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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
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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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regulation directly related to the payments industry (including regulatory, legislative and litigation activity with respect to interchange rates, 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 of privacy, data protection, security and the digital economy
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•
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regulation that directly or indirectly applies to us based on our participation in the global payments industry (including anti-money laundering, counter terrorist financing, economic sanctions and anti-corruption; 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 tax laws, as well as regulations and interpretations of such laws or challenges to our tax positions
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•
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potential or incurred liability and limitations on business related to any litigation or litigation settlements
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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 real-time account-based payment system 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
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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 our role as guarantor, as well as other contractual obligations
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•
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the impact of global economic, political, financial and societal events and conditions
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•
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reputational impact, including impact related to brand perception
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•
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the inability to attract, hire and retain a highly qualified and diverse workforce, or maintain our corporate culture
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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, 2019
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|
December 31, 2018
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||||
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(in millions, except per share data)
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||||||
ASSETS
|
|
|
|
||||
Cash and cash equivalents
|
$
|
5,857
|
|
|
$
|
6,682
|
|
Restricted cash for litigation settlement
|
662
|
|
|
553
|
|
||
Investments
|
1,317
|
|
|
1,696
|
|
||
Accounts receivable
|
2,577
|
|
|
2,276
|
|
||
Settlement due from customers
|
1,426
|
|
|
2,452
|
|
||
Restricted security deposits held for customers
|
1,044
|
|
|
1,080
|
|
||
Prepaid expenses and other current assets
|
1,513
|
|
|
1,432
|
|
||
Total Current Assets
|
14,396
|
|
|
16,171
|
|
||
Property, equipment and right-of-use assets, net of accumulated depreciation of $905 and $847, respectively
|
1,305
|
|
|
921
|
|
||
Deferred income taxes
|
504
|
|
|
570
|
|
||
Goodwill
|
2,944
|
|
|
2,904
|
|
||
Other intangible assets, net of accumulated amortization of $1,228 and $1,175, respectively
|
1,025
|
|
|
991
|
|
||
Other assets
|
3,346
|
|
|
3,303
|
|
||
Total Assets
|
$
|
23,520
|
|
|
$
|
24,860
|
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LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND EQUITY
|
|
|
|
||||
Accounts payable
|
$
|
508
|
|
|
$
|
537
|
|
Settlement due to customers
|
1,189
|
|
|
2,189
|
|
||
Restricted security deposits held for customers
|
1,044
|
|
|
1,080
|
|
||
Accrued litigation
|
1,575
|
|
|
1,591
|
|
||
Accrued expenses
|
4,329
|
|
|
4,747
|
|
||
Current portion of long-term debt
|
500
|
|
|
500
|
|
||
Other current liabilities
|
1,101
|
|
|
949
|
|
||
Total Current Liabilities
|
10,246
|
|
|
11,593
|
|
||
Long-term debt
|
5,799
|
|
|
5,834
|
|
||
Deferred income taxes
|
61
|
|
|
67
|
|
||
Other liabilities
|
2,151
|
|
|
1,877
|
|
||
Total Liabilities
|
18,257
|
|
|
19,371
|
|
||
|
|
|
|
||||
Commitments and Contingencies
|
|
|
|
||||
|
|
|
|
||||
Redeemable Non-controlling Interests
|
73
|
|
|
71
|
|
||
|
|
|
|
||||
Stockholders’ Equity
|
|
|
|
||||
