Press release of MasterCard Incorporated, dated February 5, 2009

EX-99.1 2 dex991.htm PRESS RELEASE OF MASTERCARD INCORPORATED, DATED FEBRUARY 5, 2009 Press release of MasterCard Incorporated, dated February 5, 2009

Exhibit 99.1

LOGO

MasterCard Incorporated Reports

Fourth-Quarter and Full-Year 2008 Financial Results

•

Fourth-quarter net income of $243 million, or $1.87 per diluted share, excluding a special item

•

Fourth-quarter net income of $239 million, or $1.84 per diluted share, including a special item

•

Fourth-quarter net revenue growth of 14.2%, to $1.2 billion

•

Fourth-quarter gross dollar volume up 3.4%; purchase volume up 3.1%

Purchase, NY, February 5, 2009 – MasterCard Incorporated (NYSE:MA) today announced financial results for the fourth quarter and full-year 2008. The company reported net income of $243 million, or $1.87 per diluted share, excluding a special item of $6 million related to a litigation settlement. Including the special item, the company reported net income of $239 million, or $1.84 per diluted share. The company’s total operating expenses, operating margin, other income, effective tax rate, net income and earnings per share, excluding special items, are non-GAAP financial measures that are reconciled to their most directly comparable GAAP measures in the accompanying financial tables.

Net revenue for the fourth quarter of 2008 was $1.2 billion, a 14.2% 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) tempered net revenue growth by 3.5 percentage points for the quarter. The higher net revenue in the fourth quarter versus the same period in 2007 was fueled by:

•

Pricing changes, which contributed approximately 8 percentage points of the net revenue growth; and

•

A 6.0% increase in the number of transactions processed, to 5.5 billion.

MasterCard’s gross dollar volume increased 3.4%, on a local currency basis, to $605 billion. Worldwide purchase volume during the quarter rose 3.1% on a local currency basis, versus the fourth quarter of 2007, to $455 billion, driven by modest growth in cardholder spending on a growing number of MasterCard cards. As of December 31, 2008, the company’s financial-institution customers had issued 981 million MasterCard cards, an increase of 7.6% over the cards issued at December 31, 2007.

-more-

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“Despite the significant economic turbulence around the world, we were able to achieve excellent fourth-quarter operating results while maintaining a healthy balance sheet, which is a strength in this environment,” said Robert W. Selander, MasterCard president and chief executive officer. “Our 2008 full-year results reflect our unique business model and the value we provide to our financial-institution customers around the world.”

Selander stated, “We remain committed to taking a prudent approach to our business to ensure effective cost management, while opportunistically investing to drive long-term growth for MasterCard and deliver value to our customers and shareholders. Our recent organizational realignment and our acquisition of Orbiscom, a leading payments solutions software provider, reflect that approach.”

“The economic environment remains challenging, with businesses, governments and consumers around the world rethinking how finances are managed. One thing is certain in this new reality of increased financial management control — the value and importance of electronic payments has never been greater,” concluded Selander.

The special item for the fourth quarter of 2008 represented:

•

A $6 million charge related to the settlement of a consumer protection case in California.

There were no special items for the fourth quarter of 2007.

Excluding the special item, total operating expenses decreased 16.0%, to $756 million, during the fourth quarter of 2008 compared to the same period in 2007. Currency fluctuations of 2.0 percentage points contributed to the rate of decline for total operating expenses. The decrease in total operating expenses was driven by:

•

A 3.4% decrease in general and administrative expenses, primarily resulting from initiatives to reduce travel expenses, personnel costs and professional fees. Currency fluctuations representing approximately 2.0 percentage points contributed to the rate of decline; and

•

A 32.8% decrease in advertising and marketing expenses versus the year-ago period, with approximately 1.9 percentage points related to the impact of foreign currency fluctuations contributing to the rate of decline.

Including the special item, total operating expenses for the fourth quarter of 2008 decreased 15.3% versus the year-ago period, to $762 million.

