MasterCard 2011 Annual Report Download - page 123

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MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Express’s U.S. Global Network Services billings during the quarter, up to a maximum of $150 million per
quarter. MasterCard recorded the present value of $1.8 billion, at a 5.75% discount rate, or $1.6 billion in the
quarter ended June 30, 2008. During the three months ended June 30, 2011, the Company made its final quarterly
payment of $150 million.
In 2003, MasterCard entered into a settlement agreement (the “U.S. Merchant Lawsuit Settlement”) related
to the U.S. merchant lawsuit described under the caption “U.S. Merchant and Consumer Litigations” in Note 20
(Legal and Regulatory Proceedings) and contract disputes with certain customers. Under the terms of the U.S.
Merchant Lawsuit Settlement, the Company was required to pay $125 million in 2003 and $100 million annually
each December from 2004 through 2012. On July 1, 2009, MasterCard entered into an agreement (the
“Prepayment Agreement”) with plaintiffs of the U.S. Merchant Lawsuit Settlement whereby MasterCard agreed
to make a prepayment of its remaining $400 million in payment obligations at a discounted amount of $335
million on September 30, 2009. The Company made the prepayment at the discounted amount of $335 million on
September 30, 2009, after the Prepayment Agreement became final.
See Note 20 (Legal and Regulatory Proceedings) for additional discussion regarding the Company’s legal
proceedings.
Note 19. Income Taxes
The total income tax provision for the years ended December 31 is comprised of the following components:
2011 2010 2009
(in millions)
Current
Federal ...................................................... $ 619 $379 $160
State and local ................................................ 30 17 18
Foreign ...................................................... 369 301 240
1,018 697 418
Deferred
Federal ...................................................... (155) 225 308
State and local ................................................ (6) 8 21
Foreign ...................................................... (15) (20) 8
(176) 213 337
Total income tax expense ........................................ $ 842 $910 $755
The domestic and foreign components of income before income taxes for the years ended December 31 are
as follows:
2011 2010 2009
(in millions)
United States .............................................. $1,415 $2,198 $1,482
Foreign ................................................... 1,331 559 736
Total income before income taxes .............................. $2,746 $2,757 $2,218
MasterCard has not provided for U.S. federal income and foreign withholding taxes on approximately $2
billion of undistributed earnings from non-U.S. subsidiaries as of December 31, 2011 because such earnings are
119