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MasterCard Incorporated Reports Second-Quarter 2007 Financial Results
  • Quarterly net income up 93.1% to $195 million, or $1.43 per share, excluding special items
  • Quarterly net income of $252 million, or $1.85 per share, including special items
  • Quarterly net revenues up 17.8% to $997 million
  • Gross dollar volume up 13.3%; purchase volume up 14.8%

PURCHASE, N.Y., Aug. 1 /PRNewswire-FirstCall/ -- MasterCard Incorporated (NYSE: MA) today announced financial results for second-quarter 2007. For the quarter, the company reported net income of $195 million, or $1.43 per share on a diluted basis, excluding special items, and net income of $252 million, or $1.85 per share on a diluted basis, including special items. The company's total operating expenses, total 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.

(Logo: http://www.newscom.com/cgi-bin/prnh/20061031/MCLOGO )

Net revenues for the quarter were $997 million, a 17.8% increase versus the same period in 2006. Currency fluctuation (driven by the movement of the euro relative to the US dollar) contributed approximately 2.0% of the increase in revenues for the quarter.

Fueling the higher revenue in the second quarter versus the same period in 2006 was growth in MasterCard's gross dollar volume (GDV), which increased 13.3%, on a local currency basis, to $555 billion; a 15.2% increase in the number of transactions processed to 4.6 billion; and, an increase in cross-border transaction volumes of 17.3%. Worldwide purchase volume rose 14.8%, on a local currency basis, during the quarter to $414 billion, driven by increased cardholder spending on a growing number of MasterCard cards. As of June 30, 2007, the company's customers had issued 855 million MasterCard cards, an increase of 10.7% percent over the cards issued at June 30, 2006.

"We are very pleased with our second-quarter financial results, which reflect strong growth across all regions and represent the highest quarterly net revenue in MasterCard's history," said Robert W. Selander, MasterCard president and chief executive officer. "This also marked our 13th consecutive quarter of double-digit GDV growth.

"Our evolution over several years to a more rigorous commercial environment as well as our investment in people and technology have helped us achieve success for our customers and for our shareholders, and we remain absolutely committed to both over the years ahead," added Selander.

    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.
For the second quarter of 2006, special items included:
  • A $395 million non-cash expense, resulting from the donation of approximately 13.5 million shares of Class A common stock to the MasterCard Foundation that occurred simultaneously with the company's initial public offering in May 2006, which was not deductible for tax purposes;
  • A $23 million reserve recorded for litigation settlements; and
  • $7 million in interest income earned on the IPO proceeds, ultimately used for redemption of shares of Class B common stock.

Total operating expenses increased 3.2%, to $725 million in the second quarter of 2007 compared to the same period in 2006, excluding special items for both periods mentioned above. This increase was primarily driven by higher personnel costs related to the planned hiring of additional staff and contractors to support the company's customers, an increase in professional fees related to external costs to advance our key strategic initiatives and legal costs to defend outstanding litigation. Offsetting this increase was a 12.6% decrease in advertising and market development expenses reflecting significant World Cup sponsorship activity in the second quarter of 2006, as well as a planned shift in 2007 spending to later quarters this year. On a GAAP basis, which includes special items, operating expenses decreased 35.0%, to $728 million. Currency fluctuation negatively impacted the decrease in total operating expenses by approximately 0.7% for the quarter.

Total other income was $117 million in the second quarter 2007 versus $13 million in the second quarter of 2006, including special items in both periods. The increase was driven by a $92 million increase in other income, primarily related to a settlement received under an agreement to discontinue the company's sponsorship of the 2010 and 2014 World Cup soccer events.

MasterCard's GAAP effective tax rate was 34.7% in the three months ended June 30, 2007, versus the non-GAAP rate of 33.6% in the comparable period in 2006. MasterCard's GAAP effective tax rate in 2006 was significantly impacted by the share donation to the MasterCard Foundation. The year-over-year difference was due to an increase in state income tax liabilities for uncertain tax positions as required under the recently adopted Financial Accounting Standards Board Interpretation No. 48.

