|
☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
13-4172551
|
|
(State or other jurisdiction of incorporation or organization)
|
(IRS Employer Identification Number)
|
|
|
|
|
2000 Purchase Street
|
10577
|
|
Purchase,
|
NY
|
(Zip Code)
|
(Address of principal executive offices)
|
|
Securities registered pursuant to Section 12(b) of the Act:
|
||||
Title of each class
|
|
Trading Symbol
|
|
Name of each exchange of which registered
|
Class A Common Stock, par value $0.0001 per share
|
|
MA
|
|
New York Stock Exchange
|
1.1% Notes due 2022
|
|
MA22
|
|
New York Stock Exchange
|
2.1% Notes due 2027
|
|
MA27
|
|
New York Stock Exchange
|
2.5% Notes due 2030
|
|
MA30
|
|
New York Stock Exchange
|
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.
|
Yes
|
☒
|
No
|
☐
|
|||
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 during the preceding 12 months (or for such shorter period that the registrant was required to submit such files)
|
Yes
|
☒
|
No
|
☐
|
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check One):
|
|||||||
Large accelerated filer
|
☒
|
|
Accelerated filer
|
☐
|
|
|
|
Non-accelerated filer
|
☐
|
|
Smaller reporting company
|
☐
|
|
|
|
|
|
|
Emerging growth company
|
☐
|
|
|
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange Act.
|
☐
|
||||||
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act)
|
Yes
|
☐
|
No
|
☒
|
|
|
|
|
|
PART I
|
Item 1.
|
Consolidated financial statements (unaudited)
|
|
Item 2.
|
Management’s discussion and analysis of financial condition and results of operations
|
||
Item 3.
|
Quantitative and qualitative disclosures about market risk
|
||
Item 4.
|
Controls and procedures
|
||
|
|
|
|
|
|
|
|
PART II
|
Item 1.
|
Legal proceedings
|
|
Item 1A.
|
Risk factors
|
||
Item 2.
|
Unregistered sales of equity proceeds and use of proceeds
|
||
Item 5.
|
Other information
|
||
Item 6.
|
Exhibits
|
||
-
|
Signatures
|
||
|
|
|
|
•
|
regulation directly related to the payments industry (including regulatory, legislative and litigation activity with respect to interchange rates and surcharging)
|
•
|
the impact of preferential or protective government actions
|
•
|
regulation of privacy, data, security and the digital economy
|
•
|
regulation that directly or indirectly applies to us based on our participation in the global payments industry (including anti-money laundering, counter financing of terrorism, economic sanctions and anti-corruption; account-based payment systems; and issuer practice regulation)
|
•
|
the impact of changes in tax laws, as well as regulations and interpretations of such laws or challenges to our tax positions
|
•
|
potential or incurred liability and limitations on business related to any litigation or litigation settlements
|
•
|
the impact of competition in the global payments industry (including disintermediation and pricing pressure)
|
•
|
the challenges relating to rapid technological developments and changes
|
•
|
the challenges relating to operating real-time account-based payment system and to working with new customers and end users
|
•
|
the impact of information security incidents, account data breaches or service disruptions
|
•
|
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
|
•
|
exposure to loss or illiquidity due to our role as guarantor and other contractual obligations
|
•
|
the impact of global economic, political, financial and societal events and conditions, including adverse currency fluctuations and foreign exchange controls
|
•
|
the impact of the coronavirus (COVID-19) outbreak and measures taken in response to the outbreak
|
•
|
reputational impact, including impact related to brand perception and lack of visibility of our brands in products and services
|
•
|
the inability to attract, hire and retain a highly qualified and diverse workforce, or maintain our corporate culture
|
•
|
issues related to acquisition integration, strategic investments and entry into new businesses
|
•
|
issues related to our Class A common stock and corporate governance structure
|
|
|
Page
|
|
||
|
||
|
||
|
||
|
||
|
Consolidated Statement of Operations (Unaudited)
|
|
|
|
|
||||
|
|
Three Months Ended March 31,
|
||||||
|
|
2020
|
|
2019
|
||||
|
|
(in millions, except per share data)
|
||||||
Net Revenue
|
|
$
|
4,009
|
|
|
$
|
3,889
|
|
Operating Expenses
|
|
|
|
|
||||
General and administrative
|
|
1,494
|
|
|
1,367
|
|
||
Advertising and marketing
|
|
154
|
|
|
192
|
|
||
Depreciation and amortization
|
|
144
|
|
|
117
|
|
||
Provision for litigation
|
|
6
|
|
|
—
|
|
||
Total operating expenses
|
|
1,798
|
|
|
1,676
|
|
||
Operating income
|
|
2,211
|
|
|
2,213
|
|
||
Other Income (Expense)
|
|
|
|
|
||||
Investment income
|
|
16
|
|
|
27
|
|
||
Gains (losses) on equity investments, net
|
|
(174
|
)
|
|
5
|
|
||
Interest expense
|
|
(69
|
)
|
|
(46
|
)
|
||
Other income (expense), net
|
|
3
|
|
|
4
|
|
||
Total other income (expense)
|
|
(224
|
)
|
|
(10
|
)
|
||
Income before income taxes
|
|
1,987
|
|
|
2,203
|
|
||
Income tax expense
|
|
294
|
|
|
341
|
|
||
Net Income
|
|
$
|
1,693
|
|
|
$
|
1,862
|
|
Basic Earnings per Share
|
|
$
|
1.68
|
|
|
$
|
1.81
|
|
Basic weighted-average shares outstanding
|
|
1,005
|
|
|
1,026
|
|
||
Diluted Earnings per Share
|
|
$
|
1.68
|
|
|
$
|
1.80
|
|
Diluted weighted-average shares outstanding
|
|
1,010
|
|
|
1,032
|
|
Consolidated Statement of Comprehensive Income (Unaudited)
|
|
|
|
|
||||
|
|
Three Months Ended March 31,
|
||||||
|
|
2020
|
|
2019
|
||||
|
|
(in millions)
|
||||||
Net Income
|
|
$
|
1,693
|
|
|
$
|
1,862
|
|
Other comprehensive income (loss):
|
|
|
|
|
||||
Foreign currency translation adjustments
|
|
(281
|
)
|
|
11
|
|
||
Income tax effect
|
|
14
|
|
|
3
|
|
||
Foreign currency translation adjustments, net of income tax effect
|
|
(267
|
)
|
|
14
|
|
||
Translation adjustments on net investment hedge
|
|
20
|
|
|
36
|
|
||
Income tax effect
|
|
(4
|
)
|
|
(8
|
)
|
||
Translation adjustments on net investment hedge, net of income tax effect
|
|
16
|
|
|
28
|
|
||
Cash flow hedges
|
|
(189
|
)
|
|
—
|
|
||
Income tax effect
|
|
39
|
|
|
—
|
|
||
Cash flow hedges, net of income tax effect
|
|
(150
|
)
|
|
—
|
|
||
Investment securities available-for-sale
|
|
(7
|
)
|
|
4
|
|
||
Income tax effect
|
|
2
|
|
|
(1
|
)
|
||
Investment securities available-for-sale, net of income tax effect
|
|
(5
|
)
|
|
3
|
|
||
Other comprehensive income (loss), net of tax
|
|
(406
|
)
|
|
45
|
|
||
Comprehensive Income
|
|
$
|
1,287
|
|
|
$
|
1,907
|
|
Consolidated Balance Sheet (unaudited)
|
|
|
|
|
||||
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
|
|
(in millions, except per share data)
|
||||||
Assets
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
10,207
|
|
|
$
|
6,988
|
|
Restricted cash for litigation settlement
|
|
587
|
|
|
584
|
|
||
Investments
|
|
477
|
|
|
688
|
|
||
Accounts receivable
|
|
2,441
|
|
|
2,514
|
|
||
Settlement due from customers
|
|
1,164
|
|
|
2,995
|
|
||
Restricted security deposits held for customers
|
|
1,518
|
|
|
1,370
|
|
||
Prepaid expenses and other current assets
|
|
1,729
|
|
|
1,763
|
|
||
Total current assets
|
|
18,123
|
|
|
16,902
|
|
||
Property, equipment and right-of-use assets, net of accumulated depreciation and amortization of $1,165 and $1,100, respectively
|
|
1,901
|
|
|
1,828
|
|
||
Deferred income taxes
|
|
550
|
|
|
543
|
|
||
Goodwill
|
|
4,070
|
|
|
4,021
|
|
||
Other intangible assets, net of accumulated amortization of $1,312 and $1,296, respectively
|
|
1,447
|
|
|
1,417
|
|
||
Other assets
|
|
4,557
|
|
|
4,525
|
|
||
Total Assets
|
|
$
|
30,648
|
|
|
$
|
29,236
|
|
Liabilities, Redeemable Non-controlling Interests and Equity
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
