Visa 2007 Annual Report Download - page 85

Table of Contents
The net asset (liability) of volume and support incentives changed as follows:
2006
(in millions)
Beginning balance at October 1, 2005, net asset(1) $ 110
Provision
Current year provision (635)
Performance adjustments(2) 36
Contractual amendments(3) 11
Subtotal volume and support incentives (588)
Payments 413
Ending balance at September 30, 2006, net liability(1) $ (65)
(1) Balance represents the net of the current and long term asset and current liability portions of volume and support incentives as presented on the face of the Visa U.S.A. fiscal 2007
consolidated financial statements.
(2) Amount represents adjustments resulting from management's refinement of its estimate of projected sales performance as new information becomes available.
(3) Amount represents adjustments resulting from amendments to existing contractual terms.
International Transaction Fees
International transaction fees increased 11% while multi-currency payments volume increased 9% or $4.4 billion, in fiscal 2006 as compared to fiscal
2005. The increase in international transaction fees was higher than the growth in multi-currency payments volume due to the differential between foreign and
domestic interchange rates.
Other Revenues
The increase in other revenues in fiscal 2006 primarily reflected:
• revenue growth of $18 million for technology projects and services performed for Visa International, Visa Canada and Visa Europe; and
• revenue growth of $12 million from the Visa Extras loyalty program. Visa Extras is a platform for enrolled Visa cardholders to earn reward
points toward qualifying purchases.
Operating Expenses
Total operating expenses were unchanged at $2.2 billion for both fiscal 2006 and 2005, respectively. Visa U.S.A. reduced its total operating expenses as
a percentage of total operating revenues to 75% in fiscal 2006 compared to 83% in fiscal 2005 due to more effective expense management and the absence of
certain charges associated with Visa U.S.A.'s litigation provision expense recorded in fiscal 2005. The charge to litigation provision expense in fiscal 2005
was primarily related to the multi-currency matter that was subsequently settled in fiscal 2006. See Note 20—Legal Matters to the Visa U.S.A. fiscal 2007
consolidated financial statements.
Fiscal Year 2006 vs. 2005
2006 2005 $ Change % Change
(in millions, except percentages)
Personnel $ 671 $ 619 $ 52 8%
Network, EDP and communications 328 338 (10) (3)%
Advertising, marketing and promotion 474 457 17 4%
Visa International fees 159 169 (10) (6)%
Professional and consulting fees 291 273 18 7%
Administrative and other 272 224 48 21%
Litigation provision 23 132 (109) (83)%
Total Operating Expenses $ 2,218 $ 2,212 $ 6 0%
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