MASTERCARD INC, 10-K filed on 2/14/2014
Annual Report
Document and Entity Information (USD $)
In Billions, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Jun. 28, 2013
Feb. 6, 2014
Class A Common Stock
Feb. 6, 2014
Class B Common Stock
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-K 
 
 
 
Document Period End Date
Dec. 31, 2013 
 
 
 
Document Fiscal Year Focus
2013 
 
 
 
Document Fiscal Period Focus
FY 
 
 
 
Amendment Flag
false 
 
 
 
Entity Common Stock, Shares Outstanding
 
 
1,141,285,340 
45,255,390 
Entity Well-known Seasoned Issuer
Yes 
 
 
 
Entity Voluntary Filers
No 
 
 
 
Entity Current Reporting Status
Yes 
 
 
 
Entity Public Float
 
$ 66.7 
 
 
Consolidated Balance Sheet (USD $)
In Millions, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
ASSETS
 
 
Cash and cash equivalents
$ 3,599 
$ 2,052 
Restricted cash for litigation settlement
723 
726 
Investment securities available-for-sale, at fair value
2,696 
2,951 
Accounts receivable
966 
925 
Settlement due from customers
1,351 
1,117 
Restricted security deposits held for customers
911 
777 
Prepaid expenses and other current assets
471 
681 
Deferred income taxes
233 
128 
Total Current Assets
10,950 
9,357 
Property, plant and equipment, net
526 
472 
Deferred income taxes
70 
60 
Goodwill
1,122 
1,092 
Other intangible assets, net
672 
672 
Other assets
902 
809 
Total Assets
14,242 
12,462 
LIABILITIES AND EQUITY
 
 
Accounts payable
338 
357 
Settlement due to customers
1,433 
1,064 
Restricted security deposits held for customers
911 
777 
Accrued litigation
886 
726 
Accrued expenses
2,101 
1,748 
Other current liabilities
363 
234 
Total Current Liabilities
6,032 
4,906 
Deferred income taxes
117 
104 
Other liabilities
598 
523 
Total Liabilities
6,747 
5,533 
Commitments and Contingencies
   
   
Stockholders' Equity
 
 
Additional paid-in-capital
3,762 
3,641 
Class A treasury stock, at cost, 192,702,740 and 151,998,280 shares, respectively
(6,577)
(4,139)
Retained earnings
10,121 
7,354 
Accumulated other comprehensive income
178 
61 
Total Stockholders' Equity
7,484 
6,917 
Non-controlling interests
11 
12 
Total Equity
7,495 
6,929 
Total Liabilities and Equity
14,242 
12,462 
Class A Common Stock
 
 
Stockholders' Equity
 
 
Common stock value
0 
0 
Class B Common Stock
 
 
Stockholders' Equity
 
 
Common stock value
$ 0 
$ 0 
Consolidated Balance Sheet (Parenthetical) (USD $)
Dec. 31, 2013
Dec. 31, 2012
Class A treasury stock, shares
192,702,740 
151,998,280 
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
1,341,541,110 
1,336,049,030 
Common stock, outstanding
1,148,838,370 
1,184,050,750 
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
45,350,070 
48,388,400 
Common stock, outstanding
45,350,070 
48,388,400 
Consolidated Statement of Operations (USD $)
In Millions, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Income Statement [Abstract]
 
 
 
Net Revenue
$ 8,346 
$ 7,391 
$ 6,714 
Operating Expenses
 
 
 
General and administrative
2,649 
2,429 
2,196 
Advertising and marketing
841 
775 
841 
Depreciation and amortization
258 
230 
194 
Provision for litigation settlement
95 
20 
770 
Total operating expenses
3,843 
3,454 
4,001 
Operating income
4,503 
3,937 
2,713 
Other Income (Expense)
 
 
 
Investment income
38 
37 
52 
Interest expense
(14)
(20)
(25)
Other income (expense), net
(27)
(21)
8 
Total other income (expense)
(3)
(4)
35 
Income before income taxes
4,500 
3,933 
2,748 
Income tax expense
1,384 
1,174 
842 
Net Income
$ 3,116 
$ 2,759 
$ 1,906 
Basic Earnings per Share
$ 2.57 1
$ 2.20 1
$ 1.49 
Basic Weighted-Average Shares Outstanding
1,211 1
1,253 1
1,279 1
Diluted Earnings per Share
$ 2.56 1
$ 2.19 1
$ 1.48 
Diluted Weighted-Average Shares Outstanding
1,215 1 2
1,258 1 2
1,284 1 2
Consolidated Statement of Comprehensive Income (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Statement of Comprehensive Income [Abstract]
 
 
 
Net Income
$ 3,116 
$ 2,759 
$ 1,906 
Other comprehensive income (loss):
 
 
 
Foreign currency translation adjustments
113 1
63 1
(75)
Defined benefit pension and postretirement plans
13 
(8)
(31)
Income tax effect
(5)
3 
11 
Defined benefit pension and other postretirement plans, net of income tax effect
8 1
(5)1
(20)
Investment securities available-for-sale
(3)
9 
(11)
Income tax effect
2 
(3)
4 
Investment securities available-for-sale, net of income tax effect
(1)
6 
(7)
Reclassification adjustment for investment securities available-for-sale
(5)
(2)
8 
Income tax effect
2 
1 
(3)
Reclassification adjustment for investment securities available-for-sale, net of income tax effect
(3)
(1)
5 
Other comprehensive income (loss), net of tax
117 1
63 1
(97)
Comprehensive Income
$ 3,233 
$ 2,822 
$ 1,809 
Consolidated Statement of Changes in Equity (USD $)
In Millions
Total
Retained Earnings (Accumulated Deficit)
Accumulated Other Comprehensive Income (Loss), Net of Tax
Class A Common Stock
Class B Common Stock
Additional Paid-In Capital
Class A Treasury Stock
Non-Controlling Interests
Balance at Dec. 31, 2010
$ 5,216 
$ 2,915 
$ 95 
$ 0 
$ 0 
$ 3,445 
$ (1,250)
$ 11 
Net income
1,906 
1,906 
 
 
 
 
 
0 
Activity related to non-controlling interests
(2)
 
 
 
 
 
 
(2)
Other comprehensive income (loss), net of tax
(97)
 
(97)
 
 
 
 
 
Cash dividends declared on Class A and Class B common stock ($0.06, $0.12 and $0.29 in 2011, 2012 and 2013, respectively)
(76)
(76)
 
 
 
 
 
 
Purchases of treasury stock
(1,148)
 
 
 
 
 
(1,148)
 
Share-based payments
78 
 
 
 
 
74 
4 
 
Conversion of Class B to Class A common stock
0 
 
 
0 
0 
 
 
 
Balance at Dec. 31, 2011
5,877 
4,745 
(2)
0 
0 
3,519 
(2,394)
9 
Net income
2,759 
2,759 
 
 
 
 
 
0 
Activity related to non-controlling interests
3 
 
 
 
 
 
 
3 
Other comprehensive income (loss), net of tax
63 1
 
63 
 
 
 
 
 
Cash dividends declared on Class A and Class B common stock ($0.06, $0.12 and $0.29 in 2011, 2012 and 2013, respectively)
(150)
(150)
 
 
 
 
 
 
Purchases of treasury stock
(1,748)
 
 
 
 
 
(1,748)
 
Share-based payments
125 
 
 
 
 
122 
3 
 
Conversion of Class B to Class A common stock
0 
 
 
0 
0 
 
 
 
Balance at Dec. 31, 2012
6,929 
7,354 
61 
0 
0 
3,641 
(4,139)
12 
Net income
3,116 
3,116 
 
 
 
 
 
0 
Activity related to non-controlling interests
(1)
 
 
 
 
 
 
(1)
Other comprehensive income (loss), net of tax
117 1
 
117 
 
 
 
 
 
Cash dividends declared on Class A and Class B common stock ($0.06, $0.12 and $0.29 in 2011, 2012 and 2013, 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 
 
 
0 
0 
 
 
 
Balance at Dec. 31, 2013
$ 7,495 
$ 10,121 
$ 178 
$ 0 
$ 0 
$ 3,762 
$ (6,577)
$ 11 
Consolidated Statement of Changes in Equity (Parenthetical)
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Statement of Stockholders' Equity [Abstract]
 
 
 
Cash dividends declared on Class A and Class B common stock, per share
$ 0.29 
$ 0.12 
$ 0.06 
Consolidated Statement of Cash Flows (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Operating Activities
 
 
 
Net income
$ 3,116 
$ 2,759 
$ 1,906 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
258 
230 
194 
Share-based payments
63 
0 
35 
Deferred income taxes
(119)
241 
(175)
Other
67 
52 
17 
Changes in operating assets and liabilities:
 
 
 
Accounts receivable
(42)
(121)
(162)
Income taxes receivable
153 
(185)
0 
Settlement due from customers
(194)
(500)
(114)
Prepaid expenses
(70)
(81)
27 
Accrued litigation and legal settlements
160 
(44)
467 
Accounts payable
(20)
(2)
67 
Settlement due to customers
322 
348 
74 
Accrued expenses
315 
221 
296 
Net change in other assets and liabilities
126 
30 
52 
Net cash provided by operating activities
4,135 
2,948 
2,684 
Investing Activities
 
 
 
Purchases of investment securities available-for-sale
(2,526)
(2,981)
(899)
Proceeds from sales of investment securities available-for-sale
1,488 
390 
485 
Proceeds from maturities of investment securities available-for-sale
1,321 
891 
63 
Purchases of property, plant and equipment
(155)
(96)
(77)
Capitalized software
(144)
(122)
(100)
Proceeds from maturities of investment securities held-to-maturity
36 
0 
300 
Investment in nonmarketable equity investments
(20)
(118)
(74)
Decrease (increase) in restricted cash for litigation settlement
3 
(726)
0 
Acquisition of businesses, net of cash acquired
0 
(70)
(460)
Other investing activities
(7)
(7)
14 
Net cash used in investing activities
(4)
(2,839)
(748)
Financing Activities
 
 
 
Purchases of treasury stock
(2,443)
(1,748)
(1,148)
Dividends paid
(255)
(132)
(77)
Proceeds from debt
35 
0 
0 
Cash proceeds from exercise of stock options
26 
31 
19 
Tax benefit for share-based compensation
19 
47 
12 
Other financing activities
(11)
4 
(21)
Net cash used in financing activities
(2,629)
(1,798)
(1,215)
Effect of exchange rate changes on cash and cash equivalents
45 
7 
(54)
Net increase (decrease) in cash and cash equivalents
1,547 
(1,682)
667 
Cash and cash equivalents - beginning of period
2,052 
3,734 
3,067 
Cash and cash equivalents - end of period
$ 3,599 
$ 2,052 
$ 3,734 
Summary of Significant Accounting Policies
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 “merchant discount” rate charged in connection with the acceptance of cards and other payment devices that carry MasterCard's brands.
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. Intercompany transactions and balances have been eliminated in consolidation. Certain prior period amounts have been revised or reclassified to conform to the 2013 presentation. The Company follows accounting principles generally accepted in the United States of America (“GAAP”).
The Company is a variable interest holder in certain entities. These variable interests arise from contractual, ownership or other monetary interests in the entities. The Company evaluates if the entity has sufficient equity at risk to finance their activities without additional subordinated financial support from other parties, if equity investors lack the ability to control the entity's most significant activities, have voting rights that are disproportionate to their ownership interest, or lack the ability to absorb expected losses or receive expected returns (referred to as VIEs). The Company consolidates a VIE if it is the primary beneficiary, defined as the entity that has both (i) the power to direct the activities that most significantly impact the VIE's economic performance and (ii) the obligation to absorb the losses and/or the right to receive benefits from the VIE that could potentially be significant to the VIE. To determine whether MasterCard qualifies as the primary beneficiary, the Company considers both qualitative and quantitative factors regarding the nature, size and form of the Company's involvement with the VIE. The Company assesses whether or not it is the primary beneficiary of a VIE on an ongoing basis. 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, 2013 and 2012, there were no VIEs which required consolidation.
Non-controlling interests represent the equity interest not owned by the Company and is 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 each of the years ended December 31, 2013, 2012 and 2011, 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). Prior period amounts have been revised to conform to this presentation.
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 revenue is based upon information reported to us by our customers. Transaction-based revenue (transaction processing fees) is calculated by multiplying the number and type of transactions by their contractual price. Transaction-based fees are 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 at the later of (a) when the revenue is recognized by the Company or (b) at the time the rebate or incentive is offered to 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 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 noncontrolling 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 tested annually for impairment in the fourth quarter, or sooner when circumstances indicate an impairment may exist, using a qualitative analysis. Goodwill and indefinite-lived intangible assets are tested for impairment at the reporting unit level. A reporting unit is an operating segment, or one level below an operating segment (the "component" level) if discrete financial information is prepared and regularly reviewed by management at the segment level. Components are aggregated as a single reporting unit if they have similar economic characteristics. The impairment evaluation utilizes a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit or indefinite-lived intangible asset is less than its carrying amount and whether it is necessary to perform a quantitative impairment test. If, after performing a qualitative assessment, it is determined that it is more likely than not that the fair value of the reporting unit or indefinite-lived intangible asset is less than its carrying amount, then it would be necessary to use the quantitative impairment test to identify potential impairment and measure the amount of an impairment loss to be recognized (if any). The quantitative impairment test is not necessary if, after performing the qualitative assessment, it is determined that it is more likely than not that the fair value of the reporting unit or indefinite-lived intangible asset exceeds its carrying amount. Impairment charges, if any, are recorded in general and administrative expenses.
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. Subject to approval by the Company's Board of Directors, 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 or are included in other current liabilities on the consolidated balance sheet. 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. In January 2014, $164 million was returned to MasterCard from the qualified cash settlement fund related to the opt out merchants and will be reclassified to cash and cash equivalents. See Note 18 (Legal and Regulatory Proceedings) for further detail.
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: 
l
Level 1-inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
l
Level 2-inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted prices for identical assets and liabilities in inactive markets and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
l
Level 3-inputs to the valuation methodology are unobservable and cannot be directly corroborated by observable market data.
Certain assets and liabilities are measured at fair value on a nonrecurring basis. The Company's assets and liabilities 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. 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. The Company has not elected to apply the fair value option to its eligible financial assets and liabilities.
Investment securities - The Company classifies investments in debt securities as held-to-maturity or available-for-sale and classifies investments in equity securities as available-for-sale or trading, if a readily available fair value can be determined. 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.
Investments in debt securities are classified as held-to-maturity when the Company has the intent and ability to hold the debt securities to maturity and are stated at amortized cost. Investments in debt securities not classified as held-to-maturity are classified as available-for-sale and are carried at fair value, with unrealized gains and losses, net of applicable taxes, recorded as a separate component of other comprehensive income on the consolidated statement of comprehensive income. Net realized gains and losses on debt securities are recognized in investment income on the consolidated statement of operations.
Investments in equity securities classified as available-for-sale are carried at fair value, with unrealized gains and losses, net of applicable taxes, recorded as a separate component of other comprehensive income on the consolidated statement of comprehensive income. Net realized gains and losses on available-for-sale 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.
Derivative financial instruments - The Company records all derivatives at fair value in other assets and other liabilities on the consolidated balance sheet. The Company's foreign exchange forward contracts are included in Level 2 of the Valuation Hierarchy as the fair value of these contracts are based on broker quotes for the same or similar instruments. Changes in the fair value of derivative instruments are reported in current-period earnings. The Company did not have any derivative contracts accounted for under hedge accounting as of December 31, 2013 and 2012.
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
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 overfunded or underfunded status of its single-employer defined benefit 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 other comprehensive income. 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 other comprehensive income or loss.
Defined contribution savings plans - The Company's contributions to defined contribution savings plans are recorded when the employee renders service to the Company. The charge is recorded in general and administrative expenses.
Advertising expense - 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 other comprehensive income (loss).
Stock split - On December 10, 2013, the Board of Directors declared a ten-for-one stock split of the Company's Class A and Class B common shares, which was effected in the form of a common stock dividend distributed on January 21, 2014. Except for the amount of authorized shares and par value, all references to share and per share amounts in the consolidated financial statements and accompanying notes to the consolidated financial statements have been retroactively restated to reflect the stock split.
Treasury stock - The Company records the repurchase of shares of its common stock at cost on the settlement 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 using a Black-Scholes valuation model. The fair value of restricted stock units ("RSUs"), including performance stock units ("PSUs") granted prior to 2013, 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 was used to determine the grant date fair value of PSUs granted in the first quarter of 2013. 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. For the year ended December 31, 2011, the dilutive effect of stock options is calculated including the effects of certain equity instruments granted in share-based payment transactions under the two-class method. Unvested share-based payment awards which receive non-forfeitable dividend rights, or dividend equivalents, are considered participating securities and are required to be included in computing basic EPS under the two-class method. The Company declared non-forfeitable dividends on unvested restricted stock units and contingently issuable performance stock units (“Unvested Units”) which were granted prior to 2009.
Recent accounting pronouncements
Balance sheet offsetting - In January 2013, the Financial Accounting Standards Board ("FASB") issued accounting guidance clarifying the scope of its previously issued requirements to disclose gross and net amounts of eligible financial assets and financial liabilities recognized on the balance sheet. The Company adopted the revised accounting guidance effective January 1, 2013. See Note 20 (Foreign Exchange Risk Management) for additional disclosures related to the new guidance.
Comprehensive income - In February 2013, new accounting guidance was issued by the FASB that requires disclosure of amounts reclassified from accumulated other comprehensive income to net income. The Company adopted the revised accounting guidance effective January 1, 2013. See Note 14 (Accumulated Other Comprehensive Income) for additional disclosures related to the new guidance.
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 Company will adopt the revised accounting guidance effective January 1, 2014 and does not anticipate that this new accounting guidance will have a material impact 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 will adopt the revised accounting guidance effective January 1, 2014 and does not anticipate that this new guidance will have a material impact on its consolidated financial statements.
Acquisitions
Acquisitions
Acquisitions
The Company made no acquisitions in 2013. In 2012, the Company completed three acquisitions for an aggregate cost of $70 million. The excess of purchase consideration over net assets acquired was recorded as goodwill. The goodwill is not expected to be deductible for local tax purposes.
On December 9, 2010, MasterCard entered into an agreement to acquire the prepaid card program management operations of Travelex Holdings Ltd., since renamed Access Prepaid Worldwide (“Access”). Pursuant to the terms of the acquisition agreement, the Company acquired Access on April 15, 2011, at a purchase price of 295 million U.K. pound sterling, or $481 million, including adjustments for working capital, and contingent consideration (an “earn-out”) of up to an additional 35 million U.K. pound sterling, or approximately $57 million, based on full year 2011 revenue. The Company recognized a current liability related to the earn-out of 6 million U.K. pound sterling, or approximately $9 million. The fair value of the earn-out arrangement was estimated by applying a probability-weighted income approach. The full year revenue for 2011 did not meet the requirements for payment of the earn-out and therefore the liability was eliminated and the Company recorded other income of $9 million in 2011.
In connection with the acquisition of Access, the Company recognized $6 million of acquisition-related expenses, which consisted primarily of professional fees related to completing the transaction. These amounts were included in general and administrative expenses. The consolidated financial statements include the operating results of Access from the date of the acquisition. Pro forma information related to 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
Earnings Per Share
The components of basic and diluted EPS for common shares for each of the years ended December 31 were as follows:
 
2013
 
2012
 
2011
 
(in millions, except per share data)
Numerator:
 
 
 
 
 
Net income
$
3,116

 
$
2,759

 
$
1,906

Less: Net income allocated to Unvested Units
—

 
—

 
—

Net income allocated to common shares
$
3,116

 
$
2,759

 
$
1,906

Denominator1:
 
 
 
 
 
Basic EPS weighted-average shares outstanding
1,211

 
1,253

 
1,279

Dilutive stock options and stock units
4

 
4

 
4

Diluted EPS weighted-average shares outstanding2
1,215

 
1,258

 
1,284

Earnings per Share
 
 
 
 
 
Basic
$
2.57

 
$
2.20

 
$
1.49

Diluted
$
2.56

 
$
2.19

 
$
1.48


* Table may not sum due to rounding.
1 The number of shares and per share amounts have been retroactively restated to reflect the ten-for-one stock split of the Company's Class A and Class B common shares, which was effected in the form of a common stock dividend distributed on January 21, 2014.
2 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
Supplemental Cash Flows
The following table includes supplemental cash flow disclosures for each of the years ended December 31:
 
2013
 
2012
 
2011
 
(in millions)
Cash paid for income taxes, net of refunds
$
1,215

 
$
1,046

 
$
908

Cash paid for interest
2

 
—

 
—

Cash paid for legal settlements1
—

 
65

 
303

Non-cash investing and financing activities:
 
 
 
 
 
Dividends declared but not yet paid
131

 
37

 
19

Assets recorded pursuant to capital lease
7

 
11

 
14

Fair value of assets acquired, net of cash acquired 
—

 
73

 
549

Fair value of liabilities assumed related to acquisitions
—

 
3

 
89

 
 
 
 
 
 
1 Amounts in 2012 primarily represent payments under settlement agreements related to the U.S. merchant litigations. Amounts paid into escrow related to the U.S. merchant class litigation is not included in this table. Amounts in 2011 primarily represent payments under a settlement agreement relating to the U.S. federal antitrust litigation between MasterCard and American Express Company. Under the terms of the American Express Settlement, MasterCard made 12 quarterly payments of $150 million beginning in the third quarter of 2008. The Company made its final quarterly payment of $150 million in June 2011.
Fair Value
Fair Value
Fair Value and Investment Securities
Financial Instruments – Recurring Measurements
In accordance with accounting requirements for financial instruments, the Company is disclosing the estimated fair values as of December 31, 2013 and 2012 of the financial instruments that are within the scope of the accounting guidance, as well as the methods and significant assumptions used to estimate the fair value of those financial instruments. Furthermore, the Company classifies its fair value measurements in the Valuation Hierarchy. No transfers were made among the three levels in the Valuation Hierarchy during the years ended December 31, 2013 and 2012.
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, 2013
 
Quoted Prices
in Active
Markets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 
Fair
Value
 
(in millions)
Municipal securities1
$
—

 
$
267

 
$
—

 
$
267

U.S. Government and Agency securities2
—

 
560

 
—

 
560

Taxable short-term bond funds
—

 
—

 
—

 
—

Corporate securities
—

 
1,426

 
—

 
1,426

Asset-backed securities
—

 
364

 
—

 
364

Auction rate securities
—

 
—

 
11

 
11

Other
—

 
79

 
—

 
79

Total
$
—

 
$
2,696

 
$
11

 
$
2,707

 
 
 
 
 
 
 
 
 
December 31, 2012
 
Quoted Prices
in Active
Markets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 
Fair
Value
 
(in millions)
Municipal securities1
$
—

 
$
531

 
$
—

 
$
531

U.S. Government and Agency securities2
—

 
582

 
—

 
582

Taxable short-term bond funds
210

 
—

 
—

 
210

Corporate securities
—

 
1,246

 
—

 
1,246

Asset-backed securities
—

 
316

 
—

 
316

Auction rate securities
—

 
—

 
32

 
32

Other
—

 
63

 
—

 
63

Total
$
210

 
$
2,738

 
$
32

 
$
2,980

1 Available-for-sale municipal securities are carried at fair value and are included in the above tables. However, a held-to-maturity municipal bond was carried at amortized cost and excluded from the table at December 31, 2012.
2 Excludes amounts held in escrow related to the U.S. merchant class litigation settlement of $723 million and $726 million at December 31, 2013 and 2012, respectively, which would be included in Levels 1 and 2 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 taxable short-term bond funds are based on quoted prices for identical investments in active markets and are therefore included in Level 1 of the Valuation Hierarchy.
The fair value of the Company's available-for-sale municipal securities, U.S. Government and 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 auction rate securities (“ARS”) investments have been classified within Level 3 of the Valuation Hierarchy as their valuation requires substantial judgment and estimation of factors that are not currently observable in the market due to the lack of trading in the securities. When a determination is made to classify a financial instrument within Level 3, the determination is based upon the significance of the unobservable parameters to the overall fair value measurement. However, the fair value determination for Level 3 financial instruments may include observable components. This valuation may be revised in future periods as market conditions evolve. The Company has considered the lack of liquidity in the ARS market and the lack of comparable, orderly transactions when estimating the fair value of its ARS portfolio. Historically, the Company used the income approach, which included a discounted cash flow analysis of the estimated future cash flows adjusted by a risk premium for the ARS portfolio, to estimate the fair value of its ARS portfolio. The Company estimated the fair value of its ARS portfolio to be a 10% discount to the par value as of December 31, 2013 and 2012. The Company did not realize any material losses on its ARS portfolio during the year ended December 31, 2013.
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, accounts receivable, settlement due from customers, restricted security deposits held for customers, prepaid expenses, 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.
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, 2013 and 2012, 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 fair value 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).
Refunding Revenue Bonds
The Company holds refunding revenue bonds with the same payment terms, and which contain the right of set-off with a capital lease obligation related to the Company's global technology and operations center located in O'Fallon, Missouri. The Company has netted the refunding revenue bonds and the corresponding capital lease obligation in the consolidated balance sheet and estimates that the carrying value approximates the fair value for these bonds. See Note 7 (Property, Plant and Equipment) for further details.
Non-Financial Instruments
Certain assets and liabilities are measured at fair value on a nonrecurring basis for purposes of initial recognition and impairment testing. The Company's non-financial assets and liabilities 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 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 a weighted income and market approach for estimating the fair value of its reporting unit, when necessary. As the assumptions employed to measure these assets 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.
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, 2013 and 2012 were as follows:
 
December 31, 2013
 
Amortized
Cost
 
Gross
Unrealized
Gain
 
Gross
Unrealized
Loss
 
Fair
Value
 
(in millions)
Municipal securities
$
267

 
$
—

 
$
—

 
$
267

U.S. Government and Agency securities
560

 
—

 
—

 
560

Taxable short-term bond funds
—

 
—

 
—

 
—

Corporate securities
1,425

 
2

 
(1
)
 
1,426

Asset-backed securities
364

 
—

 
—

 
364

Auction rate securities1
12

 
—

 
(1
)
 
11

Other
79

 
—

 
—

 
79

Total
$
2,707

 
$
2

 
$
(2
)
 
$
2,707

 
 
 
 
 
 
 
 
 
December 31, 2012
 
Amortized
Cost
 
Gross
Unrealized
Gain
 
Gross
Unrealized
Loss
 
Fair
Value
 
(in millions)
Municipal securities
$
522

 
$
9

 
$
—

 
$
531

U.S. Government and Agency securities
582

 
—

 
—

 
582

Taxable short-term bond funds
209

 
1

 
—

 
210

Corporate securities
1,245

 
2

 
(1
)
 
1,246

Asset-backed securities
316

 
—

 
—

 
316

Auction rate securities1
35

 
—

 
(3
)
 
32

Other
66

 
—

 
—

 
66

Total
$
2,975

 
$
12

 
$
(4
)
 
$
2,983

1 The unrealized losses related to ARS, which have been in an unrealized loss position longer than 12 months, but have not been deemed other-than-temporarily impaired. The ARS are included in other assets on the consolidated balance sheet. See Note 6 (Prepaid Expenses and Other Assets).
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 treasury bills and bonds and U.S. government sponsored agency bonds and discount notes. Taxable short-term bond funds were primarily invested in U.S. government and sponsored agency securities, corporate bonds and mortgage-backed securities. 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. The ARS are exempt from U.S. federal income tax and are fully collateralized by student loans with guarantees (ranging from approximately 95% to 98% of principal and interest) by the U.S. government via the Department of Education.
Beginning on February 11, 2008, the auction mechanism that normally provided liquidity to the ARS investments began to fail. Since mid-February 2008, all investment positions in the Company’s ARS investment portfolio have experienced failed auctions. The securities for which auctions have failed have continued to pay interest in accordance with the contractual terms of such instruments and will continue to accrue interest and be auctioned at each respective reset date until the auction succeeds, the issuer redeems the securities or they mature. As of December 31, 2013, the ARS market remained illiquid, but issuer call and redemption activity in the ARS student loan sector has occurred periodically since the auctions began to fail. During 2013, 2012 and 2011, the Company did not sell any ARS in the auction market, but there were calls at par.
The table below includes a roll-forward of the Company’s ARS investments from January 1, 2012 to December 31, 2013.
 
