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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
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Washington, D.C. 20549
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Form
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10-K
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☒
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Or
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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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For the transition period from to
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Mastercard Incorporated
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(Exact name of registrant as specified in its charter)
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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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Purchase,
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NY
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10577
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(Address of principal executive offices)
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(Zip Code)
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Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol
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Name of each exchange of which registered
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Class A Common Stock, par value $0.0001 per share
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MA
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New York Stock Exchange
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1.100% Notes due 2022
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MA22
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New York Stock Exchange
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2.100% Notes due 2027
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MA27
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New York Stock Exchange
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2.500% Notes due 2030
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MA30
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New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the Act:
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Class B common stock, par value $0.0001 per share
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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
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Yes
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No
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☐
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Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
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Yes
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☐
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No
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☒
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
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Yes
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☒
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No
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☐
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Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files)
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Yes
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☒
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No
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☐
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Portions of the registrant’s definitive proxy statement for the 2020 Annual Meeting of Stockholders are incorporated by reference into Part III hereof.
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PART I
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PART II
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PART III
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PART IV
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regulation directly related to the payments industry (including regulatory, legislative and litigation activity with respect to interchange rates and surcharging)
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the impact of preferential or protective government actions
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regulation of privacy, data, security and the digital economy
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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; and issuer practice regulation)
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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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potential or incurred liability and limitations on business related to any litigation or litigation settlements
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the impact of competition in the global payments industry (including disintermediation and pricing pressure)
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the challenges relating to rapid technological developments and changes
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the challenges relating to operating a real-time account-based payment system and to working with new customers and end users
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the impact of information security incidents, account data breaches or service disruptions
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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), merchants and governments
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exposure to loss or illiquidity due to our role as guarantor and other contractual obligations
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the impact of global economic, political, financial and societal events and conditions
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reputational impact, including impact related to brand perception and lack of visibility of our brands in products and services
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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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issues related to acquisition integration, strategic investments and entry into new businesses
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issues related to our Class A common stock and corporate governance structure
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GAAP
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Net revenue
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Net income
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Diluted EPS
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$16.9B
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$8.1B
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$7.94
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up 13%
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up 39%
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up 42%
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NON-GAAP 1 (currency-neutral)
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Net revenue
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Adjusted net income
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Adjusted diluted EPS
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$16.9B
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$7.9B
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$7.77
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up 16%
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up 20%
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up 23%
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$7.8B
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$6.5B
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Repurchased shares
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$8.2B
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in capital returned
to stockholders |
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$1.3B
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Dividends paid
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cash flows
from operations |
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Gross dollar volume
(growth on a local currency basis)
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Cross-border volume growth on a local currency basis 2
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Switched transactions 2
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$6.5T
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up 16%
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87.3B
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up 13%
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up 19%
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1
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Non-GAAP results exclude the impact of gains and losses on equity investments, Special Items and/or foreign currency. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Financial Results Overview” in Part II, Item 7 for the reconciliation to the most direct comparable GAAP financial measures.
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2
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Growth rates normalized to eliminate the effects of differing switching and carryover days between periods. Carryover days are those where transactions and volumes from days where the company does not clear and settle are processed.
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personal consumption expenditure (“PCE”) growth
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driving cash and check transactions toward electronic forms of payment
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increasing our share in the payments space
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GROW
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DIVERSIFY
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BUILD
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CORE
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CUSTOMERS AND GEOGRAPHIES
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NEW AREAS
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Credit
Debit
Commercial
Prepaid
Digital-Physical Convergence
Acceptance
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Financial Inclusion
New Markets
Businesses
Governments
Merchants
Digital Players
Local Schemes/Switches
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Data Analytics
Consulting
Marketing Services
Loyalty
Cyber and Intelligence
Processing
New Payment Flows
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ENABLED BY BRAND, DATA, TECHNOLOGY AND PEOPLE
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working with new customers, including governments, merchants, financial technology companies, digital players, mobile providers and other corporate businesses
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scaling our capabilities and business into new geographies, including growing acceptance in markets with limited electronic payments acceptance today
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broadening financial inclusion for the unbanked and underbanked
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creating and acquiring differentiated products to provide unique, innovative solutions that we bring to market to support new payment flows and related applications, such as real-time account-based payments and the Mastercard Track™ suite of products
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providing services across data analytics, consulting, marketing services, loyalty, cyber and intelligence, and processing
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Interchange Fees. Interchange fees reflect the value merchants receive from accepting our products and play a key role in balancing the costs and benefits that consumers and merchants derive. We do not earn revenues from interchange fees. Generally, interchange fees are collected from acquirers and paid to issuers to reimburse the issuers for a portion of the costs incurred. These costs are incurred by issuers in providing services that benefit all participants in the system, including acquirers and merchants, whose participation in the network enables increased sales to their existing and new customers, efficiencies in the delivery of existing and new products, guaranteed payments and improved experience for their customers. We (or, alternatively, financial institutions) establish “default interchange fees” that apply when there are no other established settlement terms in place between an issuer and an acquirer. We administer the collection and remittance of interchange fees through the settlement process.
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Additional Four-Party System Fees. The merchant discount rate is established by the acquirer to cover its costs of both participating in the four-party system and providing services to merchants. The rate takes into consideration the amount of the interchange fee which the acquirer generally pays to the issuer. Additionally, acquirers may charge merchants processing and related fees in addition to the merchant discount rate, and issuers may also charge account holders fees for the transaction, including, for example, fees for extending revolving credit.
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Authorization, Clearing and Settlement. Through our core network, we enable the routing of a transaction to the issuer for its approval, facilitate the exchange of financial transaction information between issuers and acquirers after a successfully conducted transaction, and help to settle the transaction by facilitating the exchange of funds between parties via settlement banks chosen by us and our customers.
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Cross-Border and Domestic. Our core network switches transactions throughout the world when the merchant country and country of issuance are different (“cross-border transactions”), providing account holders with the ability to use, and merchants to accept, our products and services across country borders. We also provide switched transaction services to customers where the merchant country and the country of issuance are the same (“domestic transactions”). We switch more than half of all transactions for Mastercard and Maestro-branded cards, including nearly all cross-border transactions. We switch the majority of Mastercard and Maestro-branded domestic transactions in the United States, United Kingdom, Canada, Brazil and a select number of other countries. Outside of these countries, most domestic transactions on our products are switched without our involvement.
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Year Ended December 31, 2019
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As of December 31, 2019
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GDV
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Cards
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(in billions)
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Growth (Local)
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% of Total GDV
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(in millions)
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Percentage Increase from December 31, 2018
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Mastercard-branded Programs1,2
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Consumer Credit
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$
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2,670
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10
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%
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41
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%
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882
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8
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%
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Consumer Debit and Prepaid
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3,059
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16
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%
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48
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%
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1,207
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9
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%
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Commercial Credit and Debit
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732
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14
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%
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11
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%
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85
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15
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%
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1
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Excludes Maestro and Cirrus cards and volume generated by those cards.
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2
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Prepaid includes both consumer and commercial prepaid.
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We offer commercial payment products and solutions aimed at improving the way businesses pay and get paid by providing a single connection enabling access to multiple payment types, greater control and richer data to optimize B2B transactions for both buyers and suppliers.
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We offer real-time account-based payments for ACH transactions. This platform enables payments between bank accounts in real time and provides enhanced data and messaging capabilities.
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We offer a platform that makes it easier for consumers to view, manage and pay their bills either with cards or real-time and batch ACH payments from their bank accounts.
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We offer a platform that enables consumers, businesses, governments and merchants to send and receive money beyond borders with greater speed and ease.
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The “Prevent” layer protects infrastructure, devices and data from attacks. We have continued to grow global usage of EMV chip and contactless security technology, helping to reduce fraud. Greater usage of this technology has increased the number of EMV cards issued and the transaction volume on EMV cards.
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The “Identify” layer allows us to help banks and merchants verify the authenticity of consumers during the payment process using various biometric technologies, including fingerprint, face and iris scanning technology to verify online purchases on mobile devices, as well as a card with biometric technology built in.
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The “Detect” layer spots fraudulent behavior and cyber-attacks and takes action to stop these activities once detected. Our offerings in this space include alerts when accounts are exposed to data breaches or security incidents, fraud scoring technology that scans billions of dollars of money flows each day while increasing approvals and reducing false declines, and network-level monitoring on a global scale to help identify the occurrence of widespread fraud attacks when the customer (or their processor) may be unable to detect or defend against them.
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The “Experience” layer improves the security experience for our stakeholders in areas from the speed of transactions, enhancing approvals for online and card-on-file payments, to the ability to differentiate legitimate consumers from fraudulent ones. Our offerings in this space include solutions for consumer alerts and controls and a suite of digital token services. We also have acquired an e-commerce fraud and dispute management network that enables merchants to stop delivery when a fraudulent or disputed transaction is identified, and issuers to refund the cardholder to avoid the chargeback process.
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Issuer solutions designed to provide customers with a complete processing solution to help them create differentiated products and services and allow quick deployment of payments portfolios across banking channels.
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Payment gateways that offer a single interface to provide e-commerce merchants with the ability to process secure online and in-app payments and offer value-added solutions, including outsourced electronic payments, fraud prevention and alternative payment options.
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Mobile gateways that facilitate transaction routing and processing for mobile-initiated transactions.
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Delivering better digital experiences everywhere. We are using our technologies and security protocols to develop solutions to make digital shopping and selling experiences, such as on smartphones and other connected devices, simpler, faster and safer for both consumers and merchants. We also offer products that make it easier for merchants to accept payments and expand their customer base and are developing products and practices to facilitate acceptance via mobile devices. The successful implementation of our loyalty and reward programs is an important part of enabling these digital purchasing experiences.
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Securing more transactions. We are leveraging tokenization, biometrics and machine learning technologies in our push to secure every transaction. These efforts include driving EMV-level security and benefits through all our payment channels.
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Digitizing personal and business payments. We provide solutions that enable our customers to offer consumers the ability to send and receive money quickly and securely domestically and around the world. These solutions allow our customers to address new payment flows from any funding source, such as cash, card, bank account or mobile money account, to any destination globally, securely and in real time.
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Simplifying access to, and integration of, our digital assets. Our Mastercard Developer platform makes it easy for customers and partners to leverage our many digital assets and services. By providing a single access point with tools and capabilities to find what we believe are some of the best-in-class Application Program Interfaces (“APIs”) across a broad range of Mastercard services, we enable easy integration of our services into new and existing solutions.
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Identifying and experimenting with future technologies, start-ups and trends. Through Mastercard Labs, our global innovation and development arm, we continue to bring customers and partners access to thought leadership, innovation methodologies, new technologies and relevant early-stage fintech players.
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Consumer
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delivered “click to pay”, our activation of the EMV Secure Remote Commerce industry standard that enables a faster, more secure checkout experience across web and mobile sites, mobile apps and connected devices. This checkout experience is designed to provide consumers the same convenience and security in a digital environment that they have when paying in a store, make it easier for merchants to implement secure digital payments and provide issuers with improved fraud detection and prevention capability.
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reinforced our support for contactless payments across all markets, including launching tap-and-go payments for transit systems in multiple cities globally (including New York City, Miami, Portland and Mexico City), which is creating the foundations for increased adoption of this technology to deliver a faster in-person payment experience.
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Commercial and B2B
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announced Mastercard Track, our B2B payment ecosystem which represents a collection of products and services aimed at improving the way businesses pay and get paid. The Track suite of products aims to introduce Mastercard Track Business Payment Service™, an open-loop commercial service built to simplify and automate payments between suppliers and buyers.
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extended our support for commercial cards by adding new partners to our virtual card program, with a focus on helping to make virtual cards a preferred tool with straight-through (automated) acceptance and processing.
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New payment flows
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signed new agreements to bring our real-time payments infrastructure to more markets, including our relationship with P27 Nordic Payments Platform that will help deliver one real-time and batch payments solution across the Nordic markets. This solution uses the same technology that powers the ability for consumers and businesses in the U.S. to send and receive immediate payments through the Clearing House platform. We were also selected to enhance the InstaPay real-time retail payment system in the Philippines, including operating the infrastructure for and providing anti-money laundering tools to the national clearing switch in the Philippines.
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positioned ourselves to add to our real-time payments solutions, including our pending acquisition of the majority of the Corporate Services business of Nets Denmark A/S. The pending acquisition primarily comprises the clearing and instant payment services, and e-billing solutions of the business.
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enhanced Mastercard Bill Pay Exchange™ with the acquisition of Transactis, a platform that makes it easier for consumers to view, manage and pay their bills either with cards or real-time and batch ACH payments from their bank accounts.
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acquired Transfast, enabling us to continue servicing the growing needs of consumers and businesses, as well as governments and merchants, to send and receive money beyond borders with greater speed and ease. When combined with our proprietary Mastercard Send™ assets, we have greatly extended our network reach.
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drove blockchain initiatives, with an initial focus on the cross-border B2B payments space and proof of provenance solutions for supply chains.
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Services
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extended our investments in Artificial Intelligence (“AI”) by:
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launching Mastercard ThreatScan, an AI-powered solution that helps banks proactively identify potential vulnerabilities in their authorization systems. The service works alongside an issuer’s existing fraud tools, imitating known criminal transaction behavior to identify potential weaknesses and prompt action before fraud potentially occurs.
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scaling Decision Intelligence™, our fraud scoring technology, to score billions of transactions in real time every day while increasing approvals and reducing false declines.
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acquired Ethoca, an e-commerce fraud and dispute management network that enables the sharing of intelligence between merchants and issuers, sending near real-time information to merchants to stop delivery when a fraudulent or disputed transaction is identified, and refund the cardholder to avoid the chargeback process.
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acquired RiskRecon, a provider of AI and data analytics with cyber risk assessment capabilities that are designed to help financial institutions, merchants, corporations and governments secure their digital assets.
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acquired Session M, a loyalty platform that enables stronger relationships with retailers, restaurants, airlines and consumer packaged goods companies by creating experiences that drive loyalty and impactful consumer engagement.
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enhanced the services we are able to offer to customers based on account-to-account flows, including data insights we are providing U.K. and U.S. customers to help them with anti-money laundering compliance and identification and prevention of other financial crimes.
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Other Initiatives
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In 2019, we continued to implement our shift to a symbol brand by dropping our name from our logo, and debuted our sonic brand identity, comprised of a comprehensive sound architecture featuring a distinctive melody that will be employed in physical, digital and voice environments where consumers engage with Mastercard across the globe.
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In 2019, we contributed an additional $100 million towards initiatives that focus on inclusive growth for a total of $200 million contributed through December 31, 2019. These contributions are part of our previously announced $500 million commitment to support inclusive growth efforts, such as financial inclusion, economic development, the future of work and data science for social impact.
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cash and checks
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card-based payments, including credit, charge, debit, ATM and prepaid products, as well as limited-use products such as private label
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contactless, mobile and e-commerce payments, as well as cryptocurrency
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other electronic payments, including ACH payments and wire transfers
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Cash, Check and Legacy ACH. Cash and checks continue to represent one of the most widely used forms of payment. However, an even larger share of payments on a U.S. dollar volume basis are made via legacy, or “slow,” ACH platforms.
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General Purpose Payment Networks. We compete worldwide with payment networks such as Visa, American Express, JCB, China UnionPay and Discover, among others. Some competitors have more market share than we do in certain jurisdictions. Some also have different business models that may provide an advantage in pricing, regulatory compliance burdens or otherwise. In addition, several governments are promoting, or considering promoting, local networks for domestic switching. See “Risk Factors” in Part I, Item 1A for a more detailed discussion of the risks related to payments system regulation and government actions that may prevent us from competing effectively.
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Debit and Local Networks. We compete with ATM and point-of-sale debit networks in various countries. In addition, in many countries outside of the United States, local debit brands serve as the main domestic brands, while our brands are used mostly to enable cross-border transactions (typically representing a small portion of overall transaction volume). Certain jurisdictions have also created domestic card schemes focused mostly on debit.
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Competition for Customer Business. We compete intensely with other payments companies for customer business. Globally, financial institutions typically issue both Mastercard and Visa-branded payment products, and we compete with Visa for business on the basis of individual portfolios or programs. In addition, a number of our customers issue American Express and/or Discover-branded payment cards in a manner consistent with a four-party system. We continue to face intense competitive pressure on the prices we charge our issuers and acquirers, and we seek to enter into business agreements with them through which we offer incentives and other support to issue and promote our payment products. We also compete for business from merchants, governments and mobile providers.
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Real-time Account-based Payment Systems. We face competition in the real-time account-based payment space from other companies that provide these payment solutions. In addition, real-time account-based payments face competition from other payment methods, such as cash and checks, cards, electronic, mobile and e-commerce payment platforms, cryptocurrencies and other payments networks.
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Alternative Payments Systems and New Entrants. As the global payments industry becomes more complex, we face increasing competition from alternative payment systems and emerging payment providers. Many of these providers, who in many circumstances can also be our partners or customers, have developed payments systems focused on online activity in e-commerce and mobile channels (in some cases, expanding to other channels), and may process payments using in-house account transfers, real-time account-based payment networks or global or local networks. Examples include digital wallet providers (such as Paytm, PayPal, Alipay and Amazon), mobile operator services, mobile phone-based money transfer and microfinancing services (such as mPesa), handset manufacturers and cryptocurrencies.
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Value-Added Products and Services. We face competition from companies that provide alternatives to our value-added products and services, including information services and consulting firms that provide consulting services and insights to financial institutions, as well as companies that compete against us as providers of loyalty and program management solutions. In addition, our integrated products and services offerings face competition and potential displacement from transaction processors throughout the world, which are seeking to enhance their networks that link issuers directly with point-of-sale devices for payment transaction authorization and processing services. Regulatory initiatives could also lead to increased competition in this space.
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•
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globally recognized brands
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highly adaptable global acceptance network built over 50 years which can reach a variety of parties enabling payments
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global payments network with world-class operating performance
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expertise in real-time account-based payments
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adoption of innovative products and digital solutions
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safety and security solutions embedded in our networks
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analytics insights and consulting services dedicated solely to the payments industry
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ability to serve a broad array of participants in global payments due to our expanded on-soil presence in individual markets and a heightened focus on working with governments
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world class talent
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Governments in some countries are considering, or may consider, regulatory requirements that mandate switching of domestic payments either entirely in that country or by only domestic companies.
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Some jurisdictions are considering requirements to collect, process and/or store data within their borders, as well as prohibitions on the transfer of data abroad, leading to technological and operational implications.
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Geopolitical events and resulting OFAC sanctions, adverse trade policies or other types of government actions could lead jurisdictions affected by those sanctions to take actions in response that could adversely affect our business.
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Regional groups of countries are considering, or may consider, efforts to restrict our participation in the switching of regional transactions.
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•
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Anti-Money Laundering, Counter Terrorist Financing, Economic Sanctions and Anti-Corruption - We are subject to AML and CFT laws and regulations globally, including the U.S. Bank Secrecy Act and the USA PATRIOT Act, as well as the various economic sanctions programs, including those imposed and administered by OFAC. The economic sanctions programs administered by OFAC restrict financial transactions and other dealings with certain countries and geographies (specifically Crimea, Cuba, Iran, North Korea and Syria) and with persons and entities included in OFAC sanctions lists including the SDN List. Iran, Sudan and Syria have been identified by the U.S. State Department as terrorist-sponsoring states. We are also subject to anti-corruption laws and regulations globally, including the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act, which, among other things, generally prohibit giving or offering payments or anything of value for the purpose of improperly influencing a business decision or to gain an unfair business advantage. A violation and subsequent judgment or settlement against us, or those with whom we may be associated, under these laws could subject us to substantial monetary penalties, damages, and/or have a significant reputational impact.
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•
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Account-based Payment Systems - In the U.K., Her Majesty’s Treasury has expanded the Bank of England’s oversight of certain payment system providers that are systemically important to U.K.’s payment network. As a result of these changes, aspects of our Vocalink business are now subject to the U.K. payment system oversight regime and are directly overseen by the Bank of England.
