Press Release

EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

LOGO

MasterCard Incorporated Reports

Second-Quarter 2008 Financial Results

•

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, NY, July 31, 2008 – 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.

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

-more-

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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.

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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.

MasterCard Incorporated – Page 4

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,

MasterCard Incorporated – Page 5

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.

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.

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 6

MASTERCARD INCORPORATED

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)


	Three Months Ended June 30,						Six Months 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 – Page 7

MASTERCARD INCORPORATED

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


	June 30, 2008			December 31, 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 – Page 8

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 – Page 9

MASTERCARD INCORPORATED OPERATING PERFORMANCE


	For the 3 Months ended June 30, 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, Charge and Debit Programs
Asia Pacific	$	93	26.6	%	18.8	%	$	65	23.3	%	750	$	27	9.3	%	162	171	187	7.6
Canada		27	22.2	%	12.4	%		24	13.5	%	244		4	5.9	%	5	32	38	0.8
Europe		204	30.7	%	17.8	%		152	18.6	%	1,566		53	15.6	%	272	177	191	7.7
Latin America		47	26.5	%	17.4	%		24	19.9	%	435		23	14.9	%	141	86	106	2.8
South Asia / Middle East / Africa		13	28.3	%	31.9	%		7	25.1	%	93		6	40.3	%	49	34	39	0.9
United States		271	6.2	%	6.2	%		221	8.0	%	3,487		49	-1.1	%	258	339	390	7.6
Worldwide		655	18.2	%	12.8	%		493	14.0	%	6,575		162	9.3	%	887	840	951	27.3
MasterCard Credit and Charge Programs
United States		163	0.7	%	0.7	%		142	2.8	%	1,590		21	-11.4	%	15	230	273
Worldwide less United States		304	27.4	%	17.5	%		242	19.9	%	2,643		62	8.7	%	257	420	475
Worldwide		467	16.6	%	11.0	%		384	13.0	%	4,232		83	2.7	%	272	650	748
MasterCard Debit Programs
United States		107	15.8	%	15.8	%		79	18.6	%	1,897		28	8.6	%	243	109	117
Worldwide less United States		81	32.6	%	20.3	%		30	16.3	%	446		51	22.7	%	372	80	86
Worldwide		188	22.5	%	17.7	%		109	18.0	%	2,343		79	17.3	%	615	190	203

	For the 6 Months ended June 30, 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.)
All MasterCard Credit, Charge and Debit Programs
Asia Pacific	$	180	26.7	%	18.3	%	$	127	22.8	%	1,457	$	53	8.8	%	308	171	187
Canada		51	26.4	%	12.7	%		44	13.3	%	456		8	9.3	%	10	32	38
Europe		387	30.5	%	17.7	%		287	18.3	%	3,014		100	15.8	%	518	177	191
Latin America		91	27.5	%	19.0	%		47	21.2	%	851		44	16.7	%	276	86	106
South Asia / Middle East / Africa		25	30.8	%	31.6	%		13	25.9	%	184		12	38.6	%	95	34	39
United States		529	7.5	%	7.5	%		428	9.1	%	6,740		102	1.4	%	511	339	390
Worldwide		1,264	19.0	%	13.4	%		946	14.5	%	12,701		319	10.2	%	1,719	840	951
MasterCard Credit and Charge Programs
United States		318	2.5	%	2.5	%		274	4.3	%	3,079		44	-7.8	%	30	230	273
Worldwide less United States		583	28.3	%	17.6	%		463	19.8	%	5,109		121	9.7	%	501	420	475
Worldwide		901	17.8	%	11.8	%		736	13.6	%	8,189		165	4.4	%	531	650	748
MasterCard Debit Programs
United States		212	16.1	%	16.1	%		154	18.6	%	3,660		58	9.7	%	481	109	117
Worldwide less United States		152	31.4	%	19.9	%		56	15.7	%	852		96	22.4	%	707	80	86
Worldwide		363	22.0	%	17.6	%		210	17.9	%	4,513		154	17.3	%	1,188	190	203

	For the 3 Months ended June 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	$	73	19.3	%	15.8	%	$	50	20.5	%	622	$	23	7.0	%	135	151	164
Canada		22	18.2	%	15.6	%		19	15.3	%	216		3	17.4	%	5	28	34
Europe		156	23.4	%	14.4	%		116	14.8	%	1,377		41	13.1	%	244	152	164
Latin America		37	27.5	%	22.3	%		18	24.2	%	374		19	20.4	%	126	75	91
South Asia / Middle East / Africa		10	38.4	%	41.8	%		6	32.2	%	84		4	56.2	%	37	26	29
United States		255	9.9	%	9.9	%		205	12.4	%	3,189		50	0.5	%	248	317	374
Worldwide		554	16.5	%	13.4	%		414	14.9	%	5,863		141	9.2	%	794	749	856
MasterCard Credit and Charge Programs
United States		162	5.4	%	5.4	%		138	7.4	%	1,578		24	-4.8	%	17	221	269
Worldwide less United States		239	22.2	%	15.9	%		186	17.8	%	2,293		52	9.8	%	241	365	412
Worldwide		401	14.8	%	11.4	%		324	13.1	%	3,871		76	4.7	%	258	586	681
MasterCard Debit Programs
United States		93	18.8	%	18.8	%		67	24.5	%	1,611		26	6.0	%	231	97	104
Worldwide less United States		61	25.7	%	18.9	%		22	14.0	%	381		38	21.9	%	306	66	71
Worldwide		153	21.4	%	18.8	%		89	21.7	%	1,992		64	15.0	%	537	163	175

