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Share Name | Share Symbol | Market | Type |
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MasterCard Incorporated | NYSE:MA | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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2.48 | 0.56% | 443.58 | 445.26 | 436.90 | 444.85 | 3,711,007 | 01:00:00 |
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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13-4172551
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(State or other jurisdiction of
incorporation or organization)
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(IRS Employer
Identification Number)
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2000 Purchase Street
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10577
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Purchase, NY
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(Zip Code)
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(Address of principal executive offices)
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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(do not check if a smaller reporting company)
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Smaller reporting company
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Page
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ITEM 1.
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ITEM 1A.
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ITEM 1B.
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ITEM 2.
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ITEM 3.
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ITEM 4.
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ITEM 5.
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ITEM 6.
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ITEM 7.
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ITEM 7A.
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ITEM 8.
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ITEM 9.
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ITEM 9A.
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ITEM 9B.
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ITEM 10.
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ITEM 11.
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ITEM 12.
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ITEM 13.
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ITEM 14.
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ITEM 15.
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ITEM 16.
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payments system-related legal and regulatory challenges (including interchange fees, surcharging and the extension of current regulatory activity to additional jurisdictions or products)
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the impact of preferential or protective government actions
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regulation of privacy, data protection and security
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regulation to which we are subject based on our participation in the payments industry (including payments oversight, anti-money laundering and economic sanctions, financial sector oversight, issuer practice regulation and regulation of internet and digital transactions)
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potential or incurred liability and limitations on business resulting from litigation
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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 impact of information security failures, breaches or service disruptions on our business
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issues related to our relationships with our financial institution customers (including loss of substantial business from significant customers, competitor relationships with our customers and banking industry consolidation)
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the impact of our relationships with other stakeholders, including merchants and governments
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exposure to loss or illiquidity due to settlement guarantees and other significant third-party obligations
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the impact of global economic and political events and conditions (including global financial market activity, declines in cross-border activity, negative trends in consumer spending and the effect of adverse currency fluctuation)
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reputational impact, including impact related to brand perception, account data breaches and fraudulent activity
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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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diversifying our customer base in new and existing markets by working with partners such as governments, merchants, technology companies (such as digital players and mobile providers) and other businesses
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encouraging use of our products and solutions in areas that provide new opportunities for electronic payments, such as transit, business-to-person transfers, business-to-business transfers and person-to-person transfers
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capturing more payment flows by adding automated clearing house (ACH) payments to our core card-based business via our pending acquisition of VocaLink Holdings Limited
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driving acceptance at merchants of all sizes
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broadening financial inclusion for the unbanked and underbanked
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taking advantage of the opportunities presented by the evolving ways consumers interact and transact in the growing digital economy; and
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providing value-added services across safety and security, consulting, data analytics and loyalty.
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In
2016
, we further expanded the availability of Masterpass™, our global digital payments ecosystem. Masterpass provides an easy and secure way to shop by storing payment information in a secure connected wallet of the consumer’s choice and enabling consumers to access that information to make a payment with a simple click or touch. In
2016
, several of our largest issuing customers began automatically enabling consumer accounts in Masterpass using their online banking applications. We also began work to integrate Masterpass with mobile wallet solutions provided by technology companies such as digital players and mobile providers. Our network facilitates digital transactions online, in-app and in-store for consumers, merchants, issuers and other wallet providers.
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In 2016, we continued to use our digital technologies and security protocols to enhance the suite of digital token services available through our MasterCard Digital Enablement Service (MDES). In addition to leveraging MDES to tokenize Masterpass, we continued to expand our collaborations with all of our partners, such as enabling third-party token vaults compliant with EMV® (the global standard for chip technology) to tokenize Mastercard-branded cards.
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In
2016
, we re-launched Mastercard Developers, a single gateway that enables developers, digital players, financial institutions, merchants and our other partners to innovate by accessing and integrating Mastercard technology via a diverse range of Application Programming Interfaces (APIs) across the payments, data and security spaces.
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In
2016
, we continued to expand and scale Mastercard Send™, connecting more consumers, businesses and governments to facilitate the transfer of funds via financial institutions quickly and securely.
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In
2016
, we launched Decision Intelligence™, a suite of security solutions that uses machine learning to leverage real-time insights from transactions to enhance approvals and reduce false declines. These solutions are designed to go beyond simply managing for fraud and to instead actively drive automated productive decisions and help issuers and retailers further improve the consumer shopping experience.
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In
2016
, we expanded Mastercard Identity Check™, a suite of technology solutions that leverage biometrics to help authenticate a consumer’s identity. These solutions are now available in the United States, Canada and numerous markets across Europe.
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We continue to lead the migration to EMV to bring its fraud prevention benefits to our U.S. customers, consumers and merchants. Building on our October 2015 introduction of a new liability hierarchy, in 2016 a significant number of merchants implemented EMV in the United States for payment transactions.
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European Union
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Ø
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In 2015, the European Commission issued a statement of objections related to the interregional interchange rates we set and our central acquiring rules within the European Economic Area (EEA). The statement of objections preliminarily concludes that these practices have anticompetitive effects, and the European Commission has indicated it intends to seek fines if it confirms these conclusions. Mastercard submitted a response in April 2016 and participated in a related oral hearing in May 2016.
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In June 2016, under the European Union Interchange Fee Regulation adopted in 2015, we separated our scheme activities (i.e., brand, products, franchise and licensing) from our switching activities in terms of how we go to market, make decisions and organize our structure. We are awaiting standards to be developed by the European Banking Authority establishing the requirements with which payment card networks will need to comply as part of this separation.
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United States
- In June 2016, the U.S. Court of Appeals for the Second Circuit reversed the approval of a settlement of an antitrust litigation among a class of merchants, Mastercard, Visa and a number of financial institutions. The court vacated the class action certification and sent the case back to the district court for further proceedings. The Court of Appeals’ ruling was based primarily on whether the merchants were adequately represented by counsel in the settlement.
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United Kingdom
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Beginning in May 2012, a number of retailers filed claims or threatened litigation against Mastercard seeking damages for alleged anti-competitive conduct with respect to Mastercard’s cross-border interchange fees and its U.K. and Ireland domestic interchange fees. In 2016, a tribunal in one of these cases issued a judgment against Mastercard for damages, and we entered into settlements with additional claimants. In January 2017, we received a favorable liability judgment on all significant matters in a separate action brought by ten of the claimants (who were seeking over $500 million in damages).
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In September 2016, a proposed collective action was filed in the United Kingdom on behalf of U.K. consumers seeking damages for intra-EEA and domestic U.K. interchange fees that were allegedly passed on to consumers by merchants between 1992 and 2008.
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China
- In 2016, People’s Bank of China issued regulations providing the license application and operational requirements for network operators, including international networks such as ours, to process domestic payments in China.
We are awaiting detailed implementation guidelines for this and other related regulations to be released to guide our participation in the market, including our ability to authorize, clear and settle transactions “on-soil” in China. In the meantime, we continue to work to expand issuance and acceptance of Mastercard-branded products in the Chinese market to support our existing cross-border business.
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Data Privacy
- In 2016, the European Parliament passed the General Data Protection Regulation (GDPR), a new data protection regulation that will increase our compliance burden for using and processing personal and sensitive data of EEA residents. We have implemented a comprehensive approach to achieve compliance by the May 2018 deadline. Additionally, we have adopted an alternative method of data transfer considered to be fully compliant by all data protection authorities in the European Union in response to the European Court of Justice’s 2015 invalidation of the EU-U.S. Safe Harbor treaty that had permitted the transfer of personal data between the European Union and the United States.
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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 consumers and merchants pay. 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 by them in providing services that benefit all participants in the system, including acquirers and merchants, whose participation in the network enables increased sales to existing and new customers, efficiencies in the delivery of existing and new products, guaranteed payments and improved customer experience. 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 cardholders fees for the transaction, including, for example, fees for extending revolving credit.
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Authorization, Clearing and Settlement.
Through our 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 determination and exchange of funds between parties via settlement banks chosen by us and our customers.
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Cross-Border and Domestic.
Our network switches transactions throughout the world when the merchant country and issuer country are different (cross-border transactions), providing cardholders with the ability to use, and merchants to accept, Mastercard cards and other payment devices across country borders. We also provide switched transaction services to customers in every region of the world where the merchant country and the issuer country are the same (domestic transactions). We switch approximately half of all transactions using 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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a distributed (peer-to-peer) processing structure for transactions that require fast, reliable processing to ensure they are switched close to where the transaction occurred; and
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a centralized (hub-and-spoke) processing structure for transactions that require value-added processing, such as real-time access to transaction data for fraud scoring or rewards at the point-of-sale.
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continuing the migration in the U.S. to EMV, bringing its fraud prevention benefits to our U.S. customers, consumers and merchants
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developing an industry-open standard for tokenization
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Year Ended December 31, 2016
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As of December 31, 2016
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GDV in billions
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% of Total GDV
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Cards in millions
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Percentage Increase from December 31, 2015
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Mastercard Branded Programs
1,2
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Consumer Credit
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$
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2,135
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44
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%
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740
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2
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%
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Commercial Credit
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400
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8
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%
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42
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8
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%
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Debit and Prepaid
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2,293
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47
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%
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888
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15
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%
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Creating Better Shopping and Selling Experiences.
We are using our digital 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. These include our Masterpass digital payments ecosystem and the MDES suite of digital token services we offer, as well as other products. 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.
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Engaging with New Partners.
We enable consumers to use their smartphones securely to make digital payments through numerous active partnerships with mobile leaders and large digital companies around the world. Through Mastercard Developers, our API platform, developers, digital players, financial institutions, merchants and other partners can innovate by accessing our technology via a diverse range of APIs.
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Facilitating Money Transfers and Personal Payments.
Through Mastercard Send, we provide money transfer and global remittance solutions to enable our customers to facilitate consumers sending and receiving money quickly and securely domestically and around the world. We continue to enhance our personal payments platforms, providing financial institutions connected to our network with additional opportunities for their customers to send funds domestically and globally.
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internet authentication/verification solutions that leverage biometrics
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security solutions that leverage machine learning to enhance approvals and reduce false declines
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services assisting customers, merchants and third-party service providers in protecting against attacks and subsequent account data compromises
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fraud detection and management products and services
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Issuer and acquirer 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 for our customers.
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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, wire transfers, electronic benefits transfers and bill payments
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Cash and Check
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Cash and check continue to represent the most widely used forms of payment, constituting approximately 85% of the world’s retail payment transactions.
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General Purpose Payment Networks
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We compete worldwide with payment networks such as Visa, American Express and Discover, among others. Among global networks, Visa has significantly greater volume than we do. Outside of the United States, networks such as JCB in Japan and UnionPay in China have leading positions in their domestic markets. For example, UnionPay currently operates the sole domestic payment switch in China. In addition, several governments are promoting, or considering promoting, local networks for domestic processing. See “Risk Factors” in Part I, Item 1A for a discussion of the risks related to payments system regulation and government actions that may prevent us from competing effectively for a more detailed discussion.
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Debit and Local Networks.
We compete with ATM and point-of-sale debit networks in various countries, such as Interlink®, Plus® and Visa Electron® (owned by Visa Inc.), Star® (owned by First Data Corporation), NYCE® (owned by FIS) and Pulse® (owned by Discover) in the United States; Interac in Canada; EFTPOS in Australia; and Bankserv in South Africa. 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 that are focused mostly on debit (including RuPay in India and MIR in Russia).
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Three-Party Payments Networks.
Our competitors include operators of proprietary three-party payments networks, such as American Express and Discover, which have direct acquiring relationships with merchants and direct issuing relationships with account holders. These competitors have certain competitive advantages over four-party payments systems such as ours. Among other things, these networks do not require formal interchange fees to balance payment system costs between the issuing and acquiring sides of their business, even though they have the ability to internally transfer costs in a manner similar to interchange fees. As a result, to date, operators of three-party payments networks have avoided some of the regulatory and litigation challenges that we and other four-party networks face.
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Competition for Customer Business
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We compete intensely with other payments networks 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 non-financial institution partners, such as merchants, governments and mobile providers.
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Third-Party Processors
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We face competition and potential displacement from transaction processors throughout the world, such as First Data Corporation and Total System Services, Inc., which are seeking to enhance their networks that link issuers directly with point-of-sale devices for payment transaction authorization and processing services. We also face third-party competition driven by local regulations. For example, under the Second Payment Services Directive (PSD2), which is being finalized in Europe, new third-party processors will have open access to consumer account information at financial institutions, providing these entities the opportunity to process Mastercard transactions directly with issuers and acquirers.
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Alternative Payments Systems and New Entrants
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As the global payments industry becomes more complex, we face increasing competition from alternative payment systems and emerging payment providers. Many of these providers 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, ACH payment networks or global or local networks. Examples include digital wallet providers (such as PayPal, Alipay and Amazon), mobile operator services, mobile phone-based money transfer and microfinancing services (such as mPesa), handset manufacturers and cryptocurrencies. In some circumstances, these providers can be a partner or customer, as well as a competitor.
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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.
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globally recognized brands
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highly adaptable global acceptance network built over 50 years and that we believe is the world’s fastest
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adoption of innovative products and digital solutions
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Masterpass global digital payments ecosystem
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safety and security solutions embedded in our network
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Mastercard Advisors group 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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The European Union adopted its Interchange Fee Regulation in 2015 regulating electronic payments issued and acquired within the EEA, including caps on consumer credit and debit interchange fees and the separation of brand and processing (which Mastercard implemented in 2016).
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The European Commission issued a Statement of Objections in July 2015 related to our interregional interchange fees and central acquiring rules within the EEA, to which we have responded.
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Legislation regulating the level of domestic interchange rates has been enacted, or is being considered, in many jurisdictions. For example, debit interchange in the United States is capped by statute for certain regulated entities. Also, the Reserve Bank of Australia has proposed further reductions to debit interchange rates, as well as interchange rate caps on commercial and cross-border transactions.
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Several jurisdictions have created or granted authority to create new regulatory bodies that either have or would have the authority to regulate payment systems, including the United Kingdom and India (both of which have designated us as a payments system subject to regulation), as well as Belgium, Brazil, Mexico and Russia.
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Governments in some countries are considering, or may consider, regulatory requirements that mandate processing of domestic payments either entirely in that country or by only domestic companies. In particular, we are currently excluded from domestic processing in China and are seeking market access, which is uncertain and subject to receiving a more detailed interpretation of final regulations issued in 2016 by the People’s Bank of China. Additionally, Russia has amended its National Payments Systems laws to require all payment systems to process domestic transactions through a government-owned payment switch. As a result, all Mastercard domestic transactions in Russia are currently processed by that system instead of by Mastercard.
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Regional groups of countries, such as the Gulf Cooperation Countries in the Middle East and a number of countries in South East Asia, are considering, or may consider, efforts to restrict our participation in the processing of regional transactions.