Class A common stock, $0.0001 par value; authorized 3,000 shares, 1,389 and 1,387 shares issued and 1,012 and 1,019 outstanding, respectively
|
—
|
|
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—
|
|
||
Class B common stock, $0.0001 par value; authorized 1,200 shares, 12 and 12 issued and outstanding, respectively
|
—
|
|
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—
|
|
||
Additional paid-in-capital
|
4,569
|
|
|
4,580
|
|
||
Class A treasury stock, at cost, 377 and 368 shares, respectively
|
(27,534
|
)
|
|
(25,750
|
)
|
||
Retained earnings
|
28,806
|
|
|
27,283
|
|
||
Accumulated other comprehensive income (loss)
|
(673
|
)
|
|
(718
|
)
|
||
Total Stockholders’ Equity
|
5,168
|
|
|
5,395
|
|
||
Non-controlling interests
|
22
|
|
|
23
|
|
||
Total Equity
|
5,190
|
|
|
5,418
|
|
||
Total Liabilities, Redeemable Non-controlling Interests and Equity
|
$
|
23,520
|
|
|
$
|
24,860
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(in millions, except per share data)
|
||||||
Net Revenue
|
$
|
3,889
|
|
|
$
|
3,580
|
|
Operating Expenses
|
|
|
|
||||
General and administrative
|
1,367
|
|
|
1,321
|
|
||
Advertising and marketing
|
192
|
|
|
197
|
|
||
Depreciation and amortization
|
117
|
|
|
120
|
|
||
Provision for litigation
|
—
|
|
|
117
|
|
||
Total operating expenses
|
1,676
|
|
|
1,755
|
|
||
Operating income
|
2,213
|
|
|
1,825
|
|
||
Other Income (Expense)
|
|
|
|
||||
Investment income
|
32
|
|
|
17
|
|
||
Interest expense
|
(46
|
)
|
|
(43
|
)
|
||
Other income (expense), net
|
4
|
|
|
4
|
|
||
Total other income (expense)
|
(10
|
)
|
|
(22
|
)
|
||
Income before income taxes
|
2,203
|
|
|
1,803
|
|
||
Income tax expense
|
341
|
|
|
311
|
|
||
Net Income
|
$
|
1,862
|
|
|
$
|
1,492
|
|
|
|
|
|
||||
Basic Earnings per Share
|
$
|
1.81
|
|
|
$
|
1.42
|
|
Basic weighted-average shares outstanding
|
1,026
|
|
|
1,051
|
|
||
Diluted Earnings per Share
|
$
|
1.80
|
|
|
$
|
1.41
|
|
Diluted weighted-average shares outstanding
|
1,032
|
|
|
1,057
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(in millions)
|
||||||
Net Income
|
$
|
1,862
|
|
|
$
|
1,492
|
|
Other comprehensive income (loss):
|
|
|
|
||||
Foreign currency translation adjustments
|
11
|
|
|
161
|
|
||
Income tax effect
|
3
|
|
|
(2
|
)
|
||
Foreign currency translation adjustments, net of income tax effect
|
14
|
|
|
159
|
|
||
|
|
|
|
||||
Translation adjustments on net investment hedge
|
36
|
|
|
(45
|
)
|
||
Income tax effect
|
(8
|
)
|
|
12
|
|
||
Translation adjustments on net investment hedge, net of income tax effect
|
28
|
|
|
(33
|
)
|
||
|
|
|
|
||||
Defined benefit pension and other postretirement plans
|
—
|
|
|
(1
|
)
|
||
Income tax effect
|
—
|
|
|
—
|
|
||
Defined benefit pension and other postretirement plans, net of income tax effect
|
—
|
|
|
(1
|
)
|
||
|
|
|
|
||||
Investment securities available-for-sale
|
4
|
|
|
(1
|
)
|
||
Income tax effect
|
(1
|
)
|
|
—
|
|
||
Investment securities available-for-sale, net of income tax effect
|
3
|
|
|
(1
|
)
|
||
|
|
|
|
||||
Other comprehensive income (loss), net of tax
|
45
|
|
|
124
|
|
||
Comprehensive Income
|
$
|
1,907
|
|
|
$
|
1,616
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
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, 2018
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,580
|
|
|
$
|
(25,750
|
)
|
|
$
|
27,283
|
|
|
$
|
(718
|
)
|
|
$
|
23
|
|
|
$
|
5,418
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,862
|
|
|
—
|
|
|
—
|
|
|
1,862
|
|
||||||||
Activity from non-controlling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
||||||||
Other comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
45
|
|
|
—
|
|
|
45
|
|
||||||||
Cash dividends declared on Class A and Class B common stock, $0.33 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(339
|
)
|
|
—
|
|
|
—
|
|
|
(339
|
)
|
||||||||
Purchases of treasury stock
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,790
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,790
|
)
|
||||||||
Share-based payments
|
—
|
|
|
—
|
|
|
(11
|
)
|
|
6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
||||||||
Balance at March 31, 2019
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,569
|
|
|
$
|
(27,534
|
)
|
|
$
|
28,806
|
|
|
$
|
(673
|
)
|
|
$
|
22
|
|
|
$
|
5,190
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
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