Year-to-Date 2007 Results

For the six months ended June 30, 2007, MasterCard reported net income of $410 million, or $3.00 per share, on a diluted basis, excluding the impact of special items. On a GAAP basis, which includes the impact of special items, the company reported net income of $467 million, or $3.42 per share on a diluted basis.

Net revenue for the six months ended June 30, 2007 was $1.9 billion, a 20.6% increase versus the same period in 2006. In addition to growth in GDV, processed transactions and cross-border transaction volumes, this increase was driven by a restructuring of pricing, primarily cross-border transaction pricing implemented in April 2006, which contributed approximately 2.0% of the revenue growth in the year-to-date period. Currency fluctuation contributed approximately 2.3% of the increase in revenues in the year-to-date period.

Total operating expenses increased 5.4%, to $1.3 billion, for the six-month period compared to the same period in 2006, excluding special items for both periods. Including special items, operating expenses decreased 20.7%, to $1.3 billion. Currency fluctuation negatively impacted the decrease in operating expenses by approximately 1.0% in the year-to-date period.

Total other income was $139 million for the six-month period versus $23 million for the same period in 2006, including special items in both periods. The increase was driven by a $92 million increase in other income, primarily related to a settlement received under an agreement to discontinue the company's sponsorship of the 2010 and 2014 World Cup soccer events. Additionally, investment income increased $23 million due to higher cash and short-term investment balances primarily related to the proceeds received from the company's IPO, increases in interest rates and cash generated by the company's business.

MasterCard's GAAP effective tax rate was 35.3% in the six months ended June 30, 2007, versus the non-GAAP rate of 34.0% in the comparable period in 2006. MasterCard's GAAP effective tax rate in 2006 was significantly impacted by the share donation to the MasterCard Foundation. The year-over-year difference was due to an increase in state income tax liabilities for uncertain tax positions as required under the recently adopted Financial Accounting Standards Board Interpretation No. 48.

Second-Quarter 2007 Financial Results Conference Call Details

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

The dial-in information for this call is 866-271-0675 (within the US) and 617-213-8892 (outside the US) and the passcode is 42269597. 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 US) and 617-801-6888 (outside the US) and using passcode 26628850.

The live call and replay, along with supporting materials, can also be accessed through the Investor Relations section of the company's website at www.mastercard.com.

About MasterCard Incorporated

MasterCard Incorporated advances global commerce by providing a critical economic link among financial institutions, businesses, cardholders and merchants worldwide. As a franchisor, processor and advisor, MasterCard develops and markets payment solutions, processes over 16 billion transactions each year, and provides industry-leading analysis and consulting services to financial institution customers and merchants. Through its family of brands, including MasterCard(R), Maestro(R) and Cirrus(R), MasterCard serves consumers and businesses in more than 210 countries and territories. For more information go to www.mastercard.com.

Forward-Looking Statements

Statements in this press release which are not historical facts, including statements about MasterCard's plans, strategies, beliefs and expectations, are forward-looking and subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements speak only as of the date they are made. Accordingly, except for the company's ongoing obligations under the U.S. federal securities laws, the company does not intend to update or otherwise revise the forward-looking information to reflect actual results of operations, changes in financial condition, changes in estimates, expectations or assumptions, changes in general economic or industry conditions or other circumstances arising and/or existing since the preparation of this press release or to reflect the occurrence of any unanticipated events. Such forward-looking statements include, without limitation:

* the company's evolution to a more rigorous commercial environment; and

* the company's investment and commitment to people and technology.

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, 2006, the Company's Quarterly Reports on Form 10-Q and Current Reports on Form 8-K that have been filed with the SEC during 2007, as well as reasons including difficulties, delays or the inability of the company to achieve its strategic initiatives set forth above. Factors other than those listed above could also cause the company's results to differ materially from expected results.



