Exhibit 99.1
MasterCard Incorporated Reports
First-Quarter 2008 Financial Results
| • | Net income of $398 million, or $3.01 per share, on a diluted basis |
| — | Excluding a special item of $49 million, or $0.37 per share |
| — | Including gains from sales of an investment security of $56 million, or $0.42 per share |
| • | On a GAAP basis, net income of $447 million, or $3.38 per diluted share |
| • | Net revenue growth of 29.2%, to $1.2 billion |
| • | Gross dollar volume up 14.1%, purchase volume up 15.0% |
Purchase, NY, April 29, 2008 – MasterCard Incorporated (NYSE:MA) today announced financial results for the first quarter of 2008. The company reported net income of $398 million, or $3.01 per share on a diluted basis, excluding a special item related to a $49 million after-tax gain from the termination of a customer business agreement. Including this special item, net income was $447 million, or $3.38 per share, on a diluted basis. Net income also incorporates after-tax gains of $56 million, or $0.42 per share on a diluted basis, from the remaining sales of the company’s investment in Redecard S.A. in Brazil. The company’s total other income, net income and earnings per share, excluding the special item, are non-GAAP financial measures that are reconciled to their most directly comparable GAAP measures in the accompanying financial tables.
Net revenue for the first quarter of 2008 was $1.2 billion, a 29.2% increase versus the same period in 2007. Currency fluctuations (driven by movement of the euro and the Brazilian real relative to the U.S. dollar) contributed 5.1% of the increase in net revenue for the quarter. Fueling the higher net revenue in the first quarter versus the same period in 2007 were:
| • | Growth in MasterCard’s gross dollar volume, which increased 14.1%, on a local currency basis, to $611 billion; |
| • | A 15.7% increase in the number of transactions processed, to 4.9 billion; |
| • | An increase in cross-border volumes of 23.6%; and |
| • | Pricing changes, primarily an increase in cross-border acquiring fees implemented in January 2008, which contributed approximately 6 percentage points of the revenue growth. |
Worldwide purchase volume during the quarter rose 15.0%, on a local currency basis, versus the first quarter of 2007, to $453 billion, driven by increased cardholder spending on a growing number of MasterCard cards. As of March 31, 2008, the company’s financial-institution customers had issued 935 million MasterCard cards, an increase of 12.1% over the cards issued at March 31, 2007.
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MasterCard Incorporated – Page 2
“We are very pleased with our first-quarter financial results, which reflect the strong positioning of our unified global business,” said Robert W. Selander, MasterCard president and chief executive officer. “Regions outside the U.S., such as Latin America and South Asia, Middle East and Africa, are driving significant growth, and cross-border volumes remain healthy as cardholders continue to travel and prefer the use of electronic over paper-based forms of payment.
“MasterCard continues to see growth in the U.S. region despite continued economic uncertainty,” Selander stated. “In this challenging economic environment, we are working closely with our customers to deliver the value and insights they have come to expect to help them meet their business objectives. We are committed to accelerating the global expansion of electronic payments, and are making investments to ensure we are properly aligned with our customers and merchants wherever they do business,” said Selander.
Total operating expenses increased 10.9%, to $666 million, during the first quarter of 2008 compared to the same period in 2007. Currency fluctuations contributed 3.3% of the increase in expenses for the first quarter of 2008. Growth in total operating expenses was driven by:
| • | A 10.9% increase in general and administrative expenses resulting from higher personnel costs, which were partially offset by foreign exchange settlement gains. The increase in personnel costs was primarily associated with the hiring of additional staff and contractors, mainly in technology, customer-facing and product positions; currency fluctuations represented 2.9 percentage points of the increase, and |
| • | An 11.6% increase in advertising and marketing expenses versus the year-ago period, primarily due to the timing of expenses for European sponsorship activity as well as investment in high-growth markets; currency fluctuations represented 4.4 percentage points of the increase. |
Total other income was $173 million in the first quarter of 2008 versus $22 million in the first quarter of 2007, including the $75 million pre-tax gain from the termination of a customer business agreement. Excluding this special item, total other income increased $76 million versus the first quarter of 2007. This increase was driven primarily by $86 million in pre-tax gains from remaining sales of the company’s investment in Redecard S.A. in Brazil, partially offset by other investment losses.
