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MasterCard provides services in more than 210 countries and territories
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| MasterCard Incorporated Reports Fourth-Quarter and Full-Year 2008 Financial Results |
| PURCHASE, N.Y., Feb 05, 2009 /PRNewswire-FirstCall via COMTEX/ -- - 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% 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. (Logo: http://www.newscom.com/cgi-bin/prnh/20061031/MCLOGO ) 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. "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 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. 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. 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(R), Maestro(R) and Cirrus(R), MasterCard serves consumers and businesses in more than 210 countries and territories. For more information go to www.mastercard.com. Forward-Looking Statements Statements in this press release which are not historical facts, including statements about MasterCard's plans, strategies, beliefs and expectations, are forward-looking and subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements speak only as of the date they are made. Accordingly, except for the company's ongoing obligations under the U.S. federal securities laws, the company does not intend to update or otherwise revise the forward-looking information to reflect actual results of operations, changes in financial condition, changes in estimates, expectations or assumptions, changes in general economic or industry conditions or other circumstances arising and/or existing since the preparation of this press release or to reflect the occurrence of any unanticipated events. Such forward-looking statements include, without limitation:
-- The company's ability to 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.
MASTERCARD INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Twelve Months
Ended December 31, 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
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
December 31, December 31,
2008 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
========== ==========
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
========== ========== ==========
MASTERCARD INCORPORATED OPERATING PERFORMANCE
For the 3 Months ended December 31, 2008
Purchase
All MasterCard Credit, GDV Growth Growth Volume
Charge and Debit Programs (Bil.) (USD) (Local) (Bil.)
----------------------------------------
Asia Pacific $91 3.8% 14.6% $65
Canada 23 -15.1% 5.3% 20
Europe 176 -7.1% 8.3% 130
Latin America 44 -6.0% 11.4% 24
South Asia / Middle East / Africa 14 9.3% 30.6% 7
United States 256 -5.2% -5.2% 210
Worldwide 605 -4.7% 3.4% 455
MasterCard Credit and Charge Programs
United States 152 -11.4% -11.4% 133
Worldwide less United States 272 -6.6% 8.9% 218
Worldwide 424 -8.4% 0.6% 351
MasterCard Debit Programs
United States 104 5.8% 5.8% 77
Worldwide less United States 77 4.5% 18.2% 27
Worldwide 181 5.2% 10.7% 104
For the 3 Months ended December 31, 2008
Purchase Cash
All MasterCard Credit, Growth Trans. Volume Growth
Charge and Debit Programs (Local) (Mil.) (Bil.) (Local)
----------------------------------------
Asia Pacific 17.8% 844 $26 7.1%
Canada 6.4% 256 3 -1.6%
Europe 7.6% 1,663 46 10.5%
Latin America 13.3% 486 21 9.3%
South Asia / Middle East / Africa 16.2% 103 7 47.5%
United States -4.6% 3,504 47 -7.6%
Worldwide 3.1% 6,856 149 4.4%
MasterCard Credit and Charge Programs
United States -9.6% 1,594 19 -22.7%
Worldwide less United States 10.7% 2,859 54 2.3%
Worldwide 2.0% 4,453 72 -5.7%
MasterCard Debit Programs
United States 5.5% 1,910 28 6.6%
Worldwide less United States 11.7% 493 49 22.1%
Worldwide 7.1% 2,403 77 16.0%
For the 3 Months ended December 31, 2008
Cash Acceptance
All MasterCard Credit, Trans. Accounts Cards Locations
Charge and Debit Programs (Mil.) (Mil.) (Mil.) (Mil.)
----------------------------------------
Asia Pacific 180 181 198 7.7
Canada 5 35 40 0.8
Europe 272 181 195 8.3
Latin America 149 95 115 2.8
South Asia / Middle East / Africa 57 38 42 1.0
United States 249 344 389 7.9
Worldwide 912 874 981 28.5
MasterCard Credit and Charge Programs
United States 13 226 263
Worldwide less United States 252 440 495
Worldwide 265 666 758
MasterCard Debit Programs
United States 235 118 126
Worldwide less United States 411 90 97
Worldwide 647 208 223
For the 12 Months ended December 31, 2008
Purchase
All MasterCard Credit, GDV Growth Growth Volume
Charge and Debit Programs (Bil.) (USD) (Local) (Bil.)