                           MASTERCARD INCORPORATED
                    CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (UNAUDITED)

                                     Three Months              Six Months
                                    Ended June 30,            Ended June 30,
                                 2007          2006        2007        2006
                                  (In thousands, except per share data)

    Revenues, net            $996,959      $846,489  $1,912,062   $1,584,942
    Operating Expenses
    General and
     administrative           431,463       365,161     829,990      712,998
    Advertising and market
     development              268,253       307,066     446,703      489,749
    Litigation settlements      3,400        23,250       3,400       23,250
    Charitable contributions
     to the MasterCard
     Foundation                     -       400,285           -      400,285
    Depreciation and
     amortization              25,027        24,693      49,216       49,913
       Total operating
        expenses              728,143     1,120,455   1,329,309    1,676,195
    Operating income (loss)   268,816      (273,966)    582,753      (91,253)
    Other Income (Expense)
    Investment income, net     36,466        28,999      72,714       49,691
    Interest expense          (11,170)      (16,068)    (25,526)     (26,708)
    Other income, net          92,187           443      92,147          595
      Total other income/
       (expense)              117,483        13,374     139,335       23,578
    Income (loss) before
     income taxes             386,299      (260,592)    722,088      (67,675)
    Income tax expense        134,013        49,868     254,897      116,041
    Net Income (Loss)        $252,286     $(310,460)   $467,191    $(183,716)

    Basic Net Income
     (Loss) per Share           $1.86        $(2.30)      $3.44       $(1.36)

    Basic Weighted Average
     Shares Outstanding       135,865       135,252     135,856      135,127

    Diluted Net Income
     (Loss) per Share           $1.85        $(2.30)      $3.42       $(1.36)

    Diluted Weighted Average
     Shares Outstanding       136,687       135,252     136,643      135,127



                           MASTERCARD INCORPORATED
                         CONSOLIDATED BALANCE SHEETS
                                 (UNAUDITED)

                                                     June 30,    December 31,
                                                      2007           2006
                                             (In thousands, except share data)

                                 ASSETS

    Cash and cash equivalents                     $1,520,323     $1,185,080
    Investment securities, at fair value:
      Trading                                          5,342         12,261
      Available-for-sale                           1,304,920      1,286,580
    Accounts receivable                              480,939        451,261
    Settlement due from members                      276,409        311,953
    Restricted security deposits held for members    122,153        109,897
    Prepaid expenses                                 169,200        130,849
    Other current assets                             109,248         89,348
      Total Current Assets                         3,988,534      3,577,229
    Property, plant and equipment, at cost
     (less accumulated depreciation of
     $236,246 and $220,720)                          269,985        252,731
    Deferred income taxes                            278,337        216,782
    Goodwill                                         222,543        217,013
    Other intangible assets (less accumulated
     amortization of $330,269 and $309,110)          286,289        271,373
    Municipal bonds held-to-maturity                 192,989        193,477
    Prepaid expenses                                 261,849        235,654
    Other assets                                     106,023        118,211
      Total Assets                                $5,606,549     $5,082,470

                LIABILITIES AND STOCKHOLDERS' EQUITY

    Accounts payable                                $236,662       $278,656
    Settlement due to members                        256,602        286,059
    Restricted security deposits held for members    122,153        109,897
    Obligations under U.S. merchant lawsuit
     and other litigation settlements - current      120,675        117,275
    Accrued expenses                                 889,279        936,427
    Short term debt                                   80,000              -
    Other current liabilities                        122,245         83,276
      Total Current Liabilities                    1,827,616      1,811,590
    Deferred income taxes                             67,029         66,198
    Obligations under U.S. merchant lawsuit
     and other litigation settlements                377,799        359,640
    Long-term debt                                   149,647        229,668
    Other liabilities                                325,842        246,395
      Total Liabilities                            2,747,933      2,713,491
    Commitments and Contingencies
    Minority interest                                  4,620          4,620
    Stockholders' Equity
    Class A common stock, $.0001 par value;
     authorized 3,000,000,000 shares, 79,837,897
     and 79,631,983 shares issued and
     outstanding, respectively                             8              8
    Class B common stock, $.0001 par value;
     authorized 1,200,000,000 shares, 55,337,407
     shares issued and outstanding, respectively           6              6
    Class M common stock, $.0001 par value,
     authorized 1,000,000 shares, 1,635 and 1,600
     shares issued and outstanding, respectively           -              -
    Additional paid-in capital                     3,268,457      3,289,879
    Accumulated deficit                             (540,830)    (1,029,196)
    Accumulated other comprehensive income, net of tax:
      Cumulative foreign currency translation
       adjustments                                   144,514        119,655

