Visa 2008 Annual Report Download - page 55

Table of Contents
Processed transactions increased by 4.2 billion, or 13%, to 37.0 billion during fiscal 2008 compared to prior year. Growth in transactions processed in
the United States accounted for the majority of growth in transactions processed. We continue to identify opportunities to expand our processing role outside
of the United States through the penetration of our core products and the delivery of new and innovative products that meet the needs of regional markets.
The following table sets forth transaction volumes processed by our VisaNet system during the periods presented:
Visa Inc.
Fiscal
2008
2007
Pro
Forma % Change
(in millions)
Total transactions 36,956 32,720 13%
Operating income as a percentage of operating revenues, or operating margin, was 20% for fiscal 2008 compared with pro forma operating margin of
(21%) in fiscal 2007. Our fiscal 2008 operating income includes a litigation provision of $1.5 billion, which contains an additional litigation provision of $1.1
billion in connection with an agreement reached with Discover Financial Services, to settle pending litigation. Since the Discover litigation is covered by the
Company's Retrospective Responsibility Plan, responsibility for the settlement is allocated to the Company's class B shareholders via an escrow account and
other mechanisms previously established under the plan. Refer to Note 23—Legal Matters and Note 5—Retrospective Responsibility Plan to our consolidated
financial statements included elsewhere in this report for additional information. The increase in our operating margin during 2008 is primarily attributable to
growth in operating revenues resulting from pricing changes and new fees.
Impact of Foreign Currency Rates
Our operating revenues are impacted by fluctuations in foreign currency rates. Operating revenues are impacted by the overall strengthening or
weakening of the U.S. dollar compared to local or regional currencies in which our payments volumes occur. Revenue growth attributable to the weakening of
the U.S. dollar during fiscal 2008 was approximately 2% compared to the prior year and primarily impacts service fees and international transaction fees.
Should the recent strengthening of the U.S. dollar continue, this would have the opposite impact on our revenues.
The Reorganization and IPO
Our reorganization in October 2007 and subsequent IPO in March 2008 generated certain unique and non-recurring business events and transactions.
Visa Europe did not become a subsidiary of Visa Inc., but rather remained owned by its member financial institutions and entered into a set of contractual
arrangements with Visa Inc. In connection with the reorganization, we issued different classes and series of shares reflecting the different rights and
obligations of Visa financial institution members and Visa Europe based on the geographic region in which they are located.
In March 2008, we successfully completed an IPO, selling 446.6 million shares of class A common stock to the public, which raised $19.1 billion in net
proceeds. We used $13.4 billion of the net proceeds from the IPO to redeem a portion of the class B and class C (series I) shares of Visa's financial institution
members and as a result Visa is now majority owned by the public. Pursuant to our Retrospective Responsibility Plan, we established an escrow account with
$3.0 billion of the net proceeds of the IPO. Our Retrospective Responsibility Plan is a central component of the
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