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Increased Payments Oversight
- Several central banks or similar regulatory bodies around the world that have increased, or are seeking to increase, their formal oversight of the electronic payments industry are in some cases considering designating certain payments networks as “systemically important payment systems” or “critical infrastructure.” As a result, Mastercard could be subject to new regulations relating to its payment, clearing and settlement activities (including risk management policies and procedures, collateral requirements, participant default policies and procedures, the ability to complete timely clearing and settlement of financial transactions, and capital and financial resource requirements). Also, Mastercard could be required to obtain prior approval for changes to its system rules, procedures or operations that could materially affect the level of risk presented by that payments system.
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Anti-Money Laundering and Economic Sanctions
- We are subject to AML laws and regulations, including the USA PATRIOT Act in the United States, as well as the various economic sanctions programs administered by OFAC, including restrictions on financial transactions with certain countries and with persons and entities included on OFAC sanctions lists (including the SDN List). We have policies, procedures and controls designed to comply with applicable AML and OFAC sanctions requirements. We take measures to prevent transactions that do not comply with OFAC sanctions, including obligating our customers to screen cardholders and merchants against OFAC sanctions lists. However, despite these measures, it is possible that such transactions may be processed through our payments system. Activity such as money laundering or terrorist financing involving our cards could result in an enforcement action, and our reputation may suffer due to our customer’s association with those countries, persons or entities or the existence of any such transaction. Any enforcement action or reputational damage could reduce the use and acceptance of our products and/or increase our costs, and thereby have a material adverse impact on our business. In addition, geopolitical events and resulting OFAC sanctions could lead jurisdictions affected by those sanctions to take actions in response that could adversely affect our business. For example, in response to the 2014 global sanctions imposed as a result of the Ukraine conflict, the Russian government amended its National Payments Systems laws requiring all payment systems to process domestic transactions through a government-owned payment switch. There is a risk that in the future other
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Financial Sector Oversight
- In the United States, the CFPB regulates consumer financial products, and can continue to do so by amending existing requirements or imposing new ones. The CFPB also has supervisory and independent examination authority as well as enforcement authority over certain financial institutions, their service providers, and other entities, which include us because of the services we provide to financial institutions that issue and acquire our products. It is not clear whether and/or to what extent the CFPB will regulate broader aspects of payment card networks.
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Issuer Practice Legislation and Regulation
- Our financial institution customers are subject to numerous regulations, which impact us as a consequence. Existing or new regulations in these or other areas may diminish the attractiveness of our products to our customers. In addition to regulation and investigation of issuer practices, regulations such as PSD2 in Europe require financial institutions to provide new third-party processors and other service providers access to consumer account information and the ability to initiate transactions directly with the consumer. This could enable these entities to disintermediate issuers by providing value-added services directly to consumers, and disintermediate payment networks such as ours by routing transactions to other forms of payment.
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Regulation of Internet and Digital Transactions
- Proposed legislation in various jurisdictions relating to Internet gambling and other digital areas such as cyber-security, copyright, trademark infringement and privacy could impose additional compliance burdens on us and/or our customers, including requiring us or our customers to monitor, filter, restrict, or otherwise oversee various categories of payment transactions.
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Within the global general purpose payments industry, we face substantial and increasingly intense competition worldwide from systems such as Visa, American Express, Discover, UnionPay, JCB and PayPal among others.
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In certain jurisdictions, including the United States, Visa has greater volume, scale and market share than we do, which may provide significant competitive advantages. Visa’s acquisition of Visa Europe in 2016 may provide it with additional competitive advantages.
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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.
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Our ability to compete may also be affected by the outcomes of litigation, competition-related regulatory proceedings, central bank activity and legislative activity.
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Operators of three-party payments systems tend to have greater control over consumer and merchant customer service than operators of four-party payments systems such as ours, in which we must typically rely on our issuing and acquiring financial institution customers. Our inability to control end-to-end processing may put us at a competitive disadvantage by limiting our ability to introduce value-added products and services that are dependent upon us processing the underlying transactions.
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Even when competitors operate programs that utilize a four-party system, these competitors have generally not attracted the same level of regulatory or legislative scrutiny of their pricing and business practices as have operators of four-party payments systems such as ours.
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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 process (and in some cases are processing) 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 processing the entire transaction on their own network, thereby disintermediating us.
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Regulation such as PSD2 in Europe may disintermediate us by enabling new third-party processors and other service providers opportunities to route payment transactions away from our network and towards other forms of payment.
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Although we partner with technology companies (such as digital players and mobile providers) that leverage our technology, platforms and network 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.
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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 processing and payments offerings or could force us to change our pricing or practices for these offerings.
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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 services that compete with our services.
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Technological changes, including continuing developments of technologies in the areas of smart cards and devices, contactless and mobile payments, e-commerce and cryptocurrency and block chain technology, 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 programs that could place us at a competitive disadvantage and that could reduce the use of Mastercard products.
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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 Mastercard offerings.
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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.
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Our ability to develop evolving systems and products may be inhibited by any difficulty we may experience in attracting and retaining technology experts.
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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.
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•
|
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.
|
•
|
principal customers, which are customers that participate directly in Mastercard programs and are responsible for the settlement and other activities of their sponsored affiliate customers
|
•
|
affiliate debit licensees
|
•
|
We may incur obligations in connection with transaction settlements if an issuer or acquirer fails to fund its daily settlement obligations due to technical problems, liquidity shortfalls, insolvency or other reasons.
|
•
|
If a principal customer or affiliate debit licensee of Mastercard is unable to fulfill its settlement obligations to other customers, we may bear the loss.
|
•
|
Although we are not obligated to do so, we may elect to keep merchants whole if an acquirer defaults on its merchant payment obligations, or to keep prepaid cardholders whole if an issuer defaults on its obligation to safeguard unspent prepaid funds.
|
•
|
Concurrent settlement failures of more than one of our larger customers or of several of our smaller customers either on a given day or over a condensed period of time may exceed our available resources and could materially and adversely affect our overall business and liquidity.
|
•
|
Even if we have sufficient liquidity to cover a settlement failure, we may not be able to recover the cost of such a payment and may therefore be exposed to significant losses, which could materially and adversely affect our results of operations.
|
•
|
Our customers may:
|
Ø
|
restrict credit lines to cardholders or limit the issuance of new Mastercard products to mitigate increasing cardholder defaults
|
Ø
|
implement cost reduction initiatives that reduce or eliminate payment card marketing or increase requests for greater incentives or greater cost stability
|
Ø
|
default on their settlement obligations, including as a result of sovereign defaults, causing a liquidity crisis for our other customers
|
•
|
Consumer spending can be negatively impacted by:
|
Ø
|
declining economies, foreign currency fluctuations and the pace of economic recovery, which can change cross-border travel patterns, on which a significant portion of our revenues is dependent
|
Ø
|
low levels of consumer and business confidence typically associated with recessionary environments and those markets experiencing relatively high unemployment
|
•
|
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, 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 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 the MasterCard Foundation (the “Foundation”) is disqualified from service on our board of directors
|
|
2016
|
|
2015
|
||||||||||||
|
High
|
|
Low
|
|
High
|
|
Low
|
||||||||
First Quarter
|
$
|
95.83
|
|
|
$
|
78.52
|
|
|
$
|
93.00
|
|
|
$
|
79.82
|
|
Second Quarter
|
100.00
|
|
|
87.59
|
|
|
96.31
|
|
|
85.37
|
|
||||
Third Quarter
|
102.31
|
|
|
86.65
|
|
|
99.18
|
|
|
74.61
|
|
||||
Fourth Quarter
|
108.93
|
|
|
99.51
|
|
|
101.76
|
|
|
88.92
|
|
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
|
|
3,180,216
|
|
|
$
|
102.05
|
|
|
3,180,216
|
|
|
$
|
1,772,785,237
|
|
November 1 – 30
|
|
3,613,763
|
|
|
$
|
104.71
|
|
|
3,613,763
|
|
|
$
|
1,394,380,716
|
|
December 1 – 31
|
|
3,843,257
|
|
|
$
|
103.60
|
|
|
3,843,257
|
|
|
$
|
4,996,237,293
|
|
Total
|
|
10,637,236
|
|
|
$
|
103.51
|
|
|
10,637,236
|
|
|
|
|
Years Ended December 31,
|
||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
|
(in millions, except per share data)
|
||||||||||||||||||
Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net revenue
|
$
|
10,776
|
|
|
$
|
9,667
|
|
|
$
|
9,441
|
|
|
$
|
8,312
|
|
|
$
|
7,391
|
|
Total operating expenses
|
5,015
|
|
|
4,589
|
|
|
4,335
|
|
|
3,809
|
|
|
3,454
|
|
|||||
Operating income
|
5,761
|
|
|
5,078
|
|
|
5,106
|
|
|
4,503
|
|
|
3,937
|
|
|||||
Net income
|
4,059
|
|
|
3,808
|
|
|
3,617
|
|
|
3,116
|
|
|
2,759
|
|
|||||
Basic earnings per share
|
3.70
|
|
|
3.36
|
|
|
3.11
|
|
|
2.57
|
|
|
2.20
|
|
|||||
Diluted earnings per share
|
3.69
|
|
|
3.35
|
|
|
3.10
|
|
|
2.56
|
|
|
2.19
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total assets
|
$
|
18,675
|
|
|
$
|
16,250
|
|
|
$
|
15,329
|
|
|
$
|
14,242
|
|
|
$
|
12,462
|
|
Long-term debt
|
5,180
|
|
|
3,268
|
|
|
1,494
|
|
|
—
|
|
|
—
|
|
|||||
Equity
|
5,684
|
|
|
6,062
|
|
|
6,824
|
|
|
7,495
|
|
|
6,929
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash dividends declared per share
|
$
|
0.79
|
|
|
$
|
0.67
|
|
|
$
|
0.49
|
|
|
$
|
0.29
|
|
|
$
|
0.12
|
|
•
|
In 2016 and 2015, the Company recorded provisions for litigation of
$117 million
(
$85 million
after tax, or
$0.08
per diluted share) and
$61 million
(
$44 million
after tax, or
$0.04
per diluted share), respectively, related to litigations with merchants in the U.K.
|
•
|
In 2015, the Company recorded a settlement charge of
$79 million
(
$50 million
after tax, or
$0.04
per diluted share) relating to the termination of its qualified U.S. defined benefit pension plan in general and administrative expenses (the “U.S. Employee Pension Plan Settlement Charge”).
|
|
For the Years Ended December 31,
|
|
|
||||||||||||||||||||||||||
|
2016
|
|
2015
|
|
Percent Increase (Decrease)
|
||||||||||||||||||||||||
|
Actual
|
|
Special Items
1
|
|
Non-GAAP
|
|
Actual
|
|
Special Items
1
|
|
Non-GAAP
|
|
Actual
|
|
Special Items
1
|
|
Non-GAAP
|
||||||||||||
|
(in millions, except per share data and percentages)
|
||||||||||||||||||||||||||||
Net revenue
|
$
|
10,776
|
|
|
$
|
—
|
|
|
$
|
10,776
|
|
|
$
|
9,667
|
|
|
$
|
—
|
|
|
$
|
9,667
|
|
|
11%
|
|
—%
|
|
11%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Operating expenses
|
$
|
5,015
|
|
|
$
|
(117
|
)
|
|
$
|
4,898
|
|
|
$
|
4,589
|
|
|
$
|
(140
|
)
|
|
$
|
4,449
|
|
|
9%
|
|
(1)%
|
|
10%
|
Operating income
|
$
|
5,761
|
|
|
$
|
117
|
|
|
$
|
5,878
|
|
|
$
|
5,078
|
|
|
$
|
140
|
|
|
$
|
5,218
|
|
|
13%
|
|
1%
|
|
13%
|
Operating margin
|
53.5
|
%
|
|
|
|
54.5
|
%
|
|
52.5
|
%
|
|
|
|
54.0
|
%
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Income tax expense
|
$
|
1,587
|
|
|
$
|
32
|
|
|
$
|
1,619
|
|
|
$
|
1,150
|
|
|
$
|
45
|
|
|
$
|
1,195
|
|
|
38%
|
|
3%
|
|
35%
|
Effective income tax rate
|
28.1
|
%
|
|
|
|
28.1
|
%
|
|
23.2
|
%
|
|
|
|
23.4
|
%
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net income
|
$
|
4,059
|
|
|
$
|
85
|
|
|
$
|
4,144
|
|
|
$
|
3,808
|
|
|
$
|
95
|
|
|
$
|
3,903
|
|
|
7%
|
|
—%
|
|
6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Diluted earnings per share
|
$
|
3.69
|
|
|
$
|
0.08
|
|
|
$
|
3.77
|
|
|
$
|
3.35
|
|
|
$
|
0.08
|
|
|
$
|
3.43
|
|
|
10%
|
|
—%
|
|
10%
|
Diluted weighted-average shares outstanding
|
1,101
|
|
|
|
|
1,101
|
|
|
1,137
|
|
|
|
|
1,137
|
|
|
(3)%
|
|
|
|
(3)%
|
|
For the Years Ended December 31,
|
|
|
||||||||||||||||||
|
2015
|
|
2014
|
|
Percent Increase (Decrease)
|
||||||||||||||||
|
Actual
|
|
Special Items
1
|
|
Non-GAAP
|
|
Actual
|
|
Actual
|
|
Special Items
1
|
|
Non-GAAP
|
||||||||
|
(in millions, except per share data and percentages)
|
||||||||||||||||||||
Net revenue
|
$
|
9,667
|
|
|
—
|
|
|
$
|
9,667
|
|
|
$
|
9,441
|
|
|
2%
|
|
—%
|
|
2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Operating expenses
|
$
|
4,589
|
|
|
$
|
(140
|
)
|
|
$
|
4,449
|
|
|
$
|
4,335
|
|
|
6%
|
|
3%
|
|
3%
|
Operating income
|
$
|
5,078
|
|
|
$
|
140
|
|
|
$
|
5,218
|
|
|
$
|
5,106
|
|
|
(1)%
|
|
(3)%
|
|
2%
|
Operating margin
|
52.5
|
%
|
|
|
|
54.0
|
%
|
|
54.1
|
%
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Income tax expense
|
$
|
1,150
|
|
|
$
|
45
|
|
|
$
|
1,195
|
|
|
$
|
1,462
|
|
|
(21)%
|
|
(3)%
|
|
(18)%
|
Effective income tax rate
|
23.2
|
%
|
|
|
|
23.4
|
%
|
|
28.8
|
%
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
3,808
|
|
|
$
|
95
|
|
|
$
|
3,903
|
|
|
$
|
3,617
|
|
|
5%
|
|
(3)%
|
|
8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted earnings per share
|
$
|
3.35
|
|
|
$
|
0.08
|
|
|
$
|
3.43
|
|
|
$
|
3.10
|
|
|
8%
|
|
(3)%
|
|
11%
|
Diluted weighted-average shares outstanding
|
1,137
|
|
|
|
|
1,137
|
|
|
1,169
|
|
|
(3)%
|
|
|
|
(3)%
|
•
|
Net revenue increased
11%
, or
13%
on a currency-neutral basis, in
2016
versus
2015
, primarily driven by increases across revenue categories, partially offset by higher rebates and incentives. Switched transaction growth of
16%
, cross border growth of
12%
and gross dollar volume increase of
11%
, on a local currency basis and adjusted for the impact of the recent EU regulation change, contributed to the net revenue growth.