Excluding the special item, the operating margin was 38.2% for the fourth quarter of 2008, up 22.2 percentage points over the year-ago period. Including the special item, the operating margin was 37.7% for the fourth quarter of 2008.

Total other expense was $17 million in the fourth quarter of 2008 versus total other income of $295 million in the fourth quarter of 2007. The decrease was primarily due to gains

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realized in the fourth quarter of 2007 from the sale of a portion of the company’s investment in Redecard S.A. Interest expense versus the year-ago period increased $21 million, primarily due to the interest accretion associated with the American Express settlement that occurred in the second quarter of 2008.

Excluding the special item, MasterCard’s effective tax rate was 46.1% in the fourth quarter of 2008, versus 34.9% in the comparable period in 2007. The increase was primarily due to deferred tax remeasurement and increased FIN 48 tax reserves. Including the special item, the effective tax rate was 46.2% for the fourth quarter of 2008.

Full-Year 2008 Results

For the year-ended December 31, 2008, MasterCard reported net income of $1.2 billion, or $9.45 per diluted share, excluding the impact of special items, and a net loss of $254 million, or $1.95 per diluted share, including special items. Both earnings per share figures include after-tax gains from the sale of a portion of the company’s investment in Redecard S.A. of $0.42 per share on a diluted basis.

Special items on a pre-tax basis for the full-year 2008 included:

•

A $1.65 billion charge related to the antitrust litigation settlement between MasterCard and American Express;

•

An $827.5 million net charge related to the Discover litigation settlement;

•

A $75 million gain in other income from the termination of a customer business agreement; and

•

A $6 million charge related to the settlement of a consumer protection case in California.

Special items on a pre-tax basis for full-year 2007 included:

•

$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; and

•

A $3.4 million reserve recorded for a litigation settlement.

Net revenue for full-year 2008 was $5.0 billion, a 22.7% increase versus 2007. In addition to growth in GDV, processed transactions and cross-border transaction volumes, this increase was driven by pricing changes of approximately 6 percentage points, primarily associated with the cross-border transaction pricing implemented in 2008. Currency fluctuation contributed approximately 2.5 percentage points of the increase in revenue.

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Excluding special items for both periods, total operating expenses increased 2.9%, to $3.0 billion, for full-year 2008 compared to 2007, primarily due to higher personnel expenses. Currency fluctuations contributed 1.7 percentage points of this increase. Growth in total operating expenses was driven by:

•

An increase in general and administrative expenses, which was primarily driven by an 11.6% increase in personnel expenses due to new personnel and higher contractor costs. Currency fluctuations represented approximately 1.4 percentage points of the increase; and

•

Advertising and marketing expenses, which decreased 5.8% versus full-year 2007 due to cost-containment activities, partially offset by approximately 2.0 percentage points related to the impact of foreign currency fluctuations.

Including special items, operating expenses increased 86.7%, to $5.5 billion.

Excluding special items, the operating margin was 39.0% for full-year 2008, up 11.7 percentage points over the year-ago period. Including special items, the operating margin was a negative 10.7% for full-year 2008.

Total other income was $76 million for full-year 2008 versus $473 million for the same period in 2007, excluding special items in both periods. Other income decreased due to larger gains recorded in 2007 from the sale of Redecard securities. Additionally, interest expense versus the year-ago period increased $46 million, primarily due to the interest accretion associated with the 2008 American Express settlement. Including special items, total other income was $151 million for full-year 2008 and $563 million for full-year 2007.

MasterCard’s effective tax rate, excluding litigation settlements, was 38.7% for the full-year 2008, versus a rate of 35.0% for the full-year 2007. The increase was primarily due to deferred tax remeasurement and increased FIN 48 tax reserves. Including the litigation settlements, the effective tax rate was 33.7% for 2008 and 35.0% for 2007.

Fourth-Quarter 2008 Financial Results Conference Call Details

At 9:00 a.m. EST today, the company will host a conference call to discuss its fourth-quarter and full-year 2008 financial results.