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•
|
Issuer Practice Legislation and Regulation - Our financial institution customers are subject to numerous regulations, which impact us as a consequence. In addition, certain regulations (such as PSD2 in the EEA) may disintermediate issuers. PSD2 may enable third-party payment processors to route transactions away from Mastercard products by offering account information or payment initiation services directly to those who currently use our products. This may also allow these processors to commoditize the data that are included in the transactions. If our customers are disintermediated in their business, we could face diminished demand for our integrated products and services. Other regulations, such as PSD2’s strong authentication requirement, could increase the number of transactions that consumers abandon if we are unable to secure a frictionless authentication experience under the new standards. An increase in the rate of abandoned transactions could adversely impact our volumes or other operational metrics.
|
•
|
Some of our traditional competitors, as well as alternative payment service providers, may have substantially greater financial and other resources than we have, may offer a wider range of programs and services than we offer or may use more effective advertising and marketing strategies to achieve broader brand recognition or merchant acceptance than we have.
|
•
|
Our ability to compete may also be affected by the outcomes of litigation, competition-related regulatory proceedings, central bank activity and legislative activity.
|
•
|
Parties that process our transactions in certain countries may try to eliminate our position as an intermediary in the payment process. For example, merchants could switch (and in some cases are switching) transactions directly with issuers. Additionally, processors could process transactions directly between issuers and acquirers. Large scale consolidation within processors could result in these processors developing bilateral agreements or in some cases switching the entire transaction on their own network, thereby disintermediating us.
|
•
|
Regulation in the EEA may disintermediate us by enabling third-party providers opportunities to route payment transactions away from our networks and towards other forms of payment.
|
•
|
Although we partner with technology companies (such as digital players and mobile providers) that leverage our technology, platforms and networks to deliver their products, they could develop platforms or networks that disintermediate us from digital payments and impact our ability to compete in the digital economy. This risk is heightened when we have relationships with these entities where we share Mastercard data. While we share this data in a controlled manner subject to applicable anonymization and privacy and data standards, without proper oversight we could inadvertently share too much data which could give the partner a competitive advantage.
|
•
|
Competitors, customers, technology companies, governments and other industry participants may develop products that compete with or replace value-added products and services we currently provide to support our switched transaction and payment offerings. These products could replace our own switching and payments offerings or could force us to change our pricing or practices for these offerings. In addition, governments that develop national payment platforms may promote their platforms in such a way that could put us at a competitive disadvantage in those markets.
|
•
|
Participants in the payments industry may merge, create joint ventures or form other business combinations that may strengthen their existing business services or create new payment products and services that compete with our services.
|
•
|
Technological changes, including continuing developments of technologies in the areas of smart cards and devices, contactless and mobile payments, e-commerce, cryptocurrency and block chain technology, machine learning and AI, could result in new technologies that may be superior to, or render obsolete, the technologies we currently use in our programs and services. Moreover, these changes could result in new and innovative payment methods and products that could place us at a competitive disadvantage and that could reduce the use of our products.
|
•
|
We rely in part on third parties, including some of our competitors and potential competitors, for the development of and access to new technologies. The inability of these companies to keep pace with technological developments, or the acquisition of these companies by competitors, could negatively impact our offerings.
|
•
|
Our ability to develop and adopt new services and technologies may be inhibited by industry-wide solutions and standards (such as those related to EMV, tokenization or other safety and security technologies), and by resistance from customers or merchants to such changes.
|
•
|
Our ability to develop evolving systems and products may be inhibited by any difficulty we may experience in attracting and retaining technology experts.
|
•
|
Our ability to adopt these technologies can also be inhibited by intellectual property rights of third parties. We have received, and we may in the future receive, notices or inquiries from patent holders (for example, other operating companies or non-practicing entities) suggesting that we may be infringing certain patents or that we need to license the use of their patents to avoid infringement. Such notices may, among other things, threaten litigation against us or our customers or demand significant license fees.
|
•
|
Our ability to develop new technologies and reflect technological changes in our payments offerings will require resources, which may result in additional expenses.
|
•
|
We work with technology companies (such as digital players and mobile providers) that use our technology to enhance payment safety and security and to deliver their payment-related products and services quickly and efficiently to consumers. Our inability to keep pace technologically could negatively impact the willingness of these customers to work with us, and could encourage them to use their own technology and compete against us.
|
•
|
Governmental entities typically fund projects through appropriated monies. Changes in governmental priorities or other political developments, including disruptions in governmental operations, could impact approved funding and result in changes in the scope, or lead to the termination of, the arrangements or contracts we or financial institutions enter into with respect to our payment products and services.
|
•
|
Our work with governments subjects us to U.S. and international anti-corruption laws, including the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act. A violation and subsequent judgment or settlement under these laws could subject us to substantial monetary penalties and damages and have a significant reputational impact.
|
•
|
Working or contracting with governments, either directly or via our financial institution customers, can subject us to heightened reputational risks, including extensive scrutiny and publicity, as well as a potential association with the policies of a government as a result of a business arrangement with that government. Any negative publicity or negative association with a government entity, regardless of its accuracy, may adversely affect our reputation.
|
•
|
Customers mitigating their economic exposure by limiting the issuance of new Mastercard products and requesting greater incentive or greater cost stability from us
|
•
|
Consumers and businesses lowering spending, which could impact domestic and cross-border spend
|
•
|
Government intervention (including the effect of laws, regulations and/or government investments on or in our financial institution customers), as well as uncertainty due to changing political regimes in executive, legislative and/or judicial branches of government, that may have potential negative effects on our business and our relationships with customers or otherwise alter their strategic direction away from our products
|
•
|
Tightening of credit availability that could impact the ability of participating financial institutions to lend to us under the terms of our credit facility
|
•
|
our stockholders are not entitled to the right to cumulate votes in the election of directors
|
•
|
our stockholders are not entitled to act by written consent
|
•
|
a vote of 80% or more of all of the outstanding shares of our stock then entitled to vote is required for stockholders to amend any provision of our bylaws
|
•
|
any representative of a competitor of Mastercard or of Mastercard Foundation is disqualified from service on our board of directors
|
Name
Current Position
|
|
Age
|
|
Previous Mastercard Experience
|
|
Previous Business Experience
|
Ajay Banga
President & Chief Executive Officer since July 2010 |
|
60
|
|
President and COO (2009-2010)
|
|
Executive positions at Citigroup (1996-2009), including CEO, Asia Pacific region; Chairman and CEO, International Global Consumer Group; Executive Vice President, Global Consumer Group; President, Retail Banking, North America; and business head for CitiFinancial and the U.S. Consumer Assets Division
Previous experience at Nestlé India and PepsiCo totaling 15 years, in roles of increasing responsibility
|
Ajay Bhalla
President, Cyber and Intelligence Solutions since November 2018 |
|
54
|
|
President, Enterprise Security Solutions (2014- 2018)
President, Digital Gateway Services (2011-2013)
President, South Asia and Southeast Asia (2008-2011)
President, Southeast Asia (2002-2007)
Country Manager, Singapore and Head of Marketing, Southeast Asia (1997-2002)
Vice President (1993-1997)
|
|
Various leadership positions at HSBC and Xerox Corporation (1988-1993)
|
Ann Cairns
Vice Chairman since June 2018 |
|
63
|
|
President, International (2011-2018)
|
|
Managing director, Alvarez & Marsal (led the European team managing the estate of Lehman Brothers Holdings International through the Chapter 11 process in Europe) (2002-2008)
CEO, ABN AMRO
Senior corporate and investment banking roles at Citigroup
Research scientist and engineer for British Gas
|
Gilberto Caldart
President, International since June 2018 |
|
60
|
|
President, Latin America and Caribbean region (2013-2018)
Division President, South Latin America/Brazil (2008-2013)
|
|
Various leadership positions at Citigroup, including Country Business Manager, Brazil (2002-2008)
|
Michael Fraccaro
Chief People Officer since July 2016 |
|
54
|
|
Executive Vice President, Human Resources, Global Products and Solutions (2014-2016)
Senior Vice President, Human Resources, Global Products and Solutions (2012-2014)
|
|
Various executive-level human resources positions at HSBC Group, Hong Kong, a banking and financial services firm (2000-2012)
Prior senior human resources positions in banking and financial services in Australia and the Middle East
|
Name
Current Position
|
|
Age
|
|
Previous Mastercard Experience
|
|
Previous Business Experience
|
Michael Froman
Vice Chairman and President, Strategic Growth
since April 2018
|
|
57
|
|
Mr. Froman joined the Company in April 2018 in his current role
|
|
U.S. Trade Representative in the Executive Office of President Obama (2013-2017)
Assistant to the President and Deputy National Security Advisor for International Economic Policy (2009-2013)
Various executive positions at Citigroup (1999-2009), including CEO, CitiInsurance and COO of Citigroup’s alternative investments business
|
Edward McLaughlin
President, Operations and Technology since May 2017 |
|
54
|
|
Chief Information Officer (2016-2017)
Chief Emerging Payments Officer (2010-2015)
Chief Franchise Development Officer (2009-2010)
Senior Vice President, Bill Payment and Healthcare (2005-2009)
|
|
Group Vice President, Product and Strategy, Metavante Corporation (financial services technology company) (2002-2005)
Co-Founder and CEO, Paytrust, Inc. (online payments company acquired by Metavante Corporation in 2002) (1998-2002)
|
Sachin Mehra
Chief Financial Officer since April 2019 |
|
49
|
|
Chief Financial Operations Officer (2018-2019)
Executive Vice President, Commercial Products (2015-2018)
Executive Vice President and Business Financial Officer, North America (2013-2015)
Corporate Treasurer (2010-2013)
|
|
Vice President and Treasurer, Hess Corporation (2008-2010)
Vice President and Deputy Treasurer, Hess Corporation (2007-2008)
Various treasury and finance positions of increasing responsibility, General Motors Corporation and GMAC (1996-2007)
|
Michael Miebach
Chief Product Officer since January 2016 |
|
52
|
|
President, Middle East and Africa (2010-2015)
|
|
Managing Director, Middle East and North Africa, Barclays Bank PLC (2008-2010)
Managing Director, Sub-Saharan Africa, Barclays Bank PLC (2007-2008)
Various executive positions at Citigroup in Germany, Austria, U.K. and Turkey (1994-2007)
|
Tim Murphy
General Counsel since April 2014 |
|
52
|
|
Chief Product Officer (2009-2014)
President, U.S. Region (2007-2009)
Executive Vice President, Customer Business Planning and Analysis (2006- 2007)
Senior Vice President and Associate General Counsel (2002-2006)
|
|
Associate, Cleary, Gottlieb, Steen and Hamilton, New York and London
|
Raja Rajamannar
Chief Marketing and Communications Officer and President, Healthcare since January 2016 |
|
58
|
|
Chief Marketing Officer (2013-2015)
|
|
Executive Vice President-Senior Business and Chief Transformation Officer, Anthem (formerly, WellPoint, Inc.) (2012- 2013)
Senior Vice President and Chief Innovation and Marketing Officer, Humana Inc. (2009-2012)
Various management positions at Citigroup (1994-2009), including Executive Vice President and Chief Marketing Officer-Citi Global Cards (2008-2009)
|
Name
Current Position
|
|
Age
|
|
Previous Mastercard Experience
|
|
Previous Business Experience
|
Raj Seshadri
President, Data and Services since January 2020 |
|
54
|
|
President, U.S. Issuers (2016-2019)
|
|
Managing Director, Head of iShares U.S. Wealth Advisory business, BlackRock (2014-2016)
|
Kevin Stanton
Chief Transformation Officer since January 2020 |
|
58
|
|
Chief Services Officer (2018-2019)
President, Mastercard Advisors (2010-2017)
President, Canada (2004-2010)
Senior Vice President, Strategy and Market Development (2002-2004)
Vice President, Senior Counsel and North America Region Counsel (1995-2002)
|
|
|
Craig Vosburg
President, North America since January 2016 |
|
52
|
|
Chief Product Officer (2014-2015)
Executive Vice President, U.S. Market Development (2010-2014)
Head of Mastercard Advisors, U.S. and Canada (2008-2010)
Head of Mastercard Advisors, Southeast Asia, Greater China and South Asia/Middle East/Africa (2006-2008)
|
|
Senior member-financial services practice, Bain & Company (2002-2006) and A.T. Kearney (1997-2002)
Vice president, CoreStates Financial Corporation (1989-1995)
|
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PART II
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|
|
Base period
|
|
Indexed Returns
|
||||||||||||||||||||
|
|
|
For the Years Ended December 31,
|
|||||||||||||||||||||
Company/Index
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
||||||||||||
Mastercard
|
|
$
|
100.00
|
|
|
$
|
113.80
|
|
|
$
|
121.67
|
|
|
$
|
179.67
|
|
|
$
|
225.17
|
|
|
$
|
358.38
|
|
S&P 500 Financials
|
|
100.00
|
|
|
98.47
|
|
|
120.92
|
|
|
147.75
|
|
|
128.50
|
|
|
169.78
|
|
||||||
S&P 500 Index
|
|
100.00
|
|
|
101.38
|
|
|
113.51
|
|
|
138.29
|
|
|
132.23
|
|
|
173.86
|
|
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
|
||||||
October 1 – 31
|
|
2,128,776
|
|
|
$
|
271.55
|
|
|
2,128,776
|
|
|
$
|
719,951,874
|
|
November 1 – 30
|
|
1,363,616
|
|
|
278.93
|
|
|
1,363,616
|
|
|
339,605,253
|
|
||
December 1 – 31
|
|
121,837
|
|
|
291.38
|
|
|
121,837
|
|
|
8,304,104,890
|
|
||
Total
|
|
3,614,229
|
|
|
275.00
|
|
|
3,614,229
|
|
|
|
1
|
Dollar value of shares that may yet be purchased under the 2018 Share Repurchase Program and the 2019 Share Repurchase Program are as of the end of each period presented.
|
|
|
Years Ended December 31,
|
||||||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
|
|
(in millions, except per share data)
|
||||||||||||||||||
Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net revenue
|
|
$
|
16,883
|
|
|
$
|
14,950
|
|
|
$
|
12,497
|
|
|
$
|
10,776
|
|
|
$
|
9,667
|
|
Operating expenses
|
|
7,219
|
|
|
7,668
|
|
|
5,875
|
|
|
5,015
|
|
|
4,589
|
|
|||||
Operating income
|
|
9,664
|
|
|
7,282
|
|
|
6,622
|
|
|
5,761
|
|
|
5,078
|
|
|||||
Net income
|
|
8,118
|
|
|
5,859
|
|
|
3,915
|
|
|
4,059
|
|
|
3,808
|
|
|||||
Basic earnings per share
|
|
7.98
|
|
|
5.63
|
|
|
3.67
|
|
|
3.70
|
|
|
3.36
|
|
|||||
Diluted earnings per share
|
|
7.94
|
|
|
5.60
|
|
|
3.65
|
|
|
3.69
|
|
|
3.35
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total assets
|
|
$
|
29,236
|
|
|
$
|
24,860
|
|
|
$
|
21,329
|
|
|
$
|
18,675
|
|
|
$
|
16,250
|
|
Long-term debt
|
|
8,527
|
|
|
5,834
|
|
|
5,424
|
|
|
5,180
|
|
|
3,268
|
|
|||||
Total equity
|
|
5,917
|
|
|
5,418
|
|
|
5,497
|
|
|
5,684
|
|
|
6,062
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash dividends declared per share
|
|
$
|
1.39
|
|
|
$
|
1.08
|
|
|
$
|
0.91
|
|
|
$
|
0.79
|
|
|
$
|
0.67
|
|
|
|
Year ended December 31,
|
|
2019 Increase/
(Decrease)
|
|
2018 Increase/
(Decrease)
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
|
||||||||
|
|
($ in millions, except per share data)
|
||||||||||||||
Net revenue
|
|
$
|
16,883
|
|
|
$
|
14,950
|
|
|
$
|
12,497
|
|
|
13%
|
|
20%
|
Operating expenses
|
|
$
|
7,219
|
|
|
$
|
7,668
|
|
|
$
|
5,875
|
|
|
(6)%
|
|
31%
|
Operating income
|
|
$
|
9,664
|
|
|
$
|
7,282
|
|
|
$
|
6,622
|
|
|
33%
|
|
10%
|
Operating margin
|
|
57.2
|
%
|
|
48.7
|
%
|
|
53.0
|
%
|
|
8.5 ppt
|
|
(4.3) ppt
|
|||
Income tax expense
|
|
$
|
1,613
|
|
|
$
|
1,345
|
|
|
$
|
2,607
|
|
|
20%
|
|
(48)%
|
Effective income tax rate
|
|
16.6
|
%
|
|
18.7
|
%
|
|
40.0
|
%
|
|
(2.1) ppt
|
|
(21.3) ppt
|
|||
Net income
|
|
$
|
8,118
|
|
|
$
|
5,859
|
|
|
$
|
3,915
|
|
|
39%
|
|
50%
|
Diluted earnings per share
|
|
$
|
7.94
|
|
|
$
|
5.60
|
|
|
$
|
3.65
|
|
|
42%
|
|
53%
|
Diluted weighted-average shares outstanding
|
|
1,022
|
|
|
1,047
|
|
|
1,072
|
|
|
(2)%
|
|
(2)%
|
|
|
Year ended December 31,
|
|
2019
Increase/(Decrease)
|
|
2018
Increase/(Decrease)
|
||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
As adjusted
|
|
Currency-neutral
|
|
As adjusted
|
|
Currency-neutral
|
||||||
|
|
($ in millions, except per share data)
|
||||||||||||||||||
Net revenue
|
|
$
|
16,883
|
|
|
$
|
14,950
|
|
|
$
|
12,497
|
|
|
13%
|
|
16%
|
|
20%
|
|
20%
|
Adjusted operating expenses
|
|
$
|
7,219
|
|
|
$
|
6,540
|
|
|
$
|
5,693
|
|
|
10%
|
|
12%
|
|
15%
|
|
15%
|
Adjusted operating margin
|
|
57.2
|
%
|
|
56.2
|
%
|
|
54.4
|
%
|
|
1.0 ppt
|
|
1.3 ppt
|
|
1.8 ppt
|
|
1.8 ppt
|
|||
Adjusted effective income tax rate2
|
|
17.0
|
%
|
|
18.5
|
%
|
|
26.8
|
%
|
|
(1.5) ppt
|
|
(1.3) ppt
|
|
(8.3) ppt
|
|
(8.2) ppt
|
|||
Adjusted net income2
|
|
$
|
7,937
|
|
|
$
|
6,792
|
|
|
$
|
4,906
|
|
|
17%
|
|
20%
|
|
38%
|
|
38%
|
Adjusted diluted earnings per share2
|
|
$
|
7.77
|
|
|
$
|
6.49
|
|
|
$
|
4.58
|
|
|
20%
|
|
23%
|
|
42%
|
|
41%
|
1
|
See “Non-GAAP Financial Information” for further information on our non-GAAP adjustments and the reconciliation to GAAP reported amounts.
|
2
|
For 2019 we updated our non-GAAP methodology to exclude the impact of gains and losses on our equity investments. Prior year periods were not restated as the impact of the change was immaterial in relation to our non-GAAP results.
|
1
|
The cross-border volume and switched transactions growth rates have been normalized to eliminate the effects of differing switching and carryover days between periods. Carryover days are those where transactions and volumes from days where the company does not clear and settle are processed.
|
Operating expenses
|
|
Adjusted
operating expenses
|
|
GAAP
|
|
Non-GAAP (currency-neutral)
|
Adjusted operating expenses on a currency-neutral basis included growth of approximately 2 percentage points from acquisitions and 1 percentage point related to the differential in hedging gains and losses versus the year-ago period. The remaining 9 percentage points of growth was primarily related to our continued investment in strategic initiatives.
|
down 6%
|
|
up 12%
|
|
|
|
|
Effective income tax rate
|
|
Adjusted
effective income tax rate
|
|
GAAP
|
|
Non-GAAP (currency-neutral)
|
Adjusted effective income tax rate of 17.0% primarily attributable to a more favorable geographic mix of earnings and discrete tax benefits including a favorable court ruling in the current period.
|
16.6%
|
|
17.0%
|
•
|
We generated net cash flows from operations of $8.2 billion.
|
•
|
We completed the acquisitions of businesses for total consideration of $1.5 billion.
|
•
|
We repurchased 26 million shares of our common stock for $6.5 billion and paid dividends of $1.3 billion
|
•
|
We completed debt offerings for an aggregate principal amount of $2.8 billion and separately repaid $500 million of principal that matured related to our 2014 USD Notes.
|
•
|
During 2019, we recorded net gains of $167 million ($124 million after tax, or $0.12 per diluted share), primarily related to unrealized fair market value adjustments on marketable and non-marketable equity securities.
|
•
|
During 2019, we recorded a $57 million net tax benefit ($0.06 per diluted share) which included a $30 million benefit related to a reduction to the 2017 one-time deemed repatriation tax on accumulated foreign earnings (the “Transition Tax”) resulting from final tax regulations issued in 2019 and a $27 million benefit related to additional foreign tax credits which can be carried back under transition rules.
|
•
|
During 2018, we recorded a $75 million net tax benefit ($0.07 per diluted share) which included a $90 million benefit related to the carryback of foreign tax credits due to transition rules, offset by a net $15 million expense primarily related to an increase to our Transition Tax.
|
•
|
During 2017, we recorded additional tax expense of $873 million ($0.81 per diluted share) which included $825 million of provisional charges attributable to the Transition Tax, the remeasurement of our net deferred tax asset in the U.S. and the recognition of a deferred tax liability related to a change in assertion regarding reinvestment of foreign earnings, as well as $48 million additional tax expense related to a foregone foreign tax credit benefit on 2017 repatriations.
|
•
|
During 2018, we recorded pre-tax charges of $1,128 million ($1,008 million after tax, or $0.96 per diluted share) related to litigation provisions which included pre-tax charges of:
|
◦
|
$654 million related to a fine issued by the European Commission
|
◦
|
$237 million related to both the U.S. merchant class litigation and the filed and anticipated opt-out U.S. merchant cases
|
◦
|
$237 million related to litigation settlements with U.K. and Pan-European merchants.
|
•
|
During 2017, we recorded pre-tax charges of $15 million ($10 million after tax, or $0.01 per diluted share) related to a litigation settlement with Canadian merchants.
|
•
|
During 2017, we recorded a pre-tax charge of $167 million ($108 million after tax, or $0.10 per diluted share) in general and administrative expenses related to the deconsolidation of our Venezuelan subsidiaries.
|
|
|
Year ended December 31, 2019
|
||||||||||||||||||||
|
|
Operating
expenses |
|
Operating
margin |
|
Other
income (expense) |
|
Effective
income tax rate |
|
Net
income |
|
Diluted
earnings per share |
||||||||||
|
|
($ in millions, except per share data)
|
||||||||||||||||||||
Reported - GAAP
|
|
$
|
7,219
|
|
|
57.2
|
%
|
|
$
|
67
|
|
|
16.6
|
%
|
|
$
|
8,118
|
|
|
$
|
7.94
|
|
(Gains) losses on equity investments
|
|
**
|
|
|
**
|
|
|
(167
|
)
|
|
(0.2
|
)%
|
|
(124
|
)
|
|
(0.12
|
)
|
||||
Tax act
|
|
**
|
|
|
**
|
|
|
**
|
|
|
0.6
|
%
|
|
(57
|
)
|
|
(0.06
|
)
|
||||
Non-GAAP
|
|
$
|
7,219
|
|
|
57.2
|
%
|
|
$
|
(100
|
)
|
|
17.0
|
%
|
|
$
|
7,937
|
|
|
$
|
7.77
|
|
|
|
Year ended December 31, 2018
|
||||||||||||||||||||
|
|
Operating
expenses |
|
Operating
margin |
|
Other
income
(expense) |
|
Effective
income tax rate |
|
Net
income |
|
Diluted
earnings per share |
||||||||||
|
|
($ in millions, except per share data)
|
||||||||||||||||||||
Reported - GAAP
|
|
$
|
7,668
|
|
|
48.7
|
%
|
|
$
|
(78
|
)
|
|
18.7
|
%
|
|
$
|
5,859
|
|
|
$
|
5.60
|
|
Litigation provisions
|
|
(1,128
|
)
|
|
7.5
|
%
|
|
**
|
|
|
(1.1
|
)%
|
|
1,008
|
|
|
0.96
|
|
||||
Tax act
|
|
**
|
|
|
**
|
|
|
**
|
|
|
0.9
|
%
|
|
(75
|
)
|
|
(0.07
|
)
|
||||
Non-GAAP
|
|
$
|
6,540
|
|
|
56.2
|
%
|
|
$
|
(78
|
)
|
|
18.5
|
%
|
|
$
|
6,792
|
|
|
$
|
6.49
|
|
|
|
Year ended December 31, 2017
|
||||||||||||||||||||
|
|
Operating
expenses |
|
Operating
margin |
|
Other
income
(expense) |
|
Effective
income tax rate |
|
Net
income |
|
Diluted
earnings per share |
||||||||||
|
|
($ in millions, except per share data)
|
||||||||||||||||||||
Reported - GAAP
|
|
$
|
5,875
|
|
|
53.0
|
%
|
|
$
|
(100
|
)
|
|
40.0
|
%
|
|
$
|
3,915
|
|
|
$
|
3.65
|
|
Tax act
|
|
**
|
|
|
**
|
|
|
**
|
|
|
(13.4
|
)%
|
|
873
|
|
|
0.81
|
|
||||
Venezuela charge
|
|
(167
|
)
|
|
1.3
|
%
|
|
**
|
|
|
0.2
|
%
|
|
108
|
|
|
0.10
|
|
||||
Litigation provisions
|
|
(15
|
)
|
|
0.1
|
%
|
|
**
|
|
|
—
|
%
|
|
10
|
|
|
0.01
|
|
||||
Non-GAAP
|
|
$
|
5,693
|
|
|
54.4
|
%
|
|
$
|
(100
|
)
|
|
26.8
|
%
|
|
$
|
4,906
|
|
|
$
|
4.58
|
|
|
|
Year Ended December 31, 2019 as compared to the Year Ended December 31, 2018
|
||||||||||||||
|
|
Increase/(Decrease)
|
||||||||||||||
|
|
Net revenue
|
|
Operating expenses
|
|
Operating margin
|
|
Effective income tax rate
|
|
Net income
|
|
Diluted earnings per share
|
||||
Reported - GAAP
|
|
13
|
%
|
|
(6
|
)%
|
|
8.5
|
|
(2.1) ppt
|
|
39
|
%
|
|
42
|
%
|
(Gains) losses on equity investments 1
|
|
**
|
|
|
**
|
|
|
**
|
|
(0.2) ppt
|
|
(2
|
)%
|
|
(2
|
)%
|
Tax act
|
|
**
|
|
|
**
|
|
|
**
|
|
(0.3) ppt
|
|
1
|
%
|
|
1
|
%
|
Litigation provisions
|
|
**
|
|
|
16
|
%
|
|
(7.5) ppt
|
|
1.1 ppt
|
|
(20
|
)%
|
|
(21
|
)%
|
Non-GAAP
|
|
13
|
%
|
|
10
|
%
|
|
1.0 ppt
|
|
(1.5) ppt
|
|
17
|
%
|
|
20
|
%
|
Currency impact 2
|
|
3
|
%
|
|
2
|
%
|
|
0.3 ppt
|
|
0.2 ppt
|
|
3
|
%
|
|
3
|
%
|
Non-GAAP - currency-neutral
|
|
16
|
%
|
|
12
|
%
|
|
1.3 ppt
|
|
(1.3) ppt
|
|
20
|
%
|
|
23
|
%
|
|
|
Year Ended December 31, 2018 as compared to the Year Ended December 31, 2017
|
||||||||||||||
|
|
Increase/(Decrease)
|
||||||||||||||
|
|
Net revenue
|
|
Operating expenses
|
|
Operating margin
|
|
Effective income tax rate
|
|
Net income
|
|
Diluted earnings per share
|
||||
Reported - GAAP
|
|
20
|
%
|
|
31
|
%
|
|
(4.3) ppt
|
|
(21.3) ppt
|
|
50
|
%
|
|
53
|
%
|
Litigation provisions
|
|
**
|
|
|
(19
|
)%
|
|
7.4 ppt
|
|
(1.0) ppt
|
|
25
|
%
|
|
26
|
%
|
Tax act
|
|
**
|
|
|
**
|
|
|
**
|
|
14.2 ppt
|
|
(33
|
)%
|
|
(34
|
)%
|
Venezuela charge
|
|
**
|
|
|
3
|
%
|
|
(1.3) ppt
|
|
(0.2) ppt
|
|
(3
|
)%
|
|
(3
|
)%
|
Non-GAAP
|
|
20
|
%
|
|
15
|
%
|
|
1.8 ppt
|
|
(8.3) ppt
|
|
38
|
%
|
|
42
|
%
|
Currency impact 2
|
|
—
|
%
|
|
—
|
%
|
|
—
|
|
0.1 ppt
|
|
—
|
%
|
|
—
|
%
|
Non-GAAP - currency-neutral
|
|
20
|
%
|
|
15
|
%
|
|
1.8 ppt
|
|
(8.2) ppt
|
|
38
|
%
|
|
41
|
%
|
1
|
For 2019 we updated our non-GAAP methodology to exclude the impact of gains and losses on our equity investments. Prior year periods were not restated as the impact of the change was immaterial in relation to our non-GAAP results.
