Exhibit 99.1
News Release | ![]() |
MasterCard Incorporated Reports
Third-Quarter 2007 Financial Results
• | Net income up 62.9% to $314 million, or $2.31 per share, on a diluted basis (including $0.51 from gains on partial sale of Redecard investment) |
• | Record quarterly net revenues up 20.1% to $1.08 billion |
• | Gross dollar volume up 12.8%; purchase volume up 14.1% |
• | Board of Directors approves incremental $750 million Class A share repurchase |
Purchase, NY, October 31, 2007 – MasterCard Incorporated (NYSE:MA) today announced financial results for third-quarter 2007. For the quarter, the company reported quarterly net income of $314 million, or $2.31 per share on a diluted basis, which includes after-tax gains of $70 million or $0.51 per share on a diluted basis from the partial sale of the company’s investment in Redecard S.A. in Brazil.
Net revenues for the quarter were a record, at $1.08 billion, a 20.1% increase versus the same period in 2006. Currency fluctuation (driven by the movement of the euro relative to the US dollar) contributed approximately 2.3% of the increase in revenues for the quarter.
Fueling the higher revenue in the third quarter versus the same period in 2006 was growth in MasterCard’s gross dollar volume (GDV), which increased 12.8% on a local currency basis, to $577 billion; a 13.3% increase in the number of transactions processed to 4.8 billion; and, an increase in cross-border volumes of 20.6%.
Worldwide purchase volume rose 14.1%, on a local currency basis, during the quarter to $430 billion, driven by increased cardholder spending on a growing number of MasterCard cards. As of September 30, 2007, the company’s customers had issued 878 million MasterCard cards, an increase of 11.3% over the cards issued at September 30, 2006.
“Our solid performance illustrates the strength of our diverse, global business,” said Robert W. Selander, MasterCard president and chief executive officer. “We continue to benefit from positive secular trends and outstanding growth in international and emerging markets such as South Asia/Middle East/Africa and Latin America.
“As a unified global company, one of our strongest assets is our ability to align with our customers anywhere worldwide. As our business continues to grow, we are committed to delivering best-in-class dedicated customer account teams, and to finding the right talent to help MasterCard, and our customers, win in the marketplace,” said Selander.
-more-
MasterCard Incorporated – Page 2
Total operating expenses increased 16.3%, to $730 million, in the third quarter of 2007 compared to the same period in 2006. This increase was primarily driven by higher advertising and market development expenses in the quarter, which increased 26.4%, to $264 million, resulting from a change in the timing of 2007 initiatives compared to the same period last year. The first half of 2006 had significant World Cup sponsorship activity versus this year, where a planned shift in spending to the second half of 2007 had been anticipated.
General and administrative expenses increased 10.2%, to $433 million, in the third quarter. This increase was primarily driven by personnel costs related to hiring of additional staff and contractors to support the company’s customers as well as increased performance incentive accruals. The increase in total operating expenses was also driven by a $10 million cash contribution to the MasterCard Foundation.
Currency fluctuation contributed 1.6% of the growth in total operating expenses for the quarter.
Total other income was $129 million in the third quarter of 2007 versus $17 million in the same period in 2006. The improvement was driven by a $112 million increase in investment income primarily due to gains realized from the sale of 25% of the company’s investment in Redecard S.A. in Brazil. Redecard gains contributed $0.51 per share on a diluted basis to the quarterly earnings per share of $2.31.
MasterCard’s effective tax rate was 34.8% in the three months ended September 30, 2007, versus 33.9% in the comparable period in 2006. The year-over-year difference was due to an increase in state income tax liabilities for uncertain tax positions as required under provisions of the recently adopted Financial Accounting Standards Board Interpretation No. 48 (“FIN 48”).
Year-to-Date 2007 Results
For the nine months ended September 30, 2007, MasterCard reported net income of $782 million or $5.73 per share, on a diluted basis, including the impact of special items. Excluding the impact of special items, the company reported net income of $724 million, or $5.31 per share, on a diluted basis. The company’s total operating expenses, total other income, effective tax rate, net income and earnings per share, excluding special items, are non-GAAP financial measures that are reconciled to their most directly comparable GAAP measures in the accompanying financial tables.
Special items for the nine months ended September 30, 2007 included:
• | A $3.4 million reserve recorded for a litigation settlement; and |
• | $90 million in other income related to a settlement received under an agreement to discontinue the company’s sponsorship of the 2010 and 2014 World Cup soccer events. |
MasterCard Incorporated – Page 3
Special items for the nine months ended September 30, 2006 included:
• | A $395 million non-cash expense, resulting from the donation of approximately 13.5 million shares of Class A common stock to the MasterCard Foundation that occurred simultaneously with the company’s initial public offering in May 2006, which was not deductible for tax purposes; |
• | A $23 million reserve recorded for litigation settlements; and |
• | $7 million in interest income earned on IPO proceeds, ultimately used for redemption of shares of Class B common stock. |
Net revenue for the nine months ended September 30, 2007 was approximately $3 billion, a 20.4% increase versus the same period in 2006. In addition to growth in GDV and processed transactions, this increase was driven by a restructuring of pricing, including cross-border transaction pricing implemented in April 2006. Currency fluctuation contributed approximately 2.3% of the increase in revenues in the year-to-date period.