The dial-in information for this call is 866-578-5771 (within the U.S.) and 617-213-8055 (outside the U.S.) and the passcode is 31072600. A replay of the call will be available for one week thereafter. 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 44423914.

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.

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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 approximately 21 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 effectively manage costs;

•

The company’s ability to opportunistically invest to drive long-term growth to deliver value to customers and shareholders; and

•

The continued value and importance of electronic payments within the context of the current economic environment and increased financial management control.

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 and 2009, 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 December 31,						Twelve Months Ended December 31,
	2008			2007			2008			2007
	(In thousands, except per share data)
Revenues, net	$	1,224,834		$	1,072,687		$	4,991,600		$	4,067,599
Operating Expenses
General and administrative		478,590			495,550			1,913,679			1,758,388
Advertising and marketing		247,838			368,929			1,017,575			1,080,057
Litigation settlements		6,000			—			2,482,845			3,400
Charitable contributions to the MasterCard Foundation		—			10,000			—			20,000
Depreciation and amortization		30,050			26,152			112,006			97,642

Total operating expenses		762,478			900,631			5,526,105			2,959,487

Operating income (loss)		462,356			172,056			(534,505	)		1,108,112
Other Income (Expense)
Investment income, net		19,826			311,364			182,907			530,400
Interest expense		(36,525	)		(15,313	)		(103,600	)		(57,277	)
Other income (expense), net		(597	)		(1,071	)		71,985			90,197

Total other income (expense)		(17,296	)		294,980			151,292			563,320

Income (loss) before income taxes		445,060			467,036			(383,213	)		1,671,432
Income tax expense (benefit)		205,618			162,803			(129,298	)		585,546

Net Income (Loss)	$	239,442		$	304,233		$	(253,915	)	$	1,085,886

Basic Net Income (Loss) per Share	$	1.85		$	2.28		$	(1.95	)	$	8.05

Basic Weighted Average Shares Outstanding		129,572			133,548			130,148			134,887

Diluted Net Income (Loss) per Share	$	1.84		$	2.26		$	(1.95	)	$	8.00

Diluted Weighted Average Shares Outstanding		130,404			134,448			130,148			135,695

MasterCard Incorporated – Page 7

MASTERCARD INCORPORATED

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


	December 31, 2008			December 31, 2007
	(In thousands, except share data)
ASSETS
Cash and cash equivalents	$	1,505,160		$	1,659,295
Investment securities, at fair value:
Trading		—			2,561
Available-for-sale		588,095			1,308,126
Municipal bonds held-to-maturity		154,000			—
Accounts receivable		639,482			532,633
Income taxes receivable		198,308			—
Settlement due from customers		513,191			712,558
Restricted security deposits held for customers		183,245			142,052
Prepaid expenses		213,612			156,258
Deferred income taxes		283,795			44,525
Other current assets		32,619			33,733

Total Current Assets		4,311,507			4,591,741
Property, plant and equipment, at cost (less accumulated depreciation of $278,269 and $250,888)		306,798			290,200
Deferred income taxes		567,567			263,143
Goodwill		297,993			239,626
Other intangible assets, (less accumulated amortization of $377,570 and $347,977)		394,282			320,758
Investment securities available-for-sale, at fair value		191,760			—
Municipal bonds held-to-maturity		37,450			192,489
Prepaid expenses		302,095			274,962
Other assets		66,397			87,122

Total Assets	$	6,475,849		$	6,260,041

LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable	$	262,342		$	252,391
Settlement due to customers		532,237			604,212
Restricted security deposits held for customers		183,245			142,052
Obligations under litigation settlements		713,035			107,235
Accrued expenses		1,032,061			1,071,557
Short-term debt		149,380			80,000
Other current liabilities		118,151			105,895

Total Current Liabilities		2,990,451			2,363,342
Deferred income taxes		74,518			71,278
Obligations under litigation settlements		1,023,263			297,201
Long-term debt		19,387			149,824
Other liabilities		436,255			346,469