|
2
|
Represents the currency translational and transactional impact.
|
|
|
For the Years Ended December 31,
|
|
Increase (Decrease)
|
||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
||||||
|
|
($ in millions)
|
||||||||||||||
Domestic assessments
|
|
$
|
6,781
|
|
|
$
|
6,138
|
|
|
$
|
5,130
|
|
|
10%
|
|
20%
|
Cross-border volume fees
|
|
5,606
|
|
|
4,954
|
|
|
4,174
|
|
|
13%
|
|
19%
|
|||
Transaction processing
|
|
8,469
|
|
|
7,391
|
|
|
6,188
|
|
|
15%
|
|
19%
|
|||
Other revenues
|
|
4,124
|
|
|
3,348
|
|
|
2,853
|
|
|
23%
|
|
17%
|
|||
Gross revenue
|
|
24,980
|
|
|
21,831
|
|
|
18,345
|
|
|
14%
|
|
19%
|
|||
Rebates and incentives (contra-revenue)
|
|
(8,097
|
)
|
|
(6,881
|
)
|
|
(5,848
|
)
|
|
18%
|
|
18%
|
|||
Net revenue
|
|
$
|
16,883
|
|
|
$
|
14,950
|
|
|
$
|
12,497
|
|
|
13%
|
|
20%
|
|
|
For the Years Ended December 31,
|
||||||||||||||||||||||||||
|
|
Volume
|
|
Acquisitions
|
|
Revenue Standard 1
|
|
Currency Impact 2
|
|
Other 3
|
|
Total
|
||||||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Domestic assessments
|
|
13%
|
|
14%
|
|
—%
|
|
—%
|
|
**
|
|
6%
|
|
(3)%
|
|
(1)%
|
|
1
|
%
|
4
|
2
|
%
|
4
|
10
|
%
|
|
20
|
%
|
Cross-border volume fees
|
|
14%
|
|
17%
|
|
—%
|
|
—%
|
|
**
|
|
1%
|
|
(3)%
|
|
1%
|
|
2
|
%
|
|
—
|
%
|
|
13
|
%
|
|
19
|
%
|
Transaction processing
|
|
14%
|
|
14%
|
|
—%
|
|
—%
|
|
**
|
|
—%
|
|
(2)%
|
|
—%
|
|
3
|
%
|
|
5
|
%
|
|
15
|
%
|
|
19
|
%
|
Other revenues
|
|
**
|
|
**
|
|
2%
|
|
2%
|
|
**
|
|
—%
|
|
(1)%
|
|
(1)%
|
|
22
|
%
|
5
|
16
|
%
|
5
|
23
|
%
|
|
17
|
%
|
Rebates and incentives
|
|
9%
|
|
10%
|
|
—%
|
|
—%
|
|
**
|
|
(2)%
|
|
(3)%
|
|
(1)%
|
|
11
|
%
|
6
|
11
|
%
|
6
|
18
|
%
|
|
18
|
%
|
Net revenue
|
|
13%
|
|
14%
|
|
1%
|
|
0.5%
|
|
**
|
|
4%
|
|
(3)%
|
|
—%
|
|
2
|
%
|
|
2
|
%
|
|
13
|
%
|
|
20
|
%
|
1
|
Represents the impact of our adoption of the revenue guidance in 2018. For a more detailed discussion on the impact of the revenue guidance, refer to Note 1 (Summary of Significant Accounting Policies) to the consolidated financial statements included in Part II, Item 8.
|
2
|
Represents the currency translational and transactional impact.
|
3
|
Includes impact from pricing and other non-volume based fees.
|
4
|
Includes impact of the allocation of revenue to service deliverables, which are primarily recorded in other revenue when services are performed.
|
5
|
Includes impacts from cyber and intelligence fees, data analytics and consulting fees and other payment-related products and services.
|
6
|
Includes the impact of new, renewed and expired agreements.
|
|
|
For the Years Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
||||||||
|
|
Growth (USD)
|
|
Growth (Local)
|
|
Growth (USD)
|
|
Growth (Local)
|
||||
Mastercard-branded GDV 1
|
|
10
|
%
|
|
13
|
%
|
|
13
|
%
|
|
14
|
%
|
Asia Pacific/Middle East/Africa
|
|
8
|
%
|
|
12
|
%
|
|
13
|
%
|
|
13
|
%
|
Canada
|
|
4
|
%
|
|
7
|
%
|
|
10
|
%
|
|
10
|
%
|
Europe
|
|
12
|
%
|
|
18
|
%
|
|
18
|
%
|
|
19
|
%
|
Latin America
|
|
9
|
%
|
|
15
|
%
|
|
8
|
%
|
|
17
|
%
|
United States
|
|
10
|
%
|
|
10
|
%
|
|
10
|
%
|
|
10
|
%
|
Cross-border volume 1
|
|
|
|
16
|
%
|
|
|
|
18
|
%
|
1
|
Excludes volume generated by Maestro and Cirrus cards.
|
|
For the Years Ended December 31,
|
|||||
|
|
2019
|
|
2018
|
||
Switched transactions
|
|
19
|
%
|
|
17
|
%
|
|
|
For the Years Ended December 31,
|
|
Increase (Decrease)
|
||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
||||||||
|
|
($ in millions)
|
||||||||||||||||
General and administrative
|
|
$
|
5,763
|
|
|
$
|
5,174
|
|
|
$
|
4,653
|
|
|
11
|
%
|
|
11
|
%
|
Advertising and marketing
|
|
934
|
|
|
907
|
|
|
771
|
|
|
3
|
%
|
|
18
|
%
|
|||
Depreciation and amortization
|
|
522
|
|
|
459
|
|
|
436
|
|
|
14
|
%
|
|
5
|
%
|
|||
Provision for litigation
|
|
—
|
|
|
1,128
|
|
|
15
|
|
|
**
|
|
|
**
|
|
|||
Total operating expenses
|
|
7,219
|
|
|
7,668
|
|
|
5,875
|
|
|
(6
|
)%
|
|
31
|
%
|
|||
Special Items1
|
|
—
|
|
|
(1,128
|
)
|
|
(182
|
)
|
|
**
|
|
|
**
|
|
|||
Adjusted operating expenses (excluding Special Items1)
|
|
$
|
7,219
|
|
|
$
|
6,540
|
|
|
$
|
5,693
|
|
|
10
|
%
|
|
15
|
%
|
1
|
See “Non-GAAP Financial Information” for further information on our non-GAAP adjustments and the reconciliation to GAAP reported amounts.
|
|
|
For the Years Ended December 31,
|
||||||||||||||||||||||||||||||||
|
|
Operational
|
|
Special
Items 2 |
|
Acquisitions
|
|
Revenue
Standard 3 |
|
Currency Impact 4
|
|
Total
|
||||||||||||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||
General and administrative
|
|
11%
|
|
14
|
%
|
1
|
**
|
|
|
(4
|
)%
|
|
2
|
%
|
|
1
|
%
|
|
**
|
|
—
|
%
|
|
(2
|
)%
|
|
—
|
%
|
|
11
|
%
|
|
11
|
%
|
Advertising and marketing
|
|
5%
|
|
(4
|
)%
|
|
**
|
|
|
**
|
|
|
—
|
%
|
|
—
|
%
|
|
**
|
|
21
|
%
|
|
(2
|
)%
|
|
—
|
%
|
|
3
|
%
|
|
18
|
%
|
Depreciation and amortization
|
|
9%
|
|
(5
|
)%
|
|
**
|
|
|
**
|
|
|
7
|
%
|
|
10
|
%
|
|
**
|
|
—
|
%
|
|
(2
|
)%
|
|
—
|
%
|
|
14
|
%
|
|
5
|
%
|
Provision for litigation
|
|
**
|
|
**
|
|
|
**
|
|
|
**
|
|
|
**
|
|
|
**
|
|
|
**
|
|
**
|
|
|
**
|
|
|
**
|
|
|
**
|
|
|
**
|
|
Total operating expenses
|
|
10%
|
|
10
|
%
|
1
|
(16
|
)%
|
|
16
|
%
|
|
2
|
%
|
|
2
|
%
|
|
**
|
|
3
|
%
|
|
(2
|
)%
|
|
—
|
%
|
|
(6
|
)%
|
|
31
|
%
|
1
|
Includes a 2 percentage point impact to general and administrative and total operating expenses growth due to contributions made in 2018 to support inclusive growth efforts. Contributions made in 2019 were comparable to the prior year.
|
2
|
See “Non-GAAP Financial Information” for further information on our non-GAAP adjustments and the reconciliation to GAAP reported amounts.
|
3
|
Represents the impact of our adoption of the revenue guidance in 2018. For a more detailed discussion on the impact of the revenue guidance, refer to Note 1 (Summary of Significant Accounting Policies) to the consolidated financial statements included in Part II, Item 8.
|
4
|
Represents the currency translational and transactional impact.
|
|
|
For the Years Ended December 31,
|
|
Increase (Decrease)
|
||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
||||||
|
|
($ in millions)
|
||||||||||||||
Personnel
|
|
$
|
3,537
|
|
|
$
|
3,214
|
|
|
$
|
2,687
|
|
|
10%
|
|
20%
|
Professional fees
|
|
447
|
|
|
377
|
|
|
355
|
|
|
19%
|
|
6%
|
|||
Data processing and telecommunications
|
|
666
|
|
|
600
|
|
|
504
|
|
|
11%
|
|
19%
|
|||
Foreign exchange activity 1
|
|
32
|
|
|
(36
|
)
|
|
106
|
|
|
**
|
|
**
|
|||
Other
|
|
1,081
|
|
|
1,019
|
|
|
1,001
|
|
|
6%
|
|
2%
|
|||
Total general and administrative expenses
|
|
5,763
|
|
|
5,174
|
|
|
4,653
|
|
|
11%
|
|
11%
|
|||
Special Items 2
|
|
—
|
|
|
—
|
|
|
(167
|
)
|
|
**
|
|
**
|
|||
Adjusted general and administrative expenses (excluding Special Items2)
|
|
$
|
5,763
|
|
|
$
|
5,174
|
|
|
$
|
4,486
|
|
|
11%
|
|
15%
|
1
|
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 23 (Derivative and Hedging Instruments) to the consolidated financial statements included in Part II, Item 8 for further discussion.
|
2
|
See “Non-GAAP Financial Information” for further information on our non-GAAP adjustments and the reconciliation to GAAP reported amounts.
|
|
|
For the Years Ended December 31,
|
|
Increase (Decrease)
|
||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
||||||||
|
|
($ in millions)
|
||||||||||||||||
Investment Income
|
|
$
|
97
|
|
|
$
|
122
|
|
|
$
|
56
|
|
|
(21
|
)%
|
|
**
|
|
Gains (losses) on equity investments, net
|
|
167
|
|
|
—
|
|
|
—
|
|
|
**
|
|
|
**
|
|
|||
Interest expense
|
|
(224
|
)
|
|
(186
|
)
|
|
(154
|
)
|
|
20
|
%
|
|
21
|
%
|
|||
Other income (expense), net
|
|
27
|
|
|
(14
|
)
|
|
(2
|
)
|
|
**
|
|
|
**
|
|
|||
Total other income (expense)
|
|
67
|
|
|
(78
|
)
|
|
(100
|
)
|
|
**
|
|
|
(22
|
)%
|
|
|
2019
|
|
2018
|
||||
|
|
(in billions)
|
||||||
Cash, cash equivalents and investments 1
|
|
$
|
7.7
|
|
|
$
|
8.4
|
|
Unused line of credit
|
|
6.0
|
|
|
4.5
|
|
1
|
Investments include available-for-sale securities and held-to-maturity securities. This amount excludes restricted cash and restricted cash equivalents of $2.0 billion and $1.7 billion at December 31, 2019 and 2018, respectively.
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
(in millions)
|
||||||||||
Net cash provided by operating activities
|
|
$
|
8,183
|
|
|
$
|
6,223
|
|
|
$
|
5,664
|
|
Net cash used in investing activities
|
|
(1,640
|
)
|
|
(506
|
)
|
|
(1,781
|
)
|
|||
Net cash used in financing activities
|
|
(5,867
|
)
|
|
(4,966
|
)
|
|
(4,764
|
)
|
|
|
For the Years Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
(in millions, except per share data)
|
||||||||||
Cash dividend, per share
|
|
$
|
1.32
|
|
|
$
|
1.00
|
|
|
$
|
0.88
|
|
Cash dividends paid
|
|
$
|
1,345
|
|
|
$
|
1,044
|
|
|
$
|
942
|
|
|
|
(in millions, except per share data)
|
||
Remaining authorization at December 31, 2018
|
|
$
|
6,801
|
|
Dollar-value of shares repurchased in 2019
|
|
$
|
6,497
|
|
Remaining authorization at December 31, 2019
|
|
$
|
8,304
|
|
Shares repurchased in 2019
|
|
26.4
|
|
|
Average price paid per share in 2019
|
|
$
|
245.89
|
|
|
|
Payments Due by Period
|
||||||||||||||||||
|
|
2020
|
|
2021 - 2022
|
|
2023 - 2024
|
|
2025 and thereafter
|
|
Total
|
||||||||||
|
|
(in millions)
|
||||||||||||||||||
Debt
|
|
$
|
—
|
|
|
$
|
1,435
|
|
|
$
|
1,000
|
|
|
$
|
6,165
|
|
|
$
|
8,600
|
|
Interest on debt
|
|
242
|
|
|
470
|
|
|
423
|
|
|
2,235
|
|
|
3,370
|
|
|||||
Operating leases 1
|
|
112
|
|
|
216
|
|
|
169
|
|
|
376
|
|
|
873
|
|
|||||
Other obligations
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Sponsorship, licensing and other
|
|
404
|
|
|
356
|
|
|
59
|
|
|
—
|
|
|
819
|
|
|||||
Employee benefits 2
|
|
62
|
|
|
50
|
|
|
48
|
|
|
113
|
|
|
273
|
|
|||||
Transition Tax 3
|
|
—
|
|
|
89
|
|
|
227
|
|
|
161
|
|
|
477
|
|
|||||
Redeemable non-controlling interests 4
|
|
76
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
76
|
|
|||||
Total 5
|
|
$
|
896
|
|
|
$
|
2,616
|
|
|
$
|
1,926
|
|
|
$
|
9,050
|
|
|
$
|
14,488
|
|
1
|
Amounts relate to the maturity of our operating lease liabilities. See Note 10 (Property, Equipment and Right-of-Use Assets) to the consolidated financial statements included in Part II, Item 8 for further discussion.
|
2
|
Amounts relate to severance along with expected funding requirements for defined benefit pension and postretirement plans.
|
3
|
Amounts relate to the U.S. tax liability on the Transition Tax on accumulated non-U.S. earnings of U.S entities. See Note 20 (Income Taxes) to the consolidated financial statements included in Part II, Item 8 for further discussion.
|
4
|
Amount relates to the fixed-price put option for the Vocalink remaining shareholders to sell their ownership interest to Mastercard on the third and fifth anniversaries of the transaction and quarterly thereafter. See Note 2 (Acquisitions) to the consolidated financial statements included in Part II, Item 8 for further discussion.
|
5
|
The table does not include the following:
|
•
|
Payment related to a definitive agreement to acquire the majority of the Corporate Services business of Nets Denmark A/S, for €2.85 billion (approximately $3.19 billion as of December 31, 2019) as the transaction is subject to regulatory approval and other customary closing conditions. See Note 2 (Acquisitions) to the consolidated financial statements included in Part II, Item 8 for further discussion.
|
•
|
Liability for unrecognized tax benefits of $203 million as of December 31, 2019. These amounts have been excluded from the table since the settlement period of this liability cannot be reasonably estimated and the timing of these payments will depend on the progress of tax examinations with the various authorities. See Note 20 (Income Taxes) to the consolidated financial statements included in Part II, Item 8 for further discussion.
|
•
|
Litigation provision of $914 million as of December 31, 2019 as the timing of payments is not fixed and determinable. See Note 21 (Legal and Regulatory Proceedings) to the consolidated financial statements included in Part II, Item 8 for further discussion.
|
•
|
Future cash payments that will become due to customers and merchants under business agreements as the amounts due are contingent on future performance. We have accrued $4.8 billion as of December 31, 2019 related to these customer and merchant agreements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page
|
As of December 31, 2019 and 2018 and for the years ended December 31, 2019, 2018 and 2017
|
|||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
Consolidated Statement of Operations
|
|
|
|
|
|
|
||||||
|
|
For the Years Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
(in millions, except per share data)
|
||||||||||
Net Revenue
|
|
$
|
16,883
|
|
|
$
|
14,950
|
|
|
$
|
12,497
|
|
Operating Expenses
|
|
|
|
|
|
|
||||||
General and administrative
|
|
5,763
|
|
|
5,174
|
|
|
4,653
|
|
|||
Advertising and marketing
|
|
934
|
|
|
907
|
|
|
771
|
|
|||
Depreciation and amortization
|
|
522
|
|
|
459
|
|
|
436
|
|
|||
Provision for litigation
|
|
—
|
|
|
1,128
|
|
|
15
|
|
|||
Total operating expenses
|
|
7,219
|
|
|
7,668
|
|
|
5,875
|
|
|||
Operating income
|
|
9,664
|
|
|
7,282
|
|
|
6,622
|
|
|||
Other Income (Expense)
|
|
|
|
|
|
|
||||||
Investment income
|
|
97
|
|
|
122
|
|
|
56
|
|
|||
Gains (losses) on equity investments, net
|
|
167
|
|
|
—
|
|
|
—
|
|
|||
Interest expense
|
|
(224
|
)
|
|
(186
|
)
|
|
(154
|
)
|
|||
Other income (expense), net
|
|
27
|
|
|
(14
|
)
|
|
(2
|
)
|
|||
Total other income (expense)
|
|
67
|
|
|
(78
|
)
|
|
(100
|
)
|
|||
Income before income taxes
|
|
9,731
|
|
|
7,204
|
|
|
6,522
|
|
|||
Income tax expense
|
|
1,613
|
|
|
1,345
|
|
|
2,607
|
|
|||
Net Income
|
|
$
|
8,118
|
|
|
$
|
5,859
|
|
|
$
|
3,915
|
|
|
|
|
|
|
|
|
||||||
Basic Earnings per Share
|
|
$
|
7.98
|
|
|
$
|
5.63
|
|
|
$
|
3.67
|
|
Basic weighted-average shares outstanding
|
|
1,017
|
|
|
1,041
|
|
|
1,067
|
|
|||
Diluted Earnings per Share
|
|
$
|
7.94
|
|
|
$
|
5.60
|
|
|
$
|
3.65
|
|
Diluted weighted-average shares outstanding
|
|
1,022
|
|
|
1,047
|
|
|
1,072
|
|
|||
|
|
|
|
|
|
|
||||||
The accompanying notes are an integral part of these consolidated financial statements.
|
Consolidated Statement of Comprehensive Income
|
|
|
|
|
|
|
||||||
|
|
For the Years Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
(in millions)
|
||||||||||
Net Income
|
|
$
|
8,118
|
|
|
$
|
5,859
|
|
|
$
|
3,915
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
||||||
Foreign currency translation adjustments
|
|
10
|
|
|
(319
|
)
|
|
565
|
|
|||
Income tax effect
|
|
13
|
|
|
40
|
|
|
2
|
|
|||
Foreign currency translation adjustments, net of income tax effect
|
|
23
|
|
|
(279
|
)
|
|
567
|
|
|||
|
|
|
|
|
|
|
||||||
Translation adjustments on net investment hedge
|
|
36
|
|
|
96
|
|
|
(236
|
)
|
|||
Income tax effect
|
|
(8
|
)
|
|
(21
|
)
|
|
83
|
|
|||
Translation adjustments on net investment hedge, net of income tax effect
|
|
28
|
|
|
75
|
|
|
(153
|
)
|
|||
|
|
|
|
|
|
|
||||||
Cash flow hedges
|
|
14
|
|
|
—
|
|
|
—
|
|
|||
Income tax effect
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|||
Cash flow hedges, net of income tax effect
|
|
11
|
|
|
—
|
|
|
—
|
|
|||
|
|
|
|
|
|
|
||||||
Defined benefit pension and other postretirement plans
|
|
(22
|
)
|
|
(18
|
)
|
|
15
|
|
|||
Income tax effect
|
|
3
|
|
|
3
|
|
|
(1
|
)
|
|||
Defined benefit pension and other postretirement plans, net of income tax effect
|
|
(19
|
)
|
|
(15
|
)
|
|
14
|
|
|||
|
|
|
|
|
|
|
||||||
Investment securities available-for-sale
|
|
3
|
|
|
(3
|
)
|
|
(3
|
)
|
|||
Income tax effect
|
|
(1
|
)
|
|
1
|
|
|
2
|
|
|||
Investment securities available-for-sale, net of income tax effect
|
|
2
|
|
|
(2
|
)
|
|
(1
|
)
|
|||
|
|
|
|
|
|
|
||||||
Other comprehensive income (loss), net of income tax effect
|
|
45
|
|
|
(221
|
)
|
|
427
|
|
|||
Comprehensive Income
|
|
$
|
8,163
|
|
|
$
|
5,638
|
|
|
$
|
4,342
|
|
|
|
|
|
|
|
|
||||||
The accompanying notes are an integral part of these consolidated financial statements.