      Defined benefit pension and other
       postretirement plans                           (9,679)       (11,402)
      Investment securities available-for-sale        (5,966)        (3,065)
      Derivatives accounted for as hedges             (2,514)        (1,526)
    Total accumulated other comprehensive income,
     net of tax                                      126,355        103,662
    Total Stockholders' Equity                     2,853,996      2,364,359
    Total Liabilities and Stockholders' Equity    $5,606,549     $5,082,470



                           MASTERCARD INCORPORATED
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (UNAUDITED)

                                                           Six Months
                                                          Ended June 30,
                                                        2007           2006
                                                          (In thousands)

    Operating Activities
    Net income (loss)                               $467,191      $(183,716)
    Adjustments to reconcile net income to net
     cash provided by operating activities:
      Depreciation and amortization                   49,216         49,913
      Charitable contribution of common stock to
       the MasterCard Foundation                           -        394,785
      Share based payments                            23,382          6,825
      Deferred income taxes                           (1,557)        (7,370)
      Taxes related to share based payments          (11,193)             -
      Excess tax benefit on share based payments      (6,734)             -
      Accretion of imputed interest on litigation
       settlement                                     18,644         20,974
      Other                                            4,620          4,965
      Changes in operating assets and liabilities:
        Trading securities                             6,919          4,648
        Accounts receivable                          (23,141)       (57,398)
        Settlement due from members                   43,000        (16,842)
        Prepaid expenses                             (36,647)       (14,295)
        Other current assets                          (5,067)        (5,082)
        Prepaid expenses, long-term                  (23,392)         3,998
        Litigation settlement accruals                 2,915         23,140
        Accounts payable                             (43,314)        15,818
        Settlement due to members                    (36,166)        20,014
        Accrued expenses                               6,524        (85,614)
        Net change in other assets and liabilities    10,961          8,818
    Net cash provided by operating activities        446,161        183,581
    Investing Activities
      Purchases of property, plant and equipment     (40,942)       (15,670)
      Capitalized software                           (33,741)       (15,886)
      Purchases of investment securities
       available-for-sale                         (1,924,024)    (1,506,806)
      Proceeds from sales and maturities of
       investment securities available-for-sale    1,896,975      1,356,768
      Other investing activities                       5,005         (1,403)
    Net cash used in investing activities            (96,727)      (182,997)
    Financing Activities
      Cash received from sale of common stock,
       net of issuance costs                               -      2,449,910
      Cash payment for redemption of common stock          -     (1,799,937)
      Dividends paid                                 (33,099)             -
      Cash proceeds from exercise of stock options     1,083              -
      Excess tax benefit on share based payments       6,734              -
    Net cash (used in) provided by financing
     activities                                      (25,282)       649,973
    Effect of exchange rate changes on cash and
     cash equivalents                                 11,091         14,026
    Net increase in cash and cash equivalents        335,243        664,583
    Cash and cash equivalents - beginning of
     period                                        1,185,080        545,273
    Cash and cash equivalents - end of period     $1,520,323     $1,209,856



                MASTERCARD INCORPORATED OPERATING PERFORMANCE


                               For the 3 Months ended June 30, 2007

    All MasterCard                                 Purchase           Purchase
    Credit, Charge and     GDV     Growth  Growth   Volume    Growth   Trans.
    Debit Programs        (Bil.)   (USD)  (Local)   (Bil.)    (Local)  (Mil.)