Total Liabilities		4,543,874			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, 105,126,588 and 91,243,433 shares issued and 98,385,998 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, 1,728 and 1,664 shares issued and outstanding, respectively		—			—
Additional paid-in-capital		3,304,604			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)		(236,100	)		37,699
Accumulated other comprehensive income:
Cumulative foreign currency translation adjustments		175,040			216,651
Defined benefit pension and other postretirement plans, net of tax		(43,207	)		(3,555	)
Investment securities available-for-sale, net of tax		(22,996	)		64,650

Total accumulated other comprehensive income		108,837			277,746

Total Stockholders’ Equity		1,927,355			3,027,307

Total Liabilities and Stockholders’ Equity	$	6,475,849		$	6,260,041

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MASTERCARD INCORPORATED

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	For the Years Ended December 31,
	2008			2007			2006
	(In thousands)
Operating Activities
Net income (loss)	$	(253,915	)	$	1,085,886		$	50,190
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		112,006			97,642			99,782
Gain on sale of Redecard S.A. available-for-sale securities		(85,903	)		(390,968	)		—
Charitable contribution of common stock to the MasterCard Foundation		—			—			394,785
Share based payments		60,970			58,213			19,181
Stock units settled in cash for taxes		(67,111	)		(11,334	)		—
Tax benefit for share based compensation		(47,803	)		(15,430	)		—
Impairment of investments		12,515			8,719			—
Accretion of imputed interest on litigation settlements		77,202			38,046			42,798
Deferred income taxes		(483,952	)		(5,492	)		32,267
Other		14,645			15,121			9,746
Changes in operating assets and liabilities:
Trading securities		2,561			9,700			10,211
Accounts receivable		(115,687	)		(60,984	)		(93,428	)
Income taxes receivable		(198,308	)		—			—
Settlement due from customers		183,008			(356,305	)		(75,553	)
Prepaid expenses		(65,222	)		(19,859	)		42,623
Other current assets		(19,381	)		(7,538	)		7,813
Prepaid expenses, non-current		(35,631	)		(28,398	)		(30,555	)
Litigation settlement accruals		1,254,660			(110,525	)		(170,883	)
Accounts payable		8,425			(30,650	)		89,382
Settlement due to customers		(52,852	)		276,144			89,739
Accrued expenses		36,817			176,716			86,859
Net change in other assets and liabilities		76,184			41,157			45,204

Net cash provided by operating activities		413,228			769,861			650,161

Investing Activities
Purchases of property, plant and equipment		(75,626	)		(81,587	)		(61,204	)
Capitalized software		(94,647	)		(74,835	)		(33,264	)
Purchases of investment securities available-for-sale		(519,514	)		(3,578,357	)		(3,815,115	)
Proceeds from sales and maturities of investment securities available-for-sale		976,743			4,042,011			3,233,725
Acquisition of business, net of cash acquired		(81,731	)		—			—
Other investing activities		(3,574	)		7,909			(368	)

Net cash provided by (used in) investing activities		201,651			315,141			(676,226	)

Financing Activities
Cash received from sale of common stock, net of issuance costs		—			—			2,449,910
Cash payment for the redemption of common stock		—			—			(1,799,937	)
Dividends paid		(79,259	)		(74,002	)		(12,373	)
Cash proceeds from exercise of stock options		9,546			1,597			—
Tax benefit for share based compensation		47,803			15,430			—
Payment of debt		(80,000	)		—			—
Purchase of treasury stock		(649,468	)		(600,532	)		—

Net cash provided by (used in) financing activities		(751,378	)		(657,507	)		637,600

Effect of exchange rate changes on cash and cash equivalents		(17,636	)		46,720			28,272

Net increase (decrease) in cash and cash equivalents		(154,135	)		474,215			639,807
Cash and cash equivalents — beginning of period		1,659,295			1,185,080			545,273