MasterCard’s effective tax rate was 35.1% in the three months ended March 31, 2008, versus 36.0% in the comparable period in 2007. The company’s tax rate was lower in the first quarter of 2008 due to tax reserves not increasing at the same level of the increase in pre-tax income.
MasterCard Incorporated – Page 3
Class A Share Repurchase Update
In April 2007, the MasterCard 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. On October 29, 2007, the Board amended the share repurchase plan to authorize the company to repurchase an incremental $750 million (an aggregate for the entire repurchase program of $1.25 billion) of its Class A common stock in open market transactions through June 30, 2008.
During the first quarter, approximately 1.5 million shares of Class A common stock had been repurchased at a cost of $294 million. As of April 29, 2008, the company repurchased approximately 557,000 additional shares of its Class A common stock at a cost of $129 million, for a total of $1.02 billion of the approved $1.25 billion completed.
First-Quarter 2008 Financial Results Conference Call Details
At 9:00 a.m. EDT today, the company will host a conference call to discuss its first-quarter 2008 financial results.
The dial-in information for this call is 888-713-4205 (within the U.S.) and 617-213-4862 (outside the U.S.) and the passcode is 15455901. A replay of the call will be available for one week following the meeting. The replay can be accessed by dialing 888-286-8010 (within the U.S.) and 617-801-6888 (outside the U.S.) and using passcode 18639831.
The live call and the 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 18 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 4
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 ability for the company’s regions outside the U.S., such as Latin America and South Asia, Middle East and Africa, to drive significant growth; |
| • | The company’s ability to maintain healthy cross-border volumes; |
| • | The company’s ability to see growth in the U.S. despite continued economic uncertainty; |
| • | The company’s ability to work closely with its customers to deliver value and insights to help them meet their business objectives; |
| • | The company’s ability to accelerate the global expansion of electronic payments; and |
| • | The company’s ability to make investments to properly align with its customers and merchants. |
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, 2007, the company’s Quarterly Reports on Form 10-Q and Current Reports on Form 8-K that have been filed with the SEC during 2008, 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 5
MASTERCARD INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| Three Months Ended March 31, | ||||||||
| (In thousands, except share data) | ||||||||
| 2008 | 2007 | |||||||
Revenues, net | $ | 1,182,084 | $ | 915,103 | ||||
Operating Expenses | ||||||||
General and administrative | 442,000 | 398,526 | ||||||
Advertising and marketing | 199,213 | 178,451 | ||||||
Depreciation and amortization | 25,264 | 24,188 | ||||||
Total operating expenses | 666,477 | 601,165 | ||||||
Operating income | 515,607 | 313,938 | ||||||
Other Income (Expense) | ||||||||
Investment income, net | 114,770 | 36,248 | ||||||
Interest expense | (15,318 | ) | (14,356 | ) | ||||
Other income (expense), net | 73,522 | (40 | ) | |||||
Total other income (expense) | 172,974 | 21,852 | ||||||
Income before income taxes | 688,581 | 335,790 | ||||||