Total operating expenses increased 9.1%, to $2.1 billion, for the nine-month period compared to the same period in 2006, excluding special items for both periods. Including special items, operating expenses decreased 10.6%, to $2.1 billion. Currency fluctuation contributed approximately 1.2% growth in total operating expenses in the year-to-date period.
Total other income was $268 million for the nine-month period versus $41 million for the same period in 2006, on a GAAP basis in both periods. The year-over-year difference was driven by a $135 million increase in investment income primarily due to gains realized from the sale of 25% of the company’s investment in Redecard S.A. in Brazil. Redecard gains contributed $0.51 per share on a diluted basis to the earnings per share of $5.73 for the nine months ended September 30, 2007. Additionally, other income increased $91 million primarily related to a settlement received under an agreement to discontinue the company’s sponsorship of the 2010 and 2014 World Cup soccer events.
MasterCard’s GAAP effective tax rate was 35.1% in the nine months ended September 30, 2007, versus the non-GAAP rate of 34.6% in the comparable period in 2006. MasterCard’s GAAP effective tax rate in 2006 was significantly impacted by the share donation to the MasterCard Foundation. The year-over-year difference, excluding the effects of the donation, was due to the effect of a New York state tax law change and a net increase in the accrual of income tax liabilities for uncertain tax positions as required under provisions of the recently adopted FIN 48.
MasterCard Incorporated – Page 4
Class A Share Repurchase Update and Additional Class A Share Repurchase
In April 2007, the Company’s Board of Directors authorized a plan for the Company to repurchase up to $500 million of its Class A common stock in open market transactions during 2007. As of September 30, 2007, approximately 2.0 million shares of Class A common stock had been repurchased at a cost of $277 million. Subsequent to September 30, 2007, the Company repurchased an additional 1.4 million shares of its Class A common stock at a cost of $223 million, completing the initial $500 million repurchase plan.
On October 29, 2007, the Company’s Board of Directors amended the share repurchase plan to authorize the Company to repurchase an incremental $750 million, for an aggregate of the entire repurchase program of $1.25 billion of Class A common stock in open market transactions on or prior to June 30, 2008.
“Our continued strong business results and cash position have enabled us to fund an incremental $750 million Class A repurchase program,” said Chris A. McWilton, chief financial officer. “This program demonstrates our commitment to enhance shareholder value and is in addition to the $500 million share repurchase program approved by our Board and completed earlier this year.”
Class B Share Conversion Update
In April 2007, MasterCard announced that its Board of Directors had approved plans for certain accelerated Class B share conversions subject to shareholder approval of changes to the company’s corporate charter. In June, after receiving shareholder approval at its Annual Meeting, the company announced that current holders of Class B common stock who elected to participate would be eligible in 2007 to convert up to an aggregate of 13.4 million shares of Class B common stock on a one-for-one basis into shares of Class A common stock for subsequent sale to public investors. The first election window for this conversion program extended from August 4, 2007 through October 5, 2007.
As of September 30, 2007, approximately 5.0 million shares of Class B common stock had been converted into Class A common stock as part of the initial conversion program. Subsequent to September 30, 2007, an additional 2.6 million shares of Class B common stock were converted into Class A common stock, for a total of 7.6 million shares converted during the initial share conversion window.
In October 2007, the Company’s Board of Directors approved a second program for 2007, allowing for the conversion of the balance of the initially approved 13.4 million shares, or up to 5.8 million shares of Class B into Class A common stock. The election window for this conversion program will begin on November 17, 2007 and end no later than December 14, 2007.
MasterCard Incorporated – Page 5
Third-Quarter 2007 Financial Results Conference Call Details
At 9:00 a.m. EDT today, the company will host a conference call to discuss its third-quarter financial results.
The dial-in information for this call is 800-291-9234 (within the US) and 617-614-3923 (outside the US) and the passcode is 81716198. A replay will be available for one week following the conference call. The replay can be accessed by dialing 888-286-8010 (within the US) and 617-801-6888 (outside the US) and using passcode 29891515.
The live call and replay, along with supporting materials, can also be accessed through the Investor Relations section of the company’s website at www.mastercard.com.
About MasterCard Incorporated
MasterCard Incorporated advances global commerce by providing a critical economic link among financial institutions, businesses, cardholders and merchants worldwide. As a franchisor, processor and advisor, MasterCard develops and markets payment solutions, processes over 16 billion transactions each year, and provides industry-leading analysis and consulting services to financial institution customers and merchants. Through its family of brands, including MasterCard®, Maestro® and Cirrus®, MasterCard serves consumers and businesses in more than 210 countries and territories. For more information go to www.mastercard.com.