     Asia Pacific          $73     18.5%   15.1%      $50     20.2%     620
     Canada                 22     18.2%   15.6%       19     15.1%     216
     Europe                157     23.2%   14.3%      116     14.7%   1,390
     Latin America          37     27.3%   22.1%       18     24.0%     374
     South Asia /
      Middle East /
      Africa                10     41.1%   44.6%        6     32.3%      84
     United States         255      9.8%    9.8%      205     12.4%   3,184
     Worldwide             555     16.4%   13.3%      414     14.8%   5,868

    MasterCard Credit and
    Charge Programs
     United States         162      5.5%    5.5%      138      7.5%   1,578
     Worldwide less
      United States        241     21.6%   15.3%      186     17.8%   2,292
     Worldwide             403     14.5%   11.1%      325     13.1%   3,870

    MasterCard Debit Programs
     United States          92     18.5%   18.5%       67     24.2%   1,606
     Worldwide less
      United States         59     27.5%   20.6%       23     13.1%     391
     Worldwide             151     21.8%   19.3%       89     21.2%   1,997


    All MasterCard        Cash             Cash                     Acceptance
    Credit, Charge      Volume    Growth  Trans.  Accounts   Cards  Locations
    and Debit Programs   (Bil.)  (Local)  (Mil.)   (Mil.)    (Mil.)  (Mil.)

     Asia Pacific        $23      5.4%     132      151       164     6.6
     Canada                3     18.1%       5       28        34     0.7
     Europe               41     13.0%     246      152       164     8.0
     Latin America        19     20.3%     126       75        91     2.4
     South Asia /
      Middle East /
      Africa               5     63.3%      38       26        29     0.8
     United States        50      0.5%     248      319       372     6.9
     Worldwide           141      9.0%     794      750       855    25.4

    MasterCard Credit
    and Charge Programs
     United States        24     -4.8%      17      219       268
     Worldwide less
      United States       55      7.8%     258      373       420
     Worldwide            79      3.6%     275      593       688

    MasterCard Debit Programs
     United States        26      5.9%     231       99       104
     Worldwide less
      United States       36     25.9%     288       58        62
     Worldwide            62     16.8%     519      157       167



                                  For the 6 Months ended June 30, 2007

    All MasterCard                                 Purchase           Purchase
    Credit, Charge and     GDV     Growth  Growth   Volume    Growth   Trans.
    Debit Programs        (Bil.)   (USD)  (Local)   (Bil.)   (Local)   (Mil.)
     Asia Pacific         $141     18.5%   15.1%      $96     20.2%   1,206
     Canada                 41     15.6%   15.0%       34     14.5%     404
     Europe                298     24.1%   14.8%      221     15.3%   2,667
     Latin America          72     24.7%   23.0%       35     25.4%     729
     South Asia /
      Middle East /
      Africa                19     38.8%   45.8%       11     33.7%     165
     United States         492     12.6%   12.6%      392     15.0%   6,109
     Worldwide           1,063     17.7%   14.7%      789     16.3%  11,279

    MasterCard Credit
    and Charge Programs
     United States         310      4.9%    4.9%      262      7.6%   3,002
     Worldwide less
      United States        459     21.3%   15.5%      354     18.1%   4,412
     Worldwide             769     14.1%   11.0%      616     13.4%   7,414

     MasterCard Debit Programs
     United States         182     28.5%   28.5%      130     33.6%   3,107
     Worldwide less
      United States        112     27.8%   21.9%       43     13.6%     758
     Worldwide             294     28.3%   25.9%      173     28.0%   3,865


    All MasterCard        Cash                   Cash
    Credit, Charge      Volume       Growth     Trans.      Accounts  Cards
    and Debit Programs   (Bil.)     (Local)      (Mil.)      (Mil.)   (Mil.)

     Asia Pacific        $45         5.6%         255         151      164
     Canada                6        17.5%          10          28       34
     Europe               77        13.3%         469         152      164
     Latin America        37        20.9%         245          75       91
     South Asia /
      Middle East /
      Africa               9        64.4%          73          26       29
     United States       100         4.1%         487         319      372
     Worldwide           275        10.5%       1,540         750      855
    MasterCard Credit
    and Charge Programs
     United States        48        -7.5%          33         219      268
     Worldwide less
      United States      106         7.3%         500         373      420
     Worldwide           154         2.2%         533         593      688

    MasterCard Debit Programs
     United States        52        17.5%         455          99      104
     Worldwide less
      United States       69        27.8%         552          58       62
     Worldwide           121        23.1%       1,007         157      167


                              For the 3 Months ended June 30, 2006

    All MasterCard                                 Purchase           Purchase
    Credit, Charge and     GDV    Growth  Growth    Volume    Growth   Trans.
    Debit Programs        (Bil.)   (USD)  (Local)   (Bil.)   (Local)   (Mil.)

