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VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2013
1720 by the Judicial Panel on Multidistrict Litigation or otherwise included at any time in MDL
1720 by order of any court of competent jurisdiction.
Litigation escrow agreement. In accordance with the litigation escrow agreement, the Company
maintains an escrow account, from which settlements of, or judgments in, the covered litigation are
paid. The amount of the escrow is determined by the board of directors and the Company’s litigation
committee, all members of which are affiliated with, or act for, certain Visa U.S.A. members. The
escrow funds are held in money market investments along with the interest earned, less applicable
taxes, and are classified as restricted cash on the consolidated balance sheets.
The following table sets forth the changes in the litigation escrow account:
Fiscal 2013 Fiscal 2012
(in millions)
Balance at October 1 ............................................. $ 4,432 $ 2,857
Payments to settlement funds:(1)
Class plaintiffs .................................................. (4,033) —
Individual plaintiffs ............................................... (350) —
Payments to American Express ...................................... —(140)
Deposits into the litigation escrow account ............................. —1,715
Balance at September 30 .......................................... $49$ 4,432
(1) These payments are associated with the interchange multidistrict litigation. The settlement with the
class plaintiffs in these proceedings is subject to final court approval, which the Company cannot
assure will be received, and to the adjudication of any appeals. See Note 20—Legal Matters.
An accrual for the covered litigation and a change 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 recommendations made by the litigation
committee. The accrual related to the covered litigation could be either higher or lower than the
litigation escrow account balance. The Company did not record an additional accrual for the covered
litigation during fiscal 2013. See Note 20—Legal Matters.
Conversion feature. Under the terms of the plan, when the Company funds the litigation escrow
account, the shares of class B common stock are subject to dilution through an adjustment to the
conversion rate of the shares of class B common stock to shares of class A common stock. This has
the same effect on earnings per share as repurchasing the Company’s class A common stock, by
reducing the class B conversion rate and consequently the as-converted class A common stock share
count. See Note 14—Stockholders’ Equity.
Indemnification obligations. To the extent that amounts available under the litigation escrow
arrangement and other 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.
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