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MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
69
Note 5. Fair Value and Investment Securities
Financial Instruments – Recurring Measurements
In accordance with accounting requirements for financial instruments, the Company is disclosing the estimated fair
values as of December 31, 2013 and 2012 of the financial instruments that are within the scope of the accounting
guidance, as well as the methods and significant assumptions used to estimate the fair value of those financial instruments.
Furthermore, the Company classifies its fair value measurements in the Valuation Hierarchy. No transfers were made
among the three levels in the Valuation Hierarchy during the years ended December 31, 2013 and 2012.
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, 2013
Quoted Prices
in Active
Markets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3) Fair
Value
(in millions)
Municipal securities1. . . . . . . . . . . . . . . . . . . . . $ — $ 267 $ — $ 267
U.S. Government and Agency securities2. . . . . — 560 — 560
Taxable short-term bond funds . . . . . . . . . . . . . — — — —
Corporate securities . . . . . . . . . . . . . . . . . . . . . . — 1,426 — 1,426
Asset-backed securities . . . . . . . . . . . . . . . . . . . — 364 — 364
Auction rate securities . . . . . . . . . . . . . . . . . . . . — — 11 11
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 79 — 79
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $ 2,696 $ 11 $ 2,707
December 31, 2012
Quoted Prices
in Active
Markets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3) Fair
Value
(in millions)
Municipal securities1. . . . . . . . . . . . . . . . . . . . . $ — $ 531 $ — $ 531
U.S. Government and Agency securities2. . . . . — 582 — 582
Taxable short-term bond funds . . . . . . . . . . . . . 210 — — 210
Corporate securities . . . . . . . . . . . . . . . . . . . . . . — 1,246 — 1,246
Asset-backed securities . . . . . . . . . . . . . . . . . . . — 316 — 316
Auction rate securities . . . . . . . . . . . . . . . . . . . . — — 32 32
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 63 — 63
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 210 $ 2,738 $ 32 $ 2,980
1 Available-for-sale municipal securities are carried at fair value and are included in the above tables. However, a held-to-maturity
municipal bond was carried at amortized cost and excluded from the table at December 31, 2012.
2 Excludes amounts held in escrow related to the U.S. merchant class litigation settlement of $723 million and $726 million at December
31, 2013 and 2012, respectively, which would be included in Levels 1 and 2 of the Valuation Hierarchy. See Note 10 (Accrued Expenses
and Accrued Litigation) and Note 18 (Legal and Regulatory Proceedings) for further details.
The fair value of the Company's taxable 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.