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
366
|
|
|
—
|
|
|
—
|
|
|
366
|
|
||||||||
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, 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
|
)
|
|
$
|
23,777
|
|
|
$
|
(373
|
)
|
|
$
|
28
|
|
|
$
|
5,656
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(in millions)
|
||||||
Operating Activities
|
|
|
|
||||
Net income
|
$
|
1,862
|
|
|
$
|
1,492
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Amortization of customer and merchant incentives
|
345
|
|
|
287
|
|
||
Depreciation and amortization
|
117
|
|
|
120
|
|
||
Share-based compensation
|
57
|
|
|
43
|
|
||
Deferred income taxes
|
38
|
|
|
(46
|
)
|
||
Other
|
6
|
|
|
1
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(320
|
)
|
|
(80
|
)
|
||
Settlement due from customers
|
1,026
|
|
|
(156
|
)
|
||
Prepaid expenses
|
(497
|
)
|
|
(336
|
)
|
||
Accrued litigation and legal settlements
|
1
|
|
|
111
|
|
||
Restricted security deposits held for customers
|
(35
|
)
|
|
(141
|
)
|
||
Accounts payable
|
(22
|
)
|
|
(62
|
)
|
||
Settlement due to customers
|
(1,000
|
)
|
|
(63
|
)
|
||
Accrued expenses
|
(483
|
)
|
|
(50
|
)
|
||
Net change in other assets and liabilities
|
217
|
|
|
(85
|
)
|
||
Net cash provided by operating activities
|
1,312
|
|
|
1,035
|
|
||
Investing Activities
|
|
|
|
||||
Purchases of investment securities available-for-sale
|
(305
|
)
|
|
(108
|
)
|
||
Purchases of investments held-to-maturity
|
(99
|
)
|
|
(123
|
)
|
||
Proceeds from sales of investment securities available-for-sale
|
476
|
|
|
198
|
|
||
Proceeds from maturities of investment securities available-for-sale
|
139
|
|
|
108
|
|
||
Proceeds from maturities of investments held-to-maturity
|
155
|
|
|
430
|
|
||
Purchases of property and equipment
|
(83
|
)
|
|
(82
|
)
|
||
Capitalized software
|
(59
|
)
|
|
(44
|
)
|
||
Other investing activities
|
(11
|
)
|
|
(12
|
)
|
||
Net cash provided by investing activities
|
213
|
|
|
367
|
|
||
Financing Activities
|
|
|
|
||||
Purchases of treasury stock
|
(1,824
|
)
|
|
(1,352
|
)
|
||
Dividends paid
|
(340
|
)
|
|
(263
|
)
|
||
Proceeds from debt
|
—
|
|
|
991
|
|
||
Tax withholdings related to share-based payments
|
(116
|
)
|
|
(77
|
)
|
||
Cash proceeds from exercise of stock options
|
54
|
|
|
40
|
|
||
Other financing activities
|
3
|
|
|
(4
|
)
|
||
Net cash used in financing activities
|
(2,223
|
)
|
|
(665
|
)
|
||
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents
|
(54
|
)
|
|
95
|
|
||
Net (decrease) increase in cash, cash equivalents, restricted cash and restricted cash equivalents
|
(752
|
)
|
|
832
|
|
||
Cash, cash equivalents, restricted cash and restricted cash equivalents - beginning of period
|
8,337
|
|
|
7,592
|
|
||
Cash, cash equivalents, restricted cash and restricted cash equivalents - end of period
|
$
|
7,585
|
|
|
$
|
8,424
|
|
|
Balance at December 31, 2018
|
|
Impact of lease standard
|
|
Balance at
January 1, 2019 |
||||||
|
(in millions)
|
||||||||||
Assets
|
|
|
|
|
|
||||||
Property, equipment and right-of-use assets, net
|
$
|
921
|
|
|
$
|
375
|
|
|
$
|
1,296
|
|
Liabilities
|
|
|
|
|
|
||||||
Other current liabilities
|
949
|
|
|
72
|
|
|
1,021
|
|
|||
Other liabilities
|
1,877
|
|
|
303
|
|
|
2,180
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(in millions)
|
||||||
Revenue by source:
|
|
|
|
||||
Domestic assessments
|
$
|
1,605
|
|
|
$
|
1,458
|
|
Cross-border volume fees
|
1,263
|
|
|
1,157
|
|
||
Transaction processing
|
1,922
|
|
|
1,707
|
|
||
Other revenues
|
842
|
|
|
748
|
|
||
Gross revenue
|
5,632
|
|
|
5,070
|
|
||
Rebates and incentives (contra-revenue)
|
(1,743
|
)
|
|
(1,490
|
)
|
||
Net revenue
|
$
|
3,889
|
|
|
$
|
3,580
|
|
|
|
|
|
||||
Net revenue by geographic region:
|
|
|
|
||||
North American Markets
|
$
|
1,347
|
|
|
$
|
1,248
|
|
International Markets
|
2,506
|
|
|
2,300
|
|
||
Other 1
|
36
|
|
|
32
|
|
||
Net revenue
|
$
|
3,889
|
|
|
$
|
3,580
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(in millions, except per share data)
|
||||||
Numerator
|
|
|
|
||||
Net income
|
$
|
1,862
|
|
|
$
|
1,492
|
|
Denominator
|
|
|
|
||||
Basic weighted-average shares outstanding
|
1,026
|
|
|
1,051
|
|
||
Dilutive stock options and stock units
|
6
|
|
|
6
|
|
||
Diluted weighted-average shares outstanding 1
|
1,032
|
|
|
1,057
|
|
||
Earnings per Share
|
|
|
|
||||
Basic
|
$
|
1.81
|
|
|
$
|
1.42
|
|
Diluted
|
$
|
1.80
|
|
|
