Press Release

EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

LOGO

MasterCard Incorporated Reports

Third-Quarter 2009 Financial Results

•

Net income of $456 million, or $3.48 per diluted share, excluding special items

•

Net income of $452 million, or $3.45 per diluted share, including special items

•

Net revenue growth of 2.0%, to $1.4 billion

•

Gross dollar volume and purchase volume relatively flat

•

Total operating expenses declined 13.3%, excluding special items

Purchase, NY, November 3, 2009 – MasterCard Incorporated (NYSE:MA) today announced financial results for the third quarter of 2009. The company reported net income of $456 million, or $3.48 per diluted share, excluding special items, and net income of $452 million, or $3.45 per diluted share, including special items. The company’s total operating expenses, 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 GAAP reconciliations.

Net revenue for the third quarter of 2009 was $1.4 billion, a 2.0% increase versus the same period in 2008. On a constant currency basis (excluding the movement of the euro and the Brazilian real relative to the U.S. dollar), net revenue increased 3.9% compared to the same period in 2008. The higher net revenue in the third quarter this year benefited from:

•

Pricing changes that contributed approximately 6 percentage points of the net revenue growth; and

•

A 7.6% increase in the number of transactions processed to 5.8 billion.

These factors were partially offset by the impact of slightly lower cross border volumes on third-quarter 2009 revenue, compared to the same period in 2008.

MasterCard’s gross dollar volume was relatively flat, up 0.3% on a local currency basis, versus the third quarter of 2008, to $633 billion. Worldwide purchase volume during the quarter was also relatively flat, up 0.4% on a local currency basis, versus the third quarter of 2008, to $480 billion. As of September 30, 2009, the company’s financial-institution customers had issued 964 million MasterCard cards, comparable to the number of cards issued at September 30, 2008.

“We are very pleased with our third-quarter financial results, specifically since we began to see signs of stabilization in parts of our business,” said Robert W. Selander, MasterCard chief executive officer. “Total processed transactions continued to grow at a high single-digit rate, with double-digit growth coming from our Asia Pacific/Middle East/Africa and Latin America regions. At the same time, our overall cross-border volumes are steadying with our Asia Pacific region demonstrating significant growth in the quarter, and the U.S.

-more-

MasterCard Incorporated – Page 2

showing a lower rate of decline. We continued to aggressively manage costs and improve margins, while still investing in key growth areas across our business.

“Overall, our results once again underscore the global trend toward electronic payments, and the strength of our business model,” Selander added. “We continue to make life easier for consumers, businesses and governments, all of whom seek safer, more controllable and more efficient payment alternatives for everyday commerce.”

Special items for the third quarter of 2009 represented $6.2 million pre-tax litigation settlement charges. The special item for the third quarter of 2008 represented an $827.5 million net pre-tax charge related to an antitrust litigation settlement.

Excluding special items, total operating expenses decreased 13.3%, to $685 million, during the third quarter of 2009 compared to the same period in 2008. Currency fluctuations contributed 1.3 percentage points to the rate of decline. The decrease in total operating expenses was driven by:

•

A 7.9% decrease in general and administrative expenses, primarily resulting from lower professional fees and travel expenses, along with a benefit from foreign exchange remeasurement, versus the comparable period in 2008. These factors were partially offset by increased personnel costs due to severance of $31 million in the third quarter of 2009. Excluding the impact of severance costs in both periods, general and administrative expenses declined 13.8% for the third quarter of 2009. A favorable foreign currency impact represented 1.1 percentage points of both rates of decline; and

•

A 29.4% decrease in advertising and marketing expenses versus the year-ago period, primarily related to reduced investments and continued cost containment initiatives. Favorable currency fluctuations representing approximately 1.5 percentage points contributed to the rate of decline.

Including special items, total operating expenses decreased 57.3%, to $691 million, primarily due to the net litigation settlement that occurred in the third quarter of 2008.

Excluding special items, the operating margin was 49.8% for the third quarter of 2009, up 8.8 percentage points over the year-ago period. Including special items, the operating margin was 49.4% for the third quarter of 2009.

MasterCard’s effective tax rate was 32.9% in the third quarter of 2009. For the third quarter of 2008, the effective tax rate was 39.7%, excluding special items, and 34.1% including the special items. The difference in the effective tax rate was primarily due to the charge for the net litigation settlement recorded in the third quarter of 2008.

