Mastercard 8K Second Quarter Financial Results | MA 2 Aug 06

MasterCard

Incorporated

Quarter

2006

Financial

Results

Conference

Call

August 2, 2006

Exhibit 99.2

2nd Quarter Financial Results

•

Completed initial public offering in late May

•

Made contributions to MasterCard Foundation

•

Delivered solid performance on a business-as-usual basis:

–

Earnings per share of $0.74, excluding special items

–

Loss per share of $2.30, including special items

•

Achieved strong revenue growth primarily due to higher gross dollar volume

and processed transactions, and restructured pricing

•

Achieved operating margin of 17.0% as-adjusted, in spite of:

–

Conversion of a large debit card portfolio

–

World Cup sponsorship and promotions expenses

•

Strengthened

already

solid

financial

position

$2.1

billion

cash,

cash

equivalents

and

available-for-sale

securities

quarter

end

2nd Quarter Selected Financial Performance

($ in Millions, except percentage and per share data)

17.0%

–

(32.4%)

Operating Margin

9.7%

–

9.7%

Revenue Growth

101

411

(310)

Net Income (Loss)

0.74

3.04

(2.30)

Basic and Diluted EPS

307

–

307

Advertising and Marketing

(7)

Investment Income

365

388

General Admin. and Litigation

144

418

(274)

Operating Income (Loss)

395

400

Charitable Contributions

846

–

846

Net Revenue

Adjusted

Special

Items

GAAP

Actual

Litigation settlements

Contribution of stock to the MasterCard

Foundation

Contribution of cash to the MasterCard Foundation

d. Interest Income on IPO proceeds held for redemption

e. Net tax effect of all special items is negligible

MasterCard Branded Volume

Second Quarter 2006

Note: columns may not add due to rounding

17.9

232

United States

16.4

16.7

485

Worldwide

10.1

10.4

Asia Pacific

13.8

25.9

Canada

49.4

47.9

SAMEA

26.9

28.7

Latin America

14.2

13.0

127

Europe

Local

Currency

U.S.

Dollar

Actual

($ Billions)

% Year-Over-Year Growth

Quarter Revenue -

Assessments

($ in Millions)

$234

$283

$50

$100

$150

$200

$250

$300

2Q05

2Q06

20%

30%

40%

50%

60%

70%

80%

Net Assessment Fees

Net Assessment Fees as a % of Gross Assessment Fees

•

Net assessments down $49 or

17.3% year-over-year

•

Gross assessments increased

$35 or 8.6%. Key drivers

include:

–

GDV increases

–

Restructured pricing,

primarily

a $33

reclassification to

operations fees (offsets

gross assessments)

•

Net assessments as % of gross

assessments declined due to an

increase in incentives primarily

from:

–

Debit card portfolio

conversion

–

New and renewed

customer and merchant

agreements

Quarter Revenue -

Operations Fees

($ in Millions)

•

Net operations fees up $123 or

25.2% year-over-year

•

Gross operations fees

increased $152 or 29.1%. Key

drivers include increases in:

–

Processed transactions

–

Gross dollar volume

–

Restructured pricing,

including $33

reclassification from

assessments

•

Net operations fees as % of

gross operations fees declined

due to an increase in rebates

primarily from consolidation of

major customers and the impact

of restructured pricing

$612

$489

$100

$200

$300

$400

$500

$600

$700

2Q05

2Q06

85%

88%

91%

94%

97%

100%

Net Operations Fees

Net Operations Fees as a % of Gross Operations Fees

$319

$365

$232

$307

$29

$25

$23

$400

$100

$200

$300

$400

$500

2nd Quarter 2005

2nd Quarter 2006

General & Administrative

Advertising & Marketing

Depreciation & Amortization

Litigation Settlements

Charitable Contributions

Quarter Operating Expenses

($ in Millions)

