Visa 2008 Annual Report Download - page 178

Table of Contents
VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2008
(in millions, except as noted)
The following table summarizes the activity related to accrued litigation for the twelve months ended September 30, 2008 and 2007:
Fiscal 2008 Fiscal 2007
(in millions)
Balance at October 1 $ 3,682 $ 1,000
Provision for settled legal matters 1,180 1,941
Provision for unsettled legal matters 290 714
Bank co-defendants' obligation to American Express(1) — 185
Insurance Recovery — (2)
Interest accretion on settled matters 131 75
Payments on settled matters (1,525) (231)
Balance at September 30 $ 3,758 $ 3,682
(1) Visa Inc. consolidated the initial payment to American Express (see discussion below) on behalf of the five co-defendant banks. The Company recorded
a corresponding receivable in prepaid and other current assets on the Company's consolidated balance sheets at September 30, 2007.
Covered Litigation
The following table summarizes the activity related to covered litigation matters for the twelve months ended September 30, 2008 and 2007:
Fiscal 2008 Fiscal 2007
(in millions)
Balance at October 1 $ 2,761 $ —
Provision for settled legal matters 1,092 1,926
Provision for unsettled legal matters 285 650
Bank co-defendants' obligation to American Express — 185
Interest accretion on settled matters 68 —
Payments on settled matters(1) (1,270) —
Balance at September 30 $ 2,936 $ 2,761
(1) Payments on the Company's settlement with American Express included $1,085 million funded through the escrow account established by the
Retrospective Responsibility Plan and $185 million funded by the five co-defendant banks. The escrow funds are held in money market investments
with the income earned, less the applicable taxes, classified as restricted cash on the Company's consolidated balance sheet. The amount of the escrow
funds equivalent to the actual, undiscounted amount of covered litigation payments expected to be made beyond one year from the balance sheet date is
classified as a non-current asset. Interest earned on escrow funds is included in investment income, net, on the Company's consolidated statement of
operations. See Note 5—Retrospective Responsibility Plan, for more information about the Retrospective Responsibility Plan and the escrow account.
Visa U.S.A. and Visa International are parties to certain legal proceedings discussed below that are subject to the Retrospective Responsibility Plan,
which the Company refers to as the covered litigation. For a description of the Retrospective Responsibility Plan, see Note 5—Retrospective Responsibility
Plan.
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