Visa 2009 Annual Report Download - page 85

Table of Contents
VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2009
(in millions, except as noted)
The following table sets forth the changes in the Escrow Account:
2009 2008
(in millions)
Balance at October 1 $ 1,928 $ —
Funding under the Plan 1,800 3,000
American Express settlement payments (280) (1,085)
Discover settlement payments(1) (1,748) —
Interest earned, less applicable taxes 15 13
Balance at September 30 $ 1,715 1,928
Less: Current portion of Escrow Account (1,365) (1,298)
Long-term portion of Escrow Account $ 350 630
(1) The Company made payments totaling $1.9 billion related to the Discover settlement during fiscal 2009. Of the $1.9 billion payment, $1.7 billion was
funded through the Escrow Account under the Plan and $145 million, $65 million of which was reimbursed by Morgan Stanley evenly over the four
fiscal 2009 quarters, was funded from the Company's operating cash.
An accrual for covered litigation is recorded when loss is deemed to be probable and reasonably estimable. In making this determination, the Company
evaluates information including funding decisions made by the litigation committee. The accrual related to covered litigation could be either higher or lower
than the Escrow Account balance.
The Company, at the request of the litigation committee, may conduct additional sales of class A common stock in order to increase the size of the
Escrow Account, in which case the conversion rate of the class B into class A common stock will be subject to additional dilutive adjustments to the extent of
the proceeds from those sales. To the extent that amounts available under the escrow arrangement and agreements in the Plan are insufficient to fully resolve
the covered litigation, the Company will use commercially reasonable efforts to enforce the indemnification obligations of Visa U.S.A.'s members for such
excess amount, including but not limited to enforcing indemnification obligations pursuant to Visa U.S.A.'s certificate of incorporation and bylaws and in
accordance with their membership agreements.
Visa Inc. has entered into a loss sharing agreement with Visa U.S.A., Visa International and certain Visa U.S.A. members. The loss sharing agreement
provides for the indemnification of Visa U.S.A., Visa International and, in certain circumstances, Visa Inc. with respect to: (i) the amount of a final judgment
paid by Visa U.S.A. or Visa International in the covered litigation after the operation of the interchange judgment sharing agreement, plus any amounts
reimbursable to the interchange judgment sharing agreement signatories; or (ii) the damages portion of a settlement of a covered litigation that is approved as
required under Visa U.S.A.'s certificate of incorporation by the vote of Visa U.S.A.'s specified voting members. The several obligation of each bank that is a
party to the loss sharing agreement will equal the amount of any final judgment enforceable against Visa U.S.A., Visa International or any other signatory to
the interchange judgment sharing agreement, or the amount of any approved settlement of a covered litigation, multiplied by such bank's then-current
membership proportion as calculated in accordance with Visa U.S.A.'s certificate of incorporation.
Visa U.S.A. and Visa International also entered into an interchange judgment sharing agreement with certain Visa U.S.A. members that have been
named as defendants in the interchange litigation.
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