Significant
Unobservable
Inputs (Level 3)
 
(in millions)
Fair value, December 31, 2011
$
70

Calls, at par
(42
)
Recovery of unrealized losses due to issuer calls
4

Fair value, December 31, 2012
32

Calls, at par
(23
)
Recovery of unrealized losses due to issuer calls
2

Fair value, December 31, 2013
$
11


The Company evaluated the estimated impairment of its ARS portfolio to determine if it was other-than-temporary. The Company considered several factors including, but not limited to, the following: (1) the reasons for the decline in value (changes in interest rates, credit event, or market fluctuations); (2) assessments as to whether it is more likely than not that it will hold and not be required to sell the investments for a sufficient period of time to allow for recovery of the cost basis; (3) whether the decline is substantial; and (4) the historical and anticipated duration of the events causing the decline in value. The evaluation for other-than-temporary impairments is a quantitative and qualitative process, which is subject to various risks and uncertainties. The risks and uncertainties include changes in credit quality, market liquidity, timing and amounts of issuer calls, and interest rates. The securities are fully collateralized by student loans with guarantees (ranging from approximately 95% to 98% of principal and interest) by the U.S. government via the Department of Education. As of December 31, 2013, the Company believed that the unrealized losses on the ARS were not related to credit quality but rather due to the lack of liquidity in the market. The Company believes that it is more likely than not that the Company will hold and not be required to sell its ARS investments until recovery of their cost basis which may be at maturity or earlier if called. Therefore, the Company does not consider the unrealized losses to be other-than-temporary. The Company estimated a 10% discount to the par value of the ARS portfolio at December 31, 2013 and 2012. The pre-tax impairment included in accumulated other comprehensive income related to the Company’s ARS was $1 million and $3 million as of December 31, 2013 and 2012, respectively. A hypothetical increase of 100 basis points in the discount rate used in the discounted cash flow analysis would have increased the impairment by less than $1 million at December 31, 2013 and $2 million at December 31, 2012.
Investment Maturities:
The maturity distribution based on the contractual terms of the Company’s investment securities at December 31, 2013 was as follows:
 
Available-For-Sale
 
Amortized
Cost
 
Fair Value
 
(in millions)
Due within 1 year
$
1,562

 
$
1,562

Due after 1 year through 5 years
1,121

 
1,122

Due after 5 years through 10 years
11

 
11

Due after 10 years
13

 
12

Total
$
2,707

 
$
2,707


Securities due after ten years are primarily ARS.
Investment Income:
Components of net investment income for each of the years ended December 31 were as follows:
 
2013
 
2012
 
2011
 
(in millions)
Interest income
$
33

 
$
36

 
$
44

Investment securities available-for-sale:
 
 
 
 
 
Gross realized gains
7

 
2

 
10

Gross realized losses
(2
)
 
(1
)
 
(2
)
Total investment income, net
$
38

 
$
37

 
$
52

 
 
 
 
 
 

Interest income primarily consists of interest income generated from cash, cash equivalents, investment securities available-for-sale and investment securities held-to-maturity.
Prepaid Expenses and Other Assets
Prepaid Expenses and Other Assets
Prepaid Expenses and Other Assets
Prepaid expenses and other current assets consisted of the following at December 31:
 
2013
 
2012
 
(in millions)
Customer and merchant incentives
$
239

 
$
222

Investment securities held-to-maturity
—

 
36

Prepaid income taxes
36

 
77

Income taxes receivable
4

 
163

Other
192

 
183

Total prepaid expenses and other current assets
$
471

 
$
681


Other assets consisted of the following at December 31:
 
2013
 
2012
 
(in millions)
Customer and merchant incentives
$
531

 
$
404

Nonmarketable equity investments
229

 
249

Auction rate securities available-for-sale, at fair value
11

 
32

Income taxes receivable
78

 
72

Other
53

 
52

Total other assets
$
902

 
$
809


Certain customer and merchant business agreements provide incentives upon entering into the agreement. Customer and merchant incentives represent payments made or amounts to be paid to customers and merchants under business agreements. Amounts to be paid for these incentives and the related liability were included in accrued expenses and other liabilities. Once the payment is made, the liability is relieved. Costs directly related to entering into such an agreement are deferred and amortized over the life of the agreement.
Investments for which the equity method or historical cost method of accounting is used are recorded in other assets on the consolidated balance sheet. 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 nonmarketable equity investments under the historical cost method of accounting when those investments do not qualify for the equity method of accounting.
Property, Plant and Equipment
Property, Plant and Equipment
Property, Plant and Equipment
Property, plant and equipment consisted of the following at December 31:
 
2013
 
2012
 
(in millions)
Building and land
$
451

 
$
419

Equipment
344

 
314

Furniture and fixtures
48

 
54

Leasehold improvements
77

 
71

Property, plant and equipment
920

 
858

Less accumulated depreciation and amortization
(394
)
 
(386
)
Property, plant and equipment, net
$
526

 
$
472


Effective March 1, 2009, MasterCard executed a ten-year lease between MasterCard, as tenant, and the Missouri Development Finance Board (“MDFB”), as landlord, for MasterCard's global technology and operations center located in O'Fallon, Missouri. This lease includes a bargain purchase option and is thus classified as a capital lease. The building and land assets and capital lease obligation were recorded at $154 million which represented the lesser of the present value of the minimum lease payments and the fair value of the building and land assets at the inception of the lease. The Company received refunding revenue bonds issued by MDFB in the same amount, $154 million, with the same payment terms as the capital lease and which contain the legal right of offset with the capital lease. The Company has netted its investment in the MDFB refunding revenue bonds and the corresponding capital lease obligation in the consolidated balance sheet. The related leasehold improvements will continue to be amortized over the economic life of the improvements.
As of December 31, 2013 and 2012, capital leases, excluding the capital lease noted above, of $30 million and $23 million, respectively, were included in equipment. Accumulated amortization of these capital leases was $21 million and $10 million as of December 31, 2013 and 2012, respectively.
Depreciation and amortization expense for the above property, plant and equipment was $92 million, $84 million and $77 million for the years ended December 31, 2013, 2012 and 2011, respectively.
Goodwill
Goodwill
Goodwill
The changes in the carrying amount of goodwill for the years ended December 31, 2013 and 2012 were as follows:
 
 
2013
 
2012
 
 
(in millions)
Beginning balance
 
$
1,092

 
$
1,014

Goodwill acquired during the year
 
—

 
48

Foreign currency translation
 
30

 
30

Ending balance
 
$
1,122

 
$
1,092

 
 
 
 
 

During 2012, the Company acquired three businesses and recognized $48 million of related goodwill. The Company had no accumulated impairment losses for goodwill at December 31, 2013 or 2012. Based on annual impairment testing, the Company's reporting unit is not at significant risk of goodwill impairment.
Other Intangible Assets
Other Intangible Assets
Other Intangible Assets
The following table sets forth net intangible assets, other than goodwill, at December 31:
 
 
2013
 
2012
 
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
 
(in millions)
Amortized intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
     Capitalized software
 
$
699

 
$
(404
)
 
$
295

 
$
786

 
$
(506
)
 
$
280

     Trademarks and tradenames
 
49

 
(38
)
 
11

 
48

 
(31
)
 
17

     Customer relationships
 
237

 
(84
)
 
153

 
230

 
(54
)
 
176

     Other
 
20

 
(8
)
 
12

 
11

 
(5
)
 
6

Total
 
1,005

 
(534
)
 
471

 
1,075

 
(596
)
 
479

Unamortized intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
     Customer relationships
 
201

 
—

 
201

 
193

 
—

 
193

Total
 
$
1,206

 
$
(534
)
 
$
672

 
$
1,268

 
$
(596
)
 
$
672

 
 
 
 
 
 
 
 
 
 
 
 
 

The increase in the net carrying amount of capitalized software in 2013 was primarily related to additions in internally developed software and purchased software. The increase in the net carrying amount of capitalized software in 2012 was primarily related to additions in internally developed software, purchased software and acquisitions. 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 and impairment expense on the assets above amounted to $166 million, $149 million and $118 million in 2013, 2012 and 2011, respectively. The following table sets forth the estimated future amortization expense on amortizable intangible assets on the balance sheet at December 31, 2013 for the years ending December 31:
 
 
(in millions)
2014
 
$
178

2015
 
133

2016
 
74

2017
 
31

2018 and thereafter
 
55

 
 
$
471

 
 
 
Accrued Expenses and Accrued Litigation
Accrued Expenses and Accrued Litigation
Accrued Expenses and Accrued Litigation
Accrued expenses consisted of the following at December 31:
 
2013
 
2012
 
(in millions)
Customer and merchant incentives
$
1,286

 
$
1,058

Personnel costs
413

 
354

Advertising
149

 
122

Income and other taxes
95

 
94

Other
158

 
120

Total accrued expenses
$
2,101

 
$
1,748


As of December 31, 2013 and 2012, the Company's provision related to U.S. merchant litigations was $886 million and $726 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. In the fourth quarter of 2013, MasterCard recorded an incremental net pre-tax charge of $95 million related to the opt out merchants. The accrued litigation item also includes $68 million related to the timing of MasterCard's administration of the short-term reduction in default credit interchange from U.S. issuers. There is a corresponding equal amount presented in settlement due from customers. See Note 18 (Legal and Regulatory Proceedings) for further discussion of the U.S. merchant class litigation.
Pension Plans, Postretirement Plans, Savings Plan and Other Benefits
Pension Plans, Postretirement Plans, Savings Plan and Other Benefits
Pension Plans, Postretirement Plans, Savings Plans and Other Benefits
The Company maintains various pension, postretirement, savings and other postemployment benefit plans that cover substantially all employees worldwide.
U.S. employees hired before July 1, 2007 participate in a non-contributory, qualified, defined benefit pension plan (the “Qualified Plan”) with a cash balance feature. In 2010, the Company amended the Qualified Plan to phase out participant pay credit percentages in the years 2011 and 2012 and eliminate the pay credit effective January 1, 2013. Plan participants continue to earn interest credits. In 2013, the Company recorded a $2 million partial settlement charge from lump sum distribution activity in the Qualified Plan. The Company also recognized corresponding effects in accumulated other comprehensive income and deferred taxes.
The Company also has an unfunded non-qualified supplemental executive retirement plan (the “Non-qualified Plan”) that provides certain key employees with supplemental retirement benefits in excess of limits imposed on qualified plans by U.S. tax laws. The Non-qualified Plan had settlement gains in 2011 resulting from payments to participants.
Internationally-based employees of the Company participate in plans that cover various pension and postemployment benefits specific to their country of employment. These benefits are incorporated into the disclosures below as they are not a material component of the total benefit obligations, fair value of plan assets, or plan funded status. Prior period amounts have been revised to conform to this presentation. The term “Pension Plans” includes the Qualified Plan, the Non-qualified Plan and these international defined benefit pension plans.
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. The U.S. postretirement plan and the various international postemployment benefit plans are collectively referred to as the “Postretirement Plans”.
The Company uses a December 31 measurement date for its Pension Plans and its Postretirement Plans (collectively the "Plans"). The following table sets forth the Plans' funded status, key assumptions and amounts recognized in the Company's consolidated balance sheet at December 31:
 
Pension Plans
 
Postretirement Plans
 
2013
 
2012
 
2013
 
2012
 
(in millions)
Change in benefit obligation
 
 
 
 
 
 
 
Benefit obligation at beginning of year
$
268

 
$
244

 
$
93

 
$
87

Service cost
10

 
11

 
3

 
2

Interest cost
10

 
10

 
3

 
3

Plan participants' contributions
—

 
—

 
1

 
1

Actuarial (gain) loss
6

 
14

 
(16
)
 
6

Benefits paid
(13
)
 
(11
)
 
(4
)
 
(6
)
Benefit obligation at end of year
$
281

 
$
268

 
$
80

 
$
93

 
 
 
 
 
 
 
 
Change in plan assets
 
 
 
 
 
 
 
Fair value of plan assets at beginning of year
$
267

 
$
243

 
$
—

 
$
—

Actual return on plan assets
11

 
25

 
—

 
—

Employer contributions
10

 
10

 
3

 
5

Plan participants' contributions
—

 
—

 
1

 
1

Benefits paid
(13
)
 
(11
)
 
(4
)
 
(6
)
Fair value of plan assets at end of year
$
275

 
$
267

 
$
—

 
$
—

 
 
 
 
 
 
 
 
Funded status
 
 
 
 
 
 
 
Fair value of plan assets at end of year
$
275

 
$
267

 
$
—

 
$
—

Benefit obligation at end of year
281

 
268

 
80

 
93

Funded status at end of year
$
(6
)
 
$
(1
)
 
$
(80
)
 
$
(93
)
 
 
 
 
 
 
 
 
Amounts recognized on the consolidated balance sheet consist of:
 
 
 
 
 
 
 
Prepaid expenses, long term
$
—

 
$
5

 
$
—

 
$
—

Accrued expenses
(2
)
 
(3
)
 
(4
)
 
(4
)
Other liabilities, long term
(4
)
 
(3
)
 
(76
)
 
(89
)
 
$
(6
)
 
$
(1
)
 
$
(80
)
 
$
(93
)
 
 
 
 
 
 
 
 
Amounts recognized in accumulated other comprehensive income consist of:
 
 
 
 
 
 
 
Net actuarial loss (gain)
$
52

 
$
50

 
$
(8
)
 
$
7

Prior service credit
—

 
—

 
—

 
—

 
$
52

 
$
50

 
$
(8
)
 
$
7

 
 
 
 
 
 
 
 
Weighted-average assumptions used to determine end of year benefit obligations
 
 
 
 
 
 
 
Discount rate
4.46
%
 
3.50
%
 
4.75
%
 
3.75
%
Rate of compensation increase
 
 
 
 
 
 
 
Qualified Plan
            *
 
            *
 
            *
 
            *
Non-Qualified Plan
5.00
%
 
5.00
%
 
            *
 
            *
International pension plans
2.82
%
 
            *
 
            *
 
            *
Postretirement Plans
            *
 
            *
 
3.00
%
 
5.37
%

* Not Applicable
The accumulated benefit obligation of the Pension Plans was $280 million and $267 million at December 31, 2013 and 2012, respectively.
The benefit obligations and plan assets of the Pension Plans that had benefit obligations in excess of plan assets were as follows at December 31, 2013 and 2012:
 
 
2013
 
2012
 
 
(in millions)
Projected benefit obligation
 
$
281

 
$
6

Accumulated benefit obligation
 
280

 
5

Fair value of plan assets
 
275

 
—


The assumed health care cost trend rates at December 31 for the Postretirement Plans were as follows:
 
2013
 
2012
Health care cost trend rate assumed for next year
7.50
%
 
8.00
%
Rate to which the cost trend rate is expected to decline (the ultimate trend rate)
5.00
%
 
5.00
%
Year that the rate reaches the ultimate trend rate
2019

 
2019


Components of net periodic benefit cost recorded in general and administrative expenses were as follows for the Plans for each of the years ended December 31:
 
 
Pension Plans
 
Postretirement Plans
 
 
2013
 
2012
 
2011
 
2013
 
2012
 
2011
 
 
(in millions)
Service cost
 
$
10

 
$
11

 
$
14

 
$
3

 
$
2

 
$
3

Interest cost
 
10

 
10

 
12

 
3

 
3

 
3

Expected return on plan assets
 
(13
)
 
(14
)
 
(19
)
 
—

 
—

 
—

Settlement (gain) loss
 
2

 
—

 
(1
)
 
—

 
—

 
—

Amortization:
 
 
 
 
 
 
 
 
 
 
 
 
     Actuarial loss (gain)
 
3

 
4

 
2

 
—

 
—

 
(1
)
     Prior service credit
 
—

 
(2
)
 
(2
)
 
—

 
—

 
—

Net periodic benefit cost
 
$
12

 
$
9

 
$
6

 
$
6

 
$
5

 
$
5


Other changes in plan assets and benefit obligations recognized in other comprehensive income for the years ended December 31 were as follows:
 
 
Pension Plans
 
Postretirement Plans
 
 
2013
 
2012
 
2011
 
2013
 
2012
 
2011
 
 
(in millions)
Settlement gain (loss)
 
$
(2
)
 
$
—

 
$
1

 
$
—

 
$
—

 
$
—

Current year actuarial loss (gain)
 
7

 
4

 
15

 
(15
)
 
6

 
15

Amortization of actuarial (loss) gain
 
(3
)
 
(4
)
 
(2
)
 
—

 
—

 
1

Amortization of prior service credit
 
—

 
2

 
2

 
—

 
—

 
—

Total recognized in other comprehensive income (loss)
 
$
2

 
$
2

 
$
16

 
$
(15
)
 
$
6

 
$
16

Total recognized in net periodic benefit cost and other comprehensive income
 
$
14

 
$
11

 
$
22

 
$
(9
)
 
$
11

 
$
21


The estimated amounts that are expected to be amortized from accumulated other comprehensive income into net periodic benefit cost in 2014 are as follows:
 
 
Pension Plans
 
Postretirement Plans
 
 
(in millions)
Actuarial loss
 
$
4

 
$
—


Weighted-average assumptions used to determine net periodic benefit cost were as follows for the years ended December 31:
 
 
Pension Plans
 
Postretirement Plans
 
 
2013
 
2012
 
2011
 
2013
 
2012
 
2011
Discount rate
 
3.30
%
 
4.25
%
 
5.00
%
 
3.75
%
 
4.25
%
 
5.25
%
Expected return on plan assets
 
3.29
%
 
6.00
%
 
8.00
%
 
     *
 
     *
 
     *
Rate of compensation increase:
 
 
 
 
 
 
 
 
 
 
 
 
Qualified Plan
 
     *
 
5.37
%
 
5.37
%
 
     *
 
     *
 
     *
Non-Qualified Plan
 
5.00
%
 
5.00
%
 
5.00
%
 
     *
 
     *
 
     *
International pension plans
 
2.24
%
 
     *
 
     *
 
     *
 
     *
 
     *
Postretirement Plans
 
     *
 
     *
 
     *
 
5.37
%
 
5.37
%
 
5.37
%
* Not Applicable
The assumed health care cost trend rates have a significant effect on the amounts reported for the Postretirement Plans. A one-percentage point change in assumed health care cost trend rates for 2013 would have the following effects:
 
1% increase
 
1% decrease
 
(in millions)
Effect on postretirement obligation
$
7

 
$
(6
)

The effect on total service and interest cost components would be less than $1 million.
The Company's discount rate assumptions are based on a yield curve derived from high quality corporate bonds, which is matched to the expected cash flows to each of the respective Plans.
For the Qualified Plan, the Company considered the following to determine the assumption for the expected weighted-average return on plan assets: (1) historical return data for both the equity and fixed income markets over the past ten-, twenty- and thirty-year periods; (2) projected returns for both equity and fixed income; and (3) the weighting of assets within our portfolio at December 31, 2013 by class.
Plan assets are managed with a long-term perspective intended to ensure that there is an adequate level of assets to support benefit payments to participants over the life of the Qualified Plan. Plan assets are managed within asset allocation ranges, towards targets of 80% fixed income, 12% large/medium cap U.S. equity, 4% small cap U.S. equity, and 4% non-U.S. equity. Considering the asset allocation along with intent to maintain a majority of Plan assets in fixed income securities, the Company reduced the 2013 expected return on plan assets assumption from 6% to 5%.
The Valuation Hierarchy of the Qualified Plan's assets is determined using a consistent application of the categorization measurements for the Company's financial instruments. See Note 1 (Summary of Significant Accounting Policies).
Mutual funds (including small cap U.S. equity securities and non-U.S. equity securities) are public investment vehicles valued at quoted market prices, which represent the net asset value of the shares held by the Qualified Plan and are therefore included in Level 1 of the Valuation Hierarchy. Commingled funds (including large/medium cap U.S. equity securities and fixed income securities) are valued at unit values provided by investment managers, which are based on the fair value of the underlying investments utilizing public information, independent external valuation from third-party services or third-party advisors, and are therefore included in Level 2 of the Valuation Hierarchy.
The following tables set forth by level, within the Valuation Hierarchy, the Pension Plans' assets at fair value as of December 31, 2013 and 2012:
 
December 31, 2013
 
Quoted Prices in Active Markets (Level 1)
 
Significant Other Observable Inputs (Level 2)
 
Significant Unobservable Inputs (Level 3)
 
Fair Value
 
(in millions)
Mutual funds:
 
 
 
 
 
 
 
Money market
$
115

 
$
—

 
$
—

 
$
115

Domestic small cap equity
10

 
—

 
—

 
10

International equity
9

 
—

 
—

 
9

Common and collective funds:
 
 
 
 
 
 
 
Domestic large cap equity
—

 
31

 
—

 
31

Domestic fixed income
—

 
101

 
—

 
101

Insurance contracts
—

 
9

 
—

 
9

Total
$
134

 
$
141

 
$
—

 
$
275

 
 
 
 
 
 
 
 
 
December 31, 2012
 
Quoted Prices in Active Markets (Level 1)
 
Significant Other Observable Inputs (Level 2)
 
Significant Unobservable Inputs (Level 3)
 
Fair Value
 
(in millions)
Mutual funds:
 
 
 
 
 
 
 
Money market
$
2

 
$
—

 
$
—

 
$
2

Domestic small cap equity
12

 
—

 
—

 
12

International equity
12

 
—

 
—

 
12

Common and collective funds:
 
 
 
 
 
 
 
Domestic large cap equity
—

 
32

 
—

 
32

Domestic fixed income
—

 
209

 
—

 
209

Total
$
26

 
$
241

 
$
—

 
$
267


Pursuant to the requirements of the Pension Protection Act of 2006, the Company did not have a mandatory contribution to the Qualified Plan in 2013, 2012 or 2011. However, the Company did make voluntary contributions of $10 million and $20 million to the Qualified Plan in 2012 and 2011, respectively. The Company is not required to contribute to the Qualified Plan in 2014 and does not intend to make a contribution in 2014. The international defined benefit pension plans are subject to statutory regulations for funding and the Company estimates it will contribute approximately $10 million to these plans in 2014. The Company does not make any contributions to the Non-qualified Plan or to its Postretirement Plans, other than funding benefit payments.
The following table summarizes expected benefit payments through 2023 for the Pension Plans and the Postretirement Plans, including those payments expected to be paid from the Company's general assets. Since the majority of the benefit payments for the Pension Plans are made in the form of lump-sum distributions, actual benefit payments may differ from expected benefit payments.
 