$
|
1.41
|
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(in millions)
|
||||||
Cash and cash equivalents
|
$
|
6,682
|
|
|
$
|
5,933
|
|
Restricted cash and restricted cash equivalents
|
|
|
|
||||
Restricted cash for litigation settlement
|
553
|
|
|
546
|
|
||
Restricted security deposits held for customers
|
1,080
|
|
|
1,085
|
|
||
Prepaid expenses and other current assets
|
22
|
|
|
28
|
|
||
Cash, cash equivalents, restricted cash and restricted cash equivalents -
beginning of period
|
$
|
8,337
|
|
|
$
|
7,592
|
|
|
|
|
|
||||
|
March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(in millions)
|
||||||
Cash and cash equivalents
|
$
|
5,857
|
|
|
$
|
6,890
|
|
Restricted cash and restricted cash equivalents
|
|
|
|
||||
Restricted cash for litigation settlement
|
662
|
|
|
548
|
|
||
Restricted security deposits held for customers
|
1,044
|
|
|
965
|
|
||
Prepaid expenses and other current assets
|
22
|
|
|
21
|
|
||
Cash, cash equivalents, restricted cash and restricted cash equivalents -
end of period
|
$
|
7,585
|
|
|
$
|
8,424
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||||||||||||||||||||||||||
|
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
|
$
|
—
|
|
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
15
|
|
|
$
|
—
|
|
|
$
|
15
|
|
Government and agency securities
|
48
|
|
|
88
|
|
|
—
|
|
|
136
|
|
|
65
|
|
|
92
|
|
|
—
|
|
|
157
|
|
||||||||
Corporate securities
|
—
|
|
|
838
|
|
|
—
|
|
|
838
|
|
|
—
|
|
|
1,043
|
|
|
—
|
|
|
1,043
|
|
||||||||
Asset-backed securities
|
—
|
|
|
130
|
|
|
—
|
|
|
130
|
|
|
—
|
|
|
217
|
|
|
—
|
|
|
217
|
|
||||||||
Derivative instruments 2:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Foreign currency derivative assets
|
—
|
|
|
24
|
|
|
—
|
|
|
24
|
|
|
—
|
|
|
35
|
|
|
—
|
|
|
35
|
|
||||||||
Deferred compensation plan 3:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Deferred compensation assets
|
55
|
|
|
—
|
|
|
—
|
|
|
55
|
|
|
54
|
|
|
—
|
|
|
—
|
|
|
54
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Derivative instruments 2:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Foreign currency derivative liabilities
|
$
|
—
|
|
|
$
|
(9
|
)
|
|
$
|
—
|
|
|
$
|
(9
|
)
|
|
$
|
—
|
|
|
$
|
(6
|
)
|
|
$
|
—
|
|
|
$
|
(6
|
)
|
Deferred compensation plan 4:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Deferred compensation liabilities
|
(64
|
)
|
|
—
|
|
|
—
|
|
|
(64
|
)
|
|
(54
|
)
|
|
—
|
|
|
—
|
|
|
(54
|
)
|
|
(in millions)
|
||
Balance at December 31, 2018
|
$
|
219
|
|
Net change in valuation
|
—
|
|
|
Payments
|
(5
|
)
|
|
Foreign currency translation
|
7
|
|
|
Balance at March 31, 2019
|
$
|
221
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||||||||||||||||||||||||||
|
Amortized
Cost
|
|
Gross
Unrealized
Gain
|
|
Gross
Unrealized
Loss
|
|
Fair
Value
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gain
|
|
Gross
Unrealized
Loss
|
|
Fair
Value
|
||||||||||||||||
|
(in millions)
|
||||||||||||||||||||||||||||||
Municipal securities
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8
|
|
|
$
|
15
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
15
|
|
Government and agency securities
|
136
|
|
|
—
|
|
|
—
|
|
|
136
|
|
|
157
|
|
|
—
|
|
|
—
|
|
|
157
|
|
||||||||
Corporate securities
|
835
|
|
|
3
|
|
|
—
|
|
|
838
|
|
|
1,044
|
|
|
1
|
|
|
(2
|
)
|
|
1,043
|
|
||||||||
Asset-backed securities
|
130
|
|
|
—
|
|
|
—
|
|
|
130
|
|
|
217
|
|
|
—
|
|
|
—
|
|
|
217
|
|
||||||||
Total
|
$
|
1,109
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
1,112
|
|
|
$
|
1,433
|
|
|
$
|
1
|
|
|
$
|
(2
|
)
|
|
$
|
1,432
|
|
|
Available-For-Sale
|
||||||
|
Amortized
Cost
|
|
Fair Value
|
||||
|
(in millions)
|
||||||
Due within 1 year
|
$
|
238
|
|
|
$
|
238
|
|
Due after 1 year through 5 years
|
870
|
|
|
873
|
|
||
Due after 5 years through 10 years
|
1
|
|
|
1
|
|
||
Total
|
$
|
1,109
|
|
|
$
|
1,112
|
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
|
(in millions)
|
||||||
Customer and merchant incentives
|
$
|
808
|
|
|
$
|
778
|
|
Other
|
705
|
|
|
654
|
|
||
Total prepaid expenses and other current assets
|
$
|
1,513
|
|
|
$
|
1,432
|
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
|
(in millions)
|
||||||
Customer and merchant incentives
|
$
|
2,492
|
|
|
$
|
2,458
|
|
Nonmarketable equity investments
|
348
|
|
|
337
|
|
||
Income taxes receivable
|
284
|
|
|
298
|
|
||
Other
|
222
|
|
|
210
|