MasterCard Incorporated – Page 6
Forward-Looking Statements
Statements in this press release which are not historical facts, including statements about MasterCard’s plans, strategies, beliefs and expectations, are forward-looking and subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements speak only as of the date they are made. Accordingly, except for the company’s ongoing obligations under the U.S. federal securities laws, the company does not intend to update or otherwise revise the forward-looking information to reflect actual results of operations, changes in financial condition, changes in estimates, expectations or assumptions, changes in general economic or industry conditions or other circumstances arising and/or existing since the preparation of this press release or to reflect the occurrence of any unanticipated events. Such forward-looking statements include, without limitation:
• | the company’s performance illustrating the strength of its diverse, global business; |
• | the company’s ability to benefit from positive secular trends and growth in international and emerging markets; |
• | the company’s ability to align with its customers; |
• | the company’s ability to deliver on its commitment of best-in-class dedicated customer account teams; |
• | the company’s ability to locate appropriate talent to help MasterCard and its customers; |
• | the company’s business results and cash position enabling it to fund an incremental repurchase program; |
• | the company’s ability to deliver on its commitment to enhance shareholder value. |
Actual results may differ materially from such forward-looking statements for a number of reasons, including those set forth in the company’s filings with the Securities and Exchange Commission (SEC), including the company’s Annual Report on Form 10-K for the year ended December 31, 2006, the Company’s Quarterly Reports on Form 10-Q and Current Reports on Form 8-K that have been filed with the SEC during 2007, as well as reasons including difficulties, delays or the inability of the company to achieve its strategic initiatives set forth above. Factors other than those listed above could also cause the company’s results to differ materially from expected results.
Contacts:
Investor Relations: Barbara Gasper, investor_relations@mastercard.com, 914-249-4565
Media Relations: Chris Monteiro, chris_monteiro@mastercard.com, 914-249-5826
###
MasterCard Incorporated – Page 7
MASTERCARD INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
(In thousands, except per share data) | ||||||||||||||||
Revenues, net | $ | 1,082,850 | $ | 901,969 | $ | 2,994,912 | $ | 2,486,911 | ||||||||
Operating Expenses | ||||||||||||||||
General and administrative | 432,848 | 392,883 | 1,262,838 | 1,105,881 | ||||||||||||
Advertising and market development | 264,425 | 209,187 | 711,128 | 698,936 | ||||||||||||
Litigation settlements | — | — | 3,400 | 23,250 | ||||||||||||
Charitable contributions to the MasterCard Foundation | 10,000 | — | 10,000 | 400,285 | ||||||||||||
Depreciation and amortization | 22,274 | 25,139 | 71,490 | 75,052 | ||||||||||||
Total operating expenses | 729,547 | 627,209 | 2,058,856 | 2,303,404 | ||||||||||||
Operating income | 353,303 | 274,760 | 936,056 | 183,507 | ||||||||||||
Other Income (Expense) | ||||||||||||||||
Investment income, net | 146,322 | 34,398 | 219,036 | 84,089 | ||||||||||||
Interest expense | (16,439 | ) | (16,757 | ) | (41,964 | ) | (43,465 | ) | ||||||||
Other income (expense), net | (879 | ) | (292 | ) | 91,268 | 303 | ||||||||||
Total other income (expense) | 129,004 | 17,349 | 268,340 | 40,927 | ||||||||||||
Income before income taxes | 482,307 | 292,109 | 1,204,396 | 224,434 | ||||||||||||
Income tax expense | 167,846 | 99,105 | 422,743 | 215,146 | ||||||||||||
Net Income | $ | 314,461 | $ | 193,004 | $ | 781,653 | $ | 9,288 | ||||||||
Basic Net Income per Share | $ | 2.32 | $ | 1.42 | $ | 5.76 | $ | .07 | ||||||||
Basic Weighted Average Shares Outstanding | 135,357 | 135,684 | 135,687 | 135,312 | ||||||||||||
Diluted Net Income per Share | $ | 2.31 | $ | 1.42 | $ | 5.73 | $ | .07 | ||||||||
Diluted Weighted Average Shares Outstanding | 136,228 | 136,134 | 136,502 | 135,511 | ||||||||||||
