Balance Sheet and Cash Flow

As of December 31, 2009, MasterCard had $2.06 billion in cash and equivalents, and $22.0 million in long-term debt. Adjusted free cash flow was $396.0 million, comprising cash flow from operations of $284.0 million, add back of $154.0 million associated with litigation payments, and less $43.0 million of capital expenditures. For FY09, adjusted FCF was $2.2 billion. Investments totaled $1.34 billion at the end of 4Q09, an increase from $862.0 million at the end of 3Q09, which includes both current and long-term available-for-sale and held-to-maturity investments.

Dividend

On February 10, 2010, MA paid a quarterly cash dividend of $0.15 per share to holders of record of its Class A common stock and Class B common stock as of January 8, 2010.

On February 2, 2010, MA announced that its Board of Directors has declared a quarterly cash dividend to holders of shares of its Class A common stock and Class B common stock. The cash dividend of $0.15 per share will be paid on May 10, 2010, to holders of record of its Class A common stock and Class B common stock as of April 9, 2010.

On November 10, 2009, MasterCard Inc. paid a quarterly cash dividend to shareholders of its Class A common stock and Class B common stock. The cash dividend of $0.15 per share was paid to holders of record of its Class A common stock and Class B common stock as of October 9, 2009.
 

Alliance

On April 9, 2010, MasterCard Worldwide announced a three-year exclusive alliance in the payments space with Next Jump, Inc., a next-generation e-commerce company, to revolutionize the online shopping experience.

The strategic agreement will allow the companies to work together to harness their combined assets in the payments technology, e-commerce and digital marketing space to drive innovation for the industry and improve the consumer experience. It will also give MasterCard access to Next Jump’s extensive aggregated e-commerce network, human capital through its digital technology engineers, and an agile development process to fuel innovation and drive speed to market for relevant and desirable e-commerce solutions that meet consumer demands.

As part of the new alliance with Next Jump, MasterCard also announced the launch of MasterCard MarketPlace, a program that provides MasterCard eligible consumer cardholders with hundreds of merchant-funded discounts and special benefits each day from a network of thousands of merchants across the U.S.
 

 Litigation and Regulations – Any unfavorable result with respect to litigation and regulatory issues could adversely affect MA’s profits.
 Foreign Exchange – Approximately 45% of MA’s revenue is international and fluctuations in exchange rates could adversely affect MA’s earnings.
 Pricing Pressure – The Company could face increased pricing pressure from member banks and merchants.
 Valuation – MA’s valuation appears rich to a number of bearish analysts.
 PIN Debit Market – The Company’s weak presence in the US PIN Debit market is being seen as a concern for most analysts.
 Alternative Payments Systems - The Company may lose some share of the paperless payments market if some of the alternative systems (PayPal, Bill-Me-Later, etc.) gain acceptance.