- Quarterly net income of $276 million, or $2.11 per diluted share, excluding a special item
- Quarterly net loss of $747 million, or $5.74 per diluted share, including a special item
- Quarterly net revenue growth of 25.0%, to $1.2 billion
- Gross dollar volume up 12.8%, purchase volume up 14.0%
PURCHASE, N.Y., July 31 /PRNewswire-FirstCall/ -. MasterCard Incorporated
(NYSE: MA) today announced financial results for the second quarter of 2008.
The company reported net income of $276 million, or $2.11 per diluted share,
excluding a special item, and a net loss of $747 million, or $5.74 per diluted
share, including the special item -- a $1.0 billion after-tax charge related
to an antitrust litigation settlement with American Express. The company's
total operating expenses, other income, effective tax rate, 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.
(Logo: http://www.newscom.com/cgi-bin/prnh/20061031/MCLOGO )
Net revenue for the second quarter of 2008 was $1.2 billion, a 25.0%
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 5.4 percentage points of the increase in net revenue for the
quarter. Fueling the higher net revenue in the second quarter versus the same
period in 2007 were:
-- Growth in MasterCard's gross dollar volume, which increased 12.8%, on a
local currency basis, to $655 billion;
-- A 13.6% increase in the number of transactions processed, to 5.2
billion;
-- An increase in cross-border volumes of 18.9%; and
-- Pricing changes contributed approximately 5 percentage points of the
net revenue growth.
Worldwide purchase volume during the quarter rose 14.0%, on a local
currency basis, versus the second quarter of 2007, to $493 billion, driven by
increased cardholder spending on a growing number of MasterCard cards. As of
June 30, 2008, the company's financial-institution customers had issued 951
million MasterCard cards, an increase of 11.0% over the cards issued at June
30, 2007.
'We are pleased that we have been able to continue to deliver solid
financial results in the current economic climate,' said Robert W. Selander,
MasterCard president and chief executive officer. 'Businesses, consumers and
governments around the world are demonstrating a growing preference for
electronic payments, and our cross-border volumes remain healthy as
cardholders come to rely on electronic payments and the ease, security and
convenience they provide. Additionally, more than 50% of our revenue is
generated outside of the U.S., which helps to moderate the impact of an
economic downturn in one particular region.
'During these challenging times, we are working closely with our
financial-institution customers to identify and deliver solutions that help
maximize their payments business,' added Selander. 'This quarter, we
introduced Integrated Processing Solutions (IPS) -- our new debit processing
platform -- in the U.S. and successfully implemented our first customer,
Security Service Federal Credit Union (SSFCU). We also announced an agreement
with Obopay to offer a fully integrated, on-demand, person-to-person mobile
payment service. These examples illustrate our commitment to developing
innovative solutions designed to meet the needs of today's cardholder while
driving value and growth for our customers and merchants.'
The special item for the second quarter of 2008 represented:
-- A $1.65 billion pre-tax charge related to the settlement of U.S.
federal antitrust litigation between MasterCard and American Express, which
equates to approximately $1 billion on an after-tax basis.
Special items for the second quarter of 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.
Excluding special items, total operating expenses increased 14.6%, to $830
million, during the second quarter of 2008 compared to the same period in
2007. Currency fluctuations contributed 4.5 percentage points of the increase
in expenses for the second quarter of 2008. Growth in total operating
expenses was driven by:
-- A 15.7% increase in general and administrative expenses primarily
resulting from higher personnel costs due to increased compensation and
benefits for new personnel and higher severance costs. Currency fluctuations
represented 3.3 percentage points of the increase; and
-- A 13.0% increase in advertising and marketing expenses versus the year-
ago period, with 6.6 percentage points of the growth primarily related to the
impact of foreign currency fluctuation of the euro and the Brazilian real to
the U.S. dollar. Additionally, the increase reflected significant sponsorship
activity during the quarter related to the UEFA and European Championship
soccer events.
Including special items, total operating expenses increased 240.6%, to
$2.48 billion.
Total other income was $10 million in the second quarter of 2008 versus
$117 million in the second quarter of 2007. The decrease was primarily due to
the recognition in 2007 of a $90 million gain related to a settlement with the
organization that operates the World Cup soccer events.
