MASTERCARD INC, 10-Q filed on 7/26/2018
Quarterly Report
v3.10.0.1
Document and Entity Information - shares
6 Months Ended
Jun. 30, 2018
Jul. 23, 2018
Entity Registrant Name MASTERCARD INC  
Trading Symbol MA  
Entity Central Index Key 0001141391  
Current Fiscal Year End Date --12-31  
Entity Filer Category Large Accelerated Filer  
Document Type 10-Q  
Document Period End Date Jun. 30, 2018  
Document Fiscal Year Focus 2018  
Document Fiscal Period Focus Q2  
Amendment Flag false  
Class A Common Stock    
Entity Common Stock, Shares Outstanding   1,025,054,754
Class B Common Stock    
Entity Common Stock, Shares Outstanding   13,397,705
v3.10.0.1
Consolidated Balance Sheet - USD ($)
$ in Millions
Jun. 30, 2018
Dec. 31, 2017
ASSETS    
Cash and cash equivalents $ 6,210 $ 5,933
Restricted cash for litigation settlement 549 546
Investments 1,535 1,849
Accounts receivable 2,164 1,969
Settlement due from customers 1,532 1,375
Restricted security deposits held for customers 992 1,085
Prepaid expenses and other current assets 1,323 1,040
Total Current Assets 14,305 13,797
Property, plant and equipment, net of accumulated depreciation of $778 and $714, respectively 860 829
Deferred income taxes 395 250
Goodwill 2,974 3,035
Other intangible assets, net of accumulated amortization of $1,176 and $1,157, respectively 1,043 1,120
Other assets 2,894 2,298
Total Assets 22,471 21,329
LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND EQUITY    
Accounts payable 345 933
Settlement due to customers 1,232 1,343
Restricted security deposits held for customers 992 1,085
Accrued litigation 949 709
Accrued expenses 4,418 3,931
Other current liabilities 1,519 792
Total Current Liabilities 9,455 8,793
Long-term debt 5,858 5,424
Deferred income taxes 58 106
Other liabilities 1,750 1,438
Total Liabilities 17,121 15,761
Commitments and Contingencies
Redeemable Non-controlling Interests 71 71
Stockholders’ Equity    
Additional paid-in-capital 4,453 4,365
Class A treasury stock, at cost, 358 and 342 shares, respectively (23,650) (20,764)
Retained earnings 25,086 22,364
Accumulated other comprehensive income (loss) (632) (497)
Total Stockholders’ Equity 5,257 5,468
Non-controlling interests 22 29
Total Equity 5,279 5,497
Total Liabilities, Redeemable Non-controlling Interests and Equity 22,471 21,329
Class A Common Stock    
Stockholders’ Equity    
Common stock 0 0
Total Equity 0 0
Class B Common Stock    
Stockholders’ Equity    
Common stock 0 0
Total Equity $ 0 $ 0
v3.10.0.1
Consolidated Balance Sheet (Parenthetical) - USD ($)
$ in Millions
Jun. 30, 2018
Dec. 31, 2017
Property, plant and equipment, accumulated depreciation $ 778 $ 714
Other intangible assets, accumulated amortization $ 1,176 $ 1,157
Class A treasury stock, shares 358,000,000 342,000,000
Class A Common Stock    
Common stock, par value $ 0.0001 $ 0.0001
Common stock, authorized 3,000,000,000 3,000,000,000
Common stock, issued 1,384,000,000 1,382,000,000
Common stock, outstanding 1,026,000,000 1,040,000,000
Class B Common Stock    
Common stock, par value $ 0.0001 $ 0.0001
Common stock, authorized 1,200,000,000 1,200,000,000
Common stock, issued 13,000,000 14,000,000
Common stock, outstanding 13,000,000 14,000,000
v3.10.0.1
Consolidated Statement of Operations - USD ($)
shares in Millions, $ in Millions
3 Months Ended 6 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Jun. 30, 2018
Jun. 30, 2017
Income Statement [Abstract]        
Net Revenue $ 3,665 $ 3,053 $ 7,245 $ 5,787
Operating Expenses        
General and administrative 1,154 1,075 2,448 2,026
Advertising and marketing 235 214 459 384
Depreciation and amortization 115 111 235 203
Provision for litigation settlements 225 0 342 15
Total operating expenses 1,729 1,400 3,484 2,628
Operating income 1,936 1,653 3,761 3,159
Other Income (Expense)        
Investment income 31 14 48 29
Interest expense (48) (39) (91) (78)
Other income (expense), net 3 0 7 (4)
Total other income (expense) (14) (25) (36) (53)
Income before income taxes 1,922 1,628 3,725 3,106
Income tax expense 353 451 664 848
Net Income $ 1,569 $ 1,177 $ 3,061 $ 2,258
Basic Earnings per Share $ 1.50 $ 1.10 $ 2.92 $ 2.10
Basic Weighted-Average Shares Outstanding 1,043 1,070 1,047 1,074
Diluted Earnings per Share $ 1.50 $ 1.10 $ 2.91 $ 2.09
Diluted Weighted-Average Shares Outstanding 1,049 1,075 1,053 1,078
v3.10.0.1
Consolidated Statement of Comprehensive Income - USD ($)
$ in Millions
3 Months Ended 6 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Jun. 30, 2018
Jun. 30, 2017
Statement of Comprehensive Income [Abstract]        
Net Income $ 1,569 $ 1,177 $ 3,061 $ 2,258
Other comprehensive income (loss):        
Foreign currency translation adjustments (352) 230 (191) 316
Income tax effect 7 2 5 1
Foreign currency translation adjustments, net of income tax effect (345) 232 (186) 317
Translation adjustments on net investment hedge 113 (108) 68 (142)
Income tax effect (27) 40 (15) 52
Translation adjustments on net investment hedge, net of income tax effect 86 (68) 53 (90)
Defined benefit pension and other postretirement plans 0 0 (1) (2)
Income tax effect 0 0 0 1
Defined benefit pension and other postretirement plans, net of income tax effect 0 0 (1) (1)
Investment securities available-for-sale 0 (1) (1) (2)
Income tax effect 0 1 0 1
Investment securities available-for-sale, net of income tax effect 0 0 (1) (1)
Other comprehensive income (loss), net of tax (259) 164 (135) 225
Comprehensive Income $ 1,310 $ 1,341 $ 2,926 $ 2,483
v3.10.0.1
Consolidated Statement of Changes in Equity - USD ($)
$ in Millions
Total
Class A Common Stock
Class B Common Stock
Additional Paid-In Capital
Class A Treasury Stock
Retained Earnings
Accumulated Other Comprehensive Income (Loss)
Non- Controlling Interests
Increase (Decrease) in Stockholders' Equity [Roll Forward]                
Adoption of new accounting principle | Adoption of revenue standard $ 366         $ 366    