MasterCard Incorporated – Page 3

Year-to-Date 2009 Results

For the nine months ended September 30, 2009, MasterCard reported net income of $1.2 billion, or $8.95 per diluted share, excluding the impact of special items, and net income of $1.2 billion, or $8.92 per diluted share, including special items.

Net revenue for the nine months ended September 30, 2009, was $3.8 billion, a 0.9% increase versus the same period in 2008. On a constant currency basis, net revenue increased 4.4%. Increased processed transactions of 7.0% and pricing changes of approximately 6 percentage points contributed to the revenue growth in the year-to-date period. These factors were partially offset by the impact of slightly lower cross border volumes on revenue for the nine months ended September 30, 2009, relative to the comparable period last year.

Total operating expenses decreased 12.5%, to $2.0 billion, for the nine-month period compared to the same period in 2008, excluding special items for both periods. Currency fluctuations contributed 2.5 percentage points of this decrease. Including special items, operating expenses decreased 57.8%.

Total net other expense was $32 million for the nine-month period versus total net other income of $169 million for the same period in 2008, including special items. The decrease in other income was primarily driven by gains from the sale of Redecard securities and the termination of a customer business agreement in 2008.

MasterCard’s effective tax rate, excluding special items, was 33.6% in the nine months ended September 30, 2009, versus a rate of 36.7% in the comparable period in 2008. Including the special items, the effective tax rate was 33.6% for the 2009 period, and 40.4% for the 2008 period. The difference in the effective tax rate was primarily due to the impact of the charge for litigation settlements in 2008.

Third-Quarter 2009 Financial Results Conference Call Details

At 9:00 a.m. EST today, the company will host a conference call to discuss its third-quarter 2009 financial results.

The dial-in information for this call is 866-700-6293 (within the U.S.) and 617-213-8835 (outside the U.S.) and the passcode is 63207343. 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 88640718.

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.

MasterCard Incorporated – Page 4

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. Powered by the MasterCard Worldwide Network and 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 potential stabilization of the company’s business, in light of overall economic conditions;

•

The company’s future investments in key growth areas; and

•

The company’s ability to continue to benefit from the ongoing shift toward electronic payments.

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, 2008, the company’s Quarterly Reports on Form 10-Q and Current Reports on Form 8-K that have been filed with the SEC during 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 5

MASTERCARD INCORPORATED

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2009			2008			2009			2008
	(In thousands, except per share data)
Revenues, net	$	1,364,275		$	1,338,178		$	3,800,266		$	3,766,766
Operating Expenses
General and administrative		474,457			515,046			1,428,314			1,498,028
Advertising and marketing		173,828			246,154			470,275			706,798
Litigation settlements		6,245			827,500			6,745			2,476,845
Depreciation and amortization		36,242			28,742			102,950			81,956

Total operating expenses		690,772			1,617,442			2,008,284			4,763,627

Operating income (loss)		673,503			(279,264	)		1,791,982			(996,861	)
Other Income (Expense)
Investment income, net		10,665			22,626			41,696			163,081
Interest expense		(24,098	)		(36,319	)		(91,667	)		(67,075	)
Other income (expense), net		13,324			(715	)		17,707			72,582

Total other income (expense)		(109	)		(14,408	)		(32,264	)		168,588

Income (loss) before income taxes		673,394			(293,672	)		1,759,718			(828,273	)
Income tax expense (benefit)		221,254			(100,090	)		591,489			(334,916	)

Net income (loss)		452,140			(193,582	)		1,168,229			(493,357	)
Loss attributable to non-controlling interests		59			—			302			—


Net Income (Loss) Attributable to MasterCard	$	452,199		$	(193,582	)	$	1,168,531		$	(493,357	)

Basic Earnings (Loss) per Share	$	3.46		$	(1.48	)	$	8.95		$	(3.76	)

Basic Weighted Average Shares Outstanding		129,936			129,536			129,773			130,342

Diluted Earnings (Loss) per Share	$	3.45		$	(1.48	)	$	8.92		$	(3.76	)

Diluted Weighted Average Shares Outstanding		130,359			129,536			130,152			130,342

MasterCard Incorporated – Page 6

MASTERCARD INCORPORATED

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


	September 30, 2009			December 31, 2008
	(In thousands, except share data)
ASSETS
Cash and cash equivalents	$	2,316,391		$	1,505,160
Investment securities, at fair value:
Available-for-sale		629,678			588,095
Municipal bonds held-to-maturity		—			154,000
Accounts receivable		503,472			639,482
Income taxes receivable		—			198,308
Settlement due from customers		427,075			513,191
Restricted security deposits held for customers		260,769			183,245
Prepaid expenses		268,213			213,612
Deferred income taxes		277,967			283,795
Other current assets		69,102			32,619

