MasterCard 2011 Annual Report Download - page 101

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MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Refunding Revenue Bonds
The Company holds refunding revenue bonds with the same payment terms, and which contain the right of
set-off with a capital lease obligation related to the Company’s global technology and operations center located
in O’Fallon, Missouri, called Winghaven. The Company has netted the refunding revenue bonds and the
corresponding capital lease obligation in the consolidated balance sheet and estimates that the carrying value
approximates the fair value for these bonds. See Note 8 (Property, Plant and Equipment) for further details.
Non-Financial Instruments
Certain assets and liabilities are measured at fair value on a nonrecurring basis. The Company’s
non-financial assets and liabilities measured at fair value on a nonrecurring basis include property, plant and
equipment, goodwill and other intangible assets. These assets are not measured at fair value on an ongoing basis;
however, they are subject to fair value adjustments in certain circumstances, such as when there is evidence of
impairment.
The valuation methods for goodwill and other intangible assets involve assumptions concerning comparable
company multiples, discount rates, growth projections and other assumptions of future business conditions. The
Company uses a weighted income and market approach for estimating the fair value of its reporting unit, when
necessary. As the assumptions employed to measure these assets on a nonrecurring basis are based on
management’s judgment using internal and external data, these fair value determinations are classified in Level 3
of the Valuation Hierarchy.
Note 6. Investment Securities
Amortized Costs and Fair Values—Available-for-Sale Investment Securities:
The major classes of the Company’s available-for-sale investment securities, for which unrealized gains and
losses are recorded as a separate component of other comprehensive income on the consolidated statement of
comprehensive income, and their respective amortized cost basis and fair values as of December 31, 2011 and
2010 were as follows:
December 31, 2011
Amortized
Cost
Gross
Unrealized
Gain
Gross
Unrealized
Loss 1
Fair
Value
(in millions)
Municipal securities ........................... $ 382 $ 11 $— $ 393
U.S. Government and Agency securities ........... 205 — — 205
Taxable short-term bond funds .................. 206 — (3) 203
Corporate securities ........................... 325 — — 325
Asset-backed securities ........................ 69 — — 69
Auction rate securities ......................... 78 — (8) 70
Other ...................................... 20 — — 20
Total ....................................... $1,285 $ 11 $ (11) $1,285
97