Mastercard 8K Results of Operations and Financial Condition | MA 29 Apr 08

MasterCard Incorporated

Quarter 2008

Financial Results Conference Call

April 29, 2008

Exhibit 99.2

Quarter 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

Redecard

$56

million,

$0.42

per

•

Net income of $447 million, or $3.38 per share, on a diluted basis, including the

special item

and gains from sales of Redecard

•

Net revenue of $1.2 billion, representing growth of 29.2% due to:

–

Gross dollar volume growth (14.1%

to $611 billion)

–

Increase in processed transactions (15.7% to 4.9 billion)

–

Increase in cross-border volumes (23.6%)

–

Pricing changes (6 percentage points)

–

Currency fluctuations (5.1 percentage points)

•

Improved operating margin by 9.3 ppts., to 43.6%, from 34.3%, in Q1 2007

* See Appendix A for a GAAP reconciliation of special items for the three months ended March 31, 2008

On a local currency basis

Business Update

•

Economic Overview

•

IPS Debit Processing

•

Legal and Regulatory Update

•

Redecard

Sales

•

Share Repurchase and Conversion Programs

3.01

$ 398

516

43.6%

666

$ 1,182

1Q 2008

adjusted for

special items*

$ 1.57

215

314

34.3%

601

$ 915

1Q 2007

Actual

3.38

447

516

43.6%

666

1,182

1Q 2008

Actual

91.7

Diluted EPS

85.3

Net income

10.9

Total operating expenses

64.2

9.3 ppts

Operating income

Operating margin

29.2

Net revenue

YOY

Adjusted

Growth %

Quarter Selected Financial Performance

($ in millions, except percentages and per share data)

Note: Figures may not sum due to rounding

*See Appendix A for a GAAP reconciliation of special items for the three months ended March 31, 2008

MasterCard Branded Volume (GDV)

Quarter 2008

Note: Figures may not sum due to rounding

8.9

259

United States

14.1%

20.0

$611

Worldwide

13.0

31.6

Canada

31.3

33.5

South Asia/Middle East/Africa (SAMEA)

18.7

27.8

Asia Pacific

20.7

28.7

Latin America

17.4

30.2

183

Europe

Local

Currency

U.S.

Dollar

GDV

($ billions)

YOY Growth Rate %

Quarter Revenue -

Operations Fees

($ in millions)

•

Net operations fees increased

31.4%, or $205 to $858

•

Gross operations fees increased

30.2%, or $219 to $944. Key drivers

included:

–

Processed transactions growth:

15.7%

–

Cross-border volume growth of

23.6%

–

GDV growth: 14.1%

–

Pricing changes

•

Net operations fees as a % of gross

improved slightly:

–

Rebates tempered by

adjustment

* On a local currency basis

Net Operations Fees

Net Operations Fees as a % of Gross Operations Fees

$653

$858

$150

$300

$450

$600

$750

$900

1Q07

1Q08

85%

88%

91%

94%

97%

100%

Quarter Revenue -

Assessments

($ in millions)

•

Net assessments increased

23.7%, or $62, to $324

•

Gross assessments increased

20.4%, or $94 to $554 due to

strong GDV growth of 14.1%

•

Net assessments as a % of

gross assessments improved

slightly:

–

Rebates tempered by

adjustment

* On a local currency basis

Net Assessment Fees

Net Assessment Fees as a % of Gross Assessment Fees

$262

$324

$50

$100

$150

$200

$250

$300

$350

1Q07

1Q08

20%

30%

40%

50%

60%

70%

80%

1st Quarter Operating Expenses

($ in Millions)

•

Total operating expenses

increased 10.9%, or $65, to

$666

•

G&A increased 10.9%, or $43,

to $442 primarily due to:

–

Higher personnel costs for

additional staff and

contractors

•

A&M increased 11.6%, or $21,

to $199 primarily due:

–

Timing of certain expenses

for sponsorships and

promotions

–

Currency fluctuations

$399

$178

$442

$24

$199

$25

$100

$200

$300

$400

$500

$600

Q107

Q108

General & Administrative

Advertising & Marketing

Depreciation & Amortization

Cash Flow Statement and

Balance Sheet Highlights

•

Generated $224 million in cash flow from operations during the quarter

•

Cash, cash equivalents and available-for-sale securities of $2.9 billion at

3/31/08

•

Available-for-sale securities (short & long term) decreased $281 million

primarily due to:

–

Sale of remaining shares of Redecard

–

Sale of short-term bond funds and auction rate securities

–

Investment losses

•

Auction rate securities of $237 million reclassified to non-current assets

•

Repurchased approximately 1.5 million Class A shares for $294 million

–

Stock repurchases resulted in a $0.02 per share increase to basic EPS for

the quarter

Items for Consideration

•

2Q07 special items:

–

Litigation settlements of $3 million

–

Other income of $90 million related to the World Cup settlement

agreement

•

Thoughts for 2008:

–

Net revenue growth: slower than 2007, but still double-digit

–

G&A growth: slower than net revenue growth and below 2007 G&A

growth rate

–

A&M growth: continued modest growth

–

Assume current F/X rates, no global recession and no event which

significantly disrupts cross-border travel

Appendix A:

GAAP Reconciliation

a. $75

million

gain

from

the

termination

customer

business

agreement

NM = Not meaningful

Figures may not sum due to rounding

($ million)

YOY Growth

Actual

Special

Items

As Adjusted

Actual

Special

Items

Adjusted

As Adjusted

Revenues, net

$1,182

$915

29.2%

Operating Expenses

General and administrative

442

399

10.9%

Advertising and marketing

199

178

11.6%

Litigation settlements

Depreciation and amortization

4.5%

Total operating expenses

666

601

10.9%

Operating income

516

314

64.2%

Operating Margin

43.6%

34.3%

9.3 ppts.

Other Income (Expense)

Investment income, net

115

216.6%

Interest expense

(15)

(14)

6.7%

Other income, net

(1)

Total other income

173

348.4%

Income before income taxes

689

614

336

82.7%

Income tax expense

242

216

121

78.2%

Net Income (loss)

$447

$398

$215

85.3%

Basic Net Income (Loss) per Share

$3.40

$0.37

$3.03

$1.58

91.8%

Diluted Net Income (Loss) per Share

$3.38

$0.37

$3.01

$1.57

91.7%

For the three months ended 3/31/08

For the three months ended 3/31/07

Mastercard (MA) 8-KResults of Operations and Financial Condition