	For the 6 Months ended June 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	$	142	19.3	%	15.9	%	$	96	20.5	%	1,211	$	46	7.2	%	261	151	164
Canada		41	15.6	%	15.0	%		34	14.6	%	404		6	16.9	%	10	28	34
Europe		296	24.1	%	14.8	%		220	15.3	%	2,642		77	13.4	%	464	152	164
Latin America		71	24.3	%	22.6	%		35	25.3	%	727		37	20.2	%	245	75	91
South Asia / Middle East / Africa		19	37.3	%	44.2	%		11	33.2	%	165		8	61.1	%	72	26	29
United States		492	12.6	%	12.6	%		392	15.0	%	6,117		101	4.2	%	488	317	374
Worldwide		1,062	17.8	%	14.8	%		788	16.4	%	11,265		275	10.6	%	1,540	749	856
MasterCard Credit and Charge Programs
United States		310	4.9	%	4.9	%		262	7.5	%	3,002		48	-7.5	%	33	221	269
Worldwide less United States		455	22.1	%	16.3	%		354	18.2	%	4,413		101	10.1	%	464	365	412
Worldwide		765	14.5	%	11.4	%		616	13.4	%	7,415		149	3.7	%	497	586	681
MasterCard Debit Programs
United States		182	28.8	%	28.8	%		130	33.9	%	3,114		53	17.7	%	455	97	104
Worldwide less United States		115	25.1	%	19.0	%		42	14.1	%	736		73	22.0	%	588	66	71
Worldwide		298	27.3	%	24.8	%		172	28.4	%	3,850		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.

MasterCard Incorporated – Page 10

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 11

Reconciliation to Total Operating Expenses, Total Other Income, Net Income and Earnings Per Share


($ million)	For the three months ended 6/30/08									For the three months ended 6/30/07								YOY Growth
	Actual			Special Items			As Adjusted			Actual			Special Items		As Adjusted			As Adjusted
Revenues, net	$	1,247			—		$	1,247		$	997		—		$	997		25.0	%
Operating Expenses
General and administrative		499			—			499			432		—			432		15.7	%
Advertising and marketing		303			—			303			268		—			268		13.0	%
Litigation settlements		1,649			1,649	a		—			3		3	a		—		NM
Charitable contributions to the MasterCard Foundation		—			—			—			—		—			—		NM
Depreciation and amortization		28			—			28			25		—			25		11.7	%

Total operating expenses		2,480			1,649			830			728		3			725		14.6	%

Operating income (expense)		(1,233	)		1,649			416			269		3			272		52.9	%
Operating Margin		(98.9	%)		—			33.4	%		27.0	%	—			27.3	%	6.1	ppt.
Other Income (Expense)
Investment income, net		26			—			26			36		—			36		(29.6	%)
Interest expense		(15	)		—			(15	)		(11	)	—			(11	)	38.2	%
Other income, net		—			—			—			92		90 c			2		NM

Total other income (expense)		10			—			10			117		90			27		(63.5	%)

Income (loss) before income taxes		(1,223	)		1,649			426			386		(87	)		299		42.2	%
Income tax expense (benefit)		(477	)		627			150			134		(30	)		104		44.4	%

Net Income (loss)		($747	)	$	1,023		$	276		$	252		($57	)	$	195		41.0	%

Basic Net Income (Loss) per Share		($5.74	)	$	7.86		$	2.12		$	1.86		($0.42	)	$	1.44		47.8	%

Diluted Net Income (Loss) per Share		($5.74	)	$	7.85		$	2.11		$	1.85		($0.42	)	$	1.43		47.8	%


($ million)	For the six months ended 6/30/08									For the six months ended 6/30/07								YOY Growth
	Actual			Special Items			As Adjusted			Actual			Special Items		As Adjusted			As Adjusted
Revenues, net	$	2,429			—		$	2,429		$	1,912		—		$	1,912		27.0	%
Operating Expenses
General and administrative		941			—			941			830		—			830		13.4	%
Advertising and marketing		502			—			502			447		—			447		12.4	%
Litigation settlements		1,649			1,649	a		—			3		3	a		—		NM
Charitable contributions to the MasterCard Foundation		—			—			—			—		—			—		NM
Depreciation and amortization		53			—			53			49		—			49		8.1	%

Total operating expenses		3,146			1,649			1,497			1,329		3			1,326		12.9	%

Operating income (expense)		(718	)		1,649			932			583		3			586		59.0	%
Operating Margin		(29.5	%)		—			38.4	%		30.5	%	—			30.6	%	7.8	ppt
Other Income (Expense)
Investment income, net		140			—			140			73		—			73		93.2	%
Interest expense		(31	)		—			(31	)		(26	)	—			(26	)	20.5	%
Other income, net		73			(75	) b		(2	)		92		90	c		2		NM

Total other income (expense)		183			(75	)		108			139		90			49		118.9	%

Income (loss) before income taxes		(535	)		1,574			1,040			722		(87	)		635		63.6	%
Income tax expense (benefit)		(235	)		601			366			255		(30	)		225		62.3	%

Net Income (loss)		($300	)	$	973		$	674		$	467		($57	)	$	410		64.3	%

Basic Net Income (Loss) per Share		($2.29	)	$	7.45		$	5.16		$	3.44		($0.42	)	$	3.02		70.8	%

Diluted Net Income (Loss) per Share		($2.29	)	$	7.42		$	5.13		$	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

MasterCard Incorporated – Page 12

Reconciliation to Effective Tax Rate for the American Express Litigation Settlement


	GAAP Actual			GAAP Effective Tax Rate		Litigation Settlement		Non- GAAP Adjusted		Non- GAAP Effective 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.

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