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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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13-4172551
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(State or other jurisdiction of
incorporation or organization)
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(IRS Employer
Identification Number)
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2000 Purchase Street
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10577
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Purchase, NY
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(Zip Code)
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(Address of principal executive offices)
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Large accelerated filer
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x
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Accelerated filer
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o
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Non-accelerated filer
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o
(do not check if a smaller reporting company)
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Smaller reporting company
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o
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Emerging growth company
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o
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange Act.
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o
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Page
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•
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direct regulation of the payments industry (including regulatory, legislative and litigation activity with respect to interchange fees, surcharging and the extension of current regulatory activity to additional jurisdictions or products)
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•
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the impact of preferential or protective government actions
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•
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regulation to which we are directly or indirectly subject based on our participation in the payments industry (including anti-money laundering and economic sanctions, financial sector oversight, real-time account-based payment systems, issuer practice regulation and regulation of internet and digital transactions)
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•
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the impact of changes in laws, including the recent U.S. tax legislation, regulations and interpretations thereof, or challenges to our tax positions
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•
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regulation of privacy, data protection and security
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•
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potential or incurred liability and limitations on business resulting from litigation
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•
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the impact of competition in the global payments industry (including disintermediation and pricing pressure)
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•
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the challenges relating to rapid technological developments and changes
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•
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the challenges relating to operating an account-based payment system in addition to our core network and to working with new customers and end users
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•
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the impact of information security incidents, account data breaches, fraudulent activity, or service disruptions on our business
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•
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issues related to our relationships with our financial institution customers (including loss of substantial business from significant customers, competitor relationships with our customers and banking industry consolidation)
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•
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the impact of our relationships with other stakeholders, including merchants and governments
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•
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exposure to loss or illiquidity due to settlement guarantees and other significant third-party obligations
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•
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the impact of global economic and political events and conditions (including global financial market activity, declines in cross-border activity, negative trends in consumer spending, the effect of adverse currency fluctuation and the effects of the U.K.’s proposed withdrawal from the E.U.)
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•
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reputational impact, including impact related to brand perception
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•
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issues related to acquisition integration, strategic investments and entry into new businesses
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•
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issues related to our Class A common stock and corporate governance structure
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March 31, 2018
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December 31, 2017
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||||
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(in millions, except per share data)
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||||||
ASSETS
|
|
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|
||||
Cash and cash equivalents
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$
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6,890
|
|
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$
|
5,933
|
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Restricted cash for litigation settlement
|
548
|
|
|
546
|
|
||
Investments
|
1,378
|
|
|
1,849
|
|
||
Accounts receivable
|
2,122
|
|
|
1,969
|
|
||
Settlement due from customers
|
1,531
|
|
|
1,375
|
|
||
Restricted security deposits held for customers
|
965
|
|
|
1,085
|
|
||
Prepaid expenses and other current assets
|
1,273
|
|
|
1,040
|
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||
Total Current Assets
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14,707
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|
|
13,797
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|
||
Property, plant and equipment, net of accumulated depreciation of $748 and $714, respectively
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839
|
|
|
829
|
|
||
Deferred income taxes
|
350
|
|
|
250
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||
Goodwill
|
3,104
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|
|
3,035
|
|
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Other intangible assets, net of accumulated amortization of $1,173 and $1,157, respectively
|
1,118
|
|
|
1,120
|
|
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Other assets
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2,826
|
|
|
2,298
|
|
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Total Assets
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$
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22,944
|
|
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$
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21,329
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LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND EQUITY
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|
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|
||||
Accounts payable
|
$
|
370
|
|
|
$
|
933
|
|
Settlement due to customers
|
1,280
|
|
|
1,343
|
|
||
Restricted security deposits held for customers
|
965
|
|
|
1,085
|
|
||
Accrued litigation
|
828
|
|
|
709
|
|
||
Accrued expenses
|
4,501
|
|
|
3,931
|
|
||
Other current liabilities
|
1,004
|
|
|
792
|
|
||
Total Current Liabilities
|
8,948
|
|
|
8,793
|
|
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Long-term debt
|
6,469
|
|
|
5,424
|
|
||
Deferred income taxes
|
64
|
|
|
106
|
|
||
Other liabilities
|
1,661
|
|
|
1,438
|
|
||
Total Liabilities
|
17,142
|
|
|
15,761
|
|
||
|
|
|
|
||||
Commitments and Contingencies
|
|
|
|
||||
|
|
|
|
||||
Redeemable Non-controlling Interests
|
71
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|
|
71
|
|
||
|
|
|
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||||
Stockholders’ Equity
|
|
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|
||||
Class A common stock, $0.0001 par value; authorized 3,000 shares, 1,384 and 1,382 shares issued and 1,034 and 1,040 outstanding, respectively
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—
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|
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—
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|
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Class B common stock, $0.0001 par value; authorized 1,200 shares, 14 and 14 issued and outstanding, respectively
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—
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—
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Additional paid-in-capital
|
4,367
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|
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4,365
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|
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Class A treasury stock, at cost, 350 and 342 shares, respectively
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(22,143
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)
|
|
(20,764
|
)
|
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Retained earnings
|
23,852
|
|
|
22,364
|
|
||
Accumulated other comprehensive income (loss)
|
(373
|
)
|
|
(497
|
)
|
||
Total Stockholders’ Equity
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5,703
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|
|
5,468
|
|
||
Non-controlling interests
|
28
|
|
|
29
|
|
||
Total Equity
|
5,731
|
|
|
5,497
|
|
||
Total Liabilities, Redeemable Non-controlling Interests and Equity
|
$
|
22,944
|
|
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$
|
21,329
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|
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Three Months Ended March 31,
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||||||
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2018
|
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2017
|
||||
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(in millions, except per share data)
|
||||||
Net Revenue
|
$
|
3,580
|
|
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$
|
2,734
|
|
Operating Expenses
|
|
|
|
||||
General and administrative
|
1,294
|
|
|
951
|
|
||
Advertising and marketing
|
224
|
|
|
170
|
|
||
Depreciation and amortization
|
120
|
|
|
92
|
|
||
Provision for litigation settlements
|
117
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|
|
15
|
|
||
Total operating expenses
|
1,755
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|
|
1,228
