MasterCard 2011 Annual Report Download - page 122

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MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Note 17. Commitments
At December 31, 2011, the Company had the following future minimum payments due under
non-cancelable agreements:
Total
Capital
Leases 1
Operating
Leases
Sponsorship,
Licensing &
Other
(in millions)
2012 .......................................... $336 $ 6 $22 $308
2013 .......................................... 177 43 17 117
2014 .......................................... 106 2 14 90
2015 .......................................... 77 — 12 65
2016 .......................................... 18 — 10 8
Thereafter ..................................... 25 — 19 6
Total ......................................... $739 $ 51 $94 $594
1Excludes non-cash transactions relating to the Company’s Winghaven facility. See Note 4 (Supplemental
Cash Flows) for more information.
Included in the table above are capital leases with imputed interest expense of $4 million and a net present
value of minimum lease payments of $46 million. In addition, at December 31, 2011, $79 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, which is recognized on a straight
line basis over the life of the lease, was $30 million, $27 million and $40 million for the years ended
December 31, 2011, 2010 and 2009, respectively. Consolidated lease expense for automobiles, computer
equipment and office equipment was $9 million, $8 million and $9 million for the years ended
December 31, 2011, 2010 and 2009, 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. 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.
Note 18. Obligations Under Litigation Settlements
On June 24, 2008, MasterCard entered into a settlement agreement (the “American Express Settlement”)
with American Express Company (“American Express”) relating to the U.S. federal antitrust litigation between
MasterCard and American Express. The American Express Settlement ended all existing litigation between
MasterCard and American Express. Under the terms of the American Express Settlement, MasterCard made 12
quarterly payments of $150 million beginning in the third quarter of 2008. MasterCard’s payments totaled $1.8
billion. The amount of each quarterly payment was contingent on the performance of American Express’s U.S.
Global Network Services business. The quarterly payments were in an amount equal to 15% of American
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