Cash and cash equivalents — end of period	$	1,505,160		$	1,659,295		$	1,185,080

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MASTERCARD INCORPORATED OPERATING PERFORMANCE


	For the 3 Months ended December 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, Charge and Debit Programs
Asia Pacific	$	91	3.8	%	14.6	%	$	65	17.8	%	844	$	26	7.1	%	180	181	198	7.7
Canada		23	-15.1	%	5.3	%		20	6.4	%	256		3	-1.6	%	5	35	40	0.8
Europe		176	-7.1	%	8.3	%		130	7.6	%	1,663		46	10.5	%	272	181	195	8.3
Latin America		44	-6.0	%	11.4	%		24	13.3	%	486		21	9.3	%	149	95	115	2.8
South Asia / Middle East / Africa		14	9.3	%	30.6	%		7	16.2	%	103		7	47.5	%	57	38	42	1.0
United States		256	-5.2	%	-5.2	%		210	-4.6	%	3,504		47	-7.6	%	249	344	389	7.9
Worldwide		605	-4.7	%	3.4	%		455	3.1	%	6,856		149	4.4	%	912	874	981	28.5
MasterCard Credit and Charge Programs
United States		152	-11.4	%	-11.4	%		133	-9.6	%	1,594		19	-22.7	%	13	226	263
Worldwide less United States		272	-6.6	%	8.9	%		218	10.7	%	2,859		54	2.3	%	252	440	495
Worldwide		424	-8.4	%	0.6	%		351	2.0	%	4,453		72	-5.7	%	265	666	758
MasterCard Debit Programs
United States		104	5.8	%	5.8	%		77	5.5	%	1,910		28	6.6	%	235	118	126
Worldwide less United States		77	4.5	%	18.2	%		27	11.7	%	493		49	22.1	%	411	90	97
Worldwide		181	5.2	%	10.7	%		104	7.1	%	2,403		77	16.0	%	647	208	223

	For the 12 Months ended December 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.)
All MasterCard Credit, Charge and Debit Programs
Asia Pacific	$	366	19.7	%	18.5	%	$	260	22.0	%	3,104	$	106	10.7	%	663	181	198
Canada		102	11.5	%	11.7	%		87	12.1	%	967		14	9.7	%	21	35	40
Europe		774	18.0	%	15.5	%		573	15.7	%	6,369		201	14.7	%	1,069	181	195
Latin America		184	16.6	%	16.1	%		96	18.6	%	1,788		88	13.6	%	568	95	115
South Asia / Middle East / Africa		53	24.4	%	32.6	%		27	23.0	%	385		26	44.1	%	205	38	42
United States		1,054	3.5	%	3.5	%		856	4.8	%	13,726		198	-2.0	%	1,019	344	389
Worldwide		2,533	11.5	%	10.7	%		1,899	11.3	%	26,338		634	8.9	%	3,546	874	981
MasterCard Credit and Charge Programs
United States		631	-2.2	%	-2.2	%		547	-0.1	%	6,270		84	-13.6	%	58	226	263
Worldwide less United States		1,167	16.5	%	15.5	%		929	17.5	%	10,772		237	8.4	%	1,009	440	495
Worldwide		1,798	9.2	%	8.6	%		1,476	10.3	%	17,042		322	1.6	%	1,067	666	758
MasterCard Debit Programs
United States		422	13.2	%	13.2	%		309	14.8	%	7,456		114	8.9	%	962	118	126
Worldwide less United States		313	23.9	%	20.6	%		114	16.1	%	1,840		199	23.3	%	1,517	90	97
Worldwide		735	17.5	%	16.2	%		423	15.2	%	9,296		313	17.6	%	2,479	208	223