|
|
||
Operating income
|
1,825
|
|
|
1,506
|
|
||
Other Income (Expense)
|
|
|
|
||||
Investment income
|
17
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|
|
15
|
|
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Interest expense
|
(43
|
)
|
|
(39
|
)
|
||
Other income (expense), net
|
4
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|
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(4
|
)
|
||
Total other income (expense)
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(22
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)
|
|
(28
|
)
|
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Income before income taxes
|
1,803
|
|
|
1,478
|
|
||
Income tax expense
|
311
|
|
|
397
|
|
||
Net Income
|
$
|
1,492
|
|
|
$
|
1,081
|
|
|
|
|
|
||||
Basic Earnings per Share
|
$
|
1.42
|
|
|
$
|
1.00
|
|
Basic Weighted-Average Shares Outstanding
|
1,051
|
|
|
1,078
|
|
||
Diluted Earnings per Share
|
$
|
1.41
|
|
|
$
|
1.00
|
|
Diluted Weighted-Average Shares Outstanding
|
1,057
|
|
|
1,082
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
|
(in millions)
|
|||||||
Net Income
|
|
$
|
1,492
|
|
|
$
|
1,081
|
|
Other comprehensive income (loss):
|
|
|
|
|
||||
Foreign currency translation adjustments
|
|
161
|
|
|
86
|
|
||
Income tax effect
|
|
(2
|
)
|
|
(1
|
)
|
||
Foreign currency translation adjustments, net of income tax effect
|
|
159
|
|
|
85
|
|
||
|
|
|
|
|
||||
Translation adjustments on net investment hedge
|
|
(45
|
)
|
|
(34
|
)
|
||
Income tax effect
|
|
12
|
|
|
12
|
|
||
Translation adjustments on net investment hedge, net of income tax effect
|
|
(33
|
)
|
|
(22
|
)
|
||
|
|
|
|
|
||||
Defined benefit pension and other postretirement plans
|
|
(1
|
)
|
|
(2
|
)
|
||
Income tax effect
|
|
—
|
|
|
1
|
|
||
Defined benefit pension and other postretirement plans, net of income tax effect
|
|
(1
|
)
|
|
(1
|
)
|
||
|
|
|
|
|
||||
Investment securities available-for-sale
|
|
(1
|
)
|
|
(1
|
)
|
||
Income tax effect
|
|
—
|
|
|
—
|
|
||
Investment securities available-for-sale, net of income tax effect
|
|
(1
|
)
|
|
(1
|
)
|
||
|
|
|
|
|
||||
Other comprehensive income (loss), net of tax
|
|
124
|
|
|
61
|
|
||
Comprehensive Income
|
|
$
|
1,616
|
|
|
$
|
1,142
|
|
|
Stockholders’ Equity
|
|
|
|
|
||||||||||||||||||||||||||
|
Common Stock
|
|
Additional
Paid-In Capital |
|
Class A
Treasury Stock |
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Non-
Controlling
Interests
|
|
Total Equity
|
||||||||||||||||||
|
Class A
|
|
Class B
|
|
|
|
|||||||||||||||||||||||||
|
(in millions, except per share data)
|
||||||||||||||||||||||||||||||
Balance at December 31, 2017
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,365
|
|
|
$
|
(20,764
|
)
|
|
$
|
22,364
|
|
|
$
|
(497
|
)
|
|
$
|
29
|
|
|
$
|
5,497
|
|
Adoption of revenue standard
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
441
|
|
|
—
|
|
|
—
|
|
|
441
|
|
||||||||
Adoption of intra-entity asset transfers standard
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(183
|
)
|
|
—
|
|
|
—
|
|
|
(183
|
)
|
||||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,492
|
|
|
—
|
|
|
—
|
|
|
1,492
|
|
||||||||
Activity related to non-controlling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
||||||||
Other comprehensive income (loss), net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
124
|
|
|
—
|
|
|
124
|
|
||||||||
Cash dividends declared on Class A and Class B common stock, $0.25 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(262
|
)
|
|
—
|
|
|
—
|
|
|
(262
|
)
|
||||||||
Purchases of treasury stock
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,383
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,383
|
)
|
||||||||
Share-based payments
|
—
|
|
|
—
|
|
|
2
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
||||||||
Balance at March 31, 2018
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,367
|
|
|
$
|
(22,143
|
)
|
|
$
|
23,852
|
|
|
$
|
(373
|
)
|
|
$
|
28
|
|
|
$
|
5,731
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(in millions)
|
||||||
Operating Activities
|
|
|
|
||||
Net income
|
$
|
1,492
|
|
|
$
|
1,081
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Amortization of customer and merchant incentives
|
287
|
|
|
266
|
|
||
Depreciation and amortization
|
120
|
|
|
92
|
|
||
Share-based compensation
|
43
|
|
|
39
|
|
||
Deferred income taxes
|
(46
|
)
|
|
8
|
|
||
Other
|
1
|
|
|
9
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(80
|
)
|
|
(120
|
)
|
||
Settlement due from customers
|
(156
|
)
|
|
8
|
|
||
Prepaid expenses
|
(375
|
)
|
|
(660
|
)
|
||
Accrued litigation and legal settlements
|
111
|
|
|
13
|
|
||
Restricted security deposits held for customers
|
(141
|
)
|
|
(19
|
)
|
||
Accounts payable
|
(62
|
)
|
|
57
|
|
||
Settlement due to customers
|
(63
|
)
|
|
(124
|
)
|
||
Accrued expenses
|
(140
|
)
|
|
10
|
|
||
Net change in other assets and liabilities
|
44
|
|
|
67
|
|
||
Net cash provided by operating activities
|
1,035
|
|
|
727
|
|
||
Investing Activities
|
|
|
|
||||
Purchases of investment securities available-for-sale
|
(108
|
)
|
|
(205
|
)
|
||
Purchases of investments held-to-maturity
|
(123
|
)
|
|
(377
|
)
|
||
Proceeds from sales of investment securities available-for-sale
|
198
|
|
|
89
|
|
||
Proceeds from maturities of investment securities available-for-sale
|
108
|
|
|
151
|
|
||
Proceeds from maturities of investments held-to-maturity
|
430
|
|
|
320
|
|
||
Purchases of property, plant and equipment
|
(82
|
)
|
|
(64
|
)
|
||
Capitalized software
|
(44
|
)
|
|
(30
|
)
|
||
Other investing activities
|
(12
|
)
|
|
(7
|
)
|
||
Net cash provided by (used in) investing activities
|
367
|
|
|
(123
|
)
|
||
Financing Activities
|
|
|
|
||||
Purchases of treasury stock
|
(1,352
|
)
|
|
(962
|
)
|
||
Dividends paid
|
(263
|
)
|
|
(238
|
)
|
||
Proceeds from debt
|
991
|
|
|
—
|
|
||
Tax withholdings related to share-based payments
|
(77
|
)
|
|
(46
|
)
|
||
Cash proceeds from exercise of stock options
|
40
|
|
|
19
|
|
||
Other financing activities
|
(4
|
)
|
|
(10
|
)
|
||
Net cash used in financing activities
|
(665
|
)
|
|
(1,237
|
)
|
||
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents
|
95
|
|
|
35
|
|
||
Net increase (decrease) cash, cash equivalents, restricted cash and restricted cash equivalents
|
832
|
|
|
(598
|
)
|
||
Cash, cash equivalents, restricted cash and restricted cash equivalents - beginning of period
|
7,592
|
|
|
8,273
|
|
||
Cash, cash equivalents, restricted cash and restricted cash equivalents - end of period
|
$
|
8,424
|
|
|
$
|
7,675
|
|
|
Three Months Ended March 31, 2018
|
||||||||||
|
Balances excluding revenue standard
|
|
Impact of revenue standard
|
|
As reported
|
||||||
|
(in millions)
|
||||||||||
Net Revenue
|
$
|
3,473
|
|
|
$
|
107
|
|
|
$
|
3,580
|
|
|
|
|
|
|
|
||||||
Operating Expenses
|
|
|
|
|
|
||||||
General and administrative
|
1,299
|
|
|
(5
|
)
|
|
1,294
|
|
|||
Advertising and marketing
|
184
|
|
|
40
|
|
|
224
|
|
|||
|
|
|
|
|
|
||||||
Income before income taxes
|
1,731
|
|
|
72
|
|
|
1,803
|
|
|||
Income tax expense
|
297
|
|
|
14
|
|
|
311
|
|
|||
Net Income
|
1,434
|
|
|
58
|
|
|
1,492
|
|
|
March 31, 2018
|
||||||||||
|
Balances excluding revenue standard
|
|
Impact of revenue standard
|
|
As reported
|
||||||
|
(in millions)
|
||||||||||
Assets
|
|
|
|
|
|
||||||
Accounts receivable
|
$
|
2,075
|
|
|
$
|
47
|
|
|
$
|
2,122
|
|
Prepaid expenses and other current assets
|
1,081
|
|
|
192
|
|
|
1,273
|
|
|||
Deferred income taxes
|
439
|
|
|
(89
|
)
|
|
350
|
|
|||
Other assets
|
2,088
|
|
|
738
|
|
|
2,826
|
|
|||
|
|
|
|
|
|
||||||
Liabilities
|
|
|
|
|
|
||||||
Accounts payable
|
808
|
|
|
(438
|
)
|
|
370
|
|
|||
Accrued expenses
|
4,045
|
|
|
456
|
|
|
4,501
|
|
|||
Other current liabilities
|
1,082
|
|
|
(78
|
)
|
|
1,004
|
|
|||
Other liabilities
|
1,203
|
|
|
458
|
|
|
1,661
|
|
|||
|
|
|
|
|
|
||||||
Equity
|
|
|
|
|
|
||||||
Retained earnings
|
23,362
|
|
|
490
|
|
|
23,852
|
|
|
Balance at December 31, 2017
|
|
Impact of revenue standard
|
|
Impact of intra-entity asset transfers standard
|
|
Balance at
January 1, 2018 |
||||||||
|
(in millions)
|
||||||||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Accounts receivable
|
$
|
1,969
|
|
|
$
|
44
|
|
|
$
|
—
|
|
|
$
|
2,013
|
|
Prepaid expenses and other current assets
|
1,040
|
|
|
172
|
|
|
(17
|
)
|
|
1,195
|
|
||||
Deferred income taxes
|
250
|
|
|
(82
|
)
|
|
186
|
|
|
354
|
|
||||
Other assets
|
2,298
|
|
|
660
|
|
|
(352
|
)
|
|
2,606
|
|
||||
Liabilities
|
|
|
|
|
|
|
|
||||||||
Accounts payable
|
933
|
|
|
(495
|
)
|
|
—
|
|
|
438
|
|
||||
Accrued expenses
|
3,931
|
|
|
481
|
|
|
—
|
|
|
4,412
|
|
||||
Other current liabilities
|
792
|
|
|
(44
|
)
|
|
—
|
|
|
748
|
|
||||
Other liabilities
|
1,438
|
|
|
411
|
|
|
—
|
|
|
1,849
|
|
||||
Equity
|
|
|
|
|
|
|
|
||||||||
Retained earnings
|
22,364
|
|
|
441
|
|
|
(183
|
)
|
|
22,622
|
|
•
|
domestic or cross-border transactions
|
•
|
geographic region or country in which the transaction occurs
|
•
|
volumes/transactions subject to tiered rates
|
•
|
processed or not processed by the Company
|
•
|
amount of usage of the Company’s other products or services
|
•
|
amount of rebates and incentives provided to customers
|
•
|
Switched transaction
revenue is generated from
the following products and services:
|
◦
|
Authorization is the process by which a transaction is routed to the issuer for approval. In certain circumstances, such as when the issuer’s systems are unavailable or cannot be contacted, Mastercard or others approve such transactions on behalf of the issuer in accordance with either the issuer’s instructions or applicable rules (also known as “stand-in”).
|
◦
|
Clearing is the determination and exchange of financial transaction information between issuers and acquirers after a transaction has been successfully conducted at the point of interaction. Transactions are cleared among customers through Mastercard’s central and regional processing systems.
|
◦
|
Settlement is facilitating the exchange of funds between parties.
|
•
|
Connectivity fees
are charged to issuers, acquirers and other financial institutions for network access, equipment and the transmission of authorization and settlement messages. These fees are based on the size of the data being transmitted and the number of connections to the Company’s network.
|
•
|
Other processing fees
include issuer and acquirer processing solutions; payment gateways for e-commerce merchants; mobile gateways for mobile initiated transactions; and safety and security.
|
•
|
Consulting, data analytic and research fees.
|
•
|
Safety and security services fees are for products and services offered to prevent, detect and respond to fraud and to ensure the safety of transactions made on Mastercard products.
|
•
|
Loyalty and rewards solutions fees are charged to issuers for benefits provided directly to consumers with Mastercard-branded cards, such as access to a global airline lounge network, global and local concierge services, individual insurance coverages, emergency card replacement, emergency cash advance services and a 24-hour cardholder service center. Loyalty and reward solution fees also include rewards campaigns and management services.
|
•
|
Program management services provided to prepaid card issuers consist of foreign exchange margin, commissions, load fees and ATM withdrawal fees paid by cardholders on the sale and encashment of prepaid cards.
|
•
|
Bank account-based payment services relating to automated clearing house (“ACH”) transactions and other ACH related services.
|
•
|
Other payment-related products and services, including account and transaction enhancement services, rules compliance and publications.
