MasterCard 2009 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)
Interest income is generated from cash and cash equivalents, available-for-sale investment securities and
held-to-maturity investment securities. Dividend income primarily consists of dividends received on the
Company’s cost method investments.
At December 31, 2008, the Company held investments in short-term bond funds, with underlying holdings
in structured products such as mortgage-backed securities and asset-backed securities. During 2008, certain of
these investments were deemed to be other-than-temporarily impaired and an impairment loss of $11,115 was
recorded. During 2007, one of the Company’s short-term bond funds, with underlying holdings in mortgage-
backed securities, was deemed to be other-than-temporarily impaired and an impairment loss of $8,719 was
recorded. Due to the high credit quality of the Company’s other investment securities, no other investment
securities were considered to be other-than-temporarily impaired in 2008 or 2007.
During 2008, MasterCard sold all of its remaining 6,141 shares of Redecard S.A. and realized a pre-tax
gain, net of commissions, of approximately $86,000. In 2007, MasterCard had sold 21,274 shares, or 78% of its
investment in Redecard S.A. and realized pre-tax gains, net of commissions, of approximately $391,000. These
gains are included in investment income within the consolidated statements of operations. Unrealized holding
gains, net of tax, of $62,366, were included in other comprehensive income for the year ended December 31,
2007 relating to the remaining ownership of this investment
Note 6. Prepaid Expenses
Prepaid expenses consisted of the following at December 31:
2009 2008
Customer and merchant incentives ......................... $444,692 $ 397,563
Advertising ........................................... 56,324 45,608
Income taxes .......................................... 93,140 30,080
Data processing ........................................ 28,896 24,455
Other ................................................ 18,085 18,001
Total prepaid expenses .................................. 641,137 515,707
Prepaid expenses, current ................................ (313,253) (213,612)
Prepaid expenses, long-term .............................. $327,884 $ 302,095
Prepaid customer and merchant incentives represent payments made to customers and merchants under
business agreements.
Note 7. Other Assets
Other assets consisted of the following at December 31:
2009 2008
Customer and merchant incentives .......................... $215,542 $ 46,608
Cash surrender value of keyman life insurance ................ 22,790 18,552
Cost and equity method investments ........................ 34,977 12,500
Other ................................................. 35,907 21,356
Total other assets ....................................... 309,216 99,016
Other assets, current ..................................... (124,915) (32,619)
Other assets, long-term ................................... $184,301 $ 66,397
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