371
|
|
|
$
|
489
|
|
Settlement due to customers
|
|
1,149
|
|
|
2,714
|
|
||
Restricted security deposits held for customers
|
|
1,518
|
|
|
1,370
|
|
||
Accrued litigation
|
|
852
|
|
|
914
|
|
||
Accrued expenses
|
|
4,676
|
|
|
5,489
|
|
||
Other current liabilities
|
|
1,146
|
|
|
928
|
|
||
Total current liabilities
|
|
9,712
|
|
|
11,904
|
|
||
Long-term debt
|
|
12,466
|
|
|
8,527
|
|
||
Deferred income taxes
|
|
82
|
|
|
85
|
|
||
Other liabilities
|
|
2,890
|
|
|
2,729
|
|
||
Total Liabilities
|
|
25,150
|
|
|
23,245
|
|
||
Commitments and Contingencies
|
|
|
|
|
||||
Redeemable Non-controlling Interests
|
|
75
|
|
|
74
|
|
||
Stockholders’ Equity
|
|
|
|
|
||||
Class A common stock, $0.0001 par value; authorized 3,000 shares, 1,392 and 1,391 shares issued and 993 and 996 shares outstanding, respectively
|
|
—
|
|
|
—
|
|
||
Class B common stock, $0.0001 par value; authorized 1,200 shares, 11 shares issued and outstanding
|
|
—
|
|
|
—
|
|
||
Additional paid-in-capital
|
|
4,735
|
|
|
4,787
|
|
||
Class A treasury stock, at cost, 399 and 395 shares, respectively
|
|
(33,531
|
)
|
|
(32,205
|
)
|
||
Retained earnings
|
|
35,273
|
|
|
33,984
|
|
||
Accumulated other comprehensive income (loss)
|
|
(1,079
|
)
|
|
(673
|
)
|
||
Mastercard Incorporated Stockholders' Equity
|
|
5,398
|
|
|
5,893
|
|
||
Non-controlling interests
|
|
25
|
|
|
24
|
|
||
Total Equity
|
|
5,423
|
|
|
5,917
|
|
||
Total Liabilities, Redeemable Non-controlling Interests and Equity
|
|
$
|
30,648
|
|
|
$
|
29,236
|
|
Consolidated Statement of Changes in Equity (Unaudited)
|
||||||||||||||||||||||||||||||||||||
|
|
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, 2019
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,787
|
|
|
$
|
(32,205
|
)
|
|
$
|
33,984
|
|
|
$
|
(673
|
)
|
|
$
|
5,893
|
|
|
$
|
24
|
|
|
$
|
5,917
|
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,693
|
|
|
—
|
|
|
1,693
|
|
|
—
|
|
|
1,693
|
|
|||||||||
Activity related to non-controlling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|||||||||
Redeemable non-controlling interest adjustments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
|||||||||
Other comprehensive income (loss)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(406
|
)
|
|
(406
|
)
|
|
—
|
|
|
(406
|
)
|
|||||||||
Dividends
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(402
|
)
|
|
—
|
|
|
(402
|
)
|
|
—
|
|
|
(402
|
)
|
|||||||||
Purchases of treasury stock
|
|
—
|
|
|
—
|
|
|
|
|
|
(1,330
|
)
|
|
—
|
|
|
—
|
|
|
(1,330
|
)
|
|
—
|
|
|
(1,330
|
)
|
|||||||||
Share-based payments
|
|
—
|
|
|
—
|
|
|
(52
|
)
|
|
4
|
|
|
—
|
|
|
—
|
|
|
(48
|
)
|
|
—
|
|
|
(48
|
)
|
|||||||||
Balance at March 31, 2020
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,735
|
|
|
$
|
(33,531
|
)
|
|
$
|
35,273
|
|
|
$
|
(1,079
|
)
|
|
$
|
5,398
|
|
|
$
|
25
|
|
|
$
|
5,423
|
|
|
|
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
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,862
|
|
|
—
|
|
|
1,862
|
|
|
—
|
|
|
1,862
|
|
|||||||||
Activity related to non-controlling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|||||||||
Redeemable non-controlling interest adjustments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
|||||||||
Other comprehensive income (loss)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
45
|
|
|
45
|
|
|
—
|
|
|
45
|
|
|||||||||
Dividends
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(337
|
)
|
|
—
|
|
|
(337
|
)
|
|
—
|
|
|
(337
|
)
|
|||||||||
Purchases of treasury stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,790
|
)
|
|
—
|
|
|
—
|
|
|
(1,790
|
)
|
|
—
|
|
|
(1,790
|
)
|
|||||||||
Share-based payments
|
|
—
|
|
|
—
|
|
|
(11
|
)
|
|
6
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
(5
|
)
|
|||||||||
Balance at March 31, 2019
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,569
|
|
|
$
|
(27,534
|
)
|
|
$
|
28,806
|
|
|
$
|
(673
|
)
|
|
$
|
5,168
|
|
|
$
|
22
|
|
|
$
|
5,190
|
|
Consolidated Statement of Cash Flows (Unaudited)
|
|
|
|
|
||||
|
|
Three Months Ended March 31,
|
||||||
|
|
2020
|
|
2019
|
||||
|
|
(in millions)
|
||||||
Operating Activities
|
|
|
|
|
||||
Net income
|
|
$
|
1,693
|
|
|
$
|
1,862
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
||||
Amortization of customer and merchant incentives
|
|
237
|
|
|
345
|
|
||
Depreciation and amortization
|
|
144
|
|
|
117
|
|
||
(Gains) losses on equity investments, net
|
|
174
|
|
|
5
|
|
||
Share-based compensation
|
|
52
|
|
|
57
|
|
||
Deferred income taxes
|
|
26
|
|
|
38
|
|
||
Other
|
|
20
|
|
|
1
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
||||
Accounts receivable
|
|
(3
|
)
|
|
(320
|
)
|
||
Settlement due from customers
|
|
1,831
|
|
|
1,026
|
|
||
Prepaid expenses
|
|
(331
|
)
|
|
(497
|
)
|
||
Accrued litigation and legal settlements
|
|
(62
|
)
|
|
1
|
|
||
Restricted security deposits held for customers
|
|
148
|
|
|
(35
|
)
|
||
Accounts payable
|
|
(102
|
)
|
|
(22
|
)
|
||
Settlement due to customers
|
|
(1,564
|
)
|
|
(1,000
|
)
|
||
Accrued expenses
|
|
(622
|
)
|
|
(483
|
)
|
||
Net change in other assets and liabilities
|
|
218
|
|
|
217
|
|
||
Net cash provided by operating activities
|
|
1,859
|
|
|
1,312
|
|
||
Investing Activities
|
|
|
|
|
||||
Purchases of investment securities available-for-sale
|
|
(74
|
)
|
|
(305
|
)
|
||
Purchases of investments held-to-maturity
|
|
(45
|
)
|
|
(99
|
)
|
||
Proceeds from sales of investment securities available-for-sale
|
|
179
|
|
|
476
|
|
||
Proceeds from maturities of investment securities available-for-sale
|
|
64
|
|
|
139
|
|
||
Proceeds from maturities of investments held-to-maturity
|
|
65
|
|
|
155
|
|
||
Purchases of property and equipment
|
|
(131
|
)
|
|
(83
|
)
|
||
Capitalized software
|
|
(78
|
)
|
|
(59
|
)
|
||
Purchases of equity investments
|
|
(135
|
)
|
|
—
|
|
||
Settlement of interest rate derivative contracts
|
|
(175
|
)
|
|
—
|
|
||
Other investing activities
|
|
(177
|
)
|
|
(11
|
)
|
||
Net cash (used in) provided by investing activities
|
|
(507
|
)
|
|
213
|
|
||
Financing Activities
|
|
|
|
|
||||
Purchases of treasury stock
|
|
(1,383
|
)
|
|
(1,824
|
)
|
||
Dividends paid
|
|
(403
|
)
|
|
(340
|
)
|
||
Proceeds from debt, net
|
|
3,959
|
|
|
—
|
|
||
Tax withholdings related to share-based payments
|
|
(131
|
)
|
|
(116
|
)
|
||
Cash proceeds from exercise of stock options
|
|
31
|
|
|
54
|
|
||
Other financing activities
|
|
27
|
|
|
3
|
|
||
Net cash provided by (used in) financing activities
|
|
2,100
|
|
|
(2,223
|
)
|
||
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents
|
|
(88
|
)
|
|
(54
|
)
|
||
Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents
|
|
3,364
|
|
|
(752
|
)
|
||
Cash, cash equivalents, restricted cash and restricted cash equivalents - beginning of period
|
|
8,969
|
|
|
8,337
|
|
||
Cash, cash equivalents, restricted cash and restricted cash equivalents - end of period
|
|
$
|
12,333
|
|
|
$
|
7,585
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2020
|
|
2019
|
||||
|
|
(in millions)
|
||||||
Revenue by source:
|
|
|
|
|
||||
Domestic assessments
|
|
$
|
1,683
|
|
|
$
|
1,605
|
|
Cross-border volume fees
|
|
1,217
|
|
|
1,263
|
|
||
Transaction processing
|
|
2,200
|
|
|
1,922
|
|
||
Other revenues
|
|
1,062
|
|
|
842
|
|
||
Gross revenue
|
|
6,162
|
|
|
5,632
|
|
||
Rebates and incentives (contra-revenue)
|
|
(2,153
|
)
|
|
(1,743
|
)
|
||
Net revenue
|
|
$
|
4,009
|
|
|
$
|
3,889
|
|
Net revenue by geographic region:
|
|
|
|
|
||||
North American Markets
|
|
$
|
1,334
|
|
|
$
|
1,347
|
|
International Markets
|
|
2,633
|
|
|
2,506
|
|
||
Other 1
|
|
42
|
|
|
36
|
|
||
Net revenue
|
|
$
|
4,009
|
|
|
$
|
3,889
|
|
1
|
Includes revenues managed by corporate functions.
