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Mastercard reported for 2022 q1

Published: 2022-04-28 10:16:49 ET (Before Market Open)
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ma-20220331
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
Or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 001-32877
ma-20220331_g1.jpg
Mastercard Incorporated
(Exact name of registrant as specified in its charter)
Delaware13-4172551
(State or other jurisdiction of incorporation or organization)(IRS Employer Identification Number)
2000 Purchase Street10577
Purchase,NY(Zip Code)
(Address of principal executive offices)
(914) 249-2000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Name of each exchange of which registered
Class A Common Stock, par value $0.0001 per share
MA
New York Stock Exchange
1.1% Notes due 2022
MA22
New York Stock Exchange
2.1% Notes due 2027
MA27
New York Stock Exchange
1.0% Notes due 2029
MA29A
New York Stock Exchange
2.5% Notes due 2030
MA30
New York Stock Exchange
Indicate by check mark whether the registrant (1)has filed all reports required to be filed by Section13 or 15(d)of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)has been subject to such filing requirements for the past 90 days.
Yes
No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files)
Yes


No


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check One):
Large accelerated filer
Acceleratedfiler
Non-accelerated filer
Smallerreportingcompany
Emerging growthcompany
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act)
Yes
No
As of April25, 2022, there were 964,920,839 shares outstanding of the registrant’s ClassA common stock, par value $0.0001 per share; and 7,723,884 shares outstanding of the registrant’s Class B common stock, par value $0.0001 per share.



ma-20220331_g2.jpg
MASTERCARD INCORPORATED FORM 10-Q
TABLE OF CONTENTS

2 MASTERCARD MARCH 31, 2022 FORM 10-Q


In this Report on Form 10-Q (“Report”), references to the “Company,” “Mastercard,” “we,” “us” or “our” refer to the business conducted by Mastercard Incorporated and its consolidated subsidiaries, including our operating subsidiary, Mastercard International Incorporated, and to the Mastercard brand.
Forward-Looking Statements
This Report contains forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts may be forward-looking statements. When used in this Report, the words “believe”, “expect”, “could”, “may”, “would”, “will”, “trend” and similar words are intended to identify forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements that relate to the Company’s future prospects, developments and business strategies.
Many factors and uncertainties relating to our operations and business environment, all of which are difficult to predict and many of which are outside of our control, influence whether any forward-looking statements can or will be achieved. Any one of those factors could cause our actual results to differ materially from those expressed or implied in writing in any forward-looking statements made by Mastercard or on its behalf, including, but not limited to, the following factors:
regulation directly related to the payments industry (including regulatory, legislative and litigation activity with respect to interchange rates and surcharging)
the impact of preferential or protective government actions
regulation of privacy, data, security and the digital economy
regulation that directly or indirectly applies to us based on our participation in the global payments industry (including anti-money laundering, counter financing of terrorism, economic sanctions and anti-corruption, account-based payments systems, and issuer and acquirer practice regulation)
the impact of changes in tax laws, as well as regulations and interpretations of such laws or challenges to our tax positions
potential or incurred liability and limitations on business related to any litigation or litigation settlements
the impact of the global COVID-19 pandemic and measures taken in response
the impact of competition in the global payments industry (including disintermediation and pricing pressure)
the challenges relating to rapid technological developments and changes
the challenges relating to operating a real-time account-based payments system and to working with new customers and end users
the impact of information security incidents, account data breaches or service disruptions
issues related to our relationships with our stakeholders (including loss of substantial business from significant customers, competitor relationships with our customers, consolidation amongst our customers, merchants’ continued focus on acceptance costs and unique risks from our work with governments)
exposure to loss or illiquidity due to our role as guarantor and other contractual obligations
the impact of global economic, political, financial and societal events and conditions, including adverse currency fluctuations and foreign exchange controls
events and resulting actions related to the Russian invasion of Ukraine
reputational impact, including impact related to brand perception and lack of visibility of our brands in products and services
the inability to attract, hire and retain a highly qualified and diverse workforce, or maintain our corporate culture
issues related to acquisition integration, strategic investments and entry into new businesses
issues related to our ClassA common stock and corporate governance structure
Please see a complete discussion of these risk factors in Part I, Item 1A - Risk Factors of the Company’s Annual Report on Form 10-K for the year ended December31, 2021 and in Part II, Item 1A - Risk Factors of this Report. We caution you that the important factors referenced above may not contain all of the factors that are important to you. Our forward-looking statements speak only as of the date of this Report or as of the date they are made, and we undertake no obligation to update our forward-looking statements.

