Under the terms of the U.S. retrospective responsibility plan, the Company maintains an escrow account from which settlements of, or judgments in, certain litigation referred to as the “U.S. covered litigation” are paid. The escrow funds are held in money market investments along with interest income earned, less applicable taxes, and are classified as restricted cash equivalents on the consolidated balance sheets.

On December 13, 2019, the district court entered the final judgment order approving the Amended Settlement Agreement with the Damages Class plaintiffs in the Interchange Multidistrict Litigation proceedings. A takedown payment of approximately $467 million was received on December 27, 2019, and deposited into the Company’s litigation escrow account. The deposit into the litigation escrow account and reestablishment of a prior accrual to address opt-out claims was recorded during the nine months ended June 30, 2020. The accrual related to the U.S. covered litigation could be either higher or lower than the litigation escrow account balance. See Note 14—Legal Matters.


	Nine Months Ended June 30,
	2020		2019
	(in millions)
Balance at beginning of period	$	1,205	$	1,491
Return of takedown payment to the litigation escrow account	467		—
Payments to class plaintiffs’ settlement fund⁽¹⁾	—		(600)
Payments to opt-out merchants⁽¹⁾ and interest earned on escrow funds	(524)		11
Balance at end of period	$	1,148	$	902

Visa Inc., Visa International and Visa Europe are parties to certain existing and potential litigation relating to the setting of multilateral interchange fee rates in the Visa Europe territory (the “VE territory covered litigation”). Under the terms of the Europe retrospective responsibility plan, the Company is entitled to recover certain losses resulting from VE territory covered litigation (the “VE territory covered losses”) through a periodic adjustment to the class A common stock conversion rates applicable to the UK&I and Europe preferred stock. VE territory covered losses are recorded in “right to recover for covered losses” within equity before the corresponding adjustment to the applicable conversion rate is effected. Adjustments to the conversion rate may be executed once in any six-month period unless a single, individual loss greater than €20 million is incurred, in which case, the six-month limitation does not apply. When the adjustment to the conversion rate is made, the amount previously recorded in “right to recover for covered losses” as contra-equity is then recorded against the book value of the preferred stock within stockholders’ equity.

During the three and nine months ended June 30, 2020, the Company recovered $164 million of VE territory covered losses through adjustments to the class A common stock conversion rates applicable to the UK&I and Europe preferred stock. The conversion rates applicable to the UK&I and Europe preferred stock were reduced from 12.936 and 13.884, respectively, as of September 30, 2019 to 12.775 and 13.722, respectively, as of June 30, 2020.



	Preferred Stock						Right to Recover for Covered Losses
	UK&I		Europe
	(in millions)
Balance as of September 30, 2019	$	2,285	$	3,177	$	(171)
VE territory covered losses incurred⁽¹⁾	—		—		(22)
Recovery through conversion rate adjustment⁽²⁾	(72)		(92)		169
Balance as of June 30, 2020	$	2,213	$	3,085	$	(24)

⁽²⁾Adjustment to right to recover for covered losses for the conversion rate adjustment differs from the actual recovered amount due to differences in foreign exchange rates between the time the losses were incurred and the subsequent recovery through the conversion rate adjustment.

The following table sets forth the as-converted value of the preferred stock available to recover VE territory covered losses compared to the book value of preferred shares recorded in stockholders’ equity within the Company’s consolidated balance sheets as of June 30, 2020 and September 30, 2019:


	June 30, 2020						September 30, 2019
	As-Converted Value of Preferred Stock^(1),(2)		Book Value of Preferred Stock⁽¹⁾		As-Converted Value of Preferred Stock^(1),(3)		Book Value of Preferred Stock⁽¹⁾
	(in millions)
UK&I preferred stock	$	6,121	$	2,213	$	5,519	$	2,285
Europe preferred stock	8,368		3,085		7,539		3,177
Total	14,489		5,298		13,058		5,462
Less: right to recover for covered losses	(24)		(24)		(171)		(171)
Total recovery for covered losses available	$	14,465	$	5,274	$	12,887	$	5,291

⁽²⁾The as-converted value of preferred stock is calculated as the product of: (a) 2 million and 3 million shares of the UK&I and Europe preferred stock outstanding, respectively, as of June 30, 2020; (b) 12.775 and 13.722, the class A common stock conversion rate applicable to the UK&I and Europe preferred stock as of June 30, 2020, respectively; and (c) $193.17, Visa’s class A common stock closing stock price as of June 30, 2020.

⁽³⁾The as-converted value of preferred stock is calculated as the product of: (a) 2 million and 3 million shares of the UK&I and Europe preferred stock outstanding, respectively, as of September 30, 2019; (b) 12.936 and 13.884, the class A common stock conversion rate applicable to the UK&I and Europe preferred stock as of September 30, 2019, respectively; and (c) $172.01, Visa’s class A common stock closing stock price as of September 30, 2019.