MasterCard 2011 Annual Report Download - page 99

Download and view the complete annual report

Please find page 99 of the 2011 MasterCard annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 156

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156

MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The distribution of the Company’s financial instruments which are measured at fair value on a recurring
basis within the Valuation Hierarchy was as follows:
December 31, 2011
Quoted Prices
in Active
Markets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Fair
Value
(in millions)
Municipal securities 1..................... $— $ 393 $— $ 393
U.S. Government and Agency securities ...... — 205 — 205
Taxable short-term bond funds .............. 203 — — 203
Corporate securities ...................... — 325 — 325
Asset-backed securities ................... — 69 — 69
Auction rate securities .................... — — 70 70
Other .................................. — 22 — 22
Total .................................. $203 $1,014 $ 70 $1,287
December 31, 2010
Quoted Prices
in Active
Markets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Fair
Value
(in millions)
Municipal securities 1..................... $— $ 315 $— $ 315
Taxable short-term bond funds .............. 516 — — 516
Auction rate securities .................... — — 106 106
Other .................................. — (1) — (1)
Total .................................. $516 $ 314 $106 $ 936
1Available-for-sale municipal securities are carried at fair value and are included in the above tables.
However, a held-to-maturity municipal bond is carried at amortized cost and excluded from the above
tables.
The fair value of the Company’s short-term bond funds are based on quoted prices for identical investments
in active markets and are therefore included in Level 1 of the Valuation Hierarchy.
The fair value of the Company’s available-for-sale municipal securities, U.S. Government and Agency
securities, corporate securities, asset-backed securities and other fixed income securities are based on quoted
prices for similar assets in active markets and are therefore included in Level 2 of the Valuation Hierarchy. The
Company’s foreign currency derivative contracts have also been classified within Level 2 in the other category of
the Valuation Hierarchy, as the fair value is based on broker quotes for the same or similar derivative
instruments. See Note 22 (Foreign Exchange Risk Management) for further details.
The Company’s auction rate securities (“ARS”) investments have been classified within Level 3 of the
Valuation Hierarchy as their valuation requires substantial judgment and estimation of factors that are not
currently observable in the market due to the lack of trading in the securities. This valuation may be revised in
future periods as market conditions evolve. The Company has considered the lack of liquidity in the ARS market
and the lack of comparable, orderly transactions when estimating the fair value of its ARS portfolio. Therefore,
95