Income tax expense | 241,703 | 120,884 | ||||||
Net Income | $ | 446,878 | $ | 214,906 | ||||
Basic Net Income per Share | $ | 3.40 | $ | 1.58 | ||||
Basic Weighted average shares outstanding | 131,426 | 135,847 | ||||||
Diluted Net Income per Share | $ | 3.38 | $ | 1.57 | ||||
Diluted Weighted average shares outstanding | 132,220 | 136,594 | ||||||
MasterCard Incorporated – Page 6
MASTERCARD INCORPORATED
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
| March 31, 2008 | December 31, 2008 | |||||||
| (In thousands, except share data) | ||||||||
| ASSETS | ||||||||
Cash and cash equivalents | $ | 1,872,550 | $ | 1,659,295 | ||||
Investment securities, at fair value: | ||||||||
Trading | — | 2,561 | ||||||
Available-for-sale | 790,199 | 1,308,126 | ||||||
Accounts receivable | 527,065 | 532,633 | ||||||
Settlement due from customers | 772,032 | 712,558 | ||||||
Restricted security deposits held for customers | 134,241 | 142,052 | ||||||
Prepaid expenses | 188,345 | 156,258 | ||||||
Other current assets | 139,997 | 78,258 | ||||||
Total Current Assets | 4,424,429 | 4,591,741 | ||||||
Property, plant and equipment, at cost (less accumulated depreciation of $267,888 and $250,888) | 292,748 | 290,200 | ||||||
Deferred income taxes | 285,503 | 263,143 | ||||||
Goodwill | 255,996 | 239,626 | ||||||
Other intangible assets (less accumulated amortization of $363,712 and $347,977) | 345,364 | 320,758 | ||||||
Investment securities available-for-sale, at fair value | 236,693 | — | ||||||
Municipal bonds held-to-maturity | 191,975 | 192,489 | ||||||
Prepaid expenses | 282,110 | 274,962 | ||||||
Other assets | 110,789 | 87,122 | ||||||
Total Assets | $ | 6,425,607 | $ | 6,260,041 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Accounts payable | $ | 266,448 | $ | 252,391 | ||||
Settlement due to customers | 593,989 | 604,212 | ||||||
Restricted security deposits held for customers | 134,241 | 142,052 | ||||||
Obligations under U.S. merchant lawsuit and other litigation settlements — current | 107,235 | 107,235 | ||||||
Accrued expenses | 1,046,136 | 1,071,557 | ||||||
Short-term debt | 80,000 | 80,000 | ||||||
Other current liabilities | 137,184 | 105,895 | ||||||
Total Current Liabilities | 2,365,233 | 2,363,342 | ||||||
Deferred income taxes | 76,356 | 71,278 | ||||||
Obligations under U.S. merchant lawsuit and other litigation settlements | 305,183 | 297,201 | ||||||
Long-term debt | 149,974 | 149,824 | ||||||
Other liabilities | 366,302 | 346,469 | ||||||
Total Liabilities | 3,263,048 | 3,228,114 | ||||||
Commitments and Contingencies | ||||||||
Minority interest | 4,620 | 4,620 | ||||||
Stockholders’ Equity | ||||||||
Class A common stock, $.0001 par value; authorized 3,000,000,000 shares, 91,864,938 and 91,243,433 shares issued and 86,441,214 and 87,321,541 outstanding, respectively | 9 | 9 | ||||||
Class B common stock, $.0001 par value; authorized 1,200,000,000 shares, 43,948,778 shares issued and outstanding | 5 | 5 | ||||||
Class M common stock, $.0001 par value, authorized 1,000,000 shares, 1,682 and 1,664 shares issued and outstanding, respectively | — | — | ||||||
Additional paid-in capital | 3,300,003 | 3,312,380 | ||||||
Class A treasury stock, at cost, 5,423,724 and 3,921,892, respectively | (894,644 | ) | (600,532 | ) | ||||
Retained earnings | 464,585 | 37,699 | ||||||
Accumulated other comprehensive income: | ||||||||
Cumulative foreign currency translation adjustments | 293,285 | 216,651 | ||||||