 
 
 
Postretirement Plans
 
 
Pension Plans
 
Benefit Payments
 
Expected Subsidy Receipts
 
Net Benefit Payments
 
 
(in millions)
2014
 
$
24

 
$
4

 
$
—

 
$
4

2015
 
22

 
4

 
—

 
4

2016
 
19

 
4

 
—

 
4

2017
 
20

 
4

 
—

 
4

2018
 
22

 
5

 
—

 
5

2019 - 2023
 
92

 
25

 
1

 
24


Savings Plans
Substantially all of the Company's U.S. employees are eligible to participate in a defined contribution savings plan (the “Savings Plan”) sponsored by the Company. The Savings Plan allows employees to contribute a portion of their base compensation on a pre-tax and after-tax basis in accordance with specified guidelines. The Company matches a percentage of employees' contributions up to certain limits. In addition, the Company has several defined contribution plans outside of the United States. The Company's contribution expense related to all of its defined contribution plans was $51 million, $41 million and $35 million for 2013, 2012 and 2011, respectively.
Severance Plans
The Company provides limited postemployment benefits to eligible former employees, primarily severance under formal severance plans. The Company accounts for severance expense by accruing the expected cost of the severance benefits expected to be provided after employment over their relevant service periods. The Company updates the assumptions in determining the severance accrual by evaluating the actual severance activity and long-term trends underlying the assumptions. Total severance expense of $24 million, $29 million and $23 million in 2013, 2012 and 2011, respectively, was included in general and administrative expenses in the accompanying consolidated statement of operations.
Debt
Debt
Debt
On November 16, 2013, the Company extended its committed unsecured revolving credit facility, dated as of November 16, 2012 (the “Credit Facility”) for an additional year.  The expiration date of the Credit Facility is November 15, 2018.  The available funding under the Credit Facility will remain at $3 billion through November 16, 2017 and then decrease to $2.95 billion during the final year of the Credit Facility agreement.  Other terms and conditions of the Credit Facility remain unchanged.  The option to request that each lender under the Credit Facility extend its commitment was provided pursuant to the terms of the Credit Facility agreement. Borrowings under the Credit Facility are available to provide liquidity for general corporate purposes, including providing liquidity in the event of one or more settlement failures by the Company's customers. In addition, for business continuity planning and related purposes, the Company may borrow and repay amounts under the Credit Facility from time to time. The facility fee and borrowing cost under the Credit Facility are contingent upon the Company's credit rating. At December 31, 2013, 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. MasterCard had no borrowings under the Credit Facility at December 31, 2013 and 2012.
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. MasterCard was in compliance in all material respects with the covenants of the Credit Facility at December 31, 2013 and 2012. The majority of Credit Facility lenders are customers or affiliates of customers of MasterCard.
On August 2, 2012, 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 $35 million in debt outside the United States that is included in other current liabilities on the consolidated balance sheet at December 31, 2013.
Stockholders' Equity
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
Dividend rights
B
 
$0.0001
 
1,200

 
Non-voting
Dividend rights
Preferred
 
$0.0001
 
—

 
No shares issued or outstanding at December 31, 2013 and 2012, 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:
 
 
2013
 
2012
 
 
Equity Ownership
 
General Voting Power
 
Equity Ownership
 
General Voting Power
Public Investors (Class A stockholders)
 
86.1
%
 
89.5
%
 
85.9
%
 
89.4
%
Principal or Affiliate Customers (Class B stockholders)
 
3.8
%
 
—
%
 
3.9
%
 
—
%
The MasterCard Foundation (Class A stockholders)
 
10.1
%
 
10.5
%
 
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 our Class B common stock are defined in our amended and restated certificate of incorporation (generally our 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 15 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"). This program became effective in June 2012 at the completion of the Company’s previously announced $2 billion Class A share repurchase program. (This $2 billion repurchase program consisted of $1 billion authorized in September 2010 and $1 billion authorized in April 2011.) 
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").  This program became effective at the completion of the Company's June 2012 Share Repurchase Program, which occurred 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").  During January 2014, the Company exhausted its purchases under the February 2013 Share Repurchase Program and began purchasing shares under the December 2013 Share Repurchase Program.  As of January 24, 2014, the cumulative repurchases by the Company under both the February 2013 Share Repurchase Program and December 2013 Share Repurchase Program in 2014 totaled approximately 4.2 million shares of Class A common stock for an aggregate cost of approximately $351 million, at an average price of $83.00 per share of Class A common stock.  As of January 24, 2014, the Company had approximately $3.3 billion remaining under the December 2013 Share Repurchase Program.
The following table summarizes the Company's share repurchase authorizations of its Class A common stock through December 31, 2013, as well as historical purchases:
 
 
Authorization Dates
 
 
December 2013
 
February 2013
 
June 2012
 
April 20111
 
Total
 
 
(in millions, except average price data)
Board authorization
 
$
3,500

 
$
2,000

 
$
1,500

 
$
2,000

 
$
9,000

Dollar-value of shares repurchased in 2011
 
**

 
**

 
**

 
$
1,148

 
$
1,148

Remaining authorization at December 31, 2011
 
**

 
**

 
**

 
$
852

 
$
852

Dollar-value of shares repurchased in 2012
 
**

 
**

 
$
896

 
$
852

 
$
1,748

Remaining authorization at December 31, 2012
 
**

 
**

 
$
604

 
$
—

 
$
604

Dollar-value of shares repurchased in 2013
 
$
—

 
$
1,839

 
$
604

 
$
—

 
$
2,443

Remaining authorization at December 31, 2013
 
$
3,500

 
$
161

 
$
—

 
$
—

 
$
3,661

Shares repurchased in 2011
 
**

 
**

 
**

 
44.3

 
44.3

Average price paid per share in 2011
 
**

 
**

 
**

 
$
25.89

 
$
25.89

Shares repurchased in 2012
 
**

 
**

 
19.5

 
21.1

 
40.6

Average price paid per share in 2012
 
**

 
**

 
$
46.02

 
$
40.35

 
$
43.07

Shares repurchased in 2013
 
—

 
29.2

 
11.7

 
—

 
40.9

Average price paid per share in 2013
 
$
—

 
$
63.01

 
$
51.72

 
$
—

 
$
59.78

Cumulative shares repurchased through December 31, 2013
 
—

 
29.2

 
31.1

 
65.4

 
125.7

Cumulative average price paid per share
 
$
—

 
$
63.01

 
$
48.16

 
$
30.56

 
$
42.45

** Not applicable
1 The initial authorization in September 2010 for $1 billion was amended in April 2011 to increase the authorization to $2 billion.
Accumulated Other Comprehensive Income (Loss)
Accumulated Other Comprehensive Income (Loss)
Accumulated Other Comprehensive Income (Loss)
The changes in the balances of each component of accumulated other comprehensive income (loss) for the years ended December 31, 2013 and 2012 were as follows:
 
 
Foreign Currency Translation Adjustments
 
Defined Benefit Pension and Other Postretirement Plans, Net of Tax
 
Investment Securities Available-for-Sale, Net of Tax
 
Accumulated Other Comprehensive Income (Loss)
 
 
(in millions)
Balance at December 31, 2011
 
$
30

 
$
(32
)
 
$
—

 
$
(2
)
Current period other comprehensive income (loss) *
 
63

 
(5
)
 
5

 
63

Balance at December 31, 2012
 
93

 
(37
)
 
5

 
61

Current period other comprehensive income (loss) *
 
113

 
8

 
(4
)
 
117

Balance at December 31, 2013
 
$
206

 
$
(29
)
 
$
1

 
$
178

 
 
 
 
 
 
 
 
 
* During the years ended December 31, 2013 and 2012, $6 million and $13 million of deferred costs related to the Company's Pension Plans and Postretirement Plans were reclassified from accumulated other comprehensive income to general and administrative expense. In addition, $5 million and $1 million of net gains on available-for-sale investment securities were recognized in investment income during the years ended December 31, 2013 and 2012, respectively. Tax amounts related to these items are insignificant.
Share-Based Payment and Other Benefits
Share-Based Payment and Other Benefits
Share-Based Payment and Other Benefits
In May 2006, the Company implemented the MasterCard Incorporated 2006 Long-Term Incentive Plan, which was amended and restated as of October 13, 2008 (the “LTIP”). The LTIP is a shareholder-approved omnibus plan that permits the grant of various types of equity awards to employees.
The Company has granted non-qualified stock options (“Options”), restricted stock units (“RSUs”) and performance stock units (“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 vest after three to four 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:
 
 
2013
 
2012
 
2011
Risk-free rate of return
 
0.8
%
 
1.2
%
 
2.6
%
Expected term (in years)
 
5.00

 
6.25

 
6.25

Expected volatility
 
27.1
%
 
35.2
%
 
33.7
%
Expected dividend yield
 
0.5
%
 
0.3
%
 
0.2
%
Weighted-average fair value per option granted
 
$
12.33

 
$
14.85

 
$
8.91


The risk-free rate of return was based on the U.S. Treasury yield curve in effect on the date of grant. In 2013, the expected term and the expected volatility were based on historical MasterCard information. In 2012 and 2011, the Company utilized the simplified method for calculating the expected term of the option based on the vesting terms and the contractual life of the option. The expected volatility in 2012 and 2011 was based on the average of the implied volatility of MasterCard and a blend of the historical volatility of MasterCard and the historical volatility of a group of comparable companies. 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, 2013:
 
Options
 
Weighted-Average Exercise Price
 
Weighted-Average Remaining Contractual Term
 
Aggregate Intrinsic Value
 
(in thousands)
 
 
 
(in years)
 
(in millions)
Outstanding at January 1, 2013
6,415

 
$
25

 
 
 
 
Granted
1,832

 
$
52

 
 
 
 
Exercised
(1,242
)
 
$
21

 
 
 
 
Forfeited/expired
(45
)
 
$
46

 
 
 
 
Outstanding at December 31, 2013
6,960

 
$
33

 
7.1
 
$
355

Exercisable at December 31, 2013
2,965

 
$
21

 
5.7
 
$
185

Options vested and expected to vest at December 31, 2013
6,862

 
$
32

 
7.1
 
$
351


As of December 31, 2013, there was $24 million of total unrecognized compensation cost related to non-vested options. The cost is expected to be recognized over a weighted-average period of 2.6 years.
Restricted Stock Units
The following table summarizes the Company's RSU activity for the year ended December 31, 2013:
 
Units
 
Weighted-Average Grant-Date Fair Value
 
Weighted-Average Remaining Contractual Term
 
Aggregate Intrinsic Value
 
(in thousands)
 
 
 
(in years)
 
(in millions)
Outstanding at January 1, 2013
5,456

 
$
30

 
 
 
 
Granted
1,530

 
$
52

 
 
 
 
Converted
(1,496
)
 
$
23

 
 
 
 
Forfeited/expired
(160
)
 
$
36

 
 
 
 
Outstanding at December 31, 2013
5,330

 
$
38

 
1.1
 
$
445

RSUs vested and expected to vest at December 31, 2013
5,165

 
$
38

 
1.1
 
$
432



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, 2013, there was $83 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, 2013:
 
Units
 
Weighted-Average Issue-Date Fair Value1,
 
Weighted-Average Remaining Contractual Term
 
Aggregate Intrinsic Value
 
(in thousands)
 
 
 
(in years)
 
(in millions)
Outstanding at January 1, 2013
1,135

 
$
27

 
 
 
 
Issued
180

 
$
56

 
 
 
 
Performance
49

 
$
32

 
 
 
 
Converted
(577
)
 
$
52

 
 
 
 
Forfeited/expired
—

 
$
—

 
 
 
 
Outstanding at December 31, 2013
787

 
$
37

 
0.9
 
$
66

PSUs vested and expected to vest at December 31, 2013
771

 
$
37

 
0.9
 
$
64

1 For PSUs issued in 2012 and 2011, the grant date is not established until the performance terms are fixed and the ultimate number of shares to be issued is determined. PSUs issued and converted during 2013 show a weighted-average grant-date fair value in the above figure.
In 2013, PSUs containing performance and market conditions were 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. 
The PSUs issued in 2012 and 2011 contain performance conditions based on the Company's performance against an annually predetermined return on equity goal, with an average return on equity per year over the three-year period commencing on January 1 of the grant year. The initial fair value of each PSU is the closing price on the New York Stock Exchange of the Company's Class A common stock on the date of issuance. Given that the performance conditions are subjective and not fixed on the date of issuance, these PSUs will be remeasured at the end of each reporting period, at fair value, until the time the performance conditions are fixed and the ultimate number of shares to be issued is determined. The grant-date fair value for each PSU issued in 2011 is $82.
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, 2013, there was $11 million of total unrecognized compensation cost related to non-vested PSUs. The cost is expected to be recognized over a weighted-average period of 1.5 years.
Additional Information
On July 18, 2006, the Company's stockholders approved the MasterCard Incorporated 2006 Non-Employee Director Equity Compensation Plan, which was amended and restated as of June 5, 2012 (the “Director Plan”). The Director Plan provides for awards of Deferred Stock Units (“DSUs”) to each director of the Company who is not a current employee of the Company.
The following table includes additional share-based payment information for each of the years ended December 31:
 
2013
 
2012
 
2011
 
(in millions, except weighted-average fair value)
Share-based compensation expense: Options, RSUs and PSUs
$
121

 
$
88

 
$
79

Income tax benefit recognized for equity awards
42

 
30

 
28

Income tax benefit related to options exercised
16

 
27

 
7

Additional paid-in-capital balance attributed to equity awards
233

 
187

 
151

 
 
 
 
 
 
Options:
 
 
 
 
 
Total intrinsic value of Options exercised
48

 
77

 
22

RSUs:
 
 
 
 
 
Weighted-average grant-date fair value of awards granted
52

 
42

 
26

Total intrinsic value of RSUs converted into shares of Class A common stock
78

 
91

 
4

PSUs:
 
 
 
 
 
Weighted-average issue-date fair value of awards granted
56

 
39

 
22

Total intrinsic value of PSUs converted into shares of Class A common stock
29

 
27

 
93

DSUs:
 
 
 
 
 
General and administrative expense
2

 
1

 
1

Total intrinsic value of DSUs converted into shares of Class A common stock
2

 
2

 
2

Commitments
Commitments
Commitments
At December 31, 2013, the Company had the following future minimum payments due under non-cancelable agreements:
 
Total
 
Capital
Leases 
 
Operating
Leases
 
Sponsorship,
Licensing &
Other
 
(in millions)
2014
$
379

 
$
8

 
$
24

 
$
347

2015
163

 
1

 
25

 
137

2016
84

 
—

 
23

 
61

2017
41

 
—

 
18

 
23

2018
22

 
—

 
11

 
11

Thereafter
45

 
—

 
24

 
21

Total
$
734

 
$
9

 
$
125

 
$
600

 
 
 
 
 
 
 
 

Included in the table above are capital leases with a net present value of minimum lease payments of $9 million. In addition, at December 31, 2013, $46 million of the future minimum payments in the table above for operating leases, sponsorship, licensing and other agreements was accrued. Consolidated rental expense for the Company’s leased office space was $38 million, $36 million and $30 million for the years ended December 31, 2013, 2012 and 2011, respectively. Consolidated lease expense for automobiles, computer equipment and office equipment was $14 million, $11 million and $9 million for the years ended December 31, 2013, 2012 and 2011, respectively.
Income Taxes
Income Taxes
Income Taxes
The total income tax provision for the years ended December 31 is comprised of the following components:
 
 
2013
 
2012
 
2011
 
 
 
 
(in millions)
 
 
Current
 
 
 
 
 
 
Federal
 
$
1,010

 
$
524

 
$
619

State and local
 
33

 
24

 
30

Foreign
 
456

 
390

 
369

 
 
1,499

 
938

 
1,018

Deferred
 

 

 

Federal
 
(100
)
 
248

 
(155
)
State and local
 
(4
)
 
7

 
(6
)
Foreign
 
(11
)
 
(19
)
 
(15
)
 
 
(115
)
 
236

 
(176
)
Income tax expense
 
$
1,384

 
$
1,174

 
$
842


The domestic and foreign components of income before income taxes for the years ended December 31 are as follows:
 
 
2013
 
2012
 
2011
 
 
 
 
(in millions)
 
 
United States
 
$
2,741

 
$
2,508

 
$
1,415

Foreign
 
1,759

 
1,425

 
1,333

Income before income taxes
 
$
4,500

 
$
3,933

 
$
2,748


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, 2013 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 35.0% to pretax income for the years ended December 31, as a result of the following:
 
 
2013
 
2012
 
2011
 
 
Amount
 
Percent
 
Amount
 
Percent
 
Amount
 
Percent
 
 
(in millions, except percentages)
Income before income tax expense
 
$
4,500

 
 
 
$
3,933

 
 
 
$
2,748

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Federal statutory tax
 
1,575

 
35.0
 %
 
1,376

 
35.0
 %
 
961

 
35.0
 %
State tax effect, net of federal benefit
 
19

 
0.4
 %
 
23

 
0.6
 %
 
14

 
0.5
 %
Foreign tax effect
 
(208
)
 
(4.6
)%
 
(175
)
 
(4.4
)%
 
(133
)
 
(4.9
)%
Non-deductible expenses and other differences
 
13

 
0.3
 %
 
(21
)
 
(0.5
)%
 
34

 
1.2
 %
Tax exempt income
 
(1
)
 
—
 %
 
(2
)
 
(0.1
)%
 
(3
)
 
(0.1
)%
Foreign repatriation
 
(14
)
 
(0.3
)%
 
(27
)
 
(0.7
)%
 
(31
)
 
(1.1
)%
Income tax expense
 
$
1,384

 
30.8
 %
 
$
1,174

 
29.9
 %
 
$
842

 
30.6
 %

Effective Income Tax Rate
The effective income tax rates for the years ended December 31, 2013, 2012 and 2011 were 30.8%, 29.9% and 30.6%, respectively. The effective tax rate for 2013 was higher than the effective tax rate for 2012 primarily due to the recognition of a discrete benefit relating to additional export incentives in 2012 and a lower benefit related to foreign repatriations in 2013, which was partially offset by a more favorable mix of earnings in 2013. The effective tax rate for 2012 was lower than the effective tax rate for 2011 primarily due to discrete benefits related to additional export incentives and the conclusion of tax examinations in certain jurisdictions, as well as a larger benefit from the domestic production activities deduction in the U.S. related to the Company's authorization software.
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 2013, 2012 and 2011, the impact of the incentive grant received from the Ministry of Finance resulted in a reduction of MAPPL's income tax liability of $76 million, or $0.62 per diluted share, $64 million, or $0.51 per diluted share, and $44 million, or $0.34 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:
 
 
2013
 
2012
 
 
(in millions)
Deferred Tax Assets
 
 
 
 
Accrued liabilities
 
$
124

 
$
91

Compensation and benefits
 
201

 
173

State taxes and other credits
 
99

 
96

Net operating losses
 
39

 
34

Other items
 
46

 
31

Less: Valuation allowance
 
(28
)
 
(25
)
Total Deferred Tax Assets
 
481

 
400

 
 
 
 
 
Deferred Tax Liabilities
 
 
 
 
Prepaid expenses and other accruals
 
50

 
56

Intangible assets
 
97

 
113

Property, plant and equipment
 
116

 
122

Other items
 
37

 
42

Total Deferred Tax Liabilities
 
300

 
333

 
 
 
 
 
Net Deferred Tax Assets1
 
$
181

 
$
67

 
 
 
 
 
1 $5 million and $17 million of current deferred tax liabilities have been included in other current liabilities on the balance sheet at December 31, 2013 and 2012, respectively.
The 2013 and 2012 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:
 
 
2013
 
2012
 
2011
 
 
 
 
(in millions)
 
 
Beginning balance
 
$
257

 
$
214

 
$
165

Additions:
 
 
 
 
 
 
Current year tax positions
 
80

 
58

 
34

Prior year tax positions
 
12

 
15

 
23

Reductions:
 
 
 
 
 
 
Prior year tax positions
 
(8
)
 
(21
)
 
(2
)
Settlements with tax authorities
 
(2
)
 
(2
)
 
(1
)
Expired statute of limitations
 
(19
)
 
(7
)
 