     Asia Pacific          $61     10.1%   10.2%      $40     16.3%     510
     Canada                 19     25.9%   13.8%       16     15.6%     193
     Europe                128     13.2%   14.4%       94     14.4%   1,234
     Latin America          29     28.6%   26.9%       14     30.7%     316
     South Asia /
      Middle East /
      Africa                 7     48.5%   50.0%        4     35.6%      69
     United States         232     17.9%   17.9%      182     18.6%   2,742
     Worldwide             476     16.8%   16.6%      351     17.7%   5,063
    MasterCard Credit and
    Charge Programs
     United States         154      8.8%    8.8%      129      9.6%   1,483
     Worldwide less
      United States        198     14.9%   14.3%      150     17.0%   1,976
     Worldwide             352     12.1%   11.8%      278     13.5%   3,459

    MasterCard Debit Programs
     United States          78     41.2%   41.2%       54     47.6%   1,259
     Worldwide less
      United States         46     19.6%   20.3%       19     13.8%     345
     Worldwide             124     32.3%   32.6%       72     37.0%   1,604



    All MasterCard        Cash                   Cash
    Credit, Charge      Volume       Growth     Trans.      Accounts  Cards
    and Debit Programs   (Bil.)     (Local)      (Mil.)      (Mil.)   (Mil.)

     Asia Pacific        $21         0.2%         109         136      149
     Canada                3         3.7%           5          25       31
     Europe               34        14.4%         222         130      139
     Latin America        15        23.6%         112          66       79
     South Asia /
      Middle East /
      Africa               3        79.8%          25          19       22
     United States        50        15.3%         240         299      352
     Worldwide           125        13.8%         712         675      772

    MasterCard Credit and
    Charge Programs
     United States        25         4.7%          16         212      259
     Worldwide less
      United States       48         6.8%         239         330      371
     Worldwide            74         6.1%         255         542      630

    MasterCard Debit Programs
     United States        24        28.9%         224          87       93
     Worldwide less
      United States       27        25.2%         233          46       50
     Worldwide            52        26.9%         457         133      142


                                For the 6 Months ended June 30, 2006

    All MasterCard                                 Purchase           Purchase
    Credit, Charge and     GDV    Growth  Growth    Volume    Growth   Trans.
    Debit Programs        (Bil.)   (USD)  (Local)   (Bil.)   (Local)   (Mil.)

     Asia Pacific         $119      7.3%    8.5%      $78     15.3%     986
     Canada                 35     25.2%   15.4%       30     16.9%     360
     Europe                240     10.2%   14.9%      177     14.8%   2,367
     Latin America          57     32.7%   27.4%       27     30.9%     610
     South Asia /
      Middle East /
      Africa                14     49.5%   51.5%        9     34.4%     132
     United States         437     15.6%   15.6%      341     16.8%   5,086
     Worldwide             903     14.6%   15.5%      661     16.8%   9,542

    MasterCard Credit and
    Charge Programs
     United States         296      8.2%    8.2%      244      9.5%   2,814
     Worldwide less
      United States        379     12.8%   14.4%      285     17.1%   3,793
     Worldwide             674     10.7%   11.6%      529     13.5%   6,607

     MasterCard Debit Programs
     United States         142     34.9%   34.9%       97     40.1%   2,273
     Worldwide less
      United States         87     17.8%   20.3%       35     14.2%     663
     Worldwide             229     27.8%   28.9%      132     32.1%   2,935


    All MasterCard        Cash                   Cash
    Credit, Charge      Volume       Growth     Trans.      Accounts  Cards
    and Debit Programs   (Bil.)     (Local)      (Mil.)      (Mil.)   (Mil.)