Excluding special items in both periods, MasterCard's effective tax rate
was 35.3% in the second quarter of 2008, versus 34.7% in the comparable period
in 2007. Including special items, the effective tax rate was 39.0% for the
second quarter of 2008, versus 34.7% in the comparable period in 2007. The
increase in the effective tax rate was primarily due to the tax rate related
to the American Express settlement charge, which provides a tax benefit due to
the change in the geographic distribution of pre-tax income or loss.
Year-to-Date 2008 Results
For the six months ended June 30, 2008, MasterCard reported net income of
$674 million, or $5.13 per diluted share, excluding the impact of special
items, and a net loss of $300 million, or $2.29 per diluted share, including
special items.
Net revenue for the six months ended June 30, 2008 was $2.4 billion, a
27.0% increase versus the same period in 2007. In addition to growth in GDV,
processed transactions and cross-border transaction volumes, this increase was
driven by pricing changes, primarily cross-border transaction pricing
implemented in January 2008, which contributed approximately 5 percentage
points of the revenue growth in the year-to-date period. Currency fluctuation
contributed approximately 5.2 percentage points of the increase in revenue in
the year-to-date period.
Total operating expenses increased 12.9%, to $1.5 billion, for the six-
month period compared to the same period in 2007, excluding special items for
both periods. Currency fluctuations contributed 3.9 percentage points of this
increase. Including special items, operating expenses increased 136.7%, to
$3.15 billion.
Total other income was $183 million for the six-month period versus $139
million for the same period in 2007, including special items in both periods.
The increase was primarily driven by gains from the sale of Redecard
securities and the termination of a customer business agreement in 2008,
offset by settlement received in 2007 related to discontinuing the company's
sponsorship of World Cup soccer events.
MasterCard's effective tax rate, excluding special items, was 35.2% in the
six months ended June 30, 2008, versus a rate of 35.3% in the comparable
period in 2007. Including the special items, the effective tax rate was 43.9%
for the 2008 period, and 35.3% for the 2007 period.
Class A Share Repurchase Program
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 second quarter of 2008, the company repurchased approximately
1.3 million shares of Class A common stock at a cost of $355 million,
completing its aggregate authorized share repurchase program of $1.25 billion.
Class B Common Stock Conversion
In February 2008, the MasterCard Board of Directors authorized the
conversion and sale or transfer of up to 13.1 million shares of Class B common
stock into Class A common stock. In May 2008, the company implemented and
completed a conversion program in which all of the 13.1 million authorized
shares of Class B common stock were converted into an equal number of shares
of Class A common stock and subsequently sold or transferred by participating
holders of Class B common stock to public investors.
Second-Quarter 2008 Financial Results Conference Call Details
At 9:00 a.m. EDT today, the company will host a conference call to discuss
its second-quarter 2008 financial results.
The dial-in information for this call is 800-573-4842 (within the U.S.)
and 617-224-4327 (outside the U.S.) and the passcode is 75020426. 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 29875457.
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(R), Maestro(R) and Cirrus(R), MasterCard serves consumers
and businesses in more than 210 countries and territories. For more
information go to www.mastercard.com.
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 ability to benefit from an increasing worldwide demand
for electronic payments, solid performance outside of the U.S., and continued
strength of cross-border travel volumes;
-- the company's ability to successfully implement IPS and the on-demand
person-to-person mobile payment service with Obopay; and
-- the company's ability to develop innovative solutions for customers,
merchants and cardholders around the world.
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.