|
Consolidated Balance Sheet
|
|
|
|
|
||||
|
|
December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
(in millions, except per share data)
|
||||||
Assets
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
6,988
|
|
|
$
|
6,682
|
|
Restricted cash for litigation settlement
|
|
584
|
|
|
553
|
|
||
Investments
|
|
688
|
|
|
1,696
|
|
||
Accounts receivable
|
|
2,514
|
|
|
2,276
|
|
||
Settlement due from customers
|
|
2,995
|
|
|
2,452
|
|
||
Restricted security deposits held for customers
|
|
1,370
|
|
|
1,080
|
|
||
Prepaid expenses and other current assets
|
|
1,763
|
|
|
1,432
|
|
||
Total current assets
|
|
16,902
|
|
|
16,171
|
|
||
Property, equipment and right-of-use assets, net
|
|
1,828
|
|
|
921
|
|
||
Deferred income taxes
|
|
543
|
|
|
570
|
|
||
Goodwill
|
|
4,021
|
|
|
2,904
|
|
||
Other intangible assets, net
|
|
1,417
|
|
|
991
|
|
||
Other assets
|
|
4,525
|
|
|
3,303
|
|
||
Total Assets
|
|
$
|
29,236
|
|
|
$
|
24,860
|
|
|
|
|
|
|
||||
Liabilities, Redeemable Non-controlling Interests and Equity
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
489
|
|
|
$
|
537
|
|
Settlement due to customers
|
|
2,714
|
|
|
2,189
|
|
||
Restricted security deposits held for customers
|
|
1,370
|
|
|
1,080
|
|
||
Accrued litigation
|
|
914
|
|
|
1,591
|
|
||
Accrued expenses
|
|
5,489
|
|
|
4,747
|
|
||
Current portion of long-term debt
|
|
—
|
|
|
500
|
|
||
Other current liabilities
|
|
928
|
|
|
949
|
|
||
Total current liabilities
|
|
11,904
|
|
|
11,593
|
|
||
Long-term debt
|
|
8,527
|
|
|
5,834
|
|
||
Deferred income taxes
|
|
85
|
|
|
67
|
|
||
Other liabilities
|
|
2,729
|
|
|
1,877
|
|
||
Total Liabilities
|
|
23,245
|
|
|
19,371
|
|
||
|
|
|
|
|
||||
Commitments and Contingencies
|
|
|
|
|
||||
|
|
|
|
|
||||
Redeemable Non-controlling Interests
|
|
74
|
|
|
71
|
|
||
|
|
|
|
|
||||
Stockholders’ Equity
|
|
|
|
|
||||
Class A common stock, $0.0001 par value; authorized 3,000 shares, 1,391 and 1,387 shares issued and 996 and 1,019 outstanding, respectively
|
|
—
|
|
|
—
|
|
||
Class B common stock, $0.0001 par value; authorized 1,200 shares, 11 and 12 issued and outstanding, respectively
|
|
—
|
|
|
—
|
|
||
Additional paid-in-capital
|
|
4,787
|
|
|
4,580
|
|
||
Class A treasury stock, at cost, 395 and 368 shares, respectively
|
|
(32,205
|
)
|
|
(25,750
|
)
|
||
Retained earnings
|
|
33,984
|
|
|
27,283
|
|
||
Accumulated other comprehensive income (loss)
|
|
(673
|
)
|
|
(718
|
)
|
||
Mastercard Incorporated Stockholders' Equity
|
|
5,893
|
|
|
5,395
|
|
||
Non-controlling interests
|
|
24
|
|
|
23
|
|
||
Total Equity
|
|
5,917
|
|
|
5,418
|
|
||
|
|
|
|
|
||||
Total Liabilities, Redeemable Non-controlling Interests and Equity
|
|
$
|
29,236
|
|
|
$
|
24,860
|
|
|
|
|
|
|
||||
The accompanying notes are an integral part of these consolidated financial statements.
|
Consolidated Statement of Changes in Equity
|
||||||||||||||||||||||||||||||||||||
|
|
Stockholders’ Equity
|
|
|
|
|
||||||||||||||||||||||||||||||
|
|
Common Stock
|
|
Additional
Paid-In Capital |
|
Class A
Treasury Stock |
|
Retained
Earnings |
|
Accumulated
Other Comprehensive Income (Loss) |
|
Mastercard Incorporated Stockholders' Equity
|
|
Non-
Controlling Interests |
|
Total
Equity |
||||||||||||||||||||
|
|
Class A
|
|
Class B
|
|
|
||||||||||||||||||||||||||||||
|
|
(in millions, except per share data)
|
||||||||||||||||||||||||||||||||||
Balance at December 31, 2016
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,183
|
|
|
$
|
(17,021
|
)
|
|
$
|
19,418
|
|
|
$
|
(924
|
)
|
|
$
|
5,656
|
|
|
$
|
28
|
|
|
$
|
5,684
|
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,915
|
|
|
—
|
|
|
3,915
|
|
|
—
|
|
|
3,915
|
|
|||||||||
Activity related to non-controlling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|||||||||
Redeemable non-controlling interest adjustments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
|||||||||
Other comprehensive income (loss)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
427
|
|
|
427
|
|
|
—
|
|
|
427
|
|
|||||||||
Dividends
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(967
|
)
|
|
—
|
|
|
(967
|
)
|
|
—
|
|
|
(967
|
)
|
|||||||||
Purchases of treasury stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,747
|
)
|
|
—
|
|
|
—
|
|
|
(3,747
|
)
|
|
—
|
|
|
(3,747
|
)
|
|||||||||
Share-based payments
|
|
—
|
|
|
—
|
|
|
182
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
186
|
|
|
—
|
|
|
186
|
|
|||||||||
Balance at December 31, 2017
|
|
—
|
|
|
—
|
|
|
4,365
|
|
|
(20,764
|
)
|
|
22,364
|
|
|
(497
|
)
|
|
5,468
|
|
|
29
|
|
|
5,497
|
|
|||||||||
Adoption of revenue standard
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
366
|
|
|
—
|
|
|
366
|
|
|
—
|
|
|
366
|
|
|||||||||
Adoption of intra-entity asset transfers standard
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(183
|
)
|
|
—
|
|
|
(183
|
)
|
|
—
|
|
|
(183
|
)
|
|||||||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,859
|
|
|
—
|
|
|
5,859
|
|
|
—
|
|
|
5,859
|
|
|||||||||
Activity related to non-controlling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
|
(6
|
)
|
|||||||||
Redeemable non-controlling interest adjustments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
|||||||||
Other comprehensive income (loss)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(221
|
)
|
|
(221
|
)
|
|
—
|
|
|
(221
|
)
|
|||||||||
Dividends
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,120
|
)
|
|
—
|
|
|
(1,120
|
)
|
|
—
|
|
|
(1,120
|
)
|
|||||||||
Purchases of treasury stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,991
|
)
|
|
—
|
|
|
—
|
|
|
(4,991
|
)
|
|
—
|
|
|
(4,991
|
)
|
|||||||||
Share-based payments
|
|
—
|
|
|
—
|
|
|
215
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
220
|
|
|
—
|
|
|
220
|
|
|||||||||
Balance at December 31, 2018
|
|
—
|
|
|
—
|
|
|
4,580
|
|
|
(25,750
|
)
|
|
27,283
|
|
|
(718
|
)
|
|
5,395
|
|
|
23
|
|
|
5,418
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Statement of Changes in Equity (Continued)
|
||||||||||||||||||||||||||||||||||||
|
|
Stockholders’ Equity
|
|
|
|
|
||||||||||||||||||||||||||||||
|
|
Common Stock |
|
Additional
Paid-In Capital |
|
Class A
Treasury Stock |
|
Retained
Earnings |
|
Accumulated
Other Comprehensive Income (Loss) |
|
Mastercard Incorporated Stockholders' Equity
|
|
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
|
)
|
|
5,395
|
|
|
23
|
|
|
5,418
|
|
|||||||||
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,118
|
|
|
|
|
|
8,118
|
|
|
—
|
|
|
8,118
|
|
|||||||||
Activity related to non-controlling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|||||||||
Redeemable non-controlling interest adjustments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9
|
)
|
|
—
|
|
|
(9
|
)
|
|
—
|
|
|
(9
|
)
|
|||||||||
Other comprehensive income (loss)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
45
|
|
|
45
|
|
|
—
|
|
|
45
|
|
|||||||||
Dividends
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,408
|
)
|
|
—
|
|
|
(1,408
|
)
|
|
—
|
|
|
(1,408
|
)
|
|||||||||
Purchases of treasury stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,463
|
)
|
|
—
|
|
|
—
|
|
|
(6,463
|
)
|
|
—
|
|
|
(6,463
|
)
|
|||||||||
Share-based payments
|
|
—
|
|
|
—
|
|
|
207
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
215
|
|
|
—
|
|
|
215
|
|
|||||||||
Balance at December 31, 2019
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,787
|
|
|
$
|
(32,205
|
)
|
|
$
|
33,984
|
|
|
$
|
(673
|
)
|
|
$
|
5,893
|
|
|
$
|
24
|
|
|
$
|
5,917
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
|
Consolidated Statement of Cash Flows
|
||||||||||||
|
|
For the Years Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
(in millions)
|
||||||||||
Operating Activities
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
8,118
|
|
|
$
|
5,859
|
|
|
$
|
3,915
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
||||||
Amortization of customer and merchant incentives
|
|
1,141
|
|
|
1,235
|
|
|
1,001
|
|
|||
Depreciation and amortization
|
|
522
|
|
|
459
|
|
|
437
|
|
|||
(Gains) losses on equity investments, net
|
|
(167
|
)
|
|
—
|
|
|
—
|
|
|||
Share-based compensation
|
|
250
|
|
|
196
|
|
|
176
|
|
|||
Deferred income taxes
|
|
(7
|
)
|
|
(244
|
)
|
|
86
|
|
|||
Venezuela charge
|
|
—
|
|
|
—
|
|
|
167
|
|
|||
Other
|
|
24
|
|
|
31
|
|
|
59
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
||||||
Accounts receivable
|
|
(246
|
)
|
|
(317
|
)
|
|
(445
|
)
|
|||
Income taxes receivable
|
|
(202
|
)
|
|
(120
|
)
|
|
(8
|
)
|
|||
Settlement due from customers
|
|
(444
|
)
|
|
(1,078
|
)
|
|
(281
|
)
|
|||
Prepaid expenses
|
|
(1,661
|
)
|
|
(1,769
|
)
|
|
(1,402
|
)
|
|||
Accrued litigation and legal settlements
|
|
(662
|
)
|
|
869
|
|
|
(12
|
)
|
|||
Restricted security deposits held for customers
|
|
290
|
|
|
(6
|
)
|
|
94
|
|
|||
Accounts payable
|
|
(42
|
)
|
|
101
|
|
|
290
|
|
|||
Settlement due to customers
|
|
477
|
|
|
849
|
|
|
394
|
|
|||
Accrued expenses
|
|
657
|
|
|
439
|
|
|
589
|
|
|||
Long-term taxes payable
|
|
2
|
|
|
(20
|
)
|
|
577
|
|
|||
Net change in other assets and liabilities
|
|
133
|
|
|
(261
|
)
|
|
27
|
|
|||
Net cash provided by operating activities
|
|
8,183
|
|
|
6,223
|
|
|
5,664
|
|
|||
Investing Activities
|
|
|
|
|
|
|
||||||
Purchases of investment securities available-for-sale
|
|
(643
|
)
|
|
(1,300
|
)
|
|
(714
|
)
|
|||
Purchases of investments held-to-maturity
|
|
(215
|
)
|
|
(509
|
)
|
|
(1,145
|
)
|
|||
Proceeds from sales of investment securities available-for-sale
|
|
1,098
|
|
|
604
|
|
|
304
|
|
|||
Proceeds from maturities of investment securities available-for-sale
|
|
376
|
|
|
379
|
|
|
500
|
|
|||
Proceeds from maturities of investments held-to-maturity
|
|
383
|
|
|
929
|
|
|
1,020
|
|
|||
Purchases of property and equipment
|
|
(422
|
)
|
|
(330
|
)
|
|
(300
|
)
|
|||
Capitalized software
|
|
(306
|
)
|
|
(174
|
)
|
|
(123
|
)
|
|||
Purchases of equity investments
|
|
(467
|
)
|
|
(91
|
)
|
|
(147
|
)
|
|||
Acquisition of businesses, net of cash acquired
|
|
(1,440
|
)
|
|
—
|
|
|
(1,175
|
)
|
|||
Other investing activities
|
|
(4
|
)
|
|
(14
|
)
|
|
(1
|
)
|
|||
Net cash used in investing activities
|
|
(1,640
|
)
|
|
(506
|
)
|
|
(1,781
|
)
|
|||
Financing Activities
|
|
|
|
|
|
|
||||||
Purchases of treasury stock
|
|
(6,497
|
)
|
|
(4,933
|
)
|
|
(3,762
|
)
|
|||
Dividends paid
|
|
(1,345
|
)
|
|
(1,044
|
)
|
|
(942
|
)
|
|||
Proceeds from debt
|
|
2,724
|
|
|
991
|
|
|
—
|
|
|||
Payment of debt
|
|
(500
|
)
|
|
—
|
|
|
(64
|
)
|
|||
Contingent consideration paid
|
|
(199
|
)
|
|
—
|
|
|
—
|
|
|||
Tax withholdings related to share-based payments
|
|
(161
|
)
|
|
(80
|
)
|
|
(47
|
)
|
|||
Cash proceeds from exercise of stock options
|
|
126
|
|
|
104
|
|
|
57
|
|
|||
Other financing activities
|
|
(15
|
)
|
|
(4
|
)
|
|
(6
|
)
|
|||
Net cash used in financing activities
|
|
(5,867
|
)
|
|
(4,966
|
)
|
|
(4,764
|
)
|
|||
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents
|
|
(44
|
)
|
|
(6
|
)
|
|
200
|
|
|||
Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents
|
|
632
|
|
|
745
|
|
|
(681
|
)
|
|||
Cash, cash equivalents, restricted cash and restricted cash equivalents - beginning of period
|
|
8,337
|
|
|
7,592
|
|
|
8,273
|
|
|||
Cash, cash equivalents, restricted cash and restricted cash equivalents - end of period
|
|
$
|
8,969
|
|
|
$
|
8,337
|
|
|
$
|
7,592
|
|
|
|
|
|
|
|
|
||||||
The accompanying notes are an integral part of these consolidated financial statements.
|
•
|
Restricted cash for litigation settlement - The Company has restricted cash for litigation within a qualified settlement fund related to the settlement agreement for the U.S. merchant class litigation. The funds continue to be restricted for payments until the litigation matter is resolved.
|
•
|
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 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 regard to usage. These funds are classified on the consolidated balance sheet within prepaid expenses and other current assets and other assets.
|
•
|
Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets
|
•
|
Level 2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in inactive markets and inputs that are observable for the asset or liability
|
•
|
Level 3 - inputs to the valuation methodology are unobservable and cannot be directly corroborated by observable market data
|
•
|
Available-for-sale debt securities:
|
◦
|
Available-for-sale securities that are available to meet the Company’s current operational needs are classified as current assets and the securities that are not available for current operational needs are classified as non-current assets on the consolidated balance sheet.
|
•
|
Held-to-maturity securities:
|
◦
|
Time deposits - The Company classifies time deposits with original maturities greater than three months as held-to-maturity. Held-to-maturity securities that mature within one year are classified as current assets within investments on the consolidated balance sheet while held-to-maturity securities with maturities of greater than one year are classified as non-current assets. Time deposits are carried at amortized cost on the consolidated balance sheet and are intended to be held until maturity.
|
•
|
Marketable equity securities - Marketable equity securities are strategic investments in publicly traded companies and are measured at fair value using quoted prices in their respective active markets with changes recorded through gain (losses) on equity investments, net on the consolidated statement of operations. Securities that are not for use in current operations are classified in other assets on the consolidated balance sheet.
|
•
|
Nonmarketable equity investments - The Company’s nonmarketable equity investments, which are reported in other assets on the consolidated balance sheet, include investments in privately held companies without readily determinable market values. The Company uses discounted cash flows and market assumptions to estimate the fair value of its nonmarketable equity investments when certain events or circumstances indicate that impairment may exist. The Company’s nonmarketable equity investments are accounted for under the equity method or measurement alternative method.
|
◦
|
Equity method - The Company accounts for investments in common stock or in-substance common stock under the equity method of accounting when it has the ability to exercise significant influence over the investee, generally when it holds between 20% and 50% ownership in the entity. In addition, investments in flow-through entities such as limited partnerships and limited liability companies are also accounted for under the equity method when the Company has the ability to exercise significant influence over the investee, generally when the investment ownership percentage is equal to or greater than 5% of the outstanding ownership interest. The excess of the cost over the underlying net equity of investments accounted for under the equity method is allocated to identifiable tangible and intangible assets and liabilities based on fair values at the date of acquisition. The amortization of the excess of the cost over the underlying net equity of investments and Mastercard’s share of net earnings or losses of entities accounted for under the equity method of accounting is included in other income (expense), net on the consolidated statement of operations.
|
◦
|
Measurement alternative method - The Company accounts for investments in common stock or in-substance common stock under the measurement alternative method of accounting when it does not exercise significant influence, generally when it holds less than 20% ownership in the entity or when the interest in a limited partnership or limited liability company is less than 5% and the Company has no significant influence over the operation of the investee. Investments in companies that Mastercard does not control, but that are not in the form of common stock or in-substance common stock, are also accounted for under the measurement alternative method of accounting. Measurement alternative investments are measured at cost, less any impairment and adjusted for changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. Fair value adjustments, as well as impairments, are included in gain (losses) on equity investments, net on the consolidated statement of operations.
|
Asset Category
|
|
Estimated Useful Life
|
Buildings
|
|
30 years
|
Building equipment
|
|
10 - 15 years
|
Furniture and fixtures and equipment
|
|
3 - 5 years
|
Leasehold improvements
|
|
Shorter of life of improvement or lease term
|
Right-of-use assets
|
|
Shorter of life of the asset or lease term
|
|
|
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
|
|
|
|
Year Ended December 31, 2018
|
||||||||||
|
|
Balances excluding revenue standard
|
|
Impact of revenue standard
|
|
As reported
|
||||||
|
|
(in millions)
|
||||||||||
Net Revenue
|
|
$
|
14,471
|
|
|
$
|
479
|
|
|
$
|
14,950
|
|
Operating Expenses
|
|
|
|
|
|
|
||||||
Advertising and marketing
|
|
743
|
|
|
164
|
|
|
907
|
|
|||
Income before income taxes
|
|
6,889
|
|
|
315
|
|
|
7,204
|
|
|||
Income tax expense
|
|
1,278
|
|
|
67
|
|
|
1,345
|
|
|||
Net Income
|
|
5,611
|
|
|
248
|
|
|
5,859
|
|
|
|
December 31, 2018
|
||||||||||
|
|
Balances excluding revenue standard
|
|
Impact of revenue standard
|
|
As reported
|
||||||
|
|
(in millions)
|
||||||||||
Assets
|
|
|
|
|
|
|
||||||
Accounts receivable
|
|
$
|
2,214
|
|
|
$
|
62
|
|
|
$
|
2,276
|
|
Prepaid expenses and other current assets
|
|
1,176
|
|
|
256
|
|
|
1,432
|
|
|||
Deferred income taxes
|
|
666
|
|
|
(96
|
)
|
|
570
|
|
|||
Other assets
|
|
2,388
|
|
|
915
|
|
|
3,303
|
|
|||
Liabilities
|
|
|
|
|
|
|
||||||
Accounts payable
|
|
959
|
|
|
(422
|
)
|
|
537
|
|
|||
Accrued expenses
|
|
4,375
|
|
|
372
|
|
|
4,747
|
|
|||
Other current liabilities
|
|
1,085
|
|
|
(136
|
)
|
|
949
|
|
|||
Other liabilities
|
|
1,145
|
|
|
732
|
|
|
1,877
|
|
|||
Equity
|
|
|
|
|
|
|
||||||
Retained earnings
|
|
26,692
|
|
|
591
|
|
|
27,283
|
|
|
|
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
|
|
|
181
|
|
|
(17
|
)
|
|
1,204
|
|
||||
Deferred income taxes
|
|
250
|
|
|
(69
|
)
|
|
186
|
|
|
367
|
|
||||
Other assets
|
|
2,298
|
|
|
690
|
|
|
(352
|
)
|
|
2,636
|
|
||||
Liabilities
|
|
|
|
|
|
|
|
|
||||||||
Accounts payable
|
|
933
|
|
|
(495
|
)
|
|
—
|
|
|
438
|
|
||||
Accrued expenses
|
|
3,931
|
|
|
391
|
|
|
—
|
|
|
4,322
|
|
||||
Other current liabilities
|
|
792
|
|
|
(44
|
)
|
|
—
|
|
|
748
|
|
||||
Other liabilities
|
|
1,438
|
|
|
628
|
|
|
—
|
|
|
2,066
|
|
||||
Equity
|
|
|
|
|
|
|
|
|
||||||||
Retained earnings
|
|
22,364
|
|
|
366
|
|
|
(183
|
)
|
|
22,547
|
|
|
|
2019
|
|
2017
|
||||
|
|
(in millions)
|
||||||
Assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
54
|
|
|
$
|
111
|
|
Other current assets
|
|
143
|
|
|
110
|
|
||
Other intangible assets
|
|
395
|
|
|
488
|
|
||
Goodwill
|
|
1,076
|
|
|
1,135
|
|
||
Other assets
|
|
48
|
|
|
91
|
|
||
Total assets
|
|
1,716
|
|
|
1,935
|
|
||
|
|
|
|
|
||||
Liabilities:
|
|
|
|
|
||||
Other current liabilities
|
|
121
|
|
|
234
|
|
||
Deferred income taxes
|
|
52
|
|
|
64
|
|
||
Other liabilities
|
|
32
|
|
|
66
|
|
||
Total liabilities
|
|
205
|
|
|
364
|
|
||
|
|
|
|
|
||||
Net assets acquired
|
|
$
|
1,511
|
|
|
$
|
1,571
|
|
|
|
2019
|
|
2017
|
|
2019
|
|
2017
|
||||
|
|
Acquisition Date Fair Value
|
|
Weighted-Average Useful Life
|
||||||||
|
|
(in millions)
|
|
(in years)
|
||||||||
Developed technologies
|
|
$
|
199
|
|
|
$
|
319
|
|
|
7.7
|
|
7.5
|
Customer relationships
|
|
178
|
|
|
166
|
|
|
12.6
|
|
9.9
|
||
Other
|
|
18
|
|
|
3
|
|
|
5.0
|
|
1.4
|
||
Other intangible assets
|
|
$
|
395
|
|
|
$
|
488
|
|
|
9.7
|
|
8.3
|
•
|
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.
|
•
|
Data analytics and consulting fees.
|
•
|
Cyber and intelligence fees are for products and services offered to prevent, detect and respond to fraud and to ensure the safety of transactions made primarily 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.
|
•
|
Batch and real-time account-based payment services relating to ACH transactions and other ACH related services.
|
•
|
Other payment-related products and services, including account and transaction enhancement services, rules compliance and publications.
|
|
|
2019
|
|
2018
|
||||
|
|
(in millions)
|
||||||
Revenue by source:
|
|
|
|
|
||||
Domestic assessments
|
|
$
|
6,781
|
|
|
$
|
6,138
|
|
Cross-border volume fees
|
|
5,606
|
|
|
4,954
|
|
||
Transaction processing
|
|
8,469
|
|
|
7,391
|
|
||
Other revenues
|
|
4,124
|
|
|
3,348
|
|
||
Gross revenue
|
|
24,980
|
|
|
21,831
|
|
||
Rebates and incentives (contra-revenue)
|
|
(8,097
|
)
|
|
(6,881
|
)
|
||
Net revenue
|
|
$
|
16,883
|
|
|
$
|
14,950
|
|
|
|
|
|
|
||||
Net revenue by geographic region:
|
|
|
|
|
||||
North American Markets
|
|
$
|
5,843
|
|
|
$
|
5,312
|
|
International Markets
|
|
10,869
|
|
|
9,514
|
|
||
Other 1
|
|
171
|
|
|
124
|
|
||
Net revenue
|
|
$
|
16,883
|
|
|
$
|
14,950
|
|
1
|
Includes revenues managed by corporate functions.