Adoption of new accounting principle | Adoption of intra-entity asset transfers standard (183)         (183)    
Balance at Dec. 31, 2017 5,497 $ 0 $ 0 $ 4,365 $ (20,764) 22,364 $ (497) $ 29
Increase (Decrease) in Stockholders' Equity [Roll Forward]                
Net income 3,061         3,061    
Activity related to non-controlling interests (7)             (7)
Other comprehensive income (loss), net of tax (135)           (135)  
Cash dividends declared on Class A and Class B common stock, $0.50 per share (522)         (522)    
Purchases of treasury stock (2,890)     0 (2,890)      
Share-based payments 92     88 4      
Balance at Jun. 30, 2018 $ 5,279 $ 0 $ 0 $ 4,453 $ (23,650) $ 25,086 $ (632) $ 22
v3.10.0.1
Consolidated Statement of Changes in Equity (Parenthetical)
6 Months Ended
Jun. 30, 2018
$ / shares
Statement of Stockholders' Equity [Abstract]  
Cash dividends declared on Class A and Class B common stock, per share $ 0.50
v3.10.0.1
Consolidated Statement of Cash Flows - USD ($)
$ in Millions
6 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Operating Activities    
Net income $ 3,061 $ 2,258
Adjustments to reconcile net income to net cash provided by operating activities:    
Amortization of customer and merchant incentives 578 496
Depreciation and amortization 235 203
Share-based compensation 98 88
Deferred income taxes (107) (23)
Other 5 35
Changes in operating assets and liabilities:    
Accounts receivable (195) (186)
Settlement due from customers (158) (177)
Prepaid expenses (843) (980)
Accrued litigation and legal settlements 231 15
Restricted security deposits held for customers (93) 2
Accounts payable (86) 24
Settlement due to customers (109) 159
Accrued expenses 81 (4)
Net change in other assets and liabilities (174) 142
Net cash provided by operating activities 2,524 2,052
Investing Activities    
Purchases of investment securities available-for-sale (705) (322)
Purchases of investments held-to-maturity (242) (514)
Proceeds from sales of investment securities available-for-sale 412 105
Proceeds from maturities of investment securities available-for-sale 171 248
Proceeds from maturities of investments held-to-maturity 646 461
Purchases of property, plant and equipment (172) (114)
Capitalized software (79) (54)
Acquisition of businesses, net of cash acquired 0 (951)
Investment in nonmarketable equity investments (21) (121)
Other investing activities (16) 17
Net cash used in investing activities (6) (1,245)
Financing Activities    
Purchases of treasury stock (2,881) (1,893)
Dividends paid (525) (474)
Proceeds from debt 991 0
Payment of debt 0 (64)
Tax withholdings related to share-based payments (73) (46)
Cash proceeds from exercise of stock options 67 36
Other financing activities 5 (11)
Net cash used in financing activities (2,416) (2,452)
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents 74 123
Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents 176 (1,522)
Cash, cash equivalents, restricted cash and restricted cash equivalents - beginning of period 7,592 8,273
Cash, cash equivalents, restricted cash and restricted cash equivalents - end of period $ 7,768 $ 6,751
v3.10.0.1
Summary of Significant Accounting Policies
6 Months Ended
Jun. 30, 2018
Accounting Policies [Abstract]  
Summary of 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, digital partners, businesses and other organizations worldwide, enabling them to use electronic forms of payment instead of cash and checks.
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. At June 30, 2018 and December 31, 2017, there were no significant VIEs which required consolidation. The Company consolidates acquisitions as of the date in which the Company has obtained a controlling financial interest. Intercompany transactions and balances have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform to the 2018 presentation. The Company follows accounting principles generally accepted in the United States of America (“GAAP”).
The balance sheet as of December 31, 2017 was derived from the audited consolidated financial statements as of December 31, 2017. The consolidated financial statements for the three and six months ended June 30, 2018 and 2017 and as of June 30, 2018 are unaudited, and in the opinion of management, include all normal recurring adjustments that are necessary to present fairly the results for interim periods. The results of operations for the three and six months ended June 30, 2018 are not necessarily indicative of the results to be expected for the full year.
The accompanying unaudited consolidated financial statements are presented in accordance with the U.S. Securities and Exchange Commission (“SEC”) requirements for Quarterly Reports on Form 10-Q. Reference should be made to the Mastercard Incorporated Annual Report on Form 10-K for the year ended December 31, 2017 for additional disclosures, including a summary of the Company’s significant accounting policies.
Non-controlling interest amounts are included in the consolidated statement of operations within other income (expense). For the three and six months ended June 30, 2018 and 2017, activity from non-controlling interests was not material to the respective period results.
Recent Accounting Pronouncements
Income taxes - In March 2018, the Financial Accounting Standards Board (the “FASB”) issued guidance allowing for the recognition of provisional amounts related to the 2017 U.S. tax reform (the “U.S. Tax Reform”) in the event that the accounting was not complete by the end of the period enacted. The provisional amounts can be updated within a one year measurement period with changes recorded as a component of income tax expense during the reporting period. This guidance was effective upon issuance. Refer to Note 13 (Income Taxes) for further discussion.