----------------------------------------
Asia Pacific $366 19.7% 18.5% $260
Canada 102 11.5% 11.7% 87
Europe 774 18.0% 15.5% 573
Latin America 184 16.6% 16.1% 96
South Asia / Middle East / Africa 53 24.4% 32.6% 27
United States 1,054 3.5% 3.5% 856
Worldwide 2,533 11.5% 10.7% 1,899
MasterCard Credit and Charge Programs
United States 631 -2.2% -2.2% 547
Worldwide less United States 1,167 16.5% 15.5% 929
Worldwide 1,798 9.2% 8.6% 1,476
MasterCard Debit Programs
United States 422 13.2% 13.2% 309
Worldwide less United States 313 23.9% 20.6% 114
Worldwide 735 17.5% 16.2% 423
For the 12 Months ended December 31, 2008
Purchase Cash
All MasterCard Credit, Growth Trans. Volume Growth
Charge and Debit Programs (Local) (Mil.) (Bil.) (Local)
----------------------------------------
Asia Pacific 22.0% 3,104 $106 10.7%
Canada 12.1% 967 14 9.7%
Europe 15.7% 6,369 201 14.7%
Latin America 18.6% 1,788 88 13.6%
South Asia / Middle East / Africa 23.0% 385 26 44.1%
United States 4.8% 13,726 198 -2.0%
Worldwide 11.3% 26,338 634 8.9%
MasterCard Credit and Charge Programs
United States -0.1% 6,270 84 -13.6%
Worldwide less United States 17.5% 10,772 237 8.4%
Worldwide 10.3% 17,042 322 1.6%
MasterCard Debit Programs
United States 14.8% 7,456 114 8.9%
Worldwide less United States 16.1% 1,840 199 23.3%
Worldwide 15.2% 9,296 313 17.6%
For the 12 Months ended December 31, 2008
All MasterCard Credit, Cash Trans. Accounts Cards
Charge and Debit Programs (Mil.) (Mil.) (Mil.)
----------------------------------------
Asia Pacific 663 181 198
Canada 21 35 40
Europe 1,069 181 195
Latin America 568 95 115
South Asia / Middle East / Africa 205 38 42
United States 1,019 344 389
Worldwide 3,546 874 981
MasterCard Credit and Charge Programs
United States 58 226 263
Worldwide less United States 1,009 440 495
Worldwide 1,067 666 758
MasterCard Debit Programs
United States 962 118 126
Worldwide less United States 1,517 90 97
Worldwide 2,479 208 223
For the 3 Months ended December 31, 2007
Purchase
All MasterCard Credit, GDV Growth Growth Volume
Charge and Debit Programs (Bil.) (USD) (Local) (Bil.)
----------------------------------------
Asia Pacific $87 25.9% 18.5% $61
Canada 27 35.2% 16.7% 24
Europe 190 31.8% 18.6% 142
Latin America 47 28.6% 22.3% 25
South Asia / Middle East / Africa 13 45.0% 35.4% 7
United States 270 10.6% 10.6% 220
Worldwide 634 21.3% 15.5% 478
MasterCard Credit and Charge Programs
United States 171 7.8% 7.8% 147
Worldwide less United States 291 31.1% 19.4% 231
Worldwide 462 21.4% 14.8% 378
MasterCard Debit Programs
United States 99 15.9% 15.9% 73
Worldwide less United States 73 28.5% 19.5% 27
Worldwide 172 21.0% 17.4% 100
For the 3 Months ended December 31, 2007
Purchase Cash
All MasterCard Credit, Growth Trans. Volume Growth
Charge and Debit Programs (Local) (Mil.) (Bil.) (Local)
----------------------------------------
Asia Pacific 23.7% 711 $26 7.8%
Canada 16.3% 239 4 19.2%
Europe 19.3% 1,540 48 16.4%
Latin America 26.0% 441 23 18.6%
South Asia / Middle East / Africa 28.4% 96 6 45.5%
United States 11.8% 3,445 50 5.8%
Worldwide 16.5% 6,472 156 12.4%
MasterCard Credit and Charge Programs
United States 8.8% 1,699 24 2.4%
Worldwide less United States 21.3% 2,599 60 12.3%
Worldwide 16.1% 4,298 84 9.2%
MasterCard Debit Programs
United States 18.6% 1,746 26 9.2%
Worldwide less United States 17.0% 427 46 21.0%
Worldwide 18.1% 2,173 72 16.5%
For the 3 Months ended December 31, 2007
All MasterCard Credit, Cash Trans. Accounts Cards
Charge and Debit Programs (Mil.) (Mil.) (Mil.)