(5
)
Ending balance
 
$
320

 
$
257

 
$
214


The entire unrecognized tax benefits of $320 million, if recognized, would reduce the effective tax rate. It is possible that the amount of unrecognized benefit with respect to the Company's uncertain tax positions may change within the next twelve months. An estimate of the range of possible changes cannot be made until the issues are further developed, the examinations close or the statutes expire. The Company is subject to tax in the United States, Belgium, Singapore and various other foreign jurisdictions, as well as state and local jurisdictions. The Company has effectively settled its U.S. federal income tax obligations through 2008. With limited exception, the Company is no longer subject to state and local or foreign examinations by tax authorities for years before 2002.
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 the years ended December 31, 2013, 2012 and 2011, the Company recorded tax-related interest income of $4 million, $1 million and $2 million, respectively, in its consolidated statement of operations. At December 31, 2013 and 2012 the Company had a net income tax-related interest payable of $17 million and $15 million, respectively, in its consolidated balance sheet. At December 31, 2013 and 2012, the amounts the Company had recognized for penalties payable in its consolidated balance sheet were not significant.
Legal and Regulatory Proceedings
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, except as discussed below, MasterCard has not established reserves for any of these proceedings.  Except as identified below, MasterCard does not believe that the outcome of any existing legal or regulatory proceedings to which it is a party will have a material adverse effect on its results of operations, financial condition or overall business.  However, with respect to the matters discussed below, an adverse judgment or other outcome or settlement with respect to any such proceedings 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 damage awards in amounts that could be significant. Any of these events could have a material adverse effect on MasterCard’s results of operations, financial condition and overall business.
Department of Justice Antitrust Litigation and Related Private Litigations
In April 2005, a complaint was filed in California state court on behalf of a putative class of consumers under California unfair competition law (Section 17200) and the Cartwright Act (the “Attridge action”). The claims in this action seek to leverage a 1998 action by the U.S. Department of Justice against MasterCard International, Visa U.S.A., Inc. and Visa International Corp. In that action, a federal district court concluded that both MasterCard’s Competitive Programs Policy and a Visa bylaw provision that prohibited financial institutions participating in the respective associations from issuing competing proprietary payment cards (such as American Express or Discover) constituted unlawful restraints of trade under the federal antitrust laws. The state court in the Attridge action granted the defendants' motion to dismiss the plaintiffs’ state antitrust claims but denied the defendants' motion to dismiss the plaintiffs' Section 17200 unfair competition claims. In September 2009, MasterCard executed a settlement agreement that is subject to court approval in the separate California consumer litigations (see “U.S. Merchant and Consumer Litigations”). The agreement includes a release that the parties believe encompasses the claims asserted in the Attridge action. In August 2010, the Court in the California consumer actions granted final approval to the settlement. The plaintiff from the Attridge action and three other objectors filed appeals of the settlement approval. In January 2012, the Appellate Court reversed the trial court's settlement approval and remanded the matter to the trial court for further proceedings. In August 2012, the parties in the California consumer actions filed a motion seeking approval of a revised settlement agreement. The trial court granted final approval of the settlement in April 2013, to which the objectors have appealed.
U.S. Merchant and Consumer Litigations
Commencing in October 1996, several class action suits were brought by a number of U.S. merchants against MasterCard International and Visa U.S.A., Inc. challenging certain aspects of the payment card industry under U.S. federal antitrust law. The plaintiffs claimed that MasterCard's “Honor All Cards” rule (and a similar Visa rule), which required merchants who accept MasterCard cards to accept for payment every validly presented MasterCard card, constituted an illegal tying arrangement in violation of Section 1 of the Sherman Act. In June 2003, MasterCard International signed a settlement agreement to settle the claims brought by the plaintiffs in this matter, which the Court approved in December 2003. Pursuant to the settlement, MasterCard agreed, among other things, to create two separate “Honor All Cards” rules in the United States - one for debit cards and one for credit cards.
In addition, individual or multiple complaints have been brought in 19 states and the District of Columbia alleging state unfair competition, consumer protection and common law claims against MasterCard International (and Visa) on behalf of putative classes of consumers. The claims in these actions largely mirror the allegations made in the U.S. merchant lawsuit and assert that merchants, faced with excessive interchange fees, have passed these overhead charges to consumers in the form of higher prices on goods and services sold. MasterCard has successfully resolved the cases in all of the jurisdictions except California, where there continues to be outstanding cases. As discussed above under “Department of Justice Antitrust Litigation and Related Private Litigations,” in September 2009, the parties to the California state court actions executed a settlement agreement subject to approval by the California state court. In August 2010, the court granted final approval of the settlement, subsequent to which MasterCard made a payment of $6 million required by the settlement agreement. As noted above in more detail, the plaintiff from the Attridge action and three other objectors have filed appeals of the trial court’s final approval in April 2013 of a revised settlement.
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 described above, 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. MasterCard moved to dismiss the complaints for failure to state a claim. In February 2013, the district court granted MasterCard's motion to dismiss the complaints. The plaintiffs’ motion seeking approval to amend their complaints was denied by the district court in December 2013. The plaintiffs have appealed the dismissal of both their complaints and their motion to amend their complaints.
Interchange Litigation and Regulatory Proceedings
Interchange fees represent a sharing of payment system costs among the financial institutions participating in a four-party payment card system such as MasterCard’s. Typically, interchange fees are paid by the acquirer to the issuer in connection with purchase transactions initiated with the payment system's cards. These fees reimburse the issuer for a portion of the costs incurred by it in providing services which are of benefit to all participants in the system, including acquirers and merchants. MasterCard or financial institutions establish default interchange fees in certain circumstances that apply when there is no other interchange fee arrangement between the issuer and the acquirer. MasterCard establishes a variety of interchange rates depending on such considerations as the location and the type of transaction, collects the interchange fee on behalf of the institutions entitled to receive it and remits the interchange fee to eligible institutions. 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. At this time, it is not possible to determine the ultimate resolution of, or estimate the liability related to, any of these interchange proceedings (except as otherwise indicated below), as the proceedings involve complex claims and/or substantial uncertainties and, in some cases, could include unascertainable damages or fines. Except as described below, no provision for losses has been provided in connection with them. Some of the proceedings described below could have a significant impact on our customers in the applicable country and on MasterCard’s level of business in those countries. The proceedings reflect the significant and intense legal, regulatory and legislative scrutiny worldwide that interchange fees and acceptance practices have been receiving. 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 are styled as class actions, although a few complaints were filed on behalf of individual merchant plaintiffs) against MasterCard International Incorporated, Visa U.S.A., Inc., Visa International Service Association and a number of financial institutions. Taken together, the claims in the complaints are 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 have been consolidated for pre-trial proceedings in the U.S. District Court for the Eastern District of New York in MDL No. 1720. The plaintiffs have filed a consolidated class action complaint that seeks treble damages, as well as attorneys’ fees and injunctive relief.
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. In November 2008, the district court granted MasterCard's motion to dismiss the plaintiffs’ supplemental complaint in its entirety with leave to file an amended complaint. The class plaintiffs repled their complaint. The causes of action and claims for relief in the complaint generally mirror those in the plaintiffs' original IPO-related complaint although the plaintiffs have attempted to expand their factual allegations based upon discovery that has been garnered in the case. The class plaintiffs seek treble damages and injunctive relief including, but not limited to, an order reversing and unwinding the IPO. In July 2009, the class plaintiffs and individual plaintiffs served confidential expert reports detailing the plaintiffs’ theories of liability and alleging damages in the tens of billions of dollars. The defendants served their expert reports in December 2009 rebutting the plaintiffs’ assertions both with respect to liability and damages.
In February 2011, MasterCard and MasterCard International Incorporated 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 and the defendants separately entered into a settlement agreement with the individual merchant plaintiffs (the terms of which were consistent with a memorandum of understanding that was executed by the parties in July 2012). 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. The court granted final approval of the settlement in December 2013, which has been appealed by objectors to the settlement.
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 25 opt-out complaints have been filed on behalf of numerous merchants in various jurisdictions. Those cases are in the early stages and the defendants have consolidated all of these matters (except for one state court action) in front of the same court that is overseeing the approval of the settlement. In addition, certain competitors have raised objections to the settlement, 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.
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. At December 31, 2013, MasterCard had $723 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 these opt out merchants, representing a change in its estimate of possible losses relating to these matters.  Accordingly, as of December 31, 2013, MasterCard had accrued a liability of $818 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 on appeal, 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, the Canadian Competition Bureau (the “CCB”) filed an application with the Canadian Competition Tribunal to strike down certain MasterCard rules related to point-of-sale acceptance, including the “honor all cards” and “no surcharge” rules. In July 2013, the Competition Tribunal issued a decision in MasterCard’s favor and dismissed the CCB’s application, which was not appealed. In December 2010, a complaint styled as a class action lawsuit was commenced against MasterCard in Quebec on behalf of Canadian merchants. That suit essentially repeated the allegations and arguments of the CCB application to the Canadian Competition Tribunal and sought compensatory and punitive damages in unspecified amounts, as well as injunctive relief. In March 2011, a second purported class action lawsuit was commenced in British Columbia against MasterCard, Visa and a number of large Canadian financial institutions, and in May 2011 a third purported class action lawsuit was commenced in Ontario against the same defendants. These suits allege that MasterCard, Visa and the financial institutions have engaged in a conspiracy to increase or maintain the fees paid by merchants on credit card transactions and establish rules which force merchants to accept all MasterCard and Visa credit cards and prevent merchants from charging more for payments with MasterCard and Visa premium cards. 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. In April 2012, the Quebec suit was 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 court held a class certification hearing in April 2013. Additional complaints styled as class actions have been filed in Saskatchewan and Alberta. The claims in these complaints largely mirror the claims 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.
European Union. In September 2003, the European Commission issued a Statement of Objections challenging MasterCard Europe’s cross-border default interchange fees and, in June 2006, it issued a supplemental Statement of Objections covering credit, debit and commercial card fees. In December 2007, the European Commission announced a decision that applies to MasterCard's default cross-border interchange fees for MasterCard and Maestro branded consumer payment card transactions in the European Economic Area (“EEA”) (the European Commission refers to these as “MasterCard's MIF”), but not to commercial card transactions (the European Commission stated publicly that it has not yet finished its investigation of commercial card interchange fees). The decision required MasterCard to stop applying the MasterCard MIF, to refrain from repeating the conduct, and not apply its then recently adopted (but never implemented) Maestro SEPA and Intra-Eurozone default interchange fees to debit card payment transactions within the Eurozone. The decision did not impose a fine on MasterCard, but provides for a daily penalty of up to 3.5% of MasterCard's daily consolidated global turnover in the preceding business year (which MasterCard estimates to be approximately $0.8 million per day) in the event that MasterCard fails to comply. To date, MasterCard has not been assessed any such penalty. In March 2008, MasterCard filed an application for annulment of the European Commission’s decision with the General Court of the European Union.
Following discussions with the European Commission, MasterCard announced that, effective in June 2008, MasterCard would temporarily repeal its then current default intra-EEA cross-border consumer card interchange fees in conformity with the decision. In October 2008, MasterCard received an information request from the European Commission in connection with the decision concerning certain pricing changes that MasterCard implemented as of October 2008. In March 2009, MasterCard gave certain undertakings to the European Commission and, in response, in April 2009, the Commissioner for competition policy and the Directorate-General for Competition informed MasterCard that, subject to MasterCard’s fulfilling its undertakings, they do not intend to pursue proceedings for non-compliance with or circumvention of the December 2007 decision or for infringing the antitrust laws in relation to the October 2008 pricing changes, the introduction of new cross-border consumer default interchange fees or any of the other MasterCard undertakings. MasterCard’s undertakings include: (1) repealing the October 2008 pricing changes; (2) adopting a specific methodology for the setting of cross-border consumer default interchange fees; (3) establishing new default cross-border consumer card interchange fees as of July 2009 such that the weighted average interchange fee for credit card transactions does not exceed 30 basis points and for debit card transactions does not exceed 20 basis points; (4) introducing a new rule prohibiting its acquirers from requiring merchants to process all of their MasterCard and Maestro transactions with the acquirer; and (5) introducing a new rule requiring its acquirers to provide merchants with certain pricing information in connection with MasterCard and Maestro transactions. The undertakings were effective until the General Court of the European Union issued a judgment in May 2012.
In May 2012, the General Court of the European Union issued a judgment dismissing the Company’s appeal and upholding the European Commission’s decision.  In August 2012, the Company appealed the judgment to the European Union Court of Justice (the “ECJ”).  The Advocate General to the ECJ issued a non-binding opinion in January 2014 recommending that the ECJ reject MasterCard’s appeal.  Historically, in a majority of cases, the ECJ has followed the Advocate General’s opinions. MasterCard anticipates that the ECJ will issue its final decision sometime in 2014.  Should the ECJ ultimately reject MasterCard’s appeal, the European Commission’s December 2007 decision will be upheld.  Although the interim agreement with the European Commission, by its terms, formally ended on the day of the General Court’s judgment, MasterCard intends to act consistent with the terms of the agreement.
In addition, the European Commission decision could lead to additional competition authorities in European Union member states commencing investigations or proceedings regarding domestic interchange fees or initiating regulation. The possibility of such actions has increased due to the judgment of the General Court. The judgment also increases the possibility of an adverse outcome for the Company in related and pending matters (such as the interchange proceedings in Hungary, Italy and Poland, as indicated below). In addition, the European Commission’s decision could lead, and in the case of the United Kingdom and Belgium has led, to the filing of private actions against MasterCard Europe by merchants and/or consumers which, if MasterCard is unsuccessful in its appeal of the General Court decision, could result in MasterCard owing substantial damages.
In April 2013, the European Commission announced that it has opened proceedings to investigate: (1) MasterCard’s interregional interchange fees that apply when a card issued outside the EEA is used at a merchant location in the EEA, (2) central acquiring rules, which apply when a merchant uses the services of an acquirer established in another country and (3) other business rules and practices (including the “honor all cards” rule).
Additional Litigations in Europe. In the United Kingdom, beginning in May 2012, a number of retailers have filed claims against MasterCard for unspecified damages with respect to MasterCard’s cross-border interchange fees and its U.K. and Ireland domestic interchange fees. In June 2013, the court denied MasterCard’s request to stay the proceedings pending the result of MasterCard's appeal of the European Union General Court's judgment discussed above, but the court indicated it would not issue a final decision until the Court of Justice issues its decision. In Belgium, a retailer filed claims in December 2012 for unspecified damages with respect to MasterCard’s cross-border and domestic interchange fees paid in Belgium, Greece and Luxembourg.
Additional Interchange Proceedings. In February 2007, the Office for Fair Trading of the United Kingdom (the “OFT”) commenced an investigation of MasterCard's current U.K. default credit card interchange fees and so-called “immediate debit” cards to determine whether such fees contravene U.K. and European Union competition law. The OFT had informed MasterCard that it did not intend to issue a Statement of Objections or otherwise commence formal proceedings with respect to the investigation prior to the judgment of the General Court of the European Union with respect to MasterCard's appeal of the December 2007 cross-border interchange fee decision of the European Commission, and this period was extended until the completion of MasterCard's appeal to the Court of Justice. If the OFT ultimately determines that any of MasterCard’s U.K. interchange fees contravene U.K. and European Union competition law, it may issue a new decision and possibly levy fines accruing from the date of its first decision. Such a decision could lead to the filing of private actions against MasterCard by merchants and/or consumers which could result in an award or awards of substantial damages and could have a significant adverse impact on the revenue of MasterCard International's U.K. customers and MasterCard's overall business in the U.K.
Regulatory authorities in a number of other jurisdictions around the world, including Hungary, Italy, Netherlands and Poland, have commenced competition-related proceedings or inquiries into interchange fees and acceptance practices. In some of these jurisdictions, fines have been or could be assessed against MasterCard. These matters could have a negative impact on MasterCard’s business in the specific country where the regulatory authority is located but would not be expected to have a material impact on MasterCard’s overall revenue.  In addition, regulatory authorities and/or central banks in certain other jurisdictions, including Brazil, Chile, Denmark, Germany, Latvia, Portugal, Russia, Singapore and South Africa, are reviewing MasterCard's and/or its customers' interchange fees and/or other practices and may seek to commence proceedings related to, or otherwise regulate, the establishment of such fees and/or such practices.
Other Regulatory Proceedings
In addition to challenges to interchange fees, MasterCard’s other standards and operations are also subject to regulatory and/or legal review and/or challenges in a number of jurisdictions from time to time.  These proceedings tend to reflect the increasing global regulatory focus to which the payments industry is subject and, when taken as a whole with other regulatory and legislative action, such actions could result in the imposition of costly new compliance burdens on MasterCard and its customers and may lead to increased costs and decreased transaction volumes and revenue.
Settlement and Other Risk Management
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. Subject to approval by the Board of Directors, 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,
2013
 
December 31, 2012
 
(in millions)
Gross settlement exposure
$
40,657

 
$
37,768

Collateral held for settlement exposure
(3,167
)
 
(3,775
)
Net uncollateralized settlement exposure
$
37,490

 
$
33,993


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 $503 million and $539 million at December 31, 2013 and 2012, respectively, of which $403 million and $434 million at December 31, 2013 and 2012 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 Management
Foreign Exchange Risk Management
Foreign Exchange Risk Management
The Company enters into foreign currency forward 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 also enters 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 the functional currency of the entity. 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 and reporting 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 to its consolidated balance sheet and consolidated statement of operations.
As of December 31, 2013, all forward contracts to purchase and sell foreign currency had been entered into with customers of MasterCard. MasterCard’s derivative contracts are summarized below: 
 
December 31, 2013
 
December 31, 2012
 
Notional
 
Estimated Fair
Value
 
Notional
 
Estimated Fair
Value
 
(in millions)
Commitments to purchase foreign currency
$
23

 
$
(1
)
 
$
76

 
$
(1
)
Commitments to sell foreign currency
1,722

 
1

 
1,571

 
(2
)
Balance Sheet Location:
 
 
 
 
 
 
 
Accounts Receivable*
 
 
$
13

 
 
 
$
12

Other Current Liabilities*
 
 
(13
)
 
 
 
(15
)

* 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 the contracts to purchase and sell foreign currency are summarized below:
 
Year Ended December 31,
 
2013
 
2012
 
2011
 
(in millions)
Foreign currency derivative contracts
 
 
 
 
 
General and administrative
$
48

 
$
22

 
$
(6
)
Net revenue
4

 
(6
)
 
(3
)
Total
$
52

 
$
16

 
$
(9
)

The fair value of the foreign currency forward 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 forward contracts are generally less than 18 months. The Company had no deferred gains or losses related to foreign exchange in accumulated other comprehensive income as of December 31, 2013 and 2012 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 $189 million on the Company's foreign currency derivative contracts outstanding at December 31, 2013 related to the hedging program. 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.
Segment Reporting
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%, 39%, and 40% of net revenue in 2013, 2012 and 2011, respectively. 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 2013, 2012 or 2011. The following table reflects the geographical location of the Company's property, plant and equipment, net, as of December 31:
 
2013
 
2012
 
2011
 
(in millions)
United States
$
410

 
$
394

 
$
384

Other countries
116

 
78

 
65

Total
$
526

 
$
472

 
$
449

SUMMARY OF QUARTERLY DATA (Unaudited)
SUMMARY OF QUARTERLY DATA (Unaudited)
MASTERCARD INCORPORATED
SUMMARY OF QUARTERLY DATA (Unaudited)

 
 
2013 Quarter Ended
 
 
 
 
 
March 31
 
June 30
 
September 30
 
December 31  
 
 
2013 Total
 
 
(in millions, except per share data)
Net Revenue
 
$
1,906

 
$
2,096

 
$
2,218

 
$
2,126

 
 
$
8,346

Operating income
 
1,107

 
1,228

 
1,248

 
920

 
 
4,503

Net income
 
766

 
848

 
879

 
623

 
 
3,116

Basic earnings per share1
 
$
0.63

 
$
0.70

 
$
0.73

 
$
0.52

 
 
$
2.57

Basic weighted-average shares outstanding1
 
1,226

 
1,214

 
1,205

 
1,201

 
 
1,211

Diluted earnings per share1
 
$
0.62

 
$
0.70

 
$
0.73

 
$
0.52

 
 
$
2.56

Diluted weighted-average shares outstanding1
 
1,230

 
1,217

 
1,209

 
1,205

 
 
1,215

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2012 Quarter Ended
 
 
 
 
 
March 31
 
June 30
 
September 30
 
December 31
 
 
2012 Total
 
 
(in millions, except per share data)
Net Revenue
 
$
1,758

 
$
1,820

 
$
1,918

 
$
1,895

 
 
$
7,391

Operating income
 
1,000

 
974

 
1,064

 
899

 
 
3,937

Net income
 
682

 
700

 
772

 
605

 
 
2,759

Basic earnings per share1
 
$
0.54

 
$
0.56

 
$
0.62

 
$
0.49

 
 
$
2.20

Basic weighted-average shares outstanding1
 
1,266

 
1,259

 
1,247

 
1,240

 
 
1,253

Diluted earnings per share1
 
$
0.54

 
$
0.56

 
$
0.62

 
$
0.49

 
 
$
2.19

Diluted weighted-average shares outstanding1
 
1,271

 
1,263

 
1,251

 
1,246

 
 
1,258

* Tables may not sum due to rounding.
1 The number of shares and per share amounts have been retroactively restated to reflect the ten-for-one stock split of the Company's Class A and Class B common shares, which was effected in the form of a common stock dividend distributed on January 21, 2014.
Summary of Significant Accounting Policies (Policy)
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 “merchant discount” rate charged in connection with the acceptance of cards and other payment devices that carry MasterCard's brands.
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. Intercompany transactions and balances have been eliminated in consolidation. Certain prior period amounts have been revised or reclassified to conform to the 2013 presentation. The Company follows accounting principles generally accepted in the United States of America (“GAAP”).
The Company is a variable interest holder in certain entities. These variable interests arise from contractual, ownership or other monetary interests in the entities. The Company evaluates if the entity has sufficient equity at risk to finance their activities without additional subordinated financial support from other parties, if equity investors lack the ability to control the entity's most significant activities, have voting rights that are disproportionate to their ownership interest, or lack the ability to absorb expected losses or receive expected returns (referred to as VIEs). The Company consolidates a VIE if it is the primary beneficiary, defined as the entity that has both (i) the power to direct the activities that most significantly impact the VIE's economic performance and (ii) the obligation to absorb the losses and/or the right to receive benefits from the VIE that could potentially be significant to the VIE. To determine whether MasterCard qualifies as the primary beneficiary, the Company considers both qualitative and quantitative factors regarding the nature, size and form of the Company's involvement with the VIE. The Company assesses whether or not it is the primary beneficiary of a VIE on an ongoing basis. 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, 2013 and 2012, there were no VIEs which required consolidation.
Non-controlling interests represent the equity interest not owned by the Company and is 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 each of the years ended December 31, 2013, 2012 and 2011, 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). Prior period amounts have been revised to conform to this presentation.
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 revenue is based upon information reported to us by our customers. Transaction-based revenue (transaction processing fees) is calculated by multiplying the number and type of transactions by their contractual price. Transaction-based fees are 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 at the later of (a) when the revenue is recognized by the Company or (b) at the time the rebate or incentive is offered to 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 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 noncontrolling 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 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 policy 
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 tested annually for impairment in the fourth quarter, or sooner when circumstances indicate an impairment may exist, using a qualitative analysis. Goodwill and indefinite-lived intangible assets are tested for impairment at the reporting unit level. A reporting unit is an operating segment, or one level below an operating segment (the "component" level) if discrete financial information is prepared and regularly reviewed by management at the segment level. Components are aggregated as a single reporting unit if they have similar economic characteristics. The impairment evaluation utilizes a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit or indefinite-lived intangible asset is less than its carrying amount and whether it is necessary to perform a quantitative impairment test. If, after performing a qualitative assessment, it is determined that it is more likely than not that the fair value of the reporting unit or indefinite-lived intangible asset is less than its carrying amount, then it would be necessary to use the quantitative impairment test to identify potential impairment and measure the amount of an impairment loss to be recognized (if any). The quantitative impairment test is not necessary if, after performing the qualitative assessment, it is determined that it is more likely than not that the fair value of the reporting unit or indefinite-lived intangible asset exceeds its carrying amount. Impairment charges, if any, are recorded in general and administrative expenses.
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. Subject to approval by the Company's Board of Directors, 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 or are included in other current liabilities on the consolidated balance sheet. 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 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 Policy 
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. In January 2014, $164 million was returned to MasterCard from the qualified cash settlement fund related to the opt out merchants and will be reclassified to cash and cash equivalents. See Note 18 (Legal and Regulatory Proceedings) for further detail.
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: 
l
Level 1-inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
l
Level 2-inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted prices for identical assets and liabilities in inactive markets and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
l
Level 3-inputs to the valuation methodology are unobservable and cannot be directly corroborated by observable market data.
Certain assets and liabilities are measured at fair value on a nonrecurring basis. The Company's assets and liabilities 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. 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. The Company has not elected to apply the fair value option to its eligible financial assets and liabilities.
Investment Securities Policy 
Investment securities - The Company classifies investments in debt securities as held-to-maturity or available-for-sale and classifies investments in equity securities as available-for-sale or trading, if a readily available fair value can be determined. 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.
Investments in debt securities are classified as held-to-maturity when the Company has the intent and ability to hold the debt securities to maturity and are stated at amortized cost. Investments in debt securities not classified as held-to-maturity are classified as available-for-sale and are carried at fair value, with unrealized gains and losses, net of applicable taxes, recorded as a separate component of other comprehensive income on the consolidated statement of comprehensive income. Net realized gains and losses on debt securities are recognized in investment income on the consolidated statement of operations.
Investments in equity securities classified as available-for-sale are carried at fair value, with unrealized gains and losses, net of applicable taxes, recorded as a separate component of other comprehensive income on the consolidated statement of comprehensive income. Net realized gains and losses on available-for-sale 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.
Derivative Financial Instruments Policy 
Derivative financial instruments - The Company records all derivatives at fair value in other assets and other liabilities on the consolidated balance sheet. The Company's foreign exchange forward contracts are included in Level 2 of the Valuation Hierarchy as the fair value of these contracts are based on broker quotes for the same or similar instruments. Changes in the fair value of derivative instruments are reported in current-period earnings. The Company did not have any derivative contracts accounted for under hedge accounting as of December 31, 2013 and 2012.
Settlement Due From/Due To Customers 
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 
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
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 overfunded or underfunded status of its single-employer defined benefit 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 other comprehensive income. 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 other comprehensive income or loss.
Defined contribution savings plans - The Company's contributions to defined contribution savings plans are recorded when the employee renders service to the Company. The charge is recorded in general and administrative expenses.
Advertising Expense Policy 
Advertising expense - 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 other comprehensive income (loss).
Stock Split Policy 
Stock split - On December 10, 2013, the Board of Directors declared a ten-for-one stock split of the Company's Class A and Class B common shares, which was effected in the form of a common stock dividend distributed on January 21, 2014. Except for the amount of authorized shares and par value, all references to share and per share amounts in the consolidated financial statements and accompanying notes to the consolidated financial statements have been retroactively restated to reflect the stock split.
Treasury Stock Policy 
Treasury stock - The Company records the repurchase of shares of its common stock at cost on the settlement 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 using a Black-Scholes valuation model. The fair value of restricted stock units ("RSUs"), including performance stock units ("PSUs") granted prior to 2013, 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 was used to determine the grant date fair value of PSUs granted in the first quarter of 2013. 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. For the year ended December 31, 2011, the dilutive effect of stock options is calculated including the effects of certain equity instruments granted in share-based payment transactions under the two-class method. Unvested share-based payment awards which receive non-forfeitable dividend rights, or dividend equivalents, are considered participating securities and are required to be included in computing basic EPS under the two-class method. The Company declared non-forfeitable dividends on unvested restricted stock units and contingently issuable performance stock units (“Unvested Units”) which were granted prior to 2009.
Recent Accounting Pronouncements Policy 
Recent accounting pronouncements
Balance sheet offsetting - In January 2013, the Financial Accounting Standards Board ("FASB") issued accounting guidance clarifying the scope of its previously issued requirements to disclose gross and net amounts of eligible financial assets and financial liabilities recognized on the balance sheet. The Company adopted the revised accounting guidance effective January 1, 2013. See Note 20 (Foreign Exchange Risk Management) for additional disclosures related to the new guidance.
Comprehensive income - In February 2013, new accounting guidance was issued by the FASB that requires disclosure of amounts reclassified from accumulated other comprehensive income to net income. The Company adopted the revised accounting guidance effective January 1, 2013. See Note 14 (Accumulated Other Comprehensive Income) for additional disclosures related to the new guidance.
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 Company will adopt the revised accounting guidance effective January 1, 2014 and does not anticipate that this new accounting guidance will have a material impact 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 will adopt the revised accounting guidance effective January 1, 2014 and does not anticipate that this new guidance will have a material impact on its consolidated financial statements.
Summary of Significant Accounting Policies (Tables)
Property, Plant and Equipment
The useful lives of the Company's assets are as follows:
Asset Category
 
Estimated Useful Life
Buildings
 
30
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:
 
2013
 
2012
 
(in millions)
Building and land
$
451

 
$
419

Equipment
344

 
314

Furniture and fixtures
48

 
54

Leasehold improvements
77

 
71

Property, plant and equipment
920

 
858

Less accumulated depreciation and amortization
(394
)
 
(386
)
Property, plant and equipment, net
$
526

 
$
472

Earnings Per Share (Tables)
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:
 
2013
 
2012
 
2011
 
(in millions, except per share data)
Numerator:
 
 
 
 
 
Net income
$
3,116

 
$
2,759

 
$
1,906

Less: Net income allocated to Unvested Units
—

 
—

 
—

Net income allocated to common shares
$
3,116

 
$
2,759

 
$
1,906

Denominator1:
 
 
 
 
 
Basic EPS weighted-average shares outstanding
1,211

 
1,253

 
1,279

Dilutive stock options and stock units
4

 
4

 
4

Diluted EPS weighted-average shares outstanding2
1,215

 
1,258

 
1,284

Earnings per Share
 
 
 
 
 
Basic
$
2.57

 
$
2.20

 
$
1.49

Diluted
$
2.56

 
$
2.19

 
$
1.48


* Table may not sum due to rounding.
1 The number of shares and per share amounts have been retroactively restated to reflect the ten-for-one stock split of the Company's Class A and Class B common shares, which was effected in the form of a common stock dividend distributed on January 21, 2014.
2 For the years presented, the calculation of diluted EPS excluded a minimal amount of anti-dilutive share-based payment awards.
Supplemental Cash Flows (Tables)
Schedule of Supplemental Cash Flow Disclosures
The following table includes supplemental cash flow disclosures for each of the years ended December 31:
 
2013
 
2012
 
2011
 
(in millions)
Cash paid for income taxes, net of refunds
$
1,215

 
$
1,046

 
$
908

Cash paid for interest
2

 
—

 
—

Cash paid for legal settlements1
—

 
65

 
303

Non-cash investing and financing activities:
 
 
 
 
 
Dividends declared but not yet paid
131

 
37

 
19

Assets recorded pursuant to capital lease
7

 
11

 
14

Fair value of assets acquired, net of cash acquired 
—

 
73

 
549

Fair value of liabilities assumed related to acquisitions
—

 
3

 
89

 
 