MasterCard Incorporated – Page 8
MASTERCARD INCORPORATED
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
September 30, 2007 | December 31, 2006 | |||||||
(In thousands, except share data) | ||||||||
ASSETS | ||||||||
Cash and cash equivalents | $ | 1,687,423 | $ | 1,185,080 | ||||
Investment securities, at fair value: | ||||||||
Trading | 5,036 | 12,261 | ||||||
Available-for-sale | 1,585,332 | 1,286,580 | ||||||
Accounts receivable | 536,401 | 451,261 | ||||||
Settlement due from members | 343,598 | 311,953 | ||||||
Restricted security deposits held for members | 126,694 | 109,897 | ||||||
Prepaid expenses | 167,363 | 130,849 | ||||||
Other current assets | 29,483 | 89,348 | ||||||
Total Current Assets | 4,481,330 | 3,577,229 | ||||||
Property, plant and equipment, at cost (less accumulated depreciation of $248,948 and $220,720) | 280,370 | 252,731 | ||||||
Deferred income taxes | 290,147 | 216,782 | ||||||
Goodwill | 233,076 | 217,013 | ||||||
Other intangible assets (less accumulated amortization of $340,376 and $309,110) | 303,911 | 271,373 | ||||||
Municipal bonds held-to-maturity | 192,488 | 193,477 | ||||||
Prepaid expenses | 264,667 | 235,654 | ||||||
Other assets | 88,991 | 118,211 | ||||||
Total Assets | $ | 6,134,980 | $ | 5,082,470 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Accounts payable | $ | 246,273 | $ | 278,656 | ||||
Settlement due to members | 287,929 | 286,059 | ||||||
Restricted security deposits held for members | 126,694 | 109,897 | ||||||
Obligations under U.S. merchant lawsuit and other litigation settlements — current | 107,235 | 117,275 | ||||||
Accrued expenses | 968,855 | 936,427 | ||||||
Short-term debt | 80,000 | — | ||||||
Deferred income taxes | 60,488 | — | ||||||
Other current liabilities | 119,268 | 83,276 | ||||||
Total Current Liabilities | 1,996,742 | 1,811,590 | ||||||
Deferred income taxes | 69,888 | 66,198 | ||||||
Obligations under U.S. merchant lawsuit and other litigation settlements | 387,403 | 359,640 | ||||||
Long-term debt | 149,747 | 229,668 | ||||||
Other liabilities | 353,862 | 246,395 | ||||||
Total Liabilities | 2,957,642 | 2,713,491 | ||||||
Commitments and Contingencies | ||||||||
Minority interest | 4,620 | 4,620 | ||||||
Stockholders’ Equity | ||||||||
Class A common stock, $.0001 par value; authorized 3,000,000,000 shares, 84,833,813 and 79,631,983 shares issued, respectively | 9 | 8 | ||||||
Class B common stock, $.0001 par value; authorized 1,200,000,000 shares, 50,341,491 and 55,337,407 shares issued and outstanding, respectively | 5 | 6 | ||||||
Class M common stock, $.0001 par value, authorized 1,000,000 shares, 1,636 and 1,600 shares issued and outstanding, respectively | — | — | ||||||
Additional paid-in capital | 3,261,529 | 3,289,879 | ||||||
Class A treasury stock, at cost, 2,006,300 shares and no shares, respectively | (277,164 | ) | — | |||||
Accumulated deficit | (226,368 | ) | (1,029,196 | ) | ||||
Accumulated other comprehensive income, net of tax: | ||||||||
Cumulative foreign currency translation adjustments | 191,512 | 119,655 | ||||||
Defined benefit pension and other postretirement plans | (9,675 | ) | (11,402 | ) | ||||
Investment securities available-for-sale | 234,895 | (3,065 | ) | |||||
Derivatives accounted for as hedges | (2,025 | ) | (1,526 | ) | ||||
Total accumulated other comprehensive income, net of tax | 414,707 | 103,662 | ||||||
Total Stockholders’ Equity | 3,172,718 | 2,364,359 | ||||||
Total Liabilities and Stockholders’ Equity | $ | 6,134,980 | $ | 5,082,470 | ||||
MasterCard Incorporated – Page 9
MASTERCARD INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended September 30, | ||||||||
2007 | 2006 | |||||||
(In thousands) | ||||||||
Operating Activities | ||||||||
Net income | $ | 781,653 | $ | 9,288 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 71,490 | 75,052 | ||||||
Gain on sale of Redecard S.A. available-for-sale securities | (107,042 | ) | — | |||||
Charitable contribution of common stock to the MasterCard Foundation | — | 394,785 | ||||||
Share based payments | 35,909 | 13,372 | ||||||
Deferred income taxes | (8,170 | ) | 18,962 | |||||
