MasterCard 2010 Annual Report Download - page 113

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MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued
Note 12. Accrued Expenses
Accrued expenses consisted of the following at December 31:
2010 2009
(in millions)
Customer and merchant incentives $ 666 $ 598
Personnel costs 307 367
Advertising 162 131
Income taxes 79 32
Other 101 97
Total accrued expenses $1,315 $1,225
Note 13. Pension, Savings Plan and Other Benefits
The Company maintains a non-contributory, qualified, defined benefit pension plan (the “Qualified Plan”)
with a cash balance feature covering substantially all of its U.S. employees hired before July 1, 2007. In
September 2010, the Company amended the Qualified Plan to phase out participant pay credit percentages in the
years 2011 and 2012 and eliminate the pay credit beginning January 1, 2013. Plan participants will continue to
earn interest credits. As a result of the amendment, the Company recognized a curtailment gain of $6 million in
the third quarter of 2010 and a reduction in pension liability of $17 million. The Company also recognized
corresponding effects in accumulated other comprehensive income and deferred taxes.
In 2008, the Qualified Plan experienced a steep decline in the fair value of plan assets which resulted in
significant increases in the Company’s pension liability and contributed to other comprehensive loss as of
December 31, 2008 and increased net periodic pension cost in 2009. During 2010 and 2009, Company
contributions and favorable investment returns increased the Qualified Plan’s fair value of assets and resulted in
significant decreases in the Company’s pension liability and contributed to other comprehensive income as of
December 31, 2010 and 2009.
The Company also has an unfunded non-qualified supplemental executive retirement plan (the “Non-
qualified Plan”) that provides certain key employees with supplemental retirement benefits in excess of limits
imposed on qualified plans by U.S. tax laws. The Non-qualified Plan had settlement gains in 2009 and 2008
resulting from payments to participants. The term “Pension Plans” includes both the Qualified Plan and the
Non-qualified Plan.
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