Comprehensive income - In February 2018, the FASB issued accounting guidance that allows for a one-time reclassification from accumulated other comprehensive income (loss) to retained earnings for stranded tax effects resulting from the U.S. Tax Reform. The guidance is effective for periods beginning after December 15, 2018, with early adoption permitted. The Company is in the process of evaluating the impacts this guidance will have on its consolidated financial statements and, at this time, does not expect the impacts to be material.
Derivatives and hedging - In August 2017, the FASB issued accounting guidance to improve and simplify existing guidance to allow companies to better reflect their risk management activities in the financial statements. The guidance expands the ability to account for nonfinancial and financial risk components under hedge accounting and eliminates the requirement to separately measure and recognize hedge ineffectiveness and eases requirements of an entity’s assessment of hedge effectiveness. This guidance is effective for periods beginning after December 15, 2018 and early adoption is permitted. The Company currently does not account for its foreign currency derivative contracts under hedge accounting and does not expect the standard to have an impact to the Company. For a more detailed discussion of the Company’s foreign exchange risk management activities, refer to Note 16 (Foreign Exchange Risk Management).
Net periodic pension cost and net periodic postretirement benefit cost - In March 2017, the FASB issued accounting guidance to improve the presentation of net periodic pension cost and net periodic postretirement benefit cost. Under this guidance, the service cost component is required to be reported in the same line item as other compensation costs arising from services rendered by employees during the period. The other components of the net periodic benefit costs are required to be presented in the consolidated statement of operations separately from the service cost component and outside of operating income. This guidance is required to be applied retrospectively and is effective for periods beginning after December 15, 2017. The Company adopted this guidance effective January 1, 2018, which did not result in a material impact on the Company’s current year consolidated financial statements. The Company did not apply this guidance retrospectively, as the impact was de minimis to the prior year consolidated financial statements.
Restricted cash - In November 2016, the FASB issued accounting guidance to address diversity in the classification and presentation of changes in restricted cash on the consolidated statement of cash flows. Under this guidance, companies are required to present restricted cash and restricted cash equivalents with cash and cash equivalents when reconciling the beginning-of-period and end-of-period amounts shown on the consolidated statement of cash flows. This guidance is required to be applied retrospectively and is effective for periods beginning after December 15, 2017. The Company adopted this guidance effective January 1, 2018. In accordance with the adoption of this standard, the Company includes restricted cash, which currently consists primarily of restricted cash for litigation settlement and restricted security deposits held for customers in its reconciliation of beginning-of-period and end-of-period amounts shown on the consolidated statement of cash flows.
Intra-entity asset transfers - In October 2016, the FASB issued accounting guidance to simplify the accounting for income tax consequences of intra-entity transfers of assets other than inventory. Under this guidance, companies will be required to recognize the income tax consequences of an intra-entity asset transfer when the transfer occurs. This guidance must be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the period of adoption. The guidance is effective for periods beginning after December 15, 2017. The Company adopted this guidance effective January 1, 2018. For a more detailed discussion, refer to Note 13 (Income Taxes). See the section in this note entitled Cumulative Effect of the Adopted Accounting Pronouncements for a summary of the cumulative impact of adopting this standard as of January 1, 2018.
Leases - In February 2016, the FASB issued accounting guidance that will change how companies account for and present lease arrangements. This guidance requires companies to recognize leased assets and liabilities for both financing and operating leases. This guidance is effective for periods after December 15, 2018 and early adoption is permitted. Companies are required to adopt the guidance using a modified retrospective method. The Company expects to adopt this guidance effective January 1, 2019. The Company is in the process of evaluating the potential effects this guidance will have 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. The Company adopted this guidance effective January 1, 2018 under the modified retrospective transition method, applying the standard to contracts not completed as of January 1, 2018 and considered the aggregate amount of modifications. See the section in this note entitled Cumulative Effect of the Adopted Accounting Pronouncements for a summary of the cumulative impact of adopting this standard as of January 1, 2018.
This new revenue guidance impacts the timing of certain customer incentives recognized in the Company’s consolidated statement of operations, as they are recognized over the life of the contract. Previously, such incentives were recognized when earned by the customer. The new revenue guidance also impacts the Company’s accounting recognition for certain market development fund contributions and expenditures. Historically, these items were recorded on a net basis in net revenue and will now be recognized on a gross basis, resulting in an increase to both revenues and expenses.
The following tables summarize the impact of the revenue standard on the Company’s consolidated statement of operations for the three and six months ended June 30, 2018 and consolidated balance sheet as of June 30, 2018:
 
