MasterCard 2011 Annual Report Download - page 70

Future Obligations
The following table summarizes our obligations as of December 31, 2011 that are expected to impact
liquidity and cash flow in future periods. We believe we will be able to fund these obligations through cash
generated from operations and our cash balances.
Payments Due by Period
Total 62012 2013-2014 2015-2016
2017 and
thereafter
(in millions)
Capital leases1......................... $ 51 $ 6 $ 45 $— $—
Operating leases2....................... 94 22 31 22 19
Sponsorship, licensing and other3, 4, 5 ........ 600 314 207 73 6
Total ................................. $745 $342 $283 $ 95 $ 25
1. Mostly related to certain property, plant and equipment. The capital lease for the global technology and
operations center located in O’Fallon, Missouri has been excluded from this table, see Note 8 (Property,
Plant and Equipment) to the consolidated financial statements included in Part II, Item 8 of this Report.
There is a capital lease for the Kansas City, Missouri co-processing data center.
2. We enter into operating leases in the normal course of business. Substantially all lease agreements have
fixed payment terms based on the passage of time. Some lease agreements provide us with the option to
renew the lease or purchase the leased property. Our future operating lease obligations would change if we
exercised these renewal options and if we entered into additional lease agreements.
3. Amounts primarily relate to sponsorships with certain organizations to promote the MasterCard brand. The
amounts included are fixed and non-cancelable. In addition, these amounts include amounts due in
accordance with merchant agreements for future marketing, computer hardware maintenance, software
licenses and other service agreements. Future cash payments that will become due to our customers under
agreements which provide pricing rebates on our standard fees and other incentives in exchange for
transaction volumes are not included in the table because the amounts due are indeterminable and
contingent until such time as performance has occurred. MasterCard has accrued $889 million as of
December 31, 2011 related to customer and merchant agreements.
4. Includes current liability of $2 million relating to the accounting for uncertainty in income taxes. Due to the
high degree of uncertainty regarding the timing of the non-current liabilities for uncertainties in income
taxes, we are unable to make reasonable estimates of the period of cash settlements with the respective
taxing authority.
5. Includes current liability of $4 million relating to amounts due in accordance with litigation and regulatory
settlements.
6. The table does not include the $770 million accrued as of December 31, 2011 related to the MDL Provision;
the accrual is an estimate of the Company’s financial liability that could result from a settlement based on
progress in the mediation process. See Note 20 (Legal and Regulatory Proceedings) to the consolidated
financial statements included in Part II, Item 8 of this Report for further discussion.
Seasonality
Our fourth quarter results typically include higher customer and merchant incentives, which are recorded as
contra-revenue, due to higher contract renewal activity and increased purchase volume and promotional activity
related to the holiday shopping period, generally reducing our net revenue. The fourth quarter also generally
includes increased advertising and marketing expenses, primarily due to promotional activity related to the
holiday shopping period and the timing of advertising and promotional campaigns.
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