Taxes related to share based payments | (11,193 | ) | — | |||||
Excess tax benefit on share based payments | (7,598 | ) | — | |||||
Accretion of imputed interest on litigation settlement | 28,248 | 31,777 | ||||||
Other | 8,855 | 7,440 | ||||||
Changes in operating assets and liabilities: | ||||||||
Trading securities | 7,225 | 3,814 | ||||||
Accounts receivable | (68,655 | ) | (90,419 | ) | ||||
Settlement due from members | (9,499 | ) | (10,589 | ) | ||||
Prepaid expenses | (32,657 | ) | 18,146 | |||||
Other current assets | (1,375 | ) | 9,503 | |||||
Prepaid expenses, long-term | (19,352 | ) | (4,253 | ) | ||||
Litigation settlement accruals | (10,525 | ) | (72,090 | ) | ||||
Accounts payable | (36,109 | ) | 5,695 | |||||
Settlement due to members | (18,038 | ) | �� | 13,890 | ||||
Accrued expenses | 72,644 | 1,026 | ||||||
Net change in other assets and liabilities | 41,852 | 21,384 | ||||||
Net cash provided by operating activities | 717,663 | 446,783 | ||||||
Investing Activities | ||||||||
Purchases of property, plant and equipment | (59,339 | ) | (38,599 | ) | ||||
Capitalized software | (52,322 | ) | (24,338 | ) | ||||
Purchases of investment securities available-for-sale | (2,749,413 | ) | (2,525,682 | ) | ||||
Proceeds from sales and maturities of investment securities available-for-sale | 2,928,342 | 2,349,978 | ||||||
Other investing activities | 8,551 | (881 | ) | |||||
Net cash provided by (used in) investing activities | 75,819 | (239,522 | ) | |||||
Financing Activities | ||||||||
Cash received from sale of common stock, net of issuance costs | — | 2,449,910 | ||||||
Cash payment for redemption of common stock | — | (1,799,937 | ) | |||||
Dividends paid | (53,805 | ) | — | |||||
Cash proceeds from exercise of stock options | 1,083 | — | ||||||
Excess tax benefit on share based payments | 7,598 | — | ||||||
Purchases of treasury stock | (277,164 | ) | — | |||||
Net cash (used in) provided by financing activities | (322,288 | ) | 649,973 | |||||
Effect of exchange rate changes on cash and cash equivalents | 31,149 | 18,632 | ||||||
Net increase in cash and cash equivalents | 502,343 | 875,866 | ||||||
Cash and cash equivalents — beginning of period | 1,185,080 | 545,273 | ||||||
Cash and cash equivalents — end of period | $ | 1,687,423 | $ | 1,421,139 | ||||
MasterCard Incorporated – Page 10
MASTERCARD INCORPORATED OPERATING PERFORMANCE
For the 3 Months ended September 30, 2007 | |||||||||||||||||||||||||||||||
GDV (Bil.) | Growth (USD) | Growth (Local) | Purchase Volume (Bil.) | Growth (Local) | Purchase Trans. (Mil.) | Cash Volume (Bil.) | Growth (Local) | Cash Trans. (Mil.) | Accounts (Mil.) | Cards (Mil.) | Acceptance Locations (Mil.) | ||||||||||||||||||||
All MasterCard Credit, Charge | |||||||||||||||||||||||||||||||
Asia Pacific | $ | 78 | 22.3 | % | 17.1 | % | $ | 54 | 22.2 | % | 658 | $ | 24 | 7.2 | % | 141 | 155 | 168 | 6.8 | ||||||||||||
Canada | 23 | 21.2 | % | 13.3 | % | 20 | 14.0 | % | 222 | 3 | 8.5 | % | 5 | 28 | 34 | 0.7 | |||||||||||||||
Europe | 171 | 25.8 | % | 16.1 | % | 126 | 16.8 | % | 1,459 | 45 | 14.1 | % | 254 | 159 | 172 | 8.0 | |||||||||||||||
Latin America | 39 | 24.2 | % | 20.2 | % | 20 | 23.9 | % | 393 | 19 | 16.7 | % | 129 | 75 | 92 | 2.5 | |||||||||||||||
South Asia / Middle East / Africa | 11 | 41.3 | % | 36.8 | % | 6 | 29.0 | % | 87 | 5 | 48.0 | % | 39 | 27 | 30 | 0.9 | |||||||||||||||
United States | 256 | 7.7 | % | 7.7 | % | 205 | 9.4 | % | 3,225 | 51 | 1.0 | % | 250 | 331 | 382 | 7.0 | |||||||||||||||
Worldwide | 577 | 16.6 | % | 12.8 | % | 430 | 14.1 | % | 6,044 | 147 | 9.1 | % | 817 | 775 | 878 | 25.9 | |||||||||||||||
MasterCard Credit and Charge Programs | |||||||||||||||||||||||||||||||
United States | 164 | 5.3 | % | 5.3 | % | 139 | 7.1 | % | 1,602 | 25 | -3.5 | % | 18 | 228 | 274 | ||||||||||||||||
Worldwide less United States | 258 | 24.3 | % | 16.4 | % | 201 | 19.2 | % | 2,407 | 57 | 7.5 | % | 262 | 387 | 434 | ||||||||||||||||
Worldwide | 422 | 16.2 | % | 11.8 | % | 340 | 13.9 | % | 4,008 | 82 | 3.9 | % | 280 | 615 | 708 | ||||||||||||||||
MasterCard Debit Programs | |||||||||||||||||||||||||||||||