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(in millions, except per share data)
|
||||||
Numerator
|
|
|
|
||||
Net income
|
$
|
1,492
|
|
|
$
|
1,081
|
|
Denominator
|
|
|
|
||||
Basic weighted-average shares outstanding
|
1,051
|
|
|
1,078
|
|
||
Dilutive stock options and stock units
|
6
|
|
|
4
|
|
||
Diluted weighted-average shares outstanding
1
|
1,057
|
|
|
1,082
|
|
||
Earnings per Share
|
|
|
|
||||
Basic
|
$
|
1.42
|
|
|
$
|
1.00
|
|
Diluted
|
$
|
1.41
|
|
|
$
|
1.00
|
|
•
|
Restricted cash for litigation settlement
- The Company has restricted cash for litigation within a qualified settlement fund related to a preliminary settlement agreement for the U.S. merchant class litigation. The funds continue to be restricted for payments until the litigation matter is resolved. Refer to
Note 14 (Legal and Regulatory Proceedings)
.
|
•
|
Restricted security deposits held for customers
- The Company requires collateral from certain customers for settlement of their transactions. The majority of collateral for settlement is in the form of standby letters of credit and bank guarantees which are not recorded on the consolidated balance sheet. Additionally, the Company holds cash deposits and certificates of deposit from certain customers of Mastercard as collateral for settlement of their transactions, which are recorded as assets on the consolidated balance sheet. These assets are fully offset by corresponding liabilities included on the consolidated balance sheet. These security deposits are typically held for the duration of the agreement with the customers.
|
•
|
Other restricted cash balances
- The Company has other restricted cash balances which include contractually restricted deposits, as well as cash balances that are restricted based on the Company’s intention with regards to usage.
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
|
(in millions)
|
||||||
Cash and cash equivalents
|
$
|
5,933
|
|
|
$
|
6,721
|
|
Restricted cash and restricted cash equivalents
|
|
|
|
||||
Restricted cash for litigation settlement
|
546
|
|
|
543
|
|
||
Restricted security deposits held for customers
|
1,085
|
|
|
991
|
|
||
Prepaid expenses and other current assets
|
28
|
|
|
3
|
|
||
Other assets
|
—
|
|
|
15
|
|
||
Cash, cash equivalents, restricted cash and restricted cash equivalents - beginning of period
1
|
$
|
7,592
|
|
|
$
|
8,273
|
|
|
|
|
|
||||
|
March 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(in millions)
|
||||||
Cash and cash equivalents
|
$
|
6,890
|
|
|
$
|
6,006
|
|
Restricted cash and restricted cash equivalents
|
|
|
|
||||
Restricted cash for litigation settlement
|
548
|
|
|
543
|
|
||
Restricted security deposits held for customers
|
965
|
|
|
984
|
|
||
Prepaid expenses and other current assets
|
21
|
|
|
126
|
|
||
Other assets
|
—
|
|
|
16
|
|
||
Cash, cash equivalents, restricted cash and restricted cash equivalents - end of period
1
|
$
|
8,424
|
|
|
$
|
7,675
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||||||||||||||||||||||||||
|
Quoted Prices
in Active
Markets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Total
|
|
Quoted Prices
in Active
Markets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Total
|
||||||||||||||||
|
(in millions)
|
||||||||||||||||||||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Investment securities available for sale
1
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Municipal securities
|
$
|
—
|
|
|
$
|
14
|
|
|
$
|
—
|
|
|
$
|
14
|
|
|
$
|
—
|
|
|
$
|
17
|
|
|
$
|
—
|
|
|
$
|
17
|
|
Government and agency securities
|
89
|
|
|
54
|
|
|
—
|
|
|
143
|
|
|
81
|
|
|
104
|
|
|
—
|
|
|
185
|
|
||||||||
Corporate securities
|
—
|
|
|
757
|
|
|
—
|
|
|
757
|
|
|
—
|
|
|
876
|
|
|
—
|
|
|
876
|
|
||||||||
Asset-backed securities
|
—
|
|
|
55
|
|
|
—
|
|
|
55
|
|
|
—
|
|
|
70
|
|
|
—
|
|
|
70
|
|
||||||||
Equity securities
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||||||
Derivative instruments
2
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Foreign currency derivative assets
|
—
|
|
|
9
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
6
|
|
||||||||
Deferred compensation plan
3
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Deferred compensation assets
|
61
|
|
|
—
|
|
|
—
|
|
|
61
|
|
|
55
|
|
|
—
|
|
|
—
|
|
|
55
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Derivative instruments
2
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Foreign currency derivative liabilities
|
$
|
—
|
|
|
$
|
(37
|
)
|
|
$
|
—
|
|
|
$
|
(37
|
)
|
|
$
|
—
|
|
|
$
|
(30
|
)
|
|
$
|
—
|
|
|
$
|
(30
|
)
|
Deferred compensation plan
4
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Deferred compensation liabilities
|
(58
|
)
|
|
—
|
|
|
—
|
|
|
(58
|
)
|
|
(54
|
)
|
|
—
|
|
|
—
|
|
|
(54
|
)
|
|
March 31, 2018
|
|
December 31, 2017
|
||||||||||||||||||||||||||||
|
Amortized
Cost
|
|
Gross
Unrealized
Gain
|
|
Gross
Unrealized
Loss
|
|
Fair
Value
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gain
|
|
Gross
Unrealized
Loss
|
|
Fair
Value
|
||||||||||||||||
|
(in millions)
|
||||||||||||||||||||||||||||||
Municipal securities
|
$
|
14
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
14
|
|
|
$
|
17
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
17
|
|
Government and agency securities
|
143
|
|
|
—
|
|
|
—
|
|
|
143
|
|
|
185
|
|
|
—
|
|
|
—
|
|
|
185
|
|
||||||||
Corporate securities
|
757
|
|
|
1
|
|
|
(1
|
)
|
|
757
|
|
|
875
|
|
|
2
|
|
|
(1
|
)
|
|
876
|
|
||||||||
Asset-backed securities
|
55
|
|
|
—
|
|
|
—
|
|
|
55
|
|
|
70
|
|
|
—
|
|
|
—
|
|
|
70
|
|
||||||||
Equity securities
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||||||
Total
|
$
|
969
|
|
|
$
|
2
|
|
|
$
|
(1
|
)
|
|
$
|
970
|
|
|
$
|
1,147
|
|
|
$
|
3
|
|
|
$
|
(1
|
)
|
|
$
|
1,149
|
|
|
Available-For-Sale
|
||||||
|
Amortized
Cost
|
|
Fair Value
|
||||
|
(in millions)
|
||||||
Due within 1 year
|
$
|
256
|
|
|
$
|
256
|
|
Due after 1 year through 5 years
|
713
|
|
|
713
|
|
||
Due after 5 years through 10 years
|
—
|
|
|
—
|
|
||
Due after 10 years
|
—
|
|
|
—
|
|
||
No contractual maturity
1
|
—
|
|
|
1
|
|
||
Total
|
$
|
969
|
|
|
$
