8-KOther EventsExhibits & Filings

VISA INC. 8-K Report, Corporate Update (Sep 11, 2014)

Filed September 11, 2014For Securities:V

Summary

This 8-K filing from Visa Inc. on September 11, 2014, reports the company's decision to deposit $450 million into a previously established litigation escrow account. This action is part of Visa's retrospective responsibility plan and triggers an adjustment to the conversion rate of its Class B shares. These shares are held by U.S. financial institutions. The primary impact of this deposit on investors is the potential dilution of Class B shares through a conversion rate adjustment. This adjustment effectively reduces the as-converted count of Class A common stock, which has a similar impact on earnings per share (EPS) as a stock repurchase. Investors should note this event impacts the capital structure and may affect reported EPS.

Key Highlights

  • 1Visa Inc. deposited $450 million into a litigation escrow account on September 11, 2014.
  • 2The deposit is made under the company's retrospective responsibility plan.
  • 3This action triggers an adjustment to the conversion rate of Visa's Class B shares.
  • 4Class B shares are held exclusively by U.S. financial institutions and their affiliates.
  • 5The conversion rate adjustment dilutes Class B shares.
  • 6The effect on earnings per share (EPS) is similar to a Class A common stock repurchase, due to a reduced as-converted share count.
  • 7The deposit is in accordance with Visa's current certificate of incorporation.

Frequently Asked Questions

The $450 million deposit is a funding obligation under Visa's retrospective responsibility plan, specifically related to litigation. It triggers a mechanism that adjusts the conversion rate of Class B shares.

The deposit leads to a dilution of Class B shares through an adjustment to their conversion rate. This means each Class B share will convert into fewer Class A shares than before.

The adjustment to the Class B conversion rate reduces the total as-converted count of Class A shares. This has a similar effect on EPS as if Visa had repurchased its Class A common stock, potentially increasing EPS by reducing the number of shares outstanding for EPS calculation purposes.

The Class B shares are held exclusively by U.S. financial institutions and their affiliates and successors.