United States | 92 | 12.1 | % | 12.1 | % | 66 | 14.7 | % | 1,624 | 26 | 5.9 | % | 232 | 103 | 108 | ||||||||||||||||
Worldwide less United States | 63 | 27.3 | % | 20.8 | % | 24 | 14.7 | % | 412 | 39 | 24.9 | % | 305 | 58 | 63 | ||||||||||||||||
Worldwide | 155 | 17.8 | % | 15.4 | % | 91 | 14.7 | % | 2,036 | 65 | 16.5 | % | 537 | 161 | 170 |
For the 9 Months ended September 30, 2007 | |||||||||||||||||||||||||||||
GDV (Bil.) | Growth (USD) | Growth (Local) | Purchase Volume (Bil.) | Growth (Local) | Purchase Trans. (Mil.) | Cash Volume (Bil.) | Growth (Local) | Cash Trans. (Mil.) | Accounts (Mil.) | Cards (Mil.) | |||||||||||||||||||
All MasterCard Credit, Charge and Debit Programs | |||||||||||||||||||||||||||||
Asia Pacific | $ | 220 | 20.3 | % | 16.3 | % | $ | 150 | 21.1 | % | 1,869 | $ | 70 | 7.1 | % | 402 | 155 | 168 | |||||||||||
Canada | 64 | 17.6 | % | 14.3 | % | 55 | 14.3 | % | 626 | 9 | 14.3 | % | 15 | 28 | 34 | ||||||||||||||
Europe | 469 | 24.7 | % | 15.2 | % | 347 | 15.8 | % | 4,127 | 122 | 13.6 | % | 723 | 159 | 172 | ||||||||||||||
Latin America | 111 | 24.6 | % | 22.1 | % | 55 | 24.9 | % | 1,122 | 56 | 19.4 | % | 375 | 75 | 92 | ||||||||||||||
South Asia / Middle East / Africa | 30 | 38.8 | % | 41.5 | % | 17 | 31.8 | % | 252 | 13 | 56.0 | % | 111 | 27 | 30 | ||||||||||||||
United States | 748 | 10.9 | % | 10.9 | % | 597 | 13.1 | % | 9,342 | 151 | 3.1 | % | 738 | 331 | 382 | ||||||||||||||
Worldwide | 1,642 | 17.4 | % | 14.1 | % | 1,220 | 15.6 | % | 17,338 | 422 | 10.2 | % | 2,363 | 775 | 878 | ||||||||||||||
MasterCard Credit and Charge Programs | |||||||||||||||||||||||||||||
United States | 474 | 5.1 | % | 5.1 | % | 401 | 7.4 | % | 4,603 | 73 | -6.2 | % | 51 | 228 | 274 | ||||||||||||||
Worldwide less | 718 | 22.4 | % | 15.8 | % | 555 | 18.5 | % | 6,820 | 163 | 7.3 | % | 762 | 387 | 434 | ||||||||||||||
Worldwide | 1,191 | 14.8 | % | 11.3 | % | 956 | 13.6 | % | 11,423 | 236 | 2.8 | % | 813 | 615 | 708 | ||||||||||||||
MasterCard Debit Programs | |||||||||||||||||||||||||||||
United States | 275 | 22.7 | % | 22.7 | % | 196 | 26.7 | % | 4,739 | 78 | 13.5 | % | 687 | 103 | 108 | ||||||||||||||
Worldwide less | 176 | 28.3 | % | 22.1 | % | 68 | 14.4 | % | 1,176 | 108 | 27.4 | % | 864 | 58 | 63 | ||||||||||||||
Worldwide | 450 | 24.8 | % | 22.4 | % | 264 | 23.3 | % | 5,915 | 187 | 21.2 | % | 1,551 | 161 | 170 |
For the 3 Months ended September 30, 2006 | |||||||||||||||||||||||||||||
GDV (Bil.) | Growth (USD) | Growth (Local) | Purchase Volume (Bil.) | Growth (Local) | Purchase Trans. (Mil.) | Cash Volume (Bil.) | Growth (Local) | Cash Trans. (Mil.) | Accounts (Mil.) | Cards (Mil.) | |||||||||||||||||||
All MasterCard Credit, Charge and Debit Programs | |||||||||||||||||||||||||||||
Asia Pacific | $ | 63 | 12.3 | % | 10.7 | % | $ | 42 | 17.7 | % | 546 | $ | 22 | -0.9 | % | 117 | 140 | 153 | |||||||||||
Canada | 19 | 21.2 | % | 13.0 | % | 17 | 13.7 | % | 199 | 3 | 9.1 | % | 5 | 26 | 32 | ||||||||||||||
Europe | 136 | 16.8 | % | 13.1 | % | 99 | 13.4 | % | 1,281 | 36 | 12.3 | % | 228 | 135 | 144 | ||||||||||||||
Latin America | 31 | 25.1 | % | 25.3 | % | 15 | 27.7 | % | 337 | 16 | 23.2 | % | 115 | 70 | 83 | ||||||||||||||
South Asia / Middle East / Africa | 8 | 38.2 | % | 46.2 | % | 5 | 34.0 | % | 74 | 3 | 68.6 | % | 29 | 21 | 24 | ||||||||||||||
United States | 238 | 17.1 | % | 17.1 | % | 187 | 18.5 | % | 2,890 | 50 | 12.1 | % | 244 | 301 | 353 | ||||||||||||||
Worldwide | 495 | 17.3 | % | 15.8 | % | 365 | 17.2 | % | 5,327 | 130 | 11.9 | % | 738 | 693 | 789 | ||||||||||||||
MasterCard Credit and Charge Programs | |||||||||||||||||||||||||||||
United States | 155 | 4.9 | % | 4.9 | % | 129 | 6.5 | % | 1,505 | 26 | -2.2 | % | 17 | 215 | 261 | ||||||||||||||
Worldwide less | 208 | 16.3 | % | 13.3 | % | 158 | 16.3 | % | 2,077 | 50 | 4.9 | % | 243 | 342 | 383 | ||||||||||||||
Worldwide | 363 | 11.2 | % | 9.6 | % | 287 | 11.7 | % | 3,582 | 76 | 2.3 | % | 260 | 557 | 644 | ||||||||||||||
MasterCard Debit Programs | |||||||||||||||||||||||||||||
United States | 82 | 49.7 | % | 49.7 | % | 58 | 58.3 | % | 1,385 | 24 | 32.8 | % | 227 | 87 | 93 | ||||||||||||||
Worldwide less | 50 | 22.7 | % | 20.3 | % | 20 | 13.2 | % | 360 | 30 | 25.6 | % | 250 | 50 | 53 | ||||||||||||||