     Asia Pacific        $42        -2.2%         212         136      149
     Canada                5         7.8%           9          25       31
     Europe               63        15.2%         421         130      139
     Latin America        31        24.4%         218          66       79
     South Asia /
      Middle East /
      Africa               5        90.1%          46          19       22
     United States        97        11.7%         444         299      352
     Worldwide           242        12.2%       1,352         675      772

    MasterCard Credit and
    Charge Programs
     United States        52         2.5%          32         212      259
     Worldwide less
      United States       94         6.8%         466         330      371
     Worldwide           146         5.2%         498         542      630

    MasterCard Debit Programs
     United States        45        24.8%         413          87       93
     Worldwide less
      United States       52        24.9%         441          46       50
     Worldwide            97        24.8%         854         133      142

Note that columns in the tables above may not add due to rounding; growth represents change from the comparable year-ago period.

Footnote

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

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

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

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

Information denominated in U.S. dollars is calculated by applying an established U.S. dollar/local currency exchange rate for each local currency in which MasterCard volumes are reported. These exchange rates are calculated on a quarterly basis using the average exchange rate for each quarter. However, 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 derived from information provided by MasterCard members that 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, cards and acceptance locations columns is derived from information provided by MasterCard members and is subject to certain limited verification by MasterCard. Certain information with respect to acceptance locations is provided by third parties and has not been independently verified by MasterCard. All data is subject to revision and amendment by MasterCard's members subsequent to the date of its release. A portion of the data set forth in the accounts and cards columns reflects the impact of routine portfolio changes among members and other practices that may lead to over counting of the underlying data in certain circumstances.

In the three and six months ended June 30, 2007, GDV excludes commercial funds transfers in China, which are generally transactions that facilitate the transfer of funds between bank branches, but do not involve traditional cash withdrawals or balance transfers. Data for the comparable periods in 2006 have been updated to be consistent with this approach.

Performance information for prior periods may be found in the "Investor Relations" section of MasterCard's website at www.mastercard.com.



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

    ($ million)                           For the three months ended 6/30/07
                                                         Special
                                              Actual       Items   As Adjusted
    Revenues, net                              $997           -        $997
    Operating Expenses
    General and administrative                  432           -         432
    Advertising and marketing                   268           -         268
    Litigation settlements                        3           3 a         -
    Charitable contributions to the
     MasterCard Foundation                        -           -           -
    Depreciation and amortization                25           -          25
      Total operating expenses                  728           3         725
    Operating income (expense)                  269           3         272
      Operating Margin                        27.0%           -       27.3%
    Other Income (Expense)
    Investment income, net                       36           -          36
    Interest expense                            (11)          -         (11)
    Other income, net                            92          90 e         2
      Total other income (expense)              117          90          27
    Income (loss) before income taxes           386         (87)        299
    Income tax expense (benefit)                134         (30)        104
    Net Income (loss)                          $252        ($57)       $195

    Basic Net Income (Loss) per Share         $1.86      ($0.42)      $1.44
    Diluted Net Income (Loss) per Share       $1.85      ($0.42)      $1.43


                               For the three months ended 6/30/06      YOY
    ($ million)                                                      Growth
                                             Special        As         As
                               Actual         Items      Adjusted   Adjusted
    Revenues, net                $846            -         $846        17.8%
    Operating Expenses
    General and administrative    365            -          365        18.2%
    Advertising and marketing     307            -          307       (12.6%)
    Litigation settlements         23           23 a          -           NM
    Charitable contributions to
     the MasterCard Foundation    400          395 b          5 c         NM
    Depreciation and
     amortization                  25            -           25         0.0%
      Total operating expenses  1,120          418          702         3.2%
    Operating income (expense)   (274)         418          144        88.9%
      Operating Margin         (32.4%)           -        17.0%    10.3 ppt.
    Other Income (Expense)
    Investment income, net         29           (7)d         22        63.6%
    Interest expense              (16)           -          (16)       31.3%
    Other income, net               -            -            -           NM
      Total other income
       (expense)                   13           (7)           6       350.0%
    Income (loss) before
     income taxes                (261)         411          150        99.3%
    Income tax expense
     (benefit)                     50            - f         50       108.0%
    Net Income (loss)           ($310)        $411         $101        93.1%

    Basic Net Income (Loss)
     per Share                 ($2.30)       $3.04        $0.74        94.1%
    Diluted Net Income
     (Loss) per Share          ($2.30)       $3.04        $0.74        93.0%