MASTERCARD INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Six Months
Ended June 30, Ended June 30,
2008 2007 2008 2007
(In thousands, except per share data)
Revenues, net $1,246,504 $996,959 $2,428,588 $1,912,062
Operating Expenses
General and
administrative 499,349 431,463 941,349 829,990
Advertising and
marketing 303,064 268,253 502,277 446,703
Litigation
settlements 1,649,345 3,400 1,649,345 3,400
Depreciation and
amortization 27,950 25,027 53,214 49,216
Total operating
expenses 2,479,708 728,143 3,146,185 1,329,309
Operating
income (loss) (1,233,204) 268,816 (717,597) 582,753
Other Income
(Expense)
Investment income,
net 25,685 36,466 140,455 72,714
Interest expense (15,438) (11,170) (30,756) (25,526)
Other income
(expense), net (225) 92,187 73,297 92,147
Total other
income (expense) 10,022 117,483 182,996 139,335
Income (loss)
before income
taxes (1,223,182) 386,299 (534,601) 722,088
Income tax expense
(benefit) (476,529) 134,013 (234,826) 254,897
Net Income (Loss) $(746,653) $252,286 $(299,775) $467,191
Basic Net Income
(Loss) per Share $(5.74) $1.86 $(2.29) $3.44
Basic Weighted
Average Shares
Outstanding 130,073 135,865 130,750 135,856
Diluted Net
Income (Loss)
per Share $(5.74) $1.85 $(2.29) $3.42
Diluted Weighted
Average Shares
Outstanding 130,073 136,687 130,750 136,643
MASTERCARD INCORPORATED
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
June 30, December 31,
2008 2007
(In thousands, except share data)
ASSETS
Cash and cash equivalents $1,769,211 $1,659,295
Investment securities, at fair value:
Trading - 2,561
Available-for-sale 719,023 1,308,126
Accounts receivable 575,493 532,633
Settlement due from customers 758,740 712,558
Restricted security deposits held
for customers 143,197 142,052
Prepaid expenses 203,663 156,258
Deferred income taxes 195,798 44,525
Other current assets 34,512 33,733
Total Current Assets 4,399,637 4,591,741
Property, plant and equipment, at cost
(less accumulated depreciation of
$278,146 and $250,888) 297,178 290,200
Deferred income taxes 732,620 263,143
Goodwill 259,647 239,626
Other intangible assets (less accumulated
amortization of $371,739 and $347,977) 374,891 320,758
Investment securities available-for-sale,
at fair value 224,190 -
Municipal bonds held-to-maturity 191,975 192,489
Prepaid expenses 319,271 274,962
Other assets 60,766 87,122
Total Assets $6,860,175 $6,260,041
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $260,702 $252,391
Settlement due to customers 662,274 604,212
Restricted security deposits held for customers 143,197 142,052
Obligations under litigation settlements 706,860 107,235
Accrued expenses 904,019 1,071,557
Short-term debt - 80,000
Other current liabilities 123,527 105,895
Total Current Liabilities 2,800,579 2,363,342
Deferred income taxes 83,935 71,278
Obligations under litigation settlements 1,362,559 297,201
Long-term debt 170,637 149,824
Other liabilities 389,758 346,469
Total Liabilities 4,807,468 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,
105,010,327 and 91,243,433 shares issued
and 98,269,737 and 87,321,541
outstanding, respectively 10 9
Class B common stock, $.0001 par value;
authorized 1,200,000,000 shares,
30,848,778 and 43,948,778 shares
issued and outstanding, respectively 4 5
Class M common stock, $.0001 par value,
authorized 1,000,000 shares, 1,703
and 1,664 shares issued and
outstanding, respectively - -
Additional paid-in capital 3,304,080 3,312,380
Class A treasury stock, at cost,
6,740,590 and 3,921,892, respectively (1,250,000) (600,532)
Retained earnings (accumulated deficit) (282,020) 37,699
Accumulated other comprehensive income:
Cumulative foreign currency
translation adjustments 293,501 216,651
Defined benefit pension and other
postretirement plans, net of tax (3,273) (3,555)
Investment securities available-for-sale,
net of tax (14,215) 64,650
Total accumulated other comprehensive income 276,013 277,746
Total Stockholders' Equity 2,048,087 3,027,307
Total Liabilities and Stockholders' Equity $6,860,175 $6,260,041
MASTERCARD INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months
Ended June 30,
2008 2007
(In thousands)
Operating Activities
Net income (loss) $(299,775) $467,191
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization 53,214 49,216
Gain on sale of Redecard S.A.
