Visa 2012 Annual Report Download - page 43

Table of Contents
Increases in client incentives during fiscal 2011 reflected growth in global payments volume and incentives incurred on
significant long-term client contracts that were initiated or renewed during fiscal 2011 .
Operating Expenses
The following table sets forth components of our total operating expenses for the periods presented.
The decrease in fiscal 2011 reflects the change to present revenues and offsetting expenses associated with the
processing of non-Visa network transactions on a net basis instead of on a gross basis. This decline was partially offset
by increased investment in technology projects and the inclusion of CyberSource and PlaySpan activities.
The decrease in fiscal 2011 primarily reflects a change to present revenues and offsetting expenses related to the Visa
Extras rewards program on a net basis instead of on a gross basis, combined with the
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• Client incentives increased in fiscal 2012 reflecting incentives incurred on long-term client contracts that were initiated or
renewed during fiscal 2012 , including a number of significant long-term merchant and acquirer contracts executed as
part of our strategy to mitigate the impact of the Dodd-Frank Act. Client incentives also increased as a result of overall
growth in global payments volume and certain one-time incentives incurred outside the U.S. The amount of client
incentives we record in future periods will vary based on changes in performance expectations, actual client performance,
amendments to existing contracts or the execution of new contracts. We expect incentives as a percentage of gross
revenues to be in the range of 18% to 18.5% for the full 2013 fiscal year.
Fiscal Year ended
September 30,
$ Change
% Change
(1)
2012
2011 2010
2012
vs.
2011
2011
vs.
2010
2012
vs.
2011
2011
vs.
2010
(in millions, except percentages)
Personnel
$
1,726
$
1,459
$
1,222
$
267
$
237
18
%
19
%
Network and processing
414
357
425
57
(68
)
16
%
(16
)%
Marketing
873
870
964
3
(94
)
—
%
(
10
)%
Professional fees
385
337
286
48
51
14
%
18
%
Depreciation and amortization
333
288
265
45
23
16
%
9
%
General and administrative
451
414
359
37
55
9
%
15
%
Litigation provision
4,100
7
(45
)
4,093
52
NM
NM
Total Operating Expenses
(2)
$
8,282
$
3,732
$
3,476
$
4,550
$
256
NM
7
%
(1)
Figures in the table may not recalculate exactly due to rounding. Percentage changes are calculated based on whole numbers,
not the rounded numbers presented.
(2)
Excluding the litigation provision of $4.1 billion recorded in fiscal 2012, associated with litigation covered by the retrospective
responsibility plan, operating expenses for fiscal 2012 were $4.2 billion, an increase of 12% over the prior year on an adjusted
basis.
• Personnel increased in fiscal 2012 primarily due to increases in headcount throughout the organization combined with
higher employee incentive-related costs. The increase also reflects annualized costs from our acquisitions of PlaySpan
and Fundamo in March 2011 and June 2011, respectively. The increase in fiscal 2011 primarily reflects the inclusion of
new employees from our acquisitions of CyberSource, PlaySpan and Fundamo. The increases in headcount reflect our
strategy to invest for future growth, particularly outside the U.S., in support of our core business, as well as our
eCommerce and mobile initiatives.
• Network and processing increased in fiscal 2012 primarily due to higher fees paid for the operation of our processing
network attributable to increased transaction volumes.
• Marketing remained flat in fiscal 2012 despite an increase in spending to support new product initiatives and our
sponsorship of the 2012 Summer Olympics. We expect to incur under $1 billion of marketing expense in fiscal 2013,
including incremental investment to support our key country growth strategies and new product initiatives.