Total Current Assets		4,752,667			4,311,507
Property, plant and equipment, at cost (less accumulated depreciation of $311,497 and $278,269)		450,915			306,798
Deferred income taxes		358,781			567,567
Goodwill		314,430			297,993
Other intangible assets (less accumulated amortization of $412,170 and $377,570)		410,533			394,282
Auction rate securities available-for-sale, at fair value		196,350			191,760
Municipal bonds held-to-maturity		36,400			37,450
Prepaid expenses		322,014			302,095
Other assets		97,258			66,397

Total Assets	$	6,939,348		$	6,475,849

LIABILITIES AND EQUITY
Accounts payable	$	277,715		$	253,276
Settlement due to customers		424,383			541,303
Restricted security deposits held for customers		260,769			183,245
Obligations under litigation settlements		614,220			713,035
Accrued expenses		1,048,064			1,032,061
Short-term debt		—			149,380
Other current liabilities		166,181			118,151

Total Current Liabilities		2,791,332			2,990,451
Deferred income taxes		76,186			74,518
Obligations under litigation settlements		396,117			1,023,263
Long-term debt		21,690			19,387
Other liabilities		428,787			436,255

Total Liabilities		3,714,112			4,543,874
Commitments
Stockholders’ Equity
Class A common stock, $.0001 par value; authorized 3,000,000,000 shares, 116,466,176 and 105,126,588 shares issued and 109,725,586 and 98,385,998 outstanding, respectively		11			10
Class B common stock, $.0001 par value; authorized 1,200,000,000 shares, 19,977,657 and 30,848,778 issued and outstanding, respectively		3			4
Class M common stock, $.0001 par value; authorized 1,000,000 shares, 1,803 and 1,728 shares issued and outstanding, respectively		—			—
Additional paid-in-capital		3,384,280			3,304,604
Class A treasury stock, at cost, 6,740,590 shares, respectively		(1,250,000	)		(1,250,000	)
Retained earnings (accumulated deficit)		873,424			(236,100	)
Accumulated other comprehensive income:
Cumulative foreign currency translation adjustments		254,004			175,040
Defined benefit pension and other postretirement plans, net of tax		(40,084	)		(43,207	)
Investment securities available-for-sale, net of tax		(4,115	)		(22,996	)

Total accumulated other comprehensive income		209,805			108,837

Total Stockholders’ Equity		3,217,523			1,927,355
Non-controlling interests		7,713			4,620

Total Equity		3,225,236			1,931,975

Total Liabilities and Equity	$	6,939,348		$	6,475,849

MasterCard Incorporated – Page 7

MASTERCARD INCORPORATED

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	Nine Months Ended September 30,
	2009			2008
	(In thousands)
Operating Activities
Net income (loss)	$	1,168,229		$	(493,357	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		102,950			81,956
Gain on sale of Redecard S.A. available-for-sale securities		—			(85,903	)
Share based payments		69,487			44,217
Stock units withheld for taxes		(27,884	)		(66,095	)
Tax benefit for share based compensation		(32,249	)		(48,901	)
Impairment of assets		15,991			10,600
Accretion of imputed interest on litigation settlements		72,573			47,490
Deferred income taxes		204,298			(531,454	)
Other		(13,044	)		9,482
Changes in operating assets and liabilities:
Trading securities		—			2,561
Accounts receivable		162,364			(75,851	)
Income taxes receivable		190,000			(256,469	)
Settlement due from customers		94,664			74,875
Prepaid expenses		(58,332	)		(134,762	)
Other current assets		(43,789	)		(9,759	)
Obligations under litigation settlements		(784,463	)		2,361,248
Accounts payable		20,859			(31,871	)
Settlement due to customers		(124,564	)		(58,448	)
Accrued expenses		25,347			41,914
Net change in other assets and liabilities		51,480			49,111

Net cash provided by operating activities		1,093,917			930,584

Investing Activities
Purchases of property, plant and equipment		(37,319	)		(51,250	)
Capitalized software		(59,112	)		(71,267	)
Purchases of investment securities available-for-sale		(104,620	)		(495,606	)
Proceeds from sales and maturities of investment securities, available-for-sale		84,279			851,987
Investment in affiliates		(16,043	)		—
Acquisition of business, net of cash acquired		(2,913	)		—
Other investing activities		(4,688	)		(2,223	)

