Document and Entity Information
Document and Entity Information - USD ($) $ in Billions | 12 Months Ended | ||
Dec. 31, 2015 | Feb. 04, 2016 | Jun. 30, 2015 | |
Entity Registrant Name | MASTERCARD INC | ||
Trading Symbol | MA | ||
Entity Central Index Key | 1,141,391 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Large Accelerated Filer | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2015 | ||
Document Fiscal Year Focus | 2,015 | ||
Document Fiscal Period Focus | Q4 | ||
Amendment Flag | false | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 103.7 | ||
Class A Common Stock | |||
Entity Common Stock, Shares Outstanding | 1,089,482,218 | ||
Class B Common Stock | |||
Entity Common Stock, Shares Outstanding | 21,256,530 |
Consolidated Balance Sheet
Consolidated Balance Sheet - USD ($) $ in Millions | Dec. 31, 2015 | Dec. 31, 2014 |
ASSETS | ||
Cash and cash equivalents | $ 5,747 | $ 5,137 |
Restricted cash for litigation settlement | 541 | 540 |
Investments | 991 | 1,238 |
Accounts receivable | 1,079 | 1,109 |
Settlement due from customers | 1,068 | 1,052 |
Restricted security deposits held for customers | 895 | 950 |
Prepaid expenses and other current assets | 664 | 671 |
Deferred income taxes | 0 | 300 |
Total Current Assets | 10,985 | 10,997 |
Property, plant and equipment, net | 675 | 615 |
Deferred income taxes | 317 | 96 |
Goodwill | 1,891 | 1,522 |
Other intangible assets, net | 803 | 714 |
Other assets | 1,598 | 1,385 |
Total Assets | 16,269 | 15,329 |
LIABILITIES AND EQUITY | ||
Accounts payable | 472 | 419 |
Settlement due to customers | 866 | 1,142 |
Restricted security deposits held for customers | 895 | 950 |
Accrued litigation | 709 | 771 |
Accrued expenses | 2,763 | 2,439 |
Other current liabilities | 564 | 501 |
Total Current Liabilities | 6,269 | 6,222 |
Long-term debt | 3,287 | 1,494 |
Deferred income taxes | 79 | 115 |
Other liabilities | 572 | 674 |
Total Liabilities | $ 10,207 | $ 8,505 |
Commitments and Contingencies | ||
Stockholders’ Equity | ||
Additional paid-in-capital | $ 4,004 | $ 3,876 |
Class A treasury stock, at cost, 275 and 237 shares, respectively | (13,522) | (9,995) |
Retained earnings | 16,222 | 13,169 |
Accumulated other comprehensive income (loss) | (676) | (260) |
Total Stockholders’ Equity | 6,028 | 6,790 |
Non-controlling interests | 34 | 34 |
Total Equity | 6,062 | 6,824 |
Total Liabilities and Equity | 16,269 | 15,329 |
Class A Common Stock | ||
Stockholders’ Equity | ||
Common stock value | 0 | 0 |
Total Equity | 0 | 0 |
Class B Common Stock | ||
Stockholders’ Equity | ||
Common stock value | 0 | 0 |
Total Equity | $ 0 | $ 0 |
Consolidated Balance Sheet (Par
Consolidated Balance Sheet (Parenthetical) - $ / shares | Dec. 31, 2015 | Dec. 31, 2014 |
Class A treasury stock, shares | 275,000,000 | 237,000,000 |
Class A Common Stock | ||
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, authorized shares | 3,000,000,000 | 3,000,000,000 |
Common stock, issued | 1,370,000,000 | 1,352,000,000 |
Common stock, outstanding | 1,095,000,000 | 1,115,000,000 |
Class B Common Stock | ||
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, authorized shares | 1,200,000,000 | 1,200,000,000 |
Common stock, issued | 21,000,000 | 37,000,000 |
Common stock, outstanding | 21,000,000 | 37,000,000 |
Consolidated Statement of Opera
Consolidated Statement of Operations - USD ($) shares in Millions, $ in Millions | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | ||
Income Statement [Abstract] | ||||
Net Revenue | $ 9,667 | $ 9,441 | $ 8,312 | |
Operating Expenses | ||||
General and administrative | 3,341 | 3,152 | 2,615 | |
Advertising and marketing | 821 | 862 | 841 | |
Depreciation and amortization | 366 | 321 | 258 | |
Provision for litigation settlement | 61 | 0 | 95 | |
Total operating expenses | 4,589 | 4,335 | 3,809 | |
Operating income | 5,078 | 5,106 | 4,503 | |
Other Income (Expense) | ||||
Investment income | 25 | 28 | 38 | |
Interest expense | (61) | (48) | (14) | |
Other income (expense), net | (84) | (7) | (27) | |
Total other income (expense) | (120) | (27) | (3) | |
Income before income taxes | 4,958 | 5,079 | 4,500 | |
Income tax expense | 1,150 | 1,462 | 1,384 | |
Net Income | $ 3,808 | $ 3,617 | $ 3,116 | |
Basic Earnings per Share | $ 3.36 | $ 3.11 | $ 2.57 | |
Basic Weighted-Average Shares Outstanding | 1,134 | 1,165 | 1,211 | |
Diluted Earnings per Share | $ 3.35 | $ 3.10 | $ 2.56 | |
Diluted Weighted-Average Shares Outstanding | [1] | 1,137 | 1,169 | 1,215 |
[1] | For the years presented, the calculation of diluted EPS excluded a minimal amount of anti-dilutive share-based payment awards. |
Consolidated Statement of Compr
Consolidated Statement of Comprehensive Income - USD ($) $ in Millions | 12 Months Ended | ||||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |||
Statement of Comprehensive Income [Abstract] | |||||
Net Income | $ 3,808 | $ 3,617 | $ 3,116 | ||
Other comprehensive income (loss): | |||||
Foreign currency translation adjustments | (460) | (436) | [1] | 113 | |
Income tax effect | 27 | 0 | 0 | ||
Foreign currency translation adjustments, net of income tax effect | (433) | [1],[2],[3] | (436) | [1] | 113 |
Translation adjustments on net investment hedge | (40) | 0 | 0 | ||
Income tax effect | 14 | 0 | 0 | ||
Translation adjustments on net investment hedge, net of income tax effect | (26) | [1],[2],[3] | 0 | [1] | 0 |
Defined benefit pension and other postretirement plans | (19) | (3) | 7 | ||
Income tax effect | 7 | 2 | (3) | ||
Defined benefit pension and other postretirement plans, net of income tax effect | (12) | (1) | 4 | ||
Reclassification adjustment for defined benefit pension and other postretirement plans | 80 | 7 | 6 | ||
Income tax effect | (29) | (3) | (2) | ||
Reclassification adjustment for defined benefit pension and other postretirement plans, net of income tax effect | 51 | 4 | 4 | ||
Investment securities available-for-sale | (11) | (5) | (3) | ||
Income tax effect | 0 | 1 | 2 | ||
Investment securities available-for-sale, net of income tax effect | (11) | (4) | (1) | ||
Reclassification adjustment for investment securities available-for-sale | 15 | (1) | (5) | ||
Income tax effect | 0 | 0 | 2 | ||
Reclassification adjustment for investment securities available-for-sale, net of income tax effect | 15 | (1) | (3) | ||
Other comprehensive income (loss), net of tax | (416) | [1],[2],[3] | (438) | [1] | 117 |
Comprehensive Income | $ 3,392 | $ 3,179 | $ 3,233 | ||
[1] | During 2015 and 2014, the increase in other comprehensive loss related to foreign currency translation adjustments was driven primarily by the devaluation of the euro and Brazilian real. | ||||
[2] | During 2015, $15 million of an unrealized loss (no tax impact) on a foreign denominated available-for-sale security was reclassified to other income (expense) due to an other-than-temporary impairment. | ||||
[3] | During 2015, $80 million of deferred costs ($51 million after-tax) related to the Company’s defined benefit pension plan and other post retirement plans were reclassified to general and administrative expenses. The deferred costs were driven primarily by the termination of the Company's U.S. defined benefit plan (See Note 11, Pension, Postretirement and Savings Plans). |
Consolidated Statement of Chang
Consolidated Statement of Changes in Equity - USD ($) $ in Millions | Total | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Additional Paid-In Capital | Class A Treasury Stock | Non- Controlling Interests | Class A Common Stock | Class B Common Stock | |
Balance at Dec. 31, 2012 | $ 6,929 | $ 7,354 | $ 61 | $ 3,641 | $ (4,139) | $ 12 | $ 0 | $ 0 | |
Net income | 3,116 | 3,116 | |||||||
Activity related to non-controlling interests | (1) | (1) | |||||||
Other comprehensive income (loss), net of tax | 117 | 117 | |||||||
Cash dividends declared on Class A and Class B common stock ($0.29, $0.49 and $0.67 in 2013, 2014 and 2015, respectively) | (349) | (349) | |||||||
Purchases of treasury stock | (2,443) | (2,443) | |||||||
Share-based payments | 126 | 121 | 5 | ||||||
Conversion of Class B to Class A common stock | 0 | ||||||||
Balance at Dec. 31, 2013 | 7,495 | 10,121 | 178 | 3,762 | (6,577) | 11 | 0 | 0 | |
Net income | 3,617 | 3,617 | |||||||
Activity related to non-controlling interests | 23 | 23 | |||||||
Other comprehensive income (loss), net of tax | (438) | [1] | (438) | ||||||
Cash dividends declared on Class A and Class B common stock ($0.29, $0.49 and $0.67 in 2013, 2014 and 2015, respectively) | (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 | 0 | ||||||||
Balance at Dec. 31, 2014 | 6,824 | 13,169 | (260) | 3,876 | (9,995) | 34 | 0 | 0 | |
Net income | 3,808 | 3,808 | |||||||
Activity related to non-controlling interests | 0 | 0 | |||||||
Other comprehensive income (loss), net of tax | (416) | [1],[2],[3] | (416) | ||||||
Cash dividends declared on Class A and Class B common stock ($0.29, $0.49 and $0.67 in 2013, 2014 and 2015, respectively) | (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 | 0 | ||||||||
Balance at Dec. 31, 2015 | $ 6,062 | $ 16,222 | $ (676) | $ 4,004 | $ (13,522) | $ 34 | $ 0 | $ 0 | |
[1] | During 2015 and 2014, the increase in other comprehensive loss related to foreign currency translation adjustments was driven primarily by the devaluation of the euro and Brazilian real. | ||||||||
[2] | During 2015, $15 million of an unrealized loss (no tax impact) on a foreign denominated available-for-sale security was reclassified to other income (expense) due to an other-than-temporary impairment. | ||||||||
[3] | During 2015, $80 million of deferred costs ($51 million after-tax) related to the Company’s defined benefit pension plan and other post retirement plans were reclassified to general and administrative expenses. The deferred costs were driven primarily by the termination of the Company's U.S. defined benefit plan (See Note 11, Pension, Postretirement and Savings Plans). |
Consolidated Statement of Chan7
Consolidated Statement of Changes in Equity (Parenthetical) - $ / shares | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Statement of Stockholders' Equity [Abstract] | |||
Cash dividends declared on Class A and Class B common stock, per share | $ 0.67 | $ 0.49 | $ 0.29 |
Consolidated Statement of Cash
Consolidated Statement of Cash Flows - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Operating Activities | |||
Net income | $ 3,808 | $ 3,617 | $ 3,116 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Amortization of customer and merchant incentives | 764 | 691 | 603 |
Depreciation and amortization | 366 | 321 | 258 |
Share-based payments | 22 | (15) | 63 |
Deferred income taxes | (16) | (91) | (119) |
Other | (81) | 52 | 67 |
Changes in operating assets and liabilities: | |||
Accounts receivable | (35) | (164) | (42) |
Income taxes receivable | (14) | (8) | 153 |
Settlement due from customers | (98) | 185 | (194) |
Prepaid expenses | (802) | (1,316) | (598) |
Accrued litigation and legal settlements | (63) | (115) | 160 |
Accounts payable | 49 | 61 | (20) |
Settlement due to customers | (186) | (165) | 322 |
Accrued expenses | 325 | 389 | 315 |
Net change in other assets and liabilities | 4 | (35) | 51 |
Net cash provided by operating activities | 4,043 | 3,407 | 4,135 |
Investing Activities | |||
Purchases of investment securities available-for-sale | (974) | (2,385) | (2,526) |
Purchases of other short-term investments held-to-maturity | (918) | 0 | 0 |
Proceeds from sales of investment securities available-for-sale | 703 | 2,477 | 1,488 |
Proceeds from maturities of investment securities available-for-sale | 542 | 1,358 | 1,321 |
Proceeds from maturities of investment securities held-to-maturity | 857 | 0 | 36 |
Purchases of property, plant and equipment | (177) | (175) | (155) |
Capitalized software | (165) | (159) | (144) |
Acquisition of businesses, net of cash acquired | (584) | (525) | 0 |
(Increase) decrease in restricted cash for litigation settlement | (1) | 183 | 3 |
Other investing activities | 2 | (84) | (27) |
Net cash (used in) provided by investing activities | (715) | 690 | (4) |
Financing Activities | |||
Purchases of treasury stock | (3,518) | (3,386) | (2,443) |
Proceeds from debt | 1,735 | 1,530 | 35 |
Dividends paid | (727) | (515) | (255) |
Tax benefit for share-based payments | 42 | 54 | 19 |
Cash proceeds from exercise of stock options | 27 | 28 | 26 |
Other financing activities | (17) | (50) | (11) |
Net cash used in financing activities | (2,458) | (2,339) | (2,629) |
Effect of exchange rate changes on cash and cash equivalents | (260) | (220) | 45 |
Net increase in cash and cash equivalents | 610 | 1,538 | 1,547 |
Cash and cash equivalents - beginning of period | 5,137 | 3,599 | 2,052 |
Cash and cash equivalents - end of period | $ 5,747 | $ 5,137 | $ 3,599 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies | Summary of Significant Accounting Policies Organization MasterCard Incorporated and its consolidated subsidiaries, including MasterCard International Incorporated (“MasterCard International” and together with MasterCard Incorporated, “MasterCard” or the “Company”), is a technology company in the global payments industry that connects consumers, financial institutions, merchants, governments and businesses worldwide, enabling them to use electronic forms of payment instead of cash and checks. The Company facilitates the processing of payment transactions including authorization, clearing and settlement, and delivers related products and services. The Company makes payments easier and more efficient by creating a wide range of payment solutions and services through a family of well-known brands, including MasterCard, Maestro and Cirrus. The Company also provides value-added offerings such as loyalty and reward programs, information services and consulting. The Company’s network is designed to ensure safety and security for the global payments system. A typical transaction on the Company’s network involves four participants in addition to the Company: cardholder, merchant, issuer (the cardholder’s financial institution) and acquirer (the merchant’s financial institution). The Company’s customers encompass a vast array of entities, including financial institutions and other entities that act as “issuers” and “acquirers”, as well as merchants, governments, telecommunication companies and other businesses. The Company does not issue cards, extend credit, determine or receive revenue from interest rates or other fees charged to cardholders by issuers, or establish the rates charged by acquirers in connection with merchants’ acceptance of the Company’s branded cards. Significant Accounting Policies Consolidation and basis of presentation - The consolidated financial statements include the accounts of MasterCard and its majority-owned and controlled entities, including any variable interest entities (“VIEs”) for which the Company is the primary beneficiary. Investments in VIEs for which the Company is not considered the primary beneficiary are not consolidated and are accounted for as equity method or cost method investments and recorded in other assets on the consolidated balance sheet. At December 31, 2015 and 2014 , there were no significant VIEs which required consolidation and the investments were not considered material to the consolidated financial statements. Intercompany transactions and balances have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform to the 2015 presentation. In 2014 and 2013 , net revenue and general and administrative expenses were revised to correctly classify $32 million and $34 million , respectively, of customer incentive expenses as contra revenue instead of general and administrative expenses. This revision had no impact on net income. The Company follows accounting principles generally accepted in the United States of America (“GAAP”). Non-controlling interests represent the equity interest not owned by the Company and are recorded for consolidated entities in which the Company owns less than 100% of the interests. Changes in a parent’s ownership interest while the parent retains its controlling interest are accounted for as equity transactions, and upon loss of control, retained ownership interests are remeasured at fair value, with any gain or loss recognized in earnings. For 2015, 2014 and 2013 , income from non-controlling interests was de minimis and, as a result, amounts are included in the consolidated statement of operations within other income (expense). The Company accounts for investments in common stock or in-substance common stock under the equity method of accounting when it has the ability to exercise significant influence over the investee, generally when it holds between 20% and 50% ownership in the entity. In addition, investments in flow-through entities such as limited partnerships and limited liability companies are also accounted for under the equity method when the Company has the ability to exercise significant influence over the investee, generally when the investment ownership percentage is equal to or greater than 5% of the outstanding ownership interest. The excess of the cost over the underlying net equity of investments accounted for under the equity method is allocated to identifiable tangible and intangible assets and liabilities based on fair values at the date of acquisition. The amortization of the excess of the cost over the underlying net equity of investments and MasterCard’s share of net earnings or losses of entities accounted for under the equity method of accounting is included in other income (expense) on the consolidated statement of operations. The Company accounts for investments in common stock or in-substance common stock under the cost method of accounting when it does not exercise significant influence, generally when it holds less than 20% ownership in the entity or when the interest in a limited partnership or limited liability company is less than 5% and the Company has no significant influence over the operation of the investee. Investments in companies that MasterCard does not control, but that are not in the form of common stock or in-substance common stock, are also accounted for under the cost method of accounting. Investments for which the equity method or cost method of accounting is used are recorded in other assets on the consolidated balance sheet. Use of estimates - The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Future events and their effects cannot be predicted with certainty; accordingly, accounting estimates require the exercise of judgment. The accounting estimates used in the preparation of the Company’s consolidated financial statements may change as new events occur, as more experience is acquired, as additional information is obtained and as the Company’s operating environment changes. Actual results may differ from these estimates. Revenue recognition - Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed or determinable, and collectibility is reasonably assured. Revenue is generally derived from transactional information accumulated by our systems or reported by our customers. The Company’s revenue is based on the volume of activity on cards that carry the Company’s brands, the number of transactions processed or the nature of other payment-related products and services. Volume-based revenue (domestic assessments and cross-border volume fees) is recorded as revenue in the period it is earned, which is when the related volume is generated on the cards. Certain volume-based revenue is based upon information reported to us by our customers. Transaction-based revenue (transaction processing fees) is primarily based on the number and type of transactions and is recognized as revenue in the same period as the related transactions occur. Other payment-related products and services are recognized as revenue in the same period as the related transactions occur or services are rendered. MasterCard has business agreements with certain customers that provide for rebates or other support when the customers meet certain volume hurdles as well as other support incentives such as marketing, which are tied to performance. Rebates and incentives are recorded as a reduction of revenue either when the revenue is recognized by the Company or at the time the rebate or incentive is earned by the customer. Rebates and incentives are calculated based upon estimated performance and the terms of the related business agreements. In addition, MasterCard may make payments to a customer directly related to entering into an agreement, which are generally deferred and amortized over the life of the agreement on a straight-line basis. Business combinations - The Company accounts for business combinations under the acquisition method of accounting. The Company measures the tangible and intangible identifiable assets acquired, liabilities assumed, and any non-controlling interest in the acquiree, at their fair values at the acquisition date. Acquisition-related costs are expensed as incurred and are included in general and administrative expenses. Any excess of purchase price over the fair value of net assets acquired, including identifiable intangible assets, is recorded as goodwill. Intangible assets - Intangible assets consist of capitalized software costs, trademarks, tradenames, customer relationships and other intangible assets, which have finite lives, and customer relationships which have indefinite lives. Intangible assets with finite useful lives are amortized over their estimated useful lives, on a straight-line basis, which range from one to ten years. Capitalized software includes internal and external costs incurred directly related to the design, development and testing phases of each capitalized software project. Impairment of assets - Long-lived assets, other than goodwill and indefinite-lived intangible assets, are tested for impairment whenever events or circumstances indicate that their carrying amount may not be recoverable. If the carrying value of the asset cannot be recovered from estimated future cash flows, undiscounted and without interest, the fair value of the asset is calculated using the present value of estimated net future cash flows. If the carrying amount of the asset exceeds its fair value, an impairment is recorded. Goodwill and indefinite-lived intangible assets are not amortized and are tested annually for impairment in the fourth quarter, or sooner when circumstances indicate an impairment may exist. Goodwill is tested for impairment at the reporting unit level. The impairment evaluation utilizes a quantitative assessment using a two-step impairment test. The first step is to compare the reporting unit’s carrying value, including goodwill, to the fair value. If the fair value exceeds the carrying value, then no potential impairment is considered to exist. If the carrying value exceeds the fair value, the second step is performed to determine if the implied fair value of the reporting unit’s goodwill exceeds the carrying value of the reporting unit. An impairment charge would be recorded if the carrying value exceeds the implied fair value. Impairment charges, if any, are recorded in general and administrative expenses. The impairment test for indefinite-lived intangible assets consists of a qualitative assessment to evaluate all relevant events and circumstances that could affect the significant inputs used to determine the fair value of indefinite-lived intangible assets. If the qualitative assessment indicates that it is more likely than not that indefinite-lived intangible assets are impaired, then a quantitative assessment is required. Based on the qualitative assessment performed in 2015, it was determined that the Company’s indefinite-lived intangible assets were not impaired. Litigation - The Company is a party to certain legal and regulatory proceedings with respect to a variety of matters. The Company evaluates the likelihood of an unfavorable outcome of all legal or regulatory proceedings to which it is a party and accrues a loss contingency when the loss is probable and reasonably estimable. These judgments are subjective based on the status of the legal or regulatory proceedings, the merits of its defenses and consultation with in-house and external legal counsel. Legal costs are expensed as incurred and recorded in general and administrative expenses. Settlement and other risk management - MasterCard’s rules guarantee the settlement of many of the MasterCard, Cirrus and Maestro-branded transactions between its issuers and acquirers. Settlement exposure is the outstanding settlement risk to customers under MasterCard’s rules due to the difference in timing between the payment transaction date and subsequent settlement. While the term and amount of the guarantee are unlimited, the duration of settlement exposure is short term and typically limited to a few days. In the event that MasterCard effects a payment on behalf of a failed customer, MasterCard may seek an assignment of the underlying receivables of the failed customer. Customers may be charged for the amount of any settlement loss incurred during the ordinary course activities of the Company. The Company also enters into agreements in the ordinary course of business under which the Company agrees to indemnify third parties against damages, losses and expenses incurred in connection with legal and other proceedings arising from relationships or transactions with the Company. As the extent of the Company’s obligations under these agreements depends entirely upon the occurrence of future events, the Company’s potential future liability under these agreements is not determinable. The Company accounts for each of its guarantees by recording the guarantee at its fair value at the inception or modification date through earnings. Income taxes - The Company follows an asset and liability based approach in accounting for income taxes as required under GAAP. Deferred income tax assets and liabilities are recorded to reflect the tax consequences on future years of temporary differences between the financial statement carrying amounts and income tax bases of assets and liabilities. Deferred income taxes are displayed as separate line items on the consolidated balance sheet. In 2015, the Company early adopted accounting guidance issued by the Financial Accounting Standards Board (“FASB”) in the fourth quarter of 2015, which requires all deferred income taxes to be recorded as non-current. The standard was applied prospectively, and as such, the prior period balance sheet was not reclassified. Valuation allowances are provided against assets which are not more likely than not to be realized. The Company recognizes all material tax positions, including uncertain tax positions in which it is more likely than not that the position will be sustained based on its technical merits and if challenged by the relevant taxing authorities. At each balance sheet date, unresolved uncertain tax positions are reassessed to determine whether subsequent developments require a change in the amount of recognized tax benefit. The allowance for uncertain tax positions is recorded in other current and noncurrent liabilities on the consolidated balance sheet. The Company records interest expense related to income tax matters as interest expense in its statement of operations. The Company includes penalties related to income tax matters in the income tax provision. The Company does not provide for U.S. federal income tax and foreign withholding taxes on undistributed earnings from