    ($ million)                              For the six months ended 6/30/07
                                                          Special
                                               Actual      Items   As Adjusted
    Revenues, net                             $1,912          -      $1,912
    Operating Expenses
    General and administrative                   830          -         830
    Advertising and marketing                    447          -         447
    Litigation settlements                         3          3 a        -
    Charitable contributions to the
     MasterCard Foundation                          -         -          -
    Depreciation and amortization                 49          -          49
    Total operating expenses                   1,329          3       1,326
    Operating income (expense)                   583          3         586
    Operating Margin                           30.5%          -       30.6%
    Other Income (Expense)
    Investment income, net                        73                     73
    Interest expense                             (26)         -         (26)
    Other income, net                             92         90 e         2
    Total other income (expense)                 139         90          49
    Income (loss) before income taxes            722        (87)        635
    Income tax expense (benefit)                 255        (30)        225
    Net Income (loss)                           $467       ($57)       $410

    Basic Net Income (Loss) per Share          $3.44     ($0.42)      $3.02
    Diluted Net Income (Loss) per Share        $3.42     ($0.42)      $3.00



                                 For the six months ended 6/30/06       YOY
    ($ million)                                                        Growth
                                               Special        As         As
                                 Actual         Items      Adjusted   Adjusted

    Revenues, net                 $1,585           -        $1,585      20.6%
    Operating Expenses
    General and administrative       713                       713      16.4%
    Advertising and marketing        490           -           490      (8.8%)
    Litigation settlements            23          23 a           -         NM
    Charitable contributions to
     the MasterCard Foundation       400         395 b           5 c       NM
    Depreciation and amortization     50           -            50      (1.4%)
      Total operating expenses     1,676         418         1,258       5.4%
    Operating income (expense)       (91)        418           327      79.2%
      Operating Margin             (5.7%)          -         20.6%    10 ppt.
    Other Income (Expense)
    Investment income, net            50          (7)d          43      69.8%
    Interest expense                 (27)          -           (27)      3.7%
    Other income, net                  -           -             -         NM
      Total other income (expense)    23          (7)           16     206.3%
    Income (loss) before
     income taxes                    (68)        411           343      85.1%
    Income tax expense (benefit)     116           - f         116      94.0%
    Net Income (loss)              ($184)       $411          $227      80.6%

    Basic Net Income (Loss)
     per Share                    ($1.36)      $3.04         $1.68      79.6%
    Diluted Net Income (Loss)
     per Share                    ($1.36)      $3.04         $1.68      78.6%

    a  Litigation settlements
    b  Contribution of stock to the MasterCard Foundation
    c  Contribution of cash to the MasterCard Foundation
    d  Interest income on IPO proceeds held for redemption
    e  Other income related to a settlement agreement to discontinue the
       company's sponsorship of the 2010 and 2014 World Cup soccer events
    f  Net tax effect of all special items for 2006 is negligible

    NM = Not meaningful
    Note that the figures in the preceding tables may not sum due to rounding.


    Reconciliation to Effective Tax Rate

                          GAAP      GAAP       Stock      Non-GAAP   Non-GAAP
                         Actual   Effective   Donation    Adjusted   Effective
                                  Tax Rate                           Tax Rate

    Three months ended
     June 30, 2006:
    Income (Loss) before
     income taxes         $(261)    19.1%        $395       $134      33.6%
    Income tax
     expense(1)              50                               45
    Net Income (Loss)     $(310)                             $89

    Six months ended
     June 30, 2006:
    Income (Loss) before
     income taxes          $(68)   171.5%        $395       $327      34.0%
    Income tax
     expense(1)             116                              111
    Net Income (Loss)     $(184)                            $216

    (1) Income tax expense has been calculated with and without the impact of
        the stock donation.

    Note that the figures in the preceding table 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 August 1, 2007.

SOURCE MasterCard Incorporated

CONTACT: Investor Relations: Barbara Gasper,
investor_relations@mastercard.com, +1-914-249-4565, Media Relations: Chris Monteiro, chris_monteiro@mastercard.com, +1-914-249-5826