Net cash provided by (used in) investing activities		(140,416	)		231,641

Financing Activities
Dividends paid		(59,019	)		(59,576	)
Exercise of stock options		5,791			9,335
Tax benefit for share based compensation		32,249			48,901
Purchase of treasury stock		—			(649,468	)
Payment of debt		(149,380	)		(80,000	)
Redemption of non-controlling interest		(4,620	)		—

Net cash used in financing activities		(174,979	)		(730,808	)

Effect of exchange rate changes on cash and cash equivalents		32,709			(19,255	)

Net increase in cash and cash equivalents		811,231			412,162
Cash and cash equivalents — beginning of period		1,505,160			1,659,295

Cash and cash equivalents — end of period	$	2,316,391		$	2,071,457

MasterCard Incorporated – Page 8

MASTERCARD INCORPORATED OPERATING PERFORMANCE


	For the 3 Months ended September 30, 2009
	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
APMEA	$	127	15.4	%	18.2	%	$86	16.2	%	1,080	$41	22.5	%	302	239	262	8.7
Canada		24	-10.2	%	-5.2	%	22	-2.7	%	263	3	-20.4	%	5	37	45	0.8
Europe		190	-9.7	%	0.2	%	143	1.6	%	1,746	48	-3.8	%	276	183	197	8.7
Latin America		45	-6.4	%	11.1	%	25	12.0	%	468	20	10.0	%	150	97	119	3.1
United States		247	-8.0	%	-8.0	%	204	-6.5	%	3,674	42	-14.8	%	263	295	340	8.1
Worldwide		633	-4.7	%	0.3	%	480	0.4	%	7,231	154	-0.3	%	997	851	964	29.4
MasterCard Credit and Charge Programs
United States		133	-18.0	%	-18.0	%	121	-13.9	%	1,508	11	-45.4	%	9	177	211
Worldwide less United States		290	-6.9	%	1.0	%	239	4.1	%	2,943	51	-11.6	%	231	438	497
Worldwide		423	-10.7	%	-5.8	%	361	-2.7	%	4,452	62	-20.7	%	240	615	708
MasterCard Debit Programs
United States		114	7.2	%	7.2	%	83	6.9	%	2,166	31	7.9	%	254	118	130
Worldwide less United States		97	14.0	%	26.5	%	36	23.4	%	613	61	28.3	%	502	118	126
Worldwide		211	10.2	%	15.2	%	119	11.4	%	2,779	92	20.7	%	757	236	255
APMEA = Asia Pacific / Middle East / Africa

	For the 9 Months ended September 30, 2009
	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
APMEA	$	343	8.2	%	16.9	%	$231	15.8	%	3,021	$112	19.3	%	827	239	262
Canada		67	-15.2	%	-3.1	%	58	-1.1	%	742	8	-14.8	%	15	37	45
Europe		516	-13.6	%	2.0	%	386	2.9	%	4,972	130	-0.7	%	818	183	197
Latin America		123	-11.7	%	8.5	%	68	11.2	%	1,371	56	5.3	%	429	97	119
United States		729	-8.6	%	-8.6	%	598	-7.5	%	10,618	131	-13.3	%	780	295	340
Worldwide		1,778	-7.9	%	-0.1	%	1,341	0.0	%	20,723	437	-0.4	%	2,869	851	964
MasterCard Credit and Charge Programs
United States		393	-18.0	%	-18.0	%	354	-14.5	%	4,393	39	-40.1	%	29	177	211
Worldwide less United States		796	-11.0	%	2.5	%	651	5.3	%	8,451	145	-8.5	%	711	438	497
Worldwide		1,190	-13.4	%	-5.3	%	1,005	-2.6	%	12,844	185	-17.7	%	740	615	708
MasterCard Debit Programs
United States		336	5.6	%	5.6	%	244	5.0	%	6,224	92	7.1	%	751	118	130
Worldwide less United States		253	6.3	%	23.3	%	92	20.4	%	1,655	160	24.9	%	1,378	118	126
Worldwide		588	5.9	%	12.5	%	336	8.9	%	7,879	253	17.8	%	2,129	236	255

