Visa 2008 Annual Report Download - page 65

Table of Contents
continue to increase over time as we continue to evaluate outsourcing alternatives for certain support functions. The remainder of the increase primarily
reflects an increase in fees for debit processing services related to processing transactions through non-Visa networks.
Advertising, marketing and promotion
The decrease in advertising, marketing and promotion expense in fiscal 2008 was primarily driven by the absence of certain joint promotional
campaigns with financial institution customers from the fourth quarter of fiscal 2007 that did not recur during fiscal 2008. The absence of these joint
promotional campaigns reduced advertising, marketing and promotion expense by $104 million. This decrease was offset by higher advertising and promotion
spending in connection with the 2008 Beijing Summer Olympics coupled with increased promotional activity related to our Visa Extras reward program.
Professional and consulting fees
The reduction in professional fees during fiscal 2008 reflects the absence of consulting and legal fees incurred in the prior year in connection with our
reorganization. During the first half of fiscal 2008, consulting and legal fees incurred to support the IPO in fiscal 2008 were offset against the net proceeds
from our IPO, reducing professional and consulting fees by $24 million versus the prior year comparable period. During 2007, professional fees incurred to
support the reorganization were expensed. The reduction in consulting and legal fees attributable to the absence of prior year reorganization expenses was $94
million. Additionally, legal fees decreased in fiscal 2008 reflecting settlement of the American Express litigation in fiscal 2007.
Litigation provision
The decrease in litigation provision primarily reflects (i) the absence of a $1.9 billion provision related to the settlement of outstanding litigation with
American Express made in the fourth quarter of fiscal 2007, offset by (ii) an increase during the fourth fiscal quarter of fiscal 2008 of $1.1 billion to our
litigation provision in connection with settlement of litigation with Discover Financial Services. Since both of these matters are covered by our Retrospective
Responsibility Plan, responsibility for the settlement is allocated to our class B shareholders via an escrow account and other mechanisms previously
established under the plan. The increase also reflects additional accruals made in fiscal 2008 under the provisions of SFAS 5, related to other covered
litigation. See Note 23—Legal Matters and Note 5—Retrospective Responsibility Plan to our consolidated financial statements included elsewhere in this
report.
Other Income (Expense)
The following table sets forth the components of our other income (expense) for fiscal 2008 compared to our other income (expense) on a pro forma
basis for fiscal 2007.
Fiscal Year ended September 30,
Visa Inc.
2008
Pro
Forma
2007
$
Change
%
Change
(in millions, except percentages)
Equity in earnings of unconsolidated affiliates $ 1 $ — $ 1 NM
Interest expense (143) (96) (47) 49%
Investment income, net 211 197 14 7%
Other 35 8 27 NM
Total Other Income (Expense) $ 104 $ 109 $ (5) (5)%
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