Visa 2007 Annual Report Download - page 91

Table of Contents
Cash Flow Data
Fiscal
2007 2006 2005
(in millions)
Net cash provided by operating activities $ 505 $ 434 $ 481
Net cash used in investing activities (463) (263) (473)
Net cash used in financing activities (37) (36) (46)
Increase (decrease) in cash and cash equivalents $ 5 $ 135 $ (38)
Operating Activities
Net cash provided by operating activities increased $71 million in fiscal 2007 compared to the prior year. The increase primarily reflected the absence
of a substantial program payment in connection with Visa U.S.A.'s Visa Check card program in the prior year. See Note 13—Restricted Assets and Liabilities
to the Visa U.S.A. fiscal 2007 consolidated financial statements. The increase also reflects higher non-cash accruals for accrued compensation and benefits.
Net cash provided by operating activities decreased $47 million during fiscal 2006, primarily due to payments on litigation matters largely accrued for
in fiscal 2005 but settled and paid for in fiscal 2006. In addition, lower levels of accounts payable and accrued liabilities in fiscal 2006 compared to fiscal
2005 contributed to the decrease in cash provided by operating activities. These decreases were offset by increases in the liability position of volume and
support incentives and higher net income, adjusted for non-cash items.
Investing Activities
The increase in net cash used in investing activities in fiscal 2007 is primarily driven by facilities and equipment purchases related to the new data
center discussed above. In addition, investment securities purchasing activity, net of sales and maturities, was higher during fiscal 2007.
The decrease in net cash used in investing activities in fiscal 2006 from fiscal 2005 primarily reflects fewer funds available for the purchase of
investment securities as a result of one-time litigation settlements, including the multi-currency matter.
Financing Activities
Net cash used in financing activities during fiscal 2007, 2006 and 2005 primarily reflects scheduled quarterly payments on Visa U.S.A.'s series A senior
secured notes due December 2007 and series B senior secured notes due December 2012. See Note 14 – Debt to the Visa U.S.A. fiscal 2007 consolidated
financial statements. Cash requirements remained stable as the outstanding debt decreased during fiscal 2007, 2006 and 2005.
Off-Balance Sheet Arrangements
Under Visa U.S.A.'s bylaws in effect prior to the reorganization, Visa U.S.A. indemnified issuing and acquiring customers for settlement losses suffered
by reason of the failure of any other issuing and acquiring customer to honor drafts, travelers cheques, or other instruments processed in accordance with its
operating regulations. Visa International is Visa U.S.A.'s settlement agent. Visa U.S.A. partially indemnifies Visa International from losses due to the failure
of a member. The term and the amount of the indemnity is not limited. Visa U.S.A. is responsible for losses up to $1.0 million plus .003% of Visa U.S.A.'s
payments volume, excluding Interlink, for the year preceding the loss, or approximately $40 million in fiscal 2007. Currently settlement is guaranteed by
members through the indemnification provisions in the bylaws of Visa U.S.A. and Visa
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