|
||
Total other assets
|
$
|
3,346
|
|
|
$
|
3,303
|
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
|
(in millions)
|
||||||
Building, building equipment and land
|
$
|
484
|
|
|
$
|
481
|
|
Equipment
|
1,025
|
|
|
987
|
|
||
Furniture and fixtures
|
87
|
|
|
85
|
|
||
Leasehold improvements
|
223
|
|
|
215
|
|
||
Operating lease right-of-use assets
|
391
|
|
|
—
|
|
||
Property, equipment and right-of-use assets
|
2,210
|
|
|
1,768
|
|
||
Less accumulated depreciation and amortization
|
(905
|
)
|
|
(847
|
)
|
||
Property, equipment and right-of-use assets, net
|
$
|
1,305
|
|
|
$
|
921
|
|
|
March 31,
2019 |
||
|
(in millions)
|
||
Balance sheet location
|
|
||
Property, equipment and right-of-use assets, net
|
$
|
369
|
|
Other current liabilities
|
79
|
|
|
Other liabilities
|
327
|
|
|
Operating Leases
|
||
|
(in millions)
|
||
Remainder of 2019
|
$
|
68
|
|
2020
|
81
|
|
|
2021
|
61
|
|
|
2022
|
55
|
|
|
2023
|
49
|
|
|
Thereafter
|
134
|
|
|
Total operating lease payments
|
448
|
|
|
Less: Interest
|
(42
|
)
|
|
Present value of operating lease liabilities
|
$
|
406
|
|
|
Operating Leases
|
||
|
(in millions)
|
||
2019
|
$
|
72
|
|
2020
|
75
|
|
|
2021
|
76
|
|
|
2022
|
68
|
|
|
2023
|
58
|
|
|
Thereafter
|
327
|
|
|
Total
|
$
|
676
|
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
|
(in millions)
|
||||||
Customer and merchant incentives
|
$
|
3,226
|
|
|
$
|
3,275
|
|
Personnel costs
|
292
|
|
|
744
|
|
||
Income and other taxes
|
291
|
|
|
158
|
|
||
Other
|
520
|
|
|
570
|
|
||
Total accrued expenses
|
$
|
4,329
|
|
|
$
|
4,747
|
|
|
|
|
|
|
|
|
|
||||||||
Board authorization dates
|
December
2018 |
|
December
2017 |
|
December
2016 |
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Date program became effective
|
January
2019
|
|
March
2018 |
|
April
2017 |
|
Total
|
||||||||
|
(in millions, except average price data)
|
||||||||||||||
Board authorization
|
$
|
6,500
|
|
|
$
|
4,000
|
|
|
$
|
4,000
|
|
|
$
|
14,500
|
|
Dollar value of shares repurchased during the three months ended March 31, 2018
|
$
|
—
|
|
|
$
|
118
|
|
|
$
|
1,234
|
|
|
$
|
1,352
|
|
Remaining authorization at December 31, 2018
|
$
|
6,500
|
|
|
$
|
301
|
|
|
$
|
—
|
|
|
$
|
6,801
|
|
Dollar value of shares repurchased during the three months ended March 31, 2019
|
$
|
1,523
|
|
|
$
|
301
|
|
|
$
|
—
|
|
|
$
|
1,824
|
|
Remaining authorization at March 31, 2019
|
$
|
4,977
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,977
|
|
|
|
|
|
|
|
|
|
||||||||
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
|
|
Shares repurchased during the three months ended March 31, 2019
|
7.1
|
|
|
1.6
|
|
|
—
|
|
|
8.7
|
|
||||
Average price paid per share during the three months ended March 31, 2019
|
$
|
213.68
|
|
|
$
|
188.38
|
|
|
$
|
—
|
|
|
$
|
209.05
|
|
Cumulative shares repurchased through March 31, 2019
|
7.1
|
|
|
20.6
|
|
|
28.2
|
|
|
55.9
|
|
||||
Cumulative average price paid per share
|
$
|
213.68
|
|
|
$
|
194.27
|
|
|
$
|
141.99
|
|
|
$
|
170.39
|
|
|
Outstanding Shares
|
||||
|
Class A
|
|
Class B
|
||
|
(in millions)
|
||||
Balance at December 31, 2018
|
1,018.6
|
|
|
11.8
|
|
Purchases of treasury stock
|
(8.7
|
)
|
|
—
|
|
Share-based payments
|
1.7
|
|
|
—
|
|
Conversion of Class B to Class A common stock
|
0.1
|
|
|
(0.1
|
)
|
Balance at March 31, 2019
|
1,011.7
|
|
|
11.7
|
|
|
Foreign Currency Translation Adjustments 1
|
|
Translation Adjustments on Net Investment Hedge
|
|
Defined Benefit Pension and Other Postretirement Plans
|
|
Investment Securities Available-for-Sale
|
|
Accumulated Other Comprehensive Income (Loss)
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Balance at December 31, 2018
|
$
|
(661
|
)
|
|
$
|
(66
|
)
|
|
$
|
10
|
|
|
$
|
(1
|
)
|
|
$
|
(718
|
)
|
Other comprehensive income (loss) for the period 2
|
14
|
|
|
28
|
|
|
—
|
|
|
3
|
|
|
45
|
|
|||||
Balance at March 31, 2019
|
$
|
(647
|
)
|
|
$
|
(38
|
)
|
|
$
|
10
|
|
|
$
|
2
|
|
|
$
|
(673
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance at December 31, 2017
|
$
|
(382
|
)
|
|
$
|
(141
|
)
|
|
$
|
25
|
|
|
$
|
1
|
|
|
$
|
(497
|
)
|
Other comprehensive income (loss) for the period 2
|
159
|
|
|
(33
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
124
|
|
|||||
Balance at March 31, 2018
|
$
|
(223
|
)
|
|
$
|
(174
|
)
|
|
$
|
24
|
|
|
$
|
—
|
|
|
$
|
(373
|
)
|
|
Grants in 2019
|
|
Weighted-Average
Grant-Date
Fair Value
|
|
