Visa 2011 Annual Report Download - page 49

Table of Contents
offsetting costs associated with these transactions are reported on a net basis and therefore do not appear in our financial results. Further, a large
issuer converted away from the platform entirely in June 2010. The combined impacts resulted in $89 million of revenues and related expenses
recorded in the prior fiscal year associated with Visa Extras that did not recur. These changes do not impact operating income or net income
attributable to Visa Inc. as revenue and expense amounts completely offset. The decrease was partially offset by increases in licensing fees and
the inclusion of revenue attributable to CyberSource, PlaySpan and Fundamo.
Other revenues increased in fiscal 2010 primarily due to license fees from Cielo, formerly known as Companhia Brasileira de Meios de
Pagamento, or VisaNet do Brasil, for the use of Visa trademarks and technology intellectual property. The increase also reflected growth in other
license and royalty fees.
• Client incentives increased in fiscal 2011 reflecting growth in global payments volume and incentives incurred on significant long-term client
contracts that were initiated or renewed during fiscal 2011. Beginning in our fourth quarter of fiscal 2011, the new U.S. debit regulations
triggered renegotiations with some of our existing issuing clients and resulted in new contracts with dozens of merchants and some acquirers to
win transaction routing preference. As part of our business strategy, we will continue to initiate or renew contracts with merchants and acquirers,
which will likely impact our fiscal 2012 results. We expect incentives as a percentage of gross revenues to be in the range of 17% to 18% for the
full 2012 fiscal year. The actual amount of client incentives will vary based on modifications to performance expectations for these contracts,
amendments to existing contracts or the execution of new contracts.
Client incentives increased in fiscal 2010 primarily due to growth in global payments volumes and incentives incurred on significant long-term
customer contracts that were initiated or renewed in fiscal 2010. These increases were offset by lower one-time incentives incurred for early
renewals compared to fiscal 2009.
Operating Expenses
The following table sets forth components of our total operating expenses for the periods presented.
Fiscal Year ended
September 30, $ Change % Change(1)
2011 2010 2009
2011
vs.
2010
2010
vs.
2009
2011
vs.
2010
2010
vs.
2009
(in millions, except percentages)
Personnel $ 1,459 $ 1,222 $ 1,228 $ 237 $ (6) 19% (1)%
Network and processing 357 425 393 (68) 32 (16)% 8%
Marketing 870 964 918 (94) 46 (10)% 5%
Professional fees 337 286 268 51 18 18% 7%
Depreciation and amortization 288 265 226 23 39 9% 17%
General and administrative 414 359 338 55 21 15% 7%
Litigation provision 7 (45) 2 52 (47) NM NM
Total Operating Expenses $ 3,732 $ 3,476 $ 3,373 $ 256 $ 103 7% 3%
(1) Percentage change calculated based on whole numbers, not rounded numbers.
• Personnel increased in fiscal 2011 primarily due to the inclusion of new employees from our acquisitions of CyberSource, PlaySpan and
Fundamo in July 2010, March 2011 and June
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