Visa 2008 Annual Report Download - page 70

Table of Contents
Volume and support incentives
The decrease in volume and support incentives was primarily due to the impact of lower revised estimates of performance under these agreements
during management's regular quarterly review of customer performance and due to amendments to volume and support incentives during the period.
Performance adjustments reduced volume and support incentives cost by a total of $73 million in fiscal 2007 compared to $36 million in fiscal 2006. As the
rate of payments volume growth has softened compared to the prior year, estimates of performance under volume and support incentives have been adjusted
accordingly.
Operating Expenses
The following table sets forth components of our total operating expenses for the periods presented.
Fiscal Year ended September 30, $ Change % Change
Visa Inc.
2008
Visa U.S.A.
2007
Visa
U.S.A.
2006
2008
vs.
2007
2007
vs.
2006
2008
vs.
2007
2007
vs.
2006
(in millions, except percentages)
Personnel $ 1,199 $ 721 $ 671 $ 478 $ 50 66% 7%
Network, EDP and communications 339 249 213 90 36 36% 17%
Advertising, marketing and promotion 1,016 581 474 435 107 75% 23%
Visa International fees — 173 159 (173) 14 NM 9%
Professional and consulting fees 438 334 291 104 43 31% 15%
Depreciation and amortization 237 126 138 111 (12) 88% (9)%
Administrative and other 332 202 249 130 (47) 64% (19)%
Litigation provision 1,470 2,653 23 (1,183) 2,630 (45)% NM
Total Operating Expenses $ 5,031 $ 5,039 $ 2,218 $ (8) $ 2,821 — % 127%
Fiscal 2008 compared to Fiscal 2007
Operating expenses remained flat during fiscal 2008, compared to the prior year comparable period. The increase in our operating expenses due to
inclusion of operating expenses attributed to the acquired regions of $1.3 billion was substantially offset by a decrease in litigation provision of $1.2 billion.
Personnel
The increase in personnel expense during fiscal 2008 over the prior year comparable period was primarily due to:
• $376 million in personnel expense attributed to the acquired regions;
• $93 million in severance charges related to workforce consolidation due to the elimination of overlapping functions directly connected to the
reorganization; and
• $74 million in stock based compensation expense reflecting stock-based incentives awarded to our employees in connection with our IPO.
These increases were offset by reductions in personnel and other incentive expense primarily due to changes in our defined benefit pension plan since
the prior year comparable period and the absence of a special IPO incentive incurred during the fourth quarter of the prior fiscal year.
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