Three Months Ended June 30, 2018
 
Six Months Ended June 30, 2018
 
Balances excluding revenue standard
 
Impact of revenue standard
 
As reported
 
Balances excluding revenue standard
 
Impact of revenue standard
 
As reported
 
(in millions)
Net Revenue
$
3,560

 
$
105

 
$
3,665

 
$
7,033

 
$
212

 
$
7,245

 
 
 
 
 
 
 
 
 
 
 
 
Operating Expenses
 
 
 
 
 
 
 
 
 
 
 
General and administrative
1,154

 

 
1,154

 
2,453

 
(5
)
 
2,448

Advertising and marketing
176

 
59

 
235

 
360

 
99

 
459

 
 
 
 
 
 
 
 
 
 
 
 
Income before income taxes
1,876

 
46

 
1,922

 
3,607

 
118

 
3,725

Income tax expense
339

 
14

 
353

 
636

 
28

 
664

Net Income
1,537

 
32

 
1,569

 
2,971

 
90

 
3,061

 
June 30, 2018
 
Balances excluding revenue standard
 
Impact of revenue standard
 
As reported
 
(in millions)
Assets
 
 
 
 
 
Accounts receivable
$
2,094

 
$
70

 
$
2,164

Prepaid expenses and other current assets
1,130

 
193

 
1,323

Deferred income taxes
478

 
(83
)
 
395

Other assets
2,103

 
791

 
2,894

 
 
 
 
 
 
Liabilities
 
 
 
 
 
Accounts payable
963

 
(618
)
 
345

Accrued expenses
3,869

 
549

 
4,418

Other current liabilities
1,580

 
(61
)
 
1,519

Other liabilities
1,086

 
664

 
1,750

 
 
 
 
 
 
Equity
 
 
 
 
 
Retained earnings
24,649

 
437

 
25,086


For a more detailed discussion on revenue recognition, refer to Note 3 (Revenue).
Cumulative Effect of the Adopted Accounting Pronouncements
The following table summarizes the cumulative impact of the changes made to the January 1, 2018 consolidated balance sheet for the adoption of the new accounting standards pertaining to revenue recognition and intra-entity asset transfers. The prior periods have not been restated and have been reported under the accounting standards in effect for those periods. During the second quarter of 2018, there was an adjustment to the impact of adopting the new revenue standard which increased liabilities $88 million with a corresponding tax-effected adjustment to retained earnings. In addition, certain reclassifications were made primarily between other assets, accrued expenses, and other liabilities. These revisions did not result in a material impact to the balances at January 1, 2018 or the consolidated financial statements for the period ended March 31, 2018.
 
Balance at December 31, 2017
 
Impact of revenue standard
 
Impact of intra-entity asset transfers standard
 
Balance at
January 1, 2018
 
(in millions)
Assets
 
 
 
 
 
 
 
Accounts receivable
$
1,969

 
$
44

 
$

 
$
2,013

Prepaid expenses and other current assets
1,040

 
181

 
(17
)
 
1,204

Deferred income taxes
250

 
(69
)
 
186

 
367

Other assets
2,298

 
690

 
(352
)
 
2,636

Liabilities
 
 
 
 
 
 
 
Accounts payable
933

 
(495
)
 

 
438

Accrued expenses
3,931

 
391

 

 
4,322

Other current liabilities
792

 
(44
)
 

 
748

Other liabilities
1,438

 
628

 

 
2,066

Equity
 
 
 
 
 
 
 
Retained earnings
22,364

 
366

 
(183
)
 
22,547

v3.10.0.1
Acquisitions
6 Months Ended
Jun. 30, 2018
Business Combinations [Abstract]  
Business Combination Disclosure
Acquisitions
In 2017, the Company acquired businesses for total consideration of $1.5 billion. The Company has finalized the purchase accounting for businesses acquired during the six months ended June 30, 2017 for total consideration of $1.2 billion. For the final and preliminary estimated fair values of the purchase price allocations, as of the acquisition dates, refer to Note 2 (Acquisitions) to the consolidated financial statements included in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.
v3.10.0.1
Revenue
6 Months Ended
Jun. 30, 2018
Revenue from Contract with Customer [Abstract]  
Revenue
Revenue
Mastercard’s business model involves four participants in addition to the Company: account holders, merchants, issuers (the account holders’ financial institutions) and acquirers (the merchants’ financial institutions). Revenue from contracts with customers is recognized when services are performed in an amount that reflects the consideration to which the Company expects to be entitled to in exchange for those services. Revenue recognized from domestic assessments, cross-border volume fees and transaction processing are derived from Mastercard’s payment network services. Revenue is generated by charging fees to issuers, acquirers and other stakeholders for providing switching services, as well as by assessing customers based primarily on the dollar volume of activity, or gross dollar volume, on the cards and other devices that carry the Company’s brands. Revenue is generally derived from transactional information accumulated by Mastercard’s systems or reported by customers. In addition, the Company recognizes revenue from other payment-related products and services in the period in which the related transactions occur or services are performed.
The price structure for Mastercard’s products and services is dependent on the nature of volumes, types of transactions and type of products and services offered to customers. Net revenue can be impacted by the following:
domestic or cross-border transactions
geographic region or country in which the transaction occurs
volumes/transactions subject to tiered rates
processed or not processed by the Company
amount of usage of the Company’s other products or services
amount of rebates and incentives provided to customers
The Company classifies its net revenue into the following five categories:
Domestic assessments are fees charged to issuers and acquirers based primarily on the dollar volume of activity on cards and other devices that carry the Company’s brands where the acquirer country and the issuer country are the same. Revenue from domestic assessments are recorded as revenue in the period it is earned, which is when the related volume is generated on the cards or other devices that carry the Company’s brand.
Cross-border volume fees are charged to issuers and acquirers based on the dollar volume of activity on cards and other devices that carry the Company’s brands where the acquirer country and the issuer country are different. Revenue from cross-border volume are recorded as revenue in the period it is earned, which is when the related volume is generated on the cards or other devices that carry the Company’s brand.
Transaction processing revenue is recognized for both domestic and cross-border transactions in the period in which the related transactions occur. Transaction processing includes the following:
Switched transaction revenue is generated from the following products and services:
Authorization is the process by which a transaction is routed to the issuer for approval. In certain circumstances, such as when the issuer’s systems are unavailable or cannot be contacted, Mastercard or others approve such transactions on behalf of the issuer in accordance with either the issuer’s instructions or applicable rules (also known as “stand-in”).
Clearing is the determination and exchange of financial transaction information between issuers and acquirers after a transaction has been successfully conducted at the point of interaction. Transactions are cleared among customers through Mastercard’s central and regional processing systems.
Settlement is facilitating the exchange of funds between parties.
Connectivity fees are charged to issuers, acquirers and other financial institutions for network access, equipment and the transmission of authorization and settlement messages. These fees are based on the size of the data being transmitted and the number of connections to the Company’s network.
Other processing fees include issuer and acquirer processing solutions; payment gateways for e-commerce merchants; mobile gateways for mobile initiated transactions; and safety and security.
Other revenues consist of value added service offerings that are typically sold with the Company’s payment service offerings and are recognized in the period in which the related services are performed or transactions occur. Other revenues include the following:
Consulting, data analytic and research fees.
Safety and security services fees are for products and services offered to prevent, detect and respond to fraud and to ensure the safety of transactions made primarily on Mastercard products.
Loyalty and rewards solutions fees are charged to issuers for benefits provided directly to consumers with Mastercard-branded cards, such as access to a global airline lounge network, global and local concierge services, individual insurance coverages, emergency card replacement, emergency cash advance services and a 24-hour cardholder service center. Loyalty and reward solution fees also include rewards campaigns and management services.
Program management services provided to prepaid card issuers consist of foreign exchange margin, commissions, load fees and ATM withdrawal fees paid by cardholders on the sale and encashment of prepaid cards.
Bank account-based payment services relating to automated clearing house (“ACH”) transactions and other ACH related services.
Other payment-related products and services, including account and transaction enhancement services, rules compliance and publications.
Rebates and incentives (contra-revenue) are provided to customers that meet certain volume targets and can be in the form of a rebate or other support incentives, which are tied to performance.  Rebates and incentives are recorded as a reduction of revenue when revenue is recognized, ratably over the contractual term.  In addition, Mastercard may make incentive payments to a customer directly related to entering into an agreement, which are generally capitalized and amortized over the life of the agreement on a straight-line basis.
The following table disaggregates the Company’s net revenue by revenue source and geography for the three and six months ended June 30, 2018:
 