|
970
|
|
|
March 31,
2018 |
|
December 31,
2017 |
||||
|
(in millions)
|
||||||
Customer and merchant incentives
|
$
|
701
|
|
|
$
|
464
|
|
Prepaid income taxes
|
21
|
|
|
77
|
|
||
Other
|
551
|
|
|
499
|
|
||
Total prepaid expenses and other current assets
|
$
|
1,273
|
|
|
$
|
1,040
|
|
|
March 31,
2018 |
|
December 31,
2017 |
||||
|
(in millions)
|
||||||
Customer and merchant incentives
|
$
|
2,230
|
|
|
$
|
1,434
|
|
Nonmarketable equity investments
|
253
|
|
|
249
|
|
||
Prepaid income taxes
|
—
|
|
|
352
|
|
||
Income taxes receivable
|
156
|
|
|
178
|
|
||
Other
|
187
|
|
|
85
|
|
||
Total other assets
|
$
|
2,826
|
|
|
$
|
2,298
|
|
|
March 31,
2018 |
|
December 31,
2017 |
||||
|
(in millions)
|
||||||
Customer and merchant incentives
|
$
|
3,310
|
|
|
$
|
2,648
|
|
Personnel costs
|
312
|
|
|
613
|
|
||
Advertising
|
74
|
|
|
88
|
|
||
Income and other taxes
|
374
|
|
|
194
|
|
||
Other
|
431
|
|
|
388
|
|
||
Total accrued expenses
|
$
|
4,501
|
|
|
$
|
3,931
|
|
Notes
|
|
Issuance
Date
|
|
Interest Payment Terms
|
|
Maturity
Date
|
|
Aggregate Principal Amount
|
|
Stated
Interest Rate
|
|
Effective
Interest Rate
|
|
March 31,
2018 |
|
December 31,
2017 |
||||||||
|
|
|
|
|
|
|
|
(in millions, except percentages)
|
||||||||||||||||
2018 USD Notes
|
|
February 2018
|
|
Semi-annually
|
|
2028
|
|
$
|
500
|
|
|
3.500
|
%
|
|
3.598
|
%
|
|
$
|
500
|
|
|
$
|
—
|
|
|
|
|
|
|
|
2048
|
|
500
|
|
|
3.950
|
%
|
|
3.990
|
%
|
|
500
|
|
|
—
|
|
|||
|
|
|
|
|
|
|
|
$
|
1,000
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
2016 USD Notes
|
|
November 2016
|
|
Semi-annually
|
|
2021
|
|
$
|
650
|
|
|
2.000
|
%
|
|
2.236
|
%
|
|
650
|
|
|
650
|
|
||
|
|
|
|
|
|
2026
|
|
750
|
|
|
2.950
|
%
|
|
3.044
|
%
|
|
750
|
|
|
750
|
|
|||
|
|
|
|
|
|
2046
|
|
600
|
|
|
3.800
|
%
|
|
3.893
|
%
|
|
600
|
|
|
600
|
|
|||
|
|
|
|
|
|
|
|
$
|
2,000
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
2015 Euro Notes
|
|
December 2015
|
|
Annually
|
|
2022
|
|
€
|
700
|
|
|
1.100
|
%
|
|
1.265
|
%
|
|
862
|
|
|
839
|
|
||
|
|
|
|
|
|
2027
|
|
800
|
|
|
2.100
|
%
|
|
2.189
|
%
|
|
985
|
|
|
958
|
|
|||
|
|
|
|
|
|
2030
|
|
150
|
|
|
2.500
|
%
|
|
2.562
|
%
|
|
185
|
|
|
180
|
|
|||
|
|
|
|
|
|
|
|
€
|
1,650
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
2014 USD Notes
|
|
March 2014
|
|
Semi-annually
|
|
2019
|
|
$
|
500
|
|
|
2.000
|
%
|
|
2.178
|
%
|
|
500
|
|
|
500
|
|
||
|
|
|
|
|
|
2024
|
|
1,000
|
|
|
3.375
|
%
|
|
3.484
|
%
|
|
1,000
|
|
|
1,000
|
|
|||
|
|
|
|
|
|
|
|
$
|
1,500
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,532
|
|
|
5,477
|
|
||||||
Less: Unamortized discount and debt issuance costs
|
|
(63
|
)
|
|
(53
|
)
|
||||||||||||||||||
Long-term debt
|
|
$
|
6,469
|
|
|
$
|
5,424
|
|
|
|
|
|
|
|
|
|
||||||||
Board authorization dates
|
December
2017 |
|
December
2016 |
|
December
2015 |
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Date program became effective
|
March
2018
|
|
April
2017
|
|
February 2016
|
|
Total
|
||||||||
|
(in millions, except average price data)
|
||||||||||||||
Board authorization
|
$
|
4,000
|
|
|
$
|
4,000
|
|
|
$
|
4,000
|
|
|
$
|
12,000
|
|
Dollar value of shares repurchased during the three months ended March 31, 2017
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
962
|
|
|
$
|
962
|
|
Remaining authorization at December 31, 2017
|
$
|
4,000
|
|
|
$
|
1,234
|
|
|
$
|
—
|
|
|
$
|
5,234
|
|
Dollar value of shares repurchased during the three months ended March 31, 2018
|
$
|
118
|
|
|
$
|
1,234
|
|
|
$
|
—
|
|
|
$
|
1,352
|
|
Remaining authorization at March 31, 2018
|
$
|
3,882
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,882
|
|
Shares repurchased during the three months ended March 31, 2017
|
—
|
|
|
—
|
|
|
8.8
|
|
|
8.8
|
|
||||
Average price paid per share during the three months ended March 31, 2017
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
109.06
|
|
|
$
|
109.06
|
|
Shares repurchased during the three months ended March 31, 2018
|
0.7
|
|
|
7.2
|
|
|
—
|
|
|
7.9
|
|
||||
Average price paid per share during the three months ended March 31, 2018
|
$
|
175.87
|
|
|
$
|
171.11
|
|
|
$
|
—
|
|
|
$
|
171.52
|
|
Cumulative shares repurchased through March 31, 2018
|
0.7
|
|
|
28.2
|
|
|
40.4
|
|
|
69.3
|
|
||||
Cumulative average price paid per share
|
$
|
175.87
|
|
|
$
|
141.99
|
|
|
$
|
99.10
|
|
|
$
|
117.30
|
|
|
Outstanding Shares
|
||||
|
Class A
|
|
Class B
|
||
|
(in millions)
|
||||
Balance at December 31, 2017
|
1,039.7
|
|
|
14.1
|
|
Purchases of treasury stock
|
(7.9
|
)
|
|
—
|
|
Share-based payments
|
1.5
|
|
|
—
|
|
Conversion of Class B to Class A common stock
|
0.3
|
|
|
(0.3
|
)
|
Balance at March 31, 2018
|
1,033.6
|
|
|
13.8
|
|
|
Foreign Currency Translation Adjustments
1
|
|
Translation Adjustments on Net Investment Hedge
2
|
|
Defined Benefit Pension and Other Postretirement Plans
|
|
Investment Securities Available-for-Sale
|
|
Accumulated Other Comprehensive Income (Loss)
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Balance at December 31, 2016
|
$
|
(949
|
)
|
|
$
|
12
|
|
|
$
|
11
|
|
|
$
|
2
|
|
|
$
|
(924
|
)
|
Other comprehensive income (loss) for the period
3
|
85
|
|
|
(22
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
61
|
|
|||||
Balance at March 31, 2017
|
$
|
(864
|
)
|
|
$
|
(10
|
)
|
|
$
|
10
|
|
|
$
|
1
|
|
|
$
|
(863
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance at December 31, 2017
|
$
|
(382
|
)
|
|
$
|
(141
|
)
|
|
$
|
25
|
|
|
$
|
1
|
|
|
$
|
(497
|
)
|
Other comprehensive income (loss) for the period
3
|
159
|
|
|
(33
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
124
|
|
|||||
Balance at March 31, 2018
|
$
|
(223
|
)
|
|
$
|
(174
|
)
|
|
$
|
24
|
|
|
$
|
—
|
|
|
$
|
(373
|
)
|
1
|
During the
three months ended March 31, 2018
and 2017, the decrease in other comprehensive loss related to foreign currency translation adjustments was driven primarily by the appreciation of the euro.
|
3
|
During the
three months ended March 31, 2018
and
2017
, gains and losses reclassified from accumulated other comprehensive income to the consolidated statement of operations were not significant.
