
U.S. Treasury securities
1,302 1,253   
Other current and non-current assets:
Money market funds
2    
Derivative instruments
  381 512 
Total $14,050 $14,573 $2,915 $4,563 
Liabilities
Accrued compensation and benefits:
Deferred compensation liability
$169 $135 $ $ 
Accrued and other liabilities:
Derivative instruments
  355 181 
Total $169 $135 $355 $181 
Level 1 assets. Money market funds, marketable equity securities and U.S. Treasury securities are classified as Level 1 within the fair value hierarchy, as fair value is based on unadjusted quoted prices in active markets for identical assets and liabilities. The Company’s deferred compensation liability is measured at fair value based on marketable equity securities held under the deferred compensation plan.
Level 2 assets and liabilities. The fair value of U.S. government-sponsored debt securities, as provided by third-party pricing vendors, is based on quoted prices in active markets for similar, not identical, assets. Derivative instruments are valued using inputs that are observable in the market or can be derived principally from or corroborated by observable market data.
U.S. government-sponsored debt securities and U.S. Treasury securities. As of December 31, 2020 and September 30, 2020, the Company held $3.0 billion and $3.8 billion of these investment securities, respectively. All of the Company’s long-term available-for-sale investment securities are due within one to five years.
Assets Measured at Fair Value on a Non-recurring Basis
Non-marketable equity securities. The Company’s non-marketable equity securities are investments in privately held companies without readily determinable market values. These investments are classified as Level 3 due to the absence of quoted market prices, the inherent lack of liquidity and the fact that inputs used to measure fair value are unobservable and require management’s judgment.
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VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)
During the three months ended December 31, 2020 and 2019, upward adjustments of $14 million and $9 million, respectively, were included in the carrying value of non-marketable equity securities accounted for under the fair value measurement alternative. The three months ended December 31, 2020 also included downward adjustments of $2 million. During the three months ended December 31, 2020 and 2019, there was no impairment recognized. The following table summarizes the total carrying value of the Company’s non-marketable equity securities held as of December 31, 2020 including cumulative unrealized gains and losses:
December 31,
2020
(in millions)
Initial cost basis$849 
Adjustments:
Upward adjustments226 
Downward adjustments (including impairment)(13)
Carrying amount, end of period$1,062 
Non-financial assets and liabilities. Long-lived assets such as goodwill, indefinite-lived intangible assets, finite-lived intangible assets and property, equipment and technology are considered non-financial assets. The Company does not have any non-financial liabilities measured at fair value on a non-recurring basis. Finite-lived intangible assets primarily consist of customer relationships and trade names, all of which were obtained through acquisitions.
If the Company were required to perform a quantitative assessment for impairment testing of goodwill and indefinite-lived intangible assets, the fair values would generally be estimated using an income approach. As the assumptions employed to measure these assets on a non-recurring basis are based on management’s judgment using internal and external data, these fair value determinations are classified as Level 3 in the fair value hierarchy. The Company completed its annual impairment review of its indefinite-lived intangible assets and goodwill as of February 1, 2020, and concluded that there was no impairment. No recent events or changes in circumstances indicate that impairment existed at December 31, 2020.
Other Fair Value Disclosures
Debt. Debt instruments are measured at amortized cost on the Company’s unaudited consolidated balance sheets. The fair value of the debt instruments, as provided by third-party pricing vendors, is based on quoted prices in active markets for similar, not identical, assets. If measured at fair value in the financial statements, these instruments would be classified as Level 2 in the fair value hierarchy. As of December 31, 2020, the carrying value and estimated fair value of debt was $21.1 billion and $23.8 billion, respectively. As of September 30, 2020, the carrying value and estimated fair value of debt was $24.1 billion and $26.6 billion, respectively.
Other financial instruments not measured at fair value. The following financial instruments are not measured at fair value on the Company’s unaudited consolidated balance sheet at December 31, 2020, but disclosure of their fair values is required: settlement receivable and payable and customer collateral. The estimated fair value of such instruments at December 31, 2020 approximates their carrying value due to their generally short maturities. If measured at fair value in the financial statements, these financial instruments would be classified as Level 2 in the fair value hierarchy.
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VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)
Note 7—Debt
The Company had outstanding debt as follows:
December 31,
2020
September 30,
2020
Effective Interest Rate(1)
(in millions, except percentages)
2.20% Senior Notes due December 2020
$ $3,000 2.30 %
2.15% Senior Notes due September 2022
1,000 1,000 2.30 %
2.80% Senior Notes due December 2022
2,250 2,250 2.89 %
3.15% Senior Notes due December 2025
4,000 4,000 3.26 %
1.90% Senior Notes due April 2027
1,500 1,500 2.02 %
0.75% Senior Notes due August 2027
500 500 0.84 %
2.75% Senior Notes due September 2027
750 750 2.91 %
2.05% Senior Notes due April 2030
1,500 1,500 2.13 %
1.10% Senior Notes due February 2031
1,000 1,000 1.20 %
4.15% Senior Notes due December 2035
1,500 1,500 4.23 %
2.70% Senior Notes due April 2040
1,000 1,000 2.80 %
4.30% Senior Notes due December 2045
3,500 3,500 4.37 %
3.65% Senior Notes due September 2047
750 750 3.73 %
2.00% Senior Notes due August 2050
1,750 1,750 2.09 %
Total debt
21,000 24,000 
Unamortized discounts and debt issuance costs(173)(178)
Hedge accounting fair value adjustments(2)
228 248 
Total carrying value of debt
$21,055 $