MasterCard 2008 Annual Report Download - page 117

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MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In thousands, except percent and per share data)
2008 pursuant to the terms of the Notes. As of December 31, 2007, the principal amount and fair value of the
Notes was $80,000 and $80,612, respectively. The interest expense on the Notes was $2,668, $5,336 and $5,336
for each of the years ended December 31, 2008, 2007 and 2006, respectively. The Company was in compliance
with the covenants of the Notes as of December 31, 2007.
The Company’s consolidated balance sheets include $149,380 in short-term debt (fair value estimated to be
$154,565 and $156,311 at December 31, 2008 and 2007, respectively) relating to the Company’s Variable
Interest Entity, see Note 15 (Consolidation of Variable Interest Entity) for more information.
On January 5, 2009, HSBC Bank plc (“HSBC”) notified the Company that, effective December 31, 2008, it
had terminated an uncommitted credit agreement totaling 100 million euros between HSBC and MasterCard
Europe sprl. There were no borrowings under this agreement at December 31, 2008. There were 136 euros
outstanding under this agreement at December 31, 2007.
Note 14. Stockholders’ Equity
Initial Public Offering
On May 31, 2006, MasterCard transitioned to a new ownership and governance structure upon the closing
of its IPO and issuance of a new class of the Company’s common stock. Prior to the IPO, the Company’s capital
stock was privately held by certain of its customers that were principal members of MasterCard International. All
stockholders held shares of Class A redeemable common stock.
Immediately prior to the closing of the IPO, MasterCard Incorporated filed an amended and restated
certificate of incorporation (the “certificate of incorporation”). The certificate of incorporation authorized
4,501,000 shares, consisting of the following new classes of capital stock:
Class Par Value
Authorized
Shares
(in millions) Dividend and Voting Rights
A $.0001 per share 3,000 • One vote per share
• Dividend rights
B $.0001 per share 1,200 • Non-voting
• Dividend rights
M $.0001 per share 1 • Generally non-voting, but can elect up to three, but not more than
one-quarter, of the members of the Company’s Board of Directors
and approve specified significant corporate actions (e.g., the sale
of all of the assets of the Company)
• No dividend rights
Preferred $.0001 per share 300 • No shares issued or outstanding. Dividend and voting rights are to
be determined by the Board of Directors of the Company upon
issuance.
The certificate of incorporation also provided for the immediate reclassification of all of the Company’s
99,978 outstanding shares of existing Class A redeemable common stock, causing each of its existing
stockholders to receive 1.35 shares of the Company’s newly issued Class B common stock for each share of
common stock that they held prior to the reclassification as well as a single share of Class M common stock. The
Company paid stockholders an aggregate of $27 in lieu of issuing fractional shares that resulted from the
reclassification. This resulted in the issuance of 134,969 shares of Class B common stock and 2 shares of Class
M common stock.
107