Defined benefit pension and other postretirement plans, net of tax | (3,414 | ) | (3,555 | ) | ||||
Investment securities available-for-sale, net of tax | (1,890 | ) | 64,650 | |||||
Total accumulated other comprehensive income | 287,981 | 277,746 | ||||||
Total Stockholders’ Equity | 3,157,939 | 3,027,307 | ||||||
Total Liabilities and Stockholders’ Equity | $ | 6,425,607 | $ | 6,260,041 | ||||
MasterCard Incorporated – Page 7
MASTERCARD INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| Three Months Ended March 31, | ||||||||
| 2008 | 2007 | |||||||
| (In thousands) | ||||||||
Operating Activities | ||||||||
Net income | $ | 446,878 | $ | 214,906 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 25,264 | 24,188 | ||||||
Gain on sale of Redecard S.A. available-for-sale securities | (85,903 | ) | — | |||||
Share based payments | 11,051 | 8,425 | ||||||
Stock units settled in cash for taxes | (65,760 | ) | (6,000 | ) | ||||
Tax benefit for share based compensation | (40,661 | ) | (3,761 | ) | ||||
Impairment of investments | 7,309 | — | ||||||
Accretion of imputed interest on litigation settlements | 7,982 | 9,229 | ||||||
Deferred income taxes | (31,982 | ) | 19,444 | |||||
Other | 2,550 | 2,396 | ||||||
Changes in operating assets and liabilities: | ||||||||
Trading securities | 2,561 | 7,211 | ||||||
Accounts receivable | 16,369 | 4,037 | ||||||
Settlement due from customers | (20,861 | ) | 40,211 | |||||
Prepaid expenses | (28,280 | ) | (31,694 | ) | ||||
Other current assets | (12,122 | ) | (11,496 | ) | ||||
Prepaid expenses, non-current | 1,679 | (25,971 | ) | |||||
Accounts payable | 10,046 | (48,082 | ) | |||||
Settlement due to customers | (46,381 | ) | (65,616 | ) | ||||
Accrued expenses | (5,994 | ) | (78,428 | ) | ||||
Net change in other assets and liabilities | 30,167 | 11,975 | ||||||
Net cash provided by operating activities | 223,912 | 70,974 | ||||||
Investing Activities | ||||||||
Purchases of property, plant and equipment | (12,447 | ) | (16,855 | ) | ||||
Capitalized software | (19,279 | ) | (19,248 | ) | ||||
Purchases of investment securities available-for-sale | (385,048 | ) | (1,022,330 | ) | ||||
Proceeds from sales and maturities of investment securities available-for-sale | 640,920 | 1,013,249 | ||||||
Other investing activities | (2,110 | ) | 1,077 | |||||
Net cash provided by (used in) investing activities | 222,036 | (44,107 | ) | |||||
Financing Activities | ||||||||
Dividends paid | (20,038 | ) | (12,157 | ) | ||||
Cash proceeds from exercise of stock options | 1,671 | — | ||||||
Tax benefit on share based compensation | 40,661 | 3,761 | ||||||
Purchase of treasury stock | (294,112 | ) | — | |||||
Net cash used in financing activities | (271,818 | ) | (8,396 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | 39,125 | 6,268 | ||||||
Net increase in cash and cash equivalents | 213,255 | 24,739 | ||||||
Cash and cash equivalents — beginning of period | 1,659,295 | 1,185,080 | ||||||
Cash and cash equivalents — end of period | $ | 1,872,550 | $ | 1,209,819 | ||||
Non-cash financing activities: | ||||||||
Dividends declaration | $ | 19,992 | $ | 20,715 | ||||
MasterCard Incorporated – Page 8
MASTERCARD INCORPORATED OPERATING PERFORMANCE
| For the 3 Months ended March 31, 2008 | |||||||||||||||||||||||||||||
| 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, | |||||||||||||||||||||||||||||
Asia Pacific | $ | 89 | 27.8 | % | 18.7 | % | $ 62 | 22.3 | % | 708 | $ 27 | 11.1 | % | 150 | 166 | 181 | 7.4 | ||||||||||||
