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VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2015
• any case brought after October 22, 2015, by an opt out of the Rule 23(b)(3) Settlement
Class in MDL 1720 that arises out of facts or circumstances substantially similar to those
alleged in MDL 1720 and that is not transferred to or otherwise included in MDL 1720.
Litigation escrow agreement. In accordance with the litigation escrow agreement, the Company
maintains an escrow account, from which monetary liabilities from settlements of, or judgments in, the
U.S. 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 2015 Fiscal 2014
(in millions)
Balance at October 1 ............................................ $ 1,498 $49
Return of takedown payments from settlement fund into the litigation
escrow account. ........................................... —1,056
Deposits into the litigation escrow account ........................ —450
Payments to opt-out merchants(1) ............................... (426) (57)
Balance at September 30 ........................................ $ 1,072 $ 1,498
(1) These payments are associated with the interchange multidistrict litigation. See Note 20—Legal
Matters.
An accrual for the U.S. 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 U.S. covered litigation could be either higher or lower
than the litigation escrow account balance. The Company did not record an additional accrual for the
U.S. covered litigation during fiscal 2015. 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 economic effect on earnings per share as repurchasing the Company’s class A common
stock, because it reduces 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 U.S. 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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