(in millions)
|
|
(per option/unit)
|
Non-qualified stock options
|
0.9
|
|
$53
|
Restricted stock units
|
0.9
|
|
$223
|
Performance stock units
|
0.1
|
|
$230
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
|
(in millions)
|
||||||
Gross settlement exposure
|
$
|
48,403
|
|
|
$
|
49,666
|
|
Collateral held for settlement exposure
|
(4,731
|
)
|
|
(4,711
|
)
|
||
Net uncollateralized settlement exposure
|
$
|
43,672
|
|
|
$
|
44,955
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||||||||||
|
Notional
|
|
Estimated Fair
Value
|
|
Notional
|
|
Estimated Fair
Value
|
||||||||
|
(in millions)
|
||||||||||||||
Commitments to purchase foreign currency
|
$
|
196
|
|
|
$
|
(1
|
)
|
|
$
|
34
|
|
|
$
|
(1
|
)
|
Commitments to sell foreign currency
|
1,399
|
|
|
12
|
|
|
1,066
|
|
|
26
|
|
||||
Options to sell foreign currency
|
23
|
|
|
4
|
|
|
25
|
|
|
4
|
|
||||
Balance sheet location
|
|
|
|
|
|
|
|
||||||||
Prepaid expenses and other current assets 1
|
|
|
24
|
|
|
|
|
35
|
|
||||||
Other current liabilities 1
|
|
|
(9
|
)
|
|
|
|
(6
|
)
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(in millions)
|
||||||
Foreign currency derivative contracts
|
|
|
|
||||
General and administrative
|
$
|
(5
|
)
|
|
$
|
(21
|
)
|
|
Three Months Ended March 31,
|
|
Increase/(Decrease)
|
||||||
|
2019
|
|
2018
|
|
|||||
|
($ in millions, except per share data)
|
||||||||
Net revenue
|
$
|
3,889
|
|
|
$
|
3,580
|
|
|
9%
|
|
|
|
|
|
|
||||
Operating expenses
|
$
|
1,676
|
|
|
$
|
1,755
|
|
|
(5)%
|
Operating income
|
$
|
2,213
|
|
|
$
|
1,825
|
|
|
21%
|
Operating margin
|
56.9
|
%
|
|
51.0
|
%
|
|
6.0 ppt
|
||
|
|
|
|
|
|
||||
Income tax expense
|
$
|
341
|
|
|
$
|
311
|
|
|
9%
|
Effective income tax rate
|
15.5
|
%
|
|
17.3
|
%
|
|
(1.8) ppt
|
||
|
|
|
|
|
|
||||
Net income
|
$
|
1,862
|
|
|
$
|
1,492
|
|
|
25%
|
|
|
|
|
|
|
||||
Diluted earnings per share
|
$
|
1.80
|
|
|
$
|
1.41
|
|
|
28%
|
Diluted weighted-average shares outstanding
|
1,032
|
|
|
1,057
|
|
|
(2)%
|
|
Three Months Ended March 31,
|
|
Increase/(Decrease)
|
||||||||
|
2019
|
|
2018
|
|
As adjusted
|
|
Currency-neutral
|
||||
|
($ in millions, except per share data)
|
||||||||||
Net revenue
|
$
|
3,889
|
|
|
$
|
3,580
|
|
|
9%
|
|
13%
|
|
|
|
|
|
|
|
|
||||
Adjusted operating expenses
|
$
|
1,676
|
|
|
$
|
1,638
|
|
|
2%
|
|
5%
|
|
|
|
|
|
|
|
|
||||
Adjusted operating margin
|
56.9
|
%
|
|
54.2
|
%
|
|
2.7 ppt
|
|
3.2 ppt
|
||
|
|
|
|
|
|
|
|
||||
Adjusted effective income tax rate
|
16.8
|
%
|
|
17.7
|
%
|
|
(0.9) ppt
|
|
(0.5) ppt
|
||
|
|
|
|
|
|
|
|
||||
Adjusted net income
|
$
|
1,833
|
|
|
$
|
1,581
|
|
|
16%
|
|
21%
|
|
|
|
|
|
|
|
|
||||
Adjusted diluted earnings per share
|
$
|
1.78
|
|
|
$
|
1.50
|
|
|
19%
|
|
24%
|
•
|
Net revenue increased 9%, or 13% on a currency-neutral basis, versus the comparable period in 2018 primarily driven by:
|
–
|
Switched transaction growth of 17%
|
–
|
Cross border growth of 13% on a local currency basis
|
–
|
Gross dollar volume growth of 12% on a local currency basis
|
–
|
These increases were partially offset by higher rebates and incentives, which increased 17%, or 22% on a currency-neutral basis
|
•
|
Operating expenses decreased 5%, versus the comparable period in 2018. Excluding the impact of the Special Items (defined below), adjusted operating expenses increased 2%. On a currency-neutral basis the increase was 5%, primarily related to our continued investment in strategic initiatives.
|
•
|
The effective income tax rate was 15.5%, versus 17.3% for the comparable period in 2018. The lower effective tax rate, versus the comparable period in 2018, was primarily due to final transition tax regulations and discrete benefits for share-based payments.
|
•
|
We generated net cash flows from operations of $1.3 billion.
|
•
|
We repurchased 8.7 million shares of our common stock for $1.8 billion and paid dividends of $340 million.
|
•
|
In the first quarter of 2019, we recorded a $30 million tax benefit ($0.03 per diluted share) related to a reduction to our transition tax liability, resulting from final transition tax regulations issued in January 2019.
|
•
|
In the first quarter of 2018, we recorded provisions for litigation of $117 million ($89 million after tax, or $0.08 per diluted share) related to litigation settlements with Pan-European and U.K. merchants and an increase in the reserve for our U.S. merchant opt-out cases.