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2020
|
|
2019
|
||||
|
|
(in millions, except per share data)
|
||||||
Numerator
|
|
|
|
|
||||
Net income
|
|
$
|
1,693
|
|
|
$
|
1,862
|
|
Denominator
|
|
|
|
|
||||
Basic weighted-average shares outstanding
|
|
1,005
|
|
|
1,026
|
|
||
Dilutive stock options and stock units
|
|
5
|
|
|
6
|
|
||
Diluted weighted-average shares outstanding 1
|
|
1,010
|
|
|
1,032
|
|
||
Earnings per Share
|
|
|
|
|
||||
Basic
|
|
$
|
1.68
|
|
|
$
|
1.81
|
|
Diluted
|
|
$
|
1.68
|
|
|
$
|
1.80
|
|
1
|
For the periods presented, the calculation of diluted EPS excluded a minimal amount of anti-dilutive share-based payment awards.
|
|
|
December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
(in millions)
|
||||||
Cash and cash equivalents
|
|
$
|
6,988
|
|
|
$
|
6,682
|
|
Restricted cash and restricted cash equivalents
|
|
|
|
|
||||
Restricted cash for litigation settlement
|
|
584
|
|
|
553
|
|
||
Restricted security deposits held for customers
|
|
1,370
|
|
|
1,080
|
|
||
Prepaid expenses and other current assets
|
|
27
|
|
|
22
|
|
||
Cash, cash equivalents, restricted cash and restricted cash equivalents - beginning of period
|
|
$
|
8,969
|
|
|
$
|
8,337
|
|
|
|
|
|
|
||||
|
|
March 31,
|
||||||
|
|
2020
|
|
2019
|
||||
|
|
(in millions)
|
||||||
Cash and cash equivalents
|
|
$
|
10,207
|
|
|
$
|
5,857
|
|
Restricted cash and restricted cash equivalents
|
|
|
|
|
||||
Restricted cash for litigation settlement
|
|
587
|
|
|
662
|
|
||
Restricted security deposits held for customers
|
|
1,518
|
|
|
1,044
|
|
||
Prepaid expenses and other current assets
|
|
21
|
|
|
22
|
|
||
Cash, cash equivalents, restricted cash and restricted cash equivalents - end of period
|
|
$
|
12,333
|
|
|
$
|
7,585
|
|
|
|
March 31,
2020 |
|
December 31,
2019 |
||||
|
|
(in millions)
|
||||||
Available-for-sale securities
|
|
$
|
414
|
|
|
$
|
591
|
|
Held-to-maturity securities
|
|
63
|
|
|
97
|
|
||
Total investments
|
|
$
|
477
|
|
|
$
|
688
|
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||||||||||||||||||||||||||
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gain
|
|
Gross
Unrealized
Loss
|
|
Fair
Value
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gain
|
|
Gross
Unrealized
Loss
|
|
Fair
Value
|
||||||||||||||||
|
|
(in millions)
|
||||||||||||||||||||||||||||||
Municipal securities
|
|
$
|
18
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
18
|
|
|
$
|
15
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
15
|
|
Government and agency securities
|
|
18
|
|
|
—
|
|
|
—
|
|
|
18
|
|
|
108
|
|
|
—
|
|
|
—
|
|
|
108
|
|
||||||||
Corporate securities
|
|
315
|
|
|
—
|
|
|
(5
|
)
|
|
310
|
|
|
381
|
|
|
1
|
|
|
—
|
|
|
382
|
|
||||||||
Asset-backed securities
|
|
68
|
|
|
—
|
|
|
—
|
|
|
68
|
|
|
85
|
|
|
1
|
|
|
—
|
|
|
86
|
|
||||||||
Total
|
|
$
|
419
|
|
|
$
|
—
|
|
|
$
|
(5
|
)
|
|
$
|
414
|
|
|
$
|
589
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
591
|
|
|
|
Available-For-Sale
|
||||||
|
|
Amortized Cost
|
|
Fair Value
|
||||
|
|
(in millions)
|
||||||
Due within 1 year
|
|
$
|
105
|
|
|
$
|
105
|
|
Due after 1 year through 5 years
|
|
314
|
|
|
309
|
|
||
Total
|
|
$
|
419
|
|
|
$
|
414
|
|
|
|
Balance at December 31, 2019
|
|
Purchases (Sales), net
|
|
Changes in Fair Value 1
|
|
Other 2
|
|
Balance at March 31, 2020
|
||||||||||
|
|
(in millions)
|
||||||||||||||||||
Marketable securities
|
|
$
|
479
|
|
|
$
|
—
|
|
|
$
|
(177
|
)
|
|
$
|
(20
|
)
|
|
$
|
282
|
|
Nonmarketable securities
|
|
435
|
|
|
137
|
|
|
3
|
|
|
13
|
|
|
588
|
|
|||||
Total equity investments
|
|
$
|
914
|
|
|
$
|
137
|
|
|
$
|
(174
|
)
|
|
$
|
(7
|
)
|
|
$
|
870
|
|
1
|
Recorded in gains (losses) on equity investments, net on the consolidated statement of operations
|
2
|
Includes the translational impact of currency
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||||||||||||||||||||||||||
|
|
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
|
|
$
|
—
|
|
|
$
|
18
|
|
|
$
|
—
|
|
|
$
|
18
|
|
|
$
|
—
|
|
|
$
|
15
|
|
|
$
|
—
|
|
|
$
|
15
|
|
Government and agency securities
|
|
—
|
|
|
18
|
|
|
—
|
|
|
18
|
|
|
66
|
|
|
42
|
|
|
—
|
|
|
108
|
|
||||||||
Corporate securities
|
|
—
|
|
|
310
|
|
|
—
|
|
|
310
|
|
|
—
|
|
|
382
|
|
|
—
|
|
|
382
|
|
||||||||
Asset-backed securities
|
|
—
|
|
|
68
|
|
|
—
|
|
|
68
|
|
|
—
|
|
|
86
|
|
|
—
|
|
|
86
|
|
||||||||
Derivative instruments 2:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Foreign exchange contracts
|
|
—
|
|
|
87
|
|
|
—
|
|
|
87
|
|
|
—
|
|
|
12
|
|
|
—
|
|
|
12
|
|
||||||||
Interest rate contracts
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14
|
|
|
—
|
|
|
14
|
|
||||||||
Marketable securities 3:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Equity securities
|
|
282
|
|
|
—
|
|
|
—
|
|
|
282
|
|
|
479
|
|
|
—
|
|
|
—
|
|
|
479
|
|
||||||||
Deferred compensation plan 4:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Deferred compensation assets
|
|
53
|
|
|
—
|
|
|
—
|
|
|
53
|
|
|
67
|
|
|
—
|
|
|
—
|
|
|
67
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Derivative instruments 2:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Foreign exchange derivative liabilities
|
|
$
|
—
|
|
|
$
|
(20
|
)
|
|
$
|
—
|
|
|
$
|
(20
|
)
|
|
$
|
—
|
|
|
$
|
(32
|
)
|
|
$
|
—
|
|
|
$
|
(32
|
)
|
Deferred compensation plan 5:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Deferred compensation liabilities
|
|
(60
|
)
|
|
—
|
|
|
—
|
|
|
(60
|
)
|
|
(67
|
)
|
|
—
|
|
|
—
|
|
|
(67
|
)
|
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 exchange and interest rates for similar derivative instruments. See Note 17 (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.