	For the 3 Months ended September 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
APMEA	$	110	24.5	%	23.1	%	$75	24.5	%	900	$35	20.2	%	231	211	232
Canada		27	16.5	%	16.0	%	24	15.2	%	255	4	21.5	%	6	33	39
Europe		211	24.1	%	17.9	%	155	18.3	%	1,659	56	16.9	%	284	180	194
Latin America		48	24.2	%	15.6	%	26	19.0	%	452	23	12.0	%	143	90	110
United States		268	4.7	%	4.7	%	218	6.7	%	3,480	49	-3.1	%	260	334	389
Worldwide		664	15.3	%	12.7	%	498	13.6	%	6,746	166	10.2	%	924	848	963
MasterCard Credit and Charge Programs
United States		162	-1.2	%	-1.2	%	141	1.5	%	1,596	21	-16.2	%	14	219	265
Worldwide less United States		312	21.4	%	17.4	%	248	19.6	%	2,786	63	9.7	%	260	431	486
Worldwide		473	12.6	%	10.3	%	389	12.3	%	4,382	84	1.9	%	275	650	751
MasterCard Debit Programs
United States		106	15.3	%	15.3	%	78	17.5	%	1,884	28	9.6	%	245	115	124
Worldwide less United States		85	32.8	%	24.4	%	31	20.4	%	480	54	26.8	%	404	83	89
Worldwide		191	22.5	%	19.2	%	109	18.3	%	2,364	82	20.3	%	649	198	213

	For the 9 Months ended September 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
APMEA	$	317	27.1	%	21.8	%	$216	23.6	%	2,541	$101	18.1	%	644	211	232
Canada		79	22.8	%	13.8	%	67	13.9	%	710	11	13.0	%	16	33	39
Europe		598	28.2	%	17.8	%	442	18.2	%	4,674	156	16.6	%	802	180	194
Latin America		140	26.4	%	17.8	%	72	20.5	%	1,304	67	15.1	%	420	90	110
United States		798	6.6	%	6.6	%	646	8.3	%	10,222	151	-0.1	%	771	334	389
Worldwide		1,930	17.8	%	13.3	%	1,444	14.2	%	19,451	487	10.8	%	2,653	848	963
MasterCard Credit and Charge Programs
United States		479	1.2	%	1.2	%	414	3.3	%	4,675	65	-10.6	%	45	219	265
Worldwide less United States		895	25.8	%	17.6	%	711	19.7	%	7,897	184	9.9	%	758	431	486
Worldwide		1,374	16.0	%	11.3	%	1,125	13.1	%	12,572	249	3.7	%	803	650	751
MasterCard Debit Programs
United States		318	15.9	%	15.9	%	232	18.3	%	5,547	86	9.7	%	726	115	124
Worldwide less United States		238	33.2	%	22.6	%	87	17.4	%	1,332	151	25.9	%	1,123	83	89
Worldwide		556	22.7	%	18.7	%	319	18.1	%	6,878	237	19.5	%	1,850	198	213

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 9

Footnote

The tables set forth the gross dollar volume (“GDV”), purchase volume, cash volume and the number of purchase transactions, cash transactions, accounts, cards and acceptance locations on a regional and global basis for MasterCard^®-branded and MasterCard Electronic™-branded cards. Growth rates over prior periods are provided for volume-based data.

Debit transactions on Maestro^® and Cirrus^®-branded cards, Mondex^® transactions and transactions involving brands other than MasterCard are not included in the preceding tables.

For purposes of the table: GDV represents purchase volume plus cash volume and includes the impact of balance transfers and convenience checks; “purchase volume” means the aggregate dollar amount of purchases made with MasterCard-branded cards for the relevant period; and “cash volume” means the aggregate dollar amount of cash disbursements obtained with MasterCard-branded cards for the relevant period. The number of cards includes virtual cards, which are MasterCard-branded payment accounts in connection with which functional cards are not generally issued. Acceptance locations include merchant locations, ATMs and other locations where cash may be obtained.

The MasterCard payment product is comprised of credit, charge and debit programs, and data relating to each type of program is included in the tables. Debit programs include MasterCard-branded debit programs where the primary means of cardholder validation at the point of sale is for cardholders either to sign a sales receipt or enter a PIN. The tables include information with respect to transactions involving MasterCard-branded cards that are not processed by MasterCard and transactions for which MasterCard does not earn significant revenues.

Information denominated in U.S. dollars is calculated by applying an established U.S. dollar/local currency exchange rate for each local currency in which MasterCard volumes are reported. These exchange rates are calculated on a quarterly basis using the average exchange rate for each quarter. MasterCard reports period-over-period rates of change in purchase volume and cash volume on the basis of local currency information, in order to eliminate the impact of changes in the value of foreign currencies against the U.S. dollar in calculating such rates of change.

