8-KOther EventsExhibits & Filings

VISA INC. 8-K Report, Corporate Update (Dec 23, 2011)

Filed December 23, 2011For Securities:V

Summary

Visa Inc. (V) has filed an 8-K report on December 23, 2011, announcing a significant event related to its litigation escrow account. The company has decided to deposit $1.565 billion into this account, which was previously established under its retrospective responsibility plan. This action is expected to impact the value of Visa's Class B shares, which are held by U.S. financial institutions, by reducing their as-converted share count. This reduction in shares will have a similar effect on earnings per share as a stock repurchase of Class A common stock.

Key Highlights

  • 1Visa Inc. is depositing $1.565 billion into its litigation escrow account.
  • 2This deposit is made under the company's retrospective responsibility plan.
  • 3The Class B shares, held by U.S. financial institutions, will have their as-converted share count adjusted downwards.
  • 4This adjustment to Class B shares will effectively reduce the total share count, impacting earnings per share.
  • 5The funds for this deposit will come from Visa's existing $2 billion Class A repurchase program.
  • 6The use of these funds will exhaust the remaining amount allocated to the Class A repurchase program.
  • 7This event has the same financial impact on EPS as a share buyback of Class A common stock.

Frequently Asked Questions

The deposit is made into Visa's litigation escrow account as part of its retrospective responsibility plan, likely to cover potential liabilities or settlements related to ongoing litigation.

For Class B shareholders, the number of 'as-converted' shares will decrease. For Class A shareholders and the market in general, this action will have a similar impact on earnings per share as if Visa had repurchased its own Class A stock, as the overall diluted share count will be reduced.

The $1.565 billion will be drawn from Visa's existing $2 billion Class A share repurchase program, effectively utilizing the remaining funds designated for that program.

While the funds are being diverted from the Class A repurchase program, the action itself has a similar effect on earnings per share as a repurchase. The company is still executing actions that reduce its share count.