Worldwide | 132 | 38.3 | % | 37.1 | % | 78 | 43.7 | % | 1,745 | 54 | 28.7 | % | 477 | 136 | 146 |
For the 9 Months ended September 30, 2006 | |||||||||||||||||||||||||||||
GDV (Bil.) | Growth (USD) | Growth (Local) | Purchase Volume (Bil.) | Growth (Local) | Purchase Trans. (Mil.) | Cash Volume (Bil.) | Growth (Local) | Cash Trans. (Mil.) | Accounts (Mil.) | Cards (Mil.) | |||||||||||||||||||
All MasterCard Credit, Charge and Debit Programs | |||||||||||||||||||||||||||||
Asia Pacific | $ | 183 | 9.0 | % | 9.3 | % | $ | 120 | 16.1 | % | 1,532 | $ | 63 | -1.8 | % | 329 | 140 | 153 | |||||||||||
Canada | 54 | 23.8 | % | 14.5 | % | 47 | 15.7 | % | 559 | 8 | 8.2 | % | 14 | 26 | 32 | ||||||||||||||
Europe | 376 | 12.5 | % | 14.3 | % | 277 | 14.3 | % | 3,648 | 99 | 14.1 | % | 649 | 135 | 144 | ||||||||||||||
Latin America | 89 | 30.0 | % | 26.6 | % | 42 | 29.7 | % | 947 | 47 | 24.0 | % | 333 | 70 | 83 | ||||||||||||||
South Asia / Middle East / Africa | 22 | 45.2 | % | 49.6 | % | 13 | 34.1 | % | 206 | 9 | 81.8 | % | 75 | 21 | 24 | ||||||||||||||
United States | 675 | 16.1 | % | 16.1 | % | 528 | 17.4 | % | 7,976 | 147 | 11.9 | % | 688 | 301 | 353 | ||||||||||||||
Worldwide | 1,398 | 15.6 | % | 15.6 | % | 1,026 | 16.9 | % | 14,869 | 373 | 12.1 | % | 2,089 | 693 | 789 | ||||||||||||||
MasterCard Credit and Charge Programs | |||||||||||||||||||||||||||||
United States | 451 | 7.1 | % | 7.1 | % | 373 | 8.4 | % | 4,318 | 78 | 0.9 | % | 49 | 215 | 261 | ||||||||||||||
Worldwide less | 587 | 14.0 | % | 14.0 | % | 442 | 16.8 | % | 5,870 | 144 | 6.1 | % | 710 | 342 | 383 | ||||||||||||||
Worldwide | 1,038 | 10.9 | % | 10.9 | % | 816 | 12.8 | % | 10,188 | 222 | 4.2 | % | 758 | 557 | 644 | ||||||||||||||
MasterCard Debit Programs | |||||||||||||||||||||||||||||
United States | 224 | 40.0 | % | 40.0 | % | 155 | 46.4 | % | 3,658 | 69 | 27.5 | % | 640 | 87 | 93 | ||||||||||||||
Worldwide less | 137 | 19.6 | % | 20.3 | % | 55 | 13.8 | % | 1,023 | 82 | 25.1 | % | 691 | 50 | 53 | ||||||||||||||
Worldwide | 361 | 31.5 | % | 31.8 | % | 210 | 36.1 | % | 4,680 | 151 | 26.2 | % | 1,331 | 136 | 146 |
Note that columns in the tables above may not add due to rounding; growth represents change from the comparable year-ago period.
MasterCard Incorporated – Page 11
Footnote
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 and global basis for MasterCard®-branded and MasterCard Electronic™-branded cards. Growth rates over prior periods are provided for volume-based data.
Debit transactions on Maestro® and Cirrus®-branded cards, Mondex® transactions and transactions involving brands other than MasterCard are not included in the preceding tables.
For purposes of the table: GDV represents purchase volume plus cash volume and includes the impact of balance transfers and convenience checks; “purchase volume” means the aggregate dollar amount of purchases made 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 of cardholder validation at the point of sale is for cardholders either to sign a sales receipt or enter a PIN. The tables include information with respect to transactions involving MasterCard-branded cards that are not processed by MasterCard and transactions for which MasterCard does not earn significant revenues.
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 purchase volume and cash volume 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.
The data set forth in the GDV, purchase volume, purchase transactions, cash volume and cash transactions columns is derived from information provided by MasterCard customers that is subject to verification by MasterCard and partial cross-checking against information provided by MasterCard’s transaction processing systems. The data set forth in the accounts, cards and acceptance locations columns is derived from information provided by MasterCard customers and is 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 customers subsequent to the date of its release. A portion of the data set forth in the accounts and cards columns reflects the impact of routine portfolio changes among customers and other practices that may lead to over counting of the underlying data in certain circumstances.