The data set forth in the GDV, purchase volume, purchase transactions, cash volume and cash transactions columns is provided by MasterCard customers and is subject to verification by MasterCard and partial cross-checking against information provided by MasterCard’s transaction processing systems. The data set forth in the accounts and cards columns is provided by MasterCard customers and is subject to certain limited verification by MasterCard. A portion of the data set forth in the accounts and cards columns reflects the impact of routine portfolio changes among customers and other practices that may lead to over counting of the underlying data in certain circumstances. In order to provide a true indication of how broadly our cards can be used, MasterCard seeks to provide the most accurate acceptance figures possible and to maintain that MasterCard acceptance is unsurpassed worldwide by periodically validating our results with third parties. The data set forth in the acceptance locations column is derived through a proprietary methodology designed to minimize the impact of multiple acquiring in certain markets. This data is based on information provided by our customers and other third parties and is subject to certain limited verification by MasterCard and partial cross-checking against information provided by MasterCard’s transaction processing systems. All data is subject to revision and amendment by MasterCard’s customers subsequent to the date of its release.

Performance information for prior periods can be found in the “Investor Relations” section of MasterCard’s website at www.mastercard.com.

MasterCard Incorporated – Page 10

GAAP Reconciliations


($ millions except percentages and per share data)	Three Months ended September 30, 2009									Three Months ended September 30, 2008
	Actual			Special Items			Non - GAAP			Actual			Special Items			Non - GAAP
Litigation settlements	$	6		$	(6	) a	$	—		$	828		$	(828	) a	$	—
Total operating expenses		691			(6	)		685			1,617			(828	)		790
Operating income (loss)		674			6			680			(279	)		828			548
Operating Margin		49.4	%					49.8	%		(20.9	%)					41.0	%
Income (loss) before income taxes		673			6			680			(294	)		828			534
Income taxes (benefit)		221			2			224			(100	)		312			212
Net Income (Loss)	$	452		$	4		$	456		$	(194	)	$	516		$	322

Basic Net Income (Loss) per Share	$	3.46		$	0.03		$	3.49		$	(1.48	) c	$	3.94		$	2.46	c
Diluted Net Income (Loss) per Share	$	3.45		$	0.03		$	3.48		$	(1.48	) c	$	3.94		$	2.46	c

	Nine Months ended September 30, 2009									Nine Months ended September 30, 2008
	Actual			Special Items			Non - GAAP			Actual			Special Items			Non - GAAP
Litigation settlements	$	7		$	(7	) a	$	—		$	2,477		$	(2,477	) a	$	—
Total operating expenses		2,008			(7	)		2,002			4,764			(2,477	)		2,287
Operating income (loss)		1,792			7			1,799			(997	)		2,477			1,480
Operating Margin		47.2	%					47.3	%		(26.5	%)					39.3	%
Other income (expense), net		18			—			18			73			(75	) b		(2	)
Total other income (expense)		(32	)		—			(32	)		169			(75	)		94
Income (loss) before income taxes		1,760			7			1,766			(828	)		2,402			1,574
Income taxes (benefit)		591			2			594			(335	)		913			578
Net Income (Loss)	$	1,169		$	4		$	1,173		$	(493	)	$	1,489		$	996

Basic Net Income (Loss) per Share	$	8.95		$	0.03		$	8.98		$	(3.76	) c	$	11.34		$	7.58	c
Diluted Net Income (Loss) per Share	$	8.92		$	0.03		$	8.95		$	(3.76	) c	$	11.32		$	7.56	c

a -	Litigation Settlements

b -	Gain from the termination of a customer business agreement

c -	Amounts have been revised in accordance with the adoption of a new earnings per share accounting standard related to instruments granted in share-based payment transactions on January 1, 2009.

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

MasterCard Incorporated – Page 11

Reconciliation to Effective Tax Rate


(In millions, except percentages)	Actual			Actual Effective Tax Rate		Special Items		Non-GAAP		Non-GAAP Effective Tax Rate
Three months ended September 30, 2008:

Income (loss) before income taxes	$	(294	)	34.1	%	$	828	$	534	39.7	%
Income tax expense (benefit)		(100	)				312		212
Net income (loss)	$	(194	)			$	516	$	322

Nine months ended September 30, 2008:

Income (loss) before income taxes	$	(828	)	40.4	%	$	2,402	$	1,574	36.7	%
Income tax expense (benefit)		(335	)				913		578
Net income (loss)	$	(493	)			$	1,489	$	996

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 November 3, 2009.

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