MasterCard 2008 Annual Report Download - page 116

MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In thousands, except percent and per share data)
The Company does not make any contributions to its Postretirement Plan other than funding benefits
payments. The following table summarizes expected net benefit payments from the Company’s general assets
through 2018:
Benefit
Payments
Expected
Subsidy
Receipts
Net
Benefit
Payments
2009 .................................................. $ 2,641 $ 77 $ 2,564
2010 .................................................. 3,139 91 3,048
2011 .................................................. 3,561 115 3,446
2012 .................................................. 3,994 140 3,854
2013 .................................................. 4,357 169 4,188
2014 – 2018 ............................................ 25,807 1,269 24,538
The Company provides limited postemployment benefits to eligible former U.S. employees, primarily
severance under a formal severance plan (the “Severance Plan”). The Company accounts for severance expense
in accordance with SFAS No. 112, “Employers’ Accounting for Postemployment Benefits” by accruing the
expected cost of the severance benefits expected to be provided to former employees after employment over their
relevant service periods. The Company updates the assumptions in determining the severance accrual by
evaluating the actual severance activity and long-term trends underlying the assumptions. As a result of updating
the assumptions, the Company recorded severance expense (benefit) related to the Severance Plan of $2,643,
$(3,418) and $8,400, respectively, during the years 2008, 2007 and 2006. The Company has an accrued liability
related to the Severance Plan and other severance obligations in the amount of $63,863 and $56,172 at
December 31, 2008 and 2007, respectively.
Note 13. Debt
On April 28, 2008, the Company extended its committed unsecured revolving credit facility, dated as of
April 28, 2006 (the “Credit Facility”), for an additional year. The new expiration date of the Credit Facility is
April 26, 2011. The available funding under the Credit Facility will remain at $2,500,000 through April 27, 2010
and then decrease to $2,000,000 during the final year of the Credit Facility agreement. Other terms and
conditions in the Credit Facility remain unchanged. The Company’s option to request that each lender under the
Credit Facility extend its commitment was provided pursuant to the original terms of the Credit Facility
agreement. Borrowings under the facility are available to provide liquidity in the event of one or more settlement
failures by MasterCard International customers and, subject to a limit of $500,000, for general corporate
purposes. A facility fee of 8 basis points on the total commitment, or approximately $2,030, is paid annually.
Interest on borrowings under the Credit Facility would be charged at the London Interbank Offered Rate
(LIBOR) plus an applicable margin of 37 basis points or an alternative base rate, and a utilization fee of 10 basis
points would be charged if outstanding borrowings under the facility exceed 50% of commitments. The facility
fee and borrowing cost are contingent upon the Company’s credit rating. The Company also agreed to pay
upfront fees of $1,250 and administrative fees of $325 for the Credit Facility which are being amortized straight-
line over three years. Facility and other fees associated with the Credit Facility or prior facilities totaled $2,353,
$2,477 and $2,717 for each of the years ended December 31, 2008, 2007 and 2006, respectively. MasterCard was
in compliance with the covenants of the Credit Facility and had no borrowings under the Credit Facility at
December 31, 2008 or December 31, 2007. The majority of Credit Facility lenders are customers or affiliates of
customers of MasterCard International.
In June 1998, MasterCard International issued ten-year unsecured, subordinated notes (the “Notes”) paying
a fixed interest rate of 6.67% per annum. MasterCard repaid the entire principal amount of $80,000 on June 30,
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