 
 
 
 
1 Amounts in 2012 primarily represent payments under settlement agreements related to the U.S. merchant litigations. Amounts paid into escrow related to the U.S. merchant class litigation is not included in this table. Amounts in 2011 primarily represent payments under a settlement agreement relating to the U.S. federal antitrust litigation between MasterCard and American Express Company. Under the terms of the American Express Settlement, MasterCard made 12 quarterly payments of $150 million beginning in the third quarter of 2008. The Company made its final quarterly payment of $150 million in June 2011.
Fair Value and Investment Securities (Tables)
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, 2013
 
Quoted Prices
in Active
Markets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 
Fair
Value
 
(in millions)
Municipal securities1
$
—

 
$
267

 
$
—

 
$
267

U.S. Government and Agency securities2
—

 
560

 
—

 
560

Taxable short-term bond funds
—

 
—

 
—

 
—

Corporate securities
—

 
1,426

 
—

 
1,426

Asset-backed securities
—

 
364

 
—

 
364

Auction rate securities
—

 
—

 
11

 
11

Other
—

 
79

 
—

 
79

Total
$
—

 
$
2,696

 
$
11

 
$
2,707

 
 
 
 
 
 
 
 
 
December 31, 2012
 
Quoted Prices
in Active
Markets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 
Fair
Value
 
(in millions)
Municipal securities1
$
—

 
$
531

 
$
—

 
$
531

U.S. Government and Agency securities2
—

 
582

 
—

 
582

Taxable short-term bond funds
210

 
—

 
—

 
210

Corporate securities
—

 
1,246

 
—

 
1,246

Asset-backed securities
—

 
316

 
—

 
316

Auction rate securities
—

 
—

 
32

 
32

Other
—

 
63

 
—

 
63

Total
$
210

 
$
2,738

 
$
32

 
$
2,980

1 Available-for-sale municipal securities are carried at fair value and are included in the above tables. However, a held-to-maturity municipal bond was carried at amortized cost and excluded from the table at December 31, 2012.
2 Excludes amounts held in escrow related to the U.S. merchant class litigation settlement of $723 million and $726 million at December 31, 2013 and 2012, respectively, which would be included in Levels 1 and 2 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, 2013 and 2012 were as follows:
 
December 31, 2013
 
Amortized
Cost
 
Gross
Unrealized
Gain
 
Gross
Unrealized
Loss
 
Fair
Value
 
(in millions)
Municipal securities
$
267

 
$
—

 
$
—

 
$
267

U.S. Government and Agency securities
560

 
—

 
—

 
560

Taxable short-term bond funds
—

 
—

 
—

 
—

Corporate securities
1,425

 
2

 
(1
)
 
1,426

Asset-backed securities
364

 
—

 
—

 
364

Auction rate securities1
12

 
—

 
(1
)
 
11

Other
79

 
—

 
—

 
79

Total
$
2,707

 
$
2

 
$
(2
)
 
$
2,707

 
 
 
 
 
 
 
 
 
December 31, 2012
 
Amortized
Cost
 
Gross
Unrealized
Gain
 
Gross
Unrealized
Loss
 
Fair
Value
 
(in millions)
Municipal securities
$
522

 
$
9

 
$
—

 
$
531

U.S. Government and Agency securities
582

 
—

 
—

 
582

Taxable short-term bond funds
209

 
1

 
—

 
210

Corporate securities
1,245

 
2

 
(1
)
 
1,246

Asset-backed securities
316

 
—

 
—

 
316

Auction rate securities1
35

 
—

 
(3
)
 
32

Other
66

 
—

 
—

 
66

Total
$
2,975

 
$
12

 
$
(4
)
 
$
2,983

1 The unrealized losses related to ARS, which have been in an unrealized loss position longer than 12 months, but have not been deemed other-than-temporarily impaired. The ARS are included in other assets on the consolidated balance sheet. See Note 6 (Prepaid Expenses and Other Assets).
Roll-Forward of ARS Investments 
The table below includes a roll-forward of the Company’s ARS investments from January 1, 2012 to December 31, 2013.
 
Significant
Unobservable
Inputs (Level 3)
 
(in millions)
Fair value, December 31, 2011
$
70

Calls, at par
(42
)
Recovery of unrealized losses due to issuer calls
4

Fair value, December 31, 2012
32

Calls, at par
(23
)
Recovery of unrealized losses due to issuer calls
2

Fair value, December 31, 2013
$
11

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, 2013 was as follows:
 
Available-For-Sale
 
Amortized
Cost
 
Fair Value
 
(in millions)
Due within 1 year
$
1,562

 
$
1,562

Due after 1 year through 5 years
1,121

 
1,122

Due after 5 years through 10 years
11

 
11

Due after 10 years
13

 
12

Total
$
2,707

 
$
2,707

Investment Income and Realized Gains and Losses 
Components of net investment income for each of the years ended December 31 were as follows:
 
2013
 
2012
 
2011
 
(in millions)
Interest income
$
33

 
$
36

 
$
44

Investment securities available-for-sale:
 
 
 
 
 
Gross realized gains
7

 
2

 
10

Gross realized losses
(2
)
 
(1
)
 
(2
)
Total investment income, net
$
38

 
$
37

 
$
52

 
 
 
 
 
 
Prepaid Expenses and Other Assets (Tables)
Schedule of Prepaid Expenses and Other Current Assets 
Prepaid expenses and other current assets consisted of the following at December 31:
 
2013
 
2012
 
(in millions)
Customer and merchant incentives
$
239

 
$
222

Investment securities held-to-maturity
—

 
36

Prepaid income taxes
36

 
77

Income taxes receivable
4

 
163

Other
192

 
183

Total prepaid expenses and other current assets
$
471

 
$
681

Schedule of Other Assets, Noncurrent 
Other assets consisted of the following at December 31:
 
2013
 
2012
 
(in millions)
Customer and merchant incentives
$
531

 
$
404

Nonmarketable equity investments
229

 
249

Auction rate securities available-for-sale, at fair value
11

 
32

Income taxes receivable
78

 
72

Other
53

 
52

Total other assets
$
902

 
$
809

Property, Plant and Equipment (Tables)
Property, Plant and Equipment
The useful lives of the Company's assets are as follows:
Asset Category
 
Estimated Useful Life
Buildings
 
30
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:
 
2013
 
2012
 
(in millions)
Building and land
$
451

 
$
419

Equipment
344

 
314

Furniture and fixtures
48

 
54

Leasehold improvements
77

 
71

Property, plant and equipment
920

 
858

Less accumulated depreciation and amortization
(394
)
 
(386
)
Property, plant and equipment, net
$
526

 
$
472

Goodwill (Tables)
Change in Carrying Amount of Goodwill
The changes in the carrying amount of goodwill for the years ended December 31, 2013 and 2012 were as follows:
 
 
2013
 
2012
 
 
(in millions)
Beginning balance
 
$
1,092

 
$
1,014

Goodwill acquired during the year
 
—

 
48

Foreign currency translation
 
30

 
30

Ending balance
 
$
1,122

 
$
1,092

 
 
 
 
 
Other Intangible Assets (Tables)
Schedule of Intangible Assets 
The following table sets forth net intangible assets, other than goodwill, at December 31:
 
 
2013
 
2012
 
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
 
(in millions)
Amortized intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
     Capitalized software
 
$
699

 
$
(404
)
 
$
295

 
$
786

 
$
(506
)
 
$
280

     Trademarks and tradenames
 
49

 
(38
)
 
11

 
48

 
(31
)
 
17

     Customer relationships
 
237

 
(84
)
 
153

 
230

 
(54
)
 
176

     Other
 
20

 
(8
)
 
12

 
11

 
(5
)
 
6

Total
 
1,005

 
(534
)
 
471

 
1,075

 
(596
)
 
479

Unamortized intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
     Customer relationships
 
201

 
—

 
201

 
193

 
—

 
193

Total
 
$
1,206

 
$
(534
)
 
$
672

 
$
1,268

 
$
(596
)
 
$
672

 
 
 
 
 
 
 
 
 
 
 
 
 
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, 2013 for the years ending December 31:
 
 
(in millions)
2014
 
$
178

2015
 
133

2016
 
74

2017
 
31

2018 and thereafter
 
55

 
 
$
471

 
 
 
Accrued Expenses and Accrued Litigation (Tables)
Accrued Expenses
Accrued expenses consisted of the following at December 31:
 
2013
 
2012
 
(in millions)
Customer and merchant incentives
$
1,286

 
$
1,058

Personnel costs
413

 
354

Advertising
149

 
122

Income and other taxes
95

 
94

Other
158

 
120

Total accrued expenses
$
2,101

 
$
1,748


Pension Plans, Postretirement Plans, Savings Plan and Other Benefits (Tables)
Schedule of Funded Status 
The following table sets forth the Plans' funded status, key assumptions and amounts recognized in the Company's consolidated balance sheet at December 31:
 
Pension Plans
 
Postretirement Plans
 
2013
 
2012
 
2013
 
2012
 
(in millions)
Change in benefit obligation
 
 
 
 
 
 
 
Benefit obligation at beginning of year
$
268

 
$
244

 
$
93

 
$
87

Service cost
10

 
11

 
3

 
2

Interest cost
10

 
10

 
3

 
3

Plan participants' contributions
—

 
—

 
1

 
1

Actuarial (gain) loss
6

 
14

 
(16
)
 
6

Benefits paid
(13
)
 
(11
)
 
(4
)
 
(6
)
Benefit obligation at end of year
$
281

 
$
268

 
$
80

 
$
93

 
 
 
 
 
 
 
 
Change in plan assets
 
 
 
 
 
 
 
Fair value of plan assets at beginning of year
$
267

 
$
243

 
$
—

 
$
—

Actual return on plan assets
11

 
25

 
—

 
—

Employer contributions
10

 
10

 
3

 
5

Plan participants' contributions
—

 
—

 
1

 
1

Benefits paid
(13
)
 
(11
)
 
(4
)
 
(6
)
Fair value of plan assets at end of year
$
275

 
$
267

 
$
—

 
$
—

 
 
 
 
 
 
 
 
Funded status
 
 
 
 
 
 
 
Fair value of plan assets at end of year
$
275

 
$
267

 
$
—

 
$
—

Benefit obligation at end of year
281

 
268

 
80

 
93

Funded status at end of year
$
(6
)
 
$
(1
)
 
$
(80
)
 
$
(93
)
 
 
 
 
 
 
 
 
Amounts recognized on the consolidated balance sheet consist of:
 
 
 
 
 
 
 
Prepaid expenses, long term
$
—

 
$
5

 
$
—

 
$
—

Accrued expenses
(2
)
 
(3
)
 
(4
)
 
(4
)
Other liabilities, long term
(4
)
 
(3
)
 
(76
)
 
(89
)
 
$
(6
)
 
$
(1
)
 
$
(80
)
 
$
(93
)
 
 
 
 
 
 
 
 
Amounts recognized in accumulated other comprehensive income consist of:
 
 
 
 
 
 
 
Net actuarial loss (gain)
$
52

 
$
50

 
$
(8
)
 
$
7

Prior service credit
—

 
—

 
—

 
—

 
$
52

 
$
50

 
$
(8
)
 
$
7

 
 
 
 
 
 
 
 
Weighted-average assumptions used to determine end of year benefit obligations
 
 
 
 
 
 
 
Discount rate
4.46
%
 
3.50
%
 
4.75
%
 
3.75
%
Rate of compensation increase
 
 
 
 
 
 
 
Qualified Plan
            *
 
            *
 
            *
 
            *
Non-Qualified Plan
5.00
%
 
5.00
%
 
            *
 
            *
International pension plans
2.82
%
 
            *
 
            *
 
            *
Postretirement Plans
            *
 
            *
 
3.00
%
 
5.37
%

* Not Applicable
Schedule of Pension Plans with Benefit Obligations in Excess of Plan Assets 
The benefit obligations and plan assets of the Pension Plans that had benefit obligations in excess of plan assets were as follows at December 31, 2013 and 2012:
 
 
2013
 
2012
 
 
(in millions)
Projected benefit obligation
 
$
281

 
$
6

Accumulated benefit obligation
 
280

 
5

Fair value of plan assets
 
275

 
—

Schedule of Health Care Cost Trend Rates 
The assumed health care cost trend rates at December 31 for the Postretirement Plans were as follows:
 
2013
 
2012
Health care cost trend rate assumed for next year
7.50
%
 
8.00
%
Rate to which the cost trend rate is expected to decline (the ultimate trend rate)
5.00
%
 
5.00
%
Year that the rate reaches the ultimate trend rate
2019

 
2019

Schedule of Costs of Retirement Plans 
Components of net periodic benefit cost recorded in general and administrative expenses were as follows for the Plans for each of the years ended December 31:
 
 
Pension Plans
 
Postretirement Plans
 
 
2013
 
2012
 
2011
 
2013
 
2012
 
2011
 
 
(in millions)
Service cost
 
$
10

 
$
11

 
$
14

 
$
3

 
$
2

 
$
3

Interest cost
 
10

 
10

 
12

 
3

 
3

 
3

Expected return on plan assets
 
(13
)
 
(14
)
 
(19
)
 
—

 
—

 
—

Settlement (gain) loss
 
2

 
—

 
(1
)
 
—

 
—

 
—

Amortization:
 
 
 
 
 
 
 
 
 
 
 
 
     Actuarial loss (gain)
 
3

 
4

 
2

 
—

 
—

 
(1
)
     Prior service credit
 
—

 
(2
)
 
(2
)
 
—

 
—

 
—

Net periodic benefit cost
 
$
12

 
$
9

 
$
6

 
$
6

 
$
5

 
$
5

Schedule of Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income 
Other changes in plan assets and benefit obligations recognized in other comprehensive income for the years ended December 31 were as follows:
 
 
Pension Plans
 
Postretirement Plans
 
 
2013
 
2012
 
2011
 
2013
 
2012
 
2011
 
 
(in millions)
Settlement gain (loss)
 
$
(2
)
 
$
—

 
$
1

 
$
—

 
$
—

 
$
—

Current year actuarial loss (gain)
 
7

 
4

 
15

 
(15
)
 
6

 
15

Amortization of actuarial (loss) gain
 
(3
)
 
(4
)
 
(2
)
 
—

 
—

 
1

Amortization of prior service credit
 
—

 
2

 
2

 
—

 
—

 
—

Total recognized in other comprehensive income (loss)
 
$
2

 
$
2

 
$
16

 
$
(15
)
 
$
6

 
$
16

Total recognized in net periodic benefit cost and other comprehensive income
 
$
14

 
$
11

 
$
22

 
$
(9
)
 
$
11

 
$
21

Schedule of Amounts to be Amortized from AOCI into Net Periodic Benefit Cost 
The estimated amounts that are expected to be amortized from accumulated other comprehensive income into net periodic benefit cost in 2014 are as follows:
 
 
Pension Plans
 
Postretirement Plans
 
 
(in millions)
Actuarial loss
 
$
4

 
$
—

Schedule of Weighted-Average Assumptions used in Net Periodic Pension Cost 
Weighted-average assumptions used to determine net periodic benefit cost were as follows for the years ended December 31:
 
 
Pension Plans
 
Postretirement Plans
 
 
2013
 
2012
 
2011
 
2013
 
2012
 
2011
Discount rate
 
3.30
%
 
4.25
%
 
5.00
%
 
3.75
%
 
4.25
%
 
5.25
%
Expected return on plan assets
 
3.29
%
 
6.00
%
 
8.00
%
 
     *
 
     *
 
     *
Rate of compensation increase:
 
 
 
 
 
 
 
 
 
 
 
 
Qualified Plan
 
     *
 
5.37
%
 
5.37
%
 
     *
 
     *
 
     *
Non-Qualified Plan
 
5.00
%
 
5.00
%
 
5.00
%
 
     *
 
     *
 
     *
International pension plans
 
2.24
%
 
     *
 
     *
 
     *
 
     *
 
     *
Postretirement Plans
 
     *
 
     *
 
     *
 
5.37
%
 
5.37
%
 
5.37
%
* Not Applicable
Schedule of Effect of One-Percentage-Point Change in Assumed Health Care Cost Trend Rates 
The assumed health care cost trend rates have a significant effect on the amounts reported for the Postretirement Plans. A one-percentage point change in assumed health care cost trend rates for 2013 would have the following effects:
 
1% increase
 
1% decrease
 
(in millions)
Effect on postretirement obligation
$
7

 
$
(6
)
Schedule of Valuation Hierarchy of Qualified Plans Assets at Fair Value 
The following tables set forth by level, within the Valuation Hierarchy, the Pension Plans' assets at fair value as of December 31, 2013 and 2012:
 
December 31, 2013
 
Quoted Prices in Active Markets (Level 1)
 
Significant Other Observable Inputs (Level 2)
 
Significant Unobservable Inputs (Level 3)
 
Fair Value
 
(in millions)
Mutual funds:
 
 
 
 
 
 
 
Money market
$
115

 
$
—

 
$
—

 
$
115

Domestic small cap equity
10

 
—

 
—

 
10

International equity
9

 
—

 
—

 
9

Common and collective funds:
 
 
 
 
 
 
 
Domestic large cap equity
—

 
31

 
—

 
31

Domestic fixed income
—

 
101

 
—

 
101

Insurance contracts
—

 
9

 
—

 
9

Total
$
134

 
$
141

 
$
—

 
$
275

 
 
 
 
 
 
 
 
 
December 31, 2012
 
Quoted Prices in Active Markets (Level 1)
 
Significant Other Observable Inputs (Level 2)
 
Significant Unobservable Inputs (Level 3)
 
Fair Value
 
(in millions)
Mutual funds:
 
 
 
 
 
 
 
Money market
$
2

 
$
—

 
$
—

 
$
2

Domestic small cap equity
12

 
—

 
—

 
12

International equity
12

 
—

 
—

 
12

Common and collective funds:
 
 
 
 
 
 
 
Domestic large cap equity
—

 
32

 
—

 
32

Domestic fixed income
—

 
209

 
—

 
209

Total
$
26

 
$
241

 
$
—

 
$
267

Schedule of Expected Benefit Payments 
The following table summarizes expected benefit payments through 2023 for the Pension Plans and the Postretirement Plans, including those payments expected to be paid from the Company's general assets. Since the majority of the benefit payments for the Pension Plans are made in the form of lump-sum distributions, actual benefit payments may differ from expected benefit payments.
 
 
 
 
Postretirement Plans
 
 
Pension Plans
 
Benefit Payments
 
Expected Subsidy Receipts
 
Net Benefit Payments
 
 
(in millions)
2014
 
$
24

 
$
4

 
$
—

 
$
4

2015
 
22

 
4

 
—

 
4

2016
 
19

 
4

 
—

 
4

2017
 
20

 
4

 
—

 
4

2018
 
22

 
5

 
—

 
5

2019 - 2023
 
92

 
25

 
1

 
24

Stockholders' Equity Stockholders' Equity (Tables)
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
Dividend rights
B
 
$0.0001
 
1,200

 
Non-voting
Dividend rights
Preferred
 
$0.0001
 
—

 
No shares issued or outstanding at December 31, 2013 and 2012, 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:
 
 
2013
 
2012
 
 
Equity Ownership
 
General Voting Power
 
Equity Ownership
 
General Voting Power
Public Investors (Class A stockholders)
 
86.1
%
 
89.5
%
 
85.9
%
 
89.4
%
Principal or Affiliate Customers (Class B stockholders)
 
3.8
%
 
—
%
 
3.9
%
 
—
%
The MasterCard Foundation (Class A stockholders)
 
10.1
%
 
10.5
%
 
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, 2013, as well as historical purchases:
 
 
Authorization Dates
 
 
December 2013
 
February 2013
 
June 2012
 
April 20111
 
Total
 
 
(in millions, except average price data)
Board authorization
 
$
3,500

 
$
2,000

 
$
1,500

 
$
2,000

 
$
9,000

Dollar-value of shares repurchased in 2011
 
**

 
**

 
**

 
$
1,148

 
$
1,148

Remaining authorization at December 31, 2011
 
**

 
**

 
**

 
$
852

 
$
852

Dollar-value of shares repurchased in 2012
 
**

 
**

 
$
896

 
$
852

 
$
1,748

Remaining authorization at December 31, 2012
 
**

 
**

 
$
604

 
$
—

 
$
604

Dollar-value of shares repurchased in 2013
 
$
—

 
$
1,839

 
$
604

 
$
—

 
$
2,443

Remaining authorization at December 31, 2013
 
$
3,500

 
$
161

 
$
—

 
$
—

 
$
3,661

Shares repurchased in 2011
 
**

 
**

 
**

 
44.3

 
44.3

Average price paid per share in 2011
 
**

 
**

 
**

 
$
25.89

 
$
25.89

Shares repurchased in 2012
 
**

 
**

 
19.5

 
21.1

 
40.6

Average price paid per share in 2012
 
**

 
**

 
$
46.02

 
$
40.35

 
$
43.07

Shares repurchased in 2013
 
—

 
29.2

 
11.7

 
—

 
40.9

Average price paid per share in 2013
 
$
—

 
$
63.01

 
$
51.72

 
$
—

 
$
59.78

Cumulative shares repurchased through December 31, 2013
 
—

 
29.2

 
31.1

 
65.4

 
125.7

Cumulative average price paid per share
 
$
—

 
$
63.01

 
$
48.16

 
$
30.56

 
$
42.45

** Not applicable
1 The initial authorization in September 2010 for $1 billion was amended in April 2011 to increase the authorization to $2 billion.
Accumulated Other Comprehensive Income (Loss) (Tables)
Schedule of Accumulated Other Comprehensive Income (Loss)
The changes in the balances of each component of accumulated other comprehensive income (loss) for the years ended December 31, 2013 and 2012 were as follows:
 
 
Foreign Currency Translation Adjustments
 
Defined Benefit Pension and Other Postretirement Plans, Net of Tax
 
Investment Securities Available-for-Sale, Net of Tax
 
Accumulated Other Comprehensive Income (Loss)
 
 
(in millions)
Balance at December 31, 2011
 
$
30

 
$
(32
)
 
$
—

 
$
(2
)
Current period other comprehensive income (loss) *
 
63

 
(5
)
 
5

 
63

Balance at December 31, 2012
 
93

 
(37
)
 
5

 
61

Current period other comprehensive income (loss) *
 
113

 
8

 
(4
)
 
117

Balance at December 31, 2013
 
$
206

 
$
(29
)
 
$
1

 
$
178

 
 
 
 
 
 
 
 
 
* During the years ended December 31, 2013 and 2012, $6 million and $13 million of deferred costs related to the Company's Pension Plans and Postretirement Plans were reclassified from accumulated other comprehensive income to general and administrative expense. In addition, $5 million and $1 million of net gains on available-for-sale investment securities were recognized in investment income during the years ended December 31, 2013 and 2012, respectively. Tax amounts related to these items are insignificant.
Share-Based Payment and Other Benefits (Tables)
Schedule of Weighted-Average Assumptions Used in the Valuation of 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:
 
 
2013
 
2012
 
2011
Risk-free rate of return
 
0.8
%
 
1.2
%
 
2.6
%
Expected term (in years)
 
5.00

 
6.25

 
6.25

Expected volatility
 
27.1
%
 
35.2
%
 
33.7
%
Expected dividend yield
 
0.5
%
 
0.3
%
 
0.2
%
Weighted-average fair value per option granted
 
$
12.33

 
$
14.85

 
$
8.91

Summary of Stock Option Activity 
The following table summarizes the Company's option activity for the year ended December 31, 2013:
 
Options
 
Weighted-Average Exercise Price
 
Weighted-Average Remaining Contractual Term
 
Aggregate Intrinsic Value
 
(in thousands)
 
 
 
(in years)
 
(in millions)
Outstanding at January 1, 2013
6,415

 
$
25

 
 
 
 
Granted
1,832

 
$
52

 
 
 
 
Exercised
(1,242
)
 
$
21

 
 
 
 
Forfeited/expired
(45
)
 
$
46

 
 
 
 
Outstanding at December 31, 2013
6,960

 
$
33

 
7.1
 
$
355

Exercisable at December 31, 2013
2,965

 
$
21

 
5.7
 
$
185

Options vested and expected to vest at December 31, 2013
6,862

 
$
32

 
7.1
 
$
351

Summary of Restricted Stock Unit Activity 
The following table summarizes the Company's RSU activity for the year ended December 31, 2013:
 
Units
 
Weighted-Average Grant-Date Fair Value
 
Weighted-Average Remaining Contractual Term
 
Aggregate Intrinsic Value
 
(in thousands)
 
 
 
(in years)
 
(in millions)
Outstanding at January 1, 2013
5,456

 
$
30

 
 
 
 
Granted
1,530

 
$
52

 
 
 
 
Converted
(1,496
)
 
$
23

 
 
 
 
Forfeited/expired
(160
)
 
$
36

 
 
 
 
Outstanding at December 31, 2013
5,330

 
$
38

 
1.1
 
$
445

RSUs vested and expected to vest at December 31, 2013
5,165

 
$
38

 
1.1
 
$
432

Summary of Performance Stock Unit Activity 
The following table summarizes the Company's PSU activity for the year ended December 31, 2013:
 
Units
 
Weighted-Average Issue-Date Fair Value1,
 
Weighted-Average Remaining Contractual Term
 
Aggregate Intrinsic Value
 
(in thousands)
 
 
 
(in years)
 
(in millions)
Outstanding at January 1, 2013
1,135

 
$
27

 
 
 
 
Issued
180

 
$
56

 
 
 
 