|
•
|
Operating expenses increased
9%
in
2016
versus
2015
. Excluding the impact of Special Items, adjusted operating expenses increased
10%
, or
12%
on a currency-neutral basis, in
2016
versus
2015
. The increase was primarily due to higher personnel costs due to continued investment in our strategic initiatives, lapping the favorable impact of foreign exchange activity gains recognized in 2015 and higher data processing expenses.
|
•
|
Total other expense decreased
5%
in
2016
versus
2015
, due to lower impairment charges and higher investment income in
2016
, that were partially offset by higher interest expense from debt issued in 2015 and 2016.
|
•
|
The effective income tax rate increased
4.9
percentage points to
28.1%
in
2016
versus
23.2%
in
2015
, primarily due to lapping of the favorable impact of settlements with tax authorities and the recognition of U.S. foreign tax credit benefits in 2015.
|
•
|
We generated net cash flows from operations of
$4.5 billion
in
2016
, versus
$4.0 billion
in
2015
.
|
•
|
We completed a debt offering for an aggregate principal amount of
$2 billion
.
|
•
|
We repurchased
37 million
shares of our Class A common stock for
$3.5 billion
in
2016
.
|
•
|
domestic or cross-border transactions
|
•
|
signature-based or PIN-based transactions
|
•
|
geographic region or country in which the transaction occurs
|
•
|
volumes/transactions subject to tiered rates
|
•
|
processed or not processed by Mastercard
|
•
|
amount of usage of our other products or services
|
•
|
amount of rebates and incentives provided to customers
|
1.
|
Domestic assessments
are fees charged to issuers and acquirers based primarily on the dollar volume of activity on cards and other devices that carry our brands where the merchant country and the issuer country are the same. Domestic assessments include items such as card assessments, which are fees charged on the number of cards issued or assessments for specific purposes, such as acceptance development or market development programs.
|
2.
|
Cross-border volume fees
are charged to issuers and acquirers based on the dollar volume of activity on cards and other devices that carry our brands where the merchant country and the issuer country are different. In general, a cross-border transaction generates higher revenue than a domestic transaction since cross-border fees are higher than domestic fees, and may include fees for currency conversion.
|
3.
|
Transaction processing
revenue is earned for both domestic and cross-border transactions and is primarily based on the number of transactions. Transaction processing includes the following:
|
•
|
Switched transactions
include the following products and services:
|
Ø
|
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, on behalf of the issuer approve in accordance with either the issuer’s instructions or applicable rules (also known as “stand-in”).
|
Ø
|
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. Mastercard clears transactions among customers through our central and regional processing systems.
|
Ø
|
Settlement
is facilitating the exchange of funds between parties.
|
•
|
Connectivity fees
are charged to issuers and acquirers 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; and mobile gateways for mobile initiated transactions.
|
4.
|
Other revenues:
Other revenues consist of other payment-related products and services and are primarily associated with the following:
|
•
|
Consulting, data analytic and research fees
are primarily generated by Mastercard Advisors, the Company’s professional advisory services group.
|
•
|
Safety and security services fees
are for products and services we offer to prevent, detect and respond to fraud and to ensure the safety of transactions made on Mastercard products. We work with issuers, merchants and governments to help deploy standards for safe and secure transactions for the global payments system.
|
•
|
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. For merchants, we provide targeted offers and rewards campaigns and management services for publishing offers, as well as opportunities for holders of co-brand or loyalty cards and rewards program members to obtain rewards points faster.
|
•
|
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.
|
•
|
The Company also charges for a variety of other payment-related products and services, including account and transaction enhancement services, rules compliance and publications.
|
5.
|
Rebates and incentives (contra-revenue):
Rebates and incentives are provided to certain Mastercard customers and are recorded as contra-revenue.
|
|
Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
||||||||
|
Growth (USD)
|
|
Growth (Local)
|
|
Growth (USD)
|
|
Growth (Local)
|
||||
Mastercard-branded GDV
1
|
6
|
%
|
|
9
|
%
|
|
2
|
%
|
|
13
|
%
|
Asia Pacific/Middle East/Africa
|
7
|
%
|
|
11
|
%
|
|
6
|
%
|
|
14
|
%
|
Canada
|
6
|
%
|
|
9
|
%
|
|
—
|
%
|
|
16
|
%
|
Europe
|
5
|
%
|
|
10
|
%
|
|
(5
|
)%
|
|
16
|
%
|
Latin America
|
1
|
%
|
|
15
|
%
|
|
(11
|
)%
|
|
15
|
%
|
United States
|
6
|
%
|
|
6
|
%
|
|
8
|
%
|
|
8
|
%
|
Cross-border Volume
1
|
|
|
12
|
%
|
|
|
|
16
|
%
|
||
Switched Transactions Growth
|
|
|
16
|
%
|
|
|
|
12
|
%
|
|
For the Years Ended December 31,
|
||
|
2016
|
|
2015
|
|
Growth (Local)
|
||
GDV
1
|
|
|
|
Worldwide as reported
|
9%
|
|
13%
|
Worldwide as adjusted for EU Regulation
|
11%
|
|
13%
|
|
|
|
|
Europe as reported
|
10%
|
|
16%
|
Europe as adjusted for EU Regulation
|
18%
|
|
19%
|
|
For the Years Ended December 31,
|
|
Percent Increase (Decrease)
|
||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2016
|
|
2015
|
||||||
|
(in millions, except percentages)
|
||||||||||||||
Domestic assessments
|
$
|
4,411
|
|
|
$
|
4,086
|
|
|
$
|
3,967
|
|
|
8%
|
|
3%
|
Cross-border volume
|
3,568
|
|
|
3,225
|
|
|
3,054
|
|
|
11%
|
|
6%
|
|||
Transaction processing
|
5,143
|
|
|
4,345
|
|
|
4,035
|
|
|
18%
|
|
8%
|
|||
Other revenues
|
2,431
|
|
|
1,991
|
|
|
1,688
|
|
|
22%
|
|
18%
|
|||
Gross revenue
|
15,553
|
|
|
13,647
|
|
|
12,744
|
|
|
14%
|
|
7%
|
|||
Rebates and incentives (contra-revenue)
|
(4,777
|
)
|
|
(3,980
|
)
|
|
(3,303
|
)
|
|
20%
|
|
20%
|
|||
Net revenue
|
$
|
10,776
|
|
|
$
|
9,667
|
|
|
$
|
9,441
|
|
|
11%
|
|
2%
|
|
For the Years Ended December 31,
|
|
|
|||||||||||||||||||||||||||||
|
2016
|
|
2015
|
|
Percent Increase (Decrease)
|
|||||||||||||||||||||||||||
|
Actual
|
|
Special Items
1
|
|
Non-GAAP
|
|
Actual
|
|
Special Items
1
|
|
Non-GAAP
|
|
Actual
|
|
Special Items
1
|
|
Non-GAAP
|
|||||||||||||||
|
(in millions, except percentages)
|
|||||||||||||||||||||||||||||||
General and administrative
|
$
|
3,714
|
|
|
$
|
—
|
|
|
$
|
3,714
|
|
|
$
|
3,341
|
|
|
$
|
(79
|
)
|
|
$
|
3,262
|
|
|
11
|
%
|
|
(3
|
)%
|
|
14
|
%
|
Advertising and marketing
|
811
|
|
|
—
|
|
|
811
|
|
|
821
|
|
|
—
|
|
|
821
|
|
|
(1
|
)%
|
|
—
|
%
|
|
(1
|
)%
|
||||||
Depreciation and amortization
|
373
|
|
|
—
|
|
|
373
|
|
|
366
|
|
|
—
|
|
|
366
|
|
|
2
|
%
|
|
—
|
%
|
|
2
|
%
|
||||||
Provision for litigation settlements
|
117
|
|
|
(117
|
)
|
|
—
|
|
|
61
|
|
|
(61
|
)
|
|
—
|
|
|
**
|
|
|
|
|
**
|
|
|||||||
Total operating expenses
|
$
|
5,015
|
|
|
$
|
(117
|
)
|
|
$
|
4,898
|
|
|
$
|
4,589
|
|
|
$
|
(140
|
)
|
|
$
|
4,449
|
|
|
9
|
%
|
|
(1
|
)%
|
|
10
|
%
|
|
For the Years Ended December 31,
|
|
|
|||||||||||||||||||||
|
2015
|
|
2014
|
|
Percent Increase (Decrease)
|
|||||||||||||||||||
|
Actual
|
|
Special Items
1
|
|
Non-GAAP
|
|
Actual
|
|
Actual
|
|
Special Items
1
|
|
Non-GAAP
|
|||||||||||
|
(in millions, except percentages)
|
|||||||||||||||||||||||
General and administrative
|
$
|
3,341
|
|
|
$
|
(79
|
)
|
|
$
|
3,262
|
|
|
$
|
3,152
|
|
|
6
|
%
|
|
3
|
%
|
|
3
|
%
|
Advertising and marketing
|
821
|
|
|
—
|
|
|
821
|
|
|
862
|
|
|
(5
|
)%
|
|
—
|
%
|
|
(5
|
)%
|
||||
Depreciation and amortization
|
366
|
|
|
—
|
|
|
366
|
|
|
321
|
|
|
14
|
%
|
|
—
|
%
|
|
14
|
%
|
||||
Provision for litigation settlements
|
61
|
|
|
(61
|
)
|
|
—
|
|
|
—
|
|
|
**
|
|
|
|
|
**
|
|
|||||
Total operating expenses
|
$
|
4,589
|
|
|
$
|
(140
|
)
|
|
$
|
4,449
|
|
|
$
|
4,335
|
|
|
6
|
%
|
|
3
|
%
|
|
3
|
%
|
|
For the Years Ended December 31,
|
||||||||||||||||||||||||||||
|
Operational
|
|
Special Items
2
|
|
Acquisitions
|
|
Foreign Currency
|
|
Total
|
||||||||||||||||||||
|
2016
|
|
2015
1
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
3
|
|
2015
4
|
|
2016
|
|
2015
|
||||||||||
General and administrative
|
15
|
%
|
|
(1
|
)%
|
|
(3
|
)%
|
|
3
|
%
|
|
1
|
%
|
|
7
|
%
|
|
(1
|
)%
|
|
(3
|
)%
|
|
11
|
%
|
|
6
|
%
|
Advertising and marketing
|
—
|
%
|
|
2
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
(1
|
)%
|
|
(7
|
)%
|
|
(1
|
)%
|
|
(5
|
)%
|
Depreciation and amortization
|
—
|
%
|
|
4
|
%
|
|
—
|
%
|
|
—
|
%
|
|
4
|
%
|
|
11
|
%
|
|
(2
|
)%
|
|
(1
|
)%
|
|
2
|
%
|
|
14
|
%
|
Provision for litigation settlements
|
**
|
|
|
**
|
|
|
**
|
|
|
**
|
|
|
**
|
|
|
**
|
|
|
**
|
|
|
**
|
|
|
**
|
|
|
**
|
|
Total operating expenses
|
11
|
%
|
|
1
|
%
|
|
(1
|
)%
|
|
3
|
%
|
|
1
|
%
|
|
6
|
%
|
|
(1
|
)%
|
|
(4
|
)%
|
|
9
|
%
|
|
6
|
%
|
|
For the Years Ended December 31,
|
|
Percent Increase (Decrease)
|
||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2016
|
|
2015
|
||||||
|
(in millions, except percentages)
|
||||||||||||||
Personnel
|
$
|
2,225
|
|
|
$
|
2,105
|
|
|
$
|
2,064
|
|
|
6%
|
|
2%
|
Professional fees
|
337
|
|
|
310
|
|
|
307
|
|
|
9%
|
|
1%
|
|||
Data processing and telecommunications
|
420
|
|
|
362
|
|
|
273
|
|
|
16%
|
|
33%
|
|||
Foreign exchange activity
|
34
|
|
|
(82
|
)
|
|
(30
|
)
|
|
**
|
|
**
|
|||
Other
|
698
|
|
|
646
|
|
|
538
|
|
|
8%
|
|
20%
|
|||
General and administrative expenses
|
3,714
|
|
|
3,341
|
|
|
3,152
|
|
|
11%
|
|
6%
|
|||
Special Item
1
|
—
|
|
|
(79
|
)
|
|
—
|
|
|
|
|
|
|||
Adjusted general and administrative expenses (excluding Special Item)
1
|
$
|
3,714
|
|
|
$
|
3,262
|
|
|
$
|
3,152
|
|
|
14%
|
|
3%
|
•
|
Personnel expenses increased
6%
in
2016
versus
2015
and
2%
in
2015
versus
2014
. These percentage changes include the impact of the U.S. Employee Pension Plan Settlement Charge of
$79 million
recorded in
2015
, which decreased Personnel expense growth by 4 percentage points for 2016 and increased it by 4 percentage points for
2015
. Excluding the impact of the U.S. Employee Pension Plan Settlement Charge, adjusted Personnel expense grew
10%
for
2016
versus
2015
and decreased 2% for
2015
versus
2014
. The adjusted
2016
increase was driven by a higher number of employees to support our continued investment in the areas of digital, services, data analytics and geographic expansion. The adjusted
2015
decrease was due to the lapping of the restructuring charge of
$87 million
recorded in
2014
and improved cost controls, partially offset by an increase in the number of employees resulting from our acquisitions.
|
•
|
Professional fees consist primarily of third-party services, legal costs to defend our outstanding litigation and the evaluation of regulatory developments that impact our industry and brand. The increase in
2016
versus
2015
is primarily due to higher legal costs to defend litigation. Professional fees remained consistent in
2015
versus
2014
.
|
•
|
Data processing and telecommunication expense consists of expenses to support our global payments network infrastructure, expenses to operate and maintain our computer systems and other telecommunication system. These expenses increased in both
2016
and
2015
due to capacity growth of our business and higher third-party processing costs.
|
•
|
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 20 (Foreign Exchange Risk Management)
to the consolidated financial statements included in Part II, Item 8 for further discussion. During
2016
, foreign exchange activity negatively impacted general and administrative expense growth by 4 percentage points versus the comparable period in
2015
, due to the impact from foreign exchange derivative contracts and the lapping of balance sheet remeasurement gains in the prior year. In
2015
versus
2014
, we recorded higher gains on derivative contracts, as well as balance sheet remeasurement gains related primarily to the devaluation of the Venezuelan bolivar.