Three Months Ended June 30, 2018
 
Six Months Ended June 30, 2018
 
(in millions)
Revenue by source:
 
 
 
Domestic assessments
$
1,537

 
$
2,995

Cross-border volume fees
1,198

 
2,355

Transaction processing
1,830

 
3,537

Other revenues
785

 
1,533

Gross revenue
5,350

 
10,420

Rebates and incentives (contra-revenue)
(1,685
)
 
(3,175
)
Net revenue
$
3,665

 
$
7,245

 
 
 
 
Net revenue by geography:
 
 
 
North American Markets
$
1,330

 
$
2,579

International Markets
2,275

 
4,562

Other 1
60

 
104

Net revenue
$
3,665

 
$
7,245

1 Includes revenues managed by corporate functions.
Receivables from contracts with customers of $2,005 million and $1,873 million as of June 30, 2018 and December 31, 2017, respectively, are recorded within accounts receivable in the consolidated balance sheet. The Company’s customers are billed quarterly or more frequently dependent upon the nature of the performance obligation and the underlying contractual terms. The Company does not offer extended payment terms to customers.
Contract assets include unbilled consideration typically resulting from executed consulting, data analytic and research services performed for customers in connection with Mastercard’s payment network service arrangements. Collection for these services typically occurs over the contractual term. These contract assets are included in prepaid expenses and other current assets and other assets on the consolidated balance sheet at June 30, 2018 in the amounts of $19 million and $94 million, respectively. The Company did not have contract assets at December 31, 2017.
The Company defers the recognition of revenue when consideration has been received prior to the satisfaction of performance obligations. As these performance obligations are satisfied, revenue is subsequently recognized. Deferred revenue is primarily derived from consulting, data analytic and research services. Deferred revenue is included in other current liabilities and other liabilities on the consolidated balance sheet at June 30, 2018 in the amounts of $282 million and $78 million, respectively. The comparable amounts included in other current liabilities and other liabilities at December 31, 2017 were $230 million and $17 million, respectively. Revenue recognized from performance obligations satisfied during the three and six months ended June 30, 2018 was $207 million and $368 million, respectively.
The Company’s remaining performance period for its contracts with customers for its payment network services are typically long-term in nature (generally up to 10 years). As a payment network service provider, the Company provides its customers with continuous access to its payment network and stands ready to provide transaction processing and related services over the contractual term. Consideration is variable based upon the number of transactions processed and volume activity on the cards and other devices that carry the Company’s brands. The Company has elected the optional exemption to not disclose the remaining performance obligations related to its payment network services.
The following table summarizes expected revenues for the remaining performance obligations with customers from the Company’s other products and services including real-time account-based payment services, consulting and research fees and loyalty programs.  The Company expects to recognize revenue in the future related to these unsatisfied performance obligations for fixed-fee contracts open as of June 30, 2018 that are greater than one year.
 
(in millions)
Remainder of 2018
$
156

2019-2020
521

2021-2022
147

2023 and thereafter
21

Total
$
845

v3.10.0.1
Earnings Per Share
6 Months Ended
Jun. 30, 2018
Earnings Per Share [Abstract]  
Earnings Per Share
Earnings Per Share
The components of basic and diluted earnings per share (“EPS”) for common stock were as follows:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2018
 
2017
 
2018
 
2017
 
(in millions, except per share data)
Numerator
 
 
 
 
 
 
 
Net income
$
1,569

 
$
1,177

 
$
3,061

 
$
2,258

Denominator
 
 
 
 
 
 
 
Basic weighted-average shares outstanding
1,043

 
1,070

 
1,047

 
1,074

Dilutive stock options and stock units
6

 
5

 
6

 
4

Diluted weighted-average shares outstanding 1
1,049

 
1,075

 
1,053

 
1,078

Earnings per Share
 
 
 
 
 
 
 