Performance
49

 
$
32

 
 
 
 
Converted
(577
)
 
$
52

 
 
 
 
Forfeited/expired
—

 
$
—

 
 
 
 
Outstanding at December 31, 2013
787

 
$
37

 
0.9
 
$
66

PSUs vested and expected to vest at December 31, 2013
771

 
$
37

 
0.9
 
$
64

1 For PSUs issued in 2012 and 2011, the grant date is not established until the performance terms are fixed and the ultimate number of shares to be issued is determined. PSUs issued and converted during 2013 show a weighted-average grant-date fair value in the above figure.
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:
 
2013
 
2012
 
2011
 
(in millions, except weighted-average fair value)
Share-based compensation expense: Options, RSUs and PSUs
$
121

 
$
88

 
$
79

Income tax benefit recognized for equity awards
42

 
30

 
28

Income tax benefit related to options exercised
16

 
27

 
7

Additional paid-in-capital balance attributed to equity awards
233

 
187

 
151

 
 
 
 
 
 
Options:
 
 
 
 
 
Total intrinsic value of Options exercised
48

 
77

 
22

RSUs:
 
 
 
 
 
Weighted-average grant-date fair value of awards granted
52

 
42

 
26

Total intrinsic value of RSUs converted into shares of Class A common stock
78

 
91

 
4

PSUs:
 
 
 
 
 
Weighted-average issue-date fair value of awards granted
56

 
39

 
22

Total intrinsic value of PSUs converted into shares of Class A common stock
29

 
27

 
93

DSUs:
 
 
 
 
 
General and administrative expense
2

 
1

 
1

Total intrinsic value of DSUs converted into shares of Class A common stock
2

 
2

 
2

Commitments (Tables)
Future Minimum Payments Due Under Non-Cancelable Agreements
At December 31, 2013, the Company had the following future minimum payments due under non-cancelable agreements:
 
Total
 
Capital
Leases 
 
Operating
Leases
 
Sponsorship,
Licensing &
Other
 
(in millions)
2014
$
379

 
$
8

 
$
24

 
$
347

2015
163

 
1

 
25

 
137

2016
84

 
—

 
23

 
61

2017
41

 
—

 
18

 
23

2018
22

 
—

 
11

 
11

Thereafter
45

 
—

 
24

 
21

Total
$
734

 
$
9

 
$
125

 
$
600

 
 
 
 
 
 
 
 

Income Taxes (Tables)
Components of Income Tax Provision 
The total income tax provision for the years ended December 31 is comprised of the following components:
 
 
2013
 
2012
 
2011
 
 
 
 
(in millions)
 
 
Current
 
 
 
 
 
 
Federal
 
$
1,010

 
$
524

 
$
619

State and local
 
33

 
24

 
30

Foreign
 
456

 
390

 
369

 
 
1,499

 
938

 
1,018

Deferred
 

 

 

Federal
 
(100
)
 
248

 
(155
)
State and local
 
(4
)
 
7

 
(6
)
Foreign
 
(11
)
 
(19
)
 
(15
)
 
 
(115
)
 
236

 
(176
)
Income tax expense
 
$
1,384

 
$
1,174

 
$
842

Schedule of Domestic and Foreign Earnings (Loss) Before Income Taxes 
The domestic and foreign components of income before income taxes for the years ended December 31 are as follows:
 
 
2013
 
2012
 
2011
 
 
 
 
(in millions)
 
 
United States
 
$
2,741

 
$
2,508

 
$
1,415

Foreign
 
1,759

 
1,425

 
1,333

Income before income taxes
 
$
4,500

 
$
3,933

 
$
2,748

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 35.0% to pretax income for the years ended December 31, as a result of the following:
 
 
2013
 
2012
 
2011
 
 
Amount
 
Percent
 
Amount
 
Percent
 
Amount
 
Percent
 
 
(in millions, except percentages)
Income before income tax expense
 
$
4,500

 
 
 
$
3,933

 
 
 
$
2,748

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Federal statutory tax
 
1,575

 
35.0
 %
 
1,376

 
35.0
 %
 
961

 
35.0
 %
State tax effect, net of federal benefit
 
19

 
0.4
 %
 
23

 
0.6
 %
 
14

 
0.5
 %
Foreign tax effect
 
(208
)
 
(4.6
)%
 
(175
)
 
(4.4
)%
 
(133
)
 
(4.9
)%
Non-deductible expenses and other differences
 
13

 
0.3
 %
 
(21
)
 
(0.5
)%
 
34

 
1.2
 %
Tax exempt income
 
(1
)
 
—
 %
 
(2
)
 
(0.1
)%
 
(3
)
 
(0.1
)%
Foreign repatriation
 
(14
)
 
(0.3
)%
 
(27
)
 
(0.7
)%
 
(31
)
 
(1.1
)%
Income tax expense
 
$
1,384

 
30.8
 %
 
$
1,174

 
29.9
 %
 
$
842

 
30.6
 %
Schedule of Deferred Tax Assets and Liabilities 
The components of deferred tax assets and liabilities at December 31 are as follows:
 
 
2013
 
2012
 
 
(in millions)
Deferred Tax Assets
 
 
 
 
Accrued liabilities
 
$
124

 
$
91

Compensation and benefits
 
201

 
173

State taxes and other credits
 
99

 
96

Net operating losses
 
39

 
34

Other items
 
46

 
31

Less: Valuation allowance
 
(28
)
 
(25
)
Total Deferred Tax Assets
 
481

 
400

 
 
 
 
 
Deferred Tax Liabilities
 
 
 
 
Prepaid expenses and other accruals
 
50

 
56

Intangible assets
 
97

 
113

Property, plant and equipment
 
116

 
122

Other items
 
37

 
42

Total Deferred Tax Liabilities
 
300

 
333

 
 
 
 
 
Net Deferred Tax Assets1
 
$
181

 
$
67

 
 
 
 
 
1 $5 million and $17 million of current deferred tax liabilities have been included in other current liabilities on the balance sheet at December 31, 2013 and 2012, respectively.
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:
 
 
2013
 
2012
 
2011
 
 
 
 
(in millions)
 
 
Beginning balance
 
$
257

 
$
214

 
$
165

Additions:
 
 
 
 
 
 
Current year tax positions
 
80

 
58

 
34

Prior year tax positions
 
12

 
15

 
23

Reductions:
 
 
 
 
 
 
Prior year tax positions
 
(8
)
 
(21
)
 
(2
)
Settlements with tax authorities
 
(2
)
 
(2
)
 
(1
)
Expired statute of limitations
 
(19
)
 
(7
)
 
(5
)
Ending balance
 
$
320

 
$
257

 
$
214

Settlement and Other Risk Management (Tables)
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,
2013
 
December 31, 2012
 
(in millions)
Gross settlement exposure
$
40,657

 
$
37,768

Collateral held for settlement exposure
(3,167
)
 
(3,775
)
Net uncollateralized settlement exposure
$
37,490

 
$
33,993

Foreign Exchange Risk Management (Tables)
Summary of Derivative Contracts 
MasterCard’s derivative contracts are summarized below: 
 
December 31, 2013
 
December 31, 2012
 
Notional
 
Estimated Fair
Value
 
Notional
 
Estimated Fair
Value
 
(in millions)
Commitments to purchase foreign currency
$
23

 
$
(1
)
 
$
76

 
$
(1
)
Commitments to sell foreign currency
1,722

 
1

 
1,571

 
(2
)
Balance Sheet Location:
 
 
 
 
 
 
 
Accounts Receivable*
 
 
$
13

 
 
 
$
12

Other Current Liabilities*
 
 
(13
)
 
 
 
(15
)

* 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 Management 
The amount of gain (loss) recognized in income for the contracts to purchase and sell foreign currency are summarized below:
 
Year Ended December 31,
 
2013
 
2012
 
2011
 
(in millions)
Foreign currency derivative contracts
 
 
 
 
 
General and administrative
$
48

 
$
22

 
$
(6
)
Net revenue
4

 
(6
)
 
(3
)
Total
$
52

 
$
16

 
$
(9
)

Segment Reporting Schedule of Property Plant and Equipment, Net by Geographic Region (Tables)
Schedule of Property, Plant and Equipment, Net by Geographic Region
The following table reflects the geographical location of the Company's property, plant and equipment, net, as of December 31:
 
2013
 
2012
 
2011
 
(in millions)
United States
$
410

 
$
394

 
$
384

Other countries
116

 
78

 
65

Total
$
526

 
$
472

 
$
449

SUMMARY OF QUARTERLY DATA (Unaudited) (Tables)
Schedule of Selected Quarterly Financial Data
 
 
2013 Quarter Ended
 
 
 
 
 
March 31
 
June 30
 
September 30
 
December 31  
 
 
2013 Total
 
 
(in millions, except per share data)
Net Revenue
 
$
1,906

 
$
2,096

 
$
2,218

 
$
2,126

 
 
$
8,346

Operating income
 
1,107

 
1,228

 
1,248

 
920

 
 
4,503

Net income
 
766

 
848

 
879

 
623

 
 
3,116

Basic earnings per share1
 
$
0.63

 
$
0.70

 
$
0.73

 
$
0.52

 
 
$
2.57

Basic weighted-average shares outstanding1
 
1,226

 
1,214

 
1,205

 
1,201

 
 
1,211

Diluted earnings per share1
 
$
0.62

 
$
0.70

 
$
0.73

 
$
0.52

 
 
$
2.56

Diluted weighted-average shares outstanding1
 
1,230

 
1,217

 
1,209

 
1,205

 
 
1,215

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2012 Quarter Ended
 
 
 
 
 
March 31
 
June 30
 
September 30
 
December 31
 
 
2012 Total
 
 
(in millions, except per share data)
Net Revenue
 
$
1,758

 
$
1,820

 
$
1,918

 
$
1,895

 
 
$
7,391

Operating income
 
1,000

 
974

 
1,064

 
899

 
 
3,937

Net income
 
682

 
700

 
772

 
605

 
 
2,759

Basic earnings per share1
 
$
0.54

 
$
0.56

 
$
0.62

 
$
0.49

 
 
$
2.20

Basic weighted-average shares outstanding1
 
1,266

 
1,259

 
1,247

 
1,240

 
 
1,253

Diluted earnings per share1
 
$
0.54

 
$
0.56

 
$
0.62

 
$
0.49

 
 
$
2.19

Diluted weighted-average shares outstanding1
 
1,271

 
1,263

 
1,251

 
1,246

 
 
1,258

* Tables may not sum due to rounding.
1 The number of shares and per share amounts have been retroactively restated to reflect the ten-for-one stock split of the Company's Class A and Class B common shares, which was effected in the form of a common stock dividend distributed on January 21, 2014.
Summary of Significant Accounting Policies Narrative (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Building
 
Property, Plant and Equipment [Abstract]
 
Useful Life
30 years 
Minimum
 
Organization, Consolidation and Presentation of Financial Statements [Abstract]
 
Equity Method Investment, Ownership Percentage
20.00% 
Historical Cost Method Ownership Percentage
20.00% 
Minimum |
Furniture and fixtures and equipment
 
Property, Plant and Equipment [Abstract]
 
Useful Life
2 years 
Maximum
 
Organization, Consolidation and Presentation of Financial Statements [Abstract]
 
Equity Method Investment, Ownership Percentage
50.00% 
Noncontrolling Interest, Ownership Percentage by Parent
100.00% 
Maximum |
Furniture and fixtures and equipment
 
Property, Plant and Equipment [Abstract]
 
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, Useful Life
1 year 
Other |
Maximum
 
Organization, Consolidation and Presentation of Financial Statements [Abstract]
 
Finite-Lived Intangible Assets, Useful Life
10 years 
U.S. merchant litigation - class litigation
 
Estimated amount to be received from the cash settlement fund
$ 164 
Acquisitions Narrative (Details)
In Millions, unless otherwise specified
12 Months Ended 1 Months Ended 12 Months Ended 24 Months Ended
Dec. 31, 2012
USD ($)
Apr. 28, 2011
Access [Member]
USD ($)
Apr. 28, 2011
Access [Member]
GBP (£)
Dec. 31, 2012
Access [Member]
USD ($)
Dec. 31, 2011
Access [Member]
USD ($)
Apr. 14, 2011
Access [Member]
USD ($)
Apr. 14, 2011
Access [Member]
GBP (£)
Apr. 14, 2011
Maximum
Access [Member]
USD ($)
Apr. 14, 2011
Maximum
Access [Member]
EUR (€)
Business Acquisition [Line Item]
 
 
 
 
 
 
 
 
 
Number of Businesses Acquired
3 
 
 
 
 
 
 
 
 
Purchase price for acquisitions
$ 70 
$ 481 
£ 295 
 
 
 
 
 
 
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, High
 
 
 
 
 
 
 
57 
35 
Contingent consideration liability
 
 
 
 
 
9 
6 
 
 
Change in Amount of Contingent Consideration Liability recorded as other income
 
 
 
9 
 
 
 
 
 
Acquisition-related expenses
 
 
 
 
$ 6 
 
 
 
 
Earnings Per Share Schedule of Basic and Diluted Earnings Per Share (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net income
$ 623 
$ 879 
$ 848 
$ 766 
$ 605 
$ 772 
$ 700 
$ 682 
$ 3,116 
$ 2,759 
$ 1,906 
Less: Net income allocated to Unvested Units
 
 
 
 
 
 
 
 
0 
0 
0 
Net income allocated to common shares
 
 
 
 
 
 
 
 
$ 3,116 
$ 2,759 
$ 1,906 
Basic EPS weighted-average shares outstanding
1,201 1
1,205 1
1,214 1
1,226 1
1,240 1
1,247 1
1,259 1
1,266 1
1,211 1
1,253 1
1,279 1
Dilutive stock options and stock units
 
 
 
 
 
 
 
 
4 1
4 1
4 1
Diluted EPS weighted-average shares outstanding
1,205 1
1,209 1
1,217 1
1,230 1
1,246 1
1,251 1
1,263 1
1,271 1
1,215 1 2
1,258 1 2
1,284 1 2
Basic
$ 0.52 1
$ 0.73 1
$ 0.70 1
$ 0.63 1
$ 0.49 1
$ 0.62 1
$ 0.56 1
$ 0.54 1
$ 2.57 1
$ 2.20 1
$ 1.49 
Diluted
$ 0.52 1
$ 0.73 1
$ 0.70 1
$ 0.62 1
$ 0.49 1
$ 0.62 1
$ 0.56 1
$ 0.54 1
$ 2.56 1
$ 2.19 1
$ 1.48 
Supplemental Cash Flows (Non-Cash Investing and Financing Information) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended 3 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Jun. 30, 2011
American Express Settlement
Sep. 30, 2008
American Express Settlement
Jun. 30, 2008
American Express Settlement
numberofpayments
Obligation under the terms of settlement, number of payments.
 
 
 
 
 
12 
Obligation under the terms of settlement, periodic payment
 
 
 
$ 150 
$ 150 
 
Cash paid for income taxes, net of refunds
1,215 
1,046 
908 
 
 
 
Cash paid for interest
2 
0 
0 
 
 
 
Cash paid for legal settlements
0 1
65 1
303 1
 
 
 
Dividends declared but not yet paid
131 
37 
19 
 
 
 
Assets recorded pursuant to capital lease
7 
11 
14 
 
 
 
Fair value of assets acquired, net of cash acquired
0 
73 
549 
 
 
 
Fair value of liabilities assumed related to acquisitions
$ 0 
$ 3 
$ 89 
 
 
 
Fair Value and Investment Securities Narrative Fair Value (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Fair Value By Balance Sheet Grouping [Line Items]
 
 
Restricted Cash and Cash Equivalents, Current
$ 723 
$ 726 
Impact of a 100 Basis Points Hypothetical Increase in the Discount Rate Used to Value Auction Rate Securities
1 
2 
Estimated discount to the par value of the ARS portfolio
10.00% 
10.00% 
Pre-tax impairment available accumulated other comprehensive income
$ 1 
$ 3 
Minimum
 
 
Fair Value By Balance Sheet Grouping [Line Items]
 
 
ARS, collateralized by student loans with guarantees of principal and interest by the U.S. government via the Department of Education
95.00% 
 
Maximum
 
 
Fair Value By Balance Sheet Grouping [Line Items]
 
 
ARS, collateralized by student loans with guarantees of principal and interest by the U.S. government via the Department of Education
98.00% 
 
Fair Value and Investment Securities Distribution of Financial Instruments, Measured at Fair Value on a Recurring Basis (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Fair Value, Option, Quantitative Disclosures [Line Items]
 
 
Amounts held in escrow to fund litigation settlement
$ 723 
$ 726 
Fair Value, Measured on Recurring Basis
2,707 
2,980 
Fair Value, Inputs, Level 1
 
 
Fair Value, Option, Quantitative Disclosures [Line Items]
 
 
Fair Value, Measured on Recurring Basis
0 
210 
Fair Value, Inputs, Level 2
 
 
Fair Value, Option, Quantitative Disclosures [Line Items]
 
 
Fair Value, Measured on Recurring Basis
2,696 
2,738 
Fair Value, Inputs, Level 3
 
 
Fair Value, Option, Quantitative Disclosures [Line Items]
 
 
Fair Value, Measured on Recurring Basis
11 
32 
Municipal securities
 
 
Fair Value, Option, Quantitative Disclosures [Line Items]
 
 
Fair Value, Measured on Recurring Basis
267 1
531 1
Municipal securities |
Fair Value, Inputs, Level 1
 
 
Fair Value, Option, Quantitative Disclosures [Line Items]
 
 
Fair Value, Measured on Recurring Basis
0 1
0 1
Municipal securities |
Fair Value, Inputs, Level 2
 
 
Fair Value, Option, Quantitative Disclosures [Line Items]
 
 
Fair Value, Measured on Recurring Basis
267 1
531 1
Municipal securities |
Fair Value, Inputs, Level 3
 
 
Fair Value, Option, Quantitative Disclosures [Line Items]
 
 
Fair Value, Measured on Recurring Basis
0 1
0 1
U.S. Government and Agency securities
 
 
Fair Value, Option, Quantitative Disclosures [Line Items]
 
 
Fair Value, Measured on Recurring Basis
560 2
582 2
U.S. Government and Agency securities |
Fair Value, Inputs, Level 1
 
 
Fair Value, Option, Quantitative Disclosures [Line Items]
 
 
Fair Value, Measured on Recurring Basis
0 2
0 2
U.S. Government and Agency securities |
Fair Value, Inputs, Level 2
 
 
Fair Value, Option, Quantitative Disclosures [Line Items]
 
 
Fair Value, Measured on Recurring Basis
560 2
582 2
U.S. Government and Agency securities |
Fair Value, Inputs, Level 3
 
 
Fair Value, Option, Quantitative Disclosures [Line Items]
 
 
Fair Value, Measured on Recurring Basis
0 2
0 2
Taxable short-term bond funds
 
 
Fair Value, Option, Quantitative Disclosures [Line Items]
 
 
Fair Value, Measured on Recurring Basis
0 
210 
Taxable short-term bond funds |
Fair Value, Inputs, Level 1
 
 
Fair Value, Option, Quantitative Disclosures [Line Items]
 
 
Fair Value, Measured on Recurring Basis
0 
210 
Taxable short-term bond funds |
Fair Value, Inputs, Level 2
 
 
Fair Value, Option, Quantitative Disclosures [Line Items]
 
 
Fair Value, Measured on Recurring Basis
0 
0 
Taxable short-term bond funds |
Fair Value, Inputs, Level 3
 
 
Fair Value, Option, Quantitative Disclosures [Line Items]
 
 
Fair Value, Measured on Recurring Basis
0 
0 
Corporate securities
 
 
Fair Value, Option, Quantitative Disclosures [Line Items]
 
 
Fair Value, Measured on Recurring Basis
1,426 
1,246 
Corporate securities |
Fair Value, Inputs, Level 1
 
 
Fair Value, Option, Quantitative Disclosures [Line Items]
 
 
Fair Value, Measured on Recurring Basis
0 
0 
Corporate securities |
Fair Value, Inputs, Level 2
 
 
Fair Value, Option, Quantitative Disclosures [Line Items]
 
 
Fair Value, Measured on Recurring Basis
1,426 
1,246 
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
364 
316 
Asset-backed securities |
Fair Value, Inputs, Level 1
 
 
Fair Value, Option, Quantitative Disclosures [Line Items]
 
 
Fair Value, Measured on Recurring Basis
0 
0 
Asset-backed securities |
Fair Value, Inputs, Level 2
 
 
Fair Value, Option, Quantitative Disclosures [Line Items]
 
 
Fair Value, Measured on Recurring Basis
364 
316 
Asset-backed securities |
Fair Value, Inputs, Level 3
 
 
Fair Value, Option, Quantitative Disclosures [Line Items]
 
 
Fair Value, Measured on Recurring Basis
0 
0 
Auction rate securities
 
 
Fair Value, Option, Quantitative Disclosures [Line Items]
 
 
Fair Value, Measured on Recurring Basis
11 
32 
Auction rate securities |
Fair Value, Inputs, Level 1
 
 
Fair Value, Option, Quantitative Disclosures [Line Items]
 
 
Fair Value, Measured on Recurring Basis
0 
0 
Auction rate securities |
Fair Value, Inputs, Level 2
 
 
Fair Value, Option, Quantitative Disclosures [Line Items]
 
 
Fair Value, Measured on Recurring Basis
0 
0 
Auction rate securities |
Fair Value, Inputs, Level 3
 
 
Fair Value, Option, Quantitative Disclosures [Line Items]
 
 
Fair Value, Measured on Recurring Basis
11 
32 
Other
 
 
Fair Value, Option, Quantitative Disclosures [Line Items]
 
 
Fair Value, Measured on Recurring Basis
79 
63 
Other |
Fair Value, Inputs, Level 1
 
 
Fair Value, Option, Quantitative Disclosures [Line Items]
 
 
Fair Value, Measured on Recurring Basis
0 
0 
Other |
Fair Value, Inputs, Level 2
 
 
Fair Value, Option, Quantitative Disclosures [Line Items]
 
 
Fair Value, Measured on Recurring Basis
79 
63 
Other |
Fair Value, Inputs, Level 3
 
 
Fair Value, Option, Quantitative Disclosures [Line Items]
 
 
Fair Value, Measured on Recurring Basis
$ 0 
$ 0 
Fair Value and Investment Securities Narrative Investment Securities (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Investment Identifier [Line Items]
 
 
Estimated discount to the par value of the ARS portfolio
10.00% 
10.00% 
Pre-tax impairment available accumulated other comprehensive income
$ 1 
$ 3 
Impact of a 100 Basis Points Hypothetical Increase in the Discount Rate Used to Value Auction Rate Securities
$ 1 
$ 2 
Minimum
 
 
Investment Identifier [Line Items]
 
 
ARS, collateralized by student loans with guarantees of principal and interest by the U.S. government via the Department of Education
95.00% 
 
Maximum
 
 
Investment Identifier [Line Items]
 
 
ARS, collateralized by student loans with guarantees of principal and interest by the U.S. government via the Department of Education
98.00% 
 
Fair Value and Investment Securities Available-for-Sale Investment Securities, Unrealized Gains and Losses (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Investment Identifier [Line Items]
 
 
Amortized Cost
$ 2,707 
$ 2,975 
Gross Unrealized Gain
2 
12 
Gross Unrealized Loss
(2)
(4)
Fair Value
2,707 
2,983 
Municipal securities
 
 
Investment Identifier [Line Items]
 
 
Amortized Cost
267 
522 
Gross Unrealized Gain
0 
9 
Gross Unrealized Loss
0 
0 
Fair Value
267 
531 
U.S. Government and Agency securities
 
 
Investment Identifier [Line Items]
 
 
Amortized Cost
560 
582 
Gross Unrealized Gain
0 
0 
Gross Unrealized Loss
0 
0 
Fair Value
560 
582 
Taxable short-term bond funds
 
 
Investment Identifier [Line Items]
 
 
Amortized Cost
0 
209 
Gross Unrealized Gain
0 
1 
Gross Unrealized Loss
0 
0 
Fair Value
0 
210 
Corporate securities
 
 
Investment Identifier [Line Items]
 
 
Amortized Cost
1,425 
1,245 
Gross Unrealized Gain
2 
2 
Gross Unrealized Loss
(1)
(1)
Fair Value
1,426 
1,246 
Asset-backed securities
 
 
Investment Identifier [Line Items]
 
 
Amortized Cost
364 
316 
Gross Unrealized Gain
0 
0 
Gross Unrealized Loss
0 
0 
Fair Value
364 
316 
Auction rate securities
 
 
Investment Identifier [Line Items]
 
 
Amortized Cost
12 1
35 1
Gross Unrealized Gain
0 1
0 1
Gross Unrealized Loss
(1)1
(3)1
Fair Value
11 1
32 1
Other
 
 
Investment Identifier [Line Items]
 
 
Amortized Cost
79 
66 
Gross Unrealized Gain
0 
0 
Gross Unrealized Loss
0 
0 
Fair Value
$ 79 
$ 66 
Fair Value and Investment Securities Roll-Forward of ARS Investments (Details) (Significant Unobservable Inputs (Level 3), USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Significant Unobservable Inputs (Level 3)
 
 
Investment Identifier [Line Items]
 
 
Fair value, Beginning Balance
$ 32 
$ 70 
Calls, at par
(23)
(42)
Recovery of unrealized losses due to issuer calls
2 
4 
Fair value, Ending Balance
$ 11 
$ 32 
Fair Value and Investment Securities Maturity Distribution Based on Contractual Terms of Investment Securities (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2013
Available-For-Sale Amortized Cost
 