•

G&A up $46 or 14.4% year-

over-year primarily due to

increases in personnel to

support strategic initiatives

•

A&M increased $75 or

32.6% primarily due to the

2006 World Cup

•

Litigation settlements

represent increased

reserves for ongoing

litigation

•

Charitable contributions of

$395 in common shares

and $5 in cash to the

MasterCard Foundation

Balance Sheet/Cash Flow Statement

Highlights

•

Cash, cash equivalents and available-for-sale securities of $2.1 billion

•

Equity at $2.1 billion

•

Accounts receivable increased $63 million primarily due to a pricing

change

in Europe as well as volume increases

•

Accrued expenses decreased $96 million primarily due to the payment of

year-end personnel, advertising and incentive accruals

•

Obligations under the U.S. Merchant Lawsuit and other litigation

settlements increased $44 million due to litigation settlement accruals and

interest accretion

•

Generated $184 million in cash flow from operations during the six months

ended June 30, 2006

Third Quarter Items for Consideration

($ in Millions)

3Q05 Items:

Adjustment to method of accounting for

cash-based award plan

(reported as General & Administrative expense)

($19)

Currency Conversion Reserve

(reported as Litigation Settlements expense)

($48)

Customer breach of business agreement

(reported as Other Income)

$18

Pre-Tax

Income (Expense)

Appendix A:

Operating Information Footnotes

Set forth on the following pages are tables that provide information regarding the performance results for the three and six

month periods ended June 30, 2006 for the payment programs of MasterCard International Incorporated and MasterCard

Europe sprl (collectively, “MasterCard”), the principal operating subsidiaries of MasterCard Incorporated. In addition, set

forth are

tables that provide information regarding MasterCard’s payment programs for the years ended December 31,

2005 and 2004, in each case restated to present the information on the same basis as the information in the tables for the

three and six month periods ended June 30, 2006.

The tables set forth the gross dollar volume (“GDV”), purchase volume, cash volume and the number of purchase

transactions, cash transactions, accounts, cards and acceptance locations on a regional basis for MasterCard®-branded

and

MasterCard

Electronic™-branded

cards.

Growth

rates

over

prior

periods

are

provided

for

volume-based

data.

Debit

transactions

Maestro®

and

Cirrus®

-branded

cards,

Mondex®

transactions

and

other

branded

transactions

are

not included in the preceding tables.

For purposes of the tables: GDV represents purchase volume plus cash volume and includes the impact of balance

transfers

and

convenience

checks;

“purchase

volume”

means

the

aggregate

dollar

amount

purchases

made

(including

point-of-sale) with

MasterCard-branded

cards

for

the

relevant

period;

and

“cash

volume”

means

the

aggregate

dollar

amount of cash disbursements obtained with MasterCard-branded cards for the relevant period. The number of cards

includes virtual cards, which are MasterCard-branded payment accounts in connection with which functional cards are not

generally issued. Acceptance locations include merchant locations, ATMs and other locations where cash may be

obtained.

The MasterCard payment product is comprised of credit, charge and debit programs, and data relating to each type of

program is included in the tables. Debit programs include MasterCard-branded debit programs where the primary means

cardholder

validation

the

point

sale

for

cardholders

either

sign

sales

receipt

enter

Personal

Identification

Number (PIN).

Appendix A:

Operating Information Footnotes (cont.)

Information denominated in U.S. dollars is calculated by applying an established U.S. dollar/local currency exchange rate

for each local currency in which MasterCard volumes are reported. These exchange rates are calculated on a quarterly

basis using the average exchange rate for each quarter. However, MasterCard reports period-over-period rates of change

in GDV, purchase volume and cash volume solely on the basis of local currency information, in order to eliminate the

impact of changes in the value of foreign currencies against the

U.S. dollar in calculating such rates of change.

Accordingly, the period-over-period rates of change set forth in the tables cannot be extrapolated directly by reference to

dollar volume information presented by MasterCard for the current and historical periods.

The data set forth in the GDV, purchase volume, purchase transactions, cash volume and cash transactions columns is

derived from information provided by MasterCard members that is subject to verification by MasterCard and partial

cross-checking

against

information

provided

MasterCard’s

transaction

processing

systems.

The

data

set

forth

the

accounts,

cards

and

acceptance

locations

columns

derived

from

information

provided

MasterCard

members

and

subject to certain limited verification by MasterCard. Certain information with respect to acceptance locations is provided by

third parties and has not been independently verified by MasterCard. All data is subject to revision and amendment by

MasterCard’s members subsequent to the date of its release.