Basic
$
1.50

 
$
1.10

 
$
2.92

 
$
2.10

Diluted
$
1.50

 
$
1.10

 
$
2.91

 
$
2.09



1 For the periods presented, the calculation of diluted EPS excluded a minimal amount of anti-dilutive share-based payment awards.
v3.10.0.1
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents
6 Months Ended
Jun. 30, 2018
Cash and Cash Equivalents [Abstract]  
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents
The Company’s 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 approximate fair value.
The Company classifies cash and cash equivalents as restricted when the cash is unavailable for withdrawal or usage for general operations. The Company has the following types of restricted cash and restricted cash equivalents balances:
Restricted cash for litigation settlement - The Company has restricted cash for litigation within a qualified settlement fund related to a preliminary settlement agreement for the U.S. merchant class litigation. The funds continue to be restricted for payments until the litigation matter is resolved. Refer to Note 14 (Legal and Regulatory Proceedings).
Restricted security deposits held for customers - The Company requires collateral from certain customers for settlement of their transactions. The majority of collateral for settlement is in the form of standby letters of credit and bank guarantees which are not recorded on the consolidated balance sheet. Additionally, the Company holds cash deposits and certificates of deposit from certain customers of Mastercard as collateral for settlement of their transactions, which are recorded as assets on the consolidated balance sheet. These assets are fully offset by corresponding liabilities included on the consolidated balance sheet. These security deposits are typically held for the duration of the agreement with the customers.
Other restricted cash balances - The Company has other restricted cash balances which include contractually restricted deposits, as well as cash balances that are restricted based on the Company’s intention with regards to usage. These funds are classified on the consolidated balance sheet within prepaid expenses and other currents assets and other assets.
The following table provides a reconciliation of cash, cash equivalents, restricted cash and restricted cash equivalents reported within the statement of financial position that total to the beginning of period and end of period amounts shown in the statement of cash flows.
 
December 31,
 
2017
 
2016
 
(in millions)
Cash and cash equivalents
$
5,933

 
$
6,721

Restricted cash and restricted cash equivalents
 
 
 
Restricted cash for litigation settlement
546

 
543

Restricted security deposits held for customers
1,085

 
991

Prepaid expenses and other current assets
28

 
3

Other assets

 
15

Cash, cash equivalents, restricted cash and restricted cash equivalents - beginning of period 1
$
7,592

 
$
8,273

 
 
 
 
 
June 30,
 
2018
 
2017
 
(in millions)
Cash and cash equivalents
$
6,210

 
$
5,177

Restricted cash and restricted cash equivalents
 
 
 
Restricted cash for litigation settlement
549

 
544

Restricted security deposits held for customers
992

 
993

Prepaid expenses and other current assets
17

 
12

Other assets

 
25

Cash, cash equivalents, restricted cash and restricted cash equivalents - end of period 1
$
7,768

 
$
6,751

1 As shown on the consolidated statement of cash flows.
v3.10.0.1
Fair Value
6 Months Ended
Jun. 30, 2018
Financial Instruments, Financial Liabilities, Balance Sheet Groupings [Abstract]  
Fair Value and Investment Securities
Fair Value and Investment Securities
Financial Instruments – Recurring Measurements
The Company classifies its fair value measurements of financial instruments into a three-level hierarchy (the “Valuation Hierarchy”). There were no transfers made among the three levels in the Valuation Hierarchy during the six months ended June 30, 2018.
The distribution of the Company’s financial instruments measured at fair value on a recurring basis within the Valuation Hierarchy were as follows:
 
June 30, 2018
 
December 31, 2017
 
Quoted Prices
in Active
Markets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 
Total
 
Quoted Prices
in Active
Markets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 
Total
 
(in millions)
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment securities available for sale 1:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Municipal securities
$

 
$
11

 
$

 
$
11

 
$

 
$
17

 
$

 
$
17

Government and agency securities
60

 
97

 

 
157

 
81

 
104

 

 
185

Corporate securities

 
917

 

 
917

 

 
876

 

 
876

Asset-backed securities

 
165

 

 
165

 

 
70

 

 
70

Equity securities
1

 

 

 
1

 
1

 

 

 
1

Derivative instruments 2:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign currency derivative assets

 
39

 

 
39

 

 
6

 

 
6

Deferred compensation plan 3:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deferred compensation assets
59

 

 

 
59

 
55

 

 

 
55

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivative instruments 2:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign currency derivative liabilities
$

 
$
(6
)
 
$

 
$
(6
)
 
$

 
$
(30
)
 
$

 
$
(30
)
Deferred compensation plan 4:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deferred compensation liabilities
(60
)
 

 

 
(60
)
 
(54
)
 

 

 
(54
)