MASTERCARD MARCH 31, 2022 FORM 10-Q 3





PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Item 1. Consolidated financial statements (unaudited)
Mastercard Incorporated
Index to consolidated financial statements (unaudited)

MASTERCARD MARCH 31, 2022 FORM 10-Q 5


PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Statement of Operations (Unaudited)
Three Months Ended March 31,
20222021
(inmillions,exceptpersharedata)
Net Revenue$5,167$4,155
Operating Expenses:
General and administrative1,8441,676
Advertising and marketing181119
Depreciation and amortization192163
Total operating expenses2,2171,958
Operating income2,9502,197
Other Income (Expense):
Investment income51
Gains (losses) on equity investments, net(76)94
Interest expense(110)(107)
Other income (expense), net45
Total other income (expense)(177)(7)
Income before income taxes2,7732,190
Income tax expense142362
Net Income$2,631$1,828
Basic Earnings per Share$2.69$1.84
Basic weighted-average shares outstanding977994
Diluted Earnings per Share$2.68$1.83
Diluted weighted-average shares outstanding981998

The accompanying notes are an integral part of these consolidated financial statements.

6 MASTERCARD MARCH 31, 2022 FORM 10-Q


PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Statement of Comprehensive Income (Unaudited)
Three Months Ended March 31,
20222021
(in millions)
Net Income$2,631$1,828
Other comprehensive income (loss):
Foreign currency translation adjustments(64)(198)
Income tax effect1233
Foreign currency translation adjustments, net of income tax effect(52)(165)
Translation adjustments on net investment hedges86133
Income tax effect(19)(30)
Translation adjustments on net investment hedges, net of income tax effect67103
Cash flow hedges13
Income tax effect(1)
Reclassification adjustments for cash flow hedges(5)1
Income tax effect1
Cash flow hedges, net of income tax effect(3)3
Investment securities available-for-sale
(2)1
Income tax effect1
Investment securities available-for-sale, net of income tax effect(1)1
Other comprehensive income (loss), net of tax11(58)
Comprehensive Income$2,642$1,770

The accompanying notes are an integral part of these consolidated financial statements.


MASTERCARD MARCH 31, 2022 FORM 10-Q 7


PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Balance Sheet (Unaudited)
March 31, 2022December 31, 2021
(inmillions,exceptper sharedata)
Assets
Current assets:
Cash and cash equivalents$6,879$7,421
Restricted cash for litigation settlement585586
Investments449473
Accounts receivable2,8893,006
Settlement assets1,1011,319
Restricted security deposits held for customers1,7301,873
Prepaid expenses and other current assets2,3202,271
Total current assets15,95316,949
Property, equipment and right-of-use assets, net of accumulated depreciation and amortization
of $1,679 and $1,614, respectively
1,9571,907
Deferred income taxes795486
Goodwill7,6257,662
Other intangible assets, net of accumulated amortization of $1,819 and $1,755, respectively
3,6753,671
Other assets7,1586,994
Total Assets$37,163$37,669
Liabilities, Redeemable Non-controlling Interests and Equity
Current liabilities:
Accounts payable$666$738
Settlement obligations547913
Restricted security deposits held for customers1,7301,873
Accrued litigation797840
Accrued expenses5,9546,642
Current portion of long-term debt778792
Other current liabilities1,4561,364
Total current liabilities11,92813,162
Long-term debt13,86813,109
Deferred income taxes386395
Other liabilities3,8513,591
Total Liabilities30,03330,257
Commitments and Contingencies
Redeemable Non-controlling Interests2829
Stockholders’ Equity
ClassA common stock, $0.0001 par value; authorized 3,000 shares, 1,398 and 1,397 shares issued and 967 and 972 shares outstanding, respectively
Class B common stock, $0.0001 par value; authorized 1,200 shares, 8 shares issued and outstanding
Additional paid-in-capital5,0265,061
ClassA treasury stock, at cost, 432 and 425 shares, respectively
(44,994)(42,588)
Retained earnings47,80045,648
Accumulated other comprehensive income (loss)(798)(809)
Mastercard Incorporated Stockholders' Equity7,0347,312
Non-controlling interests6871
Total Equity7,1027,383
Total Liabilities, Redeemable Non-controlling Interests and Equity$37,163$37,669

