Visa 2013 Annual Report Download - page 123

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VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2013
could, in the future, incur judgments or fines or enter into settlements of claims that could have a
material adverse effect on the Company’s financial position, results of operations or cash flows. From
time to time, the Company may engage in settlement discussions or mediations with respect to one or
more of its outstanding litigation matters, either on its own behalf or collectively with other parties.
The litigation accrual is an estimate and is based on management’s understanding of its litigation
profile, the specifics of each case, advice of counsel to the extent appropriate and management’s best
estimate of incurred loss as of the balance sheet date.
The following table summarizes the activity related to accrued litigation.
Fiscal 2013 Fiscal 2012
(in millions)
Balance at October 1 ............................................... $ 4,386 $ 425
Provision for unsettled legal matters .................................... 34,100
Interest accretion on settled matters .................................... —1
Payments on unsettled matters(1) ....................................... (4,033) —
Payments on settled matters .......................................... (351) (140)
Balance at September 30 ............................................ $5$ 4,386
(1) On December 10, 2012, the Company paid approximately $4.0 billion from the litigation escrow
account into a settlement fund established pursuant to the definitive class settlement agreement in
the interchange multidistrict litigation. The settlement with the class plaintiffs is subject to final court
approval, which the Company cannot assure will be received, and to the adjudication of any
appeals. See further discussion below.
Covered Litigation
Visa Inc., Visa U.S.A. and Visa International are parties to certain legal proceedings that are
covered by the retrospective responsibility plan, which the Company refers to as the covered litigation.
See Note 3—Retrospective Responsibility Plan. An accrual for the covered litigation and a charge to
the litigation provision are recorded when loss is deemed to be probable and reasonably estimable. In
making this determination, the Company evaluates available information, including but not limited to
actions taken by the litigation committee. The total accrual related to the covered litigation could be
either higher or lower than the escrow account balance. The Company recorded an additional accrual
of $4.1 billion for the covered litigation during fiscal 2012, which increased its total reserve for the
covered litigation from $285 million to $4.4 billion. During fiscal 2013, the Company paid approximately
$4.4 billion from the litigation escrow account into settlement funds pursuant to settlement agreements
with individual and class plaintiffs in the interchange multidistrict litigation.
The Attridge Litigation
On December 8, 2004, a complaint was filed in California state court on behalf of an alleged class
of consumers asserting claims against Visa U.S.A., Visa International and MasterCard. The claims in
this action, Attridge v. Visa U.S.A. Inc., et al., allege that Visa’s bylaw 2.10(e) and MasterCard’s
Competitive Programs Policy, which prohibited their respective members from issuing American
Express or Discover cards, constitute unlawful restraints of trade under California’s Unfair Competition
115