non-U.S. subsidiaries when such earnings are intended to be reinvested indefinitely outside of the U.S. Cash and cash equivalents - Cash and cash equivalents include certain investments with daily liquidity and with a maturity of three months or less from the date of purchase. Cash equivalents are recorded at cost, which approximates fair value. Restricted cash - The Company classifies cash as restricted when the cash is unavailable for withdrawal or usage for general operations. Restrictions may include legally restricted deposits, contracts entered into with others, or the Company’s statements of intention with regard to particular deposits. In December 2012, the Company made a payment into a qualified cash settlement fund related to its U.S. merchant class litigation. The Company has presented these funds as restricted cash for litigation settlement since the use of the funds under the qualified cash settlement fund is restricted for payment under the settlement agreement. Fair value - The Company measures certain financial assets and liabilities at fair value on a recurring basis by estimating the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants. The Company classifies these recurring fair value measurements into a three-level hierarchy (“Valuation Hierarchy”). The Valuation Hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. A financial instrument’s categorization within the Valuation Hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels of the Valuation Hierarchy are as follows: • 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. Certain assets are measured at fair value on a nonrecurring basis. The Company’s assets measured at fair value on a nonrecurring basis include property, plant and equipment, nonmarketable equity investments, goodwill and other intangible assets. These assets are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment. The valuation methods for goodwill and other intangible assets involve assumptions concerning comparable company multiples, discount rates, growth projections and other assumptions of future business conditions. The Company uses an income approach for estimating the fair value of its intangible assets and a market approach for estimating the fair value of its reporting unit, when necessary. As the assumptions employed to measure these assets and liabilities on a nonrecurring basis are based on management’s judgment using internal and external data, these fair value determinations are classified in Level 3 of the Valuation Hierarchy. Investment securities - The Company classifies investments in debt and equity securities as available-for-sale. Available-for-sale securities that are available to meet the Company’s current operational needs are classified as current assets. Available-for-sale securities that are not available to meet the Company’s current operational needs are classified as non-current assets. The investments in debt and equity securities are carried at fair value, with unrealized gains and losses, net of applicable taxes, recorded as a separate component of accumulated other comprehensive income (loss) on the consolidated statement of comprehensive income. Net realized gains and losses on debt and equity securities are recognized in investment income on the consolidated statement of operations. The specific identification method is used to determine realized gains and losses. The Company classifies time deposits with maturities greater than 3 months as held-to-maturity. Held-to-maturity securities that mature within one year are classified as current assets while held-to-maturity securities with maturities of greater than one year are classified as non-current assets. Time deposits are carried at amortized cost on the consolidated balance sheet and are intended to be held until maturity. Derivative financial instruments - The Company records all derivatives at fair value. The Company’s foreign exchange forward and option contracts are included in Level 2 of the Valuation Hierarchy as the fair value of these contracts are based on inputs, which are observable based on broker quotes for the same or similar instruments. Changes in the fair value of derivative instruments are reported in current-period earnings. These derivative contracts hedge foreign exchange risk and were not entered into for trading or speculative purposes. The Company did not have any derivative contracts accounted for under hedge accounting as of December 31, 2015 and 2014 . The Company has numerous investments in its foreign subsidiaries. The net assets of these subsidiaries are exposed to volatility in foreign currency exchange rates. The Company uses foreign currency denominated debt to hedge a portion of its net investment in foreign operations against adverse movements in exchange rates. The effective portion of the foreign currency gains and losses related to the foreign currency denominated debt are reported in accumulated other comprehensive income (loss) as part of the cumulative translation adjustment component of equity. The ineffective portion, if any, is recognized in earnings in the current period. The Company evaluates the effectiveness of the net investment hedge each quarter. Settlement due from/due to customers - The Company operates systems for clearing and settling payment transactions among MasterCard customers. Net settlements are generally cleared daily among customers through settlement cash accounts by wire transfer or other bank clearing means. However, some transactions may not settle until subsequent business days, resulting in amounts due from and due to MasterCard customers. Restricted security deposits held for MasterCard customers - MasterCard requires collateral from certain customers for settlement of their transactions. The majority of collateral for settlement is in the form of standby letters of credit and bank guarantees which are not recorded on the balance sheet. Additionally, MasterCard holds cash deposits and certificates of deposit from certain customers of MasterCard as collateral for settlement of their transactions. These assets are fully offset by corresponding liabilities included on the consolidated balance sheet. Property, plant and equipment - Property, plant and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the assets. Depreciation of leasehold improvements and amortization of capital leases is included in depreciation and amortization expense. The useful lives of the Company’s assets are as follows: 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 Lease term Leases - The Company enters into operating and capital leases for the use of premises, software and equipment. Rent expense related to lease agreements that contain lease incentives is recorded on a straight-line basis over the term of the lease. Pension and other postretirement plans - The Company recognizes the funded status of its single-employer defined benefit pension plans or postretirement plans as assets or liabilities on its balance sheet and recognizes changes in the funded status in the year in which the changes occur through accumulated other comprehensive income (loss). The funded status is measured as the difference between the fair value of plan assets and the benefit obligation at December 31, the measurement date. The fair value of plan assets represents the current market value of the pension assets. Overfunded plans are aggregated and recorded in long-term other assets, while underfunded plans are aggregated and recorded as accrued expenses and long-term other liabilities. Net periodic pension and postretirement benefit cost/(income) is recognized in general and administrative expenses in the consolidated statement of operations. These costs include service costs, interest cost, expected return on plan assets, amortization of prior service costs or credits and gains or losses previously recognized as a component of accumulated other comprehensive income (loss). Defined contribution plans - The Company’s contributions to defined contribution plans are recorded when employees render service to the Company. The charge is recorded in general and administrative expenses. Advertising and marketing - The cost of media advertising is expensed when the advertising takes place. Advertising production costs are expensed as incurred. Promotional items are expensed at the time the promotional event occurs. Sponsorship costs are recognized over the period of benefit. Foreign currency remeasurement and translation - Monetary assets and liabilities are remeasured to functional currencies using current exchange rates in effect at the balance sheet date. Non-monetary assets and liabilities are recorded at historical exchange rates. Revenue and expense accounts are remeasured at the weighted-average exchange rate for the period. Resulting exchange gains and losses related to remeasurement are included in general and administrative expenses on the consolidated statement of operations. Where a non-U.S. currency is the functional currency, translation from that functional currency to U.S. dollars is performed for balance sheet accounts using current exchange rates in effect at the balance sheet date and for revenue and expense accounts using a weighted-average exchange rate for the period. Resulting translation adjustments are reported as a component of accumulated other comprehensive income (loss). Treasury stock - The Company records the repurchase of shares of its common stock at cost on the trade date of the transaction. These shares are considered treasury stock, which is a reduction to stockholders’ equity. Treasury stock is included in authorized and issued shares but excluded from outstanding shares. Share-based payments - The Company measures share-based compensation expense at the grant date, based on the estimated fair value of the award and uses the straight-line method of attribution, net of estimated forfeitures, for expensing awards over the requisite employee service period. The Company estimates the fair value of its non-qualified stock option awards (“Options”) using a Black-Scholes valuation model. The fair value of restricted stock units (“RSUs”) is determined and fixed on the grant date based on the Company’s stock price, adjusted for the exclusion of dividend equivalents. The Monte Carlo simulation valuation model is used to determine the grant date fair value of performance stock units (“PSUs”) granted. All share-based compensation expenses are recorded in general and administrative expenses. Earnings per share - The Company calculates basic earnings per share (“EPS”) by dividing net income by the weighted-average number of common shares outstanding during the year. Diluted EPS is calculated by dividing net income by the weighted-average number of common shares outstanding during the year, adjusted for the potentially dilutive effect of stock options and unvested stock units using the treasury stock method. Recent accounting pronouncements Income taxes - In November 2015, the FASB issued accounting guidance that removes the reporting requirement to split deferred income taxes between current and non-current. Instead, the new accounting guidance requires all deferred income taxes to be reported as non-current. This standard is effective for fiscal years beginning after December 15, 2016. Early adoption is permitted. The Company early adopted the accounting guidance effective December 31, 2015. The Company applied the new guidance prospectively and, as such, prior periods were not reclassified. Debt issuance costs - In April 2015, the FASB issued accounting guidance that will change the current presentation of debt issuance costs on the balance sheet. This new guidance will move debt issuance costs from the assets section of the balance sheet to the liabilities section as a direct deduction from the carrying amount of the debt issued. The Company will adopt the accounting guidance effective January 1, 2016 and does not anticipate that it will have a material impact on its consolidated financial statements. Revenue recognition - In May 2014, the FASB issued accounting guidance that provides a single, comprehensive revenue recognition model for all contracts with customers and supersedes most of the existing revenue recognition requirements. Under this guidance, an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued accounting guidance that delayed the effective date of this standard by one year, making the guidance effective for fiscal years beginning after December 15, 2017. Early application is permitted as of the original effective date, December 15, 2016. The Company will adopt the new accounting guidance effective January 1, 2018. The accounting guidance permits either a full retrospective or a modified retrospective transition method. The Company is in the process of evaluating which transition method it will apply and the potential effects this guidance will have on its consolidated financial statements. Income taxes - In July 2013, the FASB issued accounting guidance that requires entities to present an unrecognized tax benefit net with certain deferred tax assets when specific requirements are met. The Company adopted the revised accounting guidance effective January 1, 2014. This new accounting guidance did not have a material impact on the Company’s consolidated financial statements. Foreign currency - In March 2013, the FASB issued clarifying accounting guidance on the release of cumulative translation adjustment into net income when an entity ceases to have a controlling financial interest in a subsidiary or a group of assets that is a business within a foreign entity. The revised accounting guidance became effective January 1, 2014 and did not have an impact on the Company’s consolidated financial statements. |
Acquisitions
Acquisitions | 12 Months Ended |
Dec. 31, 2015 | |
Business Combinations [Abstract] | |
Acquisitions | Acquisitions In 2015 , the Company acquired two businesses for $609 million in cash. For these businesses acquired, the Company recorded $474 million as goodwill representing the preliminary estimates of the aggregate excess of the purchase consideration over the fair value of net assets acquired. The Company acquired eight businesses in 2014 . In 2014, two of the business combinations were achieved in stages, with non-controlling interests acquired in previous years. One of the business combinations was a transaction for less than 100 percent of the equity interest. The total consideration transferred was $575 million , of which $509 million was recorded as goodwill. A portion of the goodwill related to the 2015 and 2014 acquisitions is expected to be deductible for local tax purposes. The Company made no acquisitions in 2013. The consolidated financial statements include the operating results of the acquired businesses from the dates of their respective acquisition. Pro forma information related to the acquisitions was not included because the impact on the Company’s consolidated results of operations was not considered to be material. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2015 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share The components of basic and diluted EPS for common shares for each of the years ended December 31 were as follows: 2015 2014 2013 (in millions, except per share data) Numerator: Net income $ 3,808 $ 3,617 $ 3,116 Denominator: Basic weighted-average shares outstanding 1,134 1,165 1,211 Dilutive stock options and stock units 3 4 4 Diluted weighted-average shares outstanding 1 1,137 1,169 1,215 Earnings per Share Basic $ 3.36 $ 3.11 $ 2.57 Diluted $ 3.35 $ 3.10 $ 2.56 * Table may not sum due to rounding. 1 For the years presented, the calculation of diluted EPS excluded a minimal amount of anti-dilutive share-based payment awards. |
Supplemental Cash Flows
Supplemental Cash Flows | 12 Months Ended |
Dec. 31, 2015 | |
Supplemental Cash Flow Information [Abstract] | |
Supplemental Cash Flows | Supplemental Cash Flows The following table includes supplemental cash flow disclosures for each of the years ended December 31: 2015 2014 2013 (in millions) Cash paid for income taxes, net of refunds $ 1,097 $ 2,036 $ 1,215 Cash paid for interest 44 24 2 Cash paid for legal settlements 124 28 — Non-cash investing and financing activities: Dividends declared but not yet paid 212 184 131 Assets recorded pursuant to capital lease 10 8 7 Fair value of assets acquired, net of cash acquired 626 768 — Fair value of liabilities assumed related to acquisitions 42 141 — |
Fair Value and Investment Secur
Fair Value and Investment Securities | 12 Months Ended |
Dec. 31, 2015 | |
Financial Instruments, Financial Liabilities, Balance Sheet Groupings [Abstract] | |
Fair Value and Investment Securities | Fair Value and Investment Securities The Company classifies its fair value measurements of financial instruments into a three-level hierarchy (the “Valuation Hierarchy”). Except for the reclassification of U.S. government securities from Level 2 to Level 1, there were no transfers made among the three levels in the Valuation Hierarchy for 2015 and 2014 . The distribution of the Company’s financial instruments which are measured at fair value on a recurring basis within the Valuation Hierarchy was as follows: December 31, 2015 Quoted Prices in Active Markets (Level 1) 1 Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Fair Value (in millions) Municipal securities $ — $ 62 $ — $ 62 U.S. government and agency securities 2 31 41 — 72 Corporate securities — 630 — 630 Asset-backed securities — 57 — 57 Other 2 52 — 54 Total $ 33 $ 842 $ — $ 875 December 31, 2014 Quoted Prices in Active Markets (Level 1) 1 Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Fair Value (in millions) Municipal securities $ — $ 135 $ — $ 135 U.S. government and agency securities 2 85 114 — 199 Corporate securities — 618 — 618 Asset-backed securities — 178 — 178 Other 13 56 — 69 Total $ 98 $ 1,101 $ — $ 1,199 1 During 2015, U.S. government securities were reclassified from Level 2 to Level 1 due to a reassessment of the availability of quoted prices. Prior period amounts have been revised to conform to the 2015 presentation. 2 Excludes amounts held in escrow related to the U.S. merchant class litigation settlement of $541 million and $540 million at December 31, 2015 and December 31, 2014 , which would be included in Level 1 of the Valuation Hierarchy. See Note 10 (Accrued Expenses and Accrued Litigation) and Note 18 (Legal and Regulatory Proceedings) for further details. The fair value of the Company’s available-for-sale municipal securities, U.S. government agency securities, corporate securities, asset-backed securities and other fixed income securities included in the Other category are based on quoted prices for similar assets in active markets and are therefore included in Level 2 of the Valuation Hierarchy. The Company’s foreign currency derivative contracts have also been classified within Level 2 in the Other category of the Valuation Hierarchy, as the fair value is based on broker quotes for the same or similar derivative instruments. See Note 20 (Foreign Exchange Risk Management) for further details. The Company’s U.S. government securities and marketable equity securities are classified within Level 1 of the Valuation Hierarchy as the fair values are based on unadjusted quoted prices for identical assets in active markets. Financial Instruments - Non-Recurring Measurements Certain financial instruments are carried on the consolidated balance sheet at cost, which approximates fair value due to their short-term, highly liquid nature. These instruments include cash and cash equivalents, restricted cash, time deposits, accounts receivable, settlement due from customers, restricted security deposits held for customers, accounts payable, settlement due to customers and accrued expenses. In addition, nonmarketable equity investments are measured at fair value on a nonrecurring basis for purposes of initial recognition and impairment testing. Investments on the Consolidated Balance Sheet include both available-for-sale and held-to-maturity securities. Available-for-sale securities are measured at fair value on a recurring basis and are included in the Valuation Hierarchy table above. Held-to-maturity securities are made up of time deposits with maturities of greater than three months and less than one year and are classified as Level 2 of the Valuation Hierarchy, but are not included in the table above due to their fair values not being measured on a recurring basis. At December 31, 2015 and December 31, 2014 , the cost, which approximates fair value, of the Company’s held-to-maturity securities was $130 million and $70 million , respectively. Debt The Company estimates the fair value of its long-term debt using the market pricing approach which applies market assumptions for relevant though not directly comparable undertakings. Long-term debt is classified as Level 2 of the Valuation Hierarchy. At December 31, 2015 the carrying value and fair value of long-term debt was $3.3 billion . At December 31, 2014 , the carrying value and fair value of long-term debt was $1.5 billion . Settlement and Other Guarantee Liabilities The Company estimates the fair value of its settlement and other guarantees using the market pricing approach which applies market assumptions for relevant though not directly comparable undertakings, as the latter are not observable in the market given the proprietary nature of such guarantees. At December 31, 2015 and 2014 , the carrying value and fair value of settlement and other guarantee liabilities were not material. Settlement and other guarantee liabilities are classified as Level 3 of the Valuation hierarchy as their valuation requires substantial judgment and estimation of factors that are not currently observable in the market. For additional information regarding the Company’s settlement and other guarantee liabilities, see Note 19 (Settlement and Other Risk Management). Non-Financial Instruments Certain assets are measured at fair value on a nonrecurring basis for purposes of initial recognition and impairment testing. The Company’s non-financial assets measured at fair value on a nonrecurring basis include property, plant and equipment, goodwill and other intangible assets. These assets are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment. Amortized Costs and Fair Values – Available-for-Sale Investment Securities The major classes of the Company’s available-for-sale investment securities, for which unrealized gains and losses are recorded as a separate component of other comprehensive income on the consolidated statement of comprehensive income, and their respective amortized cost basis and fair values as of December 31, 2015 and 2014 were as follows: December 31, 2015 Amortized Cost Gross Unrealized Gain Gross Unrealized Loss Fair Value (in millions) Municipal securities $ 62 $ — $ — $ 62 U.S. government and agency securities 72 — — 72 Corporate securities 631 — (1 ) 630 Asset-backed securities 57 — — 57 Other 39 1 — 40 Total $ 861 $ 1 $ (1 ) $ 861 December 31, 2014 Amortized Cost Gross Unrealized Gain Gross Unrealized Loss Fair Value (in millions) Municipal securities $ 135 $ — $ — $ 135 U.S. government and agency securities 199 — — 199 Corporate securities 619 — (1 ) 618 Asset-backed securities 178 — — 178 Other 41 1 (4 ) 38 Total $ 1,172 $ 1 $ (5 ) $ 1,168 The municipal securities are primarily comprised of tax-exempt bonds and are diversified across states and sectors. The U.S. government and agency securities are primarily invested in U.S. government bonds and U.S. government sponsored agency bonds. Corporate securities are comprised of commercial paper and corporate bonds. The asset-backed securities are investments in bonds which are collateralized primarily by automobile loan receivables. Investment Maturities: The maturity distribution based on the contractual terms of the Company’s investment securities at December 31, 2015 was as follows: Available-For-Sale Amortized Cost Fair Value (in millions) Due within 1 year $ 309 $ 309 Due after 1 year through 5 years 544 543 Due after 5 years through 10 years 1 1 Due after 10 years 6 6 No contractual maturity 1 1 2 Total $ 861 $ 861 1 Equity securities have been included in the No contractual maturity category, as these securities do not have stated maturity dates. Investment Income Interest income primarily consists of interest income generated from cash, cash equivalents and investments. Gross realized gains and losses are recorded within investment income on the Company’s consolidated statement of operations. The gross realized gains and losses from the sales of available-for-sale securities for 2015 , 2014 and 2013 were not significant. |
Prepaid Expenses and Other Asse
Prepaid Expenses and Other Assets | 12 Months Ended |
Dec. 31, 2015 | |
Prepaid Expense and Other Assets [Abstract] | |
Prepaid Expenses and Other Assets | Prepaid Expenses and Other Assets Prepaid expenses and other current assets consisted of the following at December 31: 2015 2014 (in millions) Customer and merchant incentives $ 345 $ 260 Prepaid income taxes 72 237 Other 247 174 Total prepaid expenses and other current assets $ 664 $ 671 Other assets consisted of the following at December 31: 2015 2014 (in millions) Customer and merchant incentives $ 810 $ 556 Nonmarketable equity investments 166 245 Prepaid income taxes 352 407 Income taxes receivable 160 89 Other 110 88 Total other assets $ 1,598 $ 1,385 Customer and merchant incentives represent payments made or amounts to be paid to customers and merchants under business agreements. Costs directly related to entering into such an agreement are generally deferred and amortized over the life of the agreement. Amounts to be paid for these incentives and the related liability were included in accrued expenses and other liabilities. Non-current prepaid income taxes, included in the other asset table above, primarily consists of taxes paid in the fourth quarter of 2014 relating to the deferred charge resulting from the reorganization of our legal entity and tax structure to better align with our business footprint of our non-U.S. operations. |
Property, Plant and Equipment
Property, Plant and Equipment | 12 Months Ended |
Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment consisted of the following at December 31: 2015 2014 (in millions) Building, building equipment and land $ 503 $ 510 Equipment 497 398 Furniture and fixtures 54 53 Leasehold improvements 112 91 Property, plant and equipment 1,166 1,052 Less: accumulated depreciation and amortization (491 ) (437 ) Property, plant and equipment, net $ 675 $ 615 As of December 31, 2015 and 2014 , capital leases of $20 million and $29 million , respectively, were included in equipment. Accumulated amortization of these capital leases was $9 million and $17 million as of December 31, 2015 and 2014 , respectively. Depreciation and amortization expense for the above property, plant and equipment was $131 million , $107 million and $92 million for 2015 , 2014 and 2013 , respectively. |
Goodwill
Goodwill | 12 Months Ended |
Dec. 31, 2015 | |
Goodwill [Abstract] | |
Goodwill | Goodwill The changes in the carrying amount of goodwill for the years ended December 31, 2015 and 2014 were as follows: 2015 2014 (in millions) Beginning balance $ 1,522 $ 1,122 Goodwill acquired during the year 458 525 Foreign currency translation (89 ) (106 ) Other — (19 ) Ending balance $ 1,891 $ 1,522 The Company had no accumulated impairment losses for goodwill at December 31, 2015 or 2014 . Based on annual impairment testing, the Company’s goodwill is not impaired. |
