MasterCard 2010 Annual Report Download - page 129

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MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued
Note 19. Commitments
On December 9, 2010, MasterCard entered into an agreement to acquire the prepaid card program
management operations of Travelex Holdings Ltd. (“Travelex CPM”) for 290 million U.K. pound sterling, or
approximately $458 million, with contingent consideration (an “earn-out”) of up to an additional 35 million U.K.
pound sterling, or approximately $55 million, if certain performance targets are met. The acquisition agreement
is subject to conditions precedent to the consummation of the transaction, which is expected to occur during the
first half of 2011.
In addition to the commitment to purchase Travelex CPM, at December 31, 2010, the Company had the
following future minimum payments due under non-cancelable agreements:
Total
Capital
Leases
Operating
Leases
Sponsorship,
Licensing &
Other
(in millions)
2011 $359 $ 7 $26 $326
2012 173 5 23 145
2013 88 38 13 37
2014 26 — 10 16
2015 14 — 9 5
Thereafter 17 — 16 1
Total $677 $ 50 $97 $530
Included in the table above are capital leases with imputed interest expense of $5 million and a net present
value of minimum lease payments of $45 million. In addition, at December 31, 2010, $96 million of the future
minimum payments in the table above for leases, sponsorship, licensing and other agreements was accrued.
Consolidated rental expense for the Company’s office space, which is recognized on a straight line basis over the
life of the lease, was approximately $27 million, $40 million and $43 million for the years ended December 31,
2010, 2009 and 2008, respectively. Consolidated lease expense for automobiles, computer equipment and office
equipment was $8 million, $9 million and $8 million for the years ended December 31, 2010, 2009 and 2008,
respectively.
In January 2003, MasterCard purchased a building in Kansas City, Missouri for approximately $24 million.
The building is a co-processing data center which replaced a back-up data center in Lake Success, New York.
During 2003, MasterCard entered into agreements with the City of Kansas City for (i) the sale-leaseback of the
building and related equipment which totaled $36 million and (ii) the purchase of municipal bonds for the same
amount which have been classified as investment securities held-to-maturity. The agreements enabled
MasterCard to secure state and local financial benefits. No gain or loss was recorded in connection with the
agreements. The leaseback has been accounted for as a capital lease as the agreement contains a bargain purchase
option at the end of the ten-year lease term on April 1, 2013. The building and related equipment are being
depreciated over their estimated economic life in accordance with the Company’s policy. Rent of $2 million is
due annually and is equal to the interest due on the municipal bonds. The future minimum lease payments are
$40 million and are included in the table above. A portion of the building was subleased to the original building
owner for a five-year term with a renewal option. This sublease expires on June 30, 2011. As of December 31,
2010, the future minimum sublease rental income is $1 million.
119