----------------------------------------
Asia Pacific 149 160 175
Canada 5 30 36
Europe 253 164 177
Latin America 140 81 99
South Asia / Middle East / Africa 41 29 33
United States 246 340 392
Worldwide 834 805 912
MasterCard Credit and Charge Programs
United States 17 234 279
Worldwide less United States 249 400 451
Worldwide 267 635 729
MasterCard Debit Programs
United States 228 106 113
Worldwide less United States 339 64 70
Worldwide 567 170 183
For the 12 Months ended December 31, 2007
Purchase
All MasterCard Credit, GDV Growth Growth Volume
Charge and Debit Programs (Bil.) (USD) (Local) (Bil.)
----------------------------------------
Asia Pacific $306 21.3% 16.4% $211
Canada 91 22.4% 15.0% 78
Europe 656 26.8% 16.2% 487
Latin America 158 25.5% 21.9% 79
South Asia / Middle East / Africa 43 40.6% 39.7% 24
United States 1,019 10.8% 10.8% 817
Worldwide 2,272 18.4% 14.4% 1,696
MasterCard Credit and Charge Programs
United States 645 5.8% 5.8% 548
Worldwide less United States 1,001 25.2% 17.2% 786
Worldwide 1,647 16.8% 12.4% 1,334
MasterCard Debit Programs
United States 373 20.8% 20.8% 269
Worldwide less United States 252 26.0% 19.0% 94
Worldwide 626 22.8% 20.1% 362
For the 12 Months ended December 31, 2007
Purchase Cash
All MasterCard Credit, Growth Trans. Volume Growth
Charge and Debit Programs (Local) (Mil.) (Bil.) (Local)
----------------------------------------
Asia Pacific 21.8% 2,579 $95 5.9%
Canada 15.0% 865 13 15.3%
Europe 16.9% 5,628 169 14.5%
Latin America 25.2% 1,560 79 18.9%
South Asia / Middle East / Africa 30.8% 349 19 52.9%
United States 12.7% 12,787 202 3.8%
Worldwide 15.8% 23,768 576 10.5%
MasterCard Credit and Charge Programs
United States 7.8% 6,303 97 -4.1%
Worldwide less United States 19.4% 9,419 215 10.0%
Worldwide 14.3% 15,722 313 5.2%
MasterCard Debit Programs
United States 24.4% 6,484 105 12.5%
Worldwide less United States 15.2% 1,562 159 21.3%
Worldwide 21.9% 8,046 263 17.6%
For the 12 Months ended December 31, 2007
All MasterCard Credit, Cash Trans. Accounts Cards
Charge and Debit Programs (Mil.) (Mil.) (Mil.)
----------------------------------------
Asia Pacific 543 160 175
Canada 20 30 36
Europe 968 164 177
Latin America 514 81 99
South Asia / Middle East / Africa 152 29 33
United States 983 340 392
Worldwide 3,180 805 912
MasterCard Credit and Charge Programs
United States 68 234 279
Worldwide less United States 954 400 451
Worldwide 1,022 635 729
MasterCard Debit Programs
United States 915 106 113
Worldwide less United States 1,242 64 70
Worldwide 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.