Other Intangible Assets
Other Intangible Assets | 12 Months Ended |
Dec. 31, 2015 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |
Other Intangible Assets | Other Intangible Assets The following table sets forth net intangible assets, other than goodwill, at December 31: 2015 2014 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount (in millions) Amortized intangible assets: Capitalized software $ 1,086 $ (625 ) $ 461 $ 839 $ (496 ) $ 343 Trademarks and tradenames 30 (23 ) 7 48 (38 ) 10 Customer relationships 318 (149 ) 169 292 (115 ) 177 Other 25 (19 ) 6 20 (14 ) 6 Total 1,459 (816 ) 643 1,199 (663 ) 536 Unamortized intangible assets: Customer relationships 160 — 160 178 — 178 Total $ 1,619 $ (816 ) $ 803 $ 1,377 $ (663 ) $ 714 The increase in the net carrying amount of amortized intangible assets in 2015 was primarily related to our acquired businesses. Certain intangible assets, including amortizable and unamortizable customer relationships and trademarks and tradenames, are denominated in foreign currencies. As such, the change in intangible assets includes a component attributable to foreign currency translation. Amortization on the assets above amounted to $235 million , $214 million and $166 million in 2015, 2014 and 2013 , respectively. The following table sets forth the estimated future amortization expense on amortizable intangible assets on the balance sheet at December 31, 2015 for the years ending December 31: (in millions) 2016 $ 231 2017 168 2018 105 2019 47 2020 and thereafter 92 $ 643 |
Accrued Expenses and Accrued Li
Accrued Expenses and Accrued Litigation | 12 Months Ended |
Dec. 31, 2015 | |
Accrued Liabilities [Abstract] | |
Accrued Expenses and Accrued Litigation | Accrued Expenses and Accrued Litigation Accrued expenses consisted of the following at December 31: 2015 2014 (in millions) Customer and merchant incentives $ 1,748 $ 1,433 Personnel costs 473 531 Advertising 114 154 Income and other taxes 143 105 Other 285 216 Total accrued expenses $ 2,763 $ 2,439 As of December 31, 2015 and 2014 , personnel costs included a restructuring accrual with a remaining balance of $25 million and $84 million , respectively. This accrual relates to a restructuring charge of $87 million recorded in general and administrative expenses in 2014 . The Company restructured its organization to align with its strategic priorities and to best meet the Company’s continued growth. The Company is substantially complete with these restructuring activities. The decrease in the balance was primarily due to payments and lower than expected severance actions. As of December 31, 2015 and 2014 , the Company’s provision related to U.S. merchant litigations was $709 million and $771 million , respectively. These amounts are not included in the accrued expenses table above and are separately reported as accrued litigation on the consolidated balance sheet. During 2015 and 2014, MasterCard executed settlement agreements with a number of opt-out merchants and no adjustment to the amount previously recorded was deemed necessary. See Note 18 (Legal and Regulatory Proceedings) for further discussion of the U.S. merchant class litigation. |
Pension, Postretirement and Sav
Pension, Postretirement and Savings Plans | 12 Months Ended |
Dec. 31, 2015 | |
Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract] | |
Pension, Postretirement and Savings Plans | Pension, Postretirement and Savings Plans Defined Contribution The Company sponsors defined contribution retirement plans. The primary plan is the MasterCard Savings Plan, a 401(k) plan for substantially all of the U.S. employees, which is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended. In addition, the Company has several defined contribution plans outside of the U.S. The Company’s total expense for its defined contribution plans was $61 million , $57 million and $51 million in 2015, 2014 and 2013 , respectively. Defined Benefit and Other Postretirement Plans During the third quarter of 2015, the Company terminated its non-contributory, qualified, U.S. defined benefit pension plan (the “U.S. Employee Pension Plan”). The U.S. Employee Pension Plan participants had the option to receive a lump sum distribution or to participate in an annuity with a third-party insurance company. As a result of this termination, the Company settled its obligation for $287 million , which resulted in a pension settlement charge of $79 million recorded in general and administrative expense during 2015. The Company maintains a postretirement plan providing health coverage and life insurance benefits for substantially all of its U.S. employees hired before July 1, 2007 (“U.S. Postretirement Plan”). As of December 31, 2015 and 2014 , the U.S. postretirement plan was unfunded and the Company’s obligation was $59 million and $78 million , respectively, and was recorded in Other Liabilities. The Company’s total expense for its U.S. postretirement plan was not material to the Company’s consolidated financial statements. The Company sponsors pension and postretirement plans for non-U.S. employees (“non-U.S. plans”) that cover various benefits specific to their country of employment. The Company recognizes the funded status of its defined benefit pension plans and other postretirement benefit plans, measured as the difference between the fair value of the plan assets and the projected benefit obligation, in the Consolidated Balance Sheet. The non-U.S. plans do not have a material impact on the Company’s consolidated financial statements, individually or in the aggregate. |
Debt (Notes)
Debt (Notes) | 12 Months Ended |
Dec. 31, 2015 | |
Debt Instruments [Abstract] | |
Debt | Debt In December 2015, the Company issued €1.65 billion ( $1.8 billion as translated at the December 31, 2015 exchange rate) aggregate principal amount of notes. This offering consisted of €700 million aggregate principal amount of notes due 2022, €800 million aggregate principal amount of notes due 2027 and €150 million aggregate principal amount of notes due 2030 (collectively the “Euro Notes”). The net proceeds from the issuance of the Euro Notes, after deducting the underwriting discount and offering expenses, were $1.723 billion . Interest on the Euro Notes is payable annually on December 1, commencing on December 1, 2016. In March 2014, the Company issued $500 million aggregate principal amount of notes due April 1, 2019 and $1 billion aggregate principal amount of notes due April 1, 2024 (collectively the “USD Notes”). The net proceeds from the issuance of the USD Notes, after deducting the underwriting discount and offering expenses, were $1.484 billion . Interest on the USD Notes is payable semi-annually on April 1 and October 1. The Company is not subject to any financial covenants under the Euro Notes and the USD Notes (collectively the “Notes”). The Notes may be redeemed in whole, or in part, at our option at any time for a specified make-whole amount. The Notes are senior unsecured obligations and would rank equally with any future unsecured and unsubordinated indebtedness. The proceeds of the Notes are to be used for general corporate purposes. Long-term debt consisted of the following at December 31: Stated Interest Rate Effective Interest Rate 2015 2014 (in millions, except percentages) USD Notes Due 2019 2.000 % 2.178 % $ 500 $ 500 Due 2024 3.375 % 3.484 % 1,000 1,000 Euro Notes Due 2022 1.100 % 1.265 % 763 — Due 2027 2.100 % 2.189 % 872 — Due 2030 2.500 % 2.562 % 164 — 3,299 1,500 Less: Unamortized discount (12 ) (6 ) Long-term debt $ 3,287 $ 1,494 Scheduled annual maturities of the principal portion of long-term debt outstanding at December 31, 2015 are summarized below. Amounts exclude capital lease obligations disclosed in Note 16 (Commitments). (in millions) 2016 - 2018 $ — 2019 500 2020 — Thereafter 2,799 Total $ 3,299 In November 2015, the Company established a commercial paper program (the “Commercial Paper Program”). Under the Commercial Paper Program, the Company is authorized to issue up to $3.75 billion in outstanding notes, with maturities up to 397 days from the date of issuance. The Commercial Paper Program is available in U.S. dollars. In conjunction with the Commercial Paper Program, the Company entered into a committed unsecured $3.75 billion revolving credit facility (the “Credit Facility”) on October 21, 2015, which expires on October 21, 2020. The Credit Facility amended and restated the Company’s prior credit facility. Borrowings under the Credit Facility are available in U.S. dollars and/or euros. The facility fee and borrowing cost under the Credit Facility are contingent upon the Company’s credit rating. At December 31, 2015 , the applicable facility fee was 8 basis points on the average daily commitment (whether or not utilized). In addition to the facility fee, interest on borrowings under the Credit Facility would be charged at the London Interbank Offered Rate (LIBOR) plus an applicable margin of 79.5 basis points, or an alternative base rate. The Credit Facility contains customary representations, warranties, events of default and affirmative and negative covenants, including a financial covenant limiting the maximum level of consolidated debt to earnings before interest, taxes, depreciation and amortization (EBITDA), which are substantially similar to the prior credit facility. MasterCard was in compliance in all material respects with the covenants of the Credit Facility at December 31, 2015 and 2014 . The majority of Credit Facility lenders are customers or affiliates of customers of MasterCard. Borrowings under the Commercial Paper Program and the Credit Facility are used to provide liquidity for general corporate purposes, including providing liquidity in the event of one or more settlement failures by the Company’s customers. The Company may borrow and repay amounts under the Commercial Paper Program and Credit Facility from time to time for business continuity and planning purposes. MasterCard had no borrowings under the Credit Facility at December 31, 2015 and 2014 , as well as had no borrowings under the Commercial Paper Program at December 31, 2015 . On June 15, 2015, the Company filed a universal shelf registration statement to provide additional access to capital, if needed. Pursuant to the shelf registration statement, the Company may from time to time offer to sell debt securities, preferred stock, Class A common stock, depository shares, purchase contracts, units or warrants in one or more offerings. The Company also has $10 million and $41 million in debt outside the United States that is included in other current liabilities on the consolidated balance sheet at December 31, 2015 and 2014 , respectively. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2015 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | Stockholders’ Equity Classes of Capital Stock MasterCard’s amended and restated certificate of incorporation authorizes the following classes of capital stock: Class Par Value Per Share Authorized Shares (in millions) Dividend and Voting Rights A $0.0001 3,000 One vote per share B $0.0001 1,200 Non-voting Preferred $0.0001 300 No shares issued or outstanding at December 31, 2015 and 2014, respectively. Dividend and voting rights are to be determined by the Board of Directors of the Company upon issuance. Ownership and Governance Structure Equity ownership and voting power of the Company’s shares were allocated as follows as of December 31: 2015 2014 Equity Ownership General Voting Power Equity Ownership General Voting Power Public Investors (Class A stockholders) 87.7 % 89.4 % 86.6 % 89.4 % Principal or Affiliate Customers (Class B stockholders) 1.9 % — % 3.2 % — % The MasterCard Foundation (Class A stockholders) 10.4 % 10.6 % 10.2 % 10.6 % Class B Common Stock Conversions Shares of Class B common stock are convertible on a one-for-one basis into shares of Class A common stock. Entities eligible to hold MasterCard’s Class B common stock are defined in the Company’s amended and restated certificate of incorporation (generally the Company’s principal or affiliate customers), and they are restricted from retaining ownership of shares of Class A common stock. Class B stockholders are required to subsequently sell or otherwise transfer any shares of Class A common stock received pursuant to such a conversion. The MasterCard Foundation In connection and simultaneously with its 2006 initial public offering (the “IPO”), the Company issued and donated 135 million newly authorized shares of Class A common stock to The MasterCard Foundation (the “Foundation”). The Foundation is a private charitable foundation incorporated in Canada that is controlled by directors who are independent of the Company and its principal customers. Under the terms of the donation, the Foundation became able to resell the donated shares in May 2010 and to the extent necessary to meet charitable disbursement requirements dictated by Canadian tax law. Under Canadian tax law, the Foundation is generally required to disburse at least 3.5% of its assets not used in administration each year for qualified charitable disbursements. However, the Foundation obtained permission from the Canadian tax authorities to defer the giving requirements for up to ten years, which was extended in 2011 to fifteen years. The Foundation, at its discretion, may decide to meet its disbursement obligations on an annual basis or to settle previously accumulated obligations during any given year. The Foundation will be permitted to sell all of its remaining shares beginning twenty years and eleven months after the consummation of the IPO. Stock Repurchase Programs In June 2012, the Company’s Board of Directors approved a share repurchase program authorizing the Company to repurchase up to $1.5 billion of its Class A common stock (the “June 2012 Share Repurchase Program”), which became effective in June 2012. On February 5, 2013, the Company’s Board of Directors approved a share repurchase program authorizing the Company to repurchase up to $2 billion of its Class A common stock (the “February 2013 Share Repurchase Program”), which became effective in March 2013. On December 10, 2013, the Company’s Board of Directors approved a new share repurchase program authorizing the Company to repurchase up to $3.5 billion of its Class A common stock (the “December 2013 Share Repurchase Program”), which became effective in January 2014. On December 2, 2014, the Company’s Board of Directors approved a new share repurchase program authorizing the Company to repurchase up to $3.75 billion of its Class A common stock (the “December 2014 Share Repurchase Program”), which became effective in January 2015. On December 8, 2015, the Company’s Board of Directors approved a new share repurchase program authorizing the Company to repurchase up to $4 billion of its Class A common stock (the “December 2015 Share Repurchase Program”), which became effective in February 2016. We typically complete a share repurchase program before a new program becomes effective. The following table summarizes the Company’s share repurchase authorizations of its Class A common stock through December 31, 2015 , as well as historical purchases: Authorization Dates December 2015 December 2014 December 2013 February 2013 June 2012 Total (in millions, except average price data) Board authorization $ 4,000 $ 3,750 $ 3,500 $ 2,000 $ 1,500 $ 14,750 Dollar-value of shares repurchased in 2013 $ — $ — $ — $ 1,839 $ 604 $ 2,443 Remaining authorization at December 31, 2013 $ — $ — $ 3,500 $ 161 $ — $ 3,661 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 Shares repurchased in 2013 — — — 29.2 11.7 40.9 Average price paid per share in 2013 $ — $ — $ — $ 63.01 $ 51.72 $ 59.78 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 Cumulative shares repurchased through December 31, 2015 — 35.1 45.8 31.1 31.1 143.1 Cumulative average price paid per share $ — $ 92.39 $ 76.42 $ 64.26 $ 48.16 $ 71.55 |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 12 Months Ended |
Dec. 31, 2015 | |
Statement of Comprehensive Income [Abstract] | |
Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) The changes in the balances of each component of accumulated other comprehensive income (loss), net of tax, for the years ended December 31, 2015 and 2014 were as follows: Foreign Currency Translation Adjustments Translation Adjustments on Net Investment Hedge Defined Benefit Pension and Other Postretirement Plans Investment Securities Available-for-Sale Accumulated Other Comprehensive Income (Loss) (in millions) Balance at December 31, 2013 $ 206 $ — $ (29 ) $ 1 $ 178 Other comprehensive income (loss) 1 (436 ) — 3 (5 ) (438 ) Balance at December 31, 2014 (230 ) — (26 ) (4 ) (260 ) Other comprehensive income (loss) 1,2,3 (433 ) (26 ) 39 4 (416 ) Balance at December 31, 2015 $ (663 ) $ (26 ) $ 13 $ — $ (676 ) 1 During 2015 and 2014, the increase in other comprehensive loss related to foreign currency translation adjustments was driven primarily by the devaluation of the euro and Brazilian real. 2 During 2015, $ 80 million of deferred costs ($ 51 million after-tax) related to the Company’s defined benefit pension plan and other post retirement plans were reclassified to general and administrative expenses. The deferred costs were driven primarily by the termination of the Company's U.S. defined benefit plan (See Note 11, Pension, Postretirement and Savings Plans). 3 During 2015, $ 15 million of an unrealized loss (no tax impact) on a foreign denominated available-for-sale security was reclassified to other income (expense) due to an other-than-temporary impairment. |
Share-Based Payment and Other B
Share-Based Payment and Other Benefits | 12 Months Ended |
Dec. 31, 2015 | |
Employee Service Share-based Compensation, Aggregate Disclosures [Abstract] | |
Share-Based Payment and Other Benefits | Share-Based Payments In May 2006, the Company implemented the MasterCard Incorporated 2006 Long-Term Incentive Plan, which was amended and restated as of June 5, 2012 (the “LTIP”). The LTIP is a shareholder-approved plan that permits the grant of various types of equity awards to employees. The Company has granted Options, RSUs and PSUs under the LTIP. The Options, which expire ten years from the date of grant, generally vest ratably over four years from the date of grant. The RSUs and PSUs generally vest after three years . The Company uses the straight-line method of attribution for expensing equity awards. Compensation expense is recorded net of estimated forfeitures. Estimates are adjusted as appropriate. Upon termination of employment, a participant’s unvested awards are forfeited. However, when a participant terminates employment due to disability or retirement more than six months after receiving the award, the participant retains all of their awards without providing additional service to the Company. Retirement eligibility is dependent upon age and years of service. Compensation expense is recognized over the shorter of the vesting periods stated in the LTIP or the date the individual becomes eligible to retire but not less than six months . There are approximately 116 million shares of Class A common stock authorized for equity awards under the LTIP. Although the LTIP permits the issuance of shares of Class B common stock, no such shares have been authorized for issuance. Shares issued as a result of Option exercises and the conversions of RSUs and PSUs were funded primarily with the issuance of new shares of Class A common stock. Stock Options The fair value of each Option is estimated on the date of grant using a Black-Scholes option pricing model. The following table presents the weighted-average assumptions used in the valuation and the resulting weighted-average fair value per option granted for the years ended December 31: 2015 2014 2013 Risk-free rate of return 1.5 % 1.5 % 0.8 % Expected term (in years) 5.00 5.00 5.00 Expected volatility 20.6 % 19.1 % 27.1 % Expected dividend yield 0.7 % 0.6 % 0.5 % Weighted-average fair value per Option granted $ 17.29 $ 14.29 $ 12.33 The risk-free rate of return was based on the U.S. Treasury yield curve in effect on the date of grant. The expected term and the expected volatility were based on historical MasterCard information. The expected dividend yields were based on the Company’s expected annual dividend rate on the date of grant. The following table summarizes the Company’s option activity for the year ended December 31, 2015 : Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term Aggregate Intrinsic Value (in millions) (in years) (in millions) Outstanding at January 1, 2015 7.5 $ 44 Granted 1.6 $ 90 Exercised (0.9 ) $ 30 Forfeited/expired (0.1 ) $ 70 Outstanding at December 31, 2015 8.1 $ 54 6.7 $ 348 Exercisable at December 31, 2015 4.1 $ 35 5.3 $ 256 Options vested and expected to vest at December 31, 2015 7.9 $ 54 6.7 $ 346 As of December 31, 2015 , there was $28 million of total unrecognized compensation cost related to non-vested Options. The cost is expected to be recognized over a weighted-average period of 2.3 years. Restricted Stock Units The following table summarizes the Company’s RSU activity for the year ended December 31, 2015 : 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, 2015 4.2 $ 56 Granted 1.2 $ 88 Converted (1.5 ) $ 42 Forfeited/expired (0.1 ) $ 68 Outstanding at December 31, 2015 3.8 $ 71 1.2 $ 366 RSUs vested and expected to vest at December 31, 2015 3.6 $ 71 1.1 $ 353 The fair value of each RSU is the closing stock price on the New York Stock Exchange of the Company’s Class A common stock on the date of grant, adjusted for the exclusion of dividend equivalents. Upon vesting, a portion of the RSU award may be withheld to satisfy the minimum statutory withholding taxes. The remaining RSUs will be settled in shares of the Company’s Class A common stock after the vesting period. As of December 31, 2015 , there was $99 million of total unrecognized compensation cost related to non-vested RSUs. The cost is expected to be recognized over a weighted-average period of 1.8 years. Performance Stock Units The following table summarizes the Company’s PSU activity for the year ended December 31, 2015 : 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, 2015 0.6 $ 74 Granted 0.1 $ 99 Performance 0.1 $ 56 Converted (0.3 ) $ 83 Forfeited/expired — $ — Outstanding at December 31, 2015 0.5 $ 72 0.9 $ 53 PSUs vested and expected to vest at December 31, 2015 0.5 $ 71 0.9 $ 52 Since 2013, PSUs containing performance and market conditions have been issued. Performance measures used to determine the actual number of shares that vest after three years include net revenue growth, EPS growth, and relative total shareholder return (“TSR”). Relative TSR is considered a market condition, while net revenue and EPS growth are considered performance conditions. The Monte Carlo simulation valuation model is used to determine the grant-date fair value. Compensation expenses for PSUs are recognized over the requisite service period if it is probable that the performance target will be achieved and subsequently adjusted if the probability assessment changes. As of December 31, 2015 , there was $9 million of total unrecognized compensation cost related to non-vested PSUs. The cost is expected to be recognized over a weighted-average period of 1.7 years. Additional Information The following table includes additional share-based payment information for each of the years ended December 31: 2015 2014 2013 (in millions, except weighted-average fair value) Share-based compensation expense: Options, RSUs and PSUs $ 122 $ 111 $ 121 Income tax benefit recognized for equity awards 41 37 42 Income tax benefit related to Options exercised 19 20 16 Options: Total intrinsic value of Options exercised 57 60 48 RSUs: Weighted-average grant-date fair value of awards granted 88 76 52 Total intrinsic value of RSUs converted into shares of Class A common stock 135 173 78 PSUs: Weighted-average grant-date fair value of awards granted 99 78 56 Total intrinsic value of PSUs converted into shares of Class A common stock 24 28 29 |
Commitments
