Visa 2008 Annual Report Download - page 83

Table of Contents
agreement, American Express will receive maximum payments of $2.25 billion, including up to $2.07 billion from us and $185 million from the five co-
defendant banks. An initial payment of $1.13 billion was made in March 2008, including $945 million from us and $185 million from the five co-defendant
banks. Beginning April 1, 2008, we are required to pay American Express an additional amount of up to $70 million each quarter for 16 quarters, for a
maximum total of $1.12 billion, contingent on American Express meeting certain performance criteria. All payments related to this covered litigation
settlement will be funded out of the litigation escrow account.
Judgments in and settlements of litigation, other than covered litigation, could give rise to future liquidity needs. For example, in connection with our
retailers' litigation settlement in fiscal 2003, we are required to make annual settlement payments of $200 million through fiscal 2012.
Redemption of class B and class C common stock. In March 2008, we redeemed 154,738,487 shares of class B common stock for $6,618 million and
159,657,751 shares of class C (series I) common stock for $6,828 million. Subsequent to our fiscal year end, on October 10, 2008, we completed the
redemption of 79,748,857 shares of class C (series II) common stock and 35,263,585 shares of our class C (series III) common stock held by Visa Europe for
$2,646 million, less dividends and certain other adjustments.
Dividends. On June 11, 2008, our board of directors declared a dividend in the aggregate amount of $0.105 per share of class A common stock
(determined in the case of class B and class C common stock on an as-converted basis) resulting in a payment of $93 million on August 29, 2008. On
October 14, 2008 our board of directors declared a dividend in the aggregate amount of $0.105 per share of class A common stock (determined in the case of
class B and class C common stock on an as-coverted basis). We expect to pay approximately $80 million in connection with this dividend in December 2008.
See Note 16—Stockholders' Equity and Redeemable Shares to our consolidated financial statements included elsewhere in this report for further information
regarding the dividend declarations. We intend to continue paying quarterly dividends in cash, subject to approval by our board of directors, at an annual rate
equal to $0.42 per share of class A common stock (representing an ongoing quarterly rate equal to $0.105 per share). Class B and class C common stock will
share ratably on an as-converted basis in such future dividends.
Visa Europe put-call option agreement. We have granted Visa Europe a put option which, if exercised, will require us to purchase all of the outstanding
shares of capital stock of Visa Europe from its members. Visa Europe may exercise the put option at any time after March 25, 2009. The purchase price of the
Visa Europe shares under the put option is based upon a formula that, subject to certain adjustments, applies the 12-month forward price-to-earnings multiple
applicable to our common stock at the time the option is exercised to Visa Europe's projected sustainable adjusted net operating income for the same 12-
month period. Upon exercise of the put option, we will be obligated, subject only to regulatory approvals and other limited conditions, to pay the purchase
price within 285 days in cash or, at our option, with a combination of cash and shares of our publicly tradable common stock. The portion of the purchase
price we will be able to pay in stock will initially be limited to 43.8% based upon the redemption of class C (series I) common stock and will be reduced to the
extent of any further redemptions of, or exceptions made by the directors to the transfer restrictions applicable to, the class C (series I) common stock. We
must pay the purchase price in cash if the settlement of the put option occurs after March 25, 2011.
We will incur a substantial financial obligation if Visa Europe exercises the put option, and we may need to obtain third-party financing, either by
borrowing funds or undertaking a subsequent equity offering in order to fund this payment, which would be due 285 days after exercise. At September 30,
2008, the fair value of the put option liability was $346 million. While this amount represents the fair value of the put option at September 30, 2008, it does
not represent the actual purchase price that we
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