Visa 2014 Annual Report Download - page 62

•General and administrative increased in fiscal 2014 mainly due to facilities costs and other
corporate expenses in support of our business growth and the disposal of obsolete
technology assets, partially offset by a decrease in travel activities. General and
administrative remained flat in fiscal 2013 compared to fiscal 2012.
•Litigation provision in fiscal 2014 and 2012 reflects $450 million and $4.1 billion accruals,
respectively, related to the covered litigation. See Note 3—Retrospective Responsibility Plan
and Note 20—Legal Matters to our consolidated financial statements.
Non-operating Income
Non-operating income in fiscal 2014 of $27 million increased from $18 million in fiscal 2013
primarily due to the absence of a $15 million other-than-temporary impairment loss recognized during
fiscal 2013. See Note 4—Fair Value Measurements and Investments to our consolidated financial
statements. The decrease in fiscal 2013 from $68 million in fiscal 2012 was primarily due to the
reversal in fiscal 2012 of previously accrued interest expense associated with tax reserves for
uncertainties related to the deductibility of covered litigation expense. See Note 19 —Income Taxes
and Note 20—Legal Matters to our consolidated financial statements.
Effective Income Tax Rate
The effective income tax rate of 30% in fiscal 2014 differs from the effective income tax rate of
31% in fiscal 2013 mainly due to:
• a $264 million tax benefit related to a deduction for U.S. domestic production activities, of
which $191 million related to prior fiscal years, as a result of the completion of a study in the
second quarter of fiscal 2014; and
• the absence of the following in fiscal 2014:
• a tax benefit recognized in fiscal 2013 as a result of new guidance issued by the state
of California regarding apportionment rules for years prior to fiscal 2012; and
• certain foreign tax credit benefits related to prior years recognized in fiscal 2013.
The effective income tax rate of 31% in fiscal 2013 differs from the effective income tax rate of 3%
in fiscal 2012 mainly due to:
• the aforementioned tax benefit recognized in fiscal 2013 as a result of new guidance issued
by the state of California regarding apportionment rules for years prior to fiscal 2012;
• certain foreign tax credit benefits related to prior years recognized in fiscal 2013, as
mentioned above; and
• the absence of the following in fiscal 2013:
• the fiscal 2012 reversal of previously recorded tax reserves associated with
uncertainties related to the deductibility of covered litigation expense;
• a fiscal 2012 one-time, non-cash benefit from the remeasurement of existing net
deferred tax liabilities due to the changes in California apportionment rules adopted in
that year; and
• the effect of applying the aforementioned fiscal 2012 tax benefits to a fiscal 2012 pre-
tax income that was reduced by the $4.1 billion covered litigation provision.
Adjusted effective income tax rate for fiscal 2012. Our financial results for fiscal 2012 reflected the
impact of several significant items that we believe are not indicative of our operating performance in
that or future years, as they were either non-recurring, had no cash impact or were related to amounts
covered by the retrospective responsibility plan. As such, we have presented our fiscal 2012 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
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