Volumes for the periods indicated in the following tables for MasterCard-branded debit programs in the U.S. region and

credit programs in the Asia/Pacific region are higher due to expanded data collection of PIN point of sale volumes. Prior

periods have been adjusted to ensure comparability.

A portion of the data set forth in the accounts and cards columns reflects the impact of routine portfolio changes among

members and other practices that may lead to over counting of the underlying data in certain circumstances.

The tables include information with respect to MasterCard-branded transactions that are not processed by MasterCard and

transactions for which MasterCard does not earn significant revenues.

Note

that

the

columns

the

tables

may

not

add

due

rounding.

Growth

represents

change

from

the

comparable

year-ago

period.

Appendix A: Operating Information (cont.)

All MasterCard Credit,

GDV

Growth

Purchase

Volume

Growth

Purchase

Transactions

Cash

Volume

Growth

Cash

Transactions

Accounts

Cards

Charge and Debit Programs

(Billions)

(Local)

(Billions)

(Local)

(Millions)

(Billions)

(Local)

(Millions)

South Asia / Middle East Africa

$14

51.2%

34.4%

132

89.1%

Asia / Pacific

138

8.9%

15.2%

987

1.8%

266

136

149

Europe

240

14.8%

177

14.6%

2,363

15.2%

421

126

139

Latin America

27.4%

30.8%

610

24.5%

218

Canada

15.4%

16.9%

360

7.8%

United States

437

15.6%

341

16.8%

5,084

11.9%

446

317

372

Worldwide

922

15.4%

660

16.7%

9,535

261

12.3%

1,408

692

796

MasterCard Credit and Charge Programs

United States

296

8.2%

244

9.5%

2,813

2.4%

232

282

Worldwide

694

11.8%

529

13.6%

6,625

165

6.2%

556

563

655

MasterCard Debit Programs

United States

142

35.0%

40.0%

2,271

25.2%

414

Worldwide

228

28.2%

131

31.1%

2,910

24.4%

851

130

141

For the 6 Months ended June 30, 2006

All MasterCard Credit,

GDV

Growth

Purchase

Volume

Growth

Purchase

Transactions

Cash

Volume

Growth

Cash

Transactions

Accounts

Cards

Charge and Debit Programs

(Billions)

(Local)

(Billions)

(Local)

(Millions)

(Billions)

(Local)

(Millions)

South Asia / Middle East Africa

30.0%

24.5%

104

44.5%

Asia / Pacific

127

7.0%

15.6%

841

-1.6%

206

123

136

Europe

218

12.8%

161

14.4%

2,149

8.4%

380

106

118

Latin America

35.6%

31.4%

490

39.0%

188

Canada

14.4%

15.9%

319

7.2%

United States

378

14.0%

292

16.4%

4,279

6.6%

387

294

351

Worldwide

804

13.7%

571

16.3%

8,180

233

7.8%

1,194

612

715

MasterCard Credit and Charge Programs

United States

273

4.5%

223

8.1%

2,653

-8.8%

229

281

Worldwide

625

8.0%

469

12.1%

5,977

156

-2.7%

493

517

608

MasterCard Debit Programs

United States

105

49.5%

54.8%

1,626

40.1%

354

Worldwide

179

39.0%

101

40.2%

2,203

37.3%

701

107

For the 6 Months ended June 30, 2005

Appendix A: Operating Information (cont.)

All MasterCard Credit,

GDV

Growth

Purchase

Volume

Growth

Purchase

Transactions

Cash

Volume

Growth

Cash

Transactions

Accounts

Cards

Charge and Debit Programs

(Billions)

(Local)

(Billions)

(Local)

(Millions)

(Billions)

(Local)

(Millions)