	For the 3 Months ended December 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.)	Cards (Mil.)
All MasterCard Credit, Charge and Debit Programs
Asia Pacific	$	87	25.9	%	18.5	%	$	61	23.7	%	711	$	26	7.8	%	149	160	175
Canada		27	35.2	%	16.7	%		24	16.3	%	239		4	19.2	%	5	30	36
Europe		190	31.8	%	18.6	%		142	19.3	%	1,540		48	16.4	%	253	164	177
Latin America		47	28.6	%	22.3	%		25	26.0	%	441		23	18.6	%	140	81	99
South Asia / Middle East / Africa		13	45.0	%	35.4	%		7	28.4	%	96		6	45.5	%	41	29	33
United States		270	10.6	%	10.6	%		220	11.8	%	3,445		50	5.8	%	246	340	392
Worldwide		634	21.3	%	15.5	%		478	16.5	%	6,472		156	12.4	%	834	805	912
MasterCard Credit and Charge Programs
United States		171	7.8	%	7.8	%		147	8.8	%	1,699		24	2.4	%	17	234	279
Worldwide less United States		291	31.1	%	19.4	%		231	21.3	%	2,599		60	12.3	%	249	400	451
Worldwide		462	21.4	%	14.8	%		378	16.1	%	4,298		84	9.2	%	267	635	729
MasterCard Debit Programs
United States		99	15.9	%	15.9	%		73	18.6	%	1,746		26	9.2	%	228	106	113
Worldwide less United States		73	28.5	%	19.5	%		27	17.0	%	427		46	21.0	%	339	64	70
Worldwide		172	21.0	%	17.4	%		100	18.1	%	2,173		72	16.5	%	567	170	183

	For the 12 Months ended December 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.)	Cards (Mil.)
All MasterCard Credit, Charge and Debit Programs
Asia Pacific	$	306	21.3	%	16.4	%	$	211	21.8	%	2,579	$	95	5.9	%	543	160	175
Canada		91	22.4	%	15.0	%		78	15.0	%	865		13	15.3	%	20	30	36
Europe		656	26.8	%	16.2	%		487	16.9	%	5,628		169	14.5	%	968	164	177
Latin America		158	25.5	%	21.9	%		79	25.2	%	1,560		79	18.9	%	514	81	99
South Asia / Middle East / Africa		43	40.6	%	39.7	%		24	30.8	%	349		19	52.9	%	152	29	33
United States		1,019	10.8	%	10.8	%		817	12.7	%	12,787		202	3.8	%	983	340	392
Worldwide		2,272	18.4	%	14.4	%		1,696	15.8	%	23,768		576	10.5	%	3,180	805	912
MasterCard Credit and Charge Programs
United States		645	5.8	%	5.8	%		548	7.8	%	6,303		97	-4.1	%	68	234	279
Worldwide less United States		1,001	25.2	%	17.2	%		786	19.4	%	9,419		215	10.0	%	954	400	451
Worldwide		1,647	16.8	%	12.4	%		1,334	14.3	%	15,722		313	5.2	%	1,022	635	729
MasterCard Debit Programs
United States		373	20.8	%	20.8	%		269	24.4	%	6,484		105	12.5	%	915	106	113
Worldwide less United States		252	26.0	%	19.0	%		94	15.2	%	1,562		159	21.3	%	1,242	64	70
Worldwide		626	22.8	%	20.1	%		362	21.9	%	8,046		263	17.6	%	2,158	170	183

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 of Financial Results


($ million except percentages)	For the three months ended 12/31/08									For the three months ended 12/31/07									YOY Growth
	Actual			Special Items			As Adjusted			Actual			Special Items			As Adjusted			As Adjusted
Revenues, net	$	1,225		$	—		$	1,225		$	1,073			—		$	1,073		14.2	%
Operating Expenses
General and administrative		479			—			479			496			—			496		(3.4	%)
Advertising and marketing		248			—			248			369			—			369		(32.8	%)
Litigation settlements		6			6 a			—			—			—			—		NM
Charitable contributions to the MasterCard Foundation		—			—			—			10			—			10		(100.0	%)
Depreciation and amortization		30			—			30			26			—			26		14.9	%

Total operating expenses		762			6			756			901			—			901		(16.0	%)

Operating income		462			6			468			172			—			172		172.2	%
Operating Margin		37.7	%		—			38.2	%		16.0	%		—			16.0	%	22.2	ppt.
Other Income (Expense)
Investment income, net		20			—			20			311			—			311		(93.6	%)
Interest expense		(37	)		—			(37	)		(15	)		—			(15	)	138.5	%
Other expense, net		—			—			—			(1	)		—			(1	)	NM