|
|
Grants in 2018
|
|
Weighted-Average
Grant-Date
Fair Value
|
|
(in millions)
|
|
(per option/unit)
|
Non-qualified stock options
|
0.9
|
|
$41
|
Restricted stock units
|
0.9
|
|
$170
|
Performance stock units
|
0.1
|
|
$226
|
|
March 31,
2018 |
|
December 31,
2017 |
||||
|
(in millions)
|
||||||
Gross settlement exposure
|
$
|
47,157
|
|
|
$
|
47,002
|
|
Collateral held for settlement exposure
|
(4,816
|
)
|
|
(4,360
|
)
|
||
Net uncollateralized settlement exposure
|
$
|
42,341
|
|
|
$
|
42,642
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||||||||||
|
Notional
|
|
Estimated Fair
Value
|
|
Notional
|
|
Estimated Fair
Value
|
||||||||
|
(in millions)
|
||||||||||||||
Commitments to purchase foreign currency
|
$
|
58
|
|
|
$
|
1
|
|
|
$
|
27
|
|
|
$
|
—
|
|
Commitments to sell foreign currency
|
1,041
|
|
|
(32
|
)
|
|
968
|
|
|
(26
|
)
|
||||
Options to sell foreign currency
|
31
|
|
|
3
|
|
|
27
|
|
|
2
|
|
||||
Balance sheet location
|
|
|
|
|
|
|
|
||||||||
Accounts receivable
1
|
|
|
$
|
9
|
|
|
|
|
$
|
6
|
|
||||
Other current liabilities
1
|
|
|
(37
|
)
|
|
|
|
(30
|
)
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(in millions)
|
||||||
Foreign currency derivative contracts
|
|
|
|
||||
General and administrative
|
$
|
(21
|
)
|
|
$
|
(28
|
)
|
•
|
adding new players to our customer base in new and existing markets by working with partners such as governments, merchants, technology companies (such as digital players and mobile providers) and other businesses
|
•
|
expanding capabilities based on our core network into new areas to provide opportunities for electronic payments and to capture more payment flows, such as B2C transfers, B2B transfers, P2P transfers, including in the areas of transit and government disbursements
|
•
|
driving acceptance at merchants of all sizes
|
•
|
broadening financial inclusion for the unbanked and underbanked
|
•
|
creating and acquiring differentiated products to provide unique, innovative solutions that we bring to market, such as real-time account-based payments, Mastercard B2B Hub™ and Mastercard Send™ platforms
|
•
|
providing value-added services across safety and security, consulting, data analytics and loyalty
|
|
Three Months Ended March 31,
|
|
Increase/(Decrease)
|
||||||
|
2018
|
|
2017
|
|
|||||
|
($ in millions, except per share data)
|
||||||||
Net revenue
|
$
|
3,580
|
|
|
$
|
2,734
|
|
|
31%
|
|
|
|
|
|
|
||||
Operating expenses
|
$
|
1,755
|
|
|
$
|
1,228
|
|
|
43%
|
Operating income
|
$
|
1,825
|
|
|
$
|
1,506
|
|
|
21%
|
Operating margin
|
51.0
|
%
|
|
55.1
|
%
|
|
(4.1) ppt
|
||
|
|
|
|
|
|
||||
Income tax expense
|
$
|
311
|
|
|
$
|
397
|
|
|
(22)%
|
Effective income tax rate
|
17.3
|
%
|
|
26.9
|
%
|
|
(9.6) ppt
|
||
|
|
|
|
|
|
||||
Net income
|
$
|
1,492
|
|
|
$
|
1,081
|
|
|
38%
|
|
|
|
|
|
|
||||
Diluted earnings per share
|
$
|
1.41
|
|
|
$
|
1.00
|
|
|
41%
|
Diluted weighted-average shares outstanding
|
1,057
|
|
|
1,082
|
|
|
(2)%
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
Increase/(Decrease)
|
||||||||
|
2018
|
|
2017
|
|
As adjusted
|
|
Currency-neutral
|
||||
|
($ in millions, except per share data)
|
||||||||||
Net revenue
|
$
|
3,580
|
|
|
$
|
2,734
|
|
|
31%
|
|
27%
|
|
|
|
|
|
|
|
|
||||
Adjusted operating expenses
|
$
|
1,638
|
|
|
$
|
1,213
|
|
|
35%
|
|
32%
|
|
|
|
|
|
|
|
|
||||
Adjusted operating margin
|
54.2
|
%
|
|
55.6
|
%
|
|
(1.4) ppt
|
|
(1.8) ppt
|
||
|
|
|
|
|
|
|
|
||||
Adjusted effective income tax rate
|
17.7
|
%
|
|
26.9
|
%
|
|
(9.2) ppt
|
|
(9.2) ppt
|
||
|
|
|
|
|
|
|
|
||||
Adjusted net income
|
$
|
1,581
|
|
|
$
|
1,091
|
|
|
45%
|
|
39%
|
|
|
|
|
|
|
|
|
||||
Adjusted diluted earnings per share
|
$
|
1.50
|
|
|
$
|
1.01
|
|
|
49%
|
|
43%
|
•
|
Net revenue increased
31%
, or
27%
on a currency-neutral basis, versus the comparable
period
in
2017
. Current year results include
4
percentage points of growth from the adoption of the new revenue standard and
2.5
percentage points of growth from acquisitions on a currency-neutral basis. The remaining
20
percentage points of growth was primarily driven by:
|
•
|
Operating expenses increased
43%
for the
three months ended March 31, 2018
, versus the comparable
period
in
2017
. Excluding the impact of the Special Items (defined below), adjusted operating expenses increased
35%
, or
32%
on a currency-neutral basis, for the
three months ended March 31, 2018
, versus the comparable
period
in
2017
. Current year results include
8
percentage points of growth from acquisitions,
8
percentage points of growth from our $
100 million
contribution to the Mastercard Center for Inclusive Growth, a non-profit charitable organization, and
3
percentage points of growth from the adoption of the new revenue guidance. The remaining
12
percentage points of growth is primarily related to our continued investment in strategic initiatives and higher operating costs.
|
•
|
The effective income tax rate was
17.3%
for the
three months ended March 31, 2018
, versus
26.9%
for the comparable
period
in
2017
. The lower effective tax rate, as compared to the prior year, was primarily due to a lower enacted statutory tax rate in the United States. On December 22, 2017, the U.S. passed comprehensive tax legislation (“U.S. Tax Reform”) which, among other things, reduces the U.S. corporate income tax rate from 35% to 21% in 2018. The improved rate for the period was also attributable to discrete benefits for share-based payments.
|
•
|
We generated net cash flows from operations of
$1.0 billion
compared to
$0.7 billion
for the comparable period in
2017
.
|
•
|
We completed a debt offering for an aggregate principal amount of $1 billion.
|
•
|
We repurchased
7.9 million
shares of our common stock and paid dividends of
$263 million
.
|
•
|
In the first quarter of 2018, we recorded provisions for litigation of
$70 million
(
$53 million
after tax, or
$0.05
per diluted share) related to litigation settlements with Pan-European merchants,
$27 million
(
$21 million
after tax, or
$0.02
per diluted share) related to an increased reserve for our U.S. merchant opt-out cases and
$19 million
(
$15 million
after tax, or
$0.01
per diluted share) related to litigation settlements with U.K. merchants.
|
•
|
In the first quarter of 2017, we recorded provisions for litigation of
$15 million
(
$10 million
after tax, or
$0.01
per diluted share) related to a litigation settlement with Canadian merchants.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2018
|
||||||||||||||||
|
Operating expenses
|
|
Operating margin
|
|
Effective income tax rate
|
|
Net income
|
|
Diluted earnings per share
|
||||||||
|
($ in millions, except per share data)
|
||||||||||||||||
Reported - GAAP
|
$
|
1,755
|
|
|
51.0
|
%
|
|
17.3
|
%
|
|
$
|
1,492
|
|
|
$
|
1.41
|
|
Special Items
|
(117
|
)
|
|
3.2
|
%
|
|
0.4
|
%
|
|
89
|
|
|
0.08
|
|
|||
Non-GAAP
|
$
|
1,638
|
|
|
54.2
|
%
|
|
17.7
|
%
|
|
$
|
1,581
|
|
|
$
|
1.50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2017
|
||||||||||||||||
|
Operating expenses
|
|
Operating margin
|
|
Effective income tax rate
|
|
Net income
|
|
Diluted earnings per share
|
||||||||
|
($ in millions, except per share data)
|