Canada | 24 | 31.6 | % | 13.0 | % | 20 | 13.1 | % | 212 | 4 | 12.7 | % | 5 | 31 | 37 | 0.8 | |||||||||||||
Europe | 183 | 30.2 | % | 17.4 | % | 136 | 18.0 | % | 1,459 | 47 | 15.7 | % | 249 | 172 | 185 | 7.5 | |||||||||||||
Latin America | 44 | 28.7 | % | 20.7 | % | 22 | 22.7 | % | 415 | 21 | 18.8 | % | 135 | 82 | 102 | 2.7 | |||||||||||||
South Asia / Middle East / Africa | 12 | 33.5 | % | 31.3 | % | 6 | 26.9 | % | 92 | 6 | 36.6 | % | 42 | 31 | 36 | 0.9 | |||||||||||||
United States | 259 | 8.9 | % | 8.9 | % | 206 | 10.3 | % | 3,253 | 52 | 3.8 | % | 253 | 343 | 394 | 7.2 | |||||||||||||
Worldwide | 611 | 20.0 | % | 14.1 | % | 453 | 15.0 | % | 6,138 | 157 | 11.6 | % | 834 | 825 | 935 | 26.6 | |||||||||||||
MasterCard Credit and Charge Programs | |||||||||||||||||||||||||||||
United States | 154 | 4.4 | % | 4.4 | % | 131 | 6.1 | % | 1,490 | 23 | -4.0 | % | 15 | 234 | 279 | ||||||||||||||
Worldwide less United States | 280 | 29.5 | % | 17.9 | % | 221 | 19.8 | % | 2,468 | 59 | 11.3 | % | 246 | 414 | 467 | ||||||||||||||
Worldwide | 434 | 19.3 | % | 12.7 | % | 352 | 14.3 | % | 3,958 | 82 | 6.6 | % | 261 | 648 | 745 | ||||||||||||||
MasterCard Debit Programs | |||||||||||||||||||||||||||||
United States | 104 | 16.3 | % | 16.3 | % | 75 | 18.7 | % | 1,763 | 30 | 10.8 | % | 238 | 108 | 116 | ||||||||||||||
Worldwide less United States | 72 | 30.2 | % | 19.4 | % | 26 | 14.5 | % | 418 | 46 | 22.5 | % | 336 | 69 | 74 | ||||||||||||||
Worldwide | 176 | 21.6 | % | 17.6 | % | 101 | 17.5 | % | 2,181 | 75 | 17.6 | % | 573 | 177 | 190 | ||||||||||||||
| For the 3 Months ended March 31, 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.) | Cash (Mil.) | |||||||||||||||||||
All MasterCard Credit, | |||||||||||||||||||||||||||||
Asia Pacific | $ | 69 | 19.3 | % | 15.9 | % | $ 47 | 20.6 | % | 589 | $ 23 | 7.3 | % | 126 | 147 | 160 | |||||||||||||
Canada | 18 | 12.7 | % | 14.2 | % | 15 | 13.8 | % | 188 | 3 | 16.4 | % | 5 | 27 | 33 | ||||||||||||||
Europe | 141 | 25.1 | % | 15.3 | % | 104 | 15.8 | % | 1,277 | 36 | 13.8 | % | 223 | 145 | 156 | ||||||||||||||
Latin America | 34 | 20.9 | % | 23.0 | % | 16 | 26.4 | % | 352 | 18 | 19.9 | % | 119 | 72 | 88 | ||||||||||||||
South Asia / Middle East / Africa | 9 | 36.3 | % | 47.3 | % | 5 | 34.7 | % | 80 | 4 | 66.8 | % | 36 | 25 | 28 | ||||||||||||||
United States | 238 | 15.7 | % | 15.7 | % | 187 | 18.0 | % | 2,928 | 51 | 8.0 | % | 240 | 313 | 370 | ||||||||||||||
Worldwide | 509 | 19.2 | % | 16.5 | % | 375 | 18.1 | % | 5,414 | 134 | 12.3 | % | 748 | 728 | 834 | ||||||||||||||
MasterCard Credit and Charge Programs | |||||||||||||||||||||||||||||
United States | 148 | 4.4 | % | 4.4 | % | 124 | 7.7 | % | 1,424 | 24 | -10.1 | % | 16 | 218 | 268 | ||||||||||||||
Worldwide less United States | 216 | 22.0 | % | 16.7 | % | 167 | 18.6 | % | 2,120 | 49 | 10.4 | % | 223 | 353 | 398 | ||||||||||||||
Worldwide | 364 | 14.2 | % | 11.3 | % | 291 | 13.7 | % | 3,544 | 73 | 2.7 | % | 239 | 571 | 666 | ||||||||||||||
MasterCard Debit Programs | |||||||||||||||||||||||||||||
United States | 90 | 41.1 | % | 41.1 | % | 63 | 45.5 | % | 1,504 | 27 | 31.7 | % | 224 | 95 | 102 | ||||||||||||||
Worldwide less United States | 55 | 24.4 | % | 19.1 | % | 21 | 14.4 | % | 367 | 35 | 22.1 | % | 285 | 62 | 67 | ||||||||||||||
Worldwide | 145 | 34.2 | % | 31.8 | % | 84 | 36.4 | % | 1,871 | 62 | 26.1 | % | 510 | 157 | 168 | ||||||||||||||
Note that the figures in the preceding tables may not sum due to rounding; growth represents change from the comparable year-ago period.
