Visa 2007 Annual Report Download - page 86

Table of Contents
Personnel
The increase in personnel expense in fiscal 2006 reflected annual salary adjustments, which were broadly in line with inflation, and a 4% increase in the
number of employees in support of various corporate initiatives at Visa U.S.A.
Network, EDP and Communications
The decrease in network, EDP and communications expense in fiscal 2006 primarily reflected a decrease in software expense of $9 million due to Visa
U.S.A. lowering its threshold for capitalizing software from a unit cost greater than $25,000 or an aggregate purchase cost greater than $250,000 to a unit cost
or aggregate purchase cost greater than $10,000.
Advertising, Marketing and Promotion
The increase in advertising, marketing and promotion expense in fiscal 2006 primarily reflected higher expenditures for Visa U.S.A.'s new brand mark
and card design launch which began in January 2006 and its "Life Takes Visa" advertising campaign, launched in February 2006.
Visa International Fees
The decrease in Visa International fees in fiscal 2006 primarily reflected reductions in Visa U.S.A.'s percentage of worldwide payments volumes, as
global emerging markets experienced higher payments volume growth rates than the more mature U.S. economy.
Professional and Consulting Fees
Professional and consulting fees increased in fiscal 2006 primarily due to professional contracting fees incurred to provide analysis and support for
various programs and projects including product development and innovation, call center operations and global processing and system development.
Additional expenses for accounting and auditing services were incurred in conjunction with Visa U.S.A.'s review of its internal controls over financial
reporting, and additional legal fees were incurred to support ongoing litigation matters.
Administrative and Other
Administrative and other expense increased in fiscal 2006, primarily reflecting the following non-recurring expenses:
• a $24 million charge to reimburse customers for production and issuance costs related to discontinued use of Visa-branded cards with the
holographic magnetic stripe design;
• a $13 million impairment charge for the net carrying value of an intangible asset associated with the patent and rights to market and distribute
Mini Cards in the United States; and
• an $11 million charge to reflect expenses for business objectives related to a litigation settlement in fiscal 2006. The settlement required Visa
U.S.A. to either meet certain joint business objectives or make cash payments in lieu of the business objectives over five years. Because Visa
U.S.A. expects to make these related cash payments without receiving future benefits, Visa U.S.A. charged the present value of the total
payments to its consolidated statements of operations in fiscal 2006.
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