Commitments | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments | Commitments At December 31, 2015 , the Company had the following future minimum payments due under non-cancelable agreements: Total Capital Operating Leases Sponsorship, Licensing & Other (in millions) 2016 $ 286 $ 6 $ 38 $ 242 2017 154 4 40 110 2018 89 1 34 54 2019 60 — 29 31 2020 38 — 25 13 Thereafter 69 — 58 11 Total $ 696 $ 11 $ 224 $ 461 Included in the table above are capital leases with a net present value of minimum lease payments of $11 million . In addition, at December 31, 2015 , $23 million of the future minimum payments in the table above for sponsorship, licensing and other agreements was accrued. Consolidated rental expense for the Company’s leased office space was $52 million , $48 million and $38 million for 2015 , 2014 and 2013 , respectively. Consolidated lease expense for automobiles, computer equipment and office equipment was $17 million , $17 million and $14 million for 2015 , 2014 and 2013 , respectively. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The total income tax provision for the years ended December 31 is comprised of the following components: 2015 2014 2013 (in millions) Current Federal $ 677 $ 977 $ 1,010 State and local 45 47 33 Foreign 444 528 456 1,166 1,552 1,499 Deferred Federal 4 (81 ) (100 ) State and local (3 ) (3 ) (4 ) Foreign (17 ) (6 ) (11 ) (16 ) (90 ) (115 ) Income tax expense $ 1,150 $ 1,462 $ 1,384 The domestic and foreign components of income before income taxes for the years ended December 31 are as follows: 2015 2014 2013 (in millions) United States $ 3,399 $ 3,378 $ 2,741 Foreign 1,559 1,701 1,759 Income before income taxes $ 4,958 $ 5,079 $ 4,500 MasterCard has not provided for U.S. federal income and foreign withholding taxes on approximately $3.5 billion of undistributed earnings from non-U.S. subsidiaries as of December 31, 2015 because such earnings are intended to be reinvested indefinitely outside of the United States. If these earnings were distributed, foreign tax credits may become available under current law to reduce the resulting U.S. income tax liability. However, it is not practicable to determine the amount of the tax and credits. The provision for income taxes differs from the amount of income tax determined by applying the U.S. federal statutory income tax rate of 35% to pretax income for the years ended December 31, as a result of the following: 2015 2014 2013 Amount Percent Amount Percent Amount Percent (in millions, except percentages) Income before income taxes $ 4,958 $ 5,079 $ 4,500 Federal statutory tax 1,735 35.0 % 1,778 35.0 % 1,575 35.0 % State tax effect, net of federal benefit 27 0.5 % 29 0.6 % 19 0.4 % Foreign tax effect (144 ) (2.9 )% (108 ) (2.1 )% (208 ) (4.6 )% Foreign repatriation (172 ) (3.5 )% (177 ) (3.5 )% (14 ) (0.3 )% Impact of settlements with tax authorities (147 ) (2.9 )% — — % — — % Other foreign tax credits (109 ) (2.2 )% (6 ) (0.1 )% (3 ) — % Other, net (40 ) (0.8 )% (54 ) (1.1 )% 15 0.3 % Income tax expense $ 1,150 23.2 % $ 1,462 28.8 % $ 1,384 30.8 % Effective Income Tax Rate The effective income tax rates for the years ended December 31, 2015, 2014 and 2013 were 23.2% , 28.8% and 30.8% , respectively. The effective tax rate for 2015 was lower than the effective tax rate for 2014 primarily due to settlements with tax authorities in multiple jurisdictions. Further, the information gained related to these matters was considered in measuring uncertain tax benefits recognized for the periods subsequent to the periods settled. In addition, the recognition of other U.S. foreign tax credits and a more favorable geographic mix of taxable earnings also contributed to the lower effective tax rate in 2015. The effective tax rate for 2014 was lower than the effective tax rate for 2013 primarily due to the recognition of a larger repatriation benefit and an increase in the Company’s domestic production activity deduction in the U.S. related to the Company’s authorization revenue, partially offset by an unfavorable mix of taxable earnings in 2014. During the fourth quarter of 2014, the Company implemented an initiative to better align its legal entity and tax structure with its operational footprint outside of the U.S. This initiative resulted in a one-time taxable gain in Belgium relating to the transfer of intellectual property to a related foreign entity in the United Kingdom. Management believes this improved alignment will result in greater flexibility and efficiency with regard to the global deployment of cash, as well as ongoing benefits in the Company’s effective income tax rate. The Company recorded a deferred charge related to the income tax expense on intercompany profits that resulted from the transfer. The tax associated with the transfer is deferred and amortized utilizing a 25 -year life. This deferred charge is included in other current assets and other assets on our consolidated balance sheet at December 31, 2015 in the amounts of $15 million and $352 million , respectively. The comparable amounts included in other current assets and other assets were $18 million and $407 million , respectively, at December 31, 2014 , with the difference driven by changes in foreign exchange rates and current period amortization. In 2010, in connection with the expansion of the Company’s operations in the Asia Pacific, Middle East and Africa region, the Company’s subsidiary in Singapore, MasterCard Asia Pacific Pte. Ltd. (“MAPPL”) received an incentive grant from the Singapore Ministry of Finance. The incentive had provided MAPPL with, among other benefits, a reduced income tax rate for the 10 -year period commencing January 1, 2010 on taxable income in excess of a base amount. The Company continued to explore business opportunities in this region, resulting in an expansion of the incentives being granted by the Ministry of Finance, including a further reduction to the income tax rate on taxable income in excess of a revised fixed base amount commencing July 1, 2011 and continuing through December 31, 2025. Without the incentive grant, MAPPL would have been subject to the statutory income tax rate on its earnings. For 2015, 2014 and 2013 , the impact of the incentive grant received from the Ministry of Finance resulted in a reduction of MAPPL’s income tax liability of $47 million , or $0.04 per diluted share, $40 million , or $0.03 per diluted share, and $76 million , or $0.06 per diluted share, respectively. Deferred Taxes Deferred tax assets and liabilities represent the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities. The components of deferred tax assets and liabilities at December 31 are as follows: 2015 1 2014 (in millions) Deferred Tax Assets Accrued liabilities $ 169 $ 177 Compensation and benefits 242 262 State taxes and other credits 54 65 Net operating losses 67 56 Other items 90 38 Less: Valuation allowance (54 ) (41 ) Total Deferred Tax Assets 568 557 Deferred Tax Liabilities Prepaid expenses and other accruals 46 58 Intangible assets 136 92 Property, plant and equipment 118 115 Other items 30 18 Total Deferred Tax Liabilities 330 283 Net Deferred Tax Assets $ 238 $ 274 1 As described within Recent Accounting Pronouncements section of Note 1. Summary of Significant Accounting Policies, the Company has early adopted recent guidance and now reflects 2015 deferred taxes as non-current deferred taxes within the Consolidated Balance Sheet. The 2015 and 2014 valuation allowances relate primarily to the Company’s ability to recognize tax benefits associated with certain foreign net operating losses. The recognition of these benefits is dependent upon the future taxable income in such foreign jurisdictions and the ability under tax law in these jurisdictions to utilize net operating losses following a change in control. A reconciliation of the beginning and ending balance for the Company’s unrecognized tax benefits for the years ended December 31, is as follows: 2015 2014 2013 (in millions) Beginning balance $ 364 $ 320 $ 257 Additions: Current year tax positions 20 61 80 Prior year tax positions 10 19 12 Reductions: Prior year tax positions (151 ) (6 ) (8 ) Settlements with tax authorities (53 ) — (2 ) Expired statute of limitations (9 ) (30 ) (19 ) Ending balance $ 181 $ 364 $ 320 During 2015, there was a reduction to the balance of the Company’s unrecognized tax benefits. This was primarily due to settlements with tax authorities in multiple jurisdictions. Further, the information gained related to these matters was considered in measuring uncertain tax benefits recognized for the periods subsequent to the periods settled. The entire unrecognized tax benefits of $181 million , if recognized, would reduce the effective tax rate. The Company is subject to tax in the United States, Belgium, Singapore and various other foreign jurisdictions, as well as state and local jurisdictions. Uncertain tax positions are reviewed on an ongoing basis and are adjusted after considering facts and circumstances, including progress of tax audits, developments in case law and closing of statutes of limitation. Within the next twelve months, the Company believes that the resolution of certain federal, foreign and state and local examinations are reasonably possible and that a change in estimate, reducing unrecognized tax benefits, may occur. While such a change may be significant, it is not possible to provide a range of the potential change until the examinations progress further or the related statutes of limitation expire. The Company has effectively settled its U.S. federal income tax obligations through 2008, with the exception of transfer pricing issues which are settled through 2011. With limited exception, the Company is no longer subject to state and local or foreign examinations by tax authorities for years before 2006. It is the Company’s policy to account for interest expense related to income tax matters as interest expense in its statement of operations, and to include penalties related to income tax matters in the income tax provision. For 2015 , 2014 and 2013 , the Company recorded tax-related interest income of $3 million , $2 million and $4 million , respectively, in its consolidated statement of operations. At December 31, 2015 and 2014 , the Company had a net income tax-related interest payable of $12 million and $15 million , respectively, in its consolidated balance sheet. At December 31, 2015 and 2014 , the amounts the Company had recognized for penalties payable in its consolidated balance sheet were not significant. |
Legal and Regulatory Proceeding
Legal and Regulatory Proceedings | 12 Months Ended |
Dec. 31, 2015 | |
Legal and Regulatory Proceedings [Abstract] | |
Legal and Regulatory Proceedings | Legal and Regulatory Proceedings MasterCard is a party to legal and regulatory proceedings with respect to a variety of matters in the ordinary course of business. Some of these proceedings are based on complex claims involving substantial uncertainties and unascertainable damages. Accordingly, except as discussed below, it is not possible to determine the probability of loss or estimate damages, and therefore, MasterCard has not established reserves for any of these proceedings. When the Company determines that a loss is both probable and reasonably estimable, MasterCard records a liability and discloses the amount of the liability if it is material. When a material loss contingency is only reasonably possible, MasterCard does not record a liability, but instead discloses the nature and the amount of the claim, and an estimate of the loss or range of loss, if such an estimate can be made. Unless otherwise stated below with respect to these matters, MasterCard cannot provide an estimate of the possible loss or range of loss based on one or more of the following reasons: (1) actual or potential plaintiffs have not claimed an amount of monetary damages or the amounts are unsupportable or exaggerated, (2) the matters are in early stages, (3) there is uncertainty as to the outcome of pending appeals or motions, (4) there are significant factual issues to be resolved, (5) the existence in many such proceedings of multiple defendants or potential defendants whose share of any potential financial responsibility has yet to be determined, and/or (6) there are novel legal issues presented. Furthermore, except as identified with respect to the matters below, MasterCard does not believe that the outcome of any individual existing legal or regulatory proceeding to which it is a party will have a material adverse effect on its results of operations, financial condition or overall business. However, an adverse judgment or other outcome or settlement with respect to any proceedings discussed below could result in fines or payments by MasterCard and/or could require MasterCard to change its business practices. In addition, an adverse outcome in a regulatory proceeding could lead to the filing of civil damage claims and possibly result in significant damage awards. Any of these events could have a material adverse effect on MasterCard’s results of operations, financial condition and overall business. Interchange Litigation and Regulatory Proceedings MasterCard’s interchange fees and other practices are subject to regulatory and/or legal review and/or challenges in a number of jurisdictions, including the proceedings described below. When taken as a whole, the resulting decisions, regulations and legislation with respect to interchange fees and acceptance practices may have a material adverse effect on the Company’s prospects for future growth and its overall results of operations, financial position and cash flows. United States. In June 2005, the first of a series of complaints were filed on behalf of merchants (the majority of the complaints were styled as class actions, although a few complaints were filed on behalf of individual merchant plaintiffs) against MasterCard International, Visa U.S.A., Inc., Visa International Service Association and a number of financial institutions. Taken together, the claims in the complaints were generally brought under both Sections 1 and 2 of the Sherman Act, which prohibit monopolization and attempts or conspiracies to monopolize a particular industry, and some of these complaints contain unfair competition law claims under state law. The complaints allege, among other things, that MasterCard, Visa, and certain financial institutions conspired to set the price of interchange fees, enacted point of sale acceptance rules (including the no surcharge rule) in violation of antitrust laws and engaged in unlawful tying and bundling of certain products and services. The cases were consolidated for pre-trial proceedings in the U.S. District Court for the Eastern District of New York in MDL No. 1720. The plaintiffs filed a consolidated class action complaint that seeks treble damages. In July 2006, the group of purported merchant class plaintiffs filed a supplemental complaint alleging that MasterCard’s initial public offering of its Class A Common Stock in May 2006 (the “IPO”) and certain purported agreements entered into between MasterCard and financial institutions in connection with the IPO: (1) violate U.S. antitrust laws and (2) constituted a fraudulent conveyance because the financial institutions allegedly attempted to release, without adequate consideration, MasterCard’s right to assess them for MasterCard’s litigation liabilities. The class plaintiffs sought treble damages and injunctive relief including, but not limited to, an order reversing and unwinding the IPO. In February 2011, MasterCard and MasterCard International entered into each of: (1) an omnibus judgment sharing and settlement sharing agreement with Visa Inc., Visa U.S.A. Inc. and Visa International Service Association and a number of financial institutions; and (2) a MasterCard settlement and judgment sharing agreement with a number of financial institutions. The agreements provide for the apportionment of certain costs and liabilities which MasterCard, the Visa parties and the financial institutions may incur, jointly and/or severally, in the event of an adverse judgment or settlement of one or all of the cases in the merchant litigations. Among a number of scenarios addressed by the agreements, in the event of a global settlement involving the Visa parties, the financial institutions and MasterCard, MasterCard would pay 12% of the monetary portion of the settlement. In the event of a settlement involving only MasterCard and the financial institutions with respect to their issuance of MasterCard cards, MasterCard would pay 36% of the monetary portion of such settlement. In October 2012, the parties entered into a definitive settlement agreement with respect to the merchant class litigation (including with respect to the claims related to the IPO) and the defendants separately entered into a settlement agreement with the individual merchant plaintiffs. The settlements included cash payments that were apportioned among the defendants pursuant to the omnibus judgment sharing and settlement sharing agreement described above. MasterCard also agreed to provide class members with a short-term reduction in default credit interchange rates and to modify certain of its business practices, including its No Surcharge Rule. Objections to the settlement were filed by both merchants and certain competitors, including Discover. Discover’s objections include a challenge to the settlement on the grounds that certain of the rule changes agreed to in the settlement constitute a restraint of trade in violation of Section 1 of the Sherman Act. The court granted final approval of the settlement in December 2013. Objectors to the settlement appealed the decision, and an oral argument was heard on the appeal in September 2015. Separately, the objectors filed a motion in July 2015 to set aside the approval order, contending that the merchant class was inadequately represented and the settlement was insufficient because a counsel for several individual merchant plaintiffs improperly exchanged communications with a defense counsel who at the time was representing MasterCard. Merchants representing slightly more than 25% of the MasterCard and Visa purchase volume over the relevant period chose to opt out of the class settlement. MasterCard anticipates that most of the larger merchants who opted out of the settlement will initiate separate actions seeking to recover damages, and over 30 opt-out complaints have been filed on behalf of numerous merchants in various jurisdictions. The defendants have consolidated all of these matters (except for one state court action in New Mexico) in front of the same federal district court that is overseeing the approval of the settlement. In July 2014, the district court denied the defendants’ motion to dismiss the opt-out merchant complaints for failure to state a claim. MasterCard recorded a pre-tax charge of $770 million in the fourth quarter of 2011 and an additional $20 million pre-tax charge in the second quarter of 2012 relating to the settlement agreements described above. In 2012, MasterCard paid $790 million with respect to the settlements, of which $726 million was paid into a qualified cash settlement fund related to the merchant class litigation. As of December 31, 2015 and December 31, 2014 , MasterCard had $541 million and $540 million , in the qualified cash settlement fund classified as restricted cash on its balance sheet. The class settlement agreement provided for a return to the defendants of a portion of the class cash settlement fund, based upon the percentage of purchase volume represented by the opt-out merchants. This resulted in $164 million from the cash settlement fund being returned to MasterCard in January 2014 and reclassified at that time from restricted cash to cash and cash equivalents. In the fourth quarter of 2013, MasterCard recorded an incremental net pre-tax charge of $95 million related to the opt-out merchants, representing a change in its estimate of probable losses relating to these matters. MasterCard has executed settlement agreements with a number of opt-out merchants and no adjustment to the amount previously recorded was deemed necessary. As of December 31, 2015 , MasterCard had accrued a liability of $709 million as a reserve for both the merchant class litigation and the filed and anticipated opt-out merchant cases. The portion of the accrued liability relating to the opt-out merchants does not represent an estimate of a loss, if any, if the opt-out merchant matters were litigated to a final outcome, in which case MasterCard cannot estimate the potential liability. MasterCard’s estimate involves significant judgment and may change depending on progress in settlement negotiations or depending upon decisions in any opt-out merchant cases. In addition, in the event that the merchant class litigation settlement approval is overturned, a negative outcome in the litigation could have a material adverse effect on MasterCard’s results of operations, financial position and cash flows. Canada . In December 2010, a proposed class action complaint was commenced against MasterCard in Quebec on behalf of Canadian merchants. That suit essentially repeated the allegations and arguments of a previously filed application by the Canadian Competition Bureau to the Canadian Competition Tribunal (dismissed in MasterCard’s favor) related to certain MasterCard rules related to point-of-sale acceptance, including the “honor all cards” and “no surcharge” rules. The suit sought compensatory and punitive damages in unspecified amounts, as well as injunctive relief. In the first half of 2011, additional purported class action lawsuits containing similar allegations to the Quebec class action were commenced in British Columbia and Ontario against MasterCard, Visa and a number of large Canadian financial institutions. The British Columbia suit seeks compensatory damages in unspecified amounts, and the Ontario suit seeks compensatory damages of $5 billion . The British Columbia and Ontario suits also seek punitive damages in unspecified amounts, as well as injunctive relief, interest and legal costs. The Quebec suit was later amended to include the same defendants and similar claims as in the British Columbia and Ontario suits. With respect to the status of the proceedings: (1) the Quebec suit has been stayed, (2) the Ontario suit is being temporarily suspended while the British Columbia suit proceeds, and (3) the British Columbia appellate court issued an order in August 2015 allowing several of the merchants’ claims to proceed on a class basis. Additional proposed class action complaints have been filed in Saskatchewan and Alberta with claims that largely mirror those in the British Columbia and Ontario suits. If the class action lawsuits are ultimately successful, negative decisions could have a significant adverse impact on the revenue of MasterCard’s Canadian customers and on MasterCard’s overall business in Canada and could result in substantial damage awards. Europe. In July 2015, the European Commission issued a Statement of Objections related to MasterCard’s interregional interchange fees and central acquiring rules within the European Economic Area. The Statement of Objections, which follows an investigation opened in 2013, includes preliminary conclusions concerning the anticompetitive effects of these practices. The European Commission has indicated it intends to seek fines if these conclusions are subsequently confirmed. Although the Statement of Objections does not quantify the level of fines, it is possible that they could be substantial. MasterCard would not expect fines to be imposed if it agrees with the Commission to business practice changes that address the Commission’s concerns. In the United Kingdom, beginning in May 2012, a number of retailers filed claims 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. More than 30 different retailers have filed claims or threatened litigation. Approximately 30 additional merchants have filed or threatened litigation with respect to interchange rates in Europe (“Pan-European claimants”). Although the U.K. and Pan-European claimants have not quantified the full extent of their compensatory and punitive damages, their purported damages exceed $2 billion . In June 2015, MasterCard entered into a settlement with one of these merchants for $61 million , recorded as a provision for litigation settlement. MasterCard has submitted statements of defense to the remaining retailers’ claims disputing liability and damages. A trial for liability and damages for one of the U.K. merchant cases commenced in January 2016. The merchant in that action has claimed compensatory damages of approximately $300 million , and is also seeking costs and punitive damages. MasterCard has argued that there is no liability or damage to the merchant. The trial is expected to conclude in March 2016, with a decision expected later in the year. ATM Non-Discrimination Rule Surcharge Complaints In October 2011, a trade association of independent Automated Teller Machine (“ATM”) operators and 13 independent ATM operators filed a complaint styled as a class action lawsuit in the U.S. District Court for the District of Columbia against both MasterCard and Visa (the “ATM Operators Complaint”). Plaintiffs seek to represent a class of non-bank operators of ATM terminals that operate ATM terminals in the United States with the discretion to determine the price of the ATM access fee for the terminals they operate. Plaintiffs allege that MasterCard and Visa have violated Section 1 of the Sherman Act by imposing rules that require ATM operators to charge non-discriminatory ATM surcharges for transactions processed over MasterCard’s and Visa’s respective networks that are not greater than the surcharge for transactions over other networks accepted at the same ATM. Plaintiffs seek both injunctive and monetary relief equal to treble the damages they claim to have sustained as a result of the alleged violations and their costs of suit, including attorneys’ fees. Plaintiffs have not quantified their damages although they allege that they expect damages to be in the tens of millions of dollars. Subsequently, multiple related complaints were filed in the U.S. District Court for the District of Columbia alleging both federal antitrust and multiple state unfair competition, consumer protection and common law claims against MasterCard and Visa on behalf of putative classes of users of ATM services (the “ATM Consumer Complaints”). The claims in these actions largely mirror the allegations made in the ATM Operators Complaint, although these complaints seek damages on behalf of consumers of ATM services who pay allegedly inflated ATM fees at both bank and non-bank ATM operators as a result of the defendants’ ATM rules. Plaintiffs seek both injunctive and monetary relief equal to treble the damages they claim to have sustained as a result of the alleged violations and their costs of suit, including attorneys’ fees. Plaintiffs have not quantified their damages although they allege that they expect damages to be in the tens of millions of dollars. In January 2012, the plaintiffs in the ATM Operators Complaint and the ATM Consumer Complaints filed amended class action complaints that largely mirror their prior complaints. In February 2013, the district court granted MasterCard’s motion to dismiss the complaints for failure to state a claim. On appeal, the Court of Appeals reversed the district court’s order in August 2015 and sent the case back for further proceedings. |
Settlement and Other Risk Manag
Settlement and Other Risk Management | 12 Months Ended |
Dec. 31, 2015 | |
Settlement and Other Risk Management [Abstract] | |
Settlement and Other Risk Management | Settlement and Other Risk Management MasterCard’s rules guarantee the settlement of many of the MasterCard, Cirrus and Maestro branded transactions between its issuers and acquirers (“settlement risk”). Settlement exposure is the outstanding settlement risk to customers under MasterCard’s rules due to the difference in timing between the payment transaction date and subsequent settlement. While the term and amount of the guarantee are unlimited, the duration of settlement exposure is short term and typically limited to a few days. Gross settlement exposure is estimated using the average daily card volume during the quarter multiplied by the estimated number of days to settle. The Company has global risk management policies and procedures, which include risk standards, to provide a framework for managing the Company’s settlement risk. Customer-reported transaction data and the transaction clearing data underlying the settlement exposure calculation may be revised in subsequent reporting periods. In the event that MasterCard effects a payment on behalf of a failed customer, MasterCard may seek an assignment of the underlying receivables of the failed customer. Customers may be charged for the amount of any settlement loss incurred during these ordinary course activities of the Company. The Company’s global risk management policies and procedures are aimed at managing the settlement exposure. These risk management procedures include interaction with the bank regulators of countries in which it operates, requiring customers to make adjustments to settlement processes, and requiring collateral from customers. MasterCard requires certain customers that are not in compliance with the Company’s risk standards in effect at the time of review to post collateral, typically in the form of cash, letters of credit, or guarantees. This requirement is based on management’s review of the individual risk circumstances for each customer that is out of compliance. In addition to these amounts, MasterCard holds collateral to cover variability and future growth in customer programs. The Company may also hold collateral to pay merchants in the event of an acquirer failure. Although the Company is not contractually obligated under its rules to effect such payments to merchants, the Company may elect to do so to protect brand integrity. MasterCard monitors its credit risk portfolio on a regular basis and the adequacy of collateral on hand. Additionally, from time to time, the Company reviews its risk management methodology and standards. As such, the amounts of estimated settlement exposure are revised as necessary. The Company’s estimated settlement exposure from MasterCard, Cirrus and Maestro branded transactions was as follows: December 31, December 31, 2014 (in millions) Gross settlement exposure $ 39,674 $ 41,729 Settlement exposure covered by collateral (3,601 ) (3,415 ) Net uncollateralized settlement exposure $ 36,073 $ 38,314 General economic and political conditions in countries in which MasterCard operates affect the Company’s settlement risk. Many of the Company’s financial institution customers have been directly and adversely impacted by political instability and uncertain economic conditions. These conditions present increased risk that the Company may have to perform under its settlement guarantee. This risk could increase if political, economic and financial market conditions deteriorate further. The Company’s global risk management policies and procedures are revised and enhanced from time to time. Historically, the Company has experienced a low level of losses from financial institution failures. MasterCard also provides guarantees to customers and certain other counterparties indemnifying them from losses stemming from failures of third parties to perform duties. This includes guarantees of MasterCard-branded travelers cheques issued, but not yet cashed of $420 million and $465 million at December 31, 2015 and 2014 , respectively, of which $332 million and $370 million at December 31, 2015 and 2014 , respectively, is mitigated by collateral arrangements. In addition, the Company enters into business agreements in the ordinary course of business under which the Company agrees to indemnify third parties against damages, losses and expenses incurred in connection with legal and other proceedings arising from relationships or transactions with the Company. Certain indemnifications do not provide a stated maximum exposure. As the extent of the Company’s obligations under these agreements depends entirely upon the occurrence of future events, the Company’s potential future liability under these agreements is not determinable. Historically, payments made by the Company under these types of contractual arrangements have not been material. |
