Visa 2012 Annual Report Download - page 45

Table of Contents
recognized in fiscal 2010 related to our investment in the Reserve Primary Fund.
Effective Income Tax Rate
The effective income tax rate of 3% in fiscal 2012 is lower than the effective income tax rate of 36% for fiscal 2011 and 2010,
primarily due to the impact of the following in fiscal 2012:
We expect our fiscal 2013 effective tax rate to increase to a more normalized range of 30% to 32%.
Adjusted effective income tax rate. Our financial results for fiscal 2012 reflect the impact of several significant items that we
believe are not indicative of our financial performance in the current or future years, as they are either non-recurring, have no cash
impact or are related to amounts covered by the retrospective responsibility plan. As such, we have presented our adjusted
effective income tax rate in the table below, which we believe provides a clearer understanding of our operating performance for the
fiscal year. Our adjusted effective income tax rate for fiscal 2012 excludes: the reversal of previously recorded tax reserves and
accrued interest associated with uncertainties related to the deductibility of covered litigation expense; additional covered litigation
provision recorded; and a one-time, non-cash benefit from the remeasurement of existing net deferred tax liabilities attributable to
changes in the California state apportionment rules.
Liquidity and Capital Resources
Management of Our Liquidity
We regularly evaluate cash requirements for current operations, commitments, development activities and capital
expenditures, and we may elect to raise additional funds for these purposes in the future through the issuance of either debt or
equity. Our treasury policies provide management with the guidelines and authority to manage liquidity risk in a manner consistent
with our corporate objectives.
The objectives of our treasury policies are to:
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• Other non-operating income primarily reflects non-
cash adjustments to the fair market value of the Visa Europe put option
of $122 million and $79 million in fiscal 2011 and 2010, respectively. The changes in value are not subject to tax, and do
not reflect any change in the likelihood that Visa Europe will exercise its option. See Note 2—Visa Europe to our
consolidated financial statements.
▪ the reversal of previously recorded tax reserves associated with uncertainties related to the deductibility of
covered litigation expense;
▪ a decrease in our overall state tax rate due to changes in the California apportionment rules and the associated
one-time, non-cash benefit of $208 million from the remeasurement of existing net deferred tax liabilities primarily
related to the $11 billion of indefinite-lived intangible assets recorded in our 2007 reorganization;
▪ a one-
time benefit recognized upon initial recognition of foreign tax credits;
▪ the effect of applying the foregoing adjustments to a pre-tax income that was reduced by a $4.1 billion covered
litigation provision; and
▪
the absence of nontaxable revaluations of the Visa Europe put option.
Income Before
Income Taxes
Income Tax
Provision
Effective Income
Tax Rate
(in millions, except for percentages)
As reported
$
2,207
$
65
3
%
Reversal of tax reserves
(43
)
283
Litigation provision
4,098
1,505
Remeasurement of net deferred tax liabilities —
208
Adjusted
$
6,262
$
2,061
33
%
•
provide adequate liquidity to cover operating expenditures and liquidity contingency scenarios;
•
ensure payments on required litigation settlements;
•
ensure timely completion of payments settlement activities;
•
make planned capital investments in our business;
•
pay dividends and repurchase our shares at the discretion of our board of directors; and