|
|
|
March 31,
2020 |
|
December 31,
2019 |
||||
|
|
(in millions)
|
||||||
Customer and merchant incentives
|
|
$
|
886
|
|
|
$
|
872
|
|
Prepaid income taxes
|
|
50
|
|
|
105
|
|
||
Other
|
|
793
|
|
|
786
|
|
||
Total prepaid expenses and other current assets
|
|
$
|
1,729
|
|
|
$
|
1,763
|
|
|
|
March 31,
2020 |
|
December 31,
2019 |
||||
|
|
(in millions)
|
||||||
Customer and merchant incentives
|
|
$
|
2,892
|
|
|
$
|
2,838
|
|
Equity investments
|
|
870
|
|
|
914
|
|
||
Income taxes receivable
|
|
477
|
|
|
460
|
|
||
Other
|
|
318
|
|
|
313
|
|
||
Total other assets
|
|
$
|
4,557
|
|
|
$
|
4,525
|
|
|
|
March 31,
2020 |
|
December 31,
2019 |
||||
|
|
(in millions)
|
||||||
Customer and merchant incentives
|
|
$
|
3,674
|
|
|
$
|
3,892
|
|
Personnel costs
|
|
323
|
|
|
713
|
|
||
Income and other taxes
|
|
205
|
|
|
332
|
|
||
Other
|
|
474
|
|
|
552
|
|
||
Total accrued expenses
|
|
$
|
4,676
|
|
|
$
|
5,489
|
|
|
|
|
|
|
March 31,
2020 |
|
December 31,
2019 |
|
Effective
Interest Rate |
||||||
|
|
|
|
|
(in millions)
|
|
|
||||||||
2020 USD Notes
|
|
3.300
|
%
|
Senior Notes due March 2027
|
|
$
|
1,000
|
|
|
$
|
—
|
|
|
3.420
|
%
|
|
|
3.350
|
%
|
Senior Notes due March 2030
|
|
1,500
|
|
|
—
|
|
|
3.390
|
%
|
||
|
|
3.850
|
%
|
Senior Notes due March 2050
|
|
1,500
|
|
|
—
|
|
|
3.896
|
%
|
||
|
|
|
|
|
|
|
|
|
|
||||||
2019 USD Notes
|
|
2.950
|
%
|
Senior Notes due June 2029
|
|
1,000
|
|
|
1,000
|
|
|
3.030
|
%
|
||
|
|
3.650
|
%
|
Senior Notes due June 2049
|
|
1,000
|
|
|
1,000
|
|
|
3.689
|
%
|
||
|
|
2.000
|
%
|
Senior Notes due March 2025
|
|
750
|
|
|
750
|
|
|
2.147
|
%
|
||
|
|
|
|
|
|
|
|
|
|
||||||
2018 USD Notes
|
|
3.500
|
%
|
Senior Notes due February 2028
|
|
500
|
|
|
500
|
|
|
3.598
|
%
|
||
|
|
3.950
|
%
|
Senior Notes due February 2048
|
|
500
|
|
|
500
|
|
|
3.990
|
%
|
||
|
|
|
|
|
|
|
|
|
|
||||||
2016 USD Notes
|
|
2.000
|
%
|
Senior Notes due November 2021
|
|
650
|
|
|
650
|
|
|
2.236
|
%
|
||
|
|
2.950
|
%
|
Senior Notes due November 2026
|
|
750
|
|
|
750
|
|
|
3.044
|
%
|
||
|
|
3.800
|
%
|
Senior Notes due November 2046
|
|
600
|
|
|
600
|
|
|
3.893
|
%
|
||
|
|
|
|
|
|
|
|
|
|
||||||
2015 Euro Notes 1
|
|
1.100
|
%
|
Senior Notes due December 2022
|
|
776
|
|
|
785
|
|
|
1.265
|
%
|
||
|
|
2.100
|
%
|
Senior Notes due December 2027
|
|
886
|
|
|
896
|
|
|
2.189
|
%
|
||
|
|
2.500
|
%
|
Senior Notes due December 2030
|
|
166
|
|
|
169
|
|
|
2.562
|
%
|
||
|
|
|
|
|
|
|
|
|
|
||||||
2014 USD Notes
|
|
3.375
|
%
|
Senior Notes due April 2024
|
|
1,000
|
|
|
1,000
|
|
|
3.484
|
%
|
||
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
12,578
|
|
|
8,600
|
|
|
|
||||
Less: Unamortized discount and debt issuance costs
|
(112
|
)
|
|
(73
|
)
|
|
|
||||||||
Long-term debt
|
$
|
12,466
|
|
|
$
|
8,527
|
|
|
|
1
|
Relates to euro-denominated debt issuance of €1.650 billion in December 2015
|
Board authorization dates
|
|
December 2019
|
|
December
2018 |
|
December
2017 |
|
|
||||||||
Date program became effective
|
|
January 2020
|
|
January
2019
|
|
March
2018 |
|
Total
|
||||||||
|
|
(in millions, except average price data)
|
||||||||||||||
Board authorization
|
|
$
|
8,000
|
|
|
$
|
6,500
|
|
|
$
|
4,000
|
|
|
$
|
18,500
|
|
Dollar value of shares repurchased during the three months ended March 31, 2019
|
|
$
|
—
|
|
|
$
|
1,523
|
|
|
$
|
301
|
|
|
$
|
1,824
|
|
Remaining authorization at December 31, 2019
|
|
$
|
8,000
|
|
|
$
|
304
|
|
|
$
|
—
|
|
|
$
|
8,304
|
|
Dollar value of shares repurchased during the three months ended March 31, 2020
|
|
$
|
1,079
|
|
|
$
|
304
|
|
|
$
|
—
|
|
|
$
|
1,383
|
|
Remaining authorization at March 31, 2020
|
|
$
|
6,921
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,921
|
|
Shares repurchased during the three months ended March 31, 2019
|
|
—
|
|
|
7.1
|
|
|
1.6
|
|
|
8.7
|
|
||||
Average price paid per share during the three months ended March 31, 2019
|
|
$
|
—
|
|
|
$
|
213.68
|
|
|
$
|
188.38
|
|
|
$
|
209.05
|
|
Shares repurchased during the three months ended March 31, 2020
|
|
3.7
|
|
|
1.0
|
|
|
—
|
|
|
4.7
|
|
||||
Average price paid per share during the three months ended March 31, 2020
|
|
$
|
290.86
|
|
|
$
|
304.89
|
|
|
$
|
—
|
|
|
$
|
293.83
|
|
Cumulative shares repurchased through March 31, 2020
|
|
3.7
|
|
|
25.8
|
|
|
20.6
|
|
|
50.1
|
|
||||
Cumulative average price paid per share
|
|
$
|
290.86
|
|
|
$
|
251.72
|
|
|
$
|
194.27
|
|
|
$
|
231.02
|
|
|
|
Outstanding Shares
|
||||
|
|
Class A
|
|
Class B
|
||
|
|
(in millions)
|
||||
Balance at December 31, 2019
|
|
996.0
|
|
|
11.2
|
|
Purchases of treasury stock
|
|
(4.7
|
)
|
|
—
|
|
Share-based payments
|
|
1.3
|
|
|
—
|
|
Conversion of Class B to Class A common stock
|
|
0.4
|
|
|
(0.4
|
)
|
Balance at March 31, 2020
|
|
993.0
|
|
|
10.8
|
|
|
|
Foreign Currency Translation Adjustments 1
|
|
Translation Adjustments on Net Investment Hedge 2
|
|
Cash Flow Hedges 3
|
|
Defined Benefit Pension and Other Postretirement Plans
|
|
Investment Securities Available-for-Sale 4
|
|
Accumulated Other Comprehensive Income (Loss)
|
||||||||||||
|
|
(in millions)
|
||||||||||||||||||||||
Balance at December 31, 2019
|
|
$
|
(638
|
)
|
|
$
|
(38
|
)
|
|
$
|
11
|
|
|
$
|
(9
|
)
|
|
$
|
1
|
|
|
$
|
(673
|
)
|
Other comprehensive income (loss)
|
|
(267
|
)
|
|
16
|
|
|
(150
|
)
|
|
—
|
|
|
(5
|
)
|
|
(406
|
)
|
||||||
Balance at March 31, 2020
|
|
$
|
(905
|
)
|
|
$
|
(22
|
)
|
|
$
|
(139
|
)
|
|
$
|
(9
|
)
|
|
$
|
(4
|
)
|
|
$
|
(1,079
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance at December 31, 2018
|
|
$
|
(661
|
)
|
|
$
|
(66
|
)
|
|
$
|
—
|
|
|
$
|
10
|
|
|
$
|
(1
|
)
|
|
$
|
(718
|
)
|
Other comprehensive income (loss)
|
|
14
|
|
|
28
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
45
|
|
||||||
Balance at March 31, 2019
|
|
$
|
(647
|
)
|
|
$
|
(38
|
)
|
|
$
|
—
|
|
|
$
|
10
|
|
|
$
|
2
|
|
|
$
|
(673
|
)
|
1
|
During the three months ended March 31, 2020, 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 the three months ended March 31, 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.