available-for-sale securities (85,903) -
Share based payments 28,989 23,382
Stock units settled in cash for taxes (66,090) (11,193)
Tax benefit for share based compensation (43,829) (6,734)
Impairment of investments 8,900 -
Accretion of imputed interest on
litigation settlements 16,124 18,644
Deferred income taxes (573,927) (1,557)
Other 5,208 4,620
Changes in operating assets and liabilities:
Trading securities 2,561 6,919
Accounts receivable (15,809) (23,141)
Settlement due from customers (8,172) 43,000
Prepaid expenses (41,548) (36,647)
Other current assets (1,723) (5,067)
Prepaid expenses, non-current (34,110) (23,392)
Litigation settlement accruals 1,648,859 2,915
Accounts payable (272) (43,314)
Settlement due to customers 21,577 (36,166)
Accrued expenses (155,076) 6,524
Net change in other assets and liabilities 83,601 10,961
Net cash provided by operating activities 542,799 446,161
Investing Activities
Purchases of property, plant and equipment (28,961) (40,942)
Capitalized software (38,784) (33,741)
Purchases of investment securities
available-for-sale (422,739) (1,924,024)
Proceeds from sales and maturities of
investment securities available-for-sale 737,616 1,896,975
Other investing activities 709 5,005
Net cash provided by (used in)
investing activities 247,841 (96,727)
Financing Activities
Dividends paid (39,878) (33,099)
Cash proceeds from exercise of stock options 4,656 1,083
Tax benefit for share based compensation 43,829 6,734
Payment of debt (80,000) -
Purchase of treasury stock (649,468) -
Net cash used in financing activities (720,861) (25,282)
Effect of exchange rate changes on cash
and cash equivalents 40,137 11,091
Net increase in cash and cash equivalents 109,916 335,243
Cash and cash equivalents -
beginning of period 1,659,295 1,185,080
Cash and cash equivalents - end of period $1,769,211 $1,520,323
MASTERCARD INCORPORATED OPERATING PERFORMANCE
For the 3 Months ended June 30, 2008
Purchase Purchase
All MasterCard Credit, GDV Growth Growth Volume Growth Trans.
Charge and Debit Programs (Bil.) (USD) (Local) (Bil.)(Local) (Mil.)
Asia Pacific $93 26.6% 18.8% $65 23.3% 750
Canada 27 22.2% 12.4% 24 13.5% 244
Europe 204 30.7% 17.8% 152 18.6% 1,566
Latin America 47 26.5% 17.4% 24 19.9% 435
South Asia / Middle East
/ Africa 13 28.3% 31.9% 7 25.1% 93
United States 271 6.2% 6.2% 221 8.0% 3,487
Worldwide 655 18.2% 12.8% 493 14.0% 6,575
MasterCard Credit and Charge
Programs
United States 163 0.7% 0.7% 142 2.8% 1,590
Worldwide less United States 304 27.4% 17.5% 242 19.9% 2,643
Worldwide 467 16.6% 11.0% 384 13.0% 4,232
MasterCard Debit Programs
United States 107 15.8% 15.8% 79 18.6% 1,897
Worldwide less United States 81 32.6% 20.3% 30 16.3% 446
Worldwide 188 22.5% 17.7% 109 18.0% 2,343
Acceptance
Cash Cash Loca-
All MasterCard Credit, Volume Growth Trans. Accounts Cards tions
Charge and Debit Programs (Bil.) (Local) (Mil.) (Mil.) (Mil.) (Mil.)
Asia Pacific $27 9.3% 162 171 187 7.6
Canada 4 5.9% 5 32 38 0.8
Europe 53 15.6% 272 177 191 7.7
Latin America 23 14.9% 141 86 106 2.8
South Asia / Middle East
/ Africa 6 40.3% 49 34 39 0.9
United States 49 -1.1% 258 339 390 7.6
Worldwide 162 9.3% 887 840 951 27.3
MasterCard Credit and Charge
Programs
United States 21 -11.4% 15 230 273
Worldwide less United States 62 8.7% 257 420 475
Worldwide 83 2.7% 272 650 748
MasterCard Debit Programs
United States 28 8.6% 243 109 117
Worldwide less United States 51 22.7% 372 80 86
Worldwide 79 17.3% 615 190 203
For the 6 Months ended June 30, 2008
Purchase Purchase
All MasterCard Credit, GDV Growth Growth Volume Growth Trans.