Foreign Exchange Risk Managemen
Foreign Exchange Risk Management | 12 Months Ended |
Dec. 31, 2015 | |
Foreign Currency Derivatives [Abstract] | |
Foreign Exchange Risk Management | Foreign Exchange Risk Management Derivatives The Company enters into foreign currency derivative contracts to manage risk associated with anticipated receipts and disbursements which are either transacted in a non-functional currency or valued based on a currency other than its functional currency. The Company may also enter into foreign currency derivative contracts to offset possible changes in value due to foreign exchange fluctuations of earnings, assets and liabilities denominated in currencies other than its functional currency. The objective of these activities is to reduce the Company’s exposure to gains and losses resulting from fluctuations of foreign currencies against its functional currencies. The Company does not designate foreign currency derivatives as hedging instruments pursuant to the accounting guidance for derivative instruments and hedging activities. The Company records the change in the estimated fair value of the outstanding derivatives at the end of the reporting period on its consolidated balance sheet and consolidated statement of operations. As of December 31, 2015 , the majority of derivative contracts to hedge foreign currency fluctuations had been entered into with customers of MasterCard. MasterCard’s derivative contracts are summarized below: December 31, 2015 December 31, 2014 Notional Estimated Fair Value Notional Estimated Fair Value (in millions) Commitments to purchase foreign currency $ 232 $ 1 $ 47 $ 4 Commitments to sell foreign currency 1,430 12 614 27 Options to sell foreign currency 44 1 — — Balance sheet location: Accounts receivable 1 $ 23 $ 35 Other current liabilities 1 (9 ) (4 ) 1 The fair values of derivative contracts are presented on a gross basis on the balance sheet and are subject to enforceable master netting arrangements, which contain various netting and setoff provisions. The amount of gain (loss) recognized in income for foreign currency derivative contracts is summarized below: Year Ended December 31, 2015 2014 2013 (in millions) Foreign currency derivative contracts General and administrative $ 51 $ (78 ) $ 48 Net revenue — — 4 Total $ 51 $ (78 ) $ 52 The fair value of the foreign currency derivative contracts generally reflects the estimated amounts that the Company would receive (or pay), on a pre-tax basis, to terminate the contracts at the reporting date based on broker quotes for the same or similar instruments. The terms of the foreign currency derivative contracts are generally less than 18 months . The Company had no deferred gains or losses related to foreign exchange contracts in accumulated other comprehensive income as of December 31, 2015 and 2014 as there were no derivative contracts accounted for under hedge accounting. The Company’s derivative financial instruments are subject to both market and counterparty credit risk. Market risk is the risk of loss due to the potential change in an instrument’s value caused by fluctuations in interest rates and other variables related to currency exchange rates. The effect of a hypothetical 10% adverse change in foreign currency rates could result in a fair value loss of approximately $128 million on the Company’s foreign currency derivative contracts outstanding at December 31, 2015 . Counterparty credit risk is the risk of loss due to failure of the counterparty to perform its obligations in accordance with contractual terms. To mitigate counterparty credit risk, the Company enters into derivative contracts with selected financial institutions based upon their credit ratings and other factors. Generally, the Company does not obtain collateral related to derivatives because of the high credit ratings of the counterparties. Net investment hedge The Company uses foreign currency denominated debt to hedge a portion of its net investment in foreign operations against adverse movements in exchange rates, with changes in the value of the debt recorded within currency translation adjustment in accumulated other comprehensive income (loss). The Company monitors and manages those exposures as part of its overall risk management program which focuses on the unpredictability of financial markets and seeks to reduce the potentially adverse effects that the volatility of these markets may have on our operating results. A principal objective of the Company’s risk management strategies is to reduce significant, unanticipated earnings fluctuations that may arise from volatility in foreign currency exchange rates principally through the use of derivative instruments. During the fourth quarter of 2015, the Company designated its €1.65 billion euro-denominated debt as a net investment hedge for a portion of its net investment in European foreign operations. As of December 31, 2015 , the Company had net foreign currency transaction pre-tax loss of $40 million in accumulated other comprehensive income (loss) associated with hedging activity. |
Segment Reporting
Segment Reporting | 12 Months Ended |
Dec. 31, 2015 | |
Segment Reporting [Abstract] | |
Segment Reporting | Segment Reporting MasterCard has concluded it has one operating and reportable segment, “Payment Solutions.” MasterCard’s President and Chief Executive Officer has been identified as the chief operating decision-maker. All of the Company’s activities are interrelated, and each activity is dependent upon and supportive of the other. Accordingly, all significant operating decisions are based upon analysis of MasterCard at the consolidated level. Revenue by geographic market is based on the location of the Company’s customer that issued the card, as well as the location of the merchant acquirer where the card is being used. Revenue generated in the U.S. was approximately 39% of net revenue in 2015 , 2014 and 2013 . No individual country, other than the U.S., generated more than 10% of total revenue in those periods. MasterCard did not have any one customer that generated greater than 10% of net revenue in 2015 , 2014 or 2013 . The following table reflects the geographical location of the Company’s property, plant and equipment, net, as of December 31: 2015 2014 2013 (in millions) United States $ 471 $ 450 $ 410 Other countries 204 165 116 Total $ 675 $ 615 $ 526 |
SUMMARY OF QUARTERLY DATA (Unau
SUMMARY OF QUARTERLY DATA (Unaudited) | 12 Months Ended |
Dec. 31, 2015 | |
Quarterly Financial Data [Abstract] | |
SUMMARY OF QUARTERLY DATA (Unaudited) | MASTERCARD INCORPORATED SUMMARY OF QUARTERLY DATA (Unaudited) 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 2014 Quarter Ended March 31 June 30 September 30 December 31 2014 Total (in millions, except per share data) Net revenue $ 2,172 $ 2,368 $ 2,490 $ 2,411 $ 9,441 Operating income 1,285 1,383 1,420 1,018 5,106 Net income 870 931 1,015 801 3,617 Basic earnings per share $ 0.73 $ 0.80 $ 0.88 $ 0.70 $ 3.11 Basic weighted-average shares outstanding 1,185 1,165 1,157 1,153 1,165 Diluted earnings per share $ 0.73 $ 0.80 $ 0.87 $ 0.69 $ 3.10 Diluted weighted-average shares outstanding 1,189 1,169 1,160 1,157 1,169 * Tables may not sum due to rounding. |
Summary of Significant Accoun31
Summary of Significant Accounting Policies (Policy) | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Organization | Organization MasterCard Incorporated and its consolidated subsidiaries, including MasterCard International Incorporated (“MasterCard International” and together with MasterCard Incorporated, “MasterCard” or the “Company”), is a technology company in the global payments industry that connects consumers, financial institutions, merchants, governments and businesses worldwide, enabling them to use electronic forms of payment instead of cash and checks. The Company facilitates the processing of payment transactions including authorization, clearing and settlement, and delivers related products and services. The Company makes payments easier and more efficient by creating a wide range of payment solutions and services through a family of well-known brands, including MasterCard, Maestro and Cirrus. The Company also provides value-added offerings such as loyalty and reward programs, information services and consulting. The Company’s network is designed to ensure safety and security for the global payments system. A typical transaction on the Company’s network involves four participants in addition to the Company: cardholder, merchant, issuer (the cardholder’s financial institution) and acquirer (the merchant’s financial institution). The Company’s customers encompass a vast array of entities, including financial institutions and other entities that act as “issuers” and “acquirers”, as well as merchants, governments, telecommunication companies and other businesses. The Company does not issue cards, extend credit, determine or receive revenue from interest rates or other fees charged to cardholders by issuers, or establish the rates charged by acquirers in connection with merchants’ acceptance of the Company’s branded cards. |
Consolidation and Basis of Presentation | Consolidation and basis of presentation - The consolidated financial statements include the accounts of MasterCard and its majority-owned and controlled entities, including any variable interest entities (“VIEs”) for which the Company is the primary beneficiary. Investments in VIEs for which the Company is not considered the primary beneficiary are not consolidated and are accounted for as equity method or cost method investments and recorded in other assets on the consolidated balance sheet. At December 31, 2015 and 2014 , there were no significant VIEs which required consolidation and the investments were not considered material to the consolidated financial statements. Intercompany transactions and balances have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform to the 2015 presentation. In 2014 and 2013 , net revenue and general and administrative expenses were revised to correctly classify $32 million and $34 million , respectively, of customer incentive expenses as contra revenue instead of general and administrative expenses. This revision had no impact on net income. The Company follows accounting principles generally accepted in the United States of America (“GAAP”). Non-controlling interests represent the equity interest not owned by the Company and are recorded for consolidated entities in which the Company owns less than 100% of the interests. Changes in a parent’s ownership interest while the parent retains its controlling interest are accounted for as equity transactions, and upon loss of control, retained ownership interests are remeasured at fair value, with any gain or loss recognized in earnings. For 2015, 2014 and 2013 , income from non-controlling interests was de minimis and, as a result, amounts are included in the consolidated statement of operations within other income (expense). The Company accounts for investments in common stock or in-substance common stock under the equity method of accounting when it has the ability to exercise significant influence over the investee, generally when it holds between 20% and 50% ownership in the entity. In addition, investments in flow-through entities such as limited partnerships and limited liability companies are also accounted for under the equity method when the Company has the ability to exercise significant influence over the investee, generally when the investment ownership percentage is equal to or greater than 5% of the outstanding ownership interest. The excess of the cost over the underlying net equity of investments accounted for under the equity method is allocated to identifiable tangible and intangible assets and liabilities based on fair values at the date of acquisition. The amortization of the excess of the cost over the underlying net equity of investments and MasterCard’s share of net earnings or losses of entities accounted for under the equity method of accounting is included in other income (expense) on the consolidated statement of operations. The Company accounts for investments in common stock or in-substance common stock under the cost method of accounting when it does not exercise significant influence, generally when it holds less than 20% ownership in the entity or when the interest in a limited partnership or limited liability company is less than 5% and the Company has no significant influence over the operation of the investee. Investments in companies that MasterCard does not control, but that are not in the form of common stock or in-substance common stock, are also accounted for under the cost method of accounting. Investments for which the equity method or cost method of accounting is used are recorded in other assets on the consolidated balance sheet. |
Use of Estimates Policy | Use of estimates - The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Future events and their effects cannot be predicted with certainty; accordingly, accounting estimates require the exercise of judgment. The accounting estimates used in the preparation of the Company’s consolidated financial statements may change as new events occur, as more experience is acquired, as additional information is obtained and as the Company’s operating environment changes. Actual results may differ from these estimates. |
Revenue Recognition Policy | Revenue recognition - Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed or determinable, and collectibility is reasonably assured. Revenue is generally derived from transactional information accumulated by our systems or reported by our customers. The Company’s revenue is based on the volume of activity on cards that carry the Company’s brands, the number of transactions processed or the nature of other payment-related products and services. Volume-based revenue (domestic assessments and cross-border volume fees) is recorded as revenue in the period it is earned, which is when the related volume is generated on the cards. Certain volume-based revenue is based upon information reported to us by our customers. Transaction-based revenue (transaction processing fees) is primarily based on the number and type of transactions and is recognized as revenue in the same period as the related transactions occur. Other payment-related products and services are recognized as revenue in the same period as the related transactions occur or services are rendered. MasterCard has business agreements with certain customers that provide for rebates or other support when the customers meet certain volume hurdles as well as other support incentives such as marketing, which are tied to performance. Rebates and incentives are recorded as a reduction of revenue either when the revenue is recognized by the Company or at the time the rebate or incentive is earned by the customer. Rebates and incentives are calculated based upon estimated performance and the terms of the related business agreements. In addition, MasterCard may make payments to a customer directly related to entering into an agreement, which are generally deferred and amortized over the life of the agreement on a straight-line basis. |
Business Combinations Policy | Business combinations - The Company accounts for business combinations under the acquisition method of accounting. The Company measures the tangible and intangible identifiable assets acquired, liabilities assumed, and any non-controlling interest in the acquiree, at their fair values at the acquisition date. Acquisition-related costs are expensed as incurred and are included in general and administrative expenses. Any excess of purchase price over the fair value of net assets acquired, including identifiable intangible assets, is recorded as goodwill. |
Intangible Assets and Impairment of Assets Policy | Intangible assets - Intangible assets consist of capitalized software costs, trademarks, tradenames, customer relationships and other intangible assets, which have finite lives, and customer relationships which have indefinite lives. Intangible assets with finite useful lives are amortized over their estimated useful lives, on a straight-line basis, which range from one to ten years. Capitalized software includes internal and external costs incurred directly related to the design, development and testing phases of each capitalized software project. Impairment of assets - Long-lived assets, other than goodwill and indefinite-lived intangible assets, are tested for impairment whenever events or circumstances indicate that their carrying amount may not be recoverable. If the carrying value of the asset cannot be recovered from estimated future cash flows, undiscounted and without interest, the fair value of the asset is calculated using the present value of estimated net future cash flows. If the carrying amount of the asset exceeds its fair value, an impairment is recorded. Goodwill and indefinite-lived intangible assets are not amortized and are tested annually for impairment in the fourth quarter, or sooner when circumstances indicate an impairment may exist. Goodwill is tested for impairment at the reporting unit level. The impairment evaluation utilizes a quantitative assessment using a two-step impairment test. The first step is to compare the reporting unit’s carrying value, including goodwill, to the fair value. If the fair value exceeds the carrying value, then no potential impairment is considered to exist. If the carrying value exceeds the fair value, the second step is performed to determine if the implied fair value of the reporting unit’s goodwill exceeds the carrying value of the reporting unit. An impairment charge would be recorded if the carrying value exceeds the implied fair value. Impairment charges, if any, are recorded in general and administrative expenses. The impairment test for indefinite-lived intangible assets consists of a qualitative assessment to evaluate all relevant events and circumstances that could affect the significant inputs used to determine the fair value of indefinite-lived intangible assets. If the qualitative assessment indicates that it is more likely than not that indefinite-lived intangible assets are impaired, then a quantitative assessment is required. Based on the qualitative assessment performed in 2015, it was determined that the Company’s indefinite-lived intangible assets were not impaired. |
Litigation Policy | Litigation - The Company is a party to certain legal and regulatory proceedings with respect to a variety of matters. The Company evaluates the likelihood of an unfavorable outcome of all legal or regulatory proceedings to which it is a party and accrues a loss contingency when the loss is probable and reasonably estimable. These judgments are subjective based on the status of the legal or regulatory proceedings, the merits of its defenses and consultation with in-house and external legal counsel. Legal costs are expensed as incurred and recorded in general and administrative expenses. |
Settlement and Other Risk Management Policy | Settlement and other risk management - MasterCard’s rules guarantee the settlement of many of the MasterCard, Cirrus and Maestro-branded transactions between its issuers and acquirers. Settlement exposure is the outstanding settlement risk to customers under MasterCard’s rules due to the difference in timing between the payment transaction date and subsequent settlement. While the term and amount of the guarantee are unlimited, the duration of settlement exposure is short term and typically limited to a few days. In the event that MasterCard effects a payment on behalf of a failed customer, MasterCard may seek an assignment of the underlying receivables of the failed customer. Customers may be charged for the amount of any settlement loss incurred during the ordinary course activities of the Company. The Company also enters into agreements in the ordinary course of business under which the Company agrees to indemnify third parties against damages, losses and expenses incurred in connection with legal and other proceedings arising from relationships or transactions with the Company. As the extent of the Company’s obligations under these agreements depends entirely upon the occurrence of future events, the Company’s potential future liability under these agreements is not determinable. The Company accounts for each of its guarantees by recording the guarantee at its fair value at the inception or modification date through earnings. |
Income Taxes Policy | Income taxes - The Company follows an asset and liability based approach in accounting for income taxes as required under GAAP. Deferred income tax assets and liabilities are recorded to reflect the tax consequences on future years of temporary differences between the financial statement carrying amounts and income tax bases of assets and liabilities. Deferred income taxes are displayed as separate line items on the consolidated balance sheet. In 2015, the Company early adopted accounting guidance issued by the Financial Accounting Standards Board (“FASB”) in the fourth quarter of 2015, which requires all deferred income taxes to be recorded as non-current. The standard was applied prospectively, and as such, the prior period balance sheet was not reclassified. Valuation allowances are provided against assets which are not more likely than not to be realized. The Company recognizes all material tax positions, including uncertain tax positions in which it is more likely than not that the position will be sustained based on its technical merits and if challenged by the relevant taxing authorities. At each balance sheet date, unresolved uncertain tax positions are reassessed to determine whether subsequent developments require a change in the amount of recognized tax benefit. The allowance for uncertain tax positions is recorded in other current and noncurrent liabilities on the consolidated balance sheet. The Company records interest expense related to income tax matters as interest expense in its statement of operations. The Company includes penalties related to income tax matters in the income tax provision. The Company does not provide for U.S. federal income tax and foreign withholding taxes on undistributed earnings from non-U.S. subsidiaries when such earnings are intended to be reinvested indefinitely outside of the U.S. |
Cash and Cash Equivalents and Restricted Cash Policy | Cash and cash equivalents - Cash and cash equivalents include certain investments with daily liquidity and with a maturity of three months or less from the date of purchase. Cash equivalents are recorded at cost, which approximates fair value. Restricted cash - The Company classifies cash as restricted when the cash is unavailable for withdrawal or usage for general operations. Restrictions may include legally restricted deposits, contracts entered into with others, or the Company’s statements of intention with regard to particular deposits. In December 2012, the Company made a payment into a qualified cash settlement fund related to its U.S. merchant class litigation. The Company has presented these funds as restricted cash for litigation settlement since the use of the funds under the qualified cash settlement fund is restricted for payment under the settlement agreement. |
Fair Value Policy | Fair value - The Company measures certain financial assets and liabilities at fair value on a recurring basis by estimating the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants. The Company classifies these recurring fair value measurements into a three-level hierarchy (“Valuation Hierarchy”). The Valuation Hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. A financial instrument’s categorization within the Valuation Hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels of the Valuation Hierarchy are as follows: • 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. Certain assets are measured at fair value on a nonrecurring basis. The Company’s assets measured at fair value on a nonrecurring basis include property, plant and equipment, nonmarketable equity investments, goodwill and other intangible assets. These assets are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment. The valuation methods for goodwill and other intangible assets involve assumptions concerning comparable company multiples, discount rates, growth projections and other assumptions of future business conditions. The Company uses an income approach for estimating the fair value of its intangible assets and a market approach for estimating the fair value of its reporting unit, when necessary. As the assumptions employed to measure these assets and liabilities on a nonrecurring basis are based on management’s judgment using internal and external data, these fair value determinations are classified in Level 3 of the Valuation Hierarchy. |
Investment Securities Policy | Investment securities - The Company classifies investments in debt and equity securities as available-for-sale. Available-for-sale securities that are available to meet the Company’s current operational needs are classified as current assets. Available-for-sale securities that are not available to meet the Company’s current operational needs are classified as non-current assets. The investments in debt and equity securities are carried at fair value, with unrealized gains and losses, net of applicable taxes, recorded as a separate component of accumulated other comprehensive income (loss) on the consolidated statement of comprehensive income. Net realized gains and losses on debt and equity securities are recognized in investment income on the consolidated statement of operations. The specific identification method is used to determine realized gains and losses. The Company classifies time deposits with maturities greater than 3 months as held-to-maturity. Held-to-maturity securities that mature within one year are classified as current assets while held-to-maturity securities with maturities of greater than one year are classified as non-current assets. Time deposits are carried at amortized cost on the consolidated balance sheet and are intended to be held until maturity. |