MasterCard Incorporated – Page 9
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. 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 provided by MasterCard customers and 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 and cards columns is provided by MasterCard customers and is subject to certain limited verification by MasterCard. 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 order to provide a true indication of how broadly our cards can be used, MasterCard seeks to provide the most accurate acceptance figures possible and to maintain that MasterCard acceptance is unsurpassed worldwide by periodically validating our results with third parties. The data set forth in the acceptance locations column is derived through a proprietary methodology designed to minimize the impact of multiple acquiring in certain markets. This data is based on information provided by our customers and other third parties and is subject to certain limited verification by MasterCard and partial cross-checking against information provided by MasterCard’s transaction processing systems. All data is subject to revision and amendment by MasterCard’s customers subsequent to the date of its release.
Performance information for prior periods can be found in the “Investor Relations” section of MasterCard’s website at www.mastercard.com.
MasterCard Incorporated – Page 10
Reconciliation to Total Other Income, Net Income and Earnings Per Share
| ($ million) | For the three months ended 3/31/08 | For the three months ended 3/31/07 | YOY Growth | ||||||||||||||||||||||
| Actual | Special Items | As Adjusted | Actual | Special Items | As Adjusted | As Adjusted | |||||||||||||||||||
Revenues, net | $ | 1,182 | — | $ | 1,182 | $ | 915 | — | $ | 915 | 29.2 | % | |||||||||||||
Operating Expenses | |||||||||||||||||||||||||
General and administrative | 442 | — | 442 | 399 | — | 399 | 10.9 | % | |||||||||||||||||
Advertising and marketing | 199 | — | 199 | 178 | — | 178 | 11.6 | % | |||||||||||||||||
Litigation settlements | — | — | — | — | — | — | |||||||||||||||||||
Depreciation and amortization | 25 | — | 25 | 24 | — | 24 | 4.5 | % | |||||||||||||||||
Total operating expenses | 666 | — | 666 | 601 | — | 601 | 10.9 | % | |||||||||||||||||
Operating income | 516 | — | 516 | 314 | — | 314 | 64.2 | % | |||||||||||||||||
Operating Margin | 43.6 | % | — | 43.6 | % | 34.3 | % | — | 34.3 | % | 9.3 | ppts. | |||||||||||||
Other Income (Expense) | |||||||||||||||||||||||||
Investment income, net | 115 | — | 115 | 36 | — | 36 | 216.6 | % | |||||||||||||||||
Interest expense | (15 | ) | — | (15 | ) | (14 | ) | — | (14 | ) | 6.7 | % | |||||||||||||
Other income, net | 74 | 75 | a | (1 | ) | — | — | — | NM | ||||||||||||||||
Total other income | 173 | 75 | 98 | 22 | — | 22 | 348.4 | % | |||||||||||||||||
Income before income taxes | 689 | 75 | 614 | 336 | — | 336 | 82.7 | % | |||||||||||||||||
Income tax expense | 242 | 26 | 216 | 121 | — | 121 | 78.2 | % | |||||||||||||||||
Net Income (loss) | $ | 447 | 49 | $ | 398 | $ | 215 | — | $ | 215 | 85.3 | % | |||||||||||||
Basic Net Income (Loss) per Share | $ | 3.40 | $ | 0.37 | $ | 3.03 | $ | 1.58 | — | $ | 1.58 | 91.8 | % | ||||||||||||
Diluted Net Income (Loss) per Share | $ | 3.38 | $ | 0.37 | $ | 3.01 | $ | 1.57 | — | $ | 1.57 | 91.7 | % | ||||||||||||
| a. | Gain from the termination of a customer business agreement |
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 April 29, 2008.
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