|
•
|
Other expenses include costs to provide loyalty and rewards solutions, travel and meeting expenses and rental expense for our facilities. Other expenses increased in
2016
primarily due to higher cardholder services and loyalty costs. Other expenses increased in
2015
primarily due to the impact of acquisitions and expenses incurred to support strategic development efforts including costs associated with loyalty and rewards programs.
|
|
For the Years Ended December 31,
|
|||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|||||||||||||||
|
Amount
|
|
Percent
|
|
Amount
|
|
Percent
|
|
Amount
|
|
Percent
|
|||||||||
|
(in millions, except percentages)
|
|||||||||||||||||||
Income before income taxes
|
$
|
5,646
|
|
|
|
|
$
|
4,958
|
|
|
|
|
$
|
5,079
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Federal statutory tax
|
1,976
|
|
|
35.0
|
%
|
|
1,735
|
|
|
35.0
|
%
|
|
1,778
|
|
|
35.0
|
%
|
|||
State tax effect, net of federal benefit
|
22
|
|
|
0.4
|
%
|
|
27
|
|
|
0.5
|
%
|
|
29
|
|
|
0.6
|
%
|
|||
Foreign tax effect
|
(188
|
)
|
|
(3.3
|
)%
|
|
(144
|
)
|
|
(2.9
|
)%
|
|
(108
|
)
|
|
(2.1
|
)%
|
|||
Impact of foreign tax credits
1
|
(141
|
)
|
|
(2.5
|
)%
|
|
(281
|
)
|
|
(5.7
|
)%
|
|
(183
|
)
|
|
(3.6
|
)%
|
|||
Impact of settlements with tax authorities
|
—
|
|
|
—
|
%
|
|
(147
|
)
|
|
(2.9
|
)%
|
|
—
|
|
|
—
|
%
|
|||
Other, net
|
(82
|
)
|
|
(1.5
|
)%
|
|
(40
|
)
|
|
(0.8
|
)%
|
|
(54
|
)
|
|
(1.1
|
)%
|
|||
Income tax expense
|
$
|
1,587
|
|
|
28.1
|
%
|
|
$
|
1,150
|
|
|
23.2
|
%
|
|
$
|
1,462
|
|
|
28.8
|
%
|
|
2016
|
|
2015
|
||||
|
(in billions)
|
||||||
Cash, cash equivalents and investments
1
|
$
|
8.3
|
|
|
$
|
6.7
|
|
Unused line of credit
|
3.8
|
|
|
3.8
|
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
(in millions)
|
||||||||||
Cash Flow Data:
|
|
|
|
|
|
||||||
Net cash provided by operating activities
|
$
|
4,484
|
|
|
$
|
4,043
|
|
|
$
|
3,407
|
|
Net cash (used in) provided by investing activities
|
(1,167
|
)
|
|
(715
|
)
|
|
690
|
|
|||
Net cash used in financing activities
|
(2,293
|
)
|
|
(2,458
|
)
|
|
(2,339
|
)
|
|
2016
|
|
2015
|
||||
|
(in millions)
|
||||||
Balance Sheet Data:
|
|
|
|
||||
Current assets
|
$
|
13,228
|
|
|
$
|
10,984
|
|
Current liabilities
|
7,206
|
|
|
6,269
|
|
||
Long-term liabilities
|
5,785
|
|
|
3,919
|
|
||
Equity
|
5,684
|
|
|
6,062
|
|
|
Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
(in millions, except per share data)
|
||||||||||
Cash dividend, per share
|
$
|
0.76
|
|
|
$
|
0.64
|
|
|
$
|
0.44
|
|
Cash dividends paid
|
$
|
837
|
|
|
$
|
727
|
|
|
$
|
515
|
|
|
Authorization Dates
|
||||||||||||||
|
December 2016
|
|
December 2015
|
|
December 2014
|
|
Total
|
||||||||
|
(in millions, except average price data)
|
||||||||||||||
Board authorization
|
$
|
4,000
|
|
|
$
|
4,000
|
|
|
$
|
3,750
|
|
|
$
|
11,750
|
|
Remaining authorization at December 31, 2015
|
$
|
—
|
|
|
$
|
4,000
|
|
|
$
|
507
|
|
|
$
|
4,507
|
|
Dollar-value of shares repurchased in 2016
|
$
|
—
|
|
|
$
|
3,004
|
|
|
$
|
507
|
|
|
$
|
3,511
|
|
Remaining authorization at December 31, 2016
|
$
|
4,000
|
|
|
$
|
996
|
|
|
$
|
—
|
|
|
$
|
4,996
|
|
Shares repurchased in 2016
|
—
|
|
|
31.2
|
|
|
5.7
|
|
|
36.9
|
|
||||
Average price paid per share in 2016
|
$
|
—
|
|
|
$
|
96.15
|
|
|
$
|
89.76
|
|
|
$
|
95.18
|
|
|
Payments Due by Period
|
||||||||||||||||||
|
Total
|
|
2017
|
|
2018 - 2019
|
|
2020 - 2021
|
|
2022 and thereafter
|
||||||||||
|
|
|
|
|
(in millions)
|
|
|
|
|
||||||||||
Debt
|
$
|
5,239
|
|
|
$
|
—
|
|
|
$
|
500
|
|
|
$
|
650
|
|
|
$
|
4,089
|
|
Interest on debt
|
1,547
|
|
|
131
|
|
|
258
|
|
|
243
|
|
|
915
|
|
|||||
Capital leases
|
7
|
|
|
5
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|||||
Operating leases
|
247
|
|
|
66
|
|
|
93
|
|
|
49
|
|
|
39
|
|
|||||
Other long-term obligations
1
|
|
|
|
|
|
|
|
|
|
||||||||||
Sponsorship, licensing and other
2
|
1,576
|
|
|
1,121
|
|
|
317
|
|
|
109
|
|
|
29
|
|
|||||
Employee benefits
3
|
200
|
|
|
62
|
|
|
34
|
|
|
20
|
|
|
84
|
|
|||||
Total
4
|
$
|
8,816
|
|
|
$
|
1,385
|
|
|
$
|
1,204
|
|
|
$
|
1,071
|
|
|
$
|
5,156
|
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||||
|
Notional
|
|
Estimated Fair
Value
|
|
Notional
|
|
Estimated Fair
Value
|
||||||||
|
(in millions)
|
||||||||||||||
Commitments to purchase foreign currency
|
$
|
37
|
|
|
$
|
(2
|
)
|
|
$
|
232
|
|
|
$
|
1
|
|
Commitments to sell foreign currency
|
777
|
|
|
18
|
|
|
1,430
|
|
|
12
|
|
||||
Options to sell foreign currency
|
—
|
|
|
—
|
|
|
44
|
|
|
1
|
|
|
|
|
|
|
|
Maturity
|
||||||||||||||||||||||||
|
|
|
|
Fair Market Value at December 31, 2016
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022 and there-after
|
||||||||||||||
Financial Instrument
|
|
Summary Terms
|
|
|||||||||||||||||||||||||||
|
|
|
|
(in millions)
|
||||||||||||||||||||||||||
Municipal securities
|
|
Fixed / Variable Interest
|
|
$
|
59
|
|
|
$
|
46
|
|
|
$
|
10
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Government and agency securities
|
|
Fixed / Variable Interest
|
|
166
|
|
|
72
|
|
|
64
|
|
|
4
|
|
|
—
|
|
|
21
|
|
|
5
|
|
|||||||
Corporate securities
|
|
Fixed / Variable Interest
|
|
855
|
|
|
317
|
|
|
220
|
|
|
180
|
|
|
119
|
|
|
19
|
|
|
—
|
|
|||||||
Asset-backed securities
|
|
Fixed / Variable Interest
|
|
80
|
|
|
2
|
|
|
20
|
|
|
49
|
|
|
7
|
|
|
2
|
|
|
—
|
|
|||||||
Total
|
|
|
|
$
|
1,160
|
|
|
$
|
437
|
|
|
$
|
314
|
|
|
$
|
236
|
|
|
$
|
126
|
|
|
$
|
42
|
|
|
$
|
5
|
|
|
|
|
|
|
|
Maturity
|
||||||||||||||||||||||||
Financial Instrument
|
|
Summary Terms
|
|
Fair Market Value at December 31, 2015
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021 and there-after
|
||||||||||||||
|
|
|
|
(in millions)
|
||||||||||||||||||||||||||
Municipal securities
|
|
Fixed / Variable Interest
|
|
$
|
62
|
|
|
$
|
48
|
|
|
$
|
14
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Government and agency securities
|
|
Fixed / Variable Interest
|
|
95
|
|
|
50
|
|
|
37
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|||||||
Corporate securities
|
|
Fixed / Variable Interest
|
|
645
|
|
|
210
|
|
|
308
|
|
|
123
|
|
|
3
|
|
|
—
|
|
|
1
|
|
|||||||
Asset-backed securities
|
|
Fixed / Variable Interest
|
|
57
|
|
|
1
|
|
|
20
|
|
|
22
|
|
|
13
|
|
|
1
|
|
|
—
|
|
|||||||
Total
|
|
|
|
$
|
859
|
|
|
$
|
309
|
|
|
$
|
379
|
|
|
$
|
147
|
|
|
$
|
16
|
|
|
$
|
1
|
|
|
$
|
7
|
|
|
|
Page
|
Mastercard Incorporated
|
|
|
As of December 31, 2016 and 2015 and for the years ended December 31, 2016, 2015 and 2014
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
|
(in millions, except per share data)
|
||||||
ASSETS
|
|
|
|
||||
Cash and cash equivalents
|
$
|
6,721
|
|
|
$
|
5,747
|
|
Restricted cash for litigation settlement
|
543
|
|
|
541
|
|
||
Investments
|
1,614
|
|
|
991
|
|
||
Accounts receivable
|
1,416
|
|
|
1,079
|
|
||
Settlement due from customers
|
1,093
|
|
|
1,068
|
|
||
Restricted security deposits held for customers
|
991
|
|
|
895
|
|
||
Prepaid expenses and other current assets
|
850
|
|
|
663
|
|
||
Total Current Assets
|
13,228
|
|
|
10,984
|
|
||
Property, plant and equipment, net
|
733
|
|
|
675
|
|
||
Deferred income taxes
|
307
|
|
|
317
|
|
||
Goodwill
|
1,756
|
|
|
1,891
|
|
||
Other intangible assets, net
|
722
|
|
|
803
|
|
||
Other assets
|
1,929
|
|
|
1,580
|
|
||
Total Assets
|
$
|
18,675
|
|
|
$
|
16,250
|
|
LIABILITIES AND EQUITY
|
|
|
|
||||
Accounts payable
|
$
|
609
|
|
|
$
|
472
|
|
Settlement due to customers
|
946
|
|
|
866
|
|
||
Restricted security deposits held for customers
|
991
|
|
|
895
|
|
||
Accrued litigation
|
722
|
|
|
709
|
|
||
Accrued expenses
|
3,318
|
|
|
2,763
|
|
||
Other current liabilities
|
620
|
|
|
564
|
|
||
Total Current Liabilities
|
7,206
|
|
|
6,269
|
|
||
Long-term debt
|
5,180
|
|
|
3,268
|
|
||
Deferred income taxes
|
81
|
|
|
79
|
|
||
Other liabilities
|
524
|
|
|
572
|
|
||
Total Liabilities
|
12,991
|
|
|
10,188
|
|
||
Commitments and Contingencies
|
|
|
|
||||
Stockholders’ Equity
|
|
|
|
||||
Class A common stock, $0.0001 par value; authorized 3,000 shares, 1,374 and 1,370 shares issued and 1,062 and 1,095 outstanding, respectively
|
—
|
|
|
—
|
|
||
Class B common stock, $0.0001 par value; authorized 1,200 shares, 19 and 21 issued and outstanding, respectively
|
—
|
|
|
—
|
|
||
Additional paid-in-capital
|
4,183
|
|
|
4,004
|
|
||
Class A treasury stock, at cost, 312 and 275 shares, respectively
|
(17,021
|
)
|
|
(13,522
|
)
|
||
Retained earnings
|
19,418
|
|
|
16,222
|
|
||
Accumulated other comprehensive income (loss)
|
(924
|
)
|
|
(676
|
)
|
||
Total Stockholders’ Equity
|
5,656
|
|
|
6,028
|
|
||
Non-controlling interests
|
28
|
|
|
34
|
|
||
Total Equity
|
5,684
|
|
|
6,062
|
|
||
Total Liabilities and Equity
|
$
|
18,675
|
|
|
$
|
16,250
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
(in millions, except per share data)
|
||||||||||
Net Revenue
|
$
|
10,776
|
|
|
$
|
9,667
|
|
|
$
|
9,441
|
|
Operating Expenses
|
|
|
|
|
|
||||||
General and administrative
|
3,714
|
|
|
3,341
|
|
|
3,152
|
|
|||
Advertising and marketing
|
811
|
|
|
821
|
|
|
862
|
|
|||
Depreciation and amortization
|
373
|
|
|
366
|
|
|
321
|
|
|||
Provision for litigation settlements
|
117
|
|
|
61
|
|
|
—
|
|
|||
Total operating expenses
|
5,015
|
|
|
4,589
|
|
|
4,335
|
|
|||
Operating income
|
5,761
|
|
|
5,078
|
|
|
5,106
|
|
|||
Other Income (Expense)
|
|
|
|
|
|
||||||
Investment income
|
43
|
|
|
25
|
|
|
28
|
|
|||
Interest expense
|
(95
|
)
|
|
(61
|
)
|
|
(48
|
)
|
|||
Other income (expense), net
|
(63
|
)
|
|
(84
|
)
|
|
(7
|
)
|
|||
Total other income (expense)
|
(115
|
)
|
|
(120
|
)
|
|
(27
|
)
|
|||
Income before income taxes
|
5,646
|
|
|
4,958
|
|
|
5,079
|
|
|||
Income tax expense
|
1,587
|
|
|
1,150
|
|
|
1,462
|
|
|||
Net Income
|
$
|
4,059
|
|
|
$
|
3,808
|
|
|
$
|
3,617
|
|
|
|
|
|
|
|
||||||
Basic Earnings per Share
|
$
|
3.70
|
|
|
$
|
3.36
|
|
|
$
|
3.11
|
|
Basic Weighted-Average Shares Outstanding
|
1,098
|
|
|
1,134
|
|
|
1,165
|
|
|||
Diluted Earnings per Share
|
$
|
3.69
|
|
|
$
|
3.35
|
|
|
$
|
3.10
|
|
Diluted Weighted-Average Shares Outstanding
|
1,101
|
|
|
1,137
|
|
|
1,169
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
(in millions)
|
||||||||||
Net Income
|
$
|
4,059
|
|
|
$
|
3,808
|
|
|
$
|
3,617
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
||||||
Foreign currency translation adjustments
|
(275
|
)
|
|
(460
|
)
|
|
(436
|
)
|
|||
Income tax effect
|
(11
|
)
|
|
27
|
|
|
—
|
|
|||
Foreign currency translation adjustments, net of income tax effect
|
(286
|
)
|
|
(433
|
)
|
|
(436
|
)
|
|||
|
|
|
|
|
|
||||||
Translation adjustments on net investment hedge
|
60
|
|
|
(40
|
)
|
|
—
|
|
|||
Income tax effect
|
(22
|
)
|
|
14
|
|
|
—
|
|
|||
Translation adjustments on net investment hedge, net of income tax effect
|
38
|
|
|
(26
|
)
|
|
—
|
|
|||
|
|
|
|
|
|
||||||