||||||||||||||||
Reported - GAAP
|
$
|
1,228
|
|
|
55.1
|
%
|
|
26.9
|
%
|
|
$
|
1,081
|
|
|
$
|
1.00
|
|
Special Item
|
(15
|
)
|
|
0.5
|
%
|
|
—
|
%
|
|
10
|
|
|
0.01
|
|
|||
Non-GAAP
|
$
|
1,213
|
|
|
55.6
|
%
|
|
26.9
|
%
|
|
$
|
1,091
|
|
|
$
|
1.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2018 as compared to the Three Months Ended March 31, 2017
|
||||||||||||||
|
Increase/(Decrease)
|
||||||||||||||
|
Net revenue
|
|
Operating expenses
|
|
Operating margin
|
|
Effective income tax rate
|
|
Net income
|
|
Diluted earnings per share
|
||||
Reported - GAAP
|
31
|
%
|
|
43
|
%
|
|
(4.1) ppt
|
|
(9.6) ppt
|
|
38
|
%
|
|
41
|
%
|
Special Items
|
—
|
%
|
|
(8
|
)%
|
|
2.7 ppt
|
|
0.4 ppt
|
|
7
|
%
|
|
8
|
%
|
Non-GAAP
|
31
|
%
|
|
35
|
%
|
|
(1.4) ppt
|
|
(9.2) ppt
|
|
45
|
%
|
|
49
|
%
|
Foreign currency
1
|
(4
|
)%
|
|
(3
|
)%
|
|
(0.4) ppt
|
|
– ppt
|
|
(6
|
)%
|
|
(6
|
)%
|
Non-GAAP - currency-neutral
|
27
|
%
|
|
32
|
%
|
|
(1.8) ppt
|
|
(9.2) ppt
|
|
39
|
%
|
|
43
|
%
|
|
Three Months Ended March 31,
|
|
Increase (Decrease)
|
||||||
|
2018
|
|
2017
|
|
|||||
|
($ in millions)
|
||||||||
Domestic assessments
|
$
|
1,458
|
|
|
$
|
1,189
|
|
|
23%
|
Cross-border volume fees
|
1,157
|
|
|
916
|
|
|
26%
|
||
Transaction processing
|
1,707
|
|
|
1,347
|
|
|
27%
|
||
Other revenues
|
748
|
|
|
561
|
|
|
33%
|
||
Gross revenue
|
5,070
|
|
|
4,013
|
|
|
26%
|
||
Rebates and incentives (contra-revenue)
|
(1,490
|
)
|
|
(1,279
|
)
|
|
16%
|
||
Net revenue
|
$
|
3,580
|
|
|
$
|
2,734
|
|
|
31%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2018
|
||||||||||||||||
|
Volume
|
|
Acquisitions
|
|
Revenue Standard
1
|
|
Foreign Currency
2
|
|
Other
3
|
|
Total
|
||||||
Domestic assessments
|
13
|
%
|
|
—
|
%
|
|
6
|
%
|
|
3
|
%
|
|
—
|
%
|
4
|
23
|
%
|
Cross-border volume fees
|
20
|
%
|
|
—
|
%
|
|
1
|
%
|
|
7
|
%
|
|
(2
|
)%
|
|
26
|
%
|
Transaction processing
|
15
|
%
|
|
1
|
%
|
|
—
|
%
|
|
4
|
%
|
|
6
|
%
|
|
27
|
%
|
Other revenues
|
**
|
|
|
10
|
%
|
|
—
|
%
|
|
—
|
%
|
|
23
|
%
|
5
|
33
|
%
|
Rebates and incentives (contra-revenue)
|
11
|
%
|
|
—
|
%
|
|
(1
|
)%
|
|
3
|
%
|
|
4
|
%
|
6
|
16
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net revenue
|
15
|
%
|
|
2.5
|
%
|
|
4
|
%
|
|
4
|
%
|
|
6
|
%
|
|
31
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
||||||||||
|
2018
|
|
2017
|
||||||||
|
Growth (USD)
|
|
Growth (Local)
|
|
Growth (USD)
|
|
Growth (Local)
|
||||
Mastercard-branded GDV
1
|
19
|
%
|
|
14
|
%
|
|
3
|
%
|
|
5
|
%
|
Asia Pacific/Middle East/Africa
|
19
|
%
|
|
13
|
%
|
|
6
|
%
|
|
8
|
%
|
Canada
|
15
|
%
|
|
9
|
%
|
|
17
|
%
|
|
12
|
%
|
Europe
|
31
|
%
|
|
19
|
%
|
|
(2
|
)%
|
|
1
|
%
|
Latin America
|
19
|
%
|
|
17
|
%
|
|
17
|
%
|
|
15
|
%
|
United States
|
10
|
%
|
|
10
|
%
|
|
2
|
%
|
|
2
|
%
|
Cross-border Volume
1
|
32
|
%
|
|
21
|
%
|
|
10
|
%
|
|
13
|
%
|
Switched Transactions
|
|
|
13
|
%
|
|
|
|
17
|
%
|
|
Three Months Ended March 31,
|
||
|
2018
|
|
2017
|
|
Growth (Local)
|
||
GDV
1
|
|
|
|
Worldwide as reported
|
14%
|
|
5%
|
Worldwide as adjusted for EU Regulation
|
14%
|
|
8%
|
|
|
|
|
Europe as reported
|
19%
|
|
1%
|
Europe as adjusted for EU Regulation
|
19%
|
|
14%
|
|
Three Months Ended March 31,
|
||
|
2018
|
|
2017
|
|
Growth (Local)
|
||
Switched Transactions as reported
|
13%
|
|
17%
|
Switched Transactions as adjusted for the deconsolidation of Venezuela subsidiaries
|
17%
|
|
16%
|
|
Three Months Ended March 31,
|
|
Increase (Decrease)
|
|||||||
|
2018
|
|
2017
|
|
||||||
|
($ in millions)
|
|||||||||
General and administrative
|
$
|
1,294
|
|
|
$
|
951
|
|
|
36
|
%
|
Advertising and marketing
|
224
|
|
|
170
|
|
|
32
|
%
|
||
Depreciation and amortization
|
120
|
|
|
92
|
|
|
30
|
%
|
||
Provision for litigation settlements
|
117
|
|
|
15
|
|
|
**
|
|
||
Total operating expenses
|
1,755
|
|
|
1,228
|
|
|
43
|
%
|
||
Special Items
1
|
(117
|
)
|
|
(15
|
)
|
|
**
|
|
||
Adjusted total operating expenses (excluding Special Items
1
)
|
$
|
1,638
|
|
|
$
|
1,213
|
|
|
35
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2018
|
|||||||||||||||||||
|
Operational
|
|
Special
Items
1
|
|
Acquisitions
|
|
Revenue
Standard
2
|
|
Center for Inclusive Growth
3
|
|
Foreign
Currency
4
|
|
Total
|
|||||||
General and administrative
|
15
|
%
|
|
—
|
%
|
|
8
|
%
|
|
—
|
%
|
|
10
|
%
|
|
3
|
%
|
|
36
|
%
|
Advertising and marketing
|
4
|
%
|
|
—
|
%
|
|
1
|
%
|
|
23
|
%
|
|
—
|
%
|
|
5
|
%
|
|
32
|
%
|
Depreciation and amortization
|
—
|
%
|
|
—
|
%
|
|
28
|
%
|
|
—
|
%
|
|
—
|
%
|
|
2
|
%
|
|
30
|
%
|
Provision for litigation settlements
|
**
|
|
|
**
|
|
|
**
|
|
|
**
|
|
|
**
|
|
|
**
|
|
|
**
|
|
Total operating expenses
|
12
|
%
|
|
8
|
%
|
|
8
|
%
|
|
3
|
%
|
|
8
|
%
|
|
3
|
%
|
|
43
|
%
|
|
Three Months Ended March 31,
|
|
Increase (Decrease)
|
|||||||
|
2018
|
|
2017
|
|
||||||
|
($ in millions)
|
|||||||||
Personnel
|
$
|
752
|
|
|
$
|
594
|
|
|
27
|
%
|
Professional fees
|
81
|
|
|
61
|
|
|
32
|
%
|
||
Data processing and telecommunications
|
141
|
|
|
110
|
|
|
28
|
%
|
||
Foreign exchange activity
|
28
|
|
|
37
|
|
|
**
|
|
||
Other
|
292
|
|
|
149
|
|
|
97
|
%
|
||
General and administrative expenses
|
$
|
1,294
|
|
|
$
|
951
|
|
|
36
|
%
|
•
|
Personnel expenses
increase
d
27%
, or
23%
on a currency-neutral basis, versus the comparable
period
in
2017
. The increase was due to a higher number of employees to support our continued investment in the areas of digital infrastructure, safety and security platforms and data analytics as well as geographic expansion. Acquisitions contributed
9
percentage points to personnel expense growth for the
three months ended March 31, 2018
.
|
•
|
Data processing and telecommunication expense increased
28%
, or
24%
on a currency-neutral basis, versus the comparable
period
in
2017
. This line item consists of expenses to support our global payments network infrastructure, expenses to operate and maintain our computer systems and other telecommunication systems. Acquisitions contributed
12
percentage points to expense growth for the
three months ended March 31, 2018
. The remaining increase is due to capacity growth of our business.
|
•
|
Foreign exchange activity includes gains and losses on foreign exchange derivative contracts and the impact of remeasurement of assets and liabilities denominated in foreign currencies. See
Note 16 (Foreign Exchange Risk Management)
to the consolidated financial statements included in Part I, Item 1 for further discussion. There were no significant changes in the foreign exchange activity for the
three months ended March 31, 2018
versus the comparable
period
in
2017
.
|
•
|
Other expenses include costs to provide loyalty and rewards solutions, travel and meeting expenses, rental expense for our facilities and other costs associated with our business. For the
three months ended March 31, 2018
, other expenses increased primarily due to the $100 million contribution to the Mastercard Center for Inclusive Growth, a non-profit charitable organization, to enable a variety of workforce training, financial inclusion and digital infrastructure initiatives. Additionally, the increase in other expenses was due to higher cardholder services.