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
(in millions, except per share data)
|
||||||||||
Numerator
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
8,118
|
|
|
$
|
5,859
|
|
|
$
|
3,915
|
|
Denominator
|
|
|
|
|
|
|
||||||
Basic weighted-average shares outstanding
|
|
1,017
|
|
|
1,041
|
|
|
1,067
|
|
|||
Dilutive stock options and stock units
|
|
5
|
|
|
6
|
|
|
5
|
|
|||
Diluted weighted-average shares outstanding 1
|
|
1,022
|
|
|
1,047
|
|
|
1,072
|
|
|||
Earnings per Share
|
|
|
|
|
|
|
||||||
Basic
|
|
$
|
7.98
|
|
|
$
|
5.63
|
|
|
$
|
3.67
|
|
Diluted
|
|
$
|
7.94
|
|
|
$
|
5.60
|
|
|
$
|
3.65
|
|
1
|
For the years presented, the calculation of diluted EPS excluded a minimal amount of anti-dilutive share-based payment awards.
|
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
||||||||
|
|
(in millions)
|
||||||||||||||
Cash and cash equivalents
|
|
$
|
6,988
|
|
|
$
|
6,682
|
|
|
$
|
5,933
|
|
|
$
|
6,721
|
|
Restricted cash and restricted cash equivalents
|
|
|
|
|
|
|
|
|
||||||||
Restricted cash for litigation settlement
|
|
584
|
|
|
553
|
|
|
546
|
|
|
543
|
|
||||
Restricted security deposits held for customers
|
|
1,370
|
|
|
1,080
|
|
|
1,085
|
|
|
991
|
|
||||
Prepaid expenses and other current assets
|
|
27
|
|
|
22
|
|
|
28
|
|
|
3
|
|
||||
Other assets
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15
|
|
||||
Cash, cash equivalents, restricted cash and restricted cash equivalents
|
|
$
|
8,969
|
|
|
$
|
8,337
|
|
|
$
|
7,592
|
|
|
$
|
8,273
|
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
(in millions)
|
||||||||||
Cash paid for income taxes, net of refunds
|
|
$
|
1,644
|
|
|
$
|
1,790
|
|
|
$
|
1,893
|
|
Cash paid for interest
|
|
199
|
|
|
153
|
|
|
135
|
|
|||
Cash paid for legal settlements
|
|
668
|
|
|
260
|
|
|
47
|
|
|||
Non-cash investing and financing activities
|
|
|
|
|
|
|
||||||
Dividends declared but not yet paid
|
|
403
|
|
|
340
|
|
|
263
|
|
|||
Accrued property, equipment and right-of-use assets
|
|
468
|
|
|
10
|
|
|
30
|
|
|||
Fair value of assets acquired, net of cash acquired
|
|
1,662
|
|
|
—
|
|
|
1,825
|
|
|||
Fair value of liabilities assumed related to acquisitions
|
|
205
|
|
|
—
|
|
|
365
|
|
|
|
2019
|
|
2018
|
||||
|
|
(in millions)
|
||||||
Available-for-sale securities
|
|
$
|
591
|
|
|
$
|
1,432
|
|
Held-to-maturity securities
|
|
97
|
|
|
264
|
|
||
Total investments
|
|
$
|
688
|
|
|
$
|
1,696
|
|
|
|
December 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
|
|
$
|
15
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
15
|
|
|
$
|
15
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
15
|
|
Government and agency securities
|
|
108
|
|
|
—
|
|
|
—
|
|
|
108
|
|
|
157
|
|
|
—
|
|
|
—
|
|
|
157
|
|
||||||||
Corporate securities
|
|
381
|
|
|
1
|
|
|
—
|
|
|
382
|
|
|
1,044
|
|
|
1
|
|
|
(2
|
)
|
|
1,043
|
|
||||||||
Asset-backed securities
|
|
85
|
|
|
1
|
|
|
—
|
|
|
86
|
|
|
217
|
|
|
—
|
|
|
—
|
|
|
217
|
|
||||||||
Total
|
|
$
|
589
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
591
|
|
|
$
|
1,433
|
|
|
$
|
1
|
|
|
$
|
(2
|
)
|
|
$
|
1,432
|
|
|
|
Available-For-Sale
|
||||||
|
|
Amortized
Cost |
|
Fair Value
|
||||
|
|
(in millions)
|
||||||
Due within 1 year
|
|
$
|
180
|
|
|
$
|
181
|
|
Due after 1 year through 5 years
|
|
409
|
|
|
410
|
|
||
Total
|
|
$
|
589
|
|
|
$
|
591
|
|
|
|
Balance at December 31, 2018
|
|
Purchases (Sales), net1
|
|
Changes in Fair Value2
|
|
Balance at December 31, 2019
|
||||||||
|
|
(in millions)
|
||||||||||||||
Marketable securities
|
|
$
|
—
|
|
|
$
|
362
|
|
|
$
|
117
|
|
|
$
|
479
|
|
Nonmarketable securities
|
|
337
|
|
|
48
|
|
|
50
|
|
|
435
|
|
||||
Total equity investments
|
|
$
|
337
|
|
|
$
|
410
|
|
|
$
|
167
|
|
|
$
|
914
|
|
1
|
Includes impact of balance sheet foreign currency translation
|
2
|
Recorded in gains (losses) on equity investments, net on the consolidated statement of operations
|
|
|
December 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
|
|
$
|
—
|
|
|
$
|
15
|
|
|
$
|
—
|
|
|
$
|
15
|
|
|
$
|
—
|
|
|
$
|
15
|
|
|
$
|
—
|
|
|
$
|
15
|
|
Government and agency securities
|
|
66
|
|
|
42
|
|
|
—
|
|
|
108
|
|
|
65
|
|
|
92
|
|
|
—
|
|
|
157
|
|
||||||||
Corporate securities
|
|
—
|
|
|
382
|
|
|
—
|
|
|
382
|
|
|
—
|
|
|
1,043
|
|
|
—
|
|
|
1,043
|
|
||||||||
Asset-backed securities
|
|
—
|
|
|
86
|
|
|
—
|
|
|
86
|
|
|
—
|
|
|
217
|
|
|
—
|
|
|
217
|
|
||||||||
Derivative instruments 2:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Foreign exchange contracts
|
|
—
|
|
|
12
|
|
|
—
|
|
|
12
|
|
|
—
|
|
|
35
|
|
|
—
|
|
|
35
|
|
||||||||
Interest rate contracts
|
|
—
|
|
|
14
|
|
|
—
|
|
|
14
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Marketable securities 3:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Equity securities
|
|
479
|
|
|
—
|
|
|
—
|
|
|
479
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Deferred compensation plan 4:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Deferred compensation assets
|
|
67
|
|
|
—
|
|
|
—
|
|
|
67
|
|
|
54
|
|
|
—
|
|
|
—
|
|
|
54
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Derivative instruments 2:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Foreign exchange derivative liabilities
|
|
$
|
—
|
|
|
$
|
(32
|
)
|
|
$
|
—
|
|
|
$
|
(32
|
)
|
|
$
|
—
|
|
|
$
|
(6
|
)
|
|
$
|
—
|
|
|
$
|
(6
|
)
|
Deferred compensation plan 5:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Deferred compensation liabilities
|
|
(67
|
)
|
|
—
|
|
|
—
|
|
|
(67
|
)
|
|
(54
|
)
|
|
—
|
|
|
—
|
|
|
(54
|
)
|
1
|
The Company’s U.S. government securities are classified within Level 1 of the Valuation Hierarchy as the fair values are based on unadjusted quoted prices for identical assets in active markets. The fair value of the Company’s available-for-sale municipal securities, government and agency securities, corporate securities and asset-backed securities are based on observable inputs such as quoted prices, benchmark yields and issuer spreads for similar assets in active markets and are therefore included in Level 2 of the Valuation Hierarchy.
|
2
|
The Company’s foreign exchange and interest rate derivative asset and liability contracts have been classified within Level 2 of the Valuation Hierarchy as the fair value is based on observable inputs such as broker quotes relating to foreign currency exchange rates for similar derivative instruments. See Note 23 (Derivative and Hedging Instruments) for further details.
|
3
|
The Company’s Marketable securities are publicly held and classified within Level 1 of the Valuation Hierarchy as the fair values are based on unadjusted quoted prices in their respective active markets.
|
4
|
The Company has a nonqualified deferred compensation plan where assets are invested primarily in mutual funds held in a rabbi trust, which is restricted for payments to participants of the plan. The Company has elected to use the fair value option for these mutual funds, which are measured using quoted prices of identical instruments in active markets and are included in prepaid expenses and other current assets on the consolidated balance sheet.
|
5
|
The deferred compensation liabilities are measured at fair value based on the quoted prices of identical instruments to the investment vehicles selected by the participants. These are included in other liabilities on the consolidated balance sheet.
|
|
|
2019
|
|
2018
|
||||
|
|
(in millions)
|
||||||
Customer and merchant incentives
|
|
$
|
872
|
|
|
$
|
778
|
|
Prepaid income taxes
|
|
105
|
|
|
51
|
|
||
Other
|
|
786
|
|
|
603
|
|
||
Total prepaid expenses and other current assets
|
|
$
|
1,763
|
|
|
$
|
1,432
|
|
|
|
2019
|
|
2018
|
||||
|
|
(in millions)
|
||||||
Customer and merchant incentives
|
|
$
|
2,838
|
|
|
$
|
2,458
|
|
Equity investments
|
|
914
|
|
|
337
|
|
||
Income taxes receivable
|
|
460
|
|
|
298
|
|
||
Other
|
|
313
|
|
|
210
|
|
||
Total other assets
|
|
$
|
4,525
|
|
|
$
|
3,303
|
|
|
|
2019
|
|
2018
|
||||
|
|
(in millions)
|
||||||
Building, building equipment and land
|
|
$
|
505
|
|
|
$
|
481
|
|
Equipment
|
|
1,218
|
|
|
987
|
|
||
Furniture and fixtures
|
|
92
|
|
|
85
|
|
||
Leasehold improvements
|
|
303
|
|
|
215
|
|
||
Operating lease right-of-use assets
|
|
810
|
|
|
—
|
|
||
Property, equipment and right-of-use assets
|
|
2,928
|
|
|
1,768
|
|
||
Less accumulated depreciation and amortization
|
|
(1,100
|
)
|
|
(847
|
)
|
||
Property, equipment and right-of-use assets, net
|
|
$
|
1,828
|
|
|
$
|
921
|
|
|
|
December 31,
2019 |
||
|
|
(in millions)
|
||
Balance sheet location
|
|
|
||
Property, equipment and right-of-use assets, net
|
|
$
|
711
|
|
Other current liabilities
|
|
106
|
|
|
Other liabilities
|
|
656
|
|
|
|
Operating Leases
|
||
|
|
(in millions)
|
||
2020
|
|
$
|
112
|
|
2021
|
|
113
|
|
|
2022
|
|
103
|
|
|
2023
|
|
90
|
|
|
2024
|
|
79
|
|
|
Thereafter
|
|
376
|
|
|
Total operating lease payments
|
|
873
|
|
|
Less: Interest
|
|
(111
|
)
|
|
Present value of operating lease liabilities
|
|
$
|
762
|
|
|
|
Operating Leases
|
||
|
|
(in millions)
|
||
2019
|
|
$
|
72
|
|
2020
|
|
75
|
|
|
2021
|
|
76
|
|
|
2022
|
|
68
|
|
|
2023
|
|
58
|
|
|
Thereafter
|
|
327
|
|
|
Total
|
|
$
|
676
|
|
|
|
2019
|
|
2018
|
||||
|
|
(in millions)
|
||||||
Beginning balance
|
|
$
|
2,904
|
|
|
$
|
3,035
|
|
Additions
|
|
1,076
|
|
|
2
|
|
||
Foreign currency translation
|
|
41
|
|
|
(133
|
)
|
||
Ending balance
|
|
$
|
4,021
|
|
|
$
|
2,904
|
|
|
|
2019
|
|
2018
|
||||||||||||||||||||
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
||||||||||||
|
|
(in millions)
|
||||||||||||||||||||||
Finite-lived intangible assets
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Capitalized software
|
|
$
|
1,884
|
|
|
$
|
(988
|
)
|
|
$
|
896
|
|
|
$
|
1,514
|
|
|
$
|
(898
|
)
|
|
$
|
616
|
|
Customer relationships
|
|
621
|
|
|
(264
|
)
|
|
357
|
|
|
439
|
|
|
(232
|
)
|
|
207
|
|
||||||
Other
|
|
44
|
|
|
(44
|
)
|
|
—
|
|
|
46
|
|
|
(45
|
)
|
|
1
|
|
||||||
Total
|
|
2,549
|
|
|
(1,296
|
)
|
|
1,253
|
|
|
1,999
|
|
|
(1,175
|
)
|
|
824
|
|
||||||
Indefinite-lived intangible assets
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Customer relationships
|
|
164
|
|
|
—
|
|
|
164
|
|
|
167
|
|
|
—
|
|
|
167
|
|
||||||
Total
|
|
$
|
2,713
|
|
|
$
|
(1,296
|
)
|
|
$
|
1,417
|
|
|
$
|
2,166
|
|
|
$
|
(1,175
|
)
|
|
$
|
991
|
|
|
|
(in millions)
|
||
2020
|
|
$
|
300
|
|
2021
|
|
243
|
|
|
2022
|
|
164
|
|
|
2023
|
|
115
|
|
|
2024 and thereafter
|
|
431
|
|
|
|
|
$
|
1,253
|
|
|
|
2019
|
|
2018
|
||||
|
|
(in millions)
|
||||||
Customer and merchant incentives
|
|
$
|
3,892
|
|
|
$
|
3,275
|
|
Personnel costs
|
|
713
|
|
|
744
|
|
||
Income and other taxes
|
|
332
|
|
|
158
|
|
||
Other
|
|
552
|
|
|
570
|
|
||
Total accrued expenses
|
|
$
|
5,489
|
|
|
$
|
4,747
|
|
|
|
Pension Plans
|
|
Postretirement Plan
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
($ in millions)
|
||||||||||||||
Change in benefit obligation
|
|
|
|
|
|
|
|
|
||||||||
Benefit obligation at beginning of year
|
|
$
|
438
|
|
|
$
|
468
|
|
|
$
|
57
|
|
|
$
|
61
|
|
Service cost
|
|
11
|
|
|
9
|
|
|
1
|
|
|
1
|
|
||||
Interest cost
|
|
13
|
|
|
12
|
|
|
2
|
|
|
2
|
|
||||
Actuarial (gain) loss
|
|
73
|
|
|
(7
|
)
|
|
9
|
|
|
(2
|
)
|
||||
Benefits paid
|
|
(15
|
)
|
|
(22
|
)
|
|
(5
|
)
|
|
(5
|
)
|
||||
Transfers in
|
|
2
|
|
|
1
|
|
|
—
|
|
|
—
|
|
||||
Foreign currency translation
|
|
9
|
|
|
(23
|
)
|
|
—
|
|
|
—
|
|
||||
Benefit obligation at end of year
|
|
531
|
|
|
438
|
|
|
64
|
|
|
57
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Change in plan assets
|
|
|
|
|
|
|
|
|
||||||||
Fair value of plan assets at beginning of year
|
|
410
|
|
|
427
|
|
|
—
|
|
|
—
|
|
||||
Actual (loss) gain on plan assets
|
|
79
|
|
|
(8
|
)
|
|
—
|
|
|
—
|
|
||||
Employer contributions
|
|
32
|
|
|
33
|
|
|
5
|
|
|
5
|
|
||||
Benefits paid
|
|
(15
|
)
|
|
(23
|
)
|
|
(5
|
)
|
|
(5
|
)
|
||||
Transfers in
|
|
2
|
|
|
2
|
|
|
—
|
|
|
—
|
|
||||
Foreign currency translation
|
|
10
|
|
|
(21
|
)
|
|
—
|
|
|
—
|
|
||||
Fair value of plan assets at end of year
|
|
518
|
|
|
410
|
|
|
—
|
|
|
—
|
|
||||
Funded status at end of year
|
|
$
|
(13
|
)
|
|
$
|
(28
|
)
|
|
$
|
(64
|
)
|
|
$
|
(57
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Amounts recognized on the consolidated balance sheet consist of:
|
|
|
|
|
|
|
|
|
||||||||
Other liabilities, short-term
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
(3
|
)
|
||||
Other liabilities, long-term
|
|
(13
|
)
|
|
(28
|
)
|
|
(61
|
)
|
|
(54
|
)
|
||||
|
|
$
|
(13
|
)
|
|
$
|
(28
|
)
|
|
$
|
(64
|
)
|
|
$
|
(57
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Accumulated other comprehensive income consists of:
|
|
|
|
|
|
|
|
|
||||||||
Net actuarial (gain) loss
|
|
$
|
7
|
|
|
$
|
(5
|
)
|
|
$
|
2
|
|
|
$
|
(7
|
)
|
Prior service credit
|
|
1
|
|
|
1
|
|
|
(5
|
)
|
|
(6
|
)
|
||||
Balance at end of year
|
|
$
|
8
|
|
|
$
|
(4
|
)
|
|
$
|
(3
|
)
|
|
$
|
(13
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average assumptions used to determine end of year benefit obligations
|
|
|
|
|
|
|
|
|
||||||||
Discount rate
|
|
|
|
|
|
|
|
|
||||||||
Non-U.S. Plans
|
|
0.70
|
%
|
|
1.80
|
%
|
|
*
|
|
|
*
|
|
||||
Vocalink Plan
|
|
2.00
|
%
|
|
3.10
|
%
|
|
*
|
|
|
*
|
|
||||
Postretirement Plan
|
|
*
|
|
|
*
|
|
|
3.25
|
%
|
|
4.25
|
%
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Rate of compensation increase
|
|
|
|
|
|
|
|
|
||||||||
Non-U.S. Plans
|
|
1.50
|
%
|
|
2.60
|
%
|
|
*
|
|
|
*
|
|
||||
Vocalink Plan
|
|
2.50
|
%
|
|
4.00
|
%
|
|
*
|
|
|
*
|
|
||||
Postretirement Plan
|
|
*
|
|
|
*
|
|
|
3.00
|
%
|
|
3.00
|
%
|
|
|
2019
|
|
2018
|
||||
|
|
(in millions)
|
||||||
Projected benefit obligation
|
|
$
|
531
|
|
|
$
|
438
|
|
Accumulated benefit obligation
|
|
524
|
|
|
430
|
|
||
Fair value of plan assets
|
|
518
|
|
|
410
|
|
|
|
Pension Plans
|
|
Postretirement Plan
|
||||||||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
||||||||||||
|
|
(in millions)
|
||||||||||||||||||||||
Service cost
|
|
$
|
11
|
|
|
$
|
9
|
|
|
$
|
9
|
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
1
|
|
Interest cost
|
|
13
|
|
|
12
|
|
|
8
|
|
|
2
|
|
|
2
|
|
|
2
|
|
||||||
Expected return on plan assets
|
|
(18
|
)
|
|
(20
|
)
|
|
(13
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Amortization of actuarial loss
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Amortization of prior service credit
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(2
|
)
|
|
(2
|
)
|
||||||
Net periodic benefit cost
|
|
$
|
7
|
|
|
$
|
1
|
|
|
$
|
4
|
|
|
$
|
2
|
|
|
$
|
1
|
|
|
$
|
1
|
|
|
|
Pension Plans
|
|
Postretirement Plan
|
||||||||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
||||||||||||
|
|
(in millions)
|
||||||||||||||||||||||
Current year actuarial loss (gain)
|
|
$
|
12
|
|
|
$
|
17
|
|
|
$
|
(22
|
)
|
|
$
|
9
|
|
|
$
|
(2
|
)
|
|
$
|
5
|
|
Current year prior service credit
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Amortization of prior service credit
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
2
|
|
|
2
|
|
||||||
Total other comprehensive loss (income)
|
|
$
|
12
|
|
|
$
|
18
|
|
|
$
|
(22
|
)
|
|
$
|
10
|
|
|
$
|
—
|
|
|
$
|
7
|
|
Total net periodic benefit cost and other comprehensive loss (income)
|
|
$
|
19
|
|
|
$
|
19
|
|
|
$
|
(18
|
)
|
|
$
|
12
|
|
|
$
|
1
|
|
|
$
|
8
|
|
|
|
Pension Plans
|
|
Postretirement Plan
|
||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
||||||
Discount rate
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Non-U.S. Plans
|
|
1.80
|
%
|
|
1.80
|
%
|
|
1.60
|
%
|
|
*
|
|
|
*
|
|
|
*
|
|
Vocalink Plan
|
|
2.00
|
%
|
|
2.80
|
%
|
|
2.50
|
%
|
|
*
|
|
|
*
|
|
|
*
|
|
Postretirement Plan
|
|
*
|
|
|
*
|
|
|
*
|
|
|
4.25
|
%
|
|
3.50
|
%
|
|
4.00
|
%
|
Expected return on plan assets
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Non-U.S. Plans
|
|
2.10
|
%
|
|
3.00
|
%
|
|
3.25
|
%
|
|
*
|
|
|
*
|
|
|
*
|
|
Vocalink Plan
|
|
3.75
|
%
|
|
4.75
|
%
|
|
4.75
|
%
|
|
*
|
|
|
*
|
|
|
*
|
|
Rate of compensation increase
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Non-U.S. Plans
|
|
1.50
|
%
|
|
2.60
|
%
|
|
2.59
|
%
|
|
*
|
|
|
*
|
|
|
*
|
|
Vocalink Plan
|
|
2.50
|
%
|
|
3.85
|
%
|
|
3.95
|
%
|
|
*
|
|
|
*
|
|
|
*
|
|
Postretirement Plan
|
|
*
|
|
|
*
|
|
|
*
|
|
|
3.00
|
%
|
|
3.00
|
%
|
|
3.00
|
%
|
|
|
2019
|
|
2018
|
||
Health care cost trend rate assumed for next year
|
|
6.00
|
%
|
|
6.00
|
%
|
Ultimate trend rate
|
|
5.00
|
%
|
|
5.00
|
%
|
Year that the rate reaches the ultimate trend rate
|
|
2
|
|
|
2
|
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||||||||||||||||||||
|
|
Quoted Prices in Active Markets (Level 1)
|
|
Significant Other Observable Inputs (Level 2)
|
|
Significant
Unobservable Inputs (Level 3) |
|
Fair Value
|
|
Quoted Prices in Active Markets (Level 1)
|
|
Significant Other Observable Inputs (Level 2)
|
|
Significant
Unobservable Inputs (Level 3) |
|
Fair Value
|
||||||||||||||||
|
|
(in millions)
|
||||||||||||||||||||||||||||||
Cash and cash equivalents 1
|
|
$
|
16
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
16
|
|
|
$
|
22
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
22
|
|
Government and agency securities 2
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
88
|
|
|
—
|
|
|
88
|
|
||||||||
Mutual funds 3
|
|
153
|
|
|
193
|
|
|
—
|
|
|
346
|
|
|
154
|
|
|
30
|
|
|
—
|
|
|
184
|
|
||||||||
Insurance contracts 4
|
|
—
|
|
|
75
|
|
|
—
|
|
|
75
|
|
|
—
|
|
|
57
|
|
|
—
|
|
|
57
|
|
||||||||
Asset-backed securities 5
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
34
|
|
|
34
|
|
||||||||
Other 6
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25
|
|
|
—
|
|
|
25
|
|
||||||||
Total
|
|
$
|
169
|
|
|
$
|
268
|
|
|
$
|
—
|
|
|
$
|
437
|
|
|
$
|
176
|
|
|
$
|
200
|
|
|
$
|
34
|
|
|
$
|
410
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Investments at Net Asset Value (“NAV”) 7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Mutual funds
|
|
|
|
|
|
|
|
36
|
|
|
|
|
|
|
|
|
—
|
|
||||||||||||||
Other
|
|
|
|
|
|
|
|
45
|
|
|
|
|
|
|
|
|
—
|
|
||||||||||||||
Total Plan Assets
|
|
|
|
|
|
|
|
$
|
518
|
|
|
|
|
|
|
|
|
$
|
410
|
|
1
|
Cash and cash equivalents are valued at quoted market prices, which represent the net asset value of the shares held by the Plans.