1 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. The fair value of the Company’s available-for-sale municipal securities, government and agency securities, corporate securities and asset-backed securities are based on observable inputs such as quoted prices, benchmark yields and issuer spreads for similar assets in active markets and are therefore included in Level 2 of the Valuation Hierarchy.
2 The Company’s foreign currency derivative asset and liability contracts have been classified within Level 2 of the Valuation Hierarchy as the fair value is based on observable inputs such as broker quotes relating to foreign currency exchange rates for similar derivative instruments. See Note 16 (Foreign Exchange Risk Management) for further details.
3 The Company has a nonqualified deferred compensation plan where assets are invested primarily in mutual funds held in a rabbi trust, which is restricted for payments to participants of the plan. The Company has elected to use the fair value option for these mutual funds, which are measured using quoted prices of identical instruments in active markets and are included in prepaid expenses and other current assets on the consolidated balance sheet.
4 The deferred compensation liabilities are measured at fair value based on the quoted prices of instruments identical to the investment vehicles selected by the participants. They are included in other liabilities on the consolidated balance sheet.
Settlement and Other Guarantee Liabilities
The Company estimates the fair value of its settlement and other guarantees using 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 June 30, 2018 and December 31, 2017, the carrying value and fair value of settlement and other guarantee liabilities were not material and accordingly are not included in the Valuation Hierarchy table above. Settlement and other guarantee liabilities are classified within Level 3 of the Valuation Hierarchy as their valuation requires substantial judgment and estimation of factors that are not observable in the market. For additional information regarding the Company’s settlement and other guarantee liabilities, see Note 15 (Settlement and Other Risk Management).
Financial Instruments - Non-Recurring Measurements
Held-to-Maturity Securities
Investments on the consolidated balance sheet include both available-for-sale and short-term held-to-maturity securities. Held-to-maturity securities are not measured at fair value on a recurring basis and are not included in the Valuation Hierarchy table above. At June 30, 2018 and December 31, 2017, the Company held $284 million and $700 million, respectively, of short-term held-to-maturity securities. The cost of these securities approximates fair value.
Nonmarketable Equity Investments
The Company’s nonmarketable equity investments are measured at fair value at initial recognition and for impairment testing. In addition, nonmarketable equity investments accounted for under the cost method of accounting are adjusted for changes resulting from observable price changes in orderly transactions for the identical or similar investments of the same issuer. Nonmarketable equity investments are classified within Level 3 of the Valuation Hierarchy due to the absence of quoted market prices, the inherent lack of liquidity, and the fact that inputs used to measure fair value are unobservable and require management’s judgment. The Company uses discounted cash flows and market assumptions to estimate the fair value of its nonmarketable equity investments when certain events or circumstances indicate that impairment may exist. These investments are included in other assets on the consolidated balance sheet and in Note 7 (Prepaid Expenses and Other Assets).
Debt
The Company estimates the fair value of its long-term debt based on market quotes. These debt instruments are not traded in active markets and are classified within Level 2 of the Valuation Hierarchy. At June 30, 2018, the carrying value and fair value of the total debt outstanding (including the current portion) was $6.4 billion and $6.5 billion, respectively. At December 31, 2017, the carrying value and fair value of long-term debt was $5.4 billion and $5.7 billion, respectively.
Other Financial Instruments
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, accounts receivable, settlement due from customers, restricted security deposits held for customers, accounts payable, settlement due to customers and other accrued liabilities.
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.
The contingent consideration attributable to acquisitions made in 2017 is primarily based on the achievement of 2018 revenue targets. This contingent consideration liability is included in other current liabilities on the consolidated balance sheet and is classified within Level 3 of the Valuation Hierarchy due to the absence of quoted market prices. The activity of the Company’s contingent consideration liability for the six months ended June 30, 2018 was as follows:
 
(in millions)
Balance at December 31, 2017
$
219

Net change in valuation
11

Payments
(5
)
Foreign currency translation
(6
)
Balance at June 30, 2018
$
219


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 (loss) on the consolidated statement of comprehensive income, and their respective amortized cost basis and fair values as of June 30, 2018 and December 31, 2017 were as follows:
 
 
June 30, 2018
 
December 31, 2017
 
Amortized
Cost
 
Gross
Unrealized
Gain
 
Gross
Unrealized
Loss
 
Fair
Value
 
Amortized
Cost
 
Gross
Unrealized
Gain
 
Gross
Unrealized
Loss
 
Fair
Value
 
(in millions)
Municipal securities
$
11

 
$

 
$

 
$
11

 
$
17

 
$

 
$

 
$
17

Government and agency securities
157

 

 

 
157

 
185

 

 

 
185

Corporate securities
917

 
1

 
(1
)
 
917

 
875

 
2

 
(1
)
 
876

Asset-backed securities
165

 

 

 
165

 
70

 

 

 
70

Equity securities

 
1

 

 
1

 

 
1

 

 
1

Total
$
1,250

 
$
2

 
$
(1
)
 
$
1,251

 
$
1,147

 
$
3

 
$
(1
)
 
$
1,149


The Company’s available-for-sale investment securities held at June 30, 2018 and December 31, 2017 primarily carried a credit rating of A- or better. The municipal securities are primarily comprised of tax-exempt bonds and are diversified across states and sectors. Government and agency securities include U.S. government bonds, U.S. government sponsored agency bonds and foreign government bonds with similar credit quality to that of the U.S. government 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 June 30, 2018 was as follows:
 
Available-For-Sale
 
Amortized
Cost
 
Fair Value
 
(in millions)
Due within 1 year
$
341

 
$
341

Due after 1 year through 5 years
909

 
909

Due after 5 years through 10 years

 

Due after 10 years

 

No contractual maturity 1

 
1

Total
$
1,250

 
$
1,251


1 Equity securities have been included in the No contractual maturity category, as these securities do not have stated maturity dates.
Investment Income
Investment 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 consolidated statement of operations. The gross realized gains and losses from the sales of available-for-sale securities for the three and six months ended June 30, 2018 and 2017 were not significant.
v3.10.0.1
Prepaid Expenses and Other Assets
6 Months Ended
Jun. 30, 2018
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:
 
June 30,
2018
 
December 31,
2017
 
(in millions)
Customer and merchant incentives
$
685

 
$
464

Prepaid income taxes
121

 
77

Other
517

 
499

Total prepaid expenses and other current assets
$
1,323

 
$
1,040


Other assets consisted of the following:
 
June 30,
2018
 
December 31,
2017
 
(in millions)
Customer and merchant incentives
$
2,232

 
$
1,434

Nonmarketable equity investments
268

 
249

Prepaid income taxes

 
352

Income taxes receivable
173

 
178

Other
221

 
85

Total other assets
$
2,894

 
$
2,298


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. The increase in customer and merchant incentives and the decrease in prepaid income taxes at June 30, 2018 from December 31, 2017 are primarily due to the impact from the adoption of the new accounting standards pertaining to revenue recognition and intra-entity asset transfers, respectively. See Note 1 (Summary of Significant Accounting Policies) for additional information on the cumulative impact of the adoption of these accounting pronouncements.
Nonmarketable equity investments represent the Company’s cost and equity method investments.
v3.10.0.1
Accrued Expenses
6 Months Ended
Jun. 30, 2018
Accrued Liabilities, Current [Abstract]  
Accrued Expenses and Accrued Litigation
Accrued Expenses and Accrued Litigation
Accrued expenses consisted of the following:
 