|
|
March 31,
2018 |
|
December 31,
2017 |
||||
|
(in billions)
|
||||||
Cash, cash equivalents and investments
1
|
$
|
8.3
|
|
|
$
|
7.8
|
|
Unused line of credit
|
3.8
|
|
|
3.8
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(in millions)
|
||||||
Cash Flow Data:
|
|
|
|
||||
Net cash provided by operating activities
|
$
|
1,035
|
|
|
$
|
727
|
|
Net cash provided by (used in) investing activities
|
367
|
|
|
(123
|
)
|
||
Net cash used in financing activities
|
(665
|
)
|
|
(1,237
|
)
|
|
March 31,
2018 |
|
December 31,
2017 |
||||
|
(in millions)
|
||||||
Balance Sheet Data:
|
|
|
|
||||
Current assets
|
$
|
14,707
|
|
|
$
|
13,797
|
|
Current liabilities
|
8,948
|
|
|
8,793
|
|
||
Long-term liabilities
|
8,194
|
|
|
6,968
|
|
||
Equity
|
5,731
|
|
|
5,497
|
|
|
Authorization Dates
|
||||||||||
|
December 2017
|
|
December 2016
|
|
Total
|
||||||
|
(in millions, except average price data)
|
||||||||||
Board authorization
|
$
|
4,000
|
|
|
$
|
4,000
|
|
|
$
|
8,000
|
|
Remaining authorization at December 31, 2017
|
$
|
4,000
|
|
|
$
|
1,234
|
|
|
$
|
5,234
|
|
Dollar value of shares repurchased during the three months ended March 31, 2018
|
$
|
118
|
|
|
$
|
1,234
|
|
|
$
|
1,352
|
|
Remaining authorization at March 31, 2018
|
$
|
3,882
|
|
|
$
|
—
|
|
|
$
|
3,882
|
|
Shares repurchased during the three months ended March 31, 2018
|
0.7
|
|
|
7.2
|
|
|
7.9
|
|
|||
Average price paid per share during the three months ended March 31, 2018
|
$
|
175.87
|
|
|
$
|
171.11
|
|
|
$
|
171.52
|
|
Period
|
|
Total Number
of Shares
Purchased
|
|
Average Price
Paid per Share
(including
commission cost)
|
|
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs
|
|
Dollar Value of
Shares that may yet
be Purchased under
the Plans or
Programs
1
|
||||||
January 1 - 31
|
|
1,866,432
|
|
|
$
|
161.18
|
|
|
1,866,432
|
|
|
$
|
4,933,035,685
|
|
February 1 - 28
|
|
2,915,798
|
|
|
$
|
170.63
|
|
|
2,915,798
|
|
|
$
|
4,435,518,016
|
|
March 1 - 31
|
|
3,098,907
|
|
|
$
|
178.58
|
|
|
3,098,907
|
|
|
$
|
3,882,119,096
|
|
Total
|
|
7,881,137
|
|
|
$
|
171.52
|
|
|
7,881,137
|
|
|
|
|
|
|
Exhibit
Number
|
|
Exhibit Description
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
101.INS*
|
|
XBRL Instance Document
|
|
|
|
101.SCH*
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
101.CAL*
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
101.DEF*
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
101.LAB*
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
101.PRE*
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
+
|
Management contracts or compensatory plans or arrangements.
|
*
|
Filed or furnished herewith.
|
|
|
MASTERCARD INCORPORATED
|
||
|
|
(Registrant)
|
||
|
|
|
|
|
Date:
|
May 2, 2018
|
By:
|
|
/S/ AJAY BANGA
|
|
|
|
|
Ajay Banga
|
|
|
|
|
President and Chief Executive Officer
|
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
Date:
|
May 2, 2018
|
By:
|
|
/S/ MARTINA HUND-MEJEAN
|
|
|
|
|
Martina Hund-Mejean
|
|
|
|
|
Chief Financial Officer
|
|
|
|
|
(Principal Financial Officer)
|
|
|
|
|
|
Date:
|
May 2, 2018
|
By:
|
|
/S/ SANDRA ARKELL
|
|
|
|
|
Sandra Arkell
|
|
|
|
|
Corporate Controller
|
|
|
|
|
(Principal Accounting Officer)
|
Termination Event*
|
Components of Termination Payment
|
|
Death
|
|
Target annual incentive bonus for year in which termination occurs (plus the target annual incentive bonus earned for the previous year, if not already paid)
|
Disability
|
Target annual incentive bonus prorated for year of termination (plus the target annual incentive bonus earned for the previous year, if not already paid)
|
|
For Cause or Voluntary Resignation
|
No additional payments
|
|
Without Cause or with Good Reason
|
Annual incentive bonus prorated for year of termination based upon Mastercard’s actual performance during the year in which termination occurs (subject to HRCC discretion) (plus the annual incentive bonus earned for the previous year, if not already paid)
Base salary continuation for 18 months (the severance period) following termination (extendable by an additional six months at Mastercard’s sole discretion)
An amount equal to 1.5 times the annual incentive bonus paid to the executive for the year prior to termination, paid ratably over the severance period and in accordance with Mastercard’s annual incentive bonus pay practices (or up to an amount equal to two times the bonus for the prior year, payable over 24 months at Mastercard’s discretion)
Payment of the monthly COBRA medical coverage premium for the applicable period (or, if shorter, the severance period) (not applicable to Ms. Cairns) or, if the executive is eligible, the full cost of the Mastercard Retiree Health Plan during the severance period with retiree contribution levels applying thereafter
Reasonable outplacement services for the shorter of the severance period or the period of unemployment
|
|
Mandatory Retirement
|
Other than Ms. Cairns, annual incentive bonus prorated for year of termination based upon Mastercard’s actual performance during the year in which termination occurs (subject to HRCC discretion) (plus the annual incentive bonus earned for the previous year, if not already paid)
|
“Double-Trigger” Severance Payments
|
Lump sum payments within 30 days following date of termination of (1) all base salary earned but not paid and (2) all accrued but unused vacation time
|
Pro-rata portion of the annual incentive bonus payable in year of termination and previous year, if not already paid
|
Base salary continuation for 24 months following termination (the severance period)
|
Annual bonus payments following the date of termination, the aggregate amount equal to the average annual bonus received by the executive over the prior two years of employment, payable ratably over the severance period
|
Payment of the monthly COBRA medical coverage premium for the applicable period (or, if shorter, the severance period) (not applicable to Ms. Cairns) or, if the executive is eligible, the full cost of the Mastercard Retiree Health Plan during the severance period with retiree contribution levels applying thereafter
|
Reasonable outplacement services for the shorter of the severance period or the period of unemployment
|
Such additional benefits, if any, that the executive would be entitled to under applicable Mastercard plans and programs (other than severance payments)
|
Craig Vosburg
|
12-month non-compete
24-month non-solicit
I
n the event of a violation, repayment of specified gains from stock options exercised and repayment of vested equity awards from the two-year period preceding the violation
|
Non-compete and non-solicit for longer of 18 months or the length of the severance payments (agreement to be executed within 60 days following termination)
|
Two-year non-compete and non-solicit
|
a.
|
the Eligible Member is terminated by the Company without “Cause” (as such term is defined in the “Definitions” section); or
|
b.
|
the Eligible Member terminates his or her employment with the Company for “Good Reason” (as such term is defined in the “Definitions” section);
|
•
|
the Eligible Member’s employment may be terminated at the option of the Eligible Member, effective ninety (90) days after the giving of written notice to the Company by such Eligible Member of the grounds for termination for Good Reason, which grounds, as specified by the Eligible Member, have not been cured by the Company during such ninety (90) day period; provided, however, that such Eligible Member gave notice to the Company of the event(s) constituting Good Reason within sixty (60) days after such event(s).
|
•
|
the Company may waive all or part of the ninety (90) day notice required to be given by the Eligible Member hereunder by giving written notice to such Eligible Member.
|
a.
|
the Eligible Member’s employment is terminated due to death or, at the option of the Company, upon the “Disability” (as such term is defined in the “Definitions” section) of the Eligible Member;
|
b.
|
the Eligible Member elects to voluntarily terminate his or her employment with the Company or a successor for any reason other than for Good Reason (“Voluntary Resignation”) or Mandatory Retirement;
|
c.
|
the Eligible Member’s employment with the Company is terminated for Cause;
|
•
|
the Eligible Member’s employment may be terminated for Cause by the Company, effective upon the giving of written notice by the Company to the Eligible Member of such termination for Cause, or effective upon such other date as specified therein (“Notice of Termination for Cause”). The Company’s Notice of Termination For Cause shall state the date of termination and the basis for the Company’s determination that the Eligible Member’s actions establish Cause hereunder.
|
•
|
if within sixty (60) days subsequent to the termination of the Eligible Member’s employment for death, Disability, Good Reason or Voluntary Resignation or otherwise, the Company determines that the Eligible Member could have been terminated for Cause, such voluntary termination shall be recharacterized as a termination for Cause, upon the giving of written notice to the Eligible Member and the Eligible Member is provided at least five (5) days to provide a written response to the Company. Thereafter, the Company may take appropriate legal action to seek recompense for any Severance Payments improperly paid to the Eligible Member, his estate or beneficiaries hereunder. Following a judicial determination, the prevailing party in any action under this paragraph, shall be entitled to be reimbursed by the non-prevailing party for reasonable legal fees and expenses incurred by the prevailing party in connection with the judicial proceeding seeking to enforce the provisions of this paragraph.
|
•
|
notwithstanding anything to the contrary herein, if the Company has reason to believe that there are circumstances which, if substantiated, would constitute Cause as defined herein, the Company may suspend the Eligible Member from employment immediately upon notice for such period of time as shall be reasonably necessary for the Company to ascertain whether such circumstances are substantiated. During such suspension, the Eligible Member shall continue to be paid the compensation and provided all benefits in accordance with the regular payroll and benefit practices of the Company; provided, however, that if the Eligible Member has been indicted or otherwise formally charged by governmental authorities with any felony, the Company may, in its sole discretion, and without limiting the Company’s discretion to terminate the Eligible Member’s employment for Cause (provided it has grounds to do so under the terms of this “Disqualifying Events” section, paragraph (c), suspend the Eligible Member without continuation of any compensation or benefits (except health benefits, which shall be continued during the period of suspension), pending final disposition of such criminal charge(s). Upon receiving notice of any such suspension, the Eligible Member shall promptly leave the premises of the Company and remain off such premises until further notice from the Company. In the event the Eligible Member is suspended as a result of such charges, but is later acquitted or otherwise exonerated from such charges, the Company shall pay to the Eligible Member such compensation, with interest, calculated from the date such compensation was suspended at the prime lending rate in effect on the date the Company receives notice from the Eligible Member of such acquittal or exoneration, and provide benefits withheld from the Eligible Member during the period of the Eligible Member’s suspension, if any, all of which shall be paid and provided within thirty (30) days of the date of the Eligible Member’s acquittal or exoneration from criminal charges that resulted in his suspension shall be limited with respect to the period of up to two (2) years
from the date of suspension;
|
d.