|
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 the three months ended March 31, 2020 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 17 (Derivative and Hedging Instruments) for additional information.
|
3
|
In the fourth quarter of 2019, the Company entered into treasury rate locks which are accounted for as cash flow hedges. During the three months ended March 31, 2020, in connection with the issuance of the 2020 USD Notes, these contracts were settled and the Company recorded a loss, net of tax, of $150 million in accumulated other comprehensive income (loss). The cumulative loss of $139 million will be reclassified as an adjustment to interest expense over the respective terms of the 2020 USD Notes. During the three months ended March 31, 2020, reclassifications to interest expense were not material. See Note 17 (Derivative and Hedging Instruments) for additional information.
|
4
|
During the three months ended March 31, 2020 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 6 (Investments) for additional information.
|
|
|
Grants in 2020
|
|
Weighted-Average
Grant-Date
Fair Value
|
|
|
(in millions)
|
|
(per option/unit)
|
Non-qualified stock options
|
|
0.4
|
|
$55
|
Restricted stock units
|
|
0.8
|
|
$287
|
Performance stock units
|
|
0.2
|
|
$291
|
|
|
March 31,
2020 |
|
December 31,
2019 |
||||
|
|
(in millions)
|
||||||
Gross settlement exposure
|
|
$
|
50,631
|
|
|
$
|
55,800
|
|
Collateral held for settlement exposure
|
|
(4,437
|
)
|
|
(4,772
|
)
|
||
Net uncollateralized settlement exposure
|
|
$
|
46,194
|
|
|
$
|
51,028
|
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||||||||||
|
|
Notional
|
|
Estimated Fair
Value
|
|
Notional
|
|
Estimated Fair
Value
|
||||||||
|
|
(in millions)
|
||||||||||||||
Commitments to purchase foreign currency
|
|
$
|
376
|
|
|
$
|
(12
|
)
|
|
$
|
185
|
|
|
$
|
3
|
|
Commitments to sell foreign currency
|
|
1,553
|
|
|
75
|
|
|
1,506
|
|
|
(25
|
)
|
||||
Options to sell foreign currency
|
|
26
|
|
|
4
|
|
|
21
|
|
|
2
|
|
||||
Balance sheet location
|
|
|
|
|
|
|
|
|
||||||||
Prepaid expenses and other current assets 1
|
|
|
|
87
|
|
|
|
|
12
|
|
||||||
Other current liabilities 1
|
|
|
|
(20
|
)
|
|
|
|
(32
|
)
|
1
|
The derivative contracts are subject to enforceable master netting arrangements, which contain various netting and setoff provisions.
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2020
|
|
2019
|
||||
|
|
(in millions)
|
||||||
Foreign exchange derivative contracts
|
|
|
|
|
||||
General and administrative
|
|
$
|
107
|
|
|
$
|
(5
|
)
|
|
|
Three Months Ended March 31,
|
|
Increase/(Decrease)
|
||||||
|
|
2020
|
|
2019
|
|
|||||
|
|
($ in millions, except per share data)
|
||||||||
Net revenue
|
|
$
|
4,009
|
|
|
$
|
3,889
|
|
|
3%
|
Operating expenses
|
|
$
|
1,798
|
|
|
$
|
1,676
|
|
|
7%
|
Operating income
|
|
$
|
2,211
|
|
|
$
|
2,213
|
|
|
—%
|
Operating margin
|
|
55.2
|
%
|
|
56.9
|
%
|
|
(1.8) ppt
|
||
Income tax expense
|
|
$
|
294
|
|
|
$
|
341
|
|
|
(14)%
|
Effective income tax rate
|
|
14.8
|
%
|
|
15.5
|
%
|
|
(0.7) ppt
|
||
Net income
|
|
$
|
1,693
|
|
|
$
|
1,862
|
|
|
(9)%
|
Diluted earnings per share
|
|
$
|
1.68
|
|
|
$
|
1.80
|
|
|
(7)%
|
Diluted weighted-average shares outstanding
|
|
1,010
|
|
|
1,032
|
|
|
(2)%
|
|
Three Months Ended March 31,
|
|
Increase/(Decrease)
|
||||||||
|
2020
|
|
2019
|
|
As adjusted
|
|
Currency-neutral
|
||||
|
($ in millions, except per share data)
|
||||||||||
Net revenue
|
$
|
4,009
|
|
|
$
|
3,889
|
|
|
3%
|
|
5%
|
Adjusted operating expenses
|
$
|
1,792
|
|
|
$
|
1,676
|
|
|
7%
|
|
8%
|
Adjusted operating margin
|
55.3
|
%
|
|
56.9
|
%
|
|
(1.6) ppt
|
|
(1.4) ppt
|
||
Adjusted effective income tax rate
|
14.9
|
%
|
|
16.8
|
%
|
|
(1.9) ppt
|
|
(1.8) ppt
|
||
Adjusted net income
|
$
|
1,844
|
|
|
$
|
1,828
|
|
|
1%
|
|
3%
|
Adjusted diluted earnings per share
|
$
|
1.83
|
|
|
$
|
1.78
|
|
|
3%
|
|
6%
|
1
|
See “Non-GAAP Financial Information” for further information on our non-GAAP adjustments and the reconciliation to GAAP reported amounts.
|
Net revenue
|
|
||
GAAP
|
|
Non-GAAP (currency-neutral)
|
Net revenue increased 5% on a currency-neutral basis, which included growth of approximately 1 percentage point from acquisitions. The primary drivers of our
|
up 3%
|
|
up 5%
|
net revenue growth were:
|
|
- Gross dollar volume growth of 8% on a local currency basis
|
||
|
|
|
- Switched transaction growth of 13%
|
|
|
|
- Other revenues growth of 26%, or 28% on a currency-neutral basis. This
|
|
|
|
includes 6 percentage points of growth due to acquisitions. The remaining
|
|
|
|
growth was primarily driven by our Cyber & Intelligence and Data & Services
|
|
|
|
solutions.
|
|
|
|
These increases were partially offset by:
|
|
|
|
- Higher rebates and incentives, which increased 24%, or 26% on a
|
|
|
|
currency-neutral basis, primarily due to the impact from new and renewed
|
|
|
|
agreements and increased volumes.
|
|
|
|
- Cross-border volume decline of 1% on a local currency basis
|
Operating expenses
|
|
Adjusted
operating expenses |
|
GAAP
|
|
Non-GAAP (currency-neutral)
|
Adjusted operating expenses on a currency-neutral basis included a 6 percentage point increase from acquisitions, partially offset by a 3 percentage point benefit related to the differential in hedging gains and losses versus the year-ago period. The remaining 5 percentage points of growth was primarily related to our continued investment in strategic initiatives.
