Visa 2008 Annual Report Download - page 73

Table of Contents
Professional and consulting fees
Professional and consulting fees increased in fiscal 2007 primarily due to the following:
• a $23 million increase in contractors and outsourcing expense in connection with the outsourcing of certain data processing and development
functions over the course of fiscal 2007, and additional contractors in connection with the support of other development and maintenance
projects; and
• a $19 million increase in legal fees incurred to support ongoing litigation matters.
Depreciation and amortization
The decrease in depreciation and amortization during fiscal 2007 primarily reflects the absence of 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 incurred during fiscal 2006.
Administrative and other
Administrative and other expenses decreased in fiscal 2007, primarily reflecting the absence of the following expenses incurred in fiscal 2006:
• 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; 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.
Litigation provision
Litigation provision increased $2.6 billion reflecting a $1.9 billion provision related to settlement of outstanding litigation with American Express.
Future payments under the settlement agreement were discounted at 4.72% over the payment term to determine the amount of the provision. The litigation
provision also reflects management's liability estimate under the guidelines of SFAS 5 related to the Discover litigation. The American Express and Discover
litigations are covered by our Retrospective Responsibility Plan and we intend to fund any payment obligations with amounts in the escrow account, in
accordance with our Retrospective Responsibility Plan. The remainder of the increase in litigation provision includes various litigation provisions for both
settled and unsettled matters.
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