Derivative Financial Instruments Policy | Derivative financial instruments - The Company records all derivatives at fair value. The Company’s foreign exchange forward and option contracts are included in Level 2 of the Valuation Hierarchy as the fair value of these contracts are based on inputs, which are observable based on broker quotes for the same or similar instruments. Changes in the fair value of derivative instruments are reported in current-period earnings. These derivative contracts hedge foreign exchange risk and were not entered into for trading or speculative purposes. The Company did not have any derivative contracts accounted for under hedge accounting as of December 31, 2015 and 2014 . The Company has numerous investments in its foreign subsidiaries. The net assets of these subsidiaries are exposed to volatility in foreign currency exchange rates. The Company uses foreign currency denominated debt to hedge a portion of its net investment in foreign operations against adverse movements in exchange rates. The effective portion of the foreign currency gains and losses related to the foreign currency denominated debt are reported in accumulated other comprehensive income (loss) as part of the cumulative translation adjustment component of equity. The ineffective portion, if any, is recognized in earnings in the current period. The Company evaluates the effectiveness of the net investment hedge each quarter. |
Settlement Due From/Due To Customers Policy | Settlement due from/due to customers - The Company operates systems for clearing and settling payment transactions among MasterCard customers. Net settlements are generally cleared daily among customers through settlement cash accounts by wire transfer or other bank clearing means. However, some transactions may not settle until subsequent business days, resulting in amounts due from and due to MasterCard customers. |
Restricted Security Deposits Held for MasterCard Customers Policy | Restricted security deposits held for MasterCard customers - MasterCard requires collateral from certain customers for settlement of their transactions. The majority of collateral for settlement is in the form of standby letters of credit and bank guarantees which are not recorded on the balance sheet. Additionally, MasterCard holds cash deposits and certificates of deposit from certain customers of MasterCard as collateral for settlement of their transactions. These assets are fully offset by corresponding liabilities included on the consolidated balance sheet. |
Property, Plant and Equipment Policy | Property, plant and equipment - Property, plant and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the assets. Depreciation of leasehold improvements and amortization of capital leases is included in depreciation and amortization expense. The useful lives of the Company’s assets are as follows: 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 Lease term |
Leases Policy | Leases - The Company enters into operating and capital leases for the use of premises, software and equipment. Rent expense related to lease agreements that contain lease incentives is recorded on a straight-line basis over the term of the lease. |
Pension and Other Postretirement Plans Policy | Pension and other postretirement plans - The Company recognizes the funded status of its single-employer defined benefit pension plans or postretirement plans as assets or liabilities on its balance sheet and recognizes changes in the funded status in the year in which the changes occur through accumulated other comprehensive income (loss). The funded status is measured as the difference between the fair value of plan assets and the benefit obligation at December 31, the measurement date. The fair value of plan assets represents the current market value of the pension assets. Overfunded plans are aggregated and recorded in long-term other assets, while underfunded plans are aggregated and recorded as accrued expenses and long-term other liabilities. Net periodic pension and postretirement benefit cost/(income) is recognized in general and administrative expenses in the consolidated statement of operations. These costs include service costs, interest cost, expected return on plan assets, amortization of prior service costs or credits and gains or losses previously recognized as a component of accumulated other comprehensive income (loss). Defined contribution plans - The Company’s contributions to defined contribution plans are recorded when employees render service to the Company. The charge is recorded in general and administrative expenses. |
Advertising and Marketing Policy | Advertising and marketing - The cost of media advertising is expensed when the advertising takes place. Advertising production costs are expensed as incurred. Promotional items are expensed at the time the promotional event occurs. Sponsorship costs are recognized over the period of benefit. |
Foreign Currency Remeasurement and Translation Policy | Foreign currency remeasurement and translation - Monetary assets and liabilities are remeasured to functional currencies using current exchange rates in effect at the balance sheet date. Non-monetary assets and liabilities are recorded at historical exchange rates. Revenue and expense accounts are remeasured at the weighted-average exchange rate for the period. Resulting exchange gains and losses related to remeasurement are included in general and administrative expenses on the consolidated statement of operations. Where a non-U.S. currency is the functional currency, translation from that functional currency to U.S. dollars is performed for balance sheet accounts using current exchange rates in effect at the balance sheet date and for revenue and expense accounts using a weighted-average exchange rate for the period. Resulting translation adjustments are reported as a component of accumulated other comprehensive income (loss). |
Treasury Stock Policy | Treasury stock - The Company records the repurchase of shares of its common stock at cost on the trade date of the transaction. These shares are considered treasury stock, which is a reduction to stockholders’ equity. Treasury stock is included in authorized and issued shares but excluded from outstanding shares. |
Share-based Payments Policy | Share-based payments - The Company measures share-based compensation expense at the grant date, based on the estimated fair value of the award and uses the straight-line method of attribution, net of estimated forfeitures, for expensing awards over the requisite employee service period. The Company estimates the fair value of its non-qualified stock option awards (“Options”) using a Black-Scholes valuation model. The fair value of restricted stock units (“RSUs”) is determined and fixed on the grant date based on the Company’s stock price, adjusted for the exclusion of dividend equivalents. The Monte Carlo simulation valuation model is used to determine the grant date fair value of performance stock units (“PSUs”) granted. All share-based compensation expenses are recorded in general and administrative expenses. |
Earnings Per Share Policy | Earnings per share - The Company calculates basic earnings per share (“EPS”) by dividing net income by the weighted-average number of common shares outstanding during the year. Diluted EPS is calculated by dividing net income by the weighted-average number of common shares outstanding during the year, adjusted for the potentially dilutive effect of stock options and unvested stock units using the treasury stock method. |
Recent Accounting Pronouncements Policy | Recent accounting pronouncements Income taxes - In November 2015, the FASB issued accounting guidance that removes the reporting requirement to split deferred income taxes between current and non-current. Instead, the new accounting guidance requires all deferred income taxes to be reported as non-current. This standard is effective for fiscal years beginning after December 15, 2016. Early adoption is permitted. The Company early adopted the accounting guidance effective December 31, 2015. The Company applied the new guidance prospectively and, as such, prior periods were not reclassified. Debt issuance costs - In April 2015, the FASB issued accounting guidance that will change the current presentation of debt issuance costs on the balance sheet. This new guidance will move debt issuance costs from the assets section of the balance sheet to the liabilities section as a direct deduction from the carrying amount of the debt issued. The Company will adopt the accounting guidance effective January 1, 2016 and does not anticipate that it will have a material impact on its consolidated financial statements. Revenue recognition - In May 2014, the FASB issued accounting guidance that provides a single, comprehensive revenue recognition model for all contracts with customers and supersedes most of the existing revenue recognition requirements. Under this guidance, an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued accounting guidance that delayed the effective date of this standard by one year, making the guidance effective for fiscal years beginning after December 15, 2017. Early application is permitted as of the original effective date, December 15, 2016. The Company will adopt the new accounting guidance effective January 1, 2018. The accounting guidance permits either a full retrospective or a modified retrospective transition method. The Company is in the process of evaluating which transition method it will apply and the potential effects this guidance will have on its consolidated financial statements. Income taxes - In July 2013, the FASB issued accounting guidance that requires entities to present an unrecognized tax benefit net with certain deferred tax assets when specific requirements are met. The Company adopted the revised accounting guidance effective January 1, 2014. This new accounting guidance did not have a material impact on the Company’s consolidated financial statements. Foreign currency - In March 2013, the FASB issued clarifying accounting guidance on the release of cumulative translation adjustment into net income when an entity ceases to have a controlling financial interest in a subsidiary or a group of assets that is a business within a foreign entity. The revised accounting guidance became effective January 1, 2014 and did not have an impact on the Company’s consolidated financial statements. |
Summary of Significant Accoun32
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Property, Plant and Equipment | The useful lives of the Company’s assets are as follows: 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 Lease term Property, plant and equipment consisted of the following at December 31: 2015 2014 (in millions) Building, building equipment and land $ 503 $ 510 Equipment 497 398 Furniture and fixtures 54 53 Leasehold improvements 112 91 Property, plant and equipment 1,166 1,052 Less: accumulated depreciation and amortization (491 ) (437 ) Property, plant and equipment, net $ 675 $ 615 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Earnings Per Share [Abstract] | |
Schedule of Basic and Diluted Earnings Per Share | The components of basic and diluted EPS for common shares for each of the years ended December 31 were as follows: 2015 2014 2013 (in millions, except per share data) Numerator: Net income $ 3,808 $ 3,617 $ 3,116 Denominator: Basic weighted-average shares outstanding 1,134 1,165 1,211 Dilutive stock options and stock units 3 4 4 Diluted weighted-average shares outstanding 1 1,137 1,169 1,215 Earnings per Share Basic $ 3.36 $ 3.11 $ 2.57 Diluted $ 3.35 $ 3.10 $ 2.56 * Table may not sum due to rounding. 1 For the years presented, the calculation of diluted EPS excluded a minimal amount of anti-dilutive share-based payment awards. |
Supplemental Cash Flows (Tables
Supplemental Cash Flows (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Supplemental Cash Flow Information [Abstract] | |
Schedule of Supplemental Cash Flow Disclosures | The following table includes supplemental cash flow disclosures for each of the years ended December 31: 2015 2014 2013 (in millions) Cash paid for income taxes, net of refunds $ 1,097 $ 2,036 $ 1,215 Cash paid for interest 44 24 2 Cash paid for legal settlements 124 28 — Non-cash investing and financing activities: Dividends declared but not yet paid 212 184 131 Assets recorded pursuant to capital lease 10 8 7 Fair value of assets acquired, net of cash acquired 626 768 — Fair value of liabilities assumed related to acquisitions 42 141 — |
Fair Value and Investment Sec35
Fair Value and Investment Securities (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Financial Instruments, Financial Liabilities, Balance Sheet Groupings [Abstract] | |
Distribution of Financial Instruments, Measured at Fair Value on a Recurring Basis | The distribution of the Company’s financial instruments which are measured at fair value on a recurring basis within the Valuation Hierarchy was as follows: December 31, 2015 Quoted Prices in Active Markets (Level 1) 1 Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Fair Value (in millions) Municipal securities $ — $ 62 $ — $ 62 U.S. government and agency securities 2 31 41 — 72 Corporate securities — 630 — 630 Asset-backed securities — 57 — 57 Other 2 52 — 54 Total $ 33 $ 842 $ — $ 875 December 31, 2014 Quoted Prices in Active Markets (Level 1) 1 Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Fair Value (in millions) Municipal securities $ — $ 135 $ — $ 135 U.S. government and agency securities 2 85 114 — 199 Corporate securities — 618 — 618 Asset-backed securities — 178 — 178 Other 13 56 — 69 Total $ 98 $ 1,101 $ — $ 1,199 1 During 2015, U.S. government securities were reclassified from Level 2 to Level 1 due to a reassessment of the availability of quoted prices. Prior period amounts have been revised to conform to the 2015 presentation. 2 Excludes amounts held in escrow related to the U.S. merchant class litigation settlement of $541 million and $540 million at December 31, 2015 and December 31, 2014 , which would be included in Level 1 of the Valuation Hierarchy. See Note 10 (Accrued Expenses and Accrued Litigation) and Note 18 (Legal and Regulatory Proceedings) for further details. |
Available-for-Sale Investment Securities, Unrealized Gains and Losses | The major classes of the Company’s available-for-sale investment securities, for which unrealized gains and losses are recorded as a separate component of other comprehensive income on the consolidated statement of comprehensive income, and their respective amortized cost basis and fair values as of December 31, 2015 and 2014 were as follows: December 31, 2015 Amortized Cost Gross Unrealized Gain Gross Unrealized Loss Fair Value (in millions) Municipal securities $ 62 $ — $ — $ 62 U.S. government and agency securities 72 — — 72 Corporate securities 631 — (1 ) 630 Asset-backed securities 57 — — 57 Other 39 1 — 40 Total $ 861 $ 1 $ (1 ) $ 861 December 31, 2014 Amortized Cost Gross Unrealized Gain Gross Unrealized Loss Fair Value (in millions) Municipal securities $ 135 $ — $ — $ 135 U.S. government and agency securities 199 — — 199 Corporate securities 619 — (1 ) 618 Asset-backed securities 178 — — 178 Other 41 1 (4 ) 38 Total $ 1,172 $ 1 $ (5 ) $ 1,168 |
Maturity Distribution Based on Contractual Terms of Investment Securities | The maturity distribution based on the contractual terms of the Company’s investment securities at December 31, 2015 was as follows: Available-For-Sale Amortized Cost Fair Value (in millions) Due within 1 year $ 309 $ 309 Due after 1 year through 5 years 544 543 Due after 5 years through 10 years 1 1 Due after 10 years 6 6 No contractual maturity 1 1 2 Total $ 861 $ 861 1 Equity securities have been included in the No contractual maturity category, as these securities do not have stated maturity dates. |
Prepaid Expenses and Other As36
Prepaid Expenses and Other Assets (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Prepaid Expense and Other Assets [Abstract] | |
Schedule of Prepaid Expenses and Other Current Assets | Prepaid expenses and other current assets consisted of the following at December 31: 2015 2014 (in millions) Customer and merchant incentives $ 345 $ 260 Prepaid income taxes 72 237 Other 247 174 Total prepaid expenses and other current assets $ 664 $ 671 |
Schedule of Other Assets, Noncurrent | Other assets consisted of the following at December 31: 2015 2014 (in millions) Customer and merchant incentives $ 810 $ 556 Nonmarketable equity investments 166 245 Prepaid income taxes 352 407 Income taxes receivable 160 89 Other 110 88 Total other assets $ 1,598 $ 1,385 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | The useful lives of the Company’s assets are as follows: 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 Lease term Property, plant and equipment consisted of the following at December 31: 2015 2014 (in millions) Building, building equipment and land $ 503 $ 510 Equipment 497 398 Furniture and fixtures 54 53 Leasehold improvements 112 91 Property, plant and equipment 1,166 1,052 Less: accumulated depreciation and amortization (491 ) (437 ) Property, plant and equipment, net $ 675 $ 615 |
Goodwill (Tables)
Goodwill (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Goodwill [Abstract] | |
Change in Carrying Amount of Goodwill | The changes in the carrying amount of goodwill for the years ended December 31, 2015 and 2014 were as follows: 2015 2014 (in millions) Beginning balance $ 1,522 $ 1,122 Goodwill acquired during the year 458 525 Foreign currency translation (89 ) (106 ) Other — (19 ) Ending balance $ 1,891 $ 1,522 |
Other Intangible Assets (Tables
Other Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |
Schedule of Intangible Assets | The following table sets forth net intangible assets, other than goodwill, at December 31: 2015 2014 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount (in millions) Amortized intangible assets: Capitalized software $ 1,086 $ (625 ) $ 461 $ 839 $ (496 ) $ 343 Trademarks and tradenames 30 (23 ) 7 48 (38 ) 10 Customer relationships 318 (149 ) 169 292 (115 ) 177 Other 25 (19 ) 6 20 (14 ) 6 Total 1,459 (816 ) 643 1,199 (663 ) 536 Unamortized intangible assets: Customer relationships 160 — 160 178 — 178 Total $ 1,619 $ (816 ) $ 803 $ 1,377 $ (663 ) $ 714 |
Schedule of Estimated Future Amortization Expense | The following table sets forth the estimated future amortization expense on amortizable intangible assets on the balance sheet at December 31, 2015 for the years ending December 31: (in millions) 2016 $ 231 2017 168 2018 105 2019 47 2020 and thereafter 92 $ 643 |
Accrued Expenses and Accrued 40
Accrued Expenses and Accrued Litigation (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Accrued Liabilities [Abstract] | |
Accrued Expenses | Accrued expenses consisted of the following at December 31: 2015 2014 (in millions) Customer and merchant incentives $ 1,748 $ 1,433 Personnel costs 473 531 Advertising 114 154 Income and other taxes 143 105 Other 285 216 Total accrued expenses $ 2,763 $ 2,439 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Debt Instruments [Abstract] | |
Schedule of Debt | Long-term debt consisted of the following at December 31: Stated Interest Rate Effective Interest Rate 2015 2014 (in millions, except percentages) USD Notes Due 2019 2.000 % 2.178 % $ 500 $ 500 Due 2024 3.375 % 3.484 % 1,000 1,000 Euro Notes Due 2022 1.100 % 1.265 % 763 — Due 2027 2.100 % 2.189 % 872 — Due 2030 2.500 % 2.562 % 164 — 3,299 1,500 Less: Unamortized discount (12 ) (6 ) Long-term debt $ 3,287 $ 1,494 |
Schedule of Maturities of Long-term Debt [Table Text Block] | Scheduled annual maturities of the principal portion of long-term debt outstanding at December 31, 2015 are summarized below. Amounts exclude capital lease obligations disclosed in Note 16 (Commitments). (in millions) 2016 - 2018 $ — 2019 500 2020 — Thereafter 2,799 Total $ 3,299 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Stockholders' Equity Note [Abstract] | |
Schedule of Classes of Capital Stock | MasterCard’s amended and restated certificate of incorporation authorizes the following classes of capital stock: Class Par Value Per Share Authorized Shares (in millions) Dividend and Voting Rights A $0.0001 3,000 One vote per share B $0.0001 1,200 Non-voting Preferred $0.0001 300 No shares issued or outstanding at December 31, 2015 and 2014, respectively. Dividend and voting rights are to be determined by the Board of Directors of the Company upon issuance. |
Schedule of Ownership and Governance Structure | Equity ownership and voting power of the Company’s shares were allocated as follows as of December 31: 2015 2014 Equity Ownership General Voting Power Equity Ownership General Voting Power Public Investors (Class A stockholders) 87.7 % 89.4 % 86.6 % 89.4 % Principal or Affiliate Customers (Class B stockholders) 1.9 % — % 3.2 % — % The MasterCard Foundation (Class A stockholders) 10.4 % 10.6 % 10.2 % 10.6 % |
Schedule of Share Repurchases and Authorizations | The following table summarizes the Company’s share repurchase authorizations of its Class A common stock through December 31, 2015 , as well as historical purchases: Authorization Dates December 2015 December 2014 December 2013 February 2013 June 2012 Total (in millions, except average price data) Board authorization $ 4,000 $ 3,750 $ 3,500 $ 2,000 $ 1,500 $ 14,750 Dollar-value of shares repurchased in 2013 $ — $ — $ — $ 1,839 $ 604 $ 2,443 Remaining authorization at December 31, 2013 $ — $ — $ 3,500 $ 161 $ — $ 3,661 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 Shares repurchased in 2013 — — — 29.2 11.7 40.9 Average price paid per share in 2013 $ — $ — $ — $ 63.01 $ 51.72 $ 59.78 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 Cumulative shares repurchased through December 31, 2015 — 35.1 45.8 31.1 31.1 143.1 Cumulative average price paid per share $ — $ 92.39 $ 76.42 $ 64.26 $ 48.16 $ 71.55 |
Accumulated Other Comprehensi43
Accumulated Other Comprehensive Income (Loss) (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Statement of Comprehensive Income [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) | The changes in the balances of each component of accumulated other comprehensive income (loss), net of tax, for the years ended December 31, 2015 and 2014 were as follows: Foreign Currency Translation Adjustments Translation Adjustments on Net Investment Hedge Defined Benefit Pension and Other Postretirement Plans Investment Securities Available-for-Sale Accumulated Other Comprehensive Income (Loss) (in millions) Balance at December 31, 2013 $ 206 $ — $ (29 ) $ 1 $ 178 Other comprehensive income (loss) 1 (436 ) — 3 (5 ) (438 ) Balance at December 31, 2014 (230 ) — (26 ) (4 ) (260 ) Other comprehensive income (loss) 1,2,3 (433 ) (26 ) 39 4 (416 ) Balance at December 31, 2015 $ (663 ) $ (26 ) $ 13 $ — $ (676 ) 1 During 2015 and 2014, the increase in other comprehensive loss related to foreign currency translation adjustments was driven primarily by the devaluation of the euro and Brazilian real. 2 During 2015, $ 80 million of deferred costs ($ 51 million after-tax) related to the Company’s defined benefit pension plan and other post retirement plans were reclassified to general and administrative expenses. The deferred costs were driven primarily by the termination of the Company's U.S. defined benefit plan (See Note 11, Pension, Postretirement and Savings Plans). 3 During 2015, $ 15 million of an unrealized loss (no tax impact) on a foreign denominated available-for-sale security was reclassified to other income (expense) due to an other-than-temporary impairment. |
Share-Based Payment and Other44
Share-Based Payment and Other Benefits (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Employee Service Share-based Compensation, Aggregate Disclosures [Abstract] | |
Schedule of Weighted-Average Assumptions Used in the Valuation of Stock Option Awards | The following table presents the weighted-average assumptions used in the valuation and the resulting weighted-average fair value per option granted for the years ended December 31: 2015 2014 2013 Risk-free rate of return 1.5 % 1.5 % 0.8 % Expected term (in years) 5.00 5.00 5.00 Expected volatility 20.6 % 19.1 % 27.1 % Expected dividend yield 0.7 % 0.6 % 0.5 % Weighted-average fair value per Option granted $ 17.29 $ 14.29 $ 12.33 |
Summary of Stock Option Activity | The following table summarizes the Company’s option activity for the year ended December 31, 2015 : Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term Aggregate Intrinsic Value (in millions) (in years) (in millions) Outstanding at January 1, 2015 7.5 $ 44 Granted 1.6 $ 90 Exercised (0.9 ) $ 30 Forfeited/expired (0.1 ) $ 70 Outstanding at December 31, 2015 8.1 $ 54 6.7 $ 348 Exercisable at December 31, 2015 4.1 $ 35 5.3 $ 256 Options vested and expected to vest at December 31, 2015 7.9 $ 54 6.7 $ 346 |
Summary of Restricted Stock Unit Activity | The following table summarizes the Company’s RSU activity for the year ended December 31, 2015 : 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, 2015 4.2 $ 56 Granted 1.2 $ 88 Converted (1.5 ) $ 42 Forfeited/expired (0.1 ) $ 68 Outstanding at December 31, 2015 3.8 $ 71 1.2 $ 366 RSUs vested and expected to vest at December 31, 2015 3.6 $ 71 1.1 $ 353 |
Summary of Performance Stock Unit Activity | The following table summarizes the Company’s PSU activity for the year ended December 31, 2015 : 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, 2015 0.6 $ 74 Granted 0.1 $ 99 Performance 0.1 $ 56 Converted (0.3 ) $ 83 Forfeited/expired — $ — Outstanding at December 31, 2015 0.5 $ 72 0.9 $ 53 PSUs vested and expected to vest at December 31, 2015 0.5 $ 71 0.9 $ 52 |
Schedule of Compensation Cost for Share-based Payment Arrangements, Allocation of Share-based Compensation Costs by Plan | The following table includes additional share-based payment information for each of the years ended December 31: 2015 2014 2013 (in millions, except weighted-average fair value) Share-based compensation expense: Options, RSUs and PSUs $ 122 $ 111 $ 121 Income tax benefit recognized for equity awards 41 37 42 Income tax benefit related to Options exercised 19 20 16 Options: Total intrinsic value of Options exercised 57 60 48 RSUs: Weighted-average grant-date fair value of awards granted 88 76 52 Total intrinsic value of RSUs converted into shares of Class A common stock 135 173 78 PSUs: Weighted-average grant-date fair value of awards granted 99 78 56 Total intrinsic value of PSUs converted into shares of Class A common stock 24 28 29 |
Commitments (Tables)
Commitments (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Future Minimum Payments Due Under Non-Cancelable Agreements | At December 31, 2015 , the Company had the following future minimum payments due under non-cancelable agreements: Total Capital Operating Leases Sponsorship, Licensing & Other (in millions) 2016 $ 286 $ 6 $ 38 $ 242 2017 154 4 40 110 2018 89 1 34 54 2019 60 — 29 31 2020 38 — 25 13 Thereafter 69 — 58 11 Total $ 696 $ 11 $ 224 $ 461 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Components of Income Tax Provision | The total income tax provision for the years ended December 31 is comprised of the following components: 2015 2014 2013 (in millions) Current Federal $ 677 $ 977 $ 1,010 State and local 45 47 33 Foreign 444 528 456 1,166 1,552 1,499 Deferred Federal 4 (81 ) (100 ) State and local (3 ) (3 ) (4 ) Foreign (17 ) (6 ) (11 ) (16 ) (90 ) (115 ) Income tax expense $ 1,150 $ 1,462 $ 1,384 |