|
up 7%
|
|
up 8%
|
|
|
|
|
Effective income tax rate
|
|
Adjusted
effective income tax rate |
|
GAAP
|
|
Non-GAAP (currency-neutral)
|
Adjusted effective income tax rate of 14.9% primarily attributable to a more favorable geographic mix of earnings and discrete benefits related to share-based payments.
|
14.8%
|
|
14.9%
|
•
|
We generated net cash flows from operations of $1.9 billion.
|
•
|
We repurchased 4.7 million shares of our common stock for $1.4 billion and paid dividends of $0.4 billion.
|
•
|
We completed a debt offering for an aggregate principal amount of $4 billion.
|
•
|
In the three months ended March 31, 2020 and 2019 we recorded net losses of $174 million ($146 million after tax, or $0.14 per diluted share), and net gains of $5 million ($5 million after tax, and an immaterial impact per diluted share), respectively, primarily related to unrealized fair market value adjustments on marketable and non-marketable equity securities.
|
•
|
In the three months ended March 31, 2020, we recorded pre-tax charges of $6 million ($5 million after tax, and an immaterial impact per diluted share) related to litigation settlements with U.K. merchants.
|
•
|
In the three months ended March 31, 2019, we recorded a $30 million tax benefit ($0.03 per diluted share) related to a reduction to the 2017 one-time deemed repatriation tax on accumulated foreign earnings resulting from final transition tax regulations issued in 2019.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2020
|
||||||||||||||||||||
|
|
Operating expenses
|
|
Operating margin
|
|
Other Income (Expense)
|
|
Effective income tax rate
|
|
Net income
|
|
Diluted earnings per share
|
||||||||||
|
|
($ in millions, except per share data)
|
||||||||||||||||||||
Reported - GAAP
|
|
$
|
1,798
|
|
|
55.2
|
%
|
|
$
|
(224
|
)
|
|
14.8
|
%
|
|
$
|
1,693
|
|
|
$
|
1.68
|
|
(Gains) losses on equity investments
|
|
**
|
|
|
**
|
|
|
174
|
|
|
0.1
|
%
|
|
146
|
|
|
0.14
|
|
||||
Litigation provisions
|
|
$
|
(6
|
)
|
|
0.2
|
%
|
|
**
|
|
|
—
|
%
|
|
5
|
|
|
—
|
|
|||
Non-GAAP
|
|
$
|
1,792
|
|
|
55.3
|
%
|
|
$
|
(50
|
)
|
|
14.9
|
%
|
|
$
|
1,844
|
|
|
$
|
1.83
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 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
|
|
$
|
1,676
|
|
|
56.9
|
%
|
|
$
|
(10
|
)
|
|
15.5
|
%
|
|
$
|
1,862
|
|
|
$
|
1.80
|
|
(Gains) losses on equity investments
|
|
**
|
|
|
**
|
|
|
(5
|
)
|
|
—
|
%
|
|
(5
|
)
|
|
—
|
|
||||
Tax act
|
|
**
|
|
|
**
|
|
|
**
|
|
|
1.3
|
%
|
|
(30
|
)
|
|
(0.03
|
)
|
||||
Non-GAAP
|
|
$
|
1,676
|
|
|
56.9
|
%
|
|
$
|
(15
|
)
|
|
16.8
|
%
|
|
$
|
1,828
|
|
|
$
|
1.78
|
|
**
|
Not applicable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2020 as compared to the Three Months Ended March 31, 2019
|
||||||||||
|
|
Increase/(Decrease)
|
||||||||||
|
|
Net revenue
|
|
Operating expenses
|
|
Operating margin
|
|
Effective income tax rate
|
|
Net income
|
|
Diluted earnings per share
|
Reported - GAAP
|
|
3%
|
|
7%
|
|
(1.8) ppt
|
|
(0.7) ppt
|
|
(9)%
|
|
(7)%
|
(Gains) losses on equity investments
|
|
**
|
|
**
|
|
**
|
|
0.1 ppt
|
|
8%
|
|
8%
|
Litigation provisions
|
|
**
|
|
—%
|
|
0.2 ppt
|
|
—
|
|
—%
|
|
—%
|
Tax act
|
|
**
|
|
**
|
|
**
|
|
(1.3) ppt
|
|
2%
|
|
1%
|
Non-GAAP
|
|
3%
|
|
7%
|
|
(1.6) ppt
|
|
(1.9) ppt
|
|
1%
|
|
3%
|
Currency impact 1
|
|
2%
|
|
1%
|
|
0.3 ppt
|
|
0.1 ppt
|
|
2%
|
|
3%
|
Non-GAAP - currency-neutral
|
|
5%
|
|
8%
|
|
(1.4) ppt
|
|
(1.8) ppt
|
|
3%
|
|
6%
|
**
|
Not applicable
|
1
|
Represents the translational and transactional impact of currency.
|
1
|
Data used in the calculation of GDV is provided by Mastercard customers and is subject to verification by Mastercard and partial cross-checking against information provided by Mastercard’s transaction switching systems. All data is subject to revision and amendment by Mastercard or Mastercard’s customers.
|
2
|
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.
|
|
|
Three Months Ended March 31,
|
|
Increase (Decrease)
|
||||||
|
|
2020
|
|
2019
|
|
|||||
|
|
($ in millions)
|
||||||||
Domestic assessments
|
|
$
|
1,683
|
|
|
$
|
1,605
|
|
|
5%
|
Cross-border volume fees
|
|
1,217
|
|
|
1,263
|
|
|
(4)%
|
||
Transaction processing
|
|
2,200
|
|
|
1,922
|
|
|
14%
|
||
Other revenues
|
|
1,062
|
|
|
842
|
|
|
26%
|
||
Gross revenue
|
|
6,162
|
|
|
5,632
|
|
|
9%
|
||
Rebates and incentives (contra-revenue)
|
|
(2,153
|
)
|
|
(1,743
|
)
|
|
24%
|
||
Net revenue
|
|
$
|
4,009
|
|
|
$
|
3,889
|
|
|
3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2020
|
||||||||||
|
|
Volume
|
|
Acquisitions
|
|
Currency Impact 1
|
|
Other 2
|
|
Total
|
||
Domestic assessments
|
|
8%
|
|
—%
|
|
(3)%
|
|
—
|
%
|
3
|
|
5%
|
Cross-border volume fees
|
|
(2)%
|
|
—%
|
|
(2)%
|
|
—
|
%
|
|
|
(4)%
|
Transaction processing
|
|
12%
|
|
—%
|
|
(2)%
|
|
4
|
%
|
|
|
14%
|
Other revenues
|
|
**
|
|
6%
|
|
(2)%
|
|
22
|
%
|
4
|
|
26%
|
Rebates and incentives (contra-revenue)
|
|
7%
|
|
—%
|
|
(3)%
|
|
19
|
%
|
5
|
|
24%
|
Net revenue
|
|
5%
|
|
1%
|
|
(2)%
|
|
(2
|
)%
|
|
|
3%
|
**
|
Not applicable.
|
1
|
Represents the translational and transactional impact of currency.
|
2
|
Includes impact from pricing and other non-volume based fees.
|
3
|
Includes impact of the allocation of revenue to service deliverables, which are primarily recorded in other revenue when services are performed.
|
4
|
Includes impacts from cyber and intelligence fees, data analytics and consulting fees and other payment-related products and services.
|
5
|
Includes the impact of new, renewed and expired agreements.