South Asia / Middle East Africa

34.3%

24.8%

59.4%

Asia / Pacific

6.6%

15.4%

433

-2.4%

106

123

136

Europe

113

13.5%

14.5%

1,124

11.0%

202

106

118

Latin America

36.0%

31.2%

258

40.1%

Canada

15.6%

17.1%

172

8.0%

United States

197

15.0%

154

18.4%

2,253

4.3%

203

294

351

Worldwide

416

14.4%

298

17.3%

4,294

118

7.6%

627

612

715

MasterCard Credit and Charge Programs

United States

142

5.2%

117

10.0%

1,396

-13.3%

229

281

Worldwide

322

8.6%

245

13.2%

3,135

-3.8%

257

517

608

MasterCard Debit Programs

United States

50.9%

56.7%

857

40.8%

187

Worldwide

40.2%

41.3%

1,159

38.7%

370

107

For the 3 Months ended June 30, 2005

All MasterCard Credit,

GDV

Growth

Purchase

Volume

Growth

Purchase

Transactions

Cash

Volume

Growth

Cash

Transactions

Accounts

Cards

Charge and Debit Programs

(Billions)

(Local)

(Billions)

(Local)

(Millions)

(Billions)

(Local)

(Millions)

South Asia / Middle East Africa

$22

39.9%

$14

28.3%

228

70.3%

Asia / Pacific

262

8.7%

142

15.0%

1,773

120

2.0%

456

132

144

Europe

453

13.5%

334

13.7%

4,530

119

12.8%

795

116

129

Latin America

32.3%

31.2%

1,073

33.3%

398

Canada

13.7%

16.0%

684

1.7%

United States

794

11.6%

617

14.5%

9,000

176

2.3%

769

297

351

Worldwide

1,690

13.0%

1,205

15.1%

17,287

485

8.1%

2,496

648

749

MasterCard Credit and Charge Programs

United States

576

5.1%

472

9.0%

5,596

103

-9.7%

227

276

Worldwide

1,313

9.3%

993

12.6%

12,668

321

0.3%

1,048

540

630

MasterCard Debit Programs

United States

218

33.3%

145

37.1%

3,404

26.3%

702

Worldwide

376

28.1%

212

28.4%

4,619

164

27.7%

1,447

107

118

For the Year ended December 31, 2005

Appendix A: Operating Information (cont.)

All MasterCard Credit,

GDV

Growth

Purchase

Volume

Growth

Purchase

Transactions

Cash

Volume

Growth

Cash

Transactions

Accounts

Cards

Charge and Debit Programs

(Billions)

(Local)

(Billions)

(Local)

(Millions)

(Billions)

(Local)

(Millions)

South Asia / Middle East Africa

$15

27.7%

$11

26.4%

186

31.5%

Asia / Pacific

234

2.2%

120

14.9%

1,549

114

-8.4%

374

118

131

Europe

398

14.1%

293

15.3%

4,051

105

11.0%

739

111

Latin America

33.4%

27.9%

843

38.2%

325

Canada

13.5%

13.9%

605

11.5%

United States

712

11.7%

539

12.2%

7,723

172

10.1%

621

278

337

Worldwide

1,478

11.8%

1,035

14.0%

14,957

443

6.8%

2,116

575

678

MasterCard Credit and Charge Programs

United States

548

6.4%

433

8.5%

5,219

115

-1.1%

216

271

Worldwide

1,186

8.9%

870

12.5%

11,392

315

0.0%

956

486

578

MasterCard Debit Programs

United States

164

34.2%

106

30.2%

2,504

42.1%

546

Worldwide

292

25.1%

165

22.6%

3,566

127

28.5%

1,161

100

For the Year ended December 31, 2004

Appendix B:

New Ownership Structure

($ in thousands)

December 31, 2005

June 30, 2006

49,014

77,796

Accumulated other comprehensive income, net of tax

1,169,148

$ 2,117,006

Total Stockholders’

Equity

145,515

(1,263,102)

Retained earnings (accumulated deficit)

974,605

3,302,298

Additional paid-in capital

Class M common stock, $.0001 par value

Class B common stock, $.0001 par value

Class A common stock, $.0001 par value

Stockholders’

equity:

IPO share issuance

Reduced for share redemption

Restated

give

effect

the

reclassification

common

stock

immediately

prior

the

IPO

Increased by $2,449,903 for IPO proceeds, $394,784 for charitable donation and $58,034 for stock based compensation,

less $575,028 for stock redemptions

Decreased

$1,224,901

for

the

redemption

and

$183,716

YTD

net

loss

Mastercard (MA) 8-KSecond Quarter Financial Results