Defined benefit pension and other postretirement plans
|
(1
|
)
|
|
(19
|
)
|
|
(3
|
)
|
|||
Income tax effect
|
—
|
|
|
7
|
|
|
2
|
|
|||
Defined benefit pension and other postretirement plans, net of income tax effect
|
(1
|
)
|
|
(12
|
)
|
|
(1
|
)
|
|||
|
|
|
|
|
|
||||||
Reclassification adjustment for defined benefit pension and other postretirement plans
|
(1
|
)
|
|
80
|
|
|
7
|
|
|||
Income tax effect
|
—
|
|
|
(29
|
)
|
|
(3
|
)
|
|||
Reclassification adjustment for defined benefit pension and other postretirement plans, net of income tax effect
|
(1
|
)
|
|
51
|
|
|
4
|
|
|||
|
|
|
|
|
|
||||||
Investment securities available-for-sale
|
3
|
|
|
(11
|
)
|
|
(5
|
)
|
|||
Income tax effect
|
(1
|
)
|
|
—
|
|
|
1
|
|
|||
Investment securities available-for-sale, net of income tax effect
|
2
|
|
|
(11
|
)
|
|
(4
|
)
|
|||
|
|
|
|
|
|
||||||
Reclassification adjustment for investment securities available-for-sale
|
—
|
|
|
15
|
|
|
(1
|
)
|
|||
Income tax effect
|
—
|
|
|
—
|
|
|
—
|
|
|||
Reclassification adjustment for investment securities available-for-sale, net of income tax effect
|
—
|
|
|
15
|
|
|
(1
|
)
|
|||
|
|
|
|
|
|
||||||
Other comprehensive income (loss), net of income tax effect
|
(248
|
)
|
|
(416
|
)
|
|
(438
|
)
|
|||
Comprehensive Income
|
$
|
3,811
|
|
|
$
|
3,392
|
|
|
$
|
3,179
|
|
|
Total
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Common Stock
|
|
Additional
Paid-In
Capital
|
|
Class A
Treasury
Stock
|
|
Non-
Controlling
Interests
|
||||||||||||||||||
|
|
|
Class A
|
|
Class B
|
|
|||||||||||||||||||||||||
|
(in millions, except per share data)
|
||||||||||||||||||||||||||||||
Balance at December 31, 2013
|
$
|
7,495
|
|
|
$
|
10,121
|
|
|
$
|
178
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,762
|
|
|
$
|
(6,577
|
)
|
|
$
|
11
|
|
Net income
|
3,617
|
|
|
3,617
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Activity related to non-controlling interests
|
23
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
23
|
|
||||||||
Other comprehensive income (loss), net of tax
|
(438
|
)
|
|
—
|
|
|
(438
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Cash dividends declared on Class A and Class B common stock, $0.49 per share
|
(569
|
)
|
|
(569
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Purchases of treasury stock
|
(3,424
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,424
|
)
|
|
—
|
|
||||||||
Share-based payments
|
120
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
114
|
|
|
6
|
|
|
—
|
|
||||||||
Conversion of Class B to Class A common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Balance at December 31, 2014
|
6,824
|
|
|
13,169
|
|
|
(260
|
)
|
|
—
|
|
|
—
|
|
|
3,876
|
|
|
(9,995
|
)
|
|
34
|
|
||||||||
Net income
|
3,808
|
|
|
3,808
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Activity related to non-controlling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Other comprehensive income (loss), net of tax
|
(416
|
)
|
|
—
|
|
|
(416
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Cash dividends declared on Class A and Class B common stock, $0.67 per share
|
(755
|
)
|
|
(755
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Purchases of treasury stock
|
(3,532
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,532
|
)
|
|
—
|
|
||||||||
Share-based payments
|
133
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
128
|
|
|
5
|
|
|
—
|
|
||||||||
Conversion of Class B to Class A common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Balance at December 31, 2015
|
6,062
|
|
|
16,222
|
|
|
(676
|
)
|
|
—
|
|
|
—
|
|
|
4,004
|
|
|
(13,522
|
)
|
|
34
|
|
||||||||
Net income
|
4,059
|
|
|
4,059
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Activity related to non-controlling interests
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
||||||||
Other comprehensive income (loss), net of tax
|
(248
|
)
|
|
—
|
|
|
(248
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Cash dividends declared on Class A and Class B common stock, $0.79 per share
|
(863
|
)
|
|
(863
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Purchases of treasury stock
|
(3,503
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,503
|
)
|
|
—
|
|
||||||||
Share-based payments
|
183
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
179
|
|
|
4
|
|
|
—
|
|
||||||||
Conversion of Class B to Class A common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Balance at December 31, 2016
|
$
|
5,684
|
|
|
$
|
19,418
|
|
|
$
|
(924
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,183
|
|
|
$
|
(17,021
|
)
|
|
$
|
28
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
(in millions)
|
||||||||||
Operating Activities
|
|
|
|
|
|
||||||
Net income
|
$
|
4,059
|
|
|
$
|
3,808
|
|
|
$
|
3,617
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Amortization of customer and merchant incentives
|
860
|
|
|
764
|
|
|
691
|
|
|||
Depreciation and amortization
|
373
|
|
|
366
|
|
|
321
|
|
|||
Share-based payments
|
50
|
|
|
22
|
|
|
(15
|
)
|
|||
Deferred income taxes
|
(20
|
)
|
|
(16
|
)
|
|
(91
|
)
|
|||
Other
|
29
|
|
|
(81
|
)
|
|
52
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable
|
(338
|
)
|
|
(35
|
)
|
|
(164
|
)
|
|||
Income taxes receivable
|
(1
|
)
|
|
(14
|
)
|
|
(8
|
)
|
|||
Settlement due from customers
|
(10
|
)
|
|
(98
|
)
|
|
185
|
|
|||
Prepaid expenses
|
(1,073
|
)
|
|
(802
|
)
|
|
(1,316
|
)
|
|||
Accrued litigation and legal settlements
|
17
|
|
|
(63
|
)
|
|
(115
|
)
|
|||
Accounts payable
|
145
|
|
|
49
|
|
|
61
|
|
|||
Settlement due to customers
|
66
|
|
|
(186
|
)
|
|
(165
|
)
|
|||
Accrued expenses
|
520
|
|
|
325
|
|
|
389
|
|
|||
Net change in other assets and liabilities
|
(193
|
)
|
|
4
|
|
|
(35
|
)
|
|||
Net cash provided by operating activities
|
4,484
|
|
|
4,043
|
|
|
3,407
|
|
|||
Investing Activities
|
|
|
|
|
|
||||||
Purchases of investment securities available-for-sale
|
(957
|
)
|
|
(974
|
)
|
|
(2,385
|
)
|
|||
Purchases of investments held-to-maturity
|
(867
|
)
|
|
(918
|
)
|
|
—
|
|
|||
Proceeds from sales of investment securities available-for-sale
|
277
|
|
|
703
|
|
|
2,477
|
|
|||
Proceeds from maturities of investment securities available-for-sale
|
339
|
|
|
542
|
|
|
1,358
|
|
|||
Proceeds from maturities of investments held-to-maturity
|
456
|
|
|
857
|
|
|
—
|
|
|||
Purchases of property, plant and equipment
|
(215
|
)
|
|
(177
|
)
|
|
(175
|
)
|
|||
Capitalized software
|
(167
|
)
|
|
(165
|
)
|
|
(159
|
)
|
|||
Acquisition of businesses, net of cash acquired
|
—
|
|
|
(584
|
)
|
|
(525
|
)
|
|||
(Increase) decrease in restricted cash for litigation settlement
|
(2
|
)
|
|
(1
|
)
|
|
183
|
|
|||
Other investing activities
|
(31
|
)
|
|
2
|
|
|
(84
|
)
|
|||
Net cash (used in) provided by investing activities
|
(1,167
|
)
|
|
(715
|
)
|
|
690
|
|
|||
Financing Activities
|
|
|
|
|
|
||||||
Purchases of treasury stock
|
(3,511
|
)
|
|
(3,518
|
)
|
|
(3,386
|
)
|
|||
Proceeds from debt
|
1,972
|
|
|
1,735
|
|
|
1,530
|
|
|||
Dividends paid
|
(837
|
)
|
|
(727
|
)
|
|
(515
|
)
|
|||
Tax benefit for share-based payments
|
48
|
|
|
42
|
|
|
54
|
|
|||
Cash proceeds from exercise of stock options
|
37
|
|
|
27
|
|
|
28
|
|
|||
Other financing activities
|
(2
|
)
|
|
(17
|
)
|
|
(50
|
)
|
|||
Net cash used in financing activities
|
(2,293
|
)
|
|
(2,458
|
)
|
|
(2,339
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
(50
|
)
|
|
(260
|
)
|
|
(220
|
)
|
|||
Net increase in cash and cash equivalents
|
974
|
|
|
610
|
|
|
1,538
|
|
|||
Cash and cash equivalents - beginning of period
|
5,747
|
|
|
5,137
|
|
|
3,599
|
|
|||
Cash and cash equivalents - end of period
|
$
|
6,721
|
|
|
$
|
5,747
|
|
|
$
|
5,137
|
|
•
|
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.
|
Asset Category
|
|
Estimated Useful Life
|
Buildings
|
|
30 years
|
Building equipment
|
|
10 - 15 years
|
Furniture and fixtures and equipment
|
|
2 - 5 years
|
Leasehold improvements
|
|
Shorter of life of improvement or lease term
|
Capital leases
|
|
Shorter of life of the asset or lease term
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
(in millions, except per share data)
|
||||||||||
Numerator
|
|
|
|
|
|
||||||
Net income
|
$
|
4,059
|
|
|
$
|
3,808
|
|
|
$
|
3,617
|
|
Denominator
|
|
|
|
|
|
||||||
Basic weighted-average shares outstanding
|
1,098
|
|
|
1,134
|
|
|
1,165
|
|
|||
Dilutive stock options and stock units
|
3
|
|
|
3
|
|
|
4
|
|
|||
Diluted weighted-average shares outstanding
1
|
1,101
|
|
|
1,137
|
|
|
1,169
|
|
|||
Earnings per Share
|
|
|
|
|
|
||||||
Basic
|
$
|
3.70
|
|
|
$
|
3.36
|
|
|
$
|
3.11
|
|
Diluted
|
$
|
3.69
|
|
|
$
|
3.35
|
|
|
$
|
3.10
|
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
(in millions)
|
||||||||||
Cash paid for income taxes, net of refunds
|
$
|
1,579
|
|
|
$
|
1,097
|
|
|
$
|
2,036
|
|
Cash paid for interest
|
74
|
|
|
44
|
|
|
24
|
|
|||
Cash paid for legal settlements
|
101
|
|
|
124
|
|
|
28
|
|
|||
Non-cash investing and financing activities
|
|
|
|
|
|
||||||
Dividends declared but not yet paid
|
238
|
|
|
212
|
|
|
184
|
|
|||
Assets recorded pursuant to capital lease
|
3
|
|
|
10
|
|
|
8
|
|
|||
Fair value of assets acquired, net of cash acquired
|
—
|
|
|
626
|
|
|
768
|
|
|||
Fair value of liabilities assumed related to acquisitions
|
—
|
|
|
42
|
|
|
141
|
|
|
December 31, 2016
|
||||||||||||||
|
Quoted Prices
in Active
Markets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Fair
Value
|
||||||||
|
(in millions)
|
||||||||||||||
Municipal securities
|
$
|
—
|
|
|
$
|
59
|
|
|
$
|
—
|
|
|
$
|
59
|
|
Government and agency securities
1
|
49
|
|
|
117
|
|
|
—
|
|
|
166
|
|
||||
Corporate securities
|
—
|
|
|
855
|
|
|
—
|
|
|
855
|
|
||||
Asset-backed securities
|
—
|
|
|
80
|
|
|
—
|
|
|
80
|
|
||||
Other
|
2
|
|
|
16
|
|
|
—
|
|
|
18
|
|
||||
Total
|
$
|
51
|
|
|
$
|
1,127
|
|
|
$
|
—
|
|
|
$
|
1,178
|
|
|
|
|
|
|
|
|
|
||||||||
|
December 31, 2015
|
||||||||||||||
|
Quoted Prices
in Active
Markets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Fair
Value
|
||||||||
|
(in millions)
|
||||||||||||||
Municipal securities
|
$
|
—
|
|
|
$
|
62
|
|
|
$
|
—
|
|
|
$
|
62
|
|
Government and agency securities
1
|
31
|
|
|
64
|
|
|
—
|
|
|
95
|
|
||||
Corporate securities
|
—
|
|
|
645
|
|
|
—
|
|
|
645
|
|
||||
Asset-backed securities
|
—
|
|
|
57
|
|
|
—
|
|
|
57
|
|
||||
Other
|
2
|
|
|
14
|
|
|
—
|
|
|
16
|
|
||||
Total
|
$
|
33
|
|
|
$
|
842
|
|
|
$
|
—
|
|
|
$
|
875
|
|
|
December 31, 2016
|
||||||||||||||
|
Amortized
Cost
|
|
Gross
Unrealized
Gain
|
|
Gross
Unrealized
Loss
|
|
Fair
Value
|
||||||||
|
(in millions)
|
||||||||||||||
Municipal securities
|
$
|
59
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
59
|
|
Government and agency securities
|
165
|
|
|
1
|
|
|
—
|
|
|
166
|
|
||||
Corporate securities
|
853
|
|
|
3
|
|
|
(1
|
)
|
|
855
|
|
||||
Asset-backed securities
|
80
|
|
|
—
|
|
|
—
|
|
|
80
|