The accompanying notes are an integral part of these consolidated financial statements.

8 MASTERCARD MARCH 31, 2022 FORM 10-Q


PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Statement of Changes in Equity (Unaudited)
Three Months Ended March 31, 2022
Stockholders’ Equity

Common Stock
Additional
Paid-In
Capital
Class A
Treasury
Stock
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Mastercard Incorporated Stockholders' EquityNon-
Controlling
Interests
Total
Equity
ClassAClassB
(in millions)
Balance at December 31, 2021$$$5,061$(42,588)$45,648$(809)$7,312$71$7,383
Net income2,6312,6312,631
Activity related to non-controlling interests(3)(3)
Redeemable non-controlling interest adjustments (2)(2)(2)
Other comprehensive income (loss)111111
Dividends(477)(477)(477)
Purchases of treasury stock(2,411)(2,411)(2,411)
Share-based payments(35)5(30)(30)
Balance at March 31, 2022$$$5,026$(44,994)$47,800$(798)$7,034$68$7,102
Three Months Ended March 31, 2021
Stockholders’ Equity

Common Stock
Additional
Paid-In
Capital
Class A
Treasury
Stock
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Mastercard Incorporated Stockholders' EquityNon-
Controlling
Interests
Total
Equity
ClassAClassB
(in millions)
Balance at December 31, 2020$$$4,982$(36,658)$38,747$(680)$6,391$97$6,488
Net income1,8281,8281,828
Activity related to non-controlling interests11
Redeemable non-controlling interest adjustments(1)(1)(1)
Other comprehensive income (loss)(58)(58)(58)
Dividends(434)(434)(434)
Purchases of treasury stock(1,370)(1,370)(1,370)
Share-based payments(33)4(29)(29)
Balance at March 31, 2021$$$4,949$(38,024)$40,140$(738)$6,327$98$6,425

The accompanying notes are an integral part of these consolidated financial statements.

MASTERCARD MARCH 31, 2022 FORM 10-Q 9


PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Statement of Cash Flows (Unaudited)
Three Months Ended March 31,
20222021
(in millions)
Operating Activities
Net income$2,631$1,828
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of customer and merchant incentives430338
Depreciation and amortization192163
(Gains) losses on equity investments, net76(94)
Share-based compensation7465
Deferred income taxes(320)33
Other511
Changes in operating assets and liabilities:
Accounts receivable134(70)
Settlement assets21828
Prepaid expenses(441)(562)
Accrued litigation and legal settlements(43)(2)
Restricted security deposits held for customers(144)63
Accounts payable(56)(15)
Settlement obligations(366)(178)
Accrued expenses(746)(163)
Net change in other assets and liabilities13818
Net cash provided by operating activities1,7821,463
Investing Activities
Purchases of investment securities available-for-sale(58)(155)
Purchases of investments held-to-maturity(37)(38)
Proceeds from sales of investment securities available-for-sale823
Proceeds from maturities of investment securities available-for-sale7072
Proceeds from maturities of investments held-to-maturity4379
Purchases of property and equipment(146)(65)
Capitalized software(148)(79)
Purchases of equity investments(24)(42)
Acquisition of businesses, net of cash acquired(3,364)
Other investing activities59
Net cash used in investing activities(287)(3,560)
Financing Activities
Purchases of treasury stock(2,408)(1,356)
Dividends paid(479)(439)
Proceeds from debt, net8431,282
Tax withholdings related to share-based payments(132)(121)
Cash proceeds from exercise of stock options2823
Other financing activities(6)5
Net cash used in financing activities(2,154)(606)
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents(28)(101)
Net decrease in cash, cash equivalents, restricted cash and restricted cash equivalents(687)(2,804)
Cash, cash equivalents, restricted cash and restricted cash equivalents - beginning of period9,90212,419
Cash, cash equivalents, restricted cash and restricted cash equivalents - end of period$9,215$9,615