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2019
|
||||||||||||||||
|
Operating expenses
|
|
Operating margin
|
|
Effective income tax rate
|
|
Net income
|
|
Diluted earnings per share
|
||||||||
|
($ in millions, except per share data)
|
||||||||||||||||
Reported - GAAP
|
$
|
1,676
|
|
|
56.9
|
%
|
|
15.5
|
%
|
|
$
|
1,862
|
|
|
$
|
1.80
|
|
Tax act
|
**
|
|
|
**
|
|
|
1.3
|
%
|
|
(30
|
)
|
|
(0.03
|
)
|
|||
Non-GAAP
|
$
|
1,676
|
|
|
56.9
|
%
|
|
16.8
|
%
|
|
$
|
1,833
|
|
|
$
|
1.78
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
Litigation provisions
|
(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,
|
|
Increase (Decrease)
|
||||||
|
2019
|
|
2018
|
|
|||||
|
($ in millions)
|
||||||||
Domestic assessments
|
$
|
1,605
|
|
|
$
|
1,458
|
|
|
10%
|
Cross-border volume fees
|
1,263
|
|
|
1,157
|
|
|
9%
|
||
Transaction processing
|
1,922
|
|
|
1,707
|
|
|
13%
|
||
Other revenues
|
842
|
|
|
748
|
|
|
12%
|
||
Gross revenue
|
5,632
|
|
|
5,070
|
|
|
11%
|
||
Rebates and incentives (contra-revenue)
|
(1,743
|
)
|
|
(1,490
|
)
|
|
17%
|
||
Net revenue
|
$
|
3,889
|
|
|
$
|
3,580
|
|
|
9%
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2019
|
||||||||
|
Volume
|
Foreign Currency 1
|
Other 2
|
|
Total
|
||||
Domestic assessments
|
11%
|
|
(5)%
|
|
5
|
%
|
3
|
|
10%
|
Cross-border volume fees
|
12%
|
|
(5)%
|
|
2
|
%
|
|
|
9%
|
Transaction processing
|
14%
|
|
(4)%
|
|
2
|
%
|
|
|
13%
|
Other revenues
|
**
|
|
(2)%
|
|
14
|
%
|
4
|
|
12%
|
Rebates and incentives (contra-revenue)
|
11%
|
|
(5)%
|
|
11
|
%
|
5
|
|
17%
|
|
|
|
|
|
|
|
|
|
|
Net revenue
|
11%
|
|
(4)%
|
|
2
|
%
|
|
|
9%
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
Growth (USD)
|
|
Growth (Local)
|
|
Growth (USD)
|
|
Growth (Local)
|
Mastercard-branded GDV 1
|
5%
|
|
12%
|
|
19%
|
|
14%
|
Asia Pacific/Middle East/Africa
|
4%
|
|
10%
|
|
19%
|
|
13%
|
Canada
|
1%
|
|
6%
|
|
15%
|
|
9%
|
Europe
|
5%
|
|
17%
|
|
31%
|
|
19%
|
Latin America
|
3%
|
|
13%
|
|
18%
|
|
17%
|
United States
|
8%
|
|
8%
|
|
11%
|
|
11%
|
Cross-border volume 1
|
6%
|
|
13%
|
|
30%
|
|
20%
|
Switched Transactions
|
|
|
17%
|
|
|
|
16%
|
|
Three Months Ended March 31,
|
|
Increase (Decrease)
|
||||||
|
2019
|
|
2018
|
|
|||||
|
($ in millions)
|
||||||||
General and administrative
|
$
|
1,367
|
|
|
$
|
1,321
|
|
|
3%
|
Advertising and marketing
|
192
|
|
|
197
|
|
|
(2)%
|
||
Depreciation and amortization
|
117
|
|
|
120
|
|
|
(2)%
|
||
Provision for litigation
|
—
|
|
|
117
|
|
|
**
|
||
Total operating expenses
|
1,676
|
|
|
1,755
|
|
|
(5)%
|
||
Special Items1
|
—
|
|
|
(117
|
)
|
|
**
|
||
Adjusted total operating expenses (excluding Special Items1)
|
$
|
1,676
|
|
|
$
|
1,638
|
|
|
2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2019
|
||||||
|
Operational
|
|
Special
Items 1
|
|
Foreign
Currency 2
|
|
Total
|
General and administrative
|
6%
|
|
—%
|
|
(2)%
|
|
3%
|
Advertising and marketing
|
2%
|
|
—%
|
|
(5)%
|
|
(2)%
|
Depreciation and amortization
|
—%
|
|
—%
|
|
(2)%
|
|
(2)%
|
Provision for litigation
|
**
|
|
**
|
|
**
|
|
**
|
Total operating expenses
|
5%
|
|
(7)%
|
|
(3)%
|
|
(5)%
|
|
Three Months Ended March 31,
|
|
Increase (Decrease)
|
||||||
|
2019
|
|
2018
|
|
|||||
|
($ in millions)
|
||||||||
Personnel
|
$
|
811
|
|
|
$
|
752
|
|
|
8%
|
Professional fees
|
86
|
|
|
81
|
|
|
6%
|
||
Data processing and telecommunications
|
155
|
|
|
141
|
|
|
10%
|
||
Foreign exchange activity1
|
1
|
|
|
28
|
|
|
**
|
||
Other
|
314
|
|
|
319
|
|
|
(2)%
|
||
General and administrative expenses
|
$
|
1,367
|
|
|
$
|
1,321
|
|
|
3%
|
•
|
Personnel expenses increased 8%, or 10% on a currency-neutral basis. 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.
|
•
|
Data processing and telecommunication expenses increased 10%, or 12% on a currency-neutral basis, primarily due to higher software licensing costs as well as software and hardware maintenance.
|
•
|
Foreign exchange activity contributed a benefit of 2 percentage points. For the three months ended March 31, 2019, we recorded losses from our foreign exchange derivative contracts which were primarily offset by balance sheet remeasurement gains. This compares to losses from both our foreign exchange derivative contracts and balance sheet remeasurement in the prior year comparable period.
|
•
|
Other expenses remained relatively flat for the three months ended March 31, 2019. Other expenses include charitable contribution costs, costs to provide loyalty and rewards solutions, travel and meeting expenses, rental expense for our facilities and other costs associated with our business.