|
||||
Other
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||
Total
|
$
|
1,159
|
|
|
$
|
4
|
|
|
$
|
(1
|
)
|
|
$
|
1,162
|
|
|
|
|
|
|
|
|
|
||||||||
|
December 31, 2015
|
||||||||||||||
|
Amortized
Cost
|
|
Gross
Unrealized
Gain
|
|
Gross
Unrealized
Loss
|
|
Fair
Value
|
||||||||
|
(in millions)
|
||||||||||||||
Municipal securities
|
$
|
62
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
62
|
|
Government and agency securities
|
94
|
|
|
1
|
|
|
—
|
|
|
95
|
|
||||
Corporate securities
|
646
|
|
|
—
|
|
|
(1
|
)
|
|
645
|
|
||||
Asset-backed securities
|
57
|
|
|
—
|
|
|
—
|
|
|
57
|
|
||||
Other
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||
Total
|
$
|
861
|
|
|
$
|
1
|
|
|
$
|
(1
|
)
|
|
$
|
861
|
|
|
Available-For-Sale
|
||||||
|
Amortized
Cost
|
|
Fair Value
|
||||
|
(in millions)
|
||||||
Due within 1 year
|
$
|
437
|
|
|
$
|
437
|
|
Due after 1 year through 5 years
|
715
|
|
|
718
|
|
||
Due after 5 years through 10 years
|
—
|
|
|
—
|
|
||
Due after 10 years
|
5
|
|
|
5
|
|
||
No contractual maturity
1
|
2
|
|
|
2
|
|
||
Total
|
$
|
1,159
|
|
|
$
|
1,162
|
|
|
2016
|
|
2015
|
||||
|
(in millions)
|
||||||
Customer and merchant incentives
|
$
|
479
|
|
|
$
|
345
|
|
Prepaid income taxes
|
118
|
|
|
72
|
|
||
Other
|
253
|
|
|
246
|
|
||
Total prepaid expenses and other current assets
|
$
|
850
|
|
|
$
|
663
|
|
|
2016
|
|
2015
|
||||
|
(in millions)
|
||||||
Customer and merchant incentives
|
$
|
1,134
|
|
|
$
|
810
|
|
Nonmarketable equity investments
|
132
|
|
|
166
|
|
||
Prepaid income taxes
|
325
|
|
|
352
|
|
||
Income taxes receivable
|
175
|
|
|
160
|
|
||
Other
|
163
|
|
|
92
|
|
||
Total other assets
|
$
|
1,929
|
|
|
$
|
1,580
|
|
|
2016
|
|
2015
|
||||
|
(in millions)
|
||||||
Building, building equipment and land
|
$
|
534
|
|
|
$
|
503
|
|
Equipment
|
606
|
|
|
497
|
|
||
Furniture and fixtures
|
63
|
|
|
54
|
|
||
Leasehold improvements
|
133
|
|
|
112
|
|
||
Property, plant and equipment
|
1,336
|
|
|
1,166
|
|
||
Less: accumulated depreciation and amortization
|
(603
|
)
|
|
(491
|
)
|
||
Property, plant and equipment, net
|
$
|
733
|
|
|
$
|
675
|
|
|
2016
|
|
2015
|
||||
|
(in millions)
|
||||||
Beginning balance
|
$
|
1,891
|
|
|
$
|
1,522
|
|
Additions
|
8
|
|
|
458
|
|
||
Foreign currency translation
|
(143
|
)
|
|
(89
|
)
|
||
Ending balance
|
$
|
1,756
|
|
|
$
|
1,891
|
|
|
2016
|
|
2015
|
||||||||||||||||||||
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
||||||||||||
|
(in millions)
|
||||||||||||||||||||||
Amortized intangible assets
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Capitalized software
|
$
|
1,210
|
|
|
$
|
(768
|
)
|
|
$
|
442
|
|
|
$
|
1,086
|
|
|
$
|
(625
|
)
|
|
$
|
461
|
|
Trademarks and tradenames
|
26
|
|
|
(22
|
)
|
|
4
|
|
|
30
|
|
|
(23
|
)
|
|
7
|
|
||||||
Customer relationships
|
283
|
|
|
(162
|
)
|
|
121
|
|
|
318
|
|
|
(149
|
)
|
|
169
|
|
||||||
Other
|
23
|
|
|
(22
|
)
|
|
1
|
|
|
25
|
|
|
(19
|
)
|
|
6
|
|
||||||
Total
|
1,542
|
|
|
(974
|
)
|
|
568
|
|
|
1,459
|
|
|
(816
|
)
|
|
643
|
|
||||||
Unamortized intangible assets
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Customer relationships
|
154
|
|
|
—
|
|
|
154
|
|
|
160
|
|
|
—
|
|
|
160
|
|
||||||
Total
|
$
|
1,696
|
|
|
$
|
(974
|
)
|
|
$
|
722
|
|
|
$
|
1,619
|
|
|
$
|
(816
|
)
|
|
$
|
803
|
|
|
2016
|
|
2015
|
||||
|
(in millions)
|
||||||
Customer and merchant incentives
|
$
|
2,286
|
|
|
$
|
1,748
|
|
Personnel costs
|
496
|
|
|
473
|
|
||
Advertising
|
71
|
|
|
114
|
|
||
Income and other taxes
|
161
|
|
|
143
|
|
||
Other
|
304
|
|
|
285
|
|
||
Total accrued expenses
|
$
|
3,318
|
|
|
$
|
2,763
|
|
|
Maturity
Date
|
|
Aggregate Principal Amount
|
|
Stated Interest Rate
|
|
Effective Interest Rate
|
|
2016
|
|
2015
|
||||||
|
|
|
(in millions, except percentages)
|
||||||||||||||
2016 USD Notes
|
2021
|
|
$650
|
|
2.000
|
%
|
|
2.236
|
%
|
|
$
|
650
|
|
|
$
|
—
|
|
|
2026
|
|
$750
|
|
2.950
|
%
|
|
3.044
|
%
|
|
750
|
|
|
—
|
|
||
|
2046
|
|
$600
|
|
3.800
|
%
|
|
3.893
|
%
|
|
600
|
|
|
—
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
||||||
2015 Euro Notes
|
2022
|
|
€700
|
|
1.100
|
%
|
|
1.265
|
%
|
|
738
|
|
|
763
|
|
||
|
2027
|
|
€800
|
|
2.100
|
%
|
|
2.189
|
%
|
|
843
|
|
|
872
|
|
||
|
2030
|
|
€150
|
|
2.500
|
%
|
|
2.562
|
%
|
|
158
|
|
|
164
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
||||||
2014 USD Notes
|
2019
|
|
$500
|
|
2.000
|
%
|
|
2.178
|
%
|
|
500
|
|
|
500
|
|
||
|
2024
|
|
$1,000
|
|
3.375
|
%
|
|
3.484
|
%
|
|
1,000
|
|
|
1,000
|
|
||
|
|
|
|
|
|
|
|
|
5,239
|
|
|
3,299
|
|
||||
Less: Unamortized discount and debt issuance costs
|
|
|
|
|
|
|
|
|
(59
|
)
|
|
(31
|
)
|
||||
Long-term debt
|
|
|
|
|
|
|
|
|
$
|
5,180
|
|
|
$
|
3,268
|
|
|
(in millions)
|
||
2017 - 2018
|
$
|
—
|
|
2019
|
500
|
|
|
2020
|
—
|
|
|
2021
|
650
|
|
|
Thereafter
|
4,089
|
|
|
Total
|
$
|
5,239
|
|
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, 2016 and 2015, respectively. Dividend and voting rights are to be determined by the Board of Directors of the Company upon issuance.
|
|
2016
|
|
2015
|
||||||||
|
Equity Ownership
|
|
General Voting Power
|
|
Equity Ownership
|
|
General Voting Power
|
||||
Public Investors (Class A stockholders)
|
87.7
|
%
|
|
89.3
|
%
|
|
87.7
|
%
|
|
89.4
|
%
|
Principal or Affiliate Customers (Class B stockholders)
|
1.8
|
%
|
|
—
|
%
|
|
1.9
|
%
|
|
—
|
%
|
The MasterCard Foundation (Class A stockholders)
|
10.5
|
%
|
|
10.7
|
%
|
|
10.4
|
%
|
|
10.6
|
%
|
|
Authorization Dates
|
||||||||||||||||||||||
|
December
2016 |
|
December
2015
|
|
December
2014
|
|
December
2013
|
|
February
2013
|
|
Total
|
||||||||||||
|
(in millions, except average price data)
|
||||||||||||||||||||||
Board authorization
|
$
|
4,000
|
|
|
$
|
4,000
|
|
|
$
|
3,750
|
|
|
$
|
3,500
|
|
|
$
|
2,000
|
|
|
$
|
17,250
|
|
Dollar-value of shares repurchased in 2014
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,225
|
|
|
$
|
161
|
|
|
$
|
3,386
|
|
Remaining authorization at December 31, 2014
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,750
|
|
|
$
|
275
|
|
|
$
|
—
|
|
|
$
|
4,025
|
|
Dollar-value of shares repurchased in 2015
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,243
|
|
|
$
|
275
|
|
|
$
|
—
|
|
|
$
|
3,518
|
|
Remaining authorization at December 31, 2015
|
$
|
—
|
|
|
$
|
4,000
|
|
|
$
|
507
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,507
|
|
Dollar-value of shares repurchased in 2016
|
$
|
—
|
|
|
$
|
3,004
|
|
|
$
|
507
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,511
|
|
Remaining authorization at December 31, 2016
|
$
|
4,000
|
|
|
$
|
996
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,996
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Shares repurchased in 2014
|
—
|
|
|
—
|
|
|
—
|
|
|
42.6
|
|
|
1.9
|
|
|
44.5
|
|
||||||
Average price paid per share in 2014
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
75.81
|
|
|
$
|
83.22
|
|
|
$
|
76.14
|
|
Shares repurchased in 2015
|
—
|
|
|
—
|
|
|
35.1
|
|
|
3.2
|
|
|
—
|
|
|
38.3
|
|
||||||
Average price paid per share in 2015
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
92.39
|
|
|
$
|
84.31
|
|
|
$
|
—
|
|
|
$
|
91.70
|
|
Shares repurchased in 2016
|
—
|
|
|
31.2
|
|
|
5.7
|
|
|
—
|
|
|
—
|
|
|
36.9
|
|
||||||
Average price paid per share in 2016
|
$
|
—
|
|
|
$
|
96.15
|
|
|
$
|
89.76
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
95.18
|
|
Cumulative shares repurchased through December 31, 2016
|
—
|
|
|
31.2
|
|
|
40.8
|
|
|
45.8
|
|
|
31.1
|
|
|
148.9
|
|
||||||
Cumulative average price paid per share
|
$
|
—
|
|
|
$
|
96.15
|
|
|
$
|
92.03
|
|
|
$
|
76.42
|
|
|
$
|
64.26
|
|
|
$
|
82.29
|
|
|
Outstanding Shares
|
||||
|
Class A
|
|
Class B
|
||
|
(in millions)
|
||||
Balance at December 31, 2013
|
1,148.8
|
|
|
45.4
|
|
Purchases of treasury stock
|
(44.5
|
)
|
|
—
|
|
Share-based payments
|
2.9
|
|
|
—
|
|
Conversion of Class B to Class A common stock
|
8.2
|
|
|
(8.2
|
)
|
Balance at December 31, 2014
|
1,115.4
|
|
|
37.2
|
|
Purchases of treasury stock
|
(38.3
|
)
|
|
—
|
|
Share-based payments
|
2.0
|
|
|
—
|
|
Conversion of Class B to Class A common stock
|
15.9
|
|
|
(15.9
|
)
|
Balance at December 31, 2015
|
1,095.0
|
|
|
21.3
|
|
Purchases of treasury stock
|
(36.9
|
)
|
|
—
|
|
Share-based payments
|
2.3
|
|
|
—
|
|
Conversion of Class B to Class A common stock
|
2.0
|
|
|
(2.0
|
)
|
Balance at December 31, 2016
|
1,062.4
|
|
|
19.3
|
|
|
Foreign Currency Translation Adjustments
1
|
|
Translation Adjustments on Net Investment Hedge
|
|
Defined Benefit Pension and Other Postretirement Plans
2
|
|
Investment Securities Available-for-Sale
3
|
|
Accumulated Other Comprehensive Income (Loss)
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Balance at December 31, 2014
|
$
|
(230
|
)
|
|
$
|
—
|
|
|
$
|
(26
|
)
|
|
$
|
(4
|
)
|
|
$
|
(260
|
)
|
Other comprehensive income (loss)
|
(433
|
)
|
|
(26
|
)
|
|
39
|
|
|
4
|
|
|
(416
|
)
|
|||||
Balance at December 31, 2015
|
(663
|
)
|
|
(26
|
)
|
|
13
|
|
|
—
|
|
|
(676
|
)
|
|||||
Other comprehensive income (loss)
|
(286
|
)
|
|
38
|
|
|
(2
|
)
|
|
2
|
|
|
(248
|
)
|
|||||
Balance at December 31, 2016
|
$
|
(949
|
)
|
|
$
|
12
|
|
|
$
|
11
|
|
|
$
|
2
|
|
|
$
|
(924
|
)
|
|
2016
|
|
2015
|
|
2014
|
||||||
Risk-free rate of return
|
1.3
|
%
|
|
1.5
|
%
|
|
1.5
|
%
|
|||
Expected term (in years)
|
5.00
|
|
|
5.00
|
|
|
5.00
|
|
|||
Expected volatility
|
23.3
|
%
|
|
20.6
|
%
|
|
19.1
|
%
|
|||
Expected dividend yield
|
0.8
|
%
|
|
0.7
|
%
|
|
0.6
|
%
|
|||
Weighted-average fair value per Option granted
|
$
|
18.58
|
|
|
$
|
17.29
|
|
|
$
|
14.29
|
|
|
Options
|
|
Weighted-Average Exercise Price
|
|
Weighted-Average Remaining Contractual Term
|
|
Aggregate Intrinsic Value
|
|||||
|
(in millions)
|
|
|
|
(in years)
|
|
(in millions)
|
|||||
Outstanding at January 1, 2016
|
8.1
|
|
|
$
|
54
|
|
|
|
|
|
||
Granted
|
1.7
|
|
|
$
|
90
|
|
|
|
|
|
||
Exercised
|
(1.3
|
)
|
|
$
|
30
|
|
|
|
|
|
||
Forfeited/expired
|
(0.2
|
)
|
|
$
|
80
|
|
|
|
|
|
||
Outstanding at December 31, 2016
|
8.3
|
|
|
$
|
65
|
|
|
6.7
|
|
$
|
321
|
|
Exercisable at December 31, 2016
|
4.3
|
|
|
$
|
47
|
|
|
5.3
|
|
$
|
243
|
|
Options vested and expected to vest at December 31, 2016
|
8.2
|
|
|
$
|
64
|
|
|
6.7
|
|
$
|
319
|
|
|
Units
|
|
Weighted-Average Grant-Date Fair Value
|
|
Weighted-Average Remaining Contractual Term
|
|
Aggregate Intrinsic Value
|
|||||
|
(in millions)
|
|
|
|
(in years)
|
|
(in millions)
|
|||||
Outstanding at January 1, 2016
|
3.8
|
|
|
$
|
71
|
|
|
|
|
|
||
Granted
|
1.9
|
|
|
$
|
91
|
|
|
|
|
|
||
Converted
|
(1.4
|
)
|
|
$
|
52
|
|
|
|
|
|
||
Forfeited
|
(0.2
|
)
|
|
$
|
84
|
|
|
|
|
|
||
Outstanding at December 31, 2016
|
4.1
|
|
|
$
|
86
|
|
|
1.4
|
|
$
|
424
|
|
RSUs vested and expected to vest at December 31, 2016
|
3.9
|
|
|
$
|
86
|
|
|
1.4
|
|
$
|
406
|
|
|
Units
|
|
Weighted-Average
Grant-Date Fair Value