The accompanying notes are an integral part of these consolidated financial statements.

10 MASTERCARD MARCH 31, 2022 FORM 10-Q


PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes to consolidated financial statements (unaudited)
Note 1. Summary of Significant Accounting Policies
Organization
Mastercard Incorporated and its consolidated subsidiaries, including Mastercard International Incorporated (“Mastercard International” and together with Mastercard Incorporated, “Mastercard” or the “Company”), is a technology company in the global payments industry that connects consumers, financial institutions, merchants, governments, digital partners, businesses and other organizations worldwide, enabling them to use electronic forms of payment instead of cash and checks.
Consolidation and Basis of Presentation
The consolidated financial statements include the accounts of Mastercard and its majority-owned and controlled entities, including any variable interest entities (“VIEs”) for which the Company is the primary beneficiary. Investments in VIEs for which the Company is not considered the primary beneficiary are not consolidated and are accounted for as marketable equity method or measurement alternative method investments and recorded in other assets on the consolidated balance sheet. At March31, 2022 and December31, 2021, there were no significant VIEs which required consolidation and the investments were not considered material to the consolidated financial statements. The Company consolidates acquisitions as of the date on which the Company has obtained a controlling financial interest. Intercompany transactions and balances have been eliminated in consolidation. The Company corrected prior period classifications of certain line items within investing activities on the consolidated statement of cash flows with no impact on total net cash used in investing activities. The Company follows accounting principles generally accepted in the United States of America (“GAAP”).
The balance sheet as of December31, 2021 was derived from the audited consolidated financial statements as of December31, 2021. The consolidated financial statements for the three months ended March 31, 2022 and 2021 and as of March31, 2022 are unaudited, and in the opinion of management, include all normal recurring adjustments that are necessary to present fairly the results for interim periods. The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results to be expected for the full year.
The accompanying unaudited consolidated financial statements are presented in accordance with the U.S. Securities and Exchange Commission (“SEC”) requirements for Quarterly Reports on Form 10-Q. Reference should be made to Mastercard’s Annual Report on Form 10-K for the year ended December31, 2021 for additional disclosures, including a summary of the Company’s significant accounting policies.
Key Developments
Beginning in February 2022, in response to the Russian invasion of Ukraine, the United States and other governments imposed sanctions and other restrictive measures on certain Russian-related entities and individuals and, in March 2022, the Company suspended business operations in Russia. The financial impacts related to these actions were not material to the Company’s overall financial results for the current period.
Note 2. Acquisitions
During the three months ended March 31, 2022, the Company did not acquire any businesses. In 2021, the Company acquired several businesses in separate transactions for total consideration of $4.7 billion. As of March31, 2022, the Company had finalized the purchase accounting for $3.6billion of the businesses acquired and is evaluating and finalizing the purchase accounting for the remainder of businesses acquired during 2021. For the preliminary estimated and final fair values of the purchase price allocations, as of the acquisition dates, refer to Note 2 (Acquisitions) to the consolidated financial statements included in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December31, 2021.
Pending Acquisition
As of March31, 2022, Mastercard has entered into a definitive agreement to acquire Dynamic Yield LTD. This acquisition subsequently closed in April 2022. The Company will begin consolidating the acquisition as of the date acquired.