Footnote The tables set forth the gross dollar volume ("GDV"), purchase volume, cash volume and the number of purchase transactions, cash transactions, accounts, cards and acceptance locations on a regional and global basis for MasterCard(R)-branded and MasterCard Electronic(TM)-branded cards. Growth rates over prior periods are provided for volume-based data. Debit transactions on Maestro(R) and Cirrus(R)-branded cards, Mondex(R) transactions and transactions involving brands other than MasterCard are not included in the preceding tables. For purposes of the table: GDV represents purchase volume plus cash volume and includes the impact of balance transfers and convenience checks; "purchase volume" means the aggregate dollar amount of purchases made with MasterCard-branded cards for the relevant period; and "cash volume" means the aggregate dollar amount of cash disbursements obtained with MasterCard-branded cards for the relevant period. The number of cards includes virtual cards, which are MasterCard-branded payment accounts in connection with which functional cards are not generally issued. Acceptance locations include merchant locations, ATMs and other locations where cash may be obtained. The MasterCard payment product is comprised of credit, charge and debit programs, and data relating to each type of program is included in the tables. Debit programs include MasterCard-branded debit programs where the primary means of cardholder validation at the point of sale is for cardholders either to sign a sales receipt or enter a PIN. The tables include information with respect to transactions involving MasterCard-branded cards that are not processed by MasterCard and transactions for which MasterCard does not earn significant revenues. Information denominated in U.S. dollars is calculated by applying an established U.S. dollar/local currency exchange rate for each local currency in which MasterCard volumes are reported. These exchange rates are calculated on a quarterly basis using the average exchange rate for each quarter. MasterCard reports period-over-period rates of change in purchase volume and cash volume on the basis of local currency information, in order to eliminate the impact of changes in the value of foreign currencies against the U.S. dollar in calculating such rates of change. The data set forth in the GDV, purchase volume, purchase transactions, cash volume and cash transactions columns is provided by MasterCard customers and is subject to verification by MasterCard and partial cross-checking against information provided by MasterCard's transaction processing systems. The data set forth in the accounts and cards columns is provided by MasterCard customers and is subject to certain limited verification by MasterCard. A portion of the data set forth in the accounts and cards columns reflects the impact of routine portfolio changes among customers and other practices that may lead to over counting of the underlying data in certain circumstances. In order to provide a true indication of how broadly our cards can be used, MasterCard seeks to provide the most accurate acceptance figures possible and to maintain that MasterCard acceptance is unsurpassed worldwide by periodically validating our results with third parties. The data set forth in the acceptance locations column is derived through a proprietary methodology designed to minimize the impact of multiple acquiring in certain markets. This data is based on information provided by our customers and other third parties and is subject to certain limited verification by MasterCard and partial cross-checking against information provided by MasterCard's transaction processing systems. All data is subject to revision and amendment by MasterCard's customers subsequent to the date of its release. Performance information for prior periods can be found in the "Investor Relations" section of MasterCard's website at www.mastercard.com.
Reconciliation of Financial Results
($ million except For the three months ended
percentages) 12/31/08
Actual Special Items As Adjusted
------ ------------- -----------
Revenues, net $1,225 $- $1,225
Operating Expenses
General and administrative 479 - 479
Advertising and marketing 248 - 248
Litigation settlements 6 6 (a) -
Charitable contributions to
the MasterCard Foundation - - -
Depreciation and
amortization 30 - 30
--- --- ---
Total operating expenses 762 6 756
--- --- ---
Operating income 462 6 468
Operating Margin 37.7% - 38.2%
Other Income (Expense)
Investment income, net 20 - 20
Interest expense (37) - (37)
Other expense, net - - -
--- --- ---
Total other income (expense) (17) - (17)
--- --- ---
Income before income taxes 445 6 451
Income tax expense 206 2 208
=== === ===
Net Income $239 $4 $243
==== === ====
Basic Net Income per Share $1.85 $0.03 $1.88
===== ===== =====
Diluted Net Income per Share $1.84 $0.03 $1.87
===== ===== =====
($ million except For the three months ended YOY
percentages) 12/31/07 Growth
Special As As
Actual Items Adjusted Adjusted
------ ------- -------- --------
Revenues, net $1,073 - $1,073 14.2%
Operating Expenses
General and administrative 496 - 496 (3.4%)
Advertising and marketing 369 - 369 (32.8%)
Litigation settlements - - - NM
Charitable contributions to
the MasterCard Foundation 10 - 10 (100.0%)
Depreciation and amortization 26 - 26 14.9%
--- --- ---
Total operating expenses 901 - 901 (16.0%)
--- --- ---
Operating income 172 - 172 172.2%
Operating Margin 16.0% - 16.0% 22.2 ppt.
Other Income (Expense)
Investment income, net 311 - 311 (93.6%)
Interest expense ( 15) - (15) 138.5%
Other expense, net (1) - (1) NM
--- --- ---