|
|
Weighted-Average Remaining Contractual Term
|
|
Aggregate Intrinsic Value
|
|||||
|
(in millions)
|
|
|
|
(in years)
|
|
(in millions)
|
|||||
Outstanding at January 1, 2016
|
0.5
|
|
|
$
|
72
|
|
|
|
|
|
||
Granted
|
0.2
|
|
|
$
|
92
|
|
|
|
|
|
||
Converted
|
(0.3
|
)
|
|
$
|
56
|
|
|
|
|
|
||
Outstanding at December 31, 2016
|
0.4
|
|
|
$
|
90
|
|
|
1.3
|
|
$
|
45
|
|
PSUs vested and expected to vest at December 31, 2016
|
0.4
|
|
|
$
|
90
|
|
|
1.3
|
|
$
|
44
|
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
(in millions, except weighted-average fair value)
|
||||||||||
Share-based compensation expense: Options, RSUs and PSUs
|
$
|
148
|
|
|
$
|
122
|
|
|
$
|
111
|
|
Income tax benefit recognized for equity awards
|
49
|
|
|
41
|
|
|
37
|
|
|||
Income tax benefit related to Options exercised
|
31
|
|
|
19
|
|
|
20
|
|
|||
|
|
|
|
|
|
||||||
Options:
|
|
|
|
|
|
||||||
Total intrinsic value of Options exercised
|
86
|
|
|
57
|
|
|
60
|
|
|||
RSUs:
|
|
|
|
|
|
||||||
Weighted-average grant-date fair value of awards granted
|
91
|
|
|
88
|
|
|
76
|
|
|||
Total intrinsic value of RSUs converted into shares of Class A common stock
|
122
|
|
|
135
|
|
|
173
|
|
|||
PSUs:
|
|
|
|
|
|
||||||
Weighted-average grant-date fair value of awards granted
|
92
|
|
|
99
|
|
|
78
|
|
|||
Total intrinsic value of PSUs converted into shares of Class A common stock
|
25
|
|
|
24
|
|
|
28
|
|
|
Total
|
|
Capital
Leases |
|
Operating
Leases
|
|
Sponsorship,
Licensing &
Other
|
||||||||
|
(in millions)
|
||||||||||||||
2017
|
$
|
1,192
|
|
|
$
|
5
|
|
|
$
|
66
|
|
|
$
|
1,121
|
|
2018
|
234
|
|
|
1
|
|
|
53
|
|
|
180
|
|
||||
2019
|
178
|
|
|
1
|
|
|
40
|
|
|
137
|
|
||||
2020
|
102
|
|
|
—
|
|
|
29
|
|
|
73
|
|
||||
2021
|
56
|
|
|
—
|
|
|
20
|
|
|
36
|
|
||||
Thereafter
|
68
|
|
|
—
|
|
|
39
|
|
|
29
|
|
||||
Total
|
$
|
1,830
|
|
|
$
|
7
|
|
|
$
|
247
|
|
|
$
|
1,576
|
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
|
(in millions)
|
|
|
||||||
United States
|
$
|
3,736
|
|
|
$
|
3,399
|
|
|
$
|
3,378
|
|
Foreign
|
1,910
|
|
|
1,559
|
|
|
1,701
|
|
|||
Income before income taxes
|
$
|
5,646
|
|
|
$
|
4,958
|
|
|
$
|
5,079
|
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
|
(in millions)
|
|
|
||||||
Current
|
|
|
|
|
|
||||||
Federal
|
$
|
1,074
|
|
|
$
|
677
|
|
|
$
|
977
|
|
State and local
|
36
|
|
|
45
|
|
|
47
|
|
|||
Foreign
|
497
|
|
|
444
|
|
|
528
|
|
|||
|
1,607
|
|
|
1,166
|
|
|
1,552
|
|
|||
Deferred
|
|
|
|
|
|
||||||
Federal
|
(6
|
)
|
|
4
|
|
|
(81
|
)
|
|||
State and local
|
(2
|
)
|
|
(3
|
)
|
|
(3
|
)
|
|||
Foreign
|
(12
|
)
|
|
(17
|
)
|
|
(6
|
)
|
|||
|
(20
|
)
|
|
(16
|
)
|
|
(90
|
)
|
|||
Income tax expense
|
$
|
1,587
|
|
|
$
|
1,150
|
|
|
$
|
1,462
|
|
|
2016
|
|
2015
|
|
2014
|
|||||||||||||||
|
Amount
|
|
Percent
|
|
Amount
|
|
Percent
|
|
Amount
|
|
Percent
|
|||||||||
|
(in millions, except percentages)
|
|||||||||||||||||||
Income before income taxes
|
$
|
5,646
|
|
|
|
|
$
|
4,958
|
|
|
|
|
$
|
5,079
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Federal statutory tax
|
1,976
|
|
|
35.0
|
%
|
|
1,735
|
|
|
35.0
|
%
|
|
1,778
|
|
|
35.0
|
%
|
|||
State tax effect, net of federal benefit
|
22
|
|
|
0.4
|
%
|
|
27
|
|
|
0.5
|
%
|
|
29
|
|
|
0.6
|
%
|
|||
Foreign tax effect
|
(188
|
)
|
|
(3.3
|
)%
|
|
(144
|
)
|
|
(2.9
|
)%
|
|
(108
|
)
|
|
(2.1
|
)%
|
|||
Impact of foreign tax credits
1
|
(141
|
)
|
|
(2.5
|
)%
|
|
(281
|
)
|
|
(5.7
|
)%
|
|
(183
|
)
|
|
(3.6
|
)%
|
|||
Impact of settlements with tax authorities
|
—
|
|
|
—
|
%
|
|
(147
|
)
|
|
(2.9
|
)%
|
|
—
|
|
|
—
|
%
|
|||
Other, net
|
(82
|
)
|
|
(1.5
|
)%
|
|
(40
|
)
|
|
(0.8
|
)%
|
|
(54
|
)
|
|
(1.1
|
)%
|
|||
Income tax expense
|
$
|
1,587
|
|
|
28.1
|
%
|
|
$
|
1,150
|
|
|
23.2
|
%
|
|
$
|
1,462
|
|
|
28.8
|
%
|
|
2016
|
|
2015
|
||||
|
(in millions)
|
||||||
Deferred Tax Assets
|
|
|
|
||||
Accrued liabilities
|
$
|
174
|
|
|
$
|
169
|
|
Compensation and benefits
|
273
|
|
|
242
|
|
||
State taxes and other credits
|
41
|
|
|
54
|
|
||
Net operating and capital losses
|
81
|
|
|
67
|
|
||
Other items
|
79
|
|
|
90
|
|
||
Less: Valuation allowance
|
(91
|
)
|
|
(54
|
)
|
||
Total Deferred Tax Assets
|
557
|
|
|
568
|
|
||
|
|
|
|
||||
Deferred Tax Liabilities
|
|
|
|
||||
Prepaid expenses and other accruals
|
46
|
|
|
46
|
|
||
Intangible assets
|
105
|
|
|
136
|
|
||
Property, plant and equipment
|
155
|
|
|
118
|
|
||
Other items
|
25
|
|
|
30
|
|
||
Total Deferred Tax Liabilities
|
331
|
|
|
330
|
|
||
|
|
|
|
||||
Net Deferred Tax Assets
|
$
|
226
|
|
|
$
|
238
|
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
(in millions)
|
||||||||||
Beginning balance
|
$
|
181
|
|
|
$
|
364
|
|
|
$
|
320
|
|
Additions:
|
|
|
|
|
|
||||||
Current year tax positions
|
20
|
|
|
20
|
|
|
61
|
|
|||
Prior year tax positions
|
13
|
|
|
10
|
|
|
19
|
|
|||
Reductions:
|
|
|
|
|
|
||||||
Prior year tax positions
|
(28
|
)
|
|
(151
|
)
|
|
(6
|
)
|
|||
Settlements with tax authorities
|
(2
|
)
|
|
(53
|
)
|
|
—
|
|
|||
Expired statute of limitations
|
(15
|
)
|
|
(9
|
)
|
|
(30
|
)
|
|||
Ending balance
|
$
|
169
|
|
|
$
|
181
|
|
|
$
|
364
|
|
|
December 31,
2016 |
|
December 31,
2015
|
||||
|
(in millions)
|
||||||
Gross settlement exposure
|
$
|
37,202
|
|
|
$
|
39,674
|
|
Collateral held for settlement exposure
|
(3,734
|
)
|
|
(3,601
|
)
|
||
Net uncollateralized settlement exposure
|
$
|
33,468
|
|
|
$
|
36,073
|
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||||
|
Notional
|
|
Estimated Fair
Value
|
|
Notional
|
|
Estimated Fair
Value
|
||||||||
|
(in millions)
|
||||||||||||||
Commitments to purchase foreign currency
|
$
|
37
|
|
|
$
|
(2
|
)
|
|
$
|
232
|
|
|
$
|
1
|
|
Commitments to sell foreign currency
|
777
|
|
|
18
|
|
|
1,430
|
|
|
12
|
|
||||
Options to sell foreign currency
|
—
|
|
|
—
|
|
|
44
|
|
|
1
|
|
||||
Balance sheet location
|
|
|
|
|
|
|
|
||||||||
Accounts receivable
1
|
|
|
$
|
29
|
|
|
|
|
$
|
23
|
|
||||
Other current liabilities
1
|
|
|
(13
|
)
|
|
|
|
(9
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
(in millions)
|
||||||||||
Foreign currency derivative contracts
|
|
|
|
|
|
||||||
General and administrative
|
$
|
(6
|
)
|
|
$
|
51
|
|
|
$
|
(78
|
)
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
(in millions)
|
||||||||||
United States
|
$
|
504
|
|
|
$
|
471
|
|
|
$
|
450
|
|
Other countries
|
229
|
|
|
204
|
|
|
165
|
|
|||
Total
|
$
|
733
|
|
|
$
|
675
|
|
|
$
|
615
|
|
|
2016 Quarter Ended
|
|
|
||||||||||||||||
|
March 31
|
|
June 30
|
|
September 30
|
|
December 31
|
|
2016 Total
|
||||||||||
|
(in millions, except per share data)
|
||||||||||||||||||
Net revenue
|
$
|
2,446
|
|
|
$
|
2,694
|
|
|
$
|
2,880
|
|
|
$
|
2,756
|
|
|
$
|
10,776
|
|
Operating income
|
1,348
|
|
|
1,380
|
|
|
1,670
|
|
|
1,363
|
|
|
5,761
|
|
|||||
Net income
|
959
|
|
|
983
|
|
|
1,184
|
|
|
933
|
|
|
4,059
|
|
|||||
Basic earnings per share
|
$
|
0.86
|
|
|
$
|
0.89
|
|
|
$
|
1.08
|
|
|
$
|
0.86
|
|
|
$
|
3.70
|
|
Basic weighted-average shares outstanding
|
1,109
|
|
|
1,098
|
|
|
1,096
|
|
|
1,087
|
|
|
1,098
|
|
|||||
Diluted earnings per share
|
$
|
0.86
|
|
|
$
|
0.89
|
|
|
$
|
1.08
|
|
|
$
|
0.86
|
|
|
$
|
3.69
|
|
Diluted weighted-average shares outstanding
|
1,112
|
|
|
1,101
|
|
|
1,099
|
|
|
1,090
|
|
|
1,101
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
2015 Quarter Ended
|
|
|
||||||||||||||||
|
March 31
|
|
June 30
|
|
September 30
|
|
December 31
|
|
2015 Total
|
||||||||||
|
(in millions, except per share data)
|
||||||||||||||||||
Net revenue
|
$
|
2,230
|
|
|
$
|
2,390
|
|
|
$
|
2,530
|
|
|
$
|
2,517
|
|
|
$
|
9,667
|
|
Operating income
|
1,351
|
|
|
1,251
|
|
|
1,369
|
|
|
1,107
|
|
|
5,078
|
|
|||||
Net income
|
1,020
|
|
|
921
|
|
|
977
|
|
|
890
|
|
|
3,808
|
|
|||||
Basic earnings per share
|
$
|
0.89
|
|
|
$
|
0.81
|
|
|
$
|
0.86
|
|
|
$
|
0.79
|
|
|
$
|
3.36
|
|
Basic weighted-average shares outstanding
|
1,148
|
|
|
1,138
|
|
|
1,130
|
|
|
1,121
|
|
|
1,134
|
|
|||||
Diluted earnings per share
|
$
|
0.89
|
|
|
$
|
0.81
|
|
|
$
|
0.86
|
|
|
$
|
0.79
|
|
|
$
|
3.35
|
|
Diluted weighted-average shares outstanding
|
1,152
|
|
|
1,141
|
|
|
1,133
|
|
|
1,124
|
|
|
1,137
|
|
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:
|
|
|
|
|
MASTERCARD INCORPORATED
|
|
|
|
|
(Registrant)
|
|
|
|
|
|
Date:
|
February 15, 2017
|
By:
|
|
/s/ AJAY BANGA
|
|
|
|
|
Ajay Banga
|
|
|
|
|
President and Chief Executive Officer
|
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
Date:
|
February 15, 2017
|
By:
|
|
/s/ AJAY BANGA
|
|
|
|
|
Ajay Banga
|
|
|
|
|
President and Chief Executive Officer; Director
|
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
Date:
|
February 15, 2017
|
By:
|
|
/s/ MARTINA HUND-MEJEAN
|
|
|
|
|
Martina Hund-Mejean
|
|
|
|
|
Chief Financial Officer
|
|
|
|
|
(Principal Financial Officer)
|
|
|
|
|
|
Date:
|
February 15, 2017
|
By:
|
|
/s/ ANDREA FORSTER
|
|
|
|
|
Andrea Forster
|
|
|
|
|
Corporate Controller
|
|
|
|
|
(Principal Accounting Officer)
|
|
|
|
|
|
Date:
|
February 15, 2017
|
By:
|
|
/s/ SILVIO BARZI
|
|
|
|
|
Silvio Barzi
|
|
|
|
|
Director
|
|
|
|
|
|
Date:
|
February 15, 2017
|
By:
|
|
/s/ DAVID R. CARLUCCI
|
|
|
|
|
David R. Carlucci
|
|
|
|
|
Director
|
|
|
|
|
|
Date:
|
February 15, 2017
|
By:
|
|
/s/ STEVEN J. FREIBERG
|
|
|
|
|
Steven J. Freiberg
|
|
|
|
|
Director
|
|
|
|
|
|
Date:
|
February 15, 2017
|
By:
|
|
/s/ JULIUS GENACHOWSKI
|
|
|
|
|
Julius Genachowski
|
|
|
|
|
Director
|
|
|
|
|
|
Date:
|
February 15, 2017
|
By:
|
|
/s/ RICHARD HAYTHORNTHWAITE
|
|
|
|
|
Richard Haythornthwaite
|
|
|
|
|
Chairman of the Board; Director
|
|
|
|
|
|
|
|
|
|
|
Date:
|
February 15, 2017
|
By:
|
|
/s/ MERIT E. JANOW
|
|
|
|
|
Merit E. Janow
|
|
|
|
|
Director
|
|
|
|
|
|
Date:
|
February 15, 2017
|
By:
|
|
/s/ NANCY J. KARCH
|
|
|
|
|
Nancy J. Karch
|
|
|
|
|
Director
|
|
|
|
|
|
Date:
|
February 15, 2017
|
By:
|
|
/s/ OKI MATSUMOTO
|
|
|
|
|
Oki Matsumoto
|
|
|
|
|
Director
|
|
|
|
|
|
Date:
|
February 15, 2017
|
By:
|
|
/s/ RIMA QURESHI
|
|
|
|
|
Rima Qureshi
|
|
|
|
|
Director
|
|
|
|
|
|
Date:
|
February 15, 2017
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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 15, 2017
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By:
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/s/ JACKSON TAI
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Jackson Tai
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Director
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Exhibit
Number
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Exhibit Description
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3.1(a)
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Amended and Restated Certificate of Incorporation of Mastercard Incorporated (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed September 29, 2016 (File No. 001-32877)).