Due within 1 year
$ 1,562 
Due after 1 year through 5 years
1,121 
Due after 5 years through 10 years
11 
Due after 10 years
13 
Total
2,707 
Available-For-Sale Fair Value
 
Due within 1 year
1,562 
Due after 1 year through 5 years
1,122 
Due after 5 years through 10 years
11 
Due after 10 years
12 
Total
$ 2,707 
Fair Value and Investment Securities Investment Income (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Marketable Securities [Abstract]
 
 
 
Interest income
$ 33 
$ 36 
$ 44 
Investment securities available-for-sale: Gross realized gains
7 
2 
10 
Investment securities available-for-sale: Gross realized losses
(2)
(1)
(2)
Total investment income, net
$ 38 
$ 37 
$ 52 
Prepaid Expenses and Other Assets Schedule of Prepaid Expenses (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Prepaid Expense and Other Assets [Abstract]
 
 
Customer and merchant incentives
$ 239 
$ 222 
Investment securities held-to-maturity
0 
36 
Prepaid income taxes
36 
77 
Income taxes receivable
4 
163 
Other
192 
183 
Total prepaid expenses and other current assets
$ 471 
$ 681 
Prepaid Expenses and Other Assets Schedule of Other Assets (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Prepaid Expense and Other Assets [Abstract]
 
 
Customer and merchant incentives
$ 531 
$ 404 
Nonmarketable equity investments
229 
249 
Auction rate securities available-for-sale, at fair value
11 
32 
Income taxes receivable
78 
72 
Other
53 
52 
Total other assets
$ 902 
$ 809 
Property, Plant and Equipment Narrative (Details) (USD $)
In Millions, unless otherwise specified
10 Months Ended 12 Months Ended 10 Months Ended
Dec. 31, 2009
years
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2009
Leasehold improvements
Mar. 4, 2009
Leasehold improvements
Property, Plant and Equipment [Line Items]
 
 
 
 
 
 
Length Of Lease Agreement In Years
10 
 
 
 
 
 
Building and land assets and capital lease obligation
 
 
 
 
 
$ 154 
Refunding revenue bonds issued by MDFB
 
 
 
 
154 
 
Capital leases included in equipment, excluding the O'Fallon facility
 
30 
23 
 
 
 
Accumulated amortization, capital leases
 
21 
10 
 
 
 
Depreciation expense including amortization for capital leases
 
$ 92 
$ 84 
$ 77 
 
 
Property, Plant and Equipment (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Property, Plant and Equipment [Line Items]
 
 
 
Property, plant and equipment
$ 920 
$ 858 
 
Less accumulated depreciation and amortization
(394)
(386)
 
Property, plant and equipment, net
526 
472 
449 
Building and land
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
Property, plant and equipment
451 
419 
 
Equipment
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
Property, plant and equipment
344 
314 
 
Furniture and fixtures
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
Property, plant and equipment
48 
54 
 
Leasehold improvements
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
Property, plant and equipment
$ 77 
$ 71 
 
Goodwill Goodwill Narrative (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Number of Businesses Acquired
 
3 
Goodwill, Acquired During Period
$ 0 
$ 48 
Change in Carrying Amount of Goodwill (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Goodwill [Roll Forward]
 
 
Beginning balance
$ 1,092 
$ 1,014 
Goodwill acquired during the year
0 
48 
Foreign currency translation
30 
30 
Ending balance
$ 1,122 
$ 1,092 
Other Intangible Assets (Schedule of Intangible Assets) (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Gross Carrying Amount
$ 1,206 
$ 1,268 
Accumulated Amortization
(534)
(596)
Net Carrying Amount
672 
672 
Gross Carrying Amount
1,005 
1,075 
Accumulated Amortization
(534)
(596)
Net carrying amount
471 
479 
Capitalized software
 
 
Gross Carrying Amount
699 
786 
Accumulated Amortization
(404)
(506)
Net carrying amount
295 
280 
Trademarks and tradenames
 
 
Gross Carrying Amount
49 
48 
Accumulated Amortization
(38)
(31)
Net carrying amount
11 
17 
Customer relationships
 
 
Gross Carrying Amount
237 
230 
Accumulated Amortization
(84)
(54)
Net carrying amount
153 
176 
Unamortized intangible assets:
 
 
Customer relationships
201 
193 
Other
 
 
Gross Carrying Amount
20 
11 
Accumulated Amortization
(8)
(5)
Net carrying amount
$ 12 
$ 6 
Other Intangible Assets (Schedule of Amortization and Impairment Expense) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Intangible Assets, Net (Excluding Goodwill) [Abstract]
 
 
 
Amortization and Impairment Expense on Intangible Assets
$ 166 
$ 149 
$ 118 
Other Intangible Assets (Schedule of Estimated Future Amortization Expense) (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Intangible Assets, Net (Excluding Goodwill) [Abstract]
 
 
2014
$ 178 
 
2015
133 
 
2016
74 
 
2017
31 
 
2018 and thereafter
55 
 
Net carrying amount
$ 471 
$ 479 
Accrued Expenses and Accrued Litigation (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Accrued Liabilities [Abstract]
 
 
Customer and merchant incentives
$ 1,286 
$ 1,058 
Personnel costs
413 
354 
Advertising
149 
122 
Income and other taxes
95 
94 
Other
158 
120 
Total accrued expenses
$ 2,101 
$ 1,748 
Accrued Expenses and Accrued Litigation Litigation Expense (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Loss Contingencies [Line Items]
 
 
 
Accrued litigation
$ 886 
$ 726 
 
Incremental net pre-tax charge related to opt out merchants
95 
20 
770 
U.S. Merchant Litigation - Opt Out Merchants [Member]
 
 
 
Loss Contingencies [Line Items]
 
 
 
Incremental net pre-tax charge related to opt out merchants
95 
 
 
Short-term Reduction in Default Credit Interchange - Accrued Litigation [Member]
 
 
 
Loss Contingencies [Line Items]
 
 
 
Accrued litigation
$ 68 
 
 
Pension Plans, Postretirement Plans, Savings Plan and Other Benefits Narrative (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Contribution expense for all defined contribution plans
$ 51 
$ 41 
$ 35 
Pension Plans
 
 
 
Defined Benefit Plan, Recognized Net Gain (Loss) Due to Settlements
(2)
0 
1 
Employer contributions
10 
10 
 
Accumulated benefit obligation
280 
267 
 
Defined Benefit Plan, Assumptions Used Calculating Net Periodic Benefit Cost, Expected Long-term Return on Assets
3.29% 
6.00% 
8.00% 
Qualified Plan
 
 
 
Defined Benefit Plan, Recognized Net Gain (Loss) Due to Settlements
(2)
 
 
Employer contributions
 
10 
20 
Defined Benefit Plan, Assumptions Used Calculating Net Periodic Benefit Cost, Expected Long-term Return on Assets
5.00% 
 
 
Other Postretirement Benefit Plans, Defined Benefit
 
 
 
Postretirement Plan, Effect of one percentage point increase on service and interest cost components
1 
 
 
Defined Benefit Plan, Recognized Net Gain (Loss) Due to Settlements
0 
0 
0 
Employer contributions
3 
5 
 
Employee Severance
 
 
 
Severance Plan [Abstract]
 
 
 
Severance Costs
24 
29 
23 
Fixed Income |
Qualified Plan
 
 
 
Investment allocation range target, percentage
80.00% 
 
 
U. S. Equity Large/Medium Cap |
Qualified Plan
 
 
 
Investment allocation range target, percentage
12.00% 
 
 
U. S. Equity Small Cap |
Qualified Plan
 
 
 
Investment allocation range target, percentage
4.00% 
 
 
Non U. S. Equity [Member] |
Qualified Plan
 
 
 
Investment allocation range target, percentage
4.00% 
 
 
Foreign Pension Plan, Defined Benefit
 
 
 
Estimated contributions in 2014
$ 10 
 
 
Pension Plans, Postretirement Plans, Savings Plan and Other Benefits Schedule of Funded Status (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Defined Benefit Plans, Change in Plan Assets [Roll Forward]
 
 
 
Fair value of plan assets at end of year
$ 275 
$ 267 
 
Defined Benefit Plans, Funded Status [Abstract]
 
 
 
Fair value of plan assets at end of year
275 
267 
 
Pension Plans
 
 
 
Defined Benefit Plans, Change in Benefit Obligation [Roll Forward]
 
 
 
Benefit obligation at beginning of year
268 
244 
 
Service cost
10 
11 
14 
Interest cost
10 
10 
12 
Plan participants' contributions
0 
0 
 
Actuarial (gain) loss
6 
14 
 
Benefits paid
(13)
(11)
 
Benefit obligation at end of year
281 
268 
244 
Defined Benefit Plans, Change in Plan Assets [Roll Forward]
 
 
 
Fair value of plan assets at beginning of year
267 
243 
 
Actual return on plan assets
11 
25 
 
Employer contributions
10 
10 
 
Plan participants' contributions
0 
0 
 
Benefits paid
(13)
(11)
 
Fair value of plan assets at end of year
275 
267 
243 
Defined Benefit Plans, Funded Status [Abstract]
 
 
 
Fair value of plan assets at end of year
275 
267 
243 
Benefit obligation at end of year
281 
268 
244 
Funded status at end of year
(6)
(1)
 
Prepaid expenses, long term
0 
5 
 
Accrued expenses
(2)
(3)
 
Other liabilities, long term
(4)
(3)
 
Total
(6)
(1)
 
Net actuarial loss (gain)
52 
50 
 
Prior service credit
0 
0 
 
Total
52 
50 
 
Discount rate
4.46% 
3.50% 
 
Pension Plans |
Non-Qualified
 
 
 
Defined Benefit Plans, Funded Status [Abstract]
 
 
 
Rate of compensation increase
5.00% 
5.00% 
 
Pension Plans |
Foreign Pension Plan, Defined Benefit
 
 
 
Defined Benefit Plans, Funded Status [Abstract]
 
 
 
Rate of compensation increase
2.82% 
 
 
Other Postretirement Benefit Plans, Defined Benefit
 
 
 
Defined Benefit Plans, Change in Benefit Obligation [Roll Forward]
 
 
 
Benefit obligation at beginning of year
93 
87 
 
Service cost
3 
2 
3 
Interest cost
3 
3 
3 
Plan participants' contributions
1 
1 
 
Actuarial (gain) loss
(16)
6 
 
Benefits paid
(4)
(6)
 
Benefit obligation at end of year
80 
93 
87 
Defined Benefit Plans, Change in Plan Assets [Roll Forward]
 
 
 
Fair value of plan assets at beginning of year
0 
0 
 
Actual return on plan assets
0 
0 
 
Employer contributions
3 
5 
 
Plan participants' contributions
1 
1 
 
Benefits paid
(4)
(6)
 
Fair value of plan assets at end of year
0 
0 
0 
Defined Benefit Plans, Funded Status [Abstract]
 
 
 
Fair value of plan assets at end of year
0 
0 
0 
Benefit obligation at end of year
80 
93 
87 
Funded status at end of year
(80)
(93)
 
Prepaid expenses, long term
0 
0 
 
Accrued expenses
(4)
(4)
 
Other liabilities, long term
(76)
(89)
 
Total
(80)
(93)
 
Net actuarial loss (gain)
(8)
7 
 
Prior service credit
0 
0 
 
Total
$ (8)
$ 7 
 
Discount rate
4.75% 
3.75% 
 
Rate of compensation increase
3.00% 
5.37% 
 
Pension Plans, Postretirement Plans, Savings Plan and Other Benefits Schedule of Pension Plans with Benefit Obligations in Excess of Plan Assets (Details) (Pension Plans, USD $)
In Millions, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Pension Plans
 
 
Projected benefit obligation
$ 281 
$ 6 
Accumulated benefit obligation
280 
5 
Fair value of plan assets
$ 275 
$ 0 
Pension Plans, Postretirement Plans, Savings Plan and Other Benefits Net Periodic Pension Cost for Pension Plans (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Pension Plans
 
 
 
Service cost
$ 10 
$ 11 
$ 14 
Interest cost
10 
10 
12 
Expected return on plan assets
(13)
(14)
(19)
Settlement (gain) loss
2 
0 
(1)
Actuarial loss (gain)
3 
4 
2 
Prior service credit
0 
(2)
(2)
Net periodic pension cost
12 
9 
6 
Other Postretirement Benefit Plans, Defined Benefit
 
 
 
Service cost
3 
2 
3 
Interest cost
3 
3 
3 
Expected return on plan assets
0 
0 
0 
Settlement (gain) loss
0 
0 
0 
Actuarial loss (gain)
0 
0 
(1)
Prior service credit
0 
0 
0 
Net periodic pension cost
$ 6 
$ 5 
$ 5 
Pension Plans, Postretirement Plans, Savings Plan and Other Benefits Schedule of Change in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Total recognized in other comprehensive income (loss)
$ (13)
$ 8 
$ 31 
Pension Plans
 
 
 
Settlement gain (loss)
(2)
0 
1 
Current year actuarial loss (gain)
7 
4 
15 
Amortization of actuarial (loss) gain
(3)
(4)
(2)
Amortization of prior service credit
0 
2 
2 
Total recognized in other comprehensive income (loss)
2 
2 
16 
Total recognized in net periodic benefit cost and other comprehensive income
14 
11 
22 
Other Postretirement Benefit Plans, Defined Benefit
 
 
 
Settlement gain (loss)
0 
0 
0 
Current year actuarial loss (gain)
(15)
6 
15 
Amortization of actuarial (loss) gain
0 
0 
1 
Amortization of prior service credit
0 
0 
0 
Total recognized in other comprehensive income (loss)
(15)
6 
16 
Total recognized in net periodic benefit cost and other comprehensive income
$ (9)
$ 11 
$ 21 
Pension Plans, Postretirement Plans, Savings Plan and Other Benefits Schedule of Amounts to be Amortized from AOCI into Net Periodic Benefit Cost (Details) (USD $)
12 Months Ended
Dec. 31, 2013
Pension Plans
 
Actuarial loss
$ 4,000,000 
Other Postretirement Benefit Plans, Defined Benefit
 
Actuarial loss
$ 0 
Pension Plans, Postretirement Plans, Savings Plan and Other Benefits Schedule of Weighted-Average Assumptions Used in Net Periodic Pension Cost (Details)
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Pension Plans
 
 
 
Discount rate
3.30% 
4.25% 
5.00% 
Expected return on plan assets
3.29% 
6.00% 
8.00% 
Other Postretirement Benefit Plans, Defined Benefit
 
 
 
Discount rate
3.75% 
4.25% 
5.25% 
Rate of compensation increase
5.37% 
5.37% 
5.37% 
Qualified Plan
 
 
 
Expected return on plan assets
5.00% 
 
 
Rate of compensation increase
 
5.37% 
5.37% 
Non-Qualified
 
 
 
Rate of compensation increase
5.00% 
5.00% 
5.00% 
Foreign Pension Plan, Defined Benefit |
Pension Plans
 
 
 
Rate of compensation increase
2.24% 
 
 
Pension Plans, Postretirement Plans, Savings Plan and Other Benefits Schedule of Valuation Hierarchy of Qualified Plans Assets at Fair Value (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Total assets at fair value
$ 275 
$ 267 
 
Money Market
 
 
 
Total assets at fair value
115 
2 
 
U. S. Equity Small Cap
 
 
 
Total assets at fair value
10 
12 
 
International Equity
 
 
 
Total assets at fair value
9 
12 
 
U. S. Equity Large/Medium Cap
 
 
 
Total assets at fair value
31 
32 
 
Fixed Income
 
 
 
Total assets at fair value
101 
209 
 
Insurance Contracts
 
 
 
Total assets at fair value
9 
 
 
Pension Plans
 
 
 
Total assets at fair value
275 
267 
243 
Quoted Prices in Active Markets (Level 1)
 
 
 
Total assets at fair value
134 
26 
 
Quoted Prices in Active Markets (Level 1) |
Money Market
 
 
 
Total assets at fair value
115 
2 
 
Quoted Prices in Active Markets (Level 1) |
U. S. Equity Small Cap
 
 
 
Total assets at fair value
10 
12 
 
Quoted Prices in Active Markets (Level 1) |
International Equity
 
 
 
Total assets at fair value
9 
12 
 
Quoted Prices in Active Markets (Level 1) |
U. S. Equity Large/Medium Cap
 
 
 
Total assets at fair value
0 
0 
 
Quoted Prices in Active Markets (Level 1) |
Fixed Income
 
 
 
Total assets at fair value
0 
0 
 
Quoted Prices in Active Markets (Level 1) |
Insurance Contracts
 
 
 
Total assets at fair value
0 
 
 
Significant Other Observable Inputs (Level 2)
 
 
 
Total assets at fair value
141 
241 
 
Significant Other Observable Inputs (Level 2) |
Money Market
 
 
 
Total assets at fair value
0 
0 
 
Significant Other Observable Inputs (Level 2) |
U. S. Equity Small Cap
 
 
 
Total assets at fair value
0 
0 
 
Significant Other Observable Inputs (Level 2) |
International Equity
 
 
 
Total assets at fair value
0 
0 
 
Significant Other Observable Inputs (Level 2) |
U. S. Equity Large/Medium Cap
 
 
 
Total assets at fair value
31 
32 
 
Significant Other Observable Inputs (Level 2) |
Fixed Income
 
 
 
Total assets at fair value
101 
209 
 
Significant Other Observable Inputs (Level 2) |
Insurance Contracts
 
 
 
Total assets at fair value
9 
 
 
Fair Value, Inputs, Level 3
 
 
 
Total assets at fair value
0 
0 
 
Fair Value, Inputs, Level 3 |
Money Market
 
 
 
Total assets at fair value
0 
0 
 
Fair Value, Inputs, Level 3 |
U. S. Equity Small Cap
 
 
 
Total assets at fair value
0 
0 
 
Fair Value, Inputs, Level 3 |
International Equity
 
 
 
Total assets at fair value
0 
0 
 
Fair Value, Inputs, Level 3 |
U. S. Equity Large/Medium Cap
 
 
 
Total assets at fair value
0 
0 
 
Fair Value, Inputs, Level 3 |
Fixed Income
 
 
 
Total assets at fair value
0 
0 
 
Fair Value, Inputs, Level 3 |
Insurance Contracts
 
 
 
Total assets at fair value
$ 0 
 
 
Pension Plans, Postretirement Plans, Savings Plan and Other Benefits Schedule of Expected Benefit Payments (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2013
Pension Plans
 
2014
$ 24 
2015
22 
2016
19 
2017
20 
2018
22 
2019 - 2023
92 
Benefits Payments |
Other Postretirement Benefit Plans, Defined Benefit
 
2014
4 
2015
4 
2016
4 
2017
4 
2018
5 
2019 - 2023
25 
Expected Subsidy Receipts |
Other Postretirement Benefit Plans, Defined Benefit
 
2014
0 
2015
0 
2016
0 
2017
0 
2018
0 
2019 - 2023
1 
Net Benefit Payments |
Other Postretirement Benefit Plans, Defined Benefit
 
2014
4 
2015
4 
2016
4 
2017
4 
2018
5 
2019 - 2023
$ 24 
Pension Plans, Postretirement Plans, Savings Plan and Other Benefits Health Trend (Details) (Other Postretirement Benefit Plans, Defined Benefit, USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Other Postretirement Benefit Plans, Defined Benefit
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
Postretirement Plan, Health care cost trend rate assumed for next year
7.50% 
8.00% 
Postretirement Plan, Rate to which the cost trend rate is expected to decline (the ultimate trend rate)
5.00% 
5.00% 
Postretirement Plan, Year that the rate reaches the ultimate trend rate
2019 
2019 
Postretirement Plan, Effect of one percentage point increase on postretirement obligation
$ 7 
 
Postretirement Plan, Effect of one percentage point decrease on postretirement obligation
(6)
 
Postretirement Plan, Effect of one percentage point increase on service and interest cost components
$ 1 
 
Debt (Narrative) (Details) (USD $)
12 Months Ended
Dec. 31, 2013
basispoint
Dec. 31, 2012
Nov. 16, 2017
Credit Facility
Nov. 16, 2012
Credit Facility
Dec. 31, 2013
Outside the United States
Revolving credit facility
 
 
$ 2,950,000,000 
$ 3,000,000,000 
 
Facility fee, basis points
8 
 
 
 
 
Basis points in excess of LIBOR
79.5 
 
 
 
 
Other Liabilities, Current
$ 363,000,000 
$ 234,000,000 
 
 
$ 35,000,000 
Stockholders' Equity Stockholders' Equity (Narrative) (Details) (USD $)
12 Months Ended 5 Months Ended 12 Months Ended 1 Months Ended 12 Months Ended 36 Months Ended 5 Months Ended 1 Months Ended 12 Months Ended 36 Months Ended 1 Months Ended 12 Months Ended 36 Months Ended 1 Months Ended 12 Months Ended 36 Months Ended 1 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
May 31, 2006
The MasterCard Foundation
Dec. 31, 2013
The MasterCard Foundation
Apr. 28, 2011
Class A Common Stock
Sep. 30, 2010
Class A Common Stock
Dec. 31, 2013
Class A Common Stock
Dec. 31, 2012
Class A Common Stock
Dec. 31, 2011
Class A Common Stock
Dec. 31, 2013
Class A Common Stock
May 31, 2006
Class A Common Stock
The MasterCard Foundation
Jun. 30, 2012
Class A Common Stock
2012 repurchase plan
Dec. 31, 2013
Class A Common Stock
2012 repurchase plan
Dec. 31, 2012
Class A Common Stock
2012 repurchase plan
Dec. 31, 2013
Class A Common Stock
2012 repurchase plan
Feb. 28, 2013
Class A Common Stock
February 2013 Share Repurchase Plan
Dec. 31, 2013
Class A Common Stock
February 2013 Share Repurchase Plan
Dec. 31, 2013
Class A Common Stock
February 2013 Share Repurchase Plan
Jan. 24, 2014
Class A Common Stock
December 2013 Share Repurchase Plan
Dec. 31, 2013
Class A Common Stock
December 2013 Share Repurchase Plan
Dec. 31, 2013
Class A Common Stock
December 2013 Share Repurchase Plan
Dec. 31, 2013
Class A Common Stock
December 2013 Share Repurchase Plan
Jan. 24, 2014
Class A Common Stock
February 2013 Share Repurchase Program and December 2013 Share Repurchase Program [Member]
Dec. 31, 2013
Class B Common Stock
Dec. 31, 2012
Class B Common Stock
Equity Sale Restriction Period
 
 
 
 
 
 
 
 
 
 
 
20 years 11 months 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common Stock, Shares Authorized
 
 
 
 
 
 
 
3,000,000,000 
3,000,000,000 
 
3,000,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,200,000,000 
1,200,000,000 
Common Stock, Par Value Per Share
 
 
 
 
 
 
 
$ 0.0001 
$ 0.0001 
 
$ 0.0001 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 0.0001 
$ 0.0001 
Issuance and donation of shares
 
 
 
 
 
 
 
 
 
 
 
135,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Authorized plan to repurchase stock, maximum repurchase amount
 
 
 
 
 
 
$ 1,000,000,000 
$ 9,000,000,000 
 
 
 
 
$ 1,500,000,000 
 
 
 
$ 2,000,000,000 
 
 
 
$ 3,500,000,000 
 
 
 
 
 
Incremental common stock authorized to repurchase
 
 
 
 
 
1,000,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Treasury Stock Acquired, Average Cost Per Share
 
 
 
 
 
 
 
$ 59.78 
$ 43.07 
 
$ 42.45 
 
 
$ 51.72 
$ 46.02 
$ 48.16 
 
$ 63.01 
$ 63.01 
 
 
$ 0.00 
$ 0.00 
$ 83.00 
 
 
Preferred Stock, Shares Outstanding
0 
0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shares repurchased
 
 
 
 
 
 
 
40,900,000 
40,600,000 
44,300,000 
125,700,000 
 
 
11,700,000 
19,500,000 
31,100,000 
 
29,200,000 1
29,200,000 
 
 
0 
0 
4,200,000 
 
 
Treasury Stock, Value, Acquired, Cost Method
2,443,000,000 
1,748,000,000 
1,148,000,000 
 
 
 
 
2,443,000,000 
1,748,000,000 
1,148,000,000 
 
 
 
604,000,000 
896,000,000 
 
 
1,839,000,000 
 
 
 
0 
 
351,000,000 
 
 
Remaining authorization
 
 
 
 
 
 
 
$ 3,661,000,000 
$ 604,000,000 
$ 852,000,000 
 
 
 
$ 0 
$ 604,000,000 
 
 
$ 161,000,000 
 
$ 3,300,000,000 
 
$ 3,500,000,000 
 
 
 
 
Stockholders' Equity Stockholders' Equity (Schedule of Classes of Capital Stock) (Details) (USD $)
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2013
Public Investors (Class A Stockholders)
Dec. 31, 2012
Public Investors (Class A Stockholders)
Dec. 31, 2013
Principal or Affiliate Members (Class B Stockholders)
Dec. 31, 2012
Principal or Affiliate Members (Class B Stockholders)
Dec. 31, 2013
Foundation (Class A Stockholders)
Dec. 31, 2012
Foundation (Class A Stockholders)
Dec. 31, 2013
Class A Common Stock
Dec. 31, 2012
Class A Common Stock
Dec. 31, 2013
Class B Common Stock
Dec. 31, 2012
Class B Common Stock
May 31, 2006
Preferred Stock
Common stock, par value
 
 
 
 
 
 
 