|
the failure by the Eligible Member to give a timely notice of termination for Good Reason (as described above); or
|
e.
|
the Eligible Member becomes employed by a Company Entity.
|
a.
|
Accrued Payments
|
•
|
“Base Salary” (as such term is defined in the “Definitions” section) earned but not paid prior to the Date of Termination;
|
•
|
payment for all accrued but unused vacation time up to the Date of Termination;
|
•
|
(x) in the event of the Eligible Member’s death, the target annual incentive bonus payable for the year in which the Eligible Member’s death occurs, (y) in the event of termination due to Disability, a pro rata portion (based upon completed calendar months worked prior to the date of Disability) of the target annual incentive bonus payable for the year in which the Eligible Member’s Date of Termination occurs, or (z) in the event of Mandatory Retirement, a pro rata portion (based upon actually completed calendar months worked) of the annual incentive bonus payable for the year in which the Eligible Member’s termination of employment occurs based upon the actual performance of the Company for the applicable performance period (and taking into account the terms of the annual incentive plan, including but not limited to the discretion of the Compensation Committee to reduce such bonus amount) as contemplated in accordance with the requirements of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), with such amount payable when the annual incentive bonus is regularly paid to similarly employees for such year;
|
•
|
to the extent not already paid, the annual incentive bonus for the year immediately preceding the year in which the Eligible Member’s Date of Termination, with such amount payable when the annual incentive bonus is regularly paid to similarly employees for such year; and
|
•
|
such additional benefits, if any, to which the Eligible Member is expressly eligible following the termination of the Eligible Member’s employment on account of death, Disability or Mandatory Retirement, as applicable, payable or made available under such terms and conditions as may be provided by the then existing plans, programs and/or arrangements of the Company.
|
•
|
Base Salary earned but not paid prior to the Date of Termination;
|
•
|
payment for all accrued but unused vacation time up to the Date of Termination; and
|
•
|
additional benefits, if any, to which the Eligible Member is expressly eligible following his termination for Cause or by Voluntary Resignation, as applicable, payable or made available under such terms and conditions as may be provided by the then existing plans, programs and/or arrangements of the Company.
|
•
|
a lump sump payment (subject to any previously elected deferrals under the Mastercard Incorporated Deferral Plan), within thirty (30) days following the Date of Termination of all Base Salary earned but not paid prior to the Date of Termination;
|
•
|
a lump sum payment within thirty (30) days following the Date of Termination equal to all accrued but unused vacation time up to the Date of Termination;
|
•
|
a pro rata portion (based upon actually completed calendar months worked) of the annual incentive bonus payable for the year in which the Eligible Member’s Date of Termination occurs based on the actual performance of the Company for the applicable performance period as determined by the Compensation Committee and payable in accordance with the regular bonus pay practices of the Company, as contemplated in accordance with the requirements of Section 162(m) of the Code; and
|
•
|
to the extent not already paid, the annual incentive bonus for the year immediately preceding the year in which the Eligible Member’s Date of Termination occurs, payable in the amount and at the time such bonus would have been paid had the Eligible Member remained employed.
|
b.
|
Severance Payments
|
•
|
The records of the Company with respect to employment history, compensation, absences, illnesses, and all other relevant matters shall be conclusive for all purposes of this Plan.
|
Terms
|
Definitions
|
Base Salary
|
The Eligible Member’s annual base salary as in effect from time to time.
|
Cause
|
the willful failure by the Eligible Member to perform his or her duties or responsibilities (other than due to Disability);
the Eligible Member’s engaging in serious misconduct that is injurious to the Company including, but not limited to, damage to its reputation or standing in its industry;
the Eligible Member’s having been convicted of, or entered a plea of guilty or nolo contendere to, a crime that constitutes a felony, or a crime that constitutes a misdemeanor involving moral turpitude;
the material breach by the Eligible Member of any written covenant or agreement with the Company not to disclose any information pertaining to the Company; or
the breach by the Eligible Member of the Code of Conduct, the Supplemental Code of Conduct, any material provision of the Plan, or any material provision of the following the Company policies: non-discrimination, substance abuse, workplace violence, nepotism, travel and entertainment, corporation information security, antitrust/competition law, enterprise risk management, accounting, contracts, purchasing, communications, investor relations, immigration, privacy, insider trading, financial process and reporting procedures, financial approval authority, whistleblower, anti-corruption and other similar the Company policies, whether currently in effect or adopted after the Effective Date of the Plan.
|
Company
|
Mastercard International Incorporated.
|
Company Entity
|
Any entity (including any subsidiary, affiliate or joint venture) in which the Company has a direct or indirect ownership interest of not less than 20%.
|
Disability
|
Disability shall be defined as set forth under the Mastercard Long-Term Disability Benefits Plan, as it may be amended from time to time.
Any dispute concerning whether the Eligible Member is deemed to have suffered a Disability for purposes of the Plan shall be resolved in accordance with the dispute resolution procedures set forth in the Mastercard Long-Term Disability Benefits Plan.
|
Good Reason
|
The occurrence of any of the following without the prior written consent of the Eligible Member:
the assignment to a position for which the Eligible Member is not qualified or a materially lesser position than the position held by the Eligible Member (although duties may differ without giving rise to a termination by the Eligible Member for Good Reason);
a material reduction in the Eligible Member’s annual Base Salary except that a 10 percent reduction, in the aggregate, over the period of the Eligible Member’s employment shall not be treated as a material reduction;
the relocation of the Eligible Member’s principal place of employment to a location more than fifty (50) miles from the Eligible Member’s principal place of employment (unless such relocation does not increase the Eligible Member’s commute by more than twenty (20) miles), except for required travel on the Company’s business to an extent substantially consistent with the Eligible Member’s business travel obligations as of the date of relocation.
|
Mandatory Retirement
|
The last day of the calendar year in which the Eligible Member attains the age of sixty-five (65).
|
Mastercard
|
Mastercard International Incorporated.
|
Plan Administrator
|
Executive Vice President, Total Rewards (or her functional successor)
|
Date of Termination
|
The date on which the Eligible Member incurs a termination of employment as described in the “Qualification” section or such other date on which an Eligible Member incurs a “separation from service” determined using the default provisions set forth in Section 1.409A-1(h) of the Treasury Regulations. Pursuant to such default provisions, an Eligible Member will be treated as no longer performing services for the Company when the level of services he or she performs for the Company decreases to a level equal to 20% or less of the average level of services performed by such Eligible Member during the immediately preceding 36 months.
|
1.
|
Examine, without charge, all Plan documents and copies of all documents filed by the Company with the Department of Labor. This includes annual reports and Plan descriptions. All such documents are available for review in your Human Resources Department.
|
2.
|
Obtain, upon written request to the Plan Administrator, copies of documents governing the operation of the Plan, including copies of the latest annual report (Form 5500 Series) and an updated summary plan description. The Plan Administrator may charge you a reasonable fee for the copies.
|
3.
|
Receive a summary of the Plan’s annual financial report. Once each year, the Plan Administrator will send you a Summary Annual Report of the Plan’s financial activities at no charge.
|
Topic
|
Description
|
Plan Name
|
Amended and Restated Mastercard International Incorporated Executive Severance Plan
|
Plan Sponsor
|
Mastercard International Incorporated
2000 Purchase Street
Purchase, NY 10577 USA
|
Source of Contributions to Plan
|
Employer payments from corporate assets
|
Employer Identification Number
|
95-2536378
|
Plan Number
|
______
|
Plan Administrator
|
Executive Vice President, Total Rewards (or her functional successor)
Mastercard International Incorporated
2000 Purchase Street
Purchase, NY 10577 USA
914-249-5260
|
Agent for Receiving Service of Legal Process
|
General Counsel
Mastercard International Incorporated
2000 Purchase Street
Purchase, NY 10577 USA
914-249-5301
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
Date:
|
May 2, 2018
|
|
|
|
|
By:
|
/s/ Ajay Banga
|
|
|
Ajay Banga
|
|
|
President and Chief Executive Officer
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
Date:
|
May 2, 2018
|
|
|
|
|
By:
|
/s/ Martina Hund-Mejean
|
|
|
Martina Hund-Mejean
|
|
|
Chief Financial Officer
|
|
May 2, 2018
|
|
/s/ Ajay Banga
|
Ajay Banga
|
President and Chief Executive Officer
|
|
May 2, 2018
|
|
/s/ Martina Hund-Mejean
|
Martina Hund-Mejean
|
Chief Financial Officer
|
•
|
for the period covered by this Report, Mastercard processed transactions resulting from certain European acquirers having acquired transactions for consular services with Iranian embassies located in Austria, France, Spain and Switzerland that accepted Mastercard cards (and for the six years ended December 31, 2017, Mastercard processed additional transactions related to the Iranian embassy in Switzerland)
|
•
|
for the period covered by this Report, Mastercard processed transactions resulting from certain European and Middle Eastern acquirers having acquired transactions for Iran Air, which accepted Mastercard cards in Austria, France and Qatar
|