MASTERCARD MARCH 31, 2022 FORM 10-Q 11


PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 3. Revenue
The Company’s disaggregated net revenue by source and geographic region were as follows:
Three Months Ended March 31,
20222021
(in millions)
Revenue by source:
Domestic assessments$2,134$1,798
Cross-border volume fees1,395932
Transaction processing2,9122,351
Other revenues1,5841,347
Gross revenue8,0256,428
Rebates and incentives (contra-revenue)(2,858)(2,273)
Net revenue$5,167$4,155
Net revenue by geographic region:
North American Markets$1,703$1,491
International Markets3,3852,618
Other 1
7946
Net revenue$5,167$4,155
1Includes revenues managed by corporate functions.
The Company’s customers are generally billed weekly, however, the frequency is dependent upon the nature of the performance obligation and the underlying contractual terms. The Company does not typically offer extended payment terms to customers. The following table sets forth the location of the amounts recognized on the consolidated balance sheet from contracts with customers:
March 31,
2022
December 31,
2021
(in millions)
Receivables from contracts with customers
Accounts receivable
$2,680$2,829
Contract assets
Prepaid expenses and other current assets148134
Other assets530487
Deferred revenue 1
Other current liabilities586482
Other liabilities203180
1Revenue recognized from performance obligations satisfied during the three months ended March 31, 2022 and 2021 was $335 million and $180 million, respectively.

12 MASTERCARD MARCH 31, 2022 FORM 10-Q


PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 4. Earnings Per Share
The components of basic and diluted earnings per share (“EPS”) for common shares were as follows:
Three Months Ended March 31,
20222021
(inmillions,exceptpersharedata)
Numerator
Net income$2,631$1,828
Denominator
Basic weighted-average shares outstanding977994
Dilutive stock options and stock units44
Diluted weighted-average shares outstanding 1
981998
Earnings per Share
Basic$2.69$1.84
Diluted$2.68$1.83
1For the periods presented, the calculation of diluted EPS excluded a minimal amount of anti-dilutive share-based payment awards.
Note 5. Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents
The following table provides a reconciliation of cash, cash equivalents, restricted cash and restricted cash equivalents reported on the consolidated balance sheet that total to the amounts shown on the consolidated statement of cash flows.
March 31,
2022
December 31,
2021
(in millions)
Cash and cash equivalents$6,879$7,421
Restricted cash and restricted cash equivalents
Restricted cash for litigation settlement585586
Restricted security deposits held for customers1,7301,873
Prepaid expenses and other current assets2122
Cash, cash equivalents, restricted cash and restricted cash equivalents$9,215$9,902
Note 6. Investments
The Company’s investments on the consolidated balance sheet include both available-for-sale and held-to-maturity debt securities (see Investments section below). The Company classifies its investments in equity securities of publicly traded and privately held companies within other assets on the consolidated balance sheet (see Equity Investments section below).
Investments
Investments on the consolidated balance sheet consisted of the following:
March 31,
2022
December 31,
2021
(in millions)
Available-for-sale securities 1
$289$314
Held-to-maturity securities 2
160159
Total investments $449$473
1See Available-for-Sale Securities section below for further detail.
2The cost of these securities approximates fair value.