June 30,
2018
 
December 31,
2017
 
(in millions)
Customer and merchant incentives
$
3,182

 
$
2,648

Personnel costs
442

 
613

Advertising
88

 
88

Income and other taxes
313

 
194

Other
393

 
388

Total accrued expenses
$
4,418

 
$
3,931


As of June 30, 2018 and December 31, 2017, the Company’s provision for litigation was $949 million and $709 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. See Note 14 (Legal and Regulatory Proceedings) for further discussion of the U.S. and Canadian merchant class litigations.
v3.10.0.1
Debt (Notes)
6 Months Ended
Jun. 30, 2018
Debt Disclosure [Abstract]  
Debt Disclosure
Debt
Total debt outstanding consisted of the following at June 30, 2018 and December 31, 2017:
Notes
 
Issuance
Date
 
Interest Payment Terms
 
Maturity
Date
 
Aggregate Principal Amount
 
Stated
Interest Rate
 
Effective
Interest Rate
 
June 30,
2018
 
December 31,
2017
 
 
 
 
 
 
 
 
(in millions, except percentages)
2018 USD Notes
 
February 2018
 
Semi-annually
 
2028
 
$
500

 
3.500
%
 
3.598
%
 
$
500

 
$

 
 
 
 
 
 
2048
 
500

 
3.950
%
 
3.990
%
 
500

 

 
 
 
 
 
 
 
 
$
1,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2016 USD Notes
 
November 2016
 
Semi-annually
 
2021
 
$
650

 
2.000
%
 
2.236
%
 
650

 
650

 
 
 
 
 
 
2026
 
750

 
2.950
%
 
3.044
%
 
750

 
750

 
 
 
 
 
 
2046
 
600

 
3.800
%
 
3.893
%
 
600

 
600

 
 
 
 
 
 
 
 
$
2,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2015 Euro Notes
 
December 2015
 
Annually
 
2022
 
700

 
1.100
%
 
1.265
%
 
813

 
839

 
 
 
 
 
 
2027
 
800

 
2.100
%
 
2.189
%
 
930

 
958

 
 
 
 
 
 
2030
 
150

 
2.500
%
 
2.562
%
 
174

 
180

 
 
 
 
 
 
 
 
1,650

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014 USD Notes
 
March 2014
 
Semi-annually
 
2019
 
$
500

 
2.000
%
 
2.178
%
 
500

 
500

 
 
 
 
 
 
2024
 
1,000

 
3.375
%
 
3.484
%
 
1,000

 
1,000

 
 
 
 
 
 
 
 
$
1,500

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6,417

 
5,477

Less: Unamortized discount and debt issuance costs
 
(60
)
 
(53
)
Total debt outstanding
 
6,357

 
5,424

Less: Current portion of total debt1 
 
(499
)
 

Long-term debt
 
$
5,858

 
$
5,424

1 Relates to the current portion of the 2014 USD Notes, due in April 2019, included in other current liabilities on the consolidated balance sheet.
In February 2018, the Company issued $500 million principal amount of notes due February 2028 and $500 million principal amount of notes due February 2048 (collectively the “2018 USD Notes”). The net proceeds from the issuance of the 2018 USD Notes, after deducting the original issue discount, underwriting discount and offering expenses, were $991 million.
The net proceeds, after deducting the original issue discount, underwriting discount and offering expenses, from the issuance of the 2016 USD Notes, the 2015 Euro Notes and the 2014 USD Notes, were $1.969 billion, $1.723 billion and $1.484 billion, respectively.
None of the outstanding debt, described above, is subject to financial covenants and may be redeemed in whole, or in part, at the Company’s option at any time for a specified make-whole amount. These 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.
In November 2015, the Company established a commercial paper program (the “Commercial Paper Program”) under which it 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”). Borrowings under the Credit Facility are available in U.S. dollars and/or euros. In October 2017, the Company extended the Credit Facility for an additional year to October 2022. The extension did not result in any material changes to the terms and conditions of the Credit Facility. The facility fee and borrowing cost under the Credit Facility are based upon the Company’s credit rating. At June 30, 2018, 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”). The Company was in compliance in all material respects with the covenants of the Credit Facility at June 30, 2018. The majority of Credit Facility lenders are customers or affiliates of customers of the Company.
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. The Company had no borrowings under the Credit Facility and the Commercial Paper Program at June 30, 2018 and December 31, 2017.
In March 2018, the Company filed a universal shelf registration statement (replacing a previously filed shelf registration statement that was set to expire) 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, guarantees of debt securities, preferred stock, Class A common stock, depository shares, purchase contracts, units or warrants in one or more offerings.
v3.10.0.1
Stockholders' Equity
6 Months Ended
Jun. 30, 2018
Equity [Abstract]  
Stockholders' Equity
Stockholders’ Equity
The Company’s Board of Directors has approved share repurchase programs authorizing the Company to repurchase its Class A common stock. These programs become effective after the completion of the previously authorized share repurchase program.
The following table summarizes the Company’s share repurchase authorizations of its Class A common stock through June 30, 2018, as well as historical purchases:
 
 
 
 
 
 
 
 
Board authorization dates
December
2017
 
December
2016
 
December
2015
 
 
 
 
 
 
 
 
 
 
Date program became effective
March
2018
 
April
2017
 
February 2016
 
Total
 
(in millions, except average price data)
Board authorization
$
4,000

 
$
4,000

 
$
4,000

 
$
12,000

Dollar value of shares repurchased during the six months ended June 30, 2017
$

 
$
897

 
$
996

 
$
1,893

Remaining authorization at December 31, 2017
$
4,000

 
$
1,234