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2020
|
|
2019
|
||||
|
|
Increase/(Decrease)
|
||||||
|
|
USD
|
|
Local
|
|
USD
|
|
Local
|
Mastercard-branded GDV 1
|
|
6%
|
|
8%
|
|
6%
|
|
12%
|
Asia Pacific/Middle East/Africa
|
|
3%
|
|
6%
|
|
5%
|
|
11%
|
Canada
|
|
3%
|
|
4%
|
|
1%
|
|
6%
|
Europe
|
|
9%
|
|
12%
|
|
5%
|
|
17%
|
Latin America
|
|
2%
|
|
12%
|
|
3%
|
|
13%
|
United States
|
|
6%
|
|
6%
|
|
7%
|
|
7%
|
Cross-border volume 1
|
|
(3)%
|
|
(1)%
|
|
7%
|
|
14%
|
1
|
Excludes volume generated by Maestro and Cirrus cards.
|
|
|
Three Months Ended March 31,
|
||
|
|
2020
|
|
2019
|
|
|
Increase/(Decrease)
|
||
Switched transactions
|
|
13%
|
|
17%
|
|
|
Three Months Ended March 31,
|
|
Increase (Decrease)
|
||||||
|
|
2020
|
|
2019
|
|
|||||
|
|
($ in millions)
|
||||||||
General and administrative
|
|
$
|
1,494
|
|
|
$
|
1,367
|
|
|
9%
|
Advertising and marketing
|
|
154
|
|
|
192
|
|
|
(20)%
|
||
Depreciation and amortization
|
|
144
|
|
|
117
|
|
|
23%
|
||
Provision for litigation
|
|
6
|
|
|
—
|
|
|
**
|
||
Total operating expenses
|
|
1,798
|
|
|
1,676
|
|
|
7%
|
||
Special Items1
|
|
(6
|
)
|
|
—
|
|
|
**
|
||
Adjusted total operating expenses (excluding Special Items1)
|
|
$
|
1,792
|
|
|
$
|
1,676
|
|
|
7%
|
**
|
Not meaningful.
|
1
|
See “Non-GAAP Financial Information” for further information on our non-GAAP adjustments and the reconciliation to GAAP reported amounts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2020
|
||||||||
|
|
Operational
|
|
Special
Items 1
|
|
Acquisitions
|
|
Currency Impact 2
|
|
Total
|
General and administrative
|
|
4%
|
|
**
|
|
6%
|
|
(1)%
|
|
9%
|
Advertising and marketing
|
|
(20)%
|
|
**
|
|
1%
|
|
(1)%
|
|
(20)%
|
Depreciation and amortization
|
|
11%
|
|
**
|
|
12%
|
|
(1)%
|
|
23%
|
Provision for litigation
|
|
**
|
|
**
|
|
**
|
|
**
|
|
**
|
Total operating expenses
|
|
2%
|
|
—%
|
|
6%
|
|
(1)%
|
|
7%
|
**
|
Not meaningful.
|
1
|
See “Non-GAAP Financial Information” for further information on our non-GAAP adjustments and the reconciliation to GAAP reported amounts.
|
2
|
Represents the translational and transactional impact of currency.
|
|
|
Three Months Ended March 31,
|
|
Increase (Decrease)
|
||||||
|
|
2020
|
|
2019
|
|
|||||
|
|
($ in millions)
|
||||||||
Personnel
|
|
$
|
962
|
|
|
$
|
811
|
|
|
19%
|
Professional fees
|
|
93
|
|
|
86
|
|
|
9%
|
||
Data processing and telecommunications
|
|
179
|
|
|
155
|
|
|
16%
|
||
Foreign exchange activity1
|
|
(52
|
)
|
|
1
|
|
|
**
|
||
Other
|
|
312
|
|
|
314
|
|
|
(1)%
|
||
General and administrative expenses
|
|
$
|
1,494
|
|
|
$
|
1,367
|
|
|
9%
|
**
|
Not meaningful.
|
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 17 (Derivative and Hedging Instruments) to the consolidated financial statements included in Part I, Item 1 for further discussion.
|
|
|
Three Months Ended March 31,
|
|
Increase (Decrease)
|
||||||
|
|
2020
|
|
2019
|
|
|||||
|
|
($ in millions)
|
||||||||
Investment income
|
|
$
|
16
|
|
|
$
|
27
|
|
|
(40)%
|
Gains (losses) on equity investments, net
|
|
(174
|
)
|
|
5
|
|
|
**
|
||
Interest expense
|
|
(69
|
)
|
|
(46
|
)
|
|
49%
|
||
Other income (expense), net
|
|
3
|
|
|
4
|
|
|
(30)%
|
||
Total other income (expense)
|
|
$
|
(224
|
)
|
|
$
|
(10
|
)
|
|
**
|
**
|
Not meaningful.
|
|
March 31,
2020 |
|
December 31,
2019 |
||||
|
(in billions)
|
||||||
Cash, cash equivalents and investments 1
|
$
|
10.7
|
|
|
$
|
7.7
|
|
Unused line of credit
|
6.0
|
|
|
6.0
|
|
1
|
Investments include available-for-sale securities and held-to-maturity securities. This amount excludes restricted cash and restricted cash equivalents of $2.1 billion and $2.0 billion at March 31, 2020 and December 31, 2019, respectively.
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(in millions)
|
||||||
Net cash provided by operating activities
|
$
|
1,859
|
|
|
$
|
1,312
|
|
Net cash (used in) provided by investing activities
|
(507
|
)
|
|
213
|
|
||
Net cash provided by (used in) financing activities
|
2,100
|
|
|
(2,223
|
)
|
|
|
(in millions, except average price data)
|
||
Remaining authorization at December 31, 2019
|
|
$
|
8,304
|
|
Dollar value of shares repurchased during the three months ended March 31, 2020
|
|
$
|
1,383
|
|
Remaining authorization at March 31, 2020
|
|
$
|
6,921
|
|
Shares repurchased during the three months ended March 31, 2020
|
|
4.7
|
|
|
Average price paid per share during the three months ended March 31, 2020
|
|
$
|
293.83
|
|
Period
|
|
Total Number
of Shares
Purchased
|
|
Average Price
Paid per Share
(including
commission cost)
|
|
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs
|
|
Dollar Value of
Shares that may yet
be Purchased under
the Plans or
Programs 1
|
||||||
January 1 - 31
|
|
1,727,571
|
|
|
$
|
311.90
|
|
|
1,727,571
|
|
|
$
|
7,765,281,237
|
|
February 1 - 29
|
|
726,991
|
|
|
$
|
321.53
|
|
|
726,991
|
|
|
$
|
7,531,530,765
|
|
March 1 - 31
|
|
2,254,228
|
|
|
$
|
271.05
|
|
|
2,254,228
|
|
|
$
|
6,920,512,828
|
|
Total
|
|
4,708,790
|
|
|
$
|
293.83
|
|
|
4,708,790
|
|
|
|
1
|
Dollar value of shares that may yet be purchased under the repurchase programs is as of the end of the period.
|
Exhibit
Number
|
|
Exhibit Description
|
|
|
|
|
||
|
||
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
|
||
|
||
|
||
|
||
101.INS
|
|
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
|
101.SCH*
|
|
XBRL Taxonomy Extension Schema Document
|
101.CAL*
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF*
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB*
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE*
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
+
|
Management contracts or compensatory plans or arrangements.
|
*
|
Filed or furnished herewith.