|
2
|
Governmental and agency securities are valued at unit values provided by investment managers, which are based on the fair value of the underlying investments utilizing public information, independent external valuation from third-party services or third-party advisors.
|
3
|
Certain mutual funds are valued at quoted market prices, which represent the value of the shares held by the Plans, and are therefore included in Level 1. Certain other mutual funds are valued at unit values provided by investment managers, which are based on the fair value of the underlying investments utilizing public information, independent external valuation from third-party services or third-party advisors, and are therefore included in Level 2.
|
4
|
Insurance contracts are valued at unit values provided by investment managers, which are based on the fair value of the underlying investments utilizing public information, independent external valuation from third-party services or third-party advisors.
|
5
|
Asset-backed securities are classified as Level 3 due to a lack of observable inputs in measuring fair value. These assets were sold during 2019.
|
6
|
Other represents hedge fund pooled vehicles which are based on the fair value of the underlying investments utilizing public information, independent external valuation from third-party services or third-party advisors, and are therefore included in Level 2.
|
7
|
Mutual funds (comprised primarily of credit investments) and other investments (comprised primarily of real estate investments) are valued using the NAV provided by the administrator as a practical expedient, and therefore these investments are not included in the valuation hierarchy. These investments have quarterly redemption frequencies with redemption notice periods ranging from 60 to 90 days.
|
|
|
Pension Plans
|
|
Postretirement Plan
|
||||
|
|
(in millions)
|
||||||
2020
|
|
$
|
17
|
|
|
$
|
4
|
|
2021
|
|
11
|
|
|
4
|
|
||
2022
|
|
12
|
|
|
4
|
|
||
2023
|
|
13
|
|
|
4
|
|
||
2024
|
|
15
|
|
|
4
|
|
||
2025 - 2029
|
|
70
|
|
|
20
|
|
Notes
|
|
Issuance
Date
|
|
Interest Payment Terms
|
|
Maturity
Date
|
|
Aggregate Principal Amount
|
|
Stated Interest Rate
|
|
Effective
Interest Rate
|
|
2019
|
|
2018
|
||||||||
|
|
|
|
|
|
|
|
(in millions, except percentages)
|
||||||||||||||||
2019 USD Notes
|
|
May 2019
|
|
Semi-annually
|
|
2029
|
|
$
|
1,000
|
|
|
2.950
|
%
|
|
3.030
|
%
|
|
$
|
1,000
|
|
|
$
|
—
|
|
|
|
|
|
|
|
2049
|
|
1,000
|
|
|
3.650
|
%
|
|
3.689
|
%
|
|
1,000
|
|
|
—
|
|
|||
|
|
December 2019
|
|
Semi-annually
|
|
2025
|
|
750
|
|
|
2.000
|
%
|
|
2.147
|
%
|
|
750
|
|
|
$
|
—
|
|
||
|
|
|
|
|
|
|
|
$
|
2,750
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
2018 USD Notes
|
|
February 2018
|
|
Semi-annually
|
|
2028
|
|
$
|
500
|
|
|
3.500
|
%
|
|
3.598
|
%
|
|
500
|
|
|
500
|
|
||
|
|
|
|
|
|
2048
|
|
500
|
|
|
3.950
|
%
|
|
3.990
|
%
|
|
500
|
|
|
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
|
%
|
|
785
|
|
|
801
|
|
||
|
|
|
|
|
|
2027
|
|
800
|
|
|
2.100
|
%
|
|
2.189
|
%
|
|
896
|
|
|
916
|
|
|||
|
|
|
|
|
|
2030
|
|
150
|
|
|
2.500
|
%
|
|
2.562
|
%
|
|
169
|
|
|
172
|
|
|||
|
|
|
|
|
|
|
|
€
|
1,650
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
2014 USD Notes
|
|
March 2014
|
|
Semi-annually
|
|
2019
|
|
$
|
500
|
|
|
2.000
|
%
|
|
2.178
|
%
|
|
—
|
|
|
500
|
|
||
|
|
|
|
|
|
2024
|
|
1,000
|
|
|
3.375
|
%
|
|
3.484
|
%
|
|
1,000
|
|
|
1,000
|
|
|||
|
|
|
|
|
|
|
|
$
|
1,500
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,600
|
|
|
6,389
|
|
||||||
Less: Unamortized discount and debt issuance costs
|
|
(73
|
)
|
|
(55
|
)
|
||||||||||||||||||
Total debt outstanding
|
|
$
|
8,527
|
|
|
$
|
6,334
|
|
||||||||||||||||
Less: Current portion1
|
|
—
|
|
|
(500
|
)
|
||||||||||||||||||
Long-term debt
|
|
$
|
8,527
|
|
|
$
|
5,834
|
|
1
|
Relates to the 2014 USD Notes, which was classified in current liabilities as of December 31, 2018, matured and was paid during 2019
|
Class
|
|
Par Value Per Share
|
|
Authorized Shares
(in millions)
|
|
Dividend and Voting Rights
|
|
A
|
|
$0.0001
|
|
3,000
|
|
|
One vote per share
Dividend rights |
B
|
|
$0.0001
|
|
1,200
|
|
|
Non-voting
Dividend rights |
Preferred
|
|
$0.0001
|
|
300
|
|
|
No shares issued or outstanding at December 31, 2019 and 2018. Dividend and voting rights are to be determined by the Board of Directors of the Company upon issuance.
|
|
|
2019
|
|
2018
|
||||||||
|
|
Equity Ownership
|
|
General Voting Power
|
|
Equity Ownership
|
|
General Voting Power
|
||||
Public Investors (Class A stockholders)
|
|
87.8
|
%
|
|
88.8
|
%
|
|
88.0
|
%
|
|
89.0
|
%
|
Principal or Affiliate Customers (Class B stockholders)
|
|
1.1
|
%
|
|
—
|
%
|
|
1.1
|
%
|
|
—
|
%
|
Mastercard Foundation (Class A stockholders)
|
|
11.1
|
%
|
|
11.2
|
%
|
|
10.9
|
%
|
|
11.0
|
%
|
Board authorization dates
|
|
December 2019
|
|
December
2018 |
|
December
2017 |
|
December
2016 |
|
December
2015
|
|
|
||||||||||||
Date program became effective
|
|
January 2020
|
|
January 2019
|
|
March 2018
|
|
April 2017
|
|
February 2016
|
|
Total
|
||||||||||||
|
|
(in millions, except average price data)
|
||||||||||||||||||||||
Board authorization
|
|
$
|
8,000
|
|
|
$
|
6,500
|
|
|
$
|
4,000
|
|
|
$
|
4,000
|
|
|
$
|
4,000
|
|
|
$
|
26,500
|
|
Dollar-value of shares repurchased in 2017
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,766
|
|
|
$
|
996
|
|
|
$
|
3,762
|
|
Remaining authorization at December 31, 2017
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,000
|
|
|
$
|
1,234
|
|
|
$
|
—
|
|
|
$
|
5,234
|
|
Dollar-value of shares repurchased in 2018
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,699
|
|
|
$
|
1,234
|
|
|
$
|
—
|
|
|
$
|
4,933
|
|
Remaining authorization at December 31, 2018
|
|
$
|
—
|
|
|
$
|
6,500
|
|
|
$
|
301
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,801
|
|
Dollar-value of shares repurchased in 2019
|
|
$
|
—
|
|
|
$
|
6,196
|
|
|
$
|
301
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,497
|
|
Remaining authorization at December 31, 2019
|
|
$
|
8,000
|
|
|
$
|
304
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8,304
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Shares repurchased in 2017
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21.0
|
|
|
9.1
|
|
|
30.1
|
|
||||||
Average price paid per share in 2017
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
131.97
|
|
|
$
|
109.16
|
|
|
$
|
125.05
|
|
Shares repurchased in 2018
|
|
—
|
|
|
—
|
|
|
19.0
|
|
|
7.2
|
|
|
—
|
|
|
26.2
|
|
||||||
Average price paid per share in 2018
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
194.77
|
|
|
$
|
171.11
|
|
|
$
|
—
|
|
|
$
|
188.26
|
|
Shares repurchased in 2019
|
|
—
|
|
|
24.8
|
|
|
1.6
|
|
|
—
|
|
|
—
|
|
|
26.4
|
|
||||||
Average price paid per share in 2019
|
|
$
|
—
|
|
|
$
|
249.58
|
|
|
$
|
188.38
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
245.89
|
|
Cumulative shares repurchased through December 31, 2019
|
|
—
|
|
|
24.8
|
|
|
20.6
|
|
|
28.2
|
|
|
40.4
|
|
|
114.0
|
|
||||||
Cumulative average price paid per share
|
|
$
|
—
|
|
|
$
|
249.58
|
|
|
$
|
194.27
|
|
|
$
|
141.99
|
|
|
$
|
99.10
|
|
|
$
|
159.68
|
|
|
|
Outstanding Shares
|
||||
|
|
Class A
|
|
Class B
|
||
|
|
(in millions)
|
||||
Balance at December 31, 2016
|
|
1,062.4
|
|
|
19.3
|
|
Purchases of treasury stock
|
|
(30.1
|
)
|
|
—
|
|
Share-based payments
|
|
2.2
|
|
|
—
|
|
Conversion of Class B to Class A common stock
|
|
5.2
|
|
|
(5.2
|
)
|
Balance at December 31, 2017
|
|
1,039.7
|
|
|
14.1
|
|
Purchases of treasury stock
|
|
(26.2
|
)
|
|
—
|
|
Share-based payments
|
|
2.8
|
|
|
—
|
|
Conversion of Class B to Class A common stock
|
|
2.3
|
|
|
(2.3
|
)
|
Balance at December 31, 2018
|
|
1,018.6
|
|
|
11.8
|
|
Purchases of treasury stock
|
|
(26.4
|
)
|
|
—
|
|
Share-based payments
|
|
3.2
|
|
|
—
|
|
Conversion of Class B to Class A common stock
|
|
0.6
|
|
|
(0.6
|
)
|
Balance at December 31, 2019
|
|
996.0
|
|
|
11.2
|
|
|
|
Foreign Currency Translation Adjustments 1
|
|
Translation Adjustments on Net Investment Hedge 2
|
|
Cash Flow Hedges 3
|
|
Defined Benefit Pension and Other Postretirement Plans 4
|
|
Investment Securities Available-for-Sale 5
|
|
Accumulated Other Comprehensive Income (Loss)
|
||||||||||||
|
|
(in millions)
|
||||||||||||||||||||||
Balance at December 31, 2017
|
|
$
|
(382
|
)
|
|
$
|
(141
|
)
|
|
$
|
—
|
|
|
$
|
25
|
|
|
$
|
1
|
|
|
$
|
(497
|
)
|
Other comprehensive income (loss)
|
|
(279
|
)
|
|
75
|
|
|
—
|
|
|
(15
|
)
|
|
(2
|
)
|
|
(221
|
)
|
||||||
Balance at December 31, 2018
|
|
(661
|
)
|
|
(66
|
)
|
|
—
|
|
|
10
|
|
|
(1
|
)
|
|
(718
|
)
|
||||||
Other comprehensive income (loss)
|
|
23
|
|
|
28
|
|
|
11
|
|
|
(19
|
)
|
|
2
|
|
|
45
|
|
||||||
Balance at December 31, 2019
|
|
$
|
(638
|
)
|
|
$
|
(38
|
)
|
|
$
|
11
|
|
|
$
|
(9
|
)
|
|
$
|
1
|
|
|
$
|
(673
|
)
|
1
|
During 2018, the increase in the accumulated other comprehensive loss related to foreign currency translation adjustments was driven primarily by the depreciation of the euro, British pound and Brazilian real. During 2019, the decrease in the accumulated other comprehensive loss related to foreign currency translation adjustments was driven primarily by the appreciation of the British pound partially offset by the depreciation of the euro.
|
2
|
The Company uses foreign currency denominated debt to hedge a portion of its net investment in foreign operations against adverse movements in exchange rates. Changes in the value of the debt are recorded in accumulated other comprehensive income (loss). During 2018 and 2019, the decreases in the accumulated other comprehensive loss related to the net investment hedge were driven by the depreciation of the euro. See Note 23 (Derivative and Hedging Instruments) for additional information.
|
3
|
In 2019, the Company entered into treasury rate locks which are accounted for as cash flow hedges. During 2019, in connection with these cash flow hedges, the Company recorded unrealized gains, net of tax, of $11 million in accumulated other comprehensive income (loss). See Note 23 (Derivative and Hedging Instruments) for additional information.
|
4
|
During 2018, the decrease in the accumulated other comprehensive gain related to the Company’s Plans was driven primarily by an actuarial loss within the Vocalink Plan. During 2019, the decrease in the accumulated other comprehensive gain related to the Company’s Plans was primarily driven by actuarial losses within the Vocalink and non-U.S. Plans. During 2018 and 2019, amounts reclassified from accumulated other comprehensive income (loss) to earnings, were not material. See Note 14 (Pension, Postretirement and Savings Plans) for additional information.
|
5
|
During 2018 and 2019, gains and losses on available-for-sale investment securities, reclassified from accumulated other comprehensive income (loss) to investment income, were not material. See Note 7 (Investments) for additional information.
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Risk-free rate of return
|
|
2.6
|
%
|
|
2.7
|
%
|
|
2.0
|
%
|
|||
Expected term (in years)
|
|
6.00
|
|
|
6.00
|
|
|
5.00
|
|
|||
Expected volatility
|
|
19.6
|
%
|
|
19.7
|
%
|
|
19.3
|
%
|
|||
Expected dividend yield
|
|
0.6
|
%
|
|
0.6
|
%
|
|
0.8
|
%
|
|||
Weighted-average fair value per Option granted
|
|
$
|
53.09
|
|
|
$
|
40.90
|
|
|
$
|
21.23
|
|
|
|
Options
|
|
Weighted-Average Exercise Price
|
|
Weighted-Average Remaining Contractual Term
|
|
Aggregate Intrinsic Value
|
|||||
|
|
(in millions)
|
|
|
|
(in years)
|
|
(in millions)
|
|||||
Outstanding at January 1, 2019
|
|
7.6
|
|
|
$
|
93
|
|
|
|
|
|
||
Granted
|
|
0.9
|
|
|
$
|
227
|
|
|
|
|
|
||
Exercised
|
|
(1.8
|
)
|
|
$
|
71
|
|
|
|
|
|
||
Forfeited/expired
|
|
(0.1
|
)
|
|
$
|
148
|
|
|
|
|
|
||
Outstanding at December 31, 2019
|
|
6.6
|
|
|
$
|
117
|
|
|
6.2
|
|
$
|
1,206
|
|
Exercisable at December 31, 2019
|
|
3.9
|
|
|
$
|
86
|
|
|
5.1
|
|
$
|
836
|
|
Options vested and expected to vest at December 31, 2019
|
|
6.6
|
|
|
$
|
116
|
|
|
6.2
|
|
$
|
1,200
|
|
|
|
Units
|
|
Weighted-Average Grant-Date Fair Value
|
|
Aggregate Intrinsic Value
|
|||||
|
|
(in millions)
|
|
|
|
(in millions)
|
|||||
Outstanding at January 1, 2019
|
|
3.7
|
|
|
$
|
117
|
|
|
|
||
Granted
|
|
1.0
|
|
|
$
|
226
|
|
|
|
||
Converted
|
|
(1.6
|
)
|
|
$
|
93
|
|
|
|
||
Forfeited
|
|
(0.2
|
)
|
|
$
|
154
|
|
|
|
||
Outstanding at December 31, 2019
|
|
2.9
|
|
|
$
|
166
|
|
|
$
|
852
|
|
RSUs expected to vest at December 31, 2019
|
|
2.8
|
|
|
$
|
165
|
|
|
$
|
824
|
|
|
|
Units
|
|
Weighted-Average
Grant-Date Fair Value
|
|
Aggregate Intrinsic Value
|
|||||
|
|
(in millions)
|
|
|
|
(in millions)
|
|||||
Outstanding at January 1, 2019
|
|
0.6
|
|
|
$
|
120
|
|
|
|
||
Granted
|
|
0.1
|
|
|
$
|
231
|
|
|
|
||
Converted
|
|
(0.4
|
)
|
|
$
|
92
|
|
|
|
||
Other1
|
|
0.2
|
|
|
$
|
126
|
|
|
|
||
Outstanding at December 31, 2019
|
|
0.5
|
|
|
$
|
167
|
|
|
$
|
162
|
|
PSUs expected to vest at December 31, 2019
|
|
0.5
|
|
|
$
|
167
|
|
|
$
|
162
|
|
1
|
Represents additional shares issued in March 2019 related to the 2016 PSU grant based on performance and market conditions achieved over the three-year measurement period. These shares vested upon issuance.
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
(in millions, except weighted-average fair value)
|
||||||||||
Share-based compensation expense: Options, RSUs and PSUs
|
|
$
|
250
|
|
|
$
|
196
|
|
|
$
|
176
|
|
Income tax benefit recognized for equity awards
|
|
53
|
|
|
41
|
|
|
57
|
|
|||
Income tax benefit realized related to Options exercised
|
|
69
|
|
|
53
|
|
|
36
|
|
|||
|
|
|
|
|
|
|
||||||
Options:
|
|
|
|
|
|
|
||||||
Total intrinsic value of Options exercised
|
|
317
|
|
|
242
|
|
|
106
|
|
|||
RSUs:
|
|
|
|
|
|
|
||||||
Weighted-average grant-date fair value of awards granted
|
|
226
|
|
|
171
|
|
|
112
|
|
|||
Total intrinsic value of RSUs converted into shares of Class A common stock
|
|
394
|
|
|
194
|
|
|
131
|
|
|||
PSUs:
|
|
|
|
|
|
|
||||||
Weighted-average grant-date fair value of awards granted
|
|
231
|
|
|
226
|
|
|
126
|
|
|||
Total intrinsic value of PSUs converted into shares of Class A common stock
|
|
85
|
|
|
40
|
|
|
13
|
|
|
|
(in millions)
|
||
2020
|
|
$
|
404
|
|
2021
|
|
224
|
|
|
2022
|
|
132
|
|
|
2023
|
|
42
|
|
|
2024
|
|
17
|
|
|
Thereafter
|
|
—
|
|
|
Total
|
|
$
|
819
|
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
(in millions)
|
||||||||||
United States
|
|
$
|
4,213
|
|
|
$
|
3,510
|
|
|
$
|
3,482
|
|
Foreign
|
|
5,518
|
|
|
3,694
|
|
|
3,040
|
|
|||
Income before income taxes
|
|
$
|
9,731
|
|
|
$
|
7,204
|
|
|
$
|
6,522
|
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
(in millions)
|
||||||||||
Current
|
|
|
|
|
|
|
||||||
Federal
|
|
$
|
642
|
|
|
$
|
649
|
|
|
$
|
1,704
|
|
State and local
|
|
81
|
|
|
69
|
|
|
65
|
|
|||
Foreign
|
|
897
|
|
|
871
|
|
|
752
|
|
|||
|
|
1,620
|
|
|
1,589
|
|
|
2,521
|
|
|||
Deferred
|
|
|
|
|
|
|
||||||
Federal
|
|
40
|
|
|
(228
|
)
|
|
134
|
|
|||
State and local
|
|
—
|
|
|
(11
|
)
|
|
1
|
|
|||
Foreign
|
|
(47
|
)
|
|
(5
|
)
|
|
(49
|
)
|
|||
|
|
(7
|
)
|
|
(244
|
)
|
|
86
|
|
|||
Income tax expense
|
|
$
|
1,613
|
|
|
$
|
1,345
|
|
|
$
|
2,607
|
|
|
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||
|
|
Amount
|
|
Percent
|
|
Amount
|
|
Percent
|
|
Amount
|
|
Percent
|
|||||||||
|
|
(in millions, except percentages)
|
|||||||||||||||||||
Income before income taxes
|
|
$
|
9,731
|
|
|
|
|
$
|
7,204
|
|
|
|
|
$
|
6,522
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Federal statutory tax
|
|
2,044
|
|
|
21.0
|
%
|
|
1,513
|
|
|
21.0
|
%
|
|
2,283
|
|
|
35.0
|
%
|
|||
State tax effect, net of federal benefit
|
|
65
|
|
|
0.7
|
%
|
|
46
|
|
|
0.6
|
%
|
|
43
|
|
|
0.7
|
%
|
|||
Foreign tax effect
|
|
(208
|
)
|
|
(2.1
|
)%
|
|
(92
|
)
|
|
(1.3
|
)%
|
|
(380
|
)
|
|
(5.8
|
)%
|
|||
European Commission fine
|
|
—
|
|
|
—
|
%
|
|
194
|
|
|
2.7
|
%
|
|
—
|
|
|
—
|
%
|
|||
Foreign tax credits1
|
|
(32
|
)
|
|
(0.3
|
)%
|
|
(110
|
)
|
|
(1.5
|
)%
|
|
(27
|
)
|
|
(0.4
|
)%
|
|||
Transition Tax
|
|
(30
|
)
|
|
(0.3
|
)%
|
|
22
|
|
|
0.3
|
%
|
|
629
|
|
|
9.6
|
%
|
|||
Remeasurement of deferred taxes
|
|
—
|
|
|
—
|
%
|
|
(7
|
)
|
|
(0.1
|
)%
|
|
157
|
|
|
2.4
|
%
|
|||
Windfall benefit
|
|
(129
|
)
|
|
(1.3
|
)%
|
|
(72
|
)
|
|
(1.0
|
)%
|
|
(43
|
)
|
|
(0.7
|
)%
|
|||
Other, net
|
|
(97
|
)
|
|
(1.1
|
)%
|
|
(149
|
)
|
|
(2.0
|
)%
|
|
(55
|
)
|
|
(0.8
|
)%
|
|||
Income tax expense
|
|
$
|
1,613
|
|
|
16.6
|
%
|
|
$
|
1,345
|
|
|
18.7
|
%
|
|
$
|
2,607
|
|
|
40.0
|
%
|
1
|
Included within the impact of the foreign tax credits is $27 million for 2019 and $90 million for 2018 of tax benefits relating to the carryback of certain foreign tax credits.
|
|
|
2019
|
|
2018
|
||||
|
|
(in millions)
|
||||||
Deferred Tax Assets
|
|
|
|
|
||||
Accrued liabilities
|
|
$
|
354
|
|
|
$
|
297
|
|
Compensation and benefits
|
|
214
|
|
|
210
|
|
||
State taxes and other credits
|
|
41
|
|
|
30
|
|
||
Net operating and capital losses
|
|
119
|
|
|
104
|
|
||
U.S. foreign tax credits1
|
|
145
|
|
|
—
|
|
||
Intangible assets
|
|
157
|
|
|
170
|
|
||
Other items
|
|
94
|
|
|
115
|
|
||
Less: Valuation allowance
|
|
(205
|
)
|
|
(94
|
)
|
||
Total Deferred Tax Assets
|
|
919
|
|
|
832
|
|
||
|
|
|
|
|
||||
Deferred Tax Liabilities
|
|
|
|
|
||||
Prepaid expenses and other accruals
|
|
83
|
|
|
89
|
|
||
Goodwill and intangible assets
|
|
187
|
|
|
125
|
|
||
Property, plant and equipment
|
|
128
|
|
|
97
|
|
||
Other items
|
|
63
|
|
|
18
|
|
||
Total Deferred Tax Liabilities
|
|
461
|
|
|
329
|
|
||
|
|
|
|
|
||||
Net Deferred Tax Assets
|
|
$
|
458
|
|
|
$
|
503
|
|
1
|
A deferred tax asset has been established in 2019 for $145 million related to foreign taxes paid in the current period, which are not expected to be utilized as credits in the current or future period, with a corresponding full valuation allowance.
