MasterCard 2008 Annual Report Download - page 105

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MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In thousands, except percent and per share data)
The table below includes a roll-forward of the Company’s ARS investments from January 1, 2008 to
December 31, 2008, and a reclassification of these investments from level 2 to level 3 in the Valuation
Hierarchy. When a determination is made to classify a financial instrument within level 3, the determination is
based upon the significance of the unobservable parameters to the overall fair value measurement. However, the
fair value determination for level 3 financial instruments may include observable components.
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Fair value, January 1, 2008 ............................................... $348,000 $ —
Purchases, January 1—March 31, 2008 ...................................... 321,550 —
Sales, January 1—March 31, 2008 ......................................... (420,400) —
Transfers in (out) ....................................................... (249,150) 249,150
Sales, April 1—December 31, 2008 ........................................ — (50)
Calls, July 1—December 31, 2008 ......................................... — (9,400)
Unrealized losses ....................................................... — (47,940)
Fair value, December 31, 2008 ............................................ $ — $191,760
Carrying and Fair Values—Held to Maturity:
The Company also owns certain held-to-maturity investment securities, which primarily consist of three
municipal bonds, one for $154,000 at 7.4% per annum and two totaling $37,434 at approximately 5.0% per
annum. These bonds relate to two of the Company’s U.S. locations; see Note 13 (Debt) and Note 15
(Consolidation of Variable Interest Entity) for additional information. The carrying value, gross unrecorded gains
and fair value of these held-to-maturity investment securities are as follows at December 31:
2008 2007
Carrying value .................................................. $191,450 $192,489
Gross unrecorded gains ........................................... 1,913 9,576
Fair value ...................................................... $193,363 $202,065
Investment maturities:
The maturity distribution based on the contractual terms of the Company’s investment securities at
December 31, 2008, is as follows:
Available-For-Sale Held-To-Maturity
Amortized
Cost Fair Value
Carrying
Value Fair Value
Due within 1 year ...................................... $ 16,103 $ 16,196 $154,000 $154,566
Due after 1 year through 5 years ........................... 361,050 370,851 37,450 38,797
Due after 5 years through 10 years ......................... 98,990 100,127 — —
Due after 10 years ...................................... 237,302 190,075 — —
No contractual maturity .................................. 102,716 102,606 — —
Total ................................................ $816,161 $779,855 $191,450 $193,363
95