In the three and nine months ended September 30, 2007, GDV excludes commercial funds transfers in China, which are generally transactions that facilitate the transfer of funds between bank branches, but do not involve traditional cash withdrawals or balance transfers. Data for the comparable periods in 2006 have been updated to be consistent with this approach.
Performance information for prior periods may be found in the “Investor Relations” section of MasterCard’s website at www.mastercard.com.
MasterCard Incorporated – Page 12
Reconciliation to Total Operating Expenses, Total Other Income, Net Income and Earnings Per Share
For the nine months ended 9/30/07 | For the nine months ended 9/30/06 | YOY Growth | ||||||||||||||||||||||||
($ million) | Actual | Special Items | As Adjusted | Actual | Special Items | As Adjusted | As Adjusted | |||||||||||||||||||
Revenues, net | $ | 2,995 | — | $ | 2,995 | $ | 2,487 | — | $ | 2,487 | 20.4 | % | ||||||||||||||
Operating Expenses | ||||||||||||||||||||||||||
General and administrative | 1,263 | — | 1,263 | 1,106 | — | 1,106 | 14.2 | % | ||||||||||||||||||
Advertising and marketing | 711 | — | 711 | 699 | — | 699 | 1.7 | % | ||||||||||||||||||
Litigation settlements | 3 | 3 | a | — | 23 | 23 | a | — | NM | |||||||||||||||||
Charitable contributions to the MasterCard Foundation | 10 | — | 10 | c | 400 | 395 | b | 5 | c | 100.0 | % | |||||||||||||||
Depreciation and amortization | 71 | — | 71 | 75 | — | 75 | (4.7 | %) | ||||||||||||||||||
Total operating expenses | 2,059 | 3 | 2,056 | 2,303 | 418 | 1,885 | 9.1 | % | ||||||||||||||||||
Operating income (expense) | 936 | 3 | 939 | 184 | 418 | 602 | 56.0 | % | ||||||||||||||||||
Operating Margin | 31.3 | % | — | 31.4 | % | 7.4 | % | — | 24.2 | % | 7.2 | ppt. | ||||||||||||||
Other Income (Expense) | ||||||||||||||||||||||||||
Investment income, net | 219 | — | 219 | 84 | (7 | )d | 77 | 184.4 | % | |||||||||||||||||
Interest expense | (42 | ) | — | (42 | ) | (43 | ) | — | (43 | ) | 2.3 | % | ||||||||||||||
Other income, net | 91 | 90 | e | 1 | — | — | — | NM | ||||||||||||||||||
Total other income (expense) | 268 | 90 | 178 | 41 | (7 | ) | 34 | 423.5 | % | |||||||||||||||||
Income (loss) before income taxes | 1,204 | (87 | ) | 1,117 | 224 | 411 | 636 | 75.6 | % | |||||||||||||||||
Income tax expense (benefit) | 423 | (30 | ) | 393 | 215 | — | f | 215 | 82.8 | % | ||||||||||||||||
Net Income (loss) | $ | 782 | ($57 | ) | $ | 724 | $ | 9 | $ | 411 | $ | 420 | 72.4 | % | ||||||||||||
Basic Net Income (Loss) per Share | $ | 5.76 | ($0.42 | ) | $ | 5.34 | $ | 0.07 | $ | 3.04 | $ | 3.11 | 71.7 | % | ||||||||||||
Diluted Net Income (Loss) per Share | $ | 5.73 | ($0.42 | ) | $ | 5.31 | $ | 0.07 | $ | 3.04 | $ | 3.11 | 70.7 | % | ||||||||||||
a | Litigation settlements |
b | Contribution of stock to the MasterCard Foundation |
c | Contribution of cash to the MasterCard Foundation |
d | Interest income on IPO proceeds held for redemption |
e | Other income related to a settlement agreement to discontinue the company’s sponsorship of the 2010 and 2014 World Cup soccer events |
f | Net tax effect of all special items for 2006 is negligible |
NM = Not meaningful
Note that the figures in the preceding tables may not sum due to rounding
MasterCard Incorporated – Page 13
Reconciliation to Effective Tax Rate
GAAP Actual | GAAP Effective Tax Rate | Stock Donation | Non-GAAP Adjusted | Non-GAAP Effective Tax Rate | |||||||||||
Nine months ended September 30, 2006: | |||||||||||||||
Income before income taxes | $ | 224 | 95.9 | % | $ | 395 | $ | 619 | 34.6 | % | |||||
Income tax expense1 | 215 | 214 | |||||||||||||
Net Income | $ | 9 | $ | 405 | |||||||||||
1 | Income tax expense has been calculated with and without the impact of the stock donation to the Foundation. |
Note that the figures in the preceding table may not sum due to rounding
For more information about these reconciliations, refer to MasterCard Incorporated’s Form 8-K filed with the Securities and Exchange Commission on October 31, 2007.
###