Charge and Debit Programs (Bil.) (USD) (Local) (Bil.)(Local) (Mil.)
Asia Pacific $180 26.7% 18.3% $127 22.8% 1,457
Canada 51 26.4% 12.7% 44 13.3% 456
Europe 387 30.5% 17.7% 287 18.3% 3,014
Latin America 91 27.5% 19.0% 47 21.2% 851
South Asia / Middle East
/ Africa 25 30.8% 31.6% 13 25.9% 184
United States 529 7.5% 7.5% 428 9.1% 6,740
Worldwide 1,264 19.0% 13.4% 946 14.5% 12,701
MasterCard Credit and Charge
Programs
United States 318 2.5% 2.5% 274 4.3% 3,079
Worldwide less United States 583 28.3% 17.6% 463 19.8% 5,109
Worldwide 901 17.8% 11.8% 736 13.6% 8,189
MasterCard Debit Programs
United States 212 16.1% 16.1% 154 18.6% 3,660
Worldwide less United States 152 31.4% 19.9% 56 15.7% 852
Worldwide 363 22.0% 17.6% 210 17.9% 4,513
Cash Cash
All MasterCard Credit, Volume Growth Trans. Accounts Cards
Charge and Debit Programs (Bil.) (Local) (Mil.) (Mil.) (Mil.)
Asia Pacific $53 8.8% 308 171 187
Canada 8 9.3% 10 32 38
Europe 100 15.8% 518 177 191
Latin America 44 16.7% 276 86 106
South Asia / Middle East
/ Africa 12 38.6% 95 34 39
United States 102 1.4% 511 339 390
Worldwide 319 10.2% 1,719 840 951
MasterCard Credit and Charge
Programs
United States 44 -7.8% 30 230 273
Worldwide less United States 121 9.7% 501 420 475
Worldwide 165 4.4% 531 650 748
MasterCard Debit Programs
United States 58 9.7% 481 109 117
Worldwide less United States 96 22.4% 707 80 86
Worldwide 154 17.3% 1,188 190 203
For the 3 Months ended June 30, 2007
Purchase Purchase
All MasterCard Credit, GDV Growth Growth Volume Growth Trans.
Charge and Debit Programs (Bil.) (USD) (Local) (Bil.)(Local) (Mil.)
Asia Pacific $73 19.3% 15.8% $50 20.5% 622
Canada 22 18.2% 15.6% 19 15.3% 216
Europe 156 23.4% 14.4% 116 14.8% 1,377
Latin America 37 27.5% 22.3% 18 24.2% 374
South Asia / Middle East
/ Africa 10 38.4% 41.8% 6 32.2% 84
United States 255 9.9% 9.9% 205 12.4% 3,189
Worldwide 554 16.5% 13.4% 414 14.9% 5,863
MasterCard Credit and Charge
Programs
United States 162 5.4% 5.4% 138 7.4% 1,578
Worldwide less United States 239 22.2% 15.9% 186 17.8% 2,293
Worldwide 401 14.8% 11.4% 324 13.1% 3,871
MasterCard Debit Programs
United States 93 18.8% 18.8% 67 24.5% 1,611
Worldwide less United States 61 25.7% 18.9% 22 14.0% 381
Worldwide 153 21.4% 18.8% 89 21.7% 1,992
Cash Cash
All MasterCard Credit, Volume Growth Trans. Accounts Cards
Charge and Debit Programs (Bil.) (Local) (Mil.) (Mil.) (Mil.)
Asia Pacific $23 7.0% 135 151 164
Canada 3 17.4% 5 28 34
Europe 41 13.1% 244 152 164
Latin America 19 20.4% 126 75 91
South Asia / Middle East
/ Africa 4 56.2% 37 26 29
United States 50 0.5% 248 317 374
Worldwide 141 9.2% 794 749 856
MasterCard Credit and Charge
Programs
United States 24 -4.8% 17 221 269
Worldwide less United States 52 9.8% 241 365 412
Worldwide 76 4.7% 258 586 681
MasterCard Debit Programs
United States 26 6.0% 231 97 104
Worldwide less United States 38 21.9% 306 66 71
Worldwide 64 15.0% 537 163 175
For the 6 Months ended June 30, 2007
Purchase Purchase
All MasterCard Credit, GDV Growth Growth Volume Growth Trans.