 
$ 0.0001 
$ 0.0001 
$ 0.0001 
$ 0.0001 
 
Common stock, authorized shares
 
 
 
 
 
 
 
 
3,000,000,000 
3,000,000,000 
1,200,000,000 
1,200,000,000 
 
Preferred Stock, Par Value
 
 
 
 
 
 
 
 
 
 
 
 
$ 0.0001 
Preferred Stock, Shares Authorized
 
 
 
 
 
 
 
 
 
 
 
 
0 
Preferred Stock, Shares Issued
0 
0 
 
 
 
 
 
 
 
 
 
 
 
Preferred Stock, Shares Outstanding
0 
0 
 
 
 
 
 
 
 
 
 
 
 
Equity Ownership
 
 
86.10% 
85.90% 
3.80% 
3.90% 
10.10% 
10.20% 
 
 
 
 
 
General Voting Power
 
 
89.50% 
89.40% 
0.00% 
0.00% 
10.50% 
10.60% 
 
 
 
 
 
Stockholders' Equity Stockholders Equity (Schedule of Share Repurchase Authorizations) (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified
12 Months Ended 1 Months Ended 12 Months Ended 36 Months Ended 1 Months Ended 12 Months Ended 36 Months Ended 12 Months Ended 36 Months Ended 1 Months Ended 12 Months Ended 36 Months Ended 1 Months Ended 12 Months Ended 36 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Sep. 30, 2010
Class A Common Stock
Dec. 31, 2013
Class A Common Stock
Dec. 31, 2012
Class A Common Stock
Dec. 31, 2011
Class A Common Stock
Dec. 31, 2013
Class A Common Stock
Jun. 30, 2012
2012 repurchase plan
Class A Common Stock
Dec. 31, 2013
2012 repurchase plan
Class A Common Stock
Dec. 31, 2012
2012 repurchase plan
Class A Common Stock
Dec. 31, 2013
2012 repurchase plan
Class A Common Stock
Dec. 31, 2013
2010 repurchase plan
Class A Common Stock
Dec. 31, 2012
2010 repurchase plan
Class A Common Stock
Dec. 31, 2011
2010 repurchase plan
Class A Common Stock
Dec. 31, 2013
2010 repurchase plan
Class A Common Stock
Jan. 24, 2014
December 2013 Share Repurchase Plan
Class A Common Stock
Dec. 31, 2013
December 2013 Share Repurchase Plan
Class A Common Stock
Dec. 31, 2013
December 2013 Share Repurchase Plan
Class A Common Stock
Dec. 31, 2013
December 2013 Share Repurchase Plan
Class A Common Stock
Feb. 28, 2013
February 2013 Share Repurchase Plan
Class A Common Stock
Dec. 31, 2013
February 2013 Share Repurchase Plan
Class A Common Stock
Dec. 31, 2013
February 2013 Share Repurchase Plan
Class A Common Stock
Class of Stock [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Board Authorization
 
 
 
$ 1,000 
$ 9,000 
 
 
 
$ 1,500 
 
 
 
$ 2,000 1
 
 
 
 
$ 3,500 
 
 
$ 2,000 
 
 
Dollar-value of shares repurchased
2,443 
1,748 
1,148 
 
2,443 
1,748 
1,148 
 
 
604 
896 
 
0 
852 1
1,148 1
 
 
 
0 
 
 
1,839 
 
Remaining authorization
 
 
 
 
$ 3,661 
$ 604 
$ 852 
 
 
$ 0 
$ 604 
 
$ 0 
$ 0 1
$ 852 1
 
$ 3,300 
 
$ 3,500 
 
 
$ 161 
 
Shares repurchased
 
 
 
 
40.9 
40.6 
44.3 
125.7 
 
11.7 
19.5 
31.1 
0 
21.1 1
44.3 1
65.4 
 
 
0 
0 
 
29.2 1
29.2 
Average price paid per share
 
 
 
 
$ 59.78 
$ 43.07 
 
$ 42.45 
 
$ 51.72 
$ 46.02 
$ 48.16 
$ 0.00 
$ 40.35 1
$ 25.89 1
$ 30.56 
 
 
$ 0.00 
$ 0.00 
 
$ 63.01 
$ 63.01 
Accumulated Other Comprehensive Income (Loss) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Deferred costs related to the Company's Pension Plans and Postretirement Plans that were reclassified from other comprehensive income to general and administrative expense
$ 6 
$ 13 
 
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI for Sale of Securities, before Tax
5 
2 
(8)
Accumulated Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment,
206 
93 
30 
Accumulated Other Comprehensive Income (Loss), Defined Benefit Pension and Other Postretirement Benefit Plans, Net of Tax
(29)
(37)
(32)
Accumulated Other Comprehensive Income (Loss), Investment Securities Available-for-Sale Securities, Net of Tax
1 
5 
0 
Accumulated Other Comprehensive Income (Loss)
178 
61 
(2)
Other Comprehensive Income (Loss), Foreign Currency Translation Adjustments
113 1
63 1
(75)
Other Comprehensive Income (Loss), Defined Benefit Pension and Other Postretirement Plans, Net of Tax
8 1
(5)1
(20)
Other Comprehensive Income (Loss), Investment Securities Available-for-Sale, Net of Tax
(4)1
5 1
 
Accumulated Other Comprehensive Income (Loss)
117 1
63 1
(97)
Other Comprehensive Income (Loss), Reclassification of net gains on available-for-sale investment securities, recognized in investment income
$ 3 
$ 1 
$ (5)
Share-Based Payment and Other Benefits (Narrative) (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Performance Units
 
 
 
Weighted-average grant-date fair value of awards granted
$ 56 
$ 39 
$ 22 
Restricted Stock Units (RSUs) |
Minimum
 
 
 
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period
3 years 
 
 
Restricted Stock Units (RSUs) |
Maximum
 
 
 
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period
4 years 
 
 
Long-Term Incentive Plan |
Class A Common Stock
 
 
 
Shares reserve for future issuance
116 
 
 
Stock Option
 
 
 
Share-Based Compensation Arrangement By Share-Based Payment Award Options Term
10 years 
 
 
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period
4 years 
 
 
Unrecognized compensation cost
$ 24 
 
 
Period over which unrecognized cost will be recognized, in years
2 years 7 months 6 days 
 
 
Performance-Based Restricted Stock
 
 
 
Unrecognized compensation cost
11 
 
 
Period over which unrecognized cost will be recognized, in years
1 year 6 months 
 
 
Restricted Stock Units (RSUs)
 
 
 
Weighted-average grant-date fair value of awards granted
$ 52 
$ 42 
$ 26 
Unrecognized compensation cost
$ 83 
 
 
Period over which unrecognized cost will be recognized, in years
1 year 9 months 18 days 
 
 
Performance-Based Restricted Stock
 
 
 
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period
3 years 
 
 
Performance-Based Restricted Stock |
Minimum
 
 
 
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period
3 years 
 
 
Performance-Based Restricted Stock |
Maximum
 
 
 
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period
4 years 
 
 
2011 Issuance |
Performance Units
 
 
 
Weighted-average grant-date fair value of awards granted
 
 
$ 82 
Vesting period for retirement or disability [Member] |
Performance Units
 
 
 
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period
6 months 
 
 
Minimum vesting from date of retirement eligibility [Member] |
Performance Units
 
 
 
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period
6 months 
 
 
Share Based Payment and Other Benefits (Schedule of Weighted-Average Assumptions Used in the Valuation of Awards) (Details)
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Employee Service Share-based Compensation, Aggregate Disclosures [Abstract]
 
 
 
Risk-free rate of return
0.80% 
1.20% 
2.60% 
Expected term (in years)
5 years 
6 years 3 months 
6 years 3 months 
Expected volatility
27.10% 
35.20% 
33.70% 
Expected dividend yield
0.50% 
0.30% 
0.20% 
Weighted-average fair value per option granted
$ 12.33 
$ 14.85 
$ 8.91 
Share-Based Payment and Other Benefits (Summary of Stock Option Activity) (Details) (USD $)
In Millions, except Share data in Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Employee Service Share-based Compensation, Aggregate Disclosures [Abstract]
 
Options outstanding at January 1, 2013
6,415 
Options granted
1,832 
Options exercised
(1,242)
Options forfeited/expired
(45)
Options outstanding at December 31, 2013
6,960 
Options exercisable at December 31, 2013
2,965 
Options vested and expected to vest at December 31, 2013
6,862 
Weighted average exercise price, options outstanding at January 1, 2013
$ 25 
Weighted average exercise price, options granted
$ 52 
Weighted average exercise price, options exercised
$ 21 
Weighted average exercise price, options forfeited/expired
$ 46 
Weighted average exercise price, options outstanding at December 31, 2013
$ 33 
Weighted average exercise price, options exercisable at December 31, 2013
$ 21 
Weighted average exercise price, options vested and expected to vest at December 31, 2013
$ 32 
Weighted average remaining contractual term, options outstanding at December 31, 2013, in years
7 years 1 month 6 days 
Weighted average remaining contractual term, options exercisable at December 31, 2013, in years
5 years 8 months 12 days 
Weighted average remaining contractual term, options vested and expected to vest at December 31, 2013, in years
7 years 1 month 6 days 
Aggregate intrinsic value, options outstanding at December 31, 2013
$ 355 
Aggregate intrinsic value, options exercisable at December 31, 2013
185 
Aggregate intrinsic value, options vested and expected to vest at December 31, 2013
$ 351 
Share Based Payment and Other Benefits (Summary of Restricted Stock Unit Activity) (Details) (USD $)
In Millions, except Share data in Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value
$ 355 
 
 
Restricted Stock Units (RSUs)
 
 
 
Outstanding at January 1, 2013
5,456 
 
 
Granted
1,530 
 
 
Converted
(1,496)
 
 
Forfeited/expired
(160)
 
 
Outstanding at December 31, 2013
5,330 
5,456 
 
Units vested at December 31, 2013
5,165 
 
 
Weighted-average grant-date fair value, units outstanding at January 1, 2013
$ 30 
 
 
Weighted-average grant-date fair value, granted
$ 52 
$ 42 
$ 26 
Weighted-average grant-date fair value, converted
$ 23 
 
 
Weighted-average grant-date fair value, forfeited/expired
$ 36 
 
 
Weighted-average grant-date fair value, units outstanding at December 31, 2013
$ 38 
$ 30 
 
Weighted-average grant-date fair value, units vested at December 31, 2013
$ 38 
 
 
Weighted-average remaining contractual term (in years), outstanding at December 31, 2013
1 year 1 month 6 days 
 
 
Weighted-average remaining contractual term (in years), units vested at December 31, 2013
1 year 1 month 6 days 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value
445 
 
 
Aggregate intrinsic value, units vested at December 31, 2013
$ 432 
 
 
Share Based Payment and Other Benefits (Summary of Performance Stock Unit Activity) (Details) (Performance Units, USD $)
In Millions, except Share data in Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Outstanding at January 1, 2013
1,135 
 
 
Granted
180 
 
 
Converted
(577)
 
 
Forfeited/expired
0 
 
 
Outstanding at December 31, 2013
787 
1,135 
 
Units vested at December 31, 2013
771 1
 
 
Weighted-average grant-date fair value, units outstanding at January 1, 2013
$ 27 
 
 
Weighted-average grant-date fair value, granted
$ 56 
$ 39 
$ 22 
Weighted-average grant-date fair value, converted
$ 52 
 
 
Weighted-average grant-date fair value, forfeited/expired
$ 0 
 
 
Weighted-average grant-date fair value, units outstanding at December 31, 2013
$ 37 
$ 27 
 
Weighted-average grant-date fair value, units vested at December 31, 2013
$ 37 1
 
 
Weighted-average remaining contractual term (in years), outstanding at December 31, 2013
10 months 24 days 
 
 
Weighted-average remaining contractual term (in years), units vested at December 31, 2013
10 months 24 days 1
 
 
Aggregate intrinsic value, outstanding at December 31, 2013
$ 66 
 
 
Aggregate intrinsic value, units vested at December 31, 2013
$ 64 1
 
 
Additional grants for performance
 
 
 
Granted
49 
 
 
Weighted-average grant-date fair value, granted
$ 32 
 
 
Share-Based Payment and Other Benefits Schedule of Additional Share-Based Payment Information (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Share-based compensation expense: options, RSUs and PSUs
$ 121 
$ 88 
$ 79 
Income tax benefit recognized for equity awards
42 
30 
28 
Income tax benefit related to options exercised
16 
27 
7 
Additional paid-in-capital balance attributed to equity award
233 
187 
151 
Total intrinsic value of stock Options exercised
48 
77 
22 
General and administrative expense
2,649 
2,429 
2,196 
Performance Units [Member]
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Weighted-average grant-date fair value of awards granted
$ 56 
$ 39 
$ 22 
Total intrinsic value of units converted into shares of Class A common stock
29 
27 
93 
Director Plan [Member] |
Common Class A [Member]
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Total intrinsic value of units converted into shares of Class A common stock
2 
2 
2 
General and administrative expense
2 
1 
1 
Restricted Stock Units (RSUs) [Member]
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Weighted-average grant-date fair value of awards granted
$ 52 
$ 42 
$ 26 
Total intrinsic value of units converted into shares of Class A common stock
$ 78 
$ 91 
$ 4 
Commitments Narrative (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Commitments and Contingencies Disclosure [Abstract]
 
 
 
Net present value of minimum lease payments
$ 9 
 
 
Future minimum payments operating leases, sponsorship, licensing and other agreements, accrued
46 
 
 
Rental expense for leased office space
38 
36 
30 
Lease expense for automobiles, computer equipment and office equipment
$ 14 
$ 11 
$ 9 
Commitments Future Minimum Payments Due Under Non-Cancelable Agreements (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2013
Total
 
2014
$ 379 
2015
163 
2016
84 
2017
41 
2018
22 
Thereafter
45 
Total
734 
Capital Leases
 
2014
8 
2015
1 
2016
0 
2017
0 
2018
0 
Thereafter
0 
Total
9 
Operating Leases
 
2014
24 
2015
25 
2016
23 
2017
18 
2018
11 
Thereafter
24 
Total
125 
Sponsorship, Licensing & Other
 
2014
347 
2015
137 
2016
61 
2017
23 
2018
11 
Thereafter
21 
Total
$ 600 
Income Taxes Narrative (Details) (USD $)
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Income Tax Disclosure [Abstract]
 
 
 
Undistributed foreign earnings, indefinitely reinvested
$ 3,500,000,000 
 
 
Effective income tax rate
30.80% 
29.90% 
30.60% 
Unrecognized tax benefits that would effect the effective tax rate
320,000,000 
 
 
Net tax-related interest expense (income)
(4,000,000)
(1,000,000)
(2,000,000)
Net tax-related interest payable
17,000,000 
15,000,000 
 
Earning Per Share Diluted Impact Of Incentive Grant Received Reducing Income Tax Liability
$ 0.62 
$ 0.51 
$ 0.34 
Impact Of Incentive Grant Received Reducing Income Tax Liability Value
$ 76,000,000 
$ 64,000,000 
$ 44,000,000 
Effective income Tax Rate On Taxable Income In Excess Of Base Amount Period In Effect
 
 
10 years 
Income Taxes Components of Income Tax Provision (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Current
 
 
 
Federal
$ 1,010 
$ 524 
$ 619 
State and local
33 
24 
30 
Foreign
456 
390 
369 
Current
1,499 
938 
1,018 
Deferred
 
 
 
Federal
(100)
248 
(155)
State and local
(4)
7 
(6)
Foreign
(11)
(19)
(15)
Deferred
(115)
236 
(176)
Income tax expense
$ 1,384 
$ 1,174 
$ 842 
Income Taxes Schedule of Domestic and Foreign Earnings (Loss) Before Income Taxes (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Income Tax Disclosure [Abstract]
 
 
 
United States
$ 2,741 
$ 2,508 
$ 1,415 
Foreign
1,759 
1,425 
1,333 
Income before income taxes
$ 4,500 
$ 3,933 
$ 2,748 
Income Taxes Schedule of Effective Income Tax Rate Reconciliation (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Amount
 
 
 
Income before income tax expense
$ 4,500 
$ 3,933 
$ 2,748 
Federal statutory tax
1,575 
1,376 
961 
State tax effect, net of federal benefit
19 
23 
14 
Foreign tax effect
(208)
(175)
(133)
Non-deductible expenses and other differences
13 
(21)
34 
Tax exempt income
(1)
(2)
(3)
Foreign repatriation
(14)
(27)
(31)
Income tax expense
$ 1,384 
$ 1,174 
$ 842 
Percent
 
 
 
Federal statutory tax
35.00% 
35.00% 
35.00% 
State tax effect, net of federal benefit
0.40% 
0.60% 
0.50% 
Foreign tax effect
(4.60%)
(4.40%)
(4.90%)
Non-deductible expenses and other differences
0.30% 
(0.50%)
1.20% 
Tax exempt income
0.00% 
(0.10%)
(0.10%)
Foreign repatriation
(0.30%)
(0.70%)
(1.10%)
Income tax expense
30.80% 
29.90% 
30.60% 
Income Taxes Schedule of Deferred Tax Assets and Liabilities (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Deferred Tax Assets and Liabilities [Line Items]
 
 
Accrued liabilities
$ 124 
$ 91 
Compensation and benefits
201 
173 
State taxes and other credits
99 
96 
Net operating losses
39 
34 
Other items
46 
31 
Less: Valuation allowance
(28)
(25)
Total Deferred Tax Assets
481 
400 
Prepaid expenses and other accruals
50 
56 
Intangible assets
97 
113 
Property, plant and equipment
116 
122 
Other items
37 
42 
Total Deferred Tax Liabilities
300 
333 
Net Deferred Tax Assets
181 1
67 1
Current deferred tax liabilities in other
$ 5 
$ 17 
Income Taxes Reconciliation of Beginning and Ending Tax Benefits (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Income Tax Disclosure [Abstract]
 
 
 
Beginning balance
$ 257 
$ 214 
$ 165 
Current year tax positions
80 
58 
34 
Prior year tax positions
12 
15 
23 
Prior year tax positions
(8)
(21)
(2)
Settlements with tax authorities
(2)
(2)
(1)
Expired statute of limitations
(19)
(7)
(5)
Ending balance
$ 320 
$ 257 
$ 214 
Legal and Regulatory Proceedings (Details) (USD $)
12 Months Ended 1 Months Ended 3 Months Ended 12 Months Ended 6 Months Ended 12 Months Ended 1 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Feb. 7, 2011
Event Involving Visa Parties, Member Banks and MasterCard
Feb. 7, 2011
Event Involving Member Banks and MasterCard
Jun. 30, 2012
U.S. Merchant Lawsuit Settlement
Dec. 31, 2011
U.S. Merchant Lawsuit Settlement
Dec. 31, 2012
U.S. Merchant Lawsuit Settlement
Dec. 31, 2013
U.S. merchant litigation - class litigation
merchant
Jun. 30, 2008
Cross Border
Dec. 31, 2013
Cross Border
Dec. 31, 2013
Canadian Competition Bureau
Sep. 30, 2009
State Unfair Competition
Jul. 31, 2009
Undertakings to European Commission
Debit Card Transactions
Jul. 31, 2009
Undertakings to European Commission
Credit Card Transactions
Legal And Regulatory
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Legal proceeding complaints from merchants that have opted out of settlement
 
 
 
 
 
 
 
 
25 
 
 
 
 
 
 
Compensatory damages sought, Canadian Competition Bureau
 
 
 
 
 
 
 
 
 
 
 
$ 5,000,000,000 
 
 
 
Percent of settlement MasterCard would pay
 
 
 
12.00% 
36.00% 
 
 
 
 
 
 
 
 
 
 
Approximate percentage of merchants that opted out of settlement
 
 
 
 
 
 
 
 
25.00% 
 
 
 
 
 
 
Provision for litigation settlement
95,000,000 
20,000,000 
770,000,000 
 
 
20,000,000 
770,000,000 
 
 
 
 
 
 
 
 
Estimated Litigation Liability, Current
886,000,000 
726,000,000 
 
 
 
 
 
 
818,000,000 
 
 
 
 
 
 
Daily penalty upon failure to comply European Commission's decision, percentage
 
 
 
 
 
 
 
 
 
3.50% 
 
 
 
 
 
Daily penalty upon failure to comply European Commission's decision
 
 
 
 
 
 
 
 
 
 
800,000 
 
 
 
 
Weighted Average Interchange Fee Transaction Basis Point
 
 
 
 
 
 
 
 
 
 
 
 
 
0.20% 
0.30% 
Payments for Legal Settlements
0 1
65,000,000 1
303,000,000 1
 
 
 
 
790,000,000 
726,000,000 
 
 
 
 
 
 
Restricted Cash and Cash Equivalents, Current
723,000,000 
726,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
Estimated amount to be received from the cash settlement fund
 
 
 
 
 
 
 
 
164,000,000 
 
 
 
 
 
 
Accrued litigation payment
 
 
 
 
 
 
 
 
 
 
 
 
$ 6,000,000 
 
 
Settlement and Other Risk Management Narrative (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Settlement and Other Risk Management [Abstract]
 
 
Travelers cheques outstanding, notional value
$ 503 
$ 539 
Travelers cheques covered by collateral arrangements
$ 403 
$ 434 
Settlement and Other Risk Management Estimated Settlement Exposure and Portion of Uncollateralized Settlement Exposure for MasterCard-Branded Transactions (Details) (Guarantee Obligations [Member], USD $)
In Millions, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Guarantee Obligations [Member]
 
 
Settlement exposures
 
 
Gross settlement exposure
$ 40,657 
$ 37,768 
Collateral held for settlement exposure
(3,167)
(3,775)
Net uncollateralized settlement exposure
$ 37,490 
$ 33,993 
Foreign Exchange Risk Management Classification of Outstanding Forward Contracts (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Accounts Receivable
 
 
Foreign Exchange Risk Management [Line Items]
 
 
Estimated Fair Value
$ 13 1
$ 12 1
Other Current Liabilities
 
 
Foreign Exchange Risk Management [Line Items]
 
 
Estimated Fair Value
13 1
15 1
Commitments to purchase foreign currency |
Foreign Exchange Forward [Member]
 
 
Foreign Exchange Risk Management [Line Items]
 
 
Notional
23 
76 
Estimated Fair Value
(1)
(1)
Commitments to sell foreign currency |
Foreign Exchange Forward [Member]
 
 
Foreign Exchange Risk Management [Line Items]
 
 
Notional
1,722 
1,571 
Estimated Fair Value
$ 1 
$ (2)
Foreign Exchange Risk Management (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Derivatives Not Designated As Hedging Instruments
 
 
 
Terms of the foreign currency forward contracts
18 months 
 
 
Approximate effect of 10% adverse change in foreign currency rates on fair value loss
$ 189 
 
 
Foreign Currency Derivative Contracts
 
 
 
Derivatives Not Designated As Hedging Instruments
 
 
 
Total
52 
16 
(9)
Foreign Currency Derivative Contracts |
General and Administrative
 
 
 
Derivatives Not Designated As Hedging Instruments
 
 
 
Foreign currency derivative contracts
48 
22 
(6)
Foreign Currency Derivative Contracts |
Revenues
 
 
 
Derivatives Not Designated As Hedging Instruments
 
 
 
Foreign currency derivative contracts
$ 4 
$ (6)
$ (3)
Segment Reporting (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Schedule of Property, Plant and Equipment, by Geographical Segment
 
 
 
Property, Plant and Equipment, Net
$ 526 
$ 472 
$ 449 
Percentage of revenue generated in the U.S.
39.00% 
39.00% 
40.00% 
Number of countries generating greater than 10% of total revenue
0 
0 
0 
Number of customers that generated greater than 10% of net revenue
0 
0 
0 
United States
 
 
 
Schedule of Property, Plant and Equipment, by Geographical Segment
 
 
 
Property, Plant and Equipment, Net
410 
394 
384 
Outside the United States
 
 
 
Schedule of Property, Plant and Equipment, by Geographical Segment
 
 
 
Property, Plant and Equipment, Net
$ 116 
$ 78 
$ 65 
SUMMARY OF QUARTERLY DATA (Unaudited) (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Quarterly Financial Data [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Net Revenue
$ 2,126 
$ 2,218 
$ 2,096 
$ 1,906 
$ 1,895 
$ 1,918 
$ 1,820 
$ 1,758 
$ 8,346 
$ 7,391 
$ 6,714 
Operating income
920 
1,248 
1,228 
1,107 
899 
1,064 
974 
1,000 
4,503 
3,937 
2,713 
Net income
$ 623 
$ 879 
$ 848 
$ 766 
$ 605 
$ 772 
$ 700 
$ 682 
$ 3,116 
$ 2,759 
$ 1,906 
Basic Earnings per Share
$ 0.52 1
$ 0.73 1
$ 0.70 1
$ 0.63 1
$ 0.49 1
$ 0.62 1
$ 0.56 1
$ 0.54 1
$ 2.57 1
$ 2.20 1
$ 1.49 
Basic weighted-average shares outstanding
1,201 1
1,205 1
1,214 1
1,226 1
1,240 1
1,247 1
1,259 1
1,266 1
1,211 1
1,253 1
1,279 1
Diluted earnings per share
$ 0.52 1
$ 0.73 1
$ 0.70 1
$ 0.62 1
$ 0.49 1
$ 0.62 1
$ 0.56 1
$ 0.54 1
$ 2.56 1
$ 2.19 1
$ 1.48 
Diluted weighted-average of shares outstanding
1,205 1
1,209 1
1,217 1
1,230 1
1,246 1
1,251 1
1,263 1
1,271 1
1,215 1 2
1,258 1 2
1,284 1 2