Schedule of Domestic and Foreign Income Before Income Taxes | The domestic and foreign components of income before income taxes for the years ended December 31 are as follows: 2015 2014 2013 (in millions) United States $ 3,399 $ 3,378 $ 2,741 Foreign 1,559 1,701 1,759 Income before income taxes $ 4,958 $ 5,079 $ 4,500 |
Schedule of Effective Income Tax Rate Reconciliation | The provision for income taxes differs from the amount of income tax determined by applying the U.S. federal statutory income tax rate of 35% to pretax income for the years ended December 31, as a result of the following: 2015 2014 2013 Amount Percent Amount Percent Amount Percent (in millions, except percentages) Income before income taxes $ 4,958 $ 5,079 $ 4,500 Federal statutory tax 1,735 35.0 % 1,778 35.0 % 1,575 35.0 % State tax effect, net of federal benefit 27 0.5 % 29 0.6 % 19 0.4 % Foreign tax effect (144 ) (2.9 )% (108 ) (2.1 )% (208 ) (4.6 )% Foreign repatriation (172 ) (3.5 )% (177 ) (3.5 )% (14 ) (0.3 )% Impact of settlements with tax authorities (147 ) (2.9 )% — — % — — % Other foreign tax credits (109 ) (2.2 )% (6 ) (0.1 )% (3 ) — % Other, net (40 ) (0.8 )% (54 ) (1.1 )% 15 0.3 % Income tax expense $ 1,150 23.2 % $ 1,462 28.8 % $ 1,384 30.8 % |
Schedule of Deferred Tax Assets and Liabilities | The components of deferred tax assets and liabilities at December 31 are as follows: 2015 1 2014 (in millions) Deferred Tax Assets Accrued liabilities $ 169 $ 177 Compensation and benefits 242 262 State taxes and other credits 54 65 Net operating losses 67 56 Other items 90 38 Less: Valuation allowance (54 ) (41 ) Total Deferred Tax Assets 568 557 Deferred Tax Liabilities Prepaid expenses and other accruals 46 58 Intangible assets 136 92 Property, plant and equipment 118 115 Other items 30 18 Total Deferred Tax Liabilities 330 283 Net Deferred Tax Assets $ 238 $ 274 1 As described within Recent Accounting Pronouncements section of Note 1. Summary of Significant Accounting Policies, the Company has early adopted recent guidance and now reflects 2015 deferred taxes as non-current deferred taxes within the Consolidated Balance Sheet. |
Reconciliation of Beginning and Ending Tax Benefits | A reconciliation of the beginning and ending balance for the Company’s unrecognized tax benefits for the years ended December 31, is as follows: 2015 2014 2013 (in millions) Beginning balance $ 364 $ 320 $ 257 Additions: Current year tax positions 20 61 80 Prior year tax positions 10 19 12 Reductions: Prior year tax positions (151 ) (6 ) (8 ) Settlements with tax authorities (53 ) — (2 ) Expired statute of limitations (9 ) (30 ) (19 ) Ending balance $ 181 $ 364 $ 320 |
Settlement and Other Risk Man47
Settlement and Other Risk Management (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Settlement and Other Risk Management [Abstract] | |
Estimated Settlement Exposure and Portion of Uncollateralized Settlement Exposure for MasterCard-Branded Transactions | The Company’s estimated settlement exposure from MasterCard, Cirrus and Maestro branded transactions was as follows: December 31, December 31, 2014 (in millions) Gross settlement exposure $ 39,674 $ 41,729 Settlement exposure covered by collateral (3,601 ) (3,415 ) Net uncollateralized settlement exposure $ 36,073 $ 38,314 |
Foreign Exchange Risk Managem48
Foreign Exchange Risk Management (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Foreign Currency Derivatives [Abstract] | |
Derivative contract summary | MasterCard’s derivative contracts are summarized below: December 31, 2015 December 31, 2014 Notional Estimated Fair Value Notional Estimated Fair Value (in millions) Commitments to purchase foreign currency $ 232 $ 1 $ 47 $ 4 Commitments to sell foreign currency 1,430 12 614 27 Options to sell foreign currency 44 1 — — Balance sheet location: Accounts receivable 1 $ 23 $ 35 Other current liabilities 1 (9 ) (4 ) 1 The fair values of derivative contracts are presented on a gross basis on the balance sheet and are subject to enforceable master netting arrangements, which contain various netting and setoff provisions. |
Gain (loss) recognized in income for the contracts to purchase and sell foreign currency summary | The amount of gain (loss) recognized in income for foreign currency derivative contracts is summarized below: Year Ended December 31, 2015 2014 2013 (in millions) Foreign currency derivative contracts General and administrative $ 51 $ (78 ) $ 48 Net revenue — — 4 Total $ 51 $ (78 ) $ 52 |
Segment Reporting Schedule of P
Segment Reporting Schedule of Property Plant and Equipment, Net by Geographic Region (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Segment Reporting [Abstract] | |
Schedule of Property, Plant and Equipment, Net by Geographical Location | The following table reflects the geographical location of the Company’s property, plant and equipment, net, as of December 31: 2015 2014 2013 (in millions) United States $ 471 $ 450 $ 410 Other countries 204 165 116 Total $ 675 $ 615 $ 526 |
SUMMARY OF QUARTERLY DATA (Un50
SUMMARY OF QUARTERLY DATA (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Quarterly Financial Data [Abstract] | |
Schedule of Selected Quarterly Financial Data | 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 2014 Quarter Ended March 31 June 30 September 30 December 31 2014 Total (in millions, except per share data) Net revenue $ 2,172 $ 2,368 $ 2,490 $ 2,411 $ 9,441 Operating income 1,285 1,383 1,420 1,018 5,106 Net income 870 931 1,015 801 3,617 Basic earnings per share $ 0.73 $ 0.80 $ 0.88 $ 0.70 $ 3.11 Basic weighted-average shares outstanding 1,185 1,165 1,157 1,153 1,165 Diluted earnings per share $ 0.73 $ 0.80 $ 0.87 $ 0.69 $ 3.10 Diluted weighted-average shares outstanding 1,189 1,169 1,160 1,157 1,169 * Tables may not sum due to rounding. |
Summary of Significant Accoun51
Summary of Significant Accounting Policies Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Amount of customer incentive expenses revised to be presented as contra revenue instead of general and administrative expenses | $ 32 | $ 34 | |
Building | |||
Property, Plant and Equipment [Abstract] | |||
Estimated Useful Life | 30 years | ||
Minimum | |||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Equity Method Investment, Ownership Percentage | 20.00% | ||
Minimum | Building equipment | |||
Property, Plant and Equipment [Abstract] | |||
Estimated Useful Life | 10 years | ||
Minimum | Furniture and fixtures and equipment | |||
Property, Plant and Equipment [Abstract] | |||
Estimated Useful Life | 2 years | ||
Maximum | |||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Noncontrolling Interest, Ownership Percentage by Parent | 100.00% | ||
Equity Method Investment, Ownership Percentage | 50.00% | ||
Historical Cost Method Ownership Percentage | 20.00% | ||
Maximum | Building equipment | |||
Property, Plant and Equipment [Abstract] | |||
Estimated Useful Life | 15 years | ||
Maximum | Furniture and fixtures and equipment | |||
Property, Plant and Equipment [Abstract] | |||
Estimated Useful Life | 5 years | ||
Partnership | Minimum | |||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Equity Method Investment, Ownership Percentage | 5.00% | ||
Partnership | Maximum | |||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Historical Cost Method Ownership Percentage | 5.00% | ||
Other | Minimum | |||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Finite-Lived Intangible Assets, Estimated Useful Life | 1 year | ||
Other | Maximum | |||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Finite-Lived Intangible Assets, Estimated Useful Life | 10 years |
Acquisitions Narrative (Details
Acquisitions Narrative (Details) $ in Millions | 12 Months Ended | 24 Months Ended | ||
Dec. 31, 2015USD ($)business | Dec. 31, 2014USD ($)business | Dec. 31, 2013business | Dec. 31, 2015USD ($) | |
Business Acquisition [Line Items] | ||||
Goodwill acquired | $ 458 | $ 525 | ||
Number of businesses acquired | business | 2 | 8 | 0 | |
Business combinations achieved in stages with non-controlling interest acquired in previous years | business | 2 | |||
Total consideration transferred | $ 609 | $ 575 | ||
Series of Individually Immaterial Business Acquisitions | ||||
Business Acquisition [Line Items] | ||||
Goodwill acquired | $ 474 | $ 509 |
Earnings Per Share Schedule of
Earnings Per Share Schedule of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 12 Months Ended | ||||||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | ||||
Numerator: | ||||||||||||||
Net income | $ 890 | $ 977 | $ 921 | $ 1,020 | $ 801 | $ 1,015 | $ 931 | $ 870 | $ 3,808 | $ 3,617 | $ 3,116 | |||
Denominator: | ||||||||||||||
Basic weighted-average shares outstanding | 1,121 | 1,130 | 1,138 | 1,148 | 1,153 | 1,157 | 1,165 | 1,185 | 1,134 | 1,165 | 1,211 | |||
Dilutive stock options and stock units | 3 | 4 | 4 | |||||||||||
Diluted weighted-average shares outstanding | 1,124 | 1,133 | 1,141 | 1,152 | 1,157 | 1,160 | 1,169 | 1,189 | 1,137 | [1] | 1,169 | [1] | 1,215 | [1] |
Earnings per Share | ||||||||||||||
Basic | $ 0.79 | $ 0.86 | $ 0.81 | $ 0.89 | $ 0.70 | $ 0.88 | $ 0.80 | $ 0.73 | $ 3.36 | $ 3.11 | $ 2.57 | |||
Diluted | $ 0.79 | $ 0.86 | $ 0.81 | $ 0.89 | $ 0.69 | $ 0.87 | $ 0.80 | $ 0.73 | $ 3.35 | $ 3.10 | $ 2.56 | |||
[1] | For the years presented, the calculation of diluted EPS excluded a minimal amount of anti-dilutive share-based payment awards. |
Supplemental Cash Flows (Non-Ca
Supplemental Cash Flows (Non-Cash Investing and Financing Information) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Supplemental Cash Flow Information [Abstract] | |||
Cash paid for income taxes, net of refunds | $ 1,097 | $ 2,036 | $ 1,215 |
Cash paid for interest | 44 | 24 | 2 |
Cash paid for legal settlements | 124 | 28 | 0 |
Dividends declared but not yet paid | 212 | 184 | 131 |
Assets recorded pursuant to capital lease | 10 | 8 | 7 |
Fair value of assets acquired, net of cash acquired | 626 | 768 | 0 |
Fair value of liabilities assumed related to acquisitions | $ 42 | $ 141 | $ 0 |
Fair Value and Investment Sec55
Fair Value and Investment Securities Narrative Fair Value (Details) - USD ($) $ in Millions | Dec. 31, 2015 | Dec. 31, 2014 |
Financial Instruments, Financial Liabilities, Balance Sheet Groupings [Abstract] | ||
Amounts held in escrow to fund litigation settlement | $ 541 | $ 540 |
Held-to-maturity Securities, Fair Value | 130 | 70 |
Long-term debt, fair value | 3,300 | 1,500 |
Long-term debt, carrying value | $ 3,287 | $ 1,494 |
Fair Value and Investment Sec56
Fair Value and Investment Securities Distribution of Financial Instruments, Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Millions | Dec. 31, 2015 | Dec. 31, 2014 | |
Fair Value, Option, Quantitative Disclosures [Line Items] | |||
Fair Value, Measured on Recurring Basis | $ 875 | $ 1,199 | |
Fair Value, Inputs, Level 1 | |||
Fair Value, Option, Quantitative Disclosures [Line Items] | |||
Fair Value, Measured on Recurring Basis | [1] | 33 | 98 |
Fair Value, Inputs, Level 2 | |||
Fair Value, Option, Quantitative Disclosures [Line Items] | |||
Fair Value, Measured on Recurring Basis | 842 | 1,101 | |
Fair Value, Inputs, Level 3 | |||
Fair Value, Option, Quantitative Disclosures [Line Items] | |||
Fair Value, Measured on Recurring Basis | 0 | 0 | |
Municipal securities | |||
Fair Value, Option, Quantitative Disclosures [Line Items] | |||
Fair Value, Measured on Recurring Basis | 62 | 135 | |
Municipal securities | Fair Value, Inputs, Level 1 | |||
Fair Value, Option, Quantitative Disclosures [Line Items] | |||
Fair Value, Measured on Recurring Basis | [1] | 0 | 0 |
Municipal securities | Fair Value, Inputs, Level 2 | |||
Fair Value, Option, Quantitative Disclosures [Line Items] | |||
Fair Value, Measured on Recurring Basis | 62 | 135 | |
Municipal securities | Fair Value, Inputs, Level 3 | |||
Fair Value, Option, Quantitative Disclosures [Line Items] | |||
Fair Value, Measured on Recurring Basis | 0 | 0 | |
U.S. government and agency securities | |||
Fair Value, Option, Quantitative Disclosures [Line Items] | |||
Fair Value, Measured on Recurring Basis | [2] | 72 | 199 |
U.S. government and agency securities | Fair Value, Inputs, Level 1 | |||
Fair Value, Option, Quantitative Disclosures [Line Items] | |||
Fair Value, Measured on Recurring Basis | [1],[2] | 31 | 85 |
U.S. government and agency securities | Fair Value, Inputs, Level 2 | |||
Fair Value, Option, Quantitative Disclosures [Line Items] | |||
Fair Value, Measured on Recurring Basis | [2] | 41 | 114 |
U.S. government and agency securities | Fair Value, Inputs, Level 3 | |||
Fair Value, Option, Quantitative Disclosures [Line Items] | |||
Fair Value, Measured on Recurring Basis | [2] | 0 | 0 |
Corporate securities | |||
Fair Value, Option, Quantitative Disclosures [Line Items] | |||
Fair Value, Measured on Recurring Basis | 630 | 618 | |
Corporate securities | Fair Value, Inputs, Level 1 | |||
Fair Value, Option, Quantitative Disclosures [Line Items] | |||
Fair Value, Measured on Recurring Basis | [1] | 0 | 0 |
Corporate securities | Fair Value, Inputs, Level 2 | |||
Fair Value, Option, Quantitative Disclosures [Line Items] | |||
Fair Value, Measured on Recurring Basis | 630 | 618 | |
Corporate securities | Fair Value, Inputs, Level 3 | |||
Fair Value, Option, Quantitative Disclosures [Line Items] | |||
Fair Value, Measured on Recurring Basis | 0 | 0 | |
Asset-backed securities | |||
Fair Value, Option, Quantitative Disclosures [Line Items] | |||
Fair Value, Measured on Recurring Basis | 57 | 178 | |
Asset-backed securities | Fair Value, Inputs, Level 1 | |||
Fair Value, Option, Quantitative Disclosures [Line Items] | |||
Fair Value, Measured on Recurring Basis | [1] | 0 | 0 |
Asset-backed securities | Fair Value, Inputs, Level 2 | |||
Fair Value, Option, Quantitative Disclosures [Line Items] | |||
Fair Value, Measured on Recurring Basis | 57 | 178 | |
Asset-backed securities | Fair Value, Inputs, Level 3 | |||
Fair Value, Option, Quantitative Disclosures [Line Items] | |||
Fair Value, Measured on Recurring Basis | 0 | 0 | |
Other | |||
Fair Value, Option, Quantitative Disclosures [Line Items] | |||
Fair Value, Measured on Recurring Basis | 54 | 69 | |
Other | Fair Value, Inputs, Level 1 | |||
Fair Value, Option, Quantitative Disclosures [Line Items] | |||
Fair Value, Measured on Recurring Basis | [1] | 2 | 13 |
Other | Fair Value, Inputs, Level 2 | |||
Fair Value, Option, Quantitative Disclosures [Line Items] | |||
Fair Value, Measured on Recurring Basis | 52 | 56 | |
Other | Fair Value, Inputs, Level 3 | |||
Fair Value, Option, Quantitative Disclosures [Line Items] | |||
Fair Value, Measured on Recurring Basis | $ 0 | $ 0 | |
[1] | During 2015, U.S. government securities were reclassified from Level 2 to Level 1 due to a reassessment of the availability of quoted prices. Prior period amounts have been revised to conform to the 2015 presentation. | ||
[2] | Excludes amounts held in escrow related to the U.S. merchant class litigation settlement of $541 million and $540 million at December 31, 2015 and December 31, 2014, which would be included in Level 1 of the Valuation Hierarchy. See Note 10 (Accrued Expenses and Accrued Litigation) and Note 18 (Legal and Regulatory Proceedings) for further details. |
Fair Value and Investment Sec57
Fair Value and Investment Securities Available-for-Sale Investment Securities, Unrealized Gains and Losses (Details) - USD ($) $ in Millions | Dec. 31, 2015 | Dec. 31, 2014 |
Investment Identifier [Line Items] | ||
Amortized Cost | $ 861 | $ 1,172 |
Gross Unrealized Gain | 1 | 1 |
Gross Unrealized Loss | (1) | (5) |
Fair Value | 861 | 1,168 |
Municipal securities | ||
Investment Identifier [Line Items] | ||
Amortized Cost | 62 | 135 |
Gross Unrealized Gain | 0 | 0 |
Gross Unrealized Loss | 0 | 0 |
Fair Value | 62 | 135 |
U.S. government and agency securities | ||
Investment Identifier [Line Items] | ||
Amortized Cost | 72 | 199 |
Gross Unrealized Gain | 0 | 0 |
Gross Unrealized Loss | 0 | 0 |
Fair Value | 72 | 199 |
Corporate securities | ||
Investment Identifier [Line Items] | ||
Amortized Cost | 631 | 619 |
Gross Unrealized Gain | 0 | 0 |
Gross Unrealized Loss | (1) | (1) |
Fair Value | 630 | 618 |
Asset-backed securities | ||
Investment Identifier [Line Items] | ||
Amortized Cost | 57 | 178 |
Gross Unrealized Gain | 0 | 0 |
Gross Unrealized Loss | 0 | 0 |
Fair Value | 57 | 178 |
Other | ||
Investment Identifier [Line Items] | ||
Amortized Cost | 39 | 41 |
Gross Unrealized Gain | 1 | 1 |
Gross Unrealized Loss | 0 | (4) |
Fair Value | $ 40 | $ 38 |
Fair Value and Investment Sec58
Fair Value and Investment Securities Maturity Distribution Based on Contractual Terms of Investment Securities (Details) $ in Millions | Dec. 31, 2015USD ($) | |
Available-For-Sale Amortized Cost | ||
Due within 1 year | $ 309 | |
Due after 1 year through 5 years | 544 | |
Due after 5 years through 10 years | 1 | |
Due after 10 years | 6 | |
No contractual maturity | 1 | [1] |
Total | 861 | |
Available-For-Sale Fair Value | ||
Due within 1 year | 309 | |
Due after 1 year through 5 years | 543 | |
Due after 5 years through 10 years | 1 | |
Due after 10 years | 6 | |
No contractual maturity | 2 | [1] |
Total | $ 861 | |
[1] | Equity securities have been included in the No contractual maturity category, as these securities do not have stated maturity dates. |
Prepaid Expenses and Other As59
Prepaid Expenses and Other Assets Schedule of Prepaid Expenses (Details) - USD ($) $ in Millions | Dec. 31, 2015 | Dec. 31, 2014 |
Prepaid Expense and Other Assets [Abstract] | ||
Customer and merchant incentives | $ 345 | $ 260 |
Prepaid income taxes | 72 | 237 |
Other | 247 | 174 |
Total prepaid expenses and other current assets | $ 664 | $ 671 |
Prepaid Expenses and Other As60
Prepaid Expenses and Other Assets Schedule of Other Assets (Details) - USD ($) $ in Millions | Dec. 31, 2015 | Dec. 31, 2014 |
Prepaid Expense and Other Assets [Abstract] | ||
Customer and merchant incentives | $ 810 | $ 556 |
Nonmarketable equity investments | 166 | 245 |
Prepaid income taxes | 352 | 407 |
Income taxes receivable | 160 | 89 |
Other | 110 | 88 |
Total other assets | $ 1,598 | $ 1,385 |
Property, Plant and Equipment N
Property, Plant and Equipment Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Property, Plant and Equipment [Line Items] | |||
Capital leases included in equipment | $ 20 | $ 29 | |
Accumulated amortization, capital leases | 9 | 17 | |
Depreciation expense including amortization for capital leases | $ 131 | $ 107 | $ 92 |
Property, Plant and Equipment62
Property, Plant and Equipment (Details) - USD ($) $ in Millions | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment | $ 1,166 | $ 1,052 | |
Less: accumulated depreciation and amortization | (491) | (437) | |
Property, plant and equipment, net | 675 | 615 | $ 526 |
Building, building equipment and land | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment | 503 | 510 | |
Equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment | 497 | 398 | |
Furniture and fixtures | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment | 54 | 53 | |
Leasehold improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment | $ 112 | $ 91 |
Change in Carrying Amount of Go
Change in Carrying Amount of Goodwill (Details) - USD ($) $ in Millions | 12 Months Ended | 24 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2015 | |
Goodwill [Roll Forward] | |||
Beginning balance | $ 1,522 | $ 1,122 | $ 1,122 |
Goodwill acquired during the year | 458 | 525 | |
Foreign currency translation | (89) | (106) | |
Other | 0 | (19) | |
Ending balance | $ 1,891 | $ 1,522 | $ 1,891 |
Other Intangible Assets (Schedu
Other Intangible Assets (Schedule of Intangible Assets) (Details) - USD ($) $ in Millions | Dec. 31, 2015 | Dec. 31, 2014 |
Gross Carrying Amount | $ 1,459 | $ 1,199 |
Accumulated Amortization | (816) | (663) |
Net Carrying Amount | 643 | 536 |
Unamortized intangible assets: | ||
Intangible Assets, Gross (Excluding Goodwill) | 1,619 | 1,377 |
Accumulated Amortization | (816) | (663) |
Net Carrying Amount | 803 | 714 |
Capitalized software | ||
Gross Carrying Amount | 1,086 | 839 |
Accumulated Amortization | (625) | (496) |
Net Carrying Amount | 461 | 343 |
Trademarks and tradenames | ||
Gross Carrying Amount | 30 | 48 |
Accumulated Amortization | (23) | (38) |
Net Carrying Amount | 7 | 10 |
Customer relationships | ||
Gross Carrying Amount | 318 | 292 |
Accumulated Amortization | (149) | (115) |
Net Carrying Amount | 169 | 177 |
Unamortized intangible assets: | ||
Customer relationships | 160 | 178 |
Other | ||
Gross Carrying Amount | 25 | 20 |
Accumulated Amortization | (19) | (14) |
Net Carrying Amount | $ 6 | $ 6 |
Other Intangible Assets (Narrat
Other Intangible Assets (Narrative) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |||
Amortization expense on intangible assets | $ 235 | $ 214 | $ 166 |
Other Intangible Assets (Sche66
Other Intangible Assets (Schedule of Estimated Future Amortization Expense) (Details) - USD ($) $ in Millions | Dec. 31, 2015 | Dec. 31, 2014 |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||
2,016 | $ 231 | |
2,017 | 168 | |
2,018 | 105 | |
2,019 | 47 | |
2020 and thereafter | 92 | |
Net Carrying Amount | $ 643 | $ 536 |
Accrued Expenses and Accrued 67
Accrued Expenses and Accrued Litigation (Details) - USD ($) $ in Millions | Dec. 31, 2015 | Dec. 31, 2014 |
Accrued Liabilities [Abstract] | ||
Customer and merchant incentives | $ 1,748 | $ 1,433 |
Personnel costs | 473 | 531 |
Advertising | 114 | 154 |
Income and other taxes | 143 | 105 |
Other | 285 | 216 |
Total accrued expenses | $ 2,763 | $ 2,439 |
Accrued Expenses and Accrued 68
Accrued Expenses and Accrued Litigation Accrued Expenses and Accrued Litigation (Narrative) (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2015 | |
Accrued Liabilities [Abstract] | ||
Restructuring accrual recorded within personnel costs | $ 84 | $ 25 |
Severance charge recorded in general and administrative expenses | 87 | |
Accrued litigation | $ 771 | $ 709 |
Pension, Postretirement and S69
Pension, Postretirement and Savings Plans Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Total expense related to defined contribution plans | $ 61 | $ 57 | $ 51 |
U.S. Employee Pension Plan | |||
Defined benefit plan obligation | 287 | ||
Pension settlement charge recorded in general and administrative expenses | (79) | ||
U.S. Postretirement Plan | |||
Defined benefit plan obligation | $ 59 | $ 78 |
Debt (Details)
Debt (Details) € in Millions | 1 Months Ended | 12 Months Ended | |||
Dec. 31, 2015USD ($) | Mar. 31, 2014USD ($) | Dec. 31, 2015EUR (€)basispoint | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Less: Unamortized discount | $ (12,000,000) | $ (6,000,000) | |||
Long-term debt | 3,287,000,000 | 1,494,000,000 | |||
Long-term Debt, Maturities, Repayments of Principal in Next Twelve Months | 0 | ||||
Long-term Debt, Maturities, Repayments of Principal in Year Two | 0 | ||||
Long-term Debt, Maturities, Repayments of Principal in Year Three | 0 | ||||
Long-term Debt, Maturities, Repayments of Principal in Year Four | 500,000,000 | ||||
Long-term Debt, Maturities, Repayments of Principal in Year Five | 0 | ||||
Thereafter | 2,799,000,000 | ||||
Aggregate principal amount | 3,299,000,000 | 1,500,000,000 | |||
Commercial paper maximum borrowing limit | 3,750,000,000 | ||||
Facility fee, basis points | basispoint | 8 | ||||
Basis points in excess of LIBOR | basispoint | 79.5 | ||||
Other current liabilities | 564,000,000 | 501,000,000 | |||
2022 Euro Notes | |||||
Long-term debt principal amount | 0 | ||||
2027 Euro Notes | |||||
Long-term debt principal amount | 0 | ||||
2030 Euro Notes | |||||
Long-term debt principal amount | 0 | ||||
Outside the United States | |||||
Other current liabilities | 10,000,000 | 41,000,000 | |||
Revolving Credit Facility | |||||
Revolving credit facility | 3,750,000,000 | ||||
Senior Notes [Member] | Euro Notes | |||||
Long-term debt principal amount | € 1,650 | 1,800,000,000 | |||
Proceeds from issuance of long-term debt | $ 1,723,000,000 | ||||
Senior Notes [Member] | 2019 USD Notes | |||||
Long-term debt principal amount | $ 500,000,000 | 500,000,000 | |||
Interest rate | 2.00% | 2.00% | |||
Effective interest rate | 2.178% | 2.178% | |||
Senior Notes [Member] | 2024 USD Notes | |||||
Long-term debt principal amount | $ 1,000,000,000 | $ 1,000,000,000 | |||
Interest rate | 3.375% | 3.375% | |||
Effective interest rate | 3.484% | 3.484% | |||
Senior Notes [Member] | 2022 Euro Notes | |||||
Long-term debt principal amount | € 700 | $ 763,000,000 | |||
Interest rate | 1.10% | 1.10% | |||
Effective interest rate | 1.265% | 1.265% | |||
Senior Notes [Member] | 2027 Euro Notes | |||||
Long-term debt principal amount | € 800 | $ 872,000,000 | |||
Interest rate | 2.10% | 2.10% | |||
Effective interest rate | 2.189% | 2.189% | |||
Senior Notes [Member] | 2030 Euro Notes | |||||
Long-term debt principal amount | € 150 | $ 164,000,000 | |||
Interest rate | 2.50% | 2.50% | |||
Effective interest rate | 2.562% | 2.562% | |||
Senior Notes [Member] | USD Notes [Member] | |||||
Proceeds from issuance of long-term debt | $ 1,484,000,000 |
Stockholders' Equity (Narrative
Stockholders' Equity (Narrative) (Details) - USD ($) shares in Millions, $ in Millions | 5 Months Ended | 12 Months Ended | |||||
May. 31, 2006 | Dec. 31, 2011 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Feb. 28, 2013 | Jun. 30, 2012 | |
The MasterCard Foundation | |||||||
Deferral Of Required Annual Qualified Charitable Disbursements | 10 years | ||||||
Additional Period Of Deferral Of Required Annual Qualified Charitable Disbursements | 15 years | ||||||
Required Disbursement by charitable entity | 3.50% | ||||||
Class A Common Stock | |||||||
Authorized plan to repurchase stock, maximum repurchase amount | $ 14,750 | ||||||
Class A Common Stock | The MasterCard Foundation | |||||||
Equity Sale Restriction Period | 20 years 11 months | ||||||
Issuance and donation of shares | 135 | ||||||
Class A Common Stock | June 2012 Share Repurchase Plan | |||||||
Authorized plan to repurchase stock, maximum repurchase amount | $ 1,500 | ||||||
Class A Common Stock | February 2013 Share Repurchase Plan | |||||||
Authorized plan to repurchase stock, maximum repurchase amount | $ 2,000 | ||||||
Class A Common Stock | December 2013 Share Repurchase Plan | |||||||
Authorized plan to repurchase stock, maximum repurchase amount | $ 3,500 | ||||||
Class A Common Stock | December 2014 Share Repurchase Plan | |||||||
Authorized plan to repurchase stock, maximum repurchase amount | $ 3,750 | ||||||
Class A Common Stock | December 2015 Share Repurchase Plan | |||||||
Authorized plan to repurchase stock, maximum repurchase amount | $ 4,000 |
Stockholders' Equity (Schedule
Stockholders' Equity (Schedule of Classes of Capital Stock) (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Public Investors (Class A Stockholders) | ||
Equity Ownership | 87.70% | 86.60% |
General Voting Power | 89.40% | 89.40% |
Principal or Affiliate Members (Class B Stockholders) | ||
Equity Ownership | 1.90% | 3.20% |
General Voting Power | 0.00% | 0.00% |
The MasterCard Foundation (Class A Stockholders) | ||