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
(in millions)
|
||||||||||
Beginning balance
|
|
$
|
164
|
|
|
$
|
183
|
|
|
$
|
169
|
|
Additions:
|
|
|
|
|
|
|
||||||
Current year tax positions
|
|
22
|
|
|
23
|
|
|
21
|
|
|||
Prior year tax positions
|
|
37
|
|
|
5
|
|
|
9
|
|
|||
Reductions:
|
|
|
|
|
|
|
||||||
Prior year tax positions
|
|
(11
|
)
|
|
(17
|
)
|
|
(1
|
)
|
|||
Settlements with tax authorities
|
|
(2
|
)
|
|
(18
|
)
|
|
(4
|
)
|
|||
Expired statute of limitations
|
|
(7
|
)
|
|
(12
|
)
|
|
(11
|
)
|
|||
Ending balance
|
|
$
|
203
|
|
|
$
|
164
|
|
|
$
|
183
|
|
|
|
2019
|
|
2018
|
||||
|
|
(in millions)
|
||||||
Gross settlement exposure
|
|
$
|
55,800
|
|
|
$
|
49,666
|
|
Collateral held for settlement exposure
|
|
(4,772
|
)
|
|
(4,711
|
)
|
||
Net uncollateralized settlement exposure
|
|
$
|
51,028
|
|
|
$
|
44,955
|
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||||
|
|
Notional
|
|
Estimated Fair
Value
|
|
Notional
|
|
Estimated Fair
Value
|
||||||||
|
|
(in millions)
|
||||||||||||||
Commitments to purchase foreign currency
|
|
$
|
185
|
|
|
$
|
3
|
|
|
$
|
34
|
|
|
$
|
(1
|
)
|
Commitments to sell foreign currency
|
|
1,506
|
|
|
(25
|
)
|
|
1,066
|
|
|
26
|
|
||||
Options to sell foreign currency
|
|
21
|
|
|
2
|
|
|
25
|
|
|
4
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Balance sheet location
|
|
|
|
|
|
|
|
|
||||||||
Prepaid expenses and other current assets 1
|
|
|
|
$
|
12
|
|
|
|
|
$
|
35
|
|
||||
Other current liabilities 1
|
|
|
|
(32
|
)
|
|
|
|
(6
|
)
|
1
|
The derivative contracts are subject to enforceable master netting arrangements, which contain various netting and setoff provisions.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
(in millions)
|
||||||||||
Foreign exchange derivative contracts
|
|
|
|
|
|
|
||||||
General and administrative
|
|
$
|
(39
|
)
|
|
$
|
53
|
|
|
$
|
(75
|
)
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
(in millions)
|
||||||||||
United States
|
|
$
|
1,147
|
|
|
$
|
613
|
|
|
$
|
572
|
|
Other countries
|
|
681
|
|
|
308
|
|
|
257
|
|
|||
Total
|
|
$
|
1,828
|
|
|
$
|
921
|
|
|
$
|
829
|
|
|
||||||||||||||||||||
|
|
2019 Quarter Ended
|
|
|
||||||||||||||||
|
|
March 31
|
|
June 30
|
|
September 30
|
|
December 31
|
|
2019 Total
|
||||||||||
|
|
(in millions, except per share data)
|
||||||||||||||||||
Net revenue
|
|
$
|
3,889
|
|
|
$
|
4,113
|
|
|
$
|
4,467
|
|
|
$
|
4,414
|
|
|
$
|
16,883
|
|
Operating income
|
|
2,213
|
|
|
2,397
|
|
|
2,655
|
|
|
2,399
|
|
|
9,664
|
|
|||||
Net income
|
|
1,862
|
|
|
2,048
|
|
|
2,108
|
|
|
2,100
|
|
|
8,118
|
|
|||||
Basic earnings per share
|
|
$
|
1.81
|
|
|
$
|
2.01
|
|
|
$
|
2.08
|
|
|
$
|
2.08
|
|
|
$
|
7.98
|
|
Basic weighted-average shares outstanding
|
|
1,026
|
|
|
1,020
|
|
|
1,013
|
|
|
1,008
|
|
|
1,017
|
|
|||||
Diluted earnings per share
|
|
$
|
1.80
|
|
|
$
|
2.00
|
|
|
$
|
2.07
|
|
|
$
|
2.07
|
|
|
$
|
7.94
|
|
Diluted weighted-average shares outstanding
|
|
1,032
|
|
|
1,025
|
|
|
1,019
|
|
|
1,013
|
|
|
1,022
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
2018 Quarter Ended
|
|
|
||||||||||||||||
|
|
March 31
|
|
June 30
|
|
September 30
|
|
December 31
|
|
2018 Total
|
||||||||||
|
|
(in millions, except per share data)
|
||||||||||||||||||
Net revenue
|
|
$
|
3,580
|
|
|
$
|
3,665
|
|
|
$
|
3,898
|
|
|
$
|
3,807
|
|
|
$
|
14,950
|
|
Operating income
|
|
1,825
|
|
|
1,936
|
|
|
2,287
|
|
|
1,234
|
|
|
7,282
|
|
|||||
Net income
|
|
1,492
|
|
|
1,569
|
|
|
1,899
|
|
|
899
|
|
|
5,859
|
|
|||||
Basic earnings per share
|
|
$
|
1.42
|
|
|
$
|
1.50
|
|
|
$
|
1.83
|
|
|
$
|
0.87
|
|
|
$
|
5.63
|
|
Basic weighted-average shares outstanding
|
|
1,051
|
|
|
1,043
|
|
|
1,037
|
|
|
1,032
|
|
|
1,041
|
|
|||||
Diluted earnings per share
|
|
$
|
1.41
|
|
|
$
|
1.50
|
|
|
$
|
1.82
|
|
|
$
|
0.87
|
|
|
$
|
5.60
|
|
Diluted weighted-average shares outstanding
|
|
1,057
|
|
|
1,049
|
|
|
1,043
|
|
|
1,038
|
|
|
1,047
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PART III
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
The following documents are filed as part of this Report:
|
1
|
Consolidated Financial Statements
|
2
|
Consolidated Financial Statement Schedules
|
3
|
The following exhibits are filed as part of this Report or, where indicated, were previously filed and are hereby incorporated by reference:
|
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.
|
**
|
Exhibit omits certain information that has been filed separately with the U.S. Securities and Exchange Commission and has been granted confidential treatment.
|
|
|
|
|
MASTERCARD INCORPORATED
|
|
|
|
|
(Registrant)
|
|
|
|
|
|
Date:
|
February 14, 2020
|
By:
|
|
/s/ AJAY BANGA
|
|
|
|
|
Ajay Banga
|
|
|
|
|
President and Chief Executive Officer
|
|
|
|
|
(Principal Executive Officer)
|
Date:
|
February 14, 2020
|
By:
|
|
/s/ AJAY BANGA
|
|
|
|
|
Ajay Banga
|
|
|
|
|
President and Chief Executive Officer; Director
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(Principal Executive Officer)
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Date:
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February 14, 2020
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By:
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/s/ SACHIN MEHRA
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Sachin Mehra
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Chief Financial Officer
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(Principal Financial Officer)
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Date:
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February 14, 2020
|
By:
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/s/ SANDRA ARKELL
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Sandra Arkell
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Corporate Controller
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(Principal Accounting Officer)
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Date:
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February 14, 2020
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By:
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/s/ DAVID R. CARLUCCI
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David R. Carlucci
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Director
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Date:
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February 14, 2020
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By:
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/s/ RICHARD K. DAVIS
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Richard K. Davis
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Director
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Date:
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February 14, 2020
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By:
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/s/ STEVEN J. FREIBERG
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Steven J. Freiberg
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Director
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Date:
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February 14, 2020
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By:
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/s/ JULIUS GENACHOWSKI
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Julius Genachowski
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Director
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Date:
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February 14, 2020
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By:
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/s/ CHOON PHONG GOH
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Choon Phong Goh
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Director
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Date:
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February 14, 2020
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By:
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/s/ RICHARD HAYTHORNTHWAITE
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Richard Haythornthwaite
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Chairman of the Board; Director
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Date:
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February 14, 2020
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By:
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/s/ MERIT E. JANOW
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Merit E. Janow
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Director
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Date:
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February 14, 2020
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By:
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/s/ OKI MATSUMOTO
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Oki Matsumoto
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Director
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Date:
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February 14, 2020
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By:
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/s/ YOUNGME MOON
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Youngme Moon
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Director
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Date:
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February 14, 2020
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By:
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/s/ RIMA QURESHI
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Rima Qureshi
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Director
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Date:
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February 14, 2020
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By:
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/s/ JOSÉ OCTAVIO REYES LAGUNES
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José Octavio Reyes Lagunes
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Director
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Date:
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February 14, 2020
|
By:
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/s/ GABRIELLE SULZBERGER
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Gabrielle Sulzberger
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Director
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Date:
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February 14, 2020
|
By:
|
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/s/ JACKSON TAI
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Jackson Tai
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Director
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Date:
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February 14, 2020
|
By:
|
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/s/ LANCE UGGLA
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Lance Uggla
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Director
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|
•
|
1.100% Notes due 2022 (the “2022 Notes”)
|
•
|
2.100% Notes due 2027 (the “2027 Notes”)
|
•
|
2.500% Notes due 2030 (the “2030 Notes”)
|
•
|
that is not Saturday or Sunday or any other day on which banking institutions are authorized or required by law, regulation or executive order to close in the City of New York or London; and
|
•
|
that is a day on which the Trans-European Automated Real-time Gross Settlement Express Transfer System (the TARGET2 system), or any successor thereto, operates.
|
•
|
100% of the principal amount of the Notes to be redeemed; or
|
•
|
the sum of the present values of the remaining scheduled payments of principal and interest on the Notes to be redeemed (exclusive of interest accrued to the date of redemption) discounted to the date of redemption on an annual basis (ACTUAL/ACTUAL (ICMA)) at a rate equal to the applicable Bund Rate (as defined below), plus 20 basis
|
a)
|
any Tax that would not have been imposed but for (1) the existence of any present or former connection (other than a connection arising solely from the ownership of those Notes or the receipt of payments in respect of those Notes)
|
b)
|
any estate, inheritance, gift, sales, transfer, capital gains, excise, personal property, wealth or similar Tax;
|
c)
|
any Tax imposed by reason of the beneficial owner’s past or present status as a passive foreign investment company with respect to the United States, a controlled foreign corporation with respect to the United States, a foreign tax exempt organization with respect to the United States or a personal holding company with respect to the United States or as a corporation that accumulates earnings to avoid U.S. federal income tax;
|
d)
|
any Tax which is payable otherwise than by withholding or deducting from payment of principal of or premium, if any, or interest on such Notes;
|
e)
|
any Tax required to be withheld by any paying agent from any payment of principal of and premium, if any, or interest on any Note if that payment can be made without withholding by any other paying agent;
|
f)
|
any Tax imposed on interest received by (1) a 10-percent shareholder (as defined in Section 871(h)(3)(B) of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), and the regulations that may be promulgated thereunder) of us, (2) a controlled foreign corporation that is related to us within the meaning of Section 864(d)(4) of the Code, or (3) a bank receiving interest described in Section 881(c)(3)(A) of the Code, to the extent such Tax would not have been imposed but for the beneficial owner’s status as described in clauses (1) through (3) of this paragraph (f);
|
g)
|
any withholding or deduction that is required to be made pursuant to the European Council Directive 2003/48/EC on the taxation of savings income (the “Savings Directive”) or any other European Union directive amending, supplementing or replacing the Savings Directive, or any law implementing or complying with, or introduced in order to conform to, the Savings Directive or other European Union directives;
|
h)
|
any Tax required to be withheld or deducted under Sections 1471 through 1474 of the Code (or any amended or successor version of such Sections that is substantively comparable) (“FATCA”), any regulations or other guidance thereunder, or any agreement (including any intergovernmental agreement) entered into in connection therewith; or any law, regulation or other official guidance enacted in any jurisdiction implementing FATCA or an intergovernmental agreement in respect of FATCA; or
|
i)
|
any combination of items (a), (b), (c), (d), (e), (f), (g) and (h);
|
i.
|
we have or will become obliged to pay Additional Amounts with respect to such series of notes as a result of any change in, or amendment to, the laws, regulations, treaties, or rulings of the United States or any political subdivision of or in the United States or any taxing authority thereof or therein affecting taxation, or any change in, or amendment to, the application, official interpretation, administration or enforcement of such laws, regulations, treaties or rulings (including a holding by a court of competent jurisdiction in the United States), which change or amendment is enacted, adopted, announced or becomes effective on or after the date of the issuance of the Notes; or
|
ii.
|
on or after the date of the issuance of the Notes, any action is taken by a taxing authority of, or any action has been brought in a court of competent jurisdiction in, the United States or any political subdivision of or in the United States or any taxing authority thereof or therein, including any of those actions specified in clause (i) above, whether or not such action was taken or brought with respect to us, or there is any change, amendment, clarification, application or interpretation of such laws, regulations, treaties or rulings, which in any such case, will result in a material probability that we will be required to pay Additional Amounts with respect to such Notes (it being understood that such material probability will be deemed to result if the written opinion of independent tax counsel described in clause (b) below to such effect is delivered to the trustee and the paying agent).
|
a)
|
a certificate signed by one of our officers stating that we are entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to our right to so redeem have occurred, and
|
b)
|
a written opinion of independent tax counsel of nationally recognized standing to the effect that we have or will become obligated to pay such Additional Amounts as a result of such change or amendment or that there is a material probability that we will be required to pay Additional Amounts as a result of such action, change, amendment, clarification, application or interpretation, as the case may be.
|
•
|
we are the continuing entity, or the resulting, surviving or transferee person (the “Successor”) is a corporation, partnership, trust or other entity organized and validly existing under the laws of any domestic or foreign jurisdiction and the Successor (if not us) will expressly assume, by supplemental indenture, all of our obligations under the debt securities and the indenture and, for each security that by its terms provides for conversion, provide for the right to convert that security in accordance with its terms;
|
•
|
immediately after giving effect to that transaction, no default or event of default under the indenture has occurred and is continuing; and
|
•
|
if requested, the trustee receives from us, if requested, an officer’s certificate and an opinion of counsel that the merger, consolidation, transfer, sale, lease or conveyance and the supplemental indenture, as the case may be, complies with the applicable provisions of the indenture.
|
•
|
change the stated maturity of the principal of, or installment of interest on, any debt security;
|
•
|
reduce the principal amount of any debt security or reduce the amount of the principal of any debt security which would be due and payable upon a declaration of acceleration of the maturity thereof or reduce the rate of interest on any debt security;
|
•
|
reduce any premium payable on the redemption of any debt security or change the date on which any debt security may or must be redeemed;
|
•
|
change the coin or currency in which the principal of or premium, if any, or interest on any debt security is payable;
|
•
|
impair the right of any holder to institute suit for the enforcement of any payment on or after the stated maturity of any debt security (or, in the case of redemption, on or after the redemption date);
|
•
|
reduce the percentage in principal amount of the outstanding debt securities, the consent of whose holders is required in order to take certain actions;
|
•
|
reduce the requirements for quorum or voting by holders of debt securities in the indenture or the debt security;
|
•
|
modify any of the provisions in the indenture regarding the waiver of past defaults and the waiver of certain covenants by the holders of debt securities except to increase any percentage vote required or to provide that certain other provisions of the indenture cannot be modified or waived without the consent of the holder of each debt security affected thereby; or
|
•
|
make any change that adversely affects in any material respect the right to convert or exchange any debt security or decreases the conversion or exchange rate or increases the conversion price of any convertible or exchangeable debt security, unless that decrease or increase is permitted by the terms of the debt securities; or
|
•
|
modify any of the above provisions.
|
•
|
to add to our covenants for the benefit of holders of the debt securities of all or any series or to surrender any right or power conferred upon us;
|
•
|
to evidence the succession of another person to, and the assumption by the successor of our covenants, agreements and obligations under, the indenture pursuant to the covenant described under “-Covenants-Consolidation, Merger and Sale of Assets”;
|
•
|
to add any additional events of default for the benefit of holders of the debt securities of all or any series;
|
•
|
to add one or more guarantees for the benefit of holders of the debt securities;
|
•
|
to secure the debt securities pursuant to the covenants of the indenture;
|
•
|
to add or appoint a successor or separate trustee or other agent;
|
•
|
to provide for the issuance of additional debt securities of any series;
|
•
|
to establish the form or terms of debt securities of any series as permitted by the indenture;
|
•
|
to comply with the rules of any applicable securities depository;
|
•
|
to provide for uncertificated debt securities in addition to or in place of certificated debt securities;
|
•
|
to add to, change or eliminate any of the provisions of the indenture in respect of one or more series of debt securities; provided that any such addition, change or elimination (a) shall neither (1) apply to any debt security of any series created prior to the execution of that supplemental indenture and entitled to the benefit of that provision nor (2) modify the rights of the holder of any debt security with respect to that provision or (b) shall become effective only when there is no debt security described in clause (1) outstanding;
|
•
|
to comply with requirements of the SEC in order to effect or maintain the qualification of the indenture under the Trust Indenture Act of 1939, as amended;
|
•
|
to conform any provision of the indenture, any supplemental indenture, one or more series of debt securities or any related guarantees or security documents to the description of such securities contained in our prospectus, prospectus supplement, offering memorandum or similar document with respect to the offering of the securities of such series to the extent that such description was intended to be a verbatim recitation of a provision in the indenture, such securities or any related guarantees or security documents;
|
•
|
to cure any ambiguity, omission, defect or inconsistency; or
|
•
|
to change any other provision; provided that the change does not adversely affect the interests of the holders of debt securities of any series in any material respect.
|
|
|
Page
|
||
|
|
|
||
Section 1. DEFINITIONS
|
1
|
|
||
|
|
|
||
1.1
|
|
Defined Terms
|
1
|
|
1.2
|
|
Other Definitional Provisions
|
18
|
|
1.3
|
|
Currencies; Currency Equivalents
|
19
|
|
1.4
|
|
Divisions
|
19
|
|
|
|
|
||
Section 2. AMOUNT AND TERMS OF LOANS
|
19
|
|
||
|
|
|
||
2.1
|
|
Revolving Credit Commitments
|
19
|
|
2.2
|
|
Procedure for Revolving Credit Borrowing
|
19
|
|
2.3
|
|
Facility Fee
|
20
|
|
2.4
|
|
Termination or Reduction of Commitments
|
20
|
|
2.5
|
|
Repayment of Revolving Credit Loans; Evidence of Debt
|
21
|
|
2.6
|
|
Prepayment of Loans
|
21
|
|
2.7
|
|
Conversion and Continuation Options
|
22
|
|
2.8
|
|
Minimum Amounts of Tranches
|
23
|
|
2.9
|
|
Interest Rates and Payment Dates
|
23
|
|
2.10
|
|
Computation of Interest and Fees
|
24
|
|
2.11
|
|
Interest Rate Determination
|
24
|
|
2.12
|
|
Pro Rata Treatment and Payments
|
26
|
|
2.13
|
|
Swing Line Commitment
|
27
|
|
2.14
|
|
Illegality
|
27
|
|
2.15
|
|
Requirements of Law
|
30
|
|
2.16
|
|
Taxes
|
31
|
|
2.17
|
|
Indemnity
|
34
|
|
2.18
|
|
Commitment Increases
|
34
|
|
2.19
|
|
Commitment Extensions
|
35
|
|
2.20
|
|
Replacement of Lenders
|
36
|
|
2.21
|
|
Defaulting Lenders
|
37
|
|
2.22
|
|
Defaulting Lender Cure
|
38
|
|
2.23
|
|
Designation of Subsidiary Borrowers
|
38
|
|
|
|
|
||
Section 3. REPRESENTATIONS AND WARRANTIES
|
42
|
|
||
|
|
|
||
3.1
|
|
Financial Condition
|
42
|
|
3.2
|
|
No Change
|
42
|
|
3.3
|
|
Existence; Compliance with Law
|
42
|
|
3.4
|
|
Corporate Power; Authorization; Enforceable Obligations
|
42
|
|
3.5
|
|
No Legal Bar
|
43
|
|
3.6
|
|
No Material Litigation
|
43
|
|
3.7
|
|
No Default
|
43
|
|
3.8
|
|
Ownership of Property; Liens
|
43
|
|
3.9
|
|
Intellectual Property
|
43
|
|
3.10
|
|
No Burdensome Restrictions
|
43
|
|
3.11
|
|
Taxes
|
44
|
|
3.12
|
|
Federal Margin Regulations
|
44
|
|
3.13
|
|
ERISA
|
44
|
|
3.14
|
|
Investment Company Act; Other Regulations
|
44
|
|
3.15
|
|
Material Subsidiaries
|
45
|
|
3.16
|
|
Purpose of Loans
|
45
|
|
3.17
|
|
Environmental Matters
|
45
|
|
3.18
|
|
Anti-Corruption Laws and Sanctions
|
45
|
|
3.19
|
|
Representations and Warranties of Non-U.S. Subsidiary Borrowers
|
45
|
|
3.20
|
|
Beneficial Ownership Certification.