Charge and Debit Programs (Bil.) (USD) (Local) (Bil.)(Local) (Mil.)
Asia Pacific $142 19.3% 15.9% $96 20.5% 1,211
Canada 41 15.6% 15.0% 34 14.6% 404
Europe 296 24.1% 14.8% 220 15.3% 2,642
Latin America 71 24.3% 22.6% 35 25.3% 727
South Asia / Middle East
/ Africa 19 37.3% 44.2% 11 33.2% 165
United States 492 12.6% 12.6% 392 15.0% 6,117
Worldwide 1,062 17.8% 14.8% 788 16.4% 11,265
MasterCard Credit and Charge
Programs
United States 310 4.9% 4.9% 262 7.5% 3,002
Worldwide less United States 455 22.1% 16.3% 354 18.2% 4,413
Worldwide 765 14.5% 11.4% 616 13.4% 7,415
MasterCard Debit Programs
United States 182 28.8% 28.8% 130 33.9% 3,114
Worldwide less United States 115 25.1% 19.0% 42 14.1% 736
Worldwide 298 27.3% 24.8% 172 28.4% 3,850
Cash Cash
All MasterCard Credit, Volume Growth Trans. Accounts Cards
Charge and Debit Programs (Bil.) (Local) (Mil.) (Mil.) (Mil.)
Asia Pacific $46 7.2% 261 151 164
Canada 6 16.9% 10 28 34
Europe 77 13.4% 464 152 164
Latin America 37 20.2% 245 75 91
South Asia / Middle East
/ Africa 8 61.1% 72 26 29
United States 101 4.2% 488 317 374
Worldwide 275 10.6% 1,540 749 856
MasterCard Credit and Charge
Programs
United States 48 -7.5% 33 221 269
Worldwide less United States 101 10.1% 464 365 412
Worldwide 149 3.7% 497 586 681
MasterCard Debit Programs
United States 53 17.7% 455 97 104
Worldwide less United States 73 22.0% 588 66 71
Worldwide 125 20.1% 1,044 163 175
Note that columns in the tables above may not add due to rounding; growth
represents change from the comparable year-ago period.
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(R)-branded and MasterCard Electronic(TM)-branded cards. Growth
rates over prior periods are provided for volume-based data.
Debit transactions on Maestro(R) and Cirrus(R)-branded cards, Mondex(R)
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.
Reconciliation to Total Operating Expenses, Total Other Income, Net Income
and Earnings Per Share
($ million) For the three months ended 6/30/08
Special As
Actual Items Adjusted
Revenues, net $1,247 - $1,247
Operating Expenses
General and administrative 499 - 499
Advertising and marketing 303 - 303
Litigation settlements 1,649 1,649 a -
Charitable contributions to the
MasterCard Foundation - - -
Depreciation and amortization 28 - 28
Total operating expenses 2,480 1,649 830
Operating income (expense) (1,233) 1,649 416
Operating Margin (98.9%) - 33.4%
Other Income (Expense)
Investment income, net 26 - 26
Interest expense (15) - (15)
Other income, net - - -
Total other income (expense) 10 - 10
Income (loss) before income taxes (1,223) 1,649 426
Income tax expense (benefit) (477) 627 150
Net Income (loss) ($747) $1,023 $276
Basic Net Income (Loss) per Share ($5.74) $7.86 $2.12
Diluted Net Income (Loss) per Share ($5.74) $7.85 $2.11
For the three months ended YOY
($ million) 6/30/07 Growth
Special As As
Actual Items Adjusted Adjusted
Revenues, net $997 - $997 25.0%
Operating Expenses
General and administrative 432 - 432 15.7%
Advertising and marketing 268 - 268 13.0%
Litigation settlements 3 3 a - NM
Charitable contributions to the
MasterCard Foundation - - - NM
Depreciation and amortization 25 - 25 11.7%
Total operating expenses 728 3 725 14.6%
Operating income (expense) 269 3 272 52.9%
Operating Margin 27.0% - 27.3% 6.1 ppt.