MASTERCARD MARCH 31, 2022 FORM 10-Q 13


PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Available-for-Sale Securities
The major classes of the Company’s available-for-sale investment securities and their respective amortized cost basis and fair values were as follows:
March 31, 2022December 31, 2021
Amortized
Cost
Gross
Unrealized
Gain
Gross
Unrealized
Loss
Fair
Value
Amortized
Cost
Gross
Unrealized
Gain
Gross
Unrealized
Loss
Fair
Value
(in millions)
Municipal securities$1$$$1$2$$$2
Government and agency securities85859898
Corporate securities205(2)203214214
Total$291$$(2)$289$314$$$314
The Company’s corporate and municipal available-for-sale investment securities held at March31, 2022 and December31, 2021 primarily carried a credit rating of A- or better. Corporate securities are comprised of commercial paper and corporate bonds. Municipal securities are comprised of state tax-exempt bonds and are diversified across states and sectors. Government and agency securities include U.S. government bonds, U.S. government sponsored agency bonds and foreign government bonds which are denominated in the national currency of the issuing country. Unrealized gains and losses are recorded as a separate component of other comprehensive income (loss) on the consolidated statement of comprehensive income.
The maturity distribution based on the contractual terms of the Company’s available-for-sale investment securities at March31, 2022 was as follows:
Amortized CostFairValue
(in millions)
Due within 1 year$134$134
Due after 1 year through 5 years157155
Total$291$289
Investment income on the consolidated statement of operations primarily consists of interest income generated from cash, cash equivalents, time deposits and available-for-sale investment securities, as well as realized gains and losses on the Company’s investment securities. The realized gains and losses from the sales of available-for-sale securities for the three months ended March 31, 2022 and 2021 were not material.
Equity Investments
Included in other assets on the consolidated balance sheet are equity investments with readily determinable fair values (“Marketable securities”) and equity investments without readily determinable fair values (“Nonmarketable securities”). Marketable securities are equity interests in publicly traded companies and are measured using unadjusted quoted prices in their respective active markets. Nonmarketable securities that do not qualify for equity method accounting are measured at cost, less any impairment and adjusted for changes resulting from observable price changes in orderly transactions for the identical or similar investments of the same issuer (“Measurement alternative”).
The following table is a summary of the activity related to the Company’s equity investments:
Balance at December 31, 2021PurchasesSales
Changes in Fair Value 1
Other 2
Balance at March 31, 2022
(in millions)
Marketable securities $627$$$(162)$(5)$460
Nonmarketable securities1,2072486(5)1,312
Total equity investments $1,834$24$$(76)$(10)$1,772
1Recorded in gains (losses) on equity investments, net on the consolidated statement of operations.
2Includes translational impact of currency.


14 MASTERCARD MARCH 31, 2022 FORM 10-Q


PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table sets forth the components of the Company’s Nonmarketable securities:
March 31,
2022
December 31,
2021
(in millions)
Measurement alternative
$1,038$952
Equity method
274255
Total Nonmarketable securities$1,312$1,207
The following table summarizes the total carrying value of the Company’s Measurement alternative investments, including cumulative unrealized gains and losses through March31, 2022:
March 31,
2022
(in millions)
Initial cost basis
$457
Cumulative adjustments:
Upward adjustments594
Downward adjustments (including impairment)(13)
Carrying amount, end of period$1,038
The following table summarizes the unrealized gains and losses included in the carrying value of the Company’s Measurement alternative investments and Marketable securities for the three months ended March 31, 2022 and 2021:
Three Months Ended March 31,
20222021
(in millions)
Measurement alternative investments:
Upward adjustments$86$41
Downward adjustments (including impairment)
Marketable securities:
Unrealized gains/(losses), net(162)54
Note 7. Fair Value Measurements
The Company classifies its fair value measurements of financial instruments into a three-level hierarchy (the “Valuation Hierarchy”). Financial instruments are categorized for fair value measurement purposes as recurring or non-recurring in nature.

MASTERCARD MARCH 31, 2022 FORM 10-Q 15


PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Financial Instruments - Recurring Measurements
The distribution of the Company’s financial instruments measured at fair value on a recurring basis within the Valuation Hierarchy were as follows:
March 31, 2022December 31, 2021
QuotedPrices
in Active
Markets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
TotalQuotedPrices
in Active
Markets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
(in millions)
Assets
Investment securities available-for-sale 1:
Municipal securities$$1$$1$$2$$2
Government and agency securities335285356398
Corporate securities203203214214
Derivative instruments 2:
Foreign exchange contracts434388
Interest rate contracts66
Marketable securities 3:
Equity securities460460