|
46
|
|
|
|
|
||
Section 4. CONDITIONS PRECEDENT
|
46
|
|
||
|
|
|
||
4.1
|
|
Conditions to Initial Loan
|
46
|
|
4.2
|
|
Conditions to Each Loan
|
48
|
|
|
|
|
||
Section 5. AFFIRMATIVE COVENANTS
|
48
|
|
||
|
|
|
||
5.1
|
|
Financial Statements
|
48
|
|
5.2
|
|
Certificates; Other Information
|
49
|
|
5.3
|
|
Payment of Obligations
|
49
|
|
5.4
|
|
Conduct of Business and Maintenance of Existence
|
49
|
|
5.5
|
|
Maintenance of Property; Insurance
|
50
|
|
5.6
|
|
Inspection of Property; Books and Records; Discussions
|
50
|
|
5.7
|
|
Notices
|
50
|
|
5.8
|
|
Environmental Laws
|
51
|
|
5.9
|
|
Compliance with Anti-Corruption Laws and Sanctions
|
51
|
|
|
|
|
||
Section 6. NEGATIVE COVENANTS
|
51
|
|
||
|
|
|
||
6.1
|
|
[Reserved]
|
51
|
|
6.2
|
|
Limitation on Liens
|
51
|
|
6.3
|
|
Limitation on Fundamental Changes
|
52
|
|
6.4
|
|
Limitation on Transfer or Disposition of Assets
|
53
|
|
6.5
|
|
Limitation on Transactions with Affiliates
|
54
|
|
6.6
|
|
Limitation on Violation of Anti-Corruption Laws and Sanctions
|
54
|
|
|
|
|
||
Section 7. EVENTS OF DEFAULT
|
54
|
|
||
|
|
|||
Section 8. THE MANAGING ADMINISTRATIVE AGENT
|
56
|
|
||
|
|
|
||
8.1
|
|
Appointment
|
56
|
|
8.2
|
|
Delegation of Duties
|
57
|
|
8.3
|
|
Exculpatory Provisions
|
57
|
|
8.4
|
|
Reliance by Managing Administrative Agent
|
57
|
|
8.5
|
|
Notice of Default
|
57
|
|
8.6
|
|
Non-Reliance on Managing Administrative Agent and Other Lenders
|
58
|
|
8.7
|
|
Indemnification
|
58
|
|
8.8
|
|
Managing Administrative Agent in Its Individual Capacity
|
59
|
|
8.9
|
|
Successor Managing Administrative Agent
|
59
|
|
8.10
|
|
Substitute Managing Administrative Agent
|
59
|
|
8.11
|
|
Arrangers, Etc
|
59
|
|
8.12
|
|
Certain ERISA Matters
|
59
|
|
|
|
|
||
Section 9. MISCELLANEOUS
|
60
|
|
||
|
|
|
||
9.1
|
|
Amendments and Waivers
|
60
|
|
9.2
|
|
Notices
|
61
|
|
9.3
|
|
No Waiver; Cumulative Remedies
|
66
|
|
9.4
|
|
Survival of Representations and Warranties
|
66
|
|
9.5
|
|
Payment of Expenses and Taxes
|
66
|
|
9.6
|
|
Successors and Assigns; Participations and Assignments
|
67
|
|
9.7
|
|
Adjustments; Set-off
|
70
|
|
9.8
|
|
Counterparts
|
70
|
|
9.9
|
|
Severability
|
70
|
|
9.10
|
|
Integration
|
70
|
|
9.11
|
|
Termination of Commitments and Swing Line Commitments
|
71
|
|
9.12
|
|
GOVERNING LAW
|
71
|
|
9.13
|
|
Submission To Jurisdiction; Waivers
|
71
|
|
9.14
|
|
Acknowledgements
|
71
|
|
9.15
|
|
WAIVERS OF JURY TRIAL
|
72
|
|
9.16
|
|
Waiver of Immunity
|
72
|
|
9.17
|
|
Judgment Currency
|
72
|
|
9.18
|
|
Confidentiality
|
73
|
|
9.19
|
|
USA PATRIOT Act
|
73
|
|
9.20
|
|
Termination of Agreement
|
73
|
|
9.21
|
|
Acknowledgment and Consent to Bail-In of EEA Financial Institutions
|
73
|
|
|
|
|
||
Section 10. GUARANTEE
|
74
|
|
||
|
|
|
||
10.1
|
|
Guarantee
|
74
|
|
10.2
|
|
Obligations Unconditional
|
74
|
|
10.3
|
|
Reinstatement
|
75
|
|
10.4
|
|
Subrogation
|
75
|
|
10.5
|
|
Remedies
|
75
|
|
10.6
|
|
Continuing Guarantee
|
75
|
|
SCHEDULES
|
|
1.2
|
Commitments
|
3.6
|
Material Litigation
|
3.15
|
Material Subsidiaries
|
6.2(f)
|
Liens
|
|
|
EXHIBITS
|
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A
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Form of Revolving Credit Note
|
B
|
Form of Swing Line Note
|
C
|
Form of Closing Certificate
|
D
|
Form of Swing Line Loan Participation Certificate
|
E-1
|
Form of Subsidiary Borrower Designation
|
E-2
|
Form of Subsidiary Borrower Termination Notice
|
F-1
|
Form of Opinion of General Counsel of the Company
|
F-2
|
Form of Opinion of Special New York Counsel to the Managing Administrative Agent
|
G
|
Form of Borrowing Notice
|
H
|
Form of Assignment and Acceptance
|
I
|
[Reserved]
|
J-1
|
Form of New Lender Supplement
|
J-2
|
Form of Commitment Increase Supplement
|
K-1
|
Form of US Tax Certificate
|
K-2
|
Form of US Tax Certificate
|
K-3
|
Form of US Tax Certificate
|
K-4
|
Form of US Tax Certificate
|
L
|
Form of Swing Line Borrowing Notice
|
Rating Level Period
|
Applicable Facility Fee Rate
|
Rating Level 1 Period
|
0.05%
|
Rating Level 2 Period
|
0.06%
|
Rating Level 3 Period
|
0.08%
|
Rating Level 4 Period
|
0.09%
|
Rating Level 5 Period
|
0.125%
|
Rating Level Period
|
Applicable Margin
|
|
|
LIBOR Loans
|
ABR Loans
|
Rating Level 1 Period
|
0.575%
|
0.0%
|
Rating Level 2 Period
|
0.69%
|
0.0%
|
Rating Level 3 Period
|
0.795%
|
0.0%
|
Rating Level 4 Period
|
0.91%
|
0.0%
|
Rating Level 5 Period
|
1.00%
|
0.0%
|
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60 Wall Street
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New York, NY 10005
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|
Fax: 866-240-3622
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Phone: 904-248-4549
|
|
Electronic mail: loan.admin-ny@db.com
|
|
|
The Swing Line Lender
|
U.S. Bank, National Association
|
|
Attention: Elizabeth (Beth) Correll
|
|
Senior Account Representative, Operations
|
|
800 Nicollet Mall, 3rd Floor
|
|
Minneapolis, MN 55402
|
|
Fax: 612-303-3851
|
|
Phone: 612-303-3867
|
|
Electronic mail: agencyserviceslcmshared@usbank.com
|
|
|
The Swing Line Lender
|
Bank of America, N.A.
|
|
Attention: Mac Legal - NC1-001-05-45
|
|
One Independence Center
|
|
101 N. Tryon Street
|
|
Charlotte, NC 28255
|
|
Fax: 415-436-3685 Ext. 60117
|
|
Phone: 312-453-6948
|
|
Electronic mail: Bank_of_America_As_Lender_3@baml.com
|
|
|
The Swing Line Lender
|
Goldman Sachs Bank USA
|
|
Attention: Michelle Latzoni
|
|
200 West Street
|
|
New York, NY 10282
|
|
Fax: 917-977-3966
|
|
Phone: 212-902-1099
|
|
DO NOT EMAIL NOTICES - SEND TO FAX #
|
|
|
The Swing Line Lender
|
Wells Fargo Bank, National Association
|
|
1700 Lincoln St.
|
|
Denver, CO 80203
|
|
Attention: Mary Lantz and Belinda Larsen
|
|
Attention: denlcfx@wellsfargo.com
|
|
Fax: 877-606-9426
|
|
Phone: 303-863-5564 and 303-863-5495
|
|
cc a copy to jenell.halverson@wellsfargo.com
|
MASTERCARD INCORPORATED
|
|
By:
|
/s/ Alfred Kibe
|
Name:
|
Alfred Kibe
|
Title:
|
Corporate Treasurer
|
CITIBANK, N.A.,
|
|
as Managing Administrative Agent and as Lender
|
|
By:
|
/s/ Carolyn Kee
|
Name:
|
Carolyn Kee
|
Title:
|
Vice President
|
JPMORGAN CHASE BANK, N.A.,
|
|
as Administrative Agent and as Lender
|
|
By:
|
/s/ Sarah Tarantino
|
Name:
|
Sarah Tarantino
|
Title:
|
Vice President
J.P. Morgan
|
BARCLAYS BANK PLC,
|
|
as Lender
|
|
By:
|
/s/ David J. Williams
|
Name:
|
David J. Williams
|
Title:
|
Director
|
|
|
|
Executed in New York
|
BANK OF AMERICA, N.A.,
|
|
as Lender
|
|
By:
|
/s/ Robin Noret
|
Name:
|
Robin Noret
|
Title:
|
Vice President
|
Bank of China, New York Branch,
|
|
as Lender
|
|
By:
|
/s/ Raymond Qiao
|
Name:
|
Raymond Qiao
|
Title:
|
Executive Vice President
|
Bank of Montreal
|
|
as Lender
|
|
By:
|
/s/ Chris Clark
|
Name:
|
Chris Clark
|
Title:
|
Director
|
Commonwealth Bank of Australia
|
|
as Lender
|
|
By:
|
/s/ Emma Lazenby
|
Name:
|
Emma Lazenby
|
Title:
|
Associate Director
|
|
|
|
|
COMMERZBANK AG, New York Branch,
|
|
as Lender
|
|
By:
|
/s/ Barry Feigenbaum
|
Name:
|
Barry Feigenbaum
|
Title:
|
Managing Director
|
|
|
By:
|
/s/ John Geremia
|
Name:
|
John Geremia
|
Title:
|
Managing Director
|
|
|
DEUTSCHE BANK AG NEW YORK BRANCH,
|
|
as Lender
|
|
By:
|
/s/ Ming K Chu
|
Name:
|
Ming K Chu
|
Title:
|
Director
|
|
|
By:
|
/s/ Virginia Cosenza
|
Name:
|
Virginia Cosenza
|
Title:
|
Vice President
|
GOLDMAN SACHS BANK USA,
|
|
as Lender
|
|
By:
|
/s/ Ryan Durkin
|
Name:
|
Ryan Durkin
|
Title:
|
Authorized Signatory
|
HSBC BANK USA, NATIONAL ASSOCATION,
|
|
as Lender
|
|
By:
|
/s/ James Stovel
|
Name:
|
James Stovel
|
Title:
|
Director
|
Industrial and Commercial Bank of China Limited, New York Branch
|
|
as Lender
|
|
By:
|
/s/ Letian Yan
|
Name:
|
Letian Yan
|
Title:
|
Relationship Manager
|
|
|
By:
|
/s/ Jeffrey Roth
|
Name:
|
Jeffrey Roth
|
Title:
|
Executive Director
|
Lloyds Bank Corporate Markets plc,
|
|
as Lender
|
|
By:
|
/s/ Kamala Basdeo
|
Name:
|
Kamala Basdeo
|
Title:
|
Assistant Vice President
|
|
Transaction Execution
|
|
|
By:
|
/s/ Tina Wong
|
Name:
|
Tina Wong
|
Title:
|
Assistant Vice President
|
|
Transaction Execution
|
MIZUHO BANK, LTD.,
|
|
as Lender
|
|
By:
|
/s/ Donna DeMagistris
|
Name:
|
Donna DeMagistris
|
Title:
|
Authorized Signatory
|
Morgan Stanley Bank, N.A. ,
|
|
as Lender
|
|
By:
|
/s/ Michael King
|
Name:
|
Michael King
|
Title:
|
Authorized Signatory
|
MUFG BANK, LTD.,
|
|
as Lender
|
|
By:
|
/s/ Jacob Ulevich
|
Name:
|
Jacob Ulevich
|
Title:
|
Director
|
NATIONAL WESTMINSTER BANK PLC,
|
|
as Lender
|
|
By:
|
/s/ Jonathan Eady
|
Name:
|
JONATHAN EADY
|
Title:
|
DIRECTOR
|
PNC Bank, National Association,
|
|
as Lender
|
|
By:
|
/s/ Robert M. Martin
|
Name:
|
Robert M. Martin
|
Title:
|
Senior Vice President
|
Santander Bank, N.A., as Lender
|
|
By:
|
/s/ Xavier Ruiz Sena
|
Name:
|
Xavier Ruiz Sena
|
Title:
|
Managing Director
|
|
|
Societe Generale,
|
|
as Lender
|
|
By:
|
/s/ John Hogan
|
Name:
|
John Hogan
|
Title:
|
Director
|
STANDARD CHARTERED BANK,
|
|
as Lender
|
|
By:
|
/s/ James Beck
|
Name:
|
James Beck
|
Title:
|
Associate Director
|
U.S. BANK NATIONAL ASSOCIATION,
|
|
as Lender
|
|
By:
|
/s/ Matt S. Scullin
|
Name:
|
Matt S. Scullin
|
Title:
|
Senior Vice President
|
WELLS FARGO BANK, NATIONAL ASSOCIATION,
|
|
as Lender
|
|
By:
|
/s/ Tracy Moosbrugger
|
Name:
|
Tracy Moosbrugger
|
Title:
|
Managing Director
|
Name
|
Jurisdiction
|
Global Mastercard Holdings LP
|
United Kingdom
|
Mastercard A&M Investment Holdings, LLC
|
Delaware
|
Mastercard Asia/Pacific Pte. Ltd.
|
Singapore
|
MasterCard Brasil Soluções de Pagamento Ltda.
|
Brazil
|
Mastercard/Europay U.K. Limited
|
United Kingdom
|
Mastercard Europe SA
|
Belgium
|
Mastercard Europe Services Limited
|
United Kingdom
|
Mastercard European Holding LLC
|
Delaware
|
Mastercard European Maatschap
|
Belgium
|
Mastercard European Share Holding B.V.
|
Netherlands
|
Mastercard Financing Pte. Ltd.
|
Singapore
|
Mastercard Financing Solutions LLC
|
Delaware
|
Mastercard Financing UK LP
|
United Kingdom
|
Mastercard Global Partners LP
|
Singapore
|
Mastercard Holdings LP
|
United Kingdom
|
Mastercard International Global Maatschap
|
Belgium
|
Mastercard International Incorporated
|
Delaware
|
Mastercard Netherlands B.V.
|
Netherlands
|
Mastercard Partners II LLC
|
Delaware
|
Mastercard Payment Gateway Services Group Limited
|
United Kingdom
|
Mastercard Technologies, LLC
|
Delaware
|
Mastercard UK Holdco Limited
|
United Kingdom
|
Mastercard US Holdings LLC
|
Delaware
|
Purchase Street Research, LLC
|
Delaware
|
[$][€]___________
|
New York, New York
|
[MASTERCARD INCORPORATED][NAME OF SUBSIDIARY BORROWER]
|
|
By:
|
|
Name:
|
|
Title:
|
|
LOANS, CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF LIBOR LOANS
|
|||||||
Date
|
Amount of LIBOR Loans
|
Amount Converted to or Continued as LIBOR Loans
|
Interest Period and London Interbank Offered Rate with Respect Thereto
|
Amount of Principal of LIBOR Loans Repaid
|
Amount of LIBOR Loans Converted to ABR Loans
|
Unpaid Principal Balance of LIBOR Loans
|
Notation Made By
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
MASTERCARD INCORPORATED
|
|
By:
|
|
Name:
|
|
Title:
|
|
Date
|
Amount of Swing Line Loans Made
|
Amount of Swing Line Loans
Repaid
|
Unpaid
Principal Balance of Swing Line Loans
|
Notation Made By
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
Office
|
Signature
|
Alfred Kibe
|
Corporate Treasurer
|
|
MASTERCARD INCORPORATED
|
|
|
|
By:
|
|
Name:
|
Alfred Kibe
|
Title:
|
Corporate Treasurer
|
|
|
By:
|
|
Name:
|
Seth Pruss
|
Title:
|
Assistant Corporate Secretary
|
Principal Amount of Swing Line Loan Participating Interest:
|
$_____________
|
Very truly yours,
|
|
|
|
[SWING LINE LENDER]
|
|
|
|
By:
|
|
Name:
|
|
Title:
|
|
MASTERCARD INCORPORATED
|
|
|
|
By:
|
|
Name:
|
|
Title:
|
|
|
|
[NAME OF SUBSIDIARY BORROWER]
|
|
|
|
By:
|
|
Name:
|
|
Title:
|
|
|
|
Address for Notices
|
|
c/o Mastercard Incorporated
|
|
2000 Purchase Street
|
|
Purchase, New York 10577-2509
|
|
Attention: Corporate Treasurer
|
|
Telephone: 914-249-2771
|
ACCEPTED:
|
|
|
|
CITIBANK, N.A.,
|
|
as Managing Administrative Agent
|
|
By:
|
|
Name:
|
|
Title:
|
|
|
|
To:
|
Citibank, N.A. (the “Managing Administrative Agent”) and JPMorgan Chase Bank, N.A. (the “Administrative Agent”)
|
MASTERCARD INCORPORATED
|
|
|
|
By:
|
|
Name:
|
|
Title:
|
|
MASTERCARD INCORPORATED
|
|
|
|
By:
|
|
Name:
|
|
Title:
|
|
|
|
[NAME OF SUBSIDIARY BORROWER]
|
|
|
|
By:
|
|
Name:
|
|
Title:
|
|
Credit Facility Assigned
|
Principal Amount Assigned
|
Revolving Credit
|
$_________
|
[NAME OF ASSIGNEE]
|
|
[NAME OF ASSIGNOR]
|
||
By
|
|
|
By
|
|
Name:
|
|
|
Name:
|
|
Title:
|
|
|
Title:
|
|
[Consented to and]2 Accepted:
|
|
[Consented To:]3
|
||
CITIBANK, N.A., as Managing Administrative Agent
|
|
MASTERCARD INCORPORATED
|
||
By
|
|
|
By
|
|
Name:
|
|
|
Name:
|
|
Title:
|
|
|
Title:
|
|
[Consented To:]4
|
|
|
|
|
CITIBANK, N.A., as Swing Line Lender
|
|
[], as Swing Line Lender
|
||
By
|
|
|
By
|
|
Name:
|
|
|
Name:
|
|
Title:
|
|
|
Title:
|
|
[INSERT NAME OF LENDER]
|
|
|
|
By:
|
|
Name:
|
|
Title:
|
|
Accepted this _________________ day of
|
|
___________, ____________.
|
|
|
|
MASTERCARD INCORPORATED
|
|
|
|
By:
|
|
Name:
|
|
Title:
|
|
|
|
|
|
Accepted this _________________ day of
|
|
___________, ____________.
|
|
|
|
CITIBANK, N.A., as Managing Administrative Agent
|
|
|
|
By:
|
|
Name:
|
|
Title:
|
|
[INSERT NAME OF LENDER]
|
|
|
|
By:
|
|
Name:
|
|
Title:
|
|
Accepted this _________________ day of
|
|
___________, ____________.
|
|
|
|
MASTERCARD INCORPORATED
|
|
|
|
By:
|
|
Name:
|
|
Title:
|
|
|
|
|
|
Accepted this _________________ day of
|
|
___________, ____________.
|
|
|
|
CITIBANK, N.A., as Managing Administrative Agent
|
|
|
|
By:
|
|
Name:
|
|
Title:
|
|
[NAME OF LENDER]
|
|
|
|
By:
|
|
Name:
|
|
Title:
|
|
|
|
|
Date: ________________ ____, 20[ ]
|
[NAME OF LENDER]
|
|
|
|
By:
|
|
Name:
|
|
Title:
|
|
|
|
|
Date: ________________ ____, 20[ ]
|
[NAME OF PARTICIPANT]
|
|
|
|
By:
|
|
Name:
|
|
Title:
|
|
|
|
|
Date: ________________ ____, 20[ ]
|
[NAME OF PARTICIPANT]
|
|
|
|
By:
|
|
Name:
|
|
Title:
|
|
|
|
|
Date: ________________ ____, 20[ ]
|
MASTERCARD INCORPORATED
|
|
|
|
By:
|
|
Name:
|
|
Title:
|
|
|
|
[NAME OF SUBSIDIARY BORROWER]
|
|
|
|
By:
|
|
Name:
|
|
Title:
|
|
Name
|
|
|
Jurisdiction
|
Global Mastercard Holdings LP
|
|
|
United Kingdom
|
Mastercard A&M Investment Holdings, LLC
|
|
|
Delaware
|
Mastercard Asia/Pacific Pte. Ltd.
|
|
|
Singapore
|
Mastercard/Europay U.K. Limited
|
|
|
United Kingdom
|
Mastercard Europe SA
|
|
|
Belgium
|
Mastercard Europe Services Limited
|
|
|
United Kingdom
|
Mastercard AP Financing Pte. Ltd.
|
|
|
Singapore
|
Mastercard Financing Solutions LLC
|
|
|
Delaware
|
Mastercard Holdings LP
|
|
|
United Kingdom
|
Mastercard International Incorporated
|
|
|
Delaware
|
Mastercard Payment Gateway Services Group Limited
|
|
|
United Kingdom
|
Mastercard Technologies, LLC
|
|
|
Delaware
|
Mastercard UK Holdco Limited
|
|
|
United Kingdom
|
Mastercard US Holdings LLC
|
|
|
Delaware
|
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:
|
February 14, 2020
|
|
|
|
|
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:
|
February 14, 2020
|
|
|
|
|
By:
|
/s/ Sachin Mehra
|
|
|
Sachin Mehra
|
|
|
Chief Financial Officer
|
|
February 14, 2020
|
|
/s/ Ajay Banga
|
Ajay Banga
|
President and Chief Executive Officer
|
|
February 14, 2020
|
|
/s/ Sachin Mehra
|
Sachin Mehra
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Chief Financial Officer
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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
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certain acquirers located in the Asia Pacific, European, and Middle Eastern regions having acquired transactions for Iranian airlines (including Iran Air), which accepted Mastercard cards in those regions (as well as, with respect to one of the airlines, transactions during some or all of the seven years ended December 31, 2018)
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