Total other income (expense)		(17	)		—			(17	)		295			—			295		(105.9	%)

Income before income taxes		445			6			451			467			—			467		(3.4	%)
Income tax expense		206			2			208			163			—			163		27.6	%

Net Income	$	239		$	4		$	243		$	304			—		$	304		(20.1	%)

Basic Net Income per Share	$	1.85		$	0.03		$	1.88		$	2.28			—		$	2.28		(17.5	%)

Diluted Net Income per Share	$	1.84		$	0.03		$	1.87		$	2.26			—		$	2.26		(17.3	%)


($ million except percentages)	For the year ended 12/31/08									For the year ended 12/31/07									YOY Growth
	Actual			Special Items			As Adjusted			Actual			Special Items			As Adjusted			As Adjusted
Revenues, net	$	4,992		$	—		$	4,992		$	4,068			—		$	4,068		22.7	%
Operating Expenses
General and administrative		1,914			—			1,914			1,758			—			1,758		8.8	%
Advertising and marketing		1,018			—			1,018			1,080			—			1,080		(5.8	%)
Litigation settlements		2,483			2,483	a		—			3			3	a		—		NM
Charitable contributions to the MasterCard Foundation		—			—			—			20			—			20		(100.0	%)
Depreciation and amortization		112			—			112			98			—			98		14.7	%

Total operating expenses		5,526			2,483			3,043			2,959			3			2,956		2.9	%

Operating income		(535	)		2,483			1,948			1,108			3			1,111		75.3	%
Operating Margin		(10.7	%)		—			39.0	%		27.2	%		—			27.3	%	11.7	ppt.
Other Income (Expense)
Investment income, net		183			—			183			530			—			530		(65.5	%)
Interest expense		(104	)		—			(104	)		(57	)		—			(57	)	80.9	%
Other expense, net		72			75	b		(3	)		90			90	c		—		NM

Total other income (expense)		151			75			76			563			90			473		(83.9	%)

Income before income taxes		(383	)		2,408			2,025			1,671			(87	)		1,584		27.8	%
Income tax expense		(129	)		914			785			586			30			556		41.2	%

Net Income	$	(254	)	$	1,494		$	1,239		$	1,086		$	(57	)	$	1,029		20.4	%

Basic Net Income per Share	$	(1.95	)	$	11.47		$	9.52		$	8.05		$	(0.42	)	$	7.63		24.8	%

Diluted Net Income per Share	$	(1.95	)	$	11.40		$	9.45		$	8.00		$	(0.42	)	$	7.58		24.7	%

^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 Cups

Note that the figures in the preceding tables may not sum due to rounding

MasterCard Incorporated – Page 12

Reconciliation to Effective Tax Rate for Litigation Settlements and Stock Donations


	GAAP effective tax rate calculation For the years ended December 31,
	2008			2007			2006
	(In millions, except percentages)
Income (loss) before income taxes	$	(383	)	$	1,671		$	294
Income tax expense (benefit)		(129	)		586			244
Net income (loss)	$	(254	)	$	1,086		$	50

Effective tax rate		33.7	%		35.0	%		82.9	%


	Non-GAAP effective tax rate calculation For the years ended December 31,
	2008			2007			2006
	(In millions, except percentages)
GAAP income (loss) before income taxes	$	(383	)	$	1,671		$	294
Litigation settlements		2,483			3			—
Stock donation to the MasterCard Foundation		—			—			395

Non-GAAP income before income taxes	$	2,100		$	1,674		$	689

Income tax expense (benefit)		(129	)		586			244
Impact of litigation settlements on income tax expense (benefit)		(941	)		—			—

Non-GAAP income tax expense		812			586			244

Non-GAAP net income	$	1,288		$	1,088		$	445

Non-GAAP effective tax rate		38.7	%		35.0	%		35.4	%

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 February 5, 2009.

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