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
|
(in billions)
|
||||||
Cash, cash equivalents and investments 1
|
$
|
7.2
|
|
|
$
|
8.4
|
|
Unused line of credit
|
4.5
|
|
|
4.5
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(in millions)
|
||||||
Cash Flow Data:
|
|
|
|
||||
Net cash provided by operating activities
|
$
|
1,312
|
|
|
$
|
1,035
|
|
Net cash provided by investing activities
|
213
|
|
|
367
|
|
||
Net cash used in financing activities
|
(2,223
|
)
|
|
(665
|
)
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
|
(in millions)
|
||||||
Balance Sheet Data:
|
|
|
|
||||
Current assets
|
$
|
14,396
|
|
|
$
|
16,171
|
|
Current liabilities
|
10,246
|
|
|
11,593
|
|
||
Long-term liabilities
|
8,011
|
|
|
7,778
|
|
||
Equity
|
5,190
|
|
|
5,418
|
|
|
(in millions, except average price data)
|
||
Remaining authorization at December 31, 2018
|
$
|
6,801
|
|
Dollar value of shares repurchased during the three months ended March 31, 2019
|
$
|
1,824
|
|
Remaining authorization at March 31, 2019
|
$
|
4,977
|
|
Shares repurchased during the three months ended March 31, 2019
|
8.7
|
|
|
Average price paid per share during the three months ended March 31, 2019
|
$
|
209.05
|
|
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
|
|
4,169,058
|
|
|
$
|
194.36
|
|
|
4,169,058
|
|
|
$
|
5,990,303,066
|
|
February 1 - 28
|
|
2,273,601
|
|
|
$
|
216.69
|
|
|
2,273,601
|
|
|
$
|
5,497,637,960
|
|
March 1 - 31
|
|
2,281,136
|
|
|
$
|
228.27
|
|
|
2,281,136
|
|
|
$
|
4,976,917,562
|
|
Total
|
|
8,723,795
|
|
|
$
|
209.05
|
|
|
8,723,795
|
|
|
|
|
|
|
Exhibit
Number
|
|
Exhibit Description
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
101.INS
|
|
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL 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:
|
April 30, 2019
|
By:
|
|
/S/ AJAY BANGA
|
|
|
|
|
Ajay Banga
|
|
|
|
|
President and Chief Executive Officer
|
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
Date:
|
April 30, 2019
|
By:
|
|
/S/ SACHIN MEHRA
|
|
|
|
|
Sachin Mehra
|
|
|
|
|
Chief Financial Officer
|
|
|
|
|
(Principal Financial Officer)
|
|
|
|
|
|
Date:
|
April 30, 2019
|
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 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
|
|
|
|
|
• 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)
|
|
Without Cause or with
Good Reason
(not in connection with a Change in Control)
|
|
|
|
|
• 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 in exchange for extended restrictive covenants 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 in exchange for extended restrictive covenants at Mastercard’s discretion)
• Payment of the monthly COBRA medical coverage premium for the applicable period (or, if shorter, the severance period) 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
|
|
|
|
|
• 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” Change in Control 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), but not beyond the employee’s mandatory retirement date
|
• 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, but not beyond the employee’s mandatory retirement date
|
• Payment of the monthly COBRA medical coverage premium for the applicable period (or, if shorter, the severance period) 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)
|
Long-term incentive awards
|
|
|
Severance plan payments
|
|
|
Change in Control payments
|
|
|
|
||||
• 12-month non-compete
• 24-month non-solicit
• In 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
|
|
|
|
|
|
|
|
Termination event*
|
|
|
|
|
|
Components of termination payment
|
|
|
|
|
|
||
|
|
|
|
|
|
|
Death
|
|
|
|
|
|
• Target annual incentive bonus for year in which termination occurs (plus the 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
(not in connection with a Change in Control)
|
|
|
|
|
• 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 in exchange for extended restrictive covenants 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 in exchange for extended restrictive covenants at Mastercard’s discretion)
• Payment of the monthly COBRA medical coverage premium for the applicable period (or, if shorter, the severance period) 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
|
|
|
|
|
• 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” Change in Control 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), but not beyond the employee’s mandatory retirement date
|
• 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, but not beyond the employee’s mandatory retirement date
|
• Payment of the monthly COBRA medical coverage premium for the applicable period (or, if shorter, the severance period) 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)
|
Long-term incentive awards
|
|
|
Severance plan payments
|
|
|
Change in Control payments
|
|
|
|
||||
• 12-month non-compete
• 24-month non-solicit
• In 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)
|
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:
|
April 30, 2019
|
|
|
|
|
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:
|
April 30, 2019
|
|
|
|
|
By:
|
/s/ Sachin Mehra
|
|
|
Sachin Mehra
|
|
|
Chief Financial Officer
|
|
April 30, 2019
|
|
/s/ Ajay Banga
|
Ajay Banga
|
President and Chief Executive Officer
|
|
April 30, 2019
|
|
/s/ Sachin Mehra
|
Sachin Mehra
|
Chief Financial Officer
|
•
|
certain acquirers located in the Asia Pacific, European and Middle Eastern regions having acquired transactions for consular services with Iranian embassies in those regions that accepted Mastercard cards
|
•
|
certain acquirers located in the European and Middle Eastern regions having acquired transactions for Iran Air, which accepted Mastercard cards in those regions
|