Visa Inc. Accrued lirigation. The Company evaluates the likelihood of an unfavorable outcome in legal or regulatory proceedings to which it is a party and records a loss contingency when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These judgments are subjective, based on the status of such legal or regulatory proceedings, the merits of the Company's defenses and consultation with corporate and external legal counsel. Actual outcomes of these legal and regulatory proceedings may differ materially from the Company's estimates. Litigation accruals associated with settled obligations to be paid over periods longer than one year are recorded at the present value of future payment obligations. The obligation is accreted to its full payment value with the corresponding accretion charge included in interest expense on the consolidated statements of operations. The Company expenses legal costs as incurred in professional fees. The Company recorded litigation provisions of $4.1 billion and S7 million in fiscal 2012 and 2011, respectively. The litigation accrual is an estimate and is based on management's understanding of its litigation profile, the specifics of each case, advice of counsel to the extent appropriate and management's best estimate of incurred loss at the balance sheet date. The following table summarizes the activity related to accrued litigation for the years ended September 30, 2012 and 2011: Page 446 (in millions) 2012 2011 Balance at October 1 $ 425 $ 697 Provision for unsettled legal matters 4,100 Provision for settled legal matters Reclassincation of settded matters1) 12 Interest accretion on settied matters 11 Payments on settled matters (140) (302) Balance at September 30 $ 4,386 24425 Reclastification of amouet presiously recorded in acerued liablitiet. For the quarter ended June 30, 2012, the Company recorded a litigation provision of $4.1 billion, which increased its total reserve for the covered litigation from $285 million to $4.4 billion, to reflect the class plaintiffs' Settlement Agreement and the resolution of the Individual Plaintiffs' claims. (Excerpt from the company's 2012 annual report. Author Note: The Court granted preliminary approval of the Settlement Agreement on November 9, 2012.)