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3.1(b)
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Amended and Restated Bylaws of Mastercard Incorporated (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed September 29, 2016 (File No. 001-32877)).
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4.1
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Indenture, dated as of March 31, 2014, between the Company and Deutsche Bank Trust Company Americas, as trustee (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed on March 31, 2014 (File No. 001-32877)).
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4.2
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Officer’s Certificate of the Company, dated as of March 31, 2014 (incorporated by reference to Exhibit 4.2 of the Company’s Current Report on Form 8-K filed on March 31, 2014 (File No. 001-32877)).
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4.3
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Form of Global Note representing the Company’s 2.000% Notes due 2019 (included in Exhibit 4.2) (incorporated by reference to Exhibit 4.3 of the Company’s Current Report on Form 8-K filed on March 31, 2014 (File No. 001-32877)).
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4.4
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Form of Global Note representing the Company’s 3.375% Notes due 2024 (included in Exhibit 4.2) (incorporated by reference to Exhibit 4.4 of the Company’s Current Report on Form 8-K filed on March 31, 2014 (File No. 001-32877)).
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4.5
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Officer’s Certificate of the Company, dated as of December 1, 2015 (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed on December 1, 2015 (File No. 001-32877)).
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4.6
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Form of Global Note representing the Company’s 1.100% Notes due 2022 (included in Exhibit 4.5) (incorporated by reference to Exhibit 4.2 of the Company’s Current Report on Form 8-K filed on December 1, 2015 (File No. 001-32877)).
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4.7
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Form of Global Note representing the Company’s 2.100% Notes due 2027 (included in Exhibit 4.5) (incorporated by reference to Exhibit 4.3 of the Company’s Current Report on Form 8-K filed on December 1, 2015 (File No. 001-32877)).
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4.8
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Form of Global Note representing the Company’s 2.500% Notes due 2030 (included in Exhibit 4.5) (incorporated by reference to Exhibit 4.4 of the Company’s Current Report on Form 8-K filed on December 1, 2015 (File No. 001-32877)).
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4.9
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Officer’s Certificate of the Company, dated as of November 21, 2016 (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed on November 21, 2016 (File No. 001-32877)).
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4.10
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Form of Global Note representing the Company’s 2.000% Notes due 2021 (included in Exhibit 4.1) (incorporated by reference to Exhibit 4.2 of the Company’s Current Report on Form 8-K filed on November 21, 2016 (File No. 001-32877)).
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4.11
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Form of Global Note representing the Company’s 2.950% Notes due 2026 (included in Exhibit 4.1) (incorporated by reference to Exhibit 4.3 of the Company’s Current Report on Form 8-K filed on November 21, 2016 (File No. 001-32877)).
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4.12
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Form of Global Note representing the Company’s 2.950% Notes due 2046 (included in Exhibit 4.1) (incorporated by reference to Exhibit 4.4 of the Company’s Current Report on Form 8-K filed on November 21, 2016 (File No. 001-32877)).
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10.1
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$3,750,000,000 Amended and Restated Credit Agreement, dated as of October 21, 2015, among Mastercard Incorporated, the several lenders and agents from time to time party thereto, Citibank, N.A., as managing administrative agent and JPMorgan Chase Bank, N.A. as administrative agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed October 23, 2015 (File No. 001-32877)).
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10.1.1
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First Amendment to $3,750,000,000 Amended and Restated Credit Agreement, dated as of October 5, 2016, among Mastercard Incorporated, the several lenders and agents from time to time party thereto, Citibank, N.A., as managing administrative agent and JPMorgan Chase Bank, N.A. as administrative agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 10-Q filed October 28, 2016 (File No. 001-32877)).
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10.2+
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Employment Agreement between Mastercard International Incorporated and Ajay Banga, dated as of July 1, 2010 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed July 8, 2010 (File No. 001-32877)).
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10.3+
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Employment Agreement between Martina Hund-Mejean and Mastercard International, amended and restated as of December 24, 2012 (incorporated by reference to Exhibit 10.5 to the Company’s Annual Report on Form 10-K filed February 14, 2013 (File No. 001-32877)).
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10.4+
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Description of Employment Arrangement with Gary Flood (incorporated by reference to Exhibit 10.11 to the Company’s Annual Report on Form 10-K filed February 18, 2010 (File No. 001-32877)).
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10.5+
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Offer Letter between Ann Cairns and Mastercard International Incorporated, dated June 15, 2011 (incorporated by reference to Exhibit 10.8 to the Company’s Annual Report on Form 10-K filed February 16, 2012 (File No. 001-32877)).
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10.5.1+
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Contract of Employment between Mastercard UK Management Services Limited and Ann Cairns, dated July 6, 2011 (incorporated by reference to Exhibit 10.8.1 to the Company’s Annual Report on Form 10-K filed February 16, 2012 (File No. 001-32877)).
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10.5.2+
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Deed of Employment between Mastercard UK Management Services Limited and Ann Cairns, dated July 6, 2011 (incorporated by reference to Exhibit 10.8.2 to the Company’s Annual Report on Form 10-K filed February 16, 2012 (File No. 001-32877)).
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10.6+
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Mastercard International Senior Executive Annual Incentive Compensation Plan, as amended and restated effective June 9, 2015 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed June 10, 2015 (File No. 001-32877)).
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10.7+
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Mastercard International Incorporated Restoration Program, as amended and restated January 1, 2007 unless otherwise provided (incorporated by reference to Exhibit 10.22 to the Company’s Annual Report on Form 10-K filed February 19, 2009 (File No. 001-32877)).
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10.8+
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Mastercard Incorporated Deferral Plan, as amended and restated effective December 1, 2008 for account balances established after December 31, 2004 (incorporated by reference to Exhibit 10.25 to the Company’s Annual Report on Form 10-K filed February 19, 2009 (File No. 001-32877)).
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10.9+
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Mastercard Incorporated 2006 Long Term Incentive Plan, amended and restated effective June 5, 2012 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed August 1, 2012 (File No. 001-32877)).
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10.10+
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Form of Restricted Stock Unit Agreement for awards under 2006 Long Term Incentive Plan (effective for awards granted on and subsequent to March 1, 2016) (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed April 28, 2016 (File No. 001-32877)).
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10.11+
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Form of Stock Option Agreement for awards under 2006 Long Term Incentive Plan (effective for awards granted on and subsequent to March 1, 2016) (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed April 28, 2016 (File No. 001-32877)).
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10.12+
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Form of Performance Unit Agreement for awards under 2006 Long Term Incentive Plan (effective for awards granted on and subsequent to March 1, 2016) (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed April 28, 2016 (File No. 001-32877)).
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10.13+
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Form of Mastercard Incorporated Long-Term Incentive Plan Non-Competition and Non-Solicitation Agreement for named executive officers (incorporated by reference to Exhibit 10.17 to the Company’s Annual Report on Form 10-K filed February 16, 2012 (File No. 001-32877)).
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10.14+
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Amended and Restated Mastercard International Incorporated Executive Severance Plan, amended and restated as of June 5, 2012 (incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q filed August 1, 2012 (File No. 001-32877)).
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10.15+
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Amended and Restated Mastercard International Incorporated Change in Control Severance Plan, amended and restated as of June 5, 2012 (incorporated by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q filed August 1, 2012 (File No. 001-32877)).
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10.16
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Schedule of Non-Employee Directors’ Annual Compensation effective as of June 9, 2015 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed July 29, 2015 (File No. 001-32877)).
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10.17
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2006 Non-Employee Director Equity Compensation Plan, amended and restated effective as of June 5, 2012 (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed August 1, 2012 (File No. 001-32877)).
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10.18
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Form of Deferred Stock Unit Agreement for awards under 2006 Non-Employee Director Equity Compensation Plan, amended and restated effective June 5, 2012 (effective for awards granted on and subsequent to June 28, 2016) (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed July 28, 2016 (File No. 001-32877)).
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10.19
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Form of Restricted Stock Agreement for awards under 2006 Non-Employee Director Equity Compensation Plan, amended and restated effective June 5, 2012 (effective for awards granted on and subsequent to June 28, 2016) (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed July 28, 2016 (File No. 001-32877)).
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10.20
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Form of Indemnification Agreement between Mastercard Incorporated and certain of its directors (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed May 2, 2006 (File No. 000-50250)).
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10.21
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Form of Indemnification Agreement between Mastercard Incorporated and certain of its director nominees (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed May 2, 2006 (File No. 000-50250)).
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10.22
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Deed of Gift between Mastercard Incorporated and The Mastercard Foundation (incorporated by reference to Exhibit 10.28 to Pre-Effective Amendment No. 5 to the Company’s Registration Statement on Form S-1 filed May 3, 2006 (File No. 333-128337)).
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10.23
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Settlement Agreement, dated as of June 4, 2003, between Mastercard International Incorporated and Plaintiffs in the class action litigation entitled In Re Visa Check/MasterMoney Antitrust Litigation (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed August 8, 2003 (File No. 000-50250)).
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10.24
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Stipulation and Agreement of Settlement, dated July 20, 2006, between Mastercard Incorporated, the several defendants and the plaintiffs in the consolidated federal class action lawsuit titled In re Foreign Currency Conversion Fee Antitrust Litigation (MDL 1409), and the California state court action titled Schwartz v. Visa Int’l Corp., et al. (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed November 1, 2006 (File No. 001-32877)).
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10.25
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Omnibus Agreement Regarding Interchange Litigation Judgment Sharing and Settlement Sharing, dated as of February 7, 2011, by and among Mastercard Incorporated, Mastercard International Incorporated, Visa Inc., Visa U.S.A. Inc., Visa International Service Association and Mastercard’s customer banks that are parties thereto (incorporated by reference to Exhibit 10.33 to Amendment No.1 to the Company’s Annual Report on Form 10-K/A filed on November 23, 2011).
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10.25.1
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Amendment to Omnibus Agreement Regarding Interchange Litigation Judgment Sharing and Settlement Sharing, dated as of August 25, 2014, by and among Mastercard Incorporated, Mastercard International Incorporated, Visa Inc., Visa U.S.A Inc., Visa International Service Association and Mastercard’s customer banks that are parties thereto (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed October 30, 2014 (File No. 001-32877)).
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10.25.2
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Second Amendment to Omnibus Agreement Regarding Interchange Litigation Judgment Sharing and Settlement Sharing, dated as of October 22, 2015, by and among Mastercard Incorporated, Mastercard International Incorporated, Visa Inc., Visa U.S.A Inc., Visa International Service Association and Mastercard’s customer banks that are parties thereto (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed October 29, 2015 (File No. 001-32877)).
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10.26**
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Mastercard Settlement and Judgment Sharing Agreement, dated as of February 7, 2011, by and among Mastercard Incorporated, Mastercard International Incorporated and Mastercard’s customer banks that are parties thereto (incorporated by reference to Exhibit 10.34 to Amendment No.1 to the Company’s Annual Report on Form 10-K/A filed on November 23, 2011).
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10.26.1
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Amendment to Mastercard Settlement and Judgment Sharing Agreement, dated as of August 26, 2014, by and among Mastercard Incorporated, Mastercard International Incorporated and Mastercard’s customer banks that are parties thereto (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed October 30, 2014 (File No. 001-32877)).
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10.26.2
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Second Amendment to Mastercard Settlement and Judgment Sharing Agreement, dated as of October 22, 2015, by and among Mastercard Incorporated, Mastercard International Incorporated and Mastercard’s customer banks that are parties thereto (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed October 29, 2015 (File No. 001-32877)).
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10.27
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Class Settlement Agreement, dated October 19, 2012, by and among Mastercard Incorporated and Mastercard International Incorporated; Visa, Inc., Visa U.S.A. Inc. and Visa International Service Association; the Class Plaintiffs defined therein; and the Customer Banks defined therein (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed October 31, 2012 (File No. 001-32877)).
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12.1*
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Computation of Ratio of Earnings to Fixed Charges.
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21*
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List of Subsidiaries of Mastercard Incorporated.
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23.1*
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Consent of PricewaterhouseCoopers LLP.
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31.1*
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Certification of Ajay Banga, President and Chief Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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31.2*
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Certification of Martina Hund-Mejean, Chief Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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32.1*
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Certification of Ajay Banga, President and Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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32.2*
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Certification of Martina Hund-Mejean, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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99.1*
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Disclosure pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012.
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101.INS*
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XBRL Instance Document
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101.SCH*
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XBRL Taxonomy Extension Schema Document
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101.CAL*
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XBRL Taxonomy Extension Calculation Linkbase Document
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101.DEF*
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XBRL Taxonomy Extension Definition Linkbase Document
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101.LAB*
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XBRL Taxonomy Extension Label Linkbase Document
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101.PRE*
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XBRL Taxonomy Extension Presentation Linkbase Document
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+
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Management contracts or compensatory plans or arrangements.
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*
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Filed or furnished herewith.
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**
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Exhibit omits certain information that has been filed separately with the U.S. Securities and Exchange Commission and has been granted confidential treatment.
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