Visa 2013 Annual Report Download - page 52

•Professional fees increased in fiscal 2013 and 2012, primarily reflecting greater investment in
technology projects.
•Depreciation and amortization increased in fiscal 2013 and 2012, primarily due to additional
depreciation from our ongoing investments in technology assets and infrastructure to support
our core business as well as our eCommerce and mobile initiatives.
•General and administrative remained flat in fiscal 2013 after experiencing an increase in fiscal
2012 mainly due to travel activities in support of our international expansion, combined with the
absence of unrealized foreign exchange gains recorded in fiscal 2011 upon the remeasurement
of monetary assets and liabilities held by foreign subsidiaries into their functional currencies.
•Litigation provision in fiscal 2012 reflects a $4.1 billion accrual related to the covered litigation.
See Note 3—Retrospective Responsibility Plan and Note 20—Legal Matters to our consolidated
financial statements.
Non-operating Income
Non-operating income in fiscal 2013 of $18 million decreased from $68 million in fiscal 2012
primarily due to the reversal in fiscal 2012 of previously accrued interest expense associated with tax
reserves for uncertainties related to the deductibility of covered litigation expense. See Note 19—
Income Taxes and Note 20—Legal Matters to our consolidated financial statements. The decrease in
fiscal 2012 from $200 million in fiscal 2011 was primarily due to:
• the absence of a $122 million non-cash adjustment to the fair market value of the Visa Europe
put option recorded in fiscal 2011; and
• the absence of a pre-tax gain of $85 million recognized in fiscal 2011 upon the sale of our
investment in Visa Vale issuer Companhia Brasileira de Soluções e Serviços, or CBSS; offset
by
• the reversal of previously accrued interest expense discussed above.
Effective Income Tax Rate
The effective income tax rate of 31% in fiscal 2013 differs from the effective income tax rates of
3% and 36% in fiscal 2012 and 2011, respectively, mainly due to:
• the decrease in overall ongoing state tax rate beginning in fiscal 2012 as a result of changes
in California apportionment rules adopted in that year;
• a tax benefit recognized in fiscal 2013 as a result of new guidance issued by the state of
California regarding apportionment rules for years prior to fiscal 2012;
• certain foreign tax credit benefits related to prior years recognized in fiscal 2013; and
• the absence of the following in fiscal 2013:
• the fiscal 2012 reversal of previously recorded tax reserves associated with
uncertainties related to the deductibility of covered litigation expense;
• a fiscal 2012 one-time, non-cash benefit from the remeasurement of existing net
deferred tax liabilities due to the changes in California apportionment rules adopted in
that year;
• the effect of applying the aforementioned fiscal 2012 tax benefits to a fiscal 2012 pre-
tax income that was reduced by the $4.1 billion covered litigation provision; and
• the nontaxable revaluation of the Visa Europe put option recorded in fiscal 2011.
Adjusted effective income tax rate for fiscal 2012. Our financial results for fiscal 2012 reflected the
impact of several significant items that we believe are not indicative of our financial performance in that
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