Other Income (Expense)
Investment income, net 36 - 36 (29.6%)
Interest expense (11) - (11) 38.2%
Other income, net 92 90 c 2 NM
Total other income (expense) 117 90 27 (63.5%)
Income (loss) before income taxes 386 (87) 299 42.2%
Income tax expense (benefit) 134 (30) 104 44.4%
Net Income (loss) $252 ($57) $195 41.0%
Basic Net Income (Loss) per Share $1.86 ($0.42) $1.44 47.8%
Diluted Net Income (Loss) per Share $1.85 ($0.42) $1.43 47.8%
($ million) For the six months ended 6/30/08
Special As
Actual Items Adjusted
Revenues, net $2,429 - $2,429
Operating Expenses
General and administrative 941 - 941
Advertising and marketing 502 - 502
Litigation settlements 1,649 1,649 a -
Charitable contributions to the
MasterCard Foundation - - -
Depreciation and amortization 53 - 53
Total operating expenses 3,146 1,649 1,497
Operating income (expense) (718) 1,649 932
Operating Margin (29.5%) - 38.4%
Other Income (Expense)
Investment income, net 140 - 140
Interest expense (31) - (31)
Other income, net 73 (75)b (2)
Total other income (expense) 183 (75) 108
Income (loss) before income taxes (535) 1,574 1,040
Income tax expense (benefit) (235) 601 366
Net Income (loss) ($300) $973 $674
Basic Net Income (Loss) per Share ($2.29) $7.45 $5.16
Diluted Net Income (Loss) per Share ($2.29) $7.42 $5.13
For the six months ended YOY
($ million) 6/30/07 Growth
Special As As
Actual Items Adjusted Adjusted
Revenues, net $1,912 - $1,912 27.0%
Operating Expenses
General and administrative 830 - 830 13.4%
Advertising and marketing 447 - 447 12.4%
Litigation settlements 3 3 a - NM
Charitable contributions to the
MasterCard Foundation - - - NM
Depreciation and amortization 49 - 49 8.1%
Total operating expenses 1,329 3 1,326 12.9%
Operating income (expense) 583 3 586 59.0%
Operating Margin 30.5% - 30.6% 7.8 ppt
Other Income (Expense)
Investment income, net 73 - 73 93.2%
Interest expense (26) - (26) 20.5%
Other income, net 92 90 c 2 NM
Total other income (expense) 139 90 49 118.9%
Income (loss) before income taxes 722 (87) 635 63.6%
Income tax expense (benefit) 255 (30) 225 62.3%
Net Income (loss) $467 ($57) $410 64.3%
Basic Net Income (Loss) per Share $3.44 ($0.42) $3.02 70.8%
Diluted Net Income (Loss) per Share $3.42 ($0.42) $3.00 71.1%
a - Litigation settlements
b - Gain from the termination of a customer business agreement
c - Other income related to a settlement agreement to discontinue the
company's sponsorship of the 2010 and 2014 World Cup soccer events
NM = Not meaningful
Note that the figures in the preceding tables may not sum due to
rounding
Reconciliation to Effective Tax Rate for the American Express Litigation
Settlement
GAAP Non-GAAP
GAAP Effective Litigation Non-GAAP Effective
Actual Tax Rate Settlement Adjusted Tax Rate
(In millions, except percentages)
Three months ended
June 30, 2008:
Income (loss) before
income taxes $(1,223) 39.0% $1,649 $426 35.3%
Income tax expense
(benefit) (477) 627 150
Net income (loss) $(747) $1,022 $276
Six months ended
June 30, 2008:
Income (loss) before
income taxes $(535) 43.9% $1,649 $1,114 35.2%
Income tax
expense (benefit) (235) 627 392
Net income (loss) $(300) $1,022 $722
Note that the figures in the preceding tables 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
July 31, 2008.
SOURCE MasterCard Incorporated