MasterCard 2013 Annual Report Download - page 78

Download and view the complete annual report

Please find page 78 of the 2013 MasterCard annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 120

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120

MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
74
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.
Note 7. 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.