MasterCard 2010 Annual Report Download - page 147

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MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued
The currencies underlying the foreign currency forward contracts consist primarily of the Australian dollar,
Canadian dollar, Chinese renminbi, Mexican peso and U.K. pound sterling. The fair value of the foreign currency
forward contracts and foreign currency option contracts generally reflects the estimated amounts that the
Company would receive or (pay), on a pre-tax basis, to terminate the contracts at the reporting date based on
broker quotes for the same or similar instruments. The terms of the foreign currency forward contracts are
generally less than 18 months. The Company had no deferred gains or losses in accumulated other
comprehensive income as of December 31, 2010 and 2009 as there were no derivative contracts accounted for
under hedge accounting.
The Company’s derivative financial instruments are subject to both credit and market risk. Credit risk is the
risk of loss due to failure of the counterparty to perform its obligations in accordance with contractual terms.
Market risk is the risk of loss due to the potential change in an instrument’s value caused by fluctuations in
interest rates and other variables related to currency exchange rates. Credit and market risk related to derivative
instruments were not material at December 31, 2010 and 2009.
Generally, the Company does not obtain collateral related to derivatives because of the high credit ratings of
the counterparties. The amount of loss the Company would incur if the counterparties failed to perform according
to the terms of the contracts is not considered material.
Note 25. Segment Reporting
MasterCard has one reportable segment, “Payment Solutions.” All of the Company’s activities are
interrelated, and each activity is dependent upon and supportive of the other. Accordingly, all significant
operating decisions are based upon analyses of MasterCard as one operating segment. The President and Chief
Executive Officer has been identified as the chief operating decision-maker.
Revenue by geographic market is based on the location of the Company’s customer that issued the cards
which are generating the revenue. Revenue generated in the U.S. was approximately 41.6%, 42.4% and 44.1% of
net revenues in 2010, 2009 and 2008, respectively. No individual country, other than the U.S., generated more
than 10% of total revenues in those periods. MasterCard does not maintain or measure long-lived assets by
geographic location.
MasterCard did not have any one customer that generated greater than 10% of net revenues in 2010, 2009 or
2008.
Note 26. Other Income
During the year ended December 31, 2009, the Company recognized a gain of $14 million on the
prepayment of the Company’s remaining obligation on a litigation settlement. During the year ended
December 31, 2008, the Company recognized $75 million pre-tax, in other income, related to the termination of a
customer business agreement for a customer exiting a specific line of business.
137