|
|
|
MASTERCARD INCORPORATED
|
||
|
|
(Registrant)
|
||
|
|
|
|
|
Date:
|
April 29, 2020
|
By:
|
|
/S/ AJAY BANGA
|
|
|
|
|
Ajay Banga
|
|
|
|
|
Chief Executive Officer
|
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
Date:
|
April 29, 2020
|
By:
|
|
/S/ SACHIN MEHRA
|
|
|
|
|
Sachin Mehra
|
|
|
|
|
Chief Financial Officer
|
|
|
|
|
(Principal Financial Officer)
|
|
|
|
|
|
Date:
|
April 29, 2020
|
By:
|
|
/S/ SANDRA ARKELL
|
|
|
|
|
Sandra Arkell
|
|
|
|
|
Corporate Controller
|
|
|
|
|
(Principal Accounting Officer)
|
“Double-trigger” Change in Control severance payments
|
• Lump sum payments within 30 days following date of termination of (1) all base salary earned but not paid and (2) all accrued but unused vacation time
|
• Pro rata portion of the annual incentive bonus payable in year of termination and previous year, if not already paid
|
• Base salary continuation for 24 months following termination (the severance period) but not beyond the employee’s mandatory retirement date
|
• Annual bonus payments following the date of termination, the aggregate amount equal to the average annual bonus received by the executive over the prior two years of employment, payable ratably over the severance period but not beyond the employee’s mandatory retirement date
|
• Payment of the monthly COBRA medical coverage premium for the applicable period (or, if shorter, the severance period) or, if the executive is eligible, the full cost of the Mastercard Retiree Health Plan during the severance period with retiree contribution levels applying thereafter
|
• Reasonable outplacement services for the shorter of the severance period or the period of unemployment
|
• Such additional benefits, if any, that the executive would be entitled to under applicable Mastercard plans and programs (other than severance payments)
|
Long-term incentive awards
|
|
|
Severance plan payments
|
|
|
Change in Control payments
|
|
|
|
|
|||
• 12-month non-compete
• 18-month non-solicit
• In the event of a violation, repayment of specified gains from stock options exercised and repayment of vested equity awards from the two-year period preceding the violation
|
|
|
• Non-compete and non-solicit for longer of 18 months or the length of the severance payments (agreement to be executed within 60 days following termination)
|
|
|
• Two-year non-compete and non-solicit
|
|
|
|
|
|
|
|
(a)
|
the acquisition by any person of beneficial ownership of more than 30% of the voting power of the then outstanding equity shares of Mastercard (the Outstanding Registrant Voting Securities), subject to specified exceptions
|
(b)
|
a change in the composition of the Board that causes less than a majority of Mastercard’s directors then in office to be members of the Board, subject to specified exceptions
|
(c)
|
consummation of a reorganization, merger or consolidation, or sale or other disposition of all or substantially all of Mastercard’s assets or the purchase of assets or stock of another entity (a Business Combination), in each case, unless immediately following such Business Combination (1) all or substantially all of the persons who were the beneficial owners of the Outstanding Registrant Voting Securities immediately prior to such Business Combination will beneficially own more than 50% of the then outstanding voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the entity resulting from such Business Combination in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Registrant Voting Securities, (2) no person will beneficially own more than a majority of the voting power of the then outstanding voting securities of such entity except to the extent that such ownership of Mastercard existed prior to the Business Combination and (3) at least a majority of the members of the board of directors of the entity resulting from such Business Combination will have been members of the incumbent Mastercard Board at the time of the initial agreement, or an action of Mastercard’s Board, providing such Business Combination
|
(d)
|
approval by Mastercard’s stockholders of a complete liquidation or dissolution of Mastercard
|
“Double-trigger” Change in Control severance payments
|
• Lump sum payments within 30 days following date of termination of (1) all base salary earned but not paid and (2) all accrued but unused vacation time
|
• Pro rata portion of the annual incentive bonus payable in year of termination and previous year, if not already paid
|
• Base salary continuation for 24 months following termination (the severance period) but not beyond the employee’s mandatory retirement date
|
• Annual bonus payments following the date of termination, the aggregate amount equal to the average annual bonus received by the executive over the prior two years of employment, payable ratably over the severance period but not beyond the employee’s mandatory retirement date
|
• Payment of the monthly COBRA medical coverage premium for the applicable period (or, if shorter, the severance period) or, if the executive is eligible, the full cost of the Mastercard Retiree Health Plan during the severance period with retiree contribution levels applying thereafter
|
• Reasonable outplacement services for the shorter of the severance period or the period of unemployment
|
• Such additional benefits, if any, that the executive would be entitled to under applicable Mastercard plans and programs (other than severance payments)
|
Long-term incentive awards
|
|
|
Severance plan payments
|
|
|
Change in Control payments
|
|
|
|
|
|||
• 12-month non-compete
• 18-month non-solicit
• In the event of a violation, repayment of specified gains from stock options exercised and repayment of vested equity awards from the two-year period preceding the violation
|
|
|
• Non-compete and non-solicit for longer of 18 months or the length of the severance payments (agreement to be executed within 60 days following termination)
|
|
|
• Two-year non-compete and non-solicit
|
|
|
|
|
|
|
|
(a)
|
the acquisition by any person of beneficial ownership of more than 30% of the voting power of the then outstanding equity shares of Mastercard (the Outstanding Registrant Voting Securities), subject to specified exceptions
|
(b)
|
a change in the composition of the Board that causes less than a majority of Mastercard’s directors then in office to be members of the Board, subject to specified exceptions
|
(c)
|
consummation of a reorganization, merger or consolidation, or sale or other disposition of all or substantially all of Mastercard’s assets or the purchase of assets or stock of another entity (a Business Combination), in each case, unless immediately following such Business Combination (1) all or substantially all of the persons who were the beneficial owners of the Outstanding Registrant Voting Securities immediately prior to such Business Combination will beneficially own more than 50% of the then outstanding voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the entity resulting from such Business Combination in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Registrant Voting Securities, (2) no person will beneficially own more than a majority of the voting power of the then outstanding voting securities of such entity except to the extent that such ownership of Mastercard existed prior to the Business Combination and (3) at least a majority of the members of the board of directors of the entity resulting from such Business Combination will have been members of the incumbent Mastercard Board at the time of the initial agreement, or an action of Mastercard’s Board, providing such Business Combination
|
(d)
|
approval by Mastercard’s stockholders of a complete liquidation or dissolution of Mastercard
|
“Double-trigger” Change in Control severance payments
|
• Lump sum payments within 30 days following date of termination of (1) all base salary earned but not paid and (2) all accrued but unused vacation time
|
• Pro rata portion of the annual incentive bonus payable in year of termination and previous year, if not already paid
|
• Base salary continuation for 24 months following termination (the severance period) but not beyond the employee’s mandatory retirement date
|
• Annual bonus payments following the date of termination, the aggregate amount equal to the average annual bonus received by the executive over the prior two years of employment, payable ratably over the severance period but not beyond the employee’s mandatory retirement date
|
• Payment of the monthly COBRA medical coverage premium for the applicable period (or, if shorter, the severance period) or, if the executive is eligible, the full cost of the Mastercard Retiree Health Plan during the severance period with retiree contribution levels applying thereafter
|
• Reasonable outplacement services for the shorter of the severance period or the period of unemployment
|
• Such additional benefits, if any, that the executive would be entitled to under applicable Mastercard plans and programs (other than severance payments)
|
Long-term incentive awards
|
|
|
Severance plan payments
|
|
|
Change in Control payments
|
|
|
|
|
|||
• 12-month non-compete
• 18-month non-solicit
• In the event of a violation, repayment of specified gains from stock options exercised and repayment of vested equity awards from the two-year period preceding the violation
|
|
|
• Non-compete and non-solicit for longer of 18 months or the length of the severance payments (agreement to be executed within 60 days following termination)
|
|
|
• Two-year non-compete and non-solicit
|
|
|
|
|
|
|
|
(a)
|
the acquisition by any person of beneficial ownership of more than 30% of the voting power of the then outstanding equity shares of Mastercard (the Outstanding Registrant Voting Securities), subject to specified exceptions
|
(b)
|
a change in the composition of the Board that causes less than a majority of Mastercard’s directors then in office to be members of the Board, subject to specified exceptions
|
(c)
|
consummation of a reorganization, merger or consolidation, or sale or other disposition of all or substantially all of Mastercard’s assets or the purchase of assets or stock of another entity (a Business Combination), in each case, unless immediately following such Business Combination (1) all or substantially all of the persons who were the beneficial owners of the Outstanding Registrant Voting Securities immediately prior to such Business Combination will beneficially own more than 50% of the then outstanding voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the entity resulting from such Business Combination in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Registrant Voting Securities, (2) no person will beneficially own more than a majority of the voting power of the then outstanding voting securities of such entity except to the extent that such ownership of Mastercard existed prior to the Business Combination and (3) at least a majority of the members of the board of directors of the entity resulting from such Business Combination will have been members of the incumbent Mastercard Board at the time of the initial agreement, or an action of Mastercard’s Board, providing such Business Combination
|
(d)
|
approval by Mastercard’s stockholders of a complete liquidation or dissolution of Mastercard
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
Date:
|
April 29, 2020
|
|
|
|
|
By:
|
/s/ Ajay Banga
|
|
|
Ajay Banga
|
|
|
Chief Executive Officer
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
Date:
|
April 29, 2020
|
|
|
|
|
By:
|
/s/ Sachin Mehra
|
|
|
Sachin Mehra
|
|
|
Chief Financial Officer
|
|
April 29, 2020
|
|
/s/ Ajay Banga
|
Ajay Banga
|
Chief Executive Officer
|
|
April 29, 2020
|
|
/s/ Sachin Mehra
|
Sachin Mehra
|
Chief Financial Officer
|
•
|
certain acquirers located in the European region having acquired transactions for consular services with Iranian embassies in that region that accepted Mastercard cards
|
•
|
certain acquirers located in the European and Middle Eastern regions having acquired transactions for an Iranian airline, which accepted Mastercard cards in those regions
|