Equity Ownership | 10.40% | 10.20% |
General Voting Power | 10.60% | 10.60% |
Class A Common Stock | ||
Common Stock, Par Value Per Share | $ 0.0001 | $ 0.0001 |
Common Stock, Authorized Shares | 3,000,000,000 | 3,000,000,000 |
Class B Common Stock | ||
Common Stock, Par Value Per Share | $ 0.0001 | $ 0.0001 |
Common Stock, Authorized Shares | 1,200,000,000 | 1,200,000,000 |
Preferred Stock | ||
Preferred Stock, Par Value Per Share | $ 0.0001 | |
Preferred Stock, Authorized Shares | 300,000,000 |
Stockholders' Equity (Schedul73
Stockholders' Equity (Schedule of Share Repurchase Authorizations) (Details) - Class A Common Stock - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 12 Months Ended | 13 Months Ended | 25 Months Ended | 35 Months Ended | 43 Months Ended | ||||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2015 | Dec. 31, 2015 | Dec. 31, 2015 | Dec. 31, 2015 | Feb. 28, 2013 | Jun. 30, 2012 | |
Class of Stock [Line Items] | |||||||||
Board Authorization | $ 14,750 | $ 14,750 | $ 14,750 | $ 14,750 | $ 14,750 | ||||
Dollar-value of shares repurchased | 3,518 | $ 3,386 | $ 2,443 | ||||||
Remaining authorization | $ 4,507 | $ 4,025 | $ 3,661 | 4,507 | 4,507 | 4,507 | $ 4,507 | ||
Shares repurchased | 38.3 | 44.5 | 40.9 | 143.1 | |||||
Average price paid per share | $ 91.70 | $ 76.14 | $ 59.78 | $ 71.55 | |||||
June 2012 Share Repurchase Plan | |||||||||
Class of Stock [Line Items] | |||||||||
Board Authorization | $ 1,500 | ||||||||
Dollar-value of shares repurchased | $ 0 | $ 0 | $ 604 | ||||||
Remaining authorization | $ 0 | $ 0 | $ 0 | 0 | 0 | 0 | $ 0 | ||
Shares repurchased | 0 | 0 | 11.7 | 31.1 | |||||
Average price paid per share | $ 0 | $ 0 | $ 51.72 | $ 48.16 | |||||
February 2013 Share Repurchase Plan | |||||||||
Class of Stock [Line Items] | |||||||||
Board Authorization | $ 2,000 | ||||||||
Dollar-value of shares repurchased | $ 0 | $ 161 | $ 1,839 | ||||||
Remaining authorization | $ 0 | $ 0 | $ 161 | 0 | 0 | $ 0 | $ 0 | ||
Shares repurchased | 0 | 1.9 | 29.2 | 31.1 | |||||
Average price paid per share | $ 0 | $ 83.22 | $ 63.01 | $ 64.26 | |||||
December 2013 Share Repurchase Plan | |||||||||
Class of Stock [Line Items] | |||||||||
Board Authorization | $ 3,500 | ||||||||
Dollar-value of shares repurchased | $ 275 | $ 3,225 | 0 | ||||||
Remaining authorization | $ 0 | $ 275 | $ 3,500 | 0 | $ 0 | $ 0 | 0 | ||
Shares repurchased | 3.2 | 42.6 | 0 | 45.8 | |||||
Average price paid per share | $ 84.31 | $ 75.81 | $ 0 | $ 76.42 | |||||
December 2014 Share Repurchase Plan | |||||||||
Class of Stock [Line Items] | |||||||||
Board Authorization | $ 3,750 | ||||||||
Dollar-value of shares repurchased | $ 3,243 | 0 | $ 0 | ||||||
Remaining authorization | $ 507 | $ 3,750 | $ 0 | $ 507 | $ 507 | 507 | 507 | ||
Shares repurchased | 35.1 | 0 | 0 | 35.1 | |||||
Average price paid per share | $ 92.39 | $ 0 | $ 0 | $ 92.39 | |||||
December 2015 Share Repurchase Plan | |||||||||
Class of Stock [Line Items] | |||||||||
Board Authorization | $ 4,000 | $ 4,000 | 4,000 | 4,000 | 4,000 | ||||
Remaining authorization | $ 4,000 | $ 4,000 | $ 4,000 | $ 4,000 | $ 4,000 |
Accumulated Other Comprehensi74
Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions | 12 Months Ended | |||||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | ||||
Accumulated Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Net of Tax | $ (663) | $ (230) | $ 206 | |||
Accumulated Comprehensive Income Loss Translation Adjustments on Net Investment Hedge, Net of Tax | (26) | 0 | 0 | |||
Accumulated Other Comprehensive Income (Loss), Defined Benefit Pension and Other Postretirement Plans, Net of Tax | 13 | (26) | (29) | |||
Accumulated Other Comprehensive Income (Loss), Investment Securities Available-for-Sale Securities, Net of Tax | 0 | (4) | 1 | |||
Accumulated Other Comprehensive Income (Loss), Net of Tax | (676) | (260) | 178 | |||
Other Comprehensive Income (Loss), Foreign Currency Translation Adjustments, Net of Tax | (433) | [1],[2],[3] | (436) | [1] | 113 | |
Other Comprehensive Income Loss Translation Adjustments on Net Investment Hedge, Net of Tax | (26) | [1],[2],[3] | 0 | [1] | 0 | |
Other Comprehensive Income (Loss), Defined Benefit Pension and Other Postretirement Plans, Net of Tax | [1] | 39 | [2],[3] | 3 | ||
Other Comprehensive Income (Loss), Investment Securities Available-for-Sale, Net of Tax | [1] | 4 | [2],[3] | (5) | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax | (416) | [1],[2],[3] | (438) | [1] | 117 | |
Reclassification adjustment for defined benefit pension and other postretirement plans | 80 | 7 | 6 | |||
Other Comprehensive (Income) Loss, Reclassification Adjustment from AOCI, Pension and Other Postretirement Benefit Plans, Net of Tax | 51 | 4 | 4 | |||
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI for Sale of Securities, Net of Tax | $ (15) | $ 1 | $ 3 | |||
[1] | During 2015 and 2014, the increase in other comprehensive loss related to foreign currency translation adjustments was driven primarily by the devaluation of the euro and Brazilian real. | |||||
[2] | During 2015, $15 million of an unrealized loss (no tax impact) on a foreign denominated available-for-sale security was reclassified to other income (expense) due to an other-than-temporary impairment. | |||||
[3] | During 2015, $80 million of deferred costs ($51 million after-tax) related to the Company’s defined benefit pension plan and other post retirement plans were reclassified to general and administrative expenses. The deferred costs were driven primarily by the termination of the Company's U.S. defined benefit plan (See Note 11, Pension, Postretirement and Savings Plans). |
Share-Based Payment and Other75
Share-Based Payment and Other Benefits (Narrative) (Details) shares in Millions, $ in Millions | 12 Months Ended |
Dec. 31, 2015USD ($)shares | |
Restricted Stock Units (RSUs) | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period | 3 years |
Long-Term Incentive Plan | Class A Common Stock | |
Shares reserve for future issuance | shares | 116 |
Stock Option | |
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period | 10 years |
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period | 4 years |
Unrecognized compensation cost | $ 28 |
Period over which unrecognized cost will be recognized, in years | 2 years 4 months |
Performance-Based Restricted Stock | |
Unrecognized compensation cost | $ 9 |
Period over which unrecognized cost will be recognized, in years | 1 year 8 months |
Restricted Stock Units (RSUs) | |
Unrecognized compensation cost | $ 99 |
Period over which unrecognized cost will be recognized, in years | 1 year 10 months |
Performance-Based Restricted Stock | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period | 3 years |
Vesting period for retirement or disability | Performance stock units | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period | 6 months |
Minimum vesting from date of retirement eligibility | Performance stock units | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period | 6 months |
Share-Based Payment and Other76
Share-Based Payment and Other Benefits (Schedule of Weighted-Average Assumptions Used in the Valuation of Awards) (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Employee Service Share-based Compensation, Aggregate Disclosures [Abstract] | |||
Risk-free rate of return | 1.50% | 1.50% | 0.80% |
Expected term (in years) | 5 years | 5 years | 5 years |
Expected volatility | 20.60% | 19.10% | 27.10% |
Expected dividend yield | 0.70% | 0.60% | 0.50% |
Weighted-average fair value per option granted | $ 17.29 | $ 14.29 | $ 12.33 |
Share-Based Payment and Other77
Share-Based Payment and Other Benefits (Summary of Stock Option Activity) (Details) $ / shares in Units, shares in Millions, $ in Millions | 12 Months Ended |
Dec. 31, 2015USD ($)$ / sharesshares | |
Employee Service Share-based Compensation, Aggregate Disclosures [Abstract] | |
Options outstanding at January 1, 2015 | shares | 7.5 |
Options granted | shares | 1.6 |
Options exercised | shares | (0.9) |
Options forfeited/expired | shares | (0.1) |
Options outstanding at December 31, 2015 | shares | 8.1 |
Options exercisable at December 31, 2015 | shares | 4.1 |
Options vested and expected to vest at December 31, 2015 | shares | 7.9 |
Weighted-average exercise price, options outstanding at January 1, 2015 | $ / shares | $ 44 |
Weighted-average exercise price, options granted | $ / shares | 90 |
Weighted-average exercise price, options exercised | $ / shares | 30 |
Weighted-average exercise price, options forfeited/expired | $ / shares | 70 |
Weighted-average exercise price, options outstanding at December 31, 2015 | $ / shares | 54 |
Weighted-average exercise price, options exercisable at December 31, 2015 | $ / shares | 35 |
Weighted-average exercise price, options vested and expected to vest at December 31, 2015 | $ / shares | $ 54 |
Weighted-average remaining contractual term, options outstanding at December 31, 2015, in years | 6 years 8 months |
Weighted-average remaining contractual term, options exercisable at December 31, 2015, in years | 5 years 4 months |
Weighted-average remaining contractual term, options vested and expected to vest at December 31, 2015, in years | 6 years 8 months |
Aggregate intrinsic value, options outstanding at December 31, 2015 | $ | $ 348 |
Aggregate intrinsic value, options exercisable at December 31, 2015 | $ | 256 |
Aggregate intrinsic value, options vested and expected to vest at December 31, 2015 | $ | $ 346 |
Share-Based Payment and Other78
Share-Based Payment and Other Benefits (Summary of Restricted Stock Unit Activity) (Details) - Restricted Stock Units (RSUs) $ / shares in Units, shares in Millions, $ in Millions | 12 Months Ended |
Dec. 31, 2015USD ($)$ / sharesshares | |
Outstanding at January 1, 2015 | shares | 4.2 |
Granted | shares | 1.2 |
Converted | shares | (1.5) |
Forfeited/expired | shares | (0.1) |
Outstanding at December 31, 2015 | shares | 3.8 |
Units vested and expected to vest at December 31, 2015 | shares | 3.6 |
Weighted-average grant-date fair value, units outstanding at January 1, 2015 | $ / shares | $ 56 |
Weighted-average grant-date fair value, granted | $ / shares | 88 |
Weighted-average grant-date fair value, converted | $ / shares | 42 |
Weighted-average grant-date fair value, forfeited/expired | $ / shares | 68 |
Weighted-average grant-date fair value, units outstanding at December 31, 2015 | $ / shares | 71 |
Weighted-average grant-date fair value, units vested and expected to vest at December 31, 2015 | $ / shares | $ 71 |
Weighted-average remaining contractual term (in years), outstanding at December 31, 2015 | 1 year 2 months |
Weighted-average remaining contractual term (in years), units vested and expected to vest at December 31, 2015 | 1 year 1 month |
Aggregate intrinsic value, units outstanding at December 31, 2015 | $ | $ 366 |
Aggregate intrinsic value, units vested and expected to vest at December 31, 2015 | $ | $ 353 |
Share-Based Payment and Other79
Share-Based Payment and Other Benefits (Summary of Performance Stock Unit Activity) (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Performance stock units | |||
Outstanding at January 1, 2015 | 0.6 | ||
Granted | 0.1 | ||
Converted | (0.3) | ||
Forfeited/expired | 0 | ||
Outstanding at December 31, 2015 | 0.5 | 0.6 | |
Units vested and expected to vest at December 31, 2015 | 0.5 | ||
Weighted-average grant-date fair value, units outstanding at January 1, 2015 | $ 74 | ||
Weighted-average grant-date fair value, granted | 99 | $ 78 | $ 56 |
Weighted-average grant-date fair value, converted | 83 | ||
Weighted-average grant-date fair value, forfeited/expired | 0 | ||
Weighted-average grant-date fair value, units outstanding at December 31, 2015 | 72 | $ 74 | |
Weighted-average grant-date fair value, units vested and expected to vest at December 31, 2015 | $ 71 | ||
Weighted-average remaining contractual term (in years), outstanding at December 31, 2015 | 11 months | ||
Weighted-average remaining contractual term (in years), units vested and expected to vest at December 31, 2015 | 11 months | ||
Aggregate intrinsic value, units outstanding at December 31, 2015 | $ 53 | ||
Aggregate intrinsic value, units vested and expected to vest at December 31, 2015 | $ 52 | ||
Additional grants for performance | |||
Granted | 0.1 | ||
Weighted-average grant-date fair value, granted | $ 56 |
Share-Based Payment and Other80
Share-Based Payment and Other Benefits Schedule of Additional Share-Based Payment Information (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation expense: Options, RSUs and PSUs | $ 122 | $ 111 | $ 121 |
Income tax benefit recognized for equity awards | 41 | 37 | 42 |
Income tax benefit related to options exercised | 19 | 20 | 16 |
Total intrinsic value of stock options exercised | $ 57 | $ 60 | $ 48 |
Performance stock units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Weighted-average grant-date fair value of awards granted | $ 99 | $ 78 | $ 56 |
Total intrinsic value of units converted into shares of Class A common stock | $ 24 | $ 28 | $ 29 |
Restricted Stock Units (RSUs) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Weighted-average grant-date fair value of awards granted | $ 88 | $ 76 | $ 52 |
Total intrinsic value of units converted into shares of Class A common stock | $ 135 | $ 173 | $ 78 |
Commitments Narrative (Details)
Commitments Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Commitments and Contingencies Disclosure [Abstract] | |||
Net present value of minimum lease payments | $ 11 | ||
Future minimum payments operating leases, sponsorship, licensing and other agreements, accrued | 23 | ||
Rental expense for leased office space | 52 | $ 48 | $ 38 |
Lease expense for automobiles, computer equipment and office equipment | $ 17 | $ 17 | $ 14 |
Commitments Future Minimum Paym
Commitments Future Minimum Payments Due Under Non-Cancelable Agreements (Details) $ in Millions | Dec. 31, 2015USD ($) |
Total | |
2,016 | $ 286 |
2,017 | 154 |
2,018 | 89 |
2,019 | 60 |
2,020 | 38 |
Thereafter | 69 |
Total | 696 |
Capital Leases | |
2,016 | 6 |
2,017 | 4 |
2,018 | 1 |
2,019 | 0 |
2,020 | 0 |
Thereafter | 0 |
Total | 11 |
Operating Leases | |
2,016 | 38 |
2,017 | 40 |
2,018 | 34 |
2,019 | 29 |
2,020 | 25 |
Thereafter | 58 |
Total | 224 |
Sponsorship, Licensing & Other | |
2,016 | 242 |
2,017 | 110 |
2,018 | 54 |
2,019 | 31 |
2,020 | 13 |
Thereafter | 11 |
Total | $ 461 |
Income Taxes Narrative (Details
Income Taxes Narrative (Details) - USD ($) $ / shares in Units, $ in Millions | Jan. 01, 2010 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Income Tax Disclosure [Abstract] | ||||
Undistributed foreign earnings, indefinitely reinvested | $ 3,500 | |||
Federal statutory tax | 35.00% | 35.00% | 35.00% | |
Effective income tax rate | 23.20% | 28.80% | 30.80% | |
Amortization Period for Deferred Charge | 25 years | |||
Prepaid taxes on intercompany profit transfer | $ 15 | $ 18 | ||
Non-current prepaid taxes on intercompany profit transfer | 352 | 407 | ||
Effective income Tax Rate On Taxable Income In Excess Of Base Amount Period In Effect | 10 years | |||
Impact Of Incentive Grant Received Reducing Income Tax Liability Value | $ 47 | $ 40 | $ 76 | |
Earning Per Share Diluted Impact Of Incentive Grant Received Reducing Income Tax Liability | $ 0.04 | $ 0.03 | $ 0.06 | |
Unrecognized tax benefits that would reduce the effective tax rate | $ 181 | |||
Net tax-related interest expense (income) | (3) | $ (2) | $ (4) | |
Net tax-related interest payable | $ 12 | $ 15 |
Income Taxes Components of Inco
Income Taxes Components of Income Tax Provision (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Current | |||
Federal | $ 677 | $ 977 | $ 1,010 |
State and local | 45 | 47 | 33 |
Foreign | 444 | 528 | 456 |
Current | 1,166 | 1,552 | 1,499 |
Deferred | |||
Federal | 4 | (81) | (100) |
State and local | (3) | (3) | (4) |
Foreign | (17) | (6) | (11) |
Deferred | (16) | (90) | (115) |
Income tax expense | $ 1,150 | $ 1,462 | $ 1,384 |
Income Taxes Schedule of Domest
Income Taxes Schedule of Domestic and Foreign Earnings (Loss) Before Income Taxes (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Income Tax Disclosure [Abstract] | |||
United States | $ 3,399 | $ 3,378 | $ 2,741 |
Foreign | 1,559 | 1,701 | 1,759 |
Income before income taxes | $ 4,958 | $ 5,079 | $ 4,500 |
Income Taxes Schedule of Effect
Income Taxes Schedule of Effective Income Tax Rate Reconciliation (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Amount | |||
Income before income taxes | $ 4,958 | $ 5,079 | $ 4,500 |
Federal statutory tax | 1,735 | 1,778 | 1,575 |
State tax effect, net of federal benefit | 27 | 29 | 19 |
Foreign tax effect | (144) | (108) | (208) |
Foreign repatriation | (172) | (177) | (14) |
Impact of settlements with tax authorities | (147) | 0 | 0 |
Other foreign tax credits | (109) | (6) | (3) |
Other, net | (40) | (54) | 15 |
Income tax expense | $ 1,150 | $ 1,462 | $ 1,384 |
Percent | |||
Federal statutory tax | 35.00% | 35.00% | 35.00% |
State tax effect, net of federal benefit | 0.50% | 0.60% | 0.40% |
Foreign tax effect | (2.90%) | (2.10%) | (4.60%) |
Foreign repatriation | (3.50%) | (3.50%) | (0.30%) |
Impact of settlements with tax authorities | (2.90%) | 0.00% | 0.00% |
Other foreign tax credits | (2.20%) | (0.10%) | (0.00%) |
Other, net | (0.80%) | (1.10%) | 0.30% |
Income tax expense | 23.20% | 28.80% | 30.80% |
Income Taxes Schedule of Deferr
Income Taxes Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2015 | Dec. 31, 2014 | |
Deferred Tax Assets and Liabilities [Line Items] | |||
Accrued liabilities | $ 169 | $ 177 | |
Compensation and benefits | 242 | 262 | |
State taxes and other credits | 54 | 65 | |
Net operating losses | 67 | 56 | |
Other items | 90 | 38 | |
Less: Valuation allowance | (54) | (41) | |
Total Deferred Tax Assets | 568 | 557 | |
Prepaid expenses and other accruals | 46 | 58 | |
Intangible assets | 136 | 92 | |
Property, plant and equipment | 118 | 115 | |
Other items | 30 | 18 | |
Total Deferred Tax Liabilities | 330 | 283 | |
Net Deferred Tax Assets | [1] | $ 238 | $ 274 |
[1] | As described within Recent Accounting Pronouncements section of Note 1. Summary of Significant Accounting Policies, the Company has early adopted recent guidance and now reflects 2015 deferred taxes as non-current deferred taxes within the Consolidated Balance Sheet. |
Income Taxes Reconciliation of
Income Taxes Reconciliation of Beginning and Ending Tax Benefits (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Income Tax Disclosure [Abstract] | |||
Beginning balance | $ 364 | $ 320 | $ 257 |
Current year tax positions | 20 | 61 | 80 |
Prior year tax positions | 10 | 19 | 12 |
Prior year tax positions | (151) | (6) | (8) |
Settlements with tax authorities | (53) | 0 | (2) |
Expired statute of limitations | (9) | (30) | (19) |
Ending balance | $ 181 | $ 364 | $ 320 |
Legal and Regulatory Proceedi89
Legal and Regulatory Proceedings (Details) $ in Millions | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||||
Jun. 30, 2015USD ($) | Jan. 31, 2014USD ($) | Feb. 28, 2011 | Dec. 31, 2013USD ($) | Jun. 30, 2012USD ($) | Dec. 31, 2011USD ($) | Dec. 31, 2015USD ($)merchantplaintiff | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | Dec. 31, 2012USD ($) | |
Legal And Regulatory | ||||||||||
Provision for litigation settlement | $ 61 | $ 0 | $ 95 | |||||||
Accrued litigation | 709 | 771 | ||||||||
Payments for Legal Settlements | 124 | 28 | $ 0 | |||||||
Restricted cash for litigation settlement | 541 | $ 540 | ||||||||
Event Involving Visa Parties, Member Banks and MasterCard | ||||||||||
Legal And Regulatory | ||||||||||
Percent of settlement MasterCard would pay | 12.00% | |||||||||
Event Involving Member Banks and MasterCard | ||||||||||
Legal And Regulatory | ||||||||||
Percent of settlement MasterCard would pay | 36.00% | |||||||||
U.S. Merchant Lawsuit Settlement | ||||||||||
Legal And Regulatory | ||||||||||
Provision for litigation settlement | $ 20 | $ 770 | ||||||||
Payments for Legal Settlements | $ 790 | |||||||||
U.S. merchant litigation - class litigation | ||||||||||
Legal And Regulatory | ||||||||||
Payments for Legal Settlements | $ 726 | |||||||||
Amount Received From Qualified Cash Settlement Fund | $ 164 | |||||||||
U.S. Merchant Litigation - Opt Out Merchants [Member] | ||||||||||
Legal And Regulatory | ||||||||||
Provision for litigation settlement | $ 95 | |||||||||
Canadian Competition Bureau | ||||||||||
Legal And Regulatory | ||||||||||
Loss Contingency, Damages Sought, Value | $ 5,000 | |||||||||
Minimum | U.S. merchant litigation - class litigation | ||||||||||
Legal And Regulatory | ||||||||||
Legal proceeding complaints from merchants that have opted out of settlement | merchant | 30 | |||||||||
Approximate percentage of merchants that opted out of settlement | 25.00% | |||||||||
United Kingdom Cross-border Interchange and Domestic Interchange [Member] | Minimum | ||||||||||
Legal And Regulatory | ||||||||||
Loss Contingency, Damages Sought, Value | $ 2,000 | |||||||||
Loss Contingency, Number of Plaintiffs | plaintiff | 30 | |||||||||
merchants that have filed or threatened to file litigation with respect to interchange rates in Europe [Domain] | ||||||||||
Legal And Regulatory | ||||||||||
Loss Contingency, Damages Sought, Value | $ 300 | |||||||||
Loss Contingency, Number of Plaintiffs | plaintiff | 30 | |||||||||
U.K. Merchant Lawsuit Settlement | ||||||||||
Legal And Regulatory | ||||||||||
Provision for litigation settlement | $ 61 |
Settlement and Other Risk Man90
Settlement and Other Risk Management Narrative (Details) - USD ($) $ in Millions | Dec. 31, 2015 | Dec. 31, 2014 |
Settlement and Other Risk Management [Abstract] | ||
Travelers cheques outstanding, notional value | $ 420 | $ 465 |
Travelers cheques covered by collateral arrangements | $ 332 | $ 370 |
Settlement and Other Risk Man91
Settlement and Other Risk Management Estimated Settlement Exposure and Portion of Uncollateralized Settlement Exposure for MasterCard-Branded Transactions (Details) - Guarantee Obligations - USD ($) $ in Millions | Dec. 31, 2015 | Dec. 31, 2014 |
Risks Inherent in Servicing Assets and Servicing Liabilities [Line Items] | ||
Gross settlement exposure | $ 39,674 | $ 41,729 |
Settlement exposure covered by collateral | (3,601) | (3,415) |
Net uncollateralized settlement exposure | $ 36,073 | $ 38,314 |
Foreign Exchange Risk Managem92
Foreign Exchange Risk Management Classification of Outstanding Forward Contracts (Details) - USD ($) $ in Millions | Dec. 31, 2015 | Dec. 31, 2014 | |
Accounts Receivable | |||
Foreign Exchange Risk Management | |||
Forward contracts to purchase and sell foreign currency - Balance sheet location - Accounts receivable | [1] | $ 23 | $ 35 |
Other Current Liabilities | |||
Foreign Exchange Risk Management | |||
Forward contracts to purchase and sell foreign currency - Balance sheet location - Other current liabilities | [1] | (9) | (4) |
Commitments to purchase foreign currency | Foreign Exchange Forward | |||
Foreign Exchange Risk Management | |||
Commitments to purchase/sell foreign currency, Notional | 232 | 47 | |
Commitments to purchase/sell foreign currency, Estimated Fair Value | 1 | 4 | |
Commitments to sell foreign currency | Foreign Exchange Forward | |||
Foreign Exchange Risk Management | |||
Commitments to purchase/sell foreign currency, Notional | 1,430 | 614 | |
Commitments to purchase/sell foreign currency, Estimated Fair Value | 12 | 27 | |
Commitments to sell foreign currency | Foreign Exchange Option | |||
Foreign Exchange Risk Management | |||
Commitments to purchase/sell foreign currency, Notional | 44 | 0 | |
Commitments to purchase/sell foreign currency, Estimated Fair Value | $ 1 | $ 0 | |
[1] | The fair values of derivative contracts are presented on a gross basis on the balance sheet and are subject to enforceable master netting arrangements, which contain various netting and setoff provisions. |
Foreign Exchange Risk Managem93
Foreign Exchange Risk Management Foreign Exchange Risk Management (Details) € in Millions, $ in Millions | 12 Months Ended | ||||
Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | Dec. 31, 2015EUR (€) | Dec. 31, 2015USD ($) | |
Foreign Exchange Risk Management | |||||
Terms of the foreign currency forward contracts | 18 months | ||||
Net foreign currency transaction pre-tax loss in accumulated other comprehensive income | $ (40) | $ 0 | $ 0 | ||
Foreign Currency Derivative Contracts | |||||
Foreign Exchange Risk Management | |||||
Total gain (loss) for contracts to purchase and sell foreign currency | 51 | (78) | 52 | ||
Approximate effect of 10% adverse change in foreign currency rates on fair value loss | $ 128 | ||||
Foreign Currency Derivative Contracts | General and Administrative | |||||
Foreign Exchange Risk Management | |||||
Gain (loss) for contracts to purchase and sell foreign currency | 51 | (78) | 48 | ||
Foreign Currency Derivative Contracts | Net revenue | |||||
Foreign Exchange Risk Management | |||||
Gain (loss) for contracts to purchase and sell foreign currency | $ 0 | $ 0 | $ 4 | ||
Net Investment Hedging [Member] | |||||
Foreign Exchange Risk Management | |||||
Euro-denominated debt designated as hedge of net investment in European foreign operations denominated in euros | € | € 1,650 |
Segment Reporting (Details)
Segment Reporting (Details) - USD ($) $ in Millions | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Schedule of Property, Plant and Equipment, by Geographical Segment | |||
Property, Plant and Equipment, Net | $ 675 | $ 615 | $ 526 |
United States | |||
Schedule of Property, Plant and Equipment, by Geographical Segment | |||
Property, Plant and Equipment, Net | 471 | 450 | 410 |
Other countries | |||
Schedule of Property, Plant and Equipment, by Geographical Segment | |||
Property, Plant and Equipment, Net | $ 204 | $ 165 | $ 116 |
Segment Reporting (Narrative) (
Segment Reporting (Narrative) (Details) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Segment Reporting [Abstract] | |||
Percentage of revenue generated in the U.S. | 39.00% | 39.00% | 39.00% |
Number of countries generating greater than 10% of total revenue, other than the U.S. | 0 | 0 | |
Number of customers that generated greater than 10% of net revenue | 0 | 0 | 0 |
SUMMARY OF QUARTERLY DATA (Un96
SUMMARY OF QUARTERLY DATA (Unaudited) (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 12 Months Ended | ||||||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | ||||
Quarterly Financial Data [Abstract] | ||||||||||||||
Net revenue | $ 2,517 | $ 2,530 | $ 2,390 | $ 2,230 | $ 2,411 | $ 2,490 | $ 2,368 | $ 2,172 | $ 9,667 | $ 9,441 | $ 8,312 | |||
Operating income | 1,107 | 1,369 | 1,251 | 1,351 | 1,018 | 1,420 | 1,383 | 1,285 | 5,078 | 5,106 | 4,503 | |||
Net income | $ 890 | $ 977 | $ 921 | $ 1,020 | $ 801 | $ 1,015 | $ 931 | $ 870 | $ 3,808 | $ 3,617 | $ 3,116 | |||
Basic Earnings per Share | $ 0.79 | $ 0.86 | $ 0.81 | $ 0.89 | $ 0.70 | $ 0.88 | $ 0.80 | $ 0.73 | $ 3.36 | $ 3.11 | $ 2.57 | |||
Basic weighted-average shares outstanding | 1,121 | 1,130 | 1,138 | 1,148 | 1,153 | 1,157 | 1,165 | 1,185 | 1,134 | 1,165 | 1,211 | |||
Diluted earnings per share | $ 0.79 | $ 0.86 | $ 0.81 | $ 0.89 | $ 0.69 | $ 0.87 | $ 0.80 | $ 0.73 | $ 3.35 | $ 3.10 | $ 2.56 | |||
Diluted weighted-average shares outstanding | 1,124 | 1,133 | 1,141 | 1,152 | 1,157 | 1,160 | 1,169 | 1,189 | 1,137 | [1] | 1,169 | [1] | 1,215 | [1] |
[1] | For the years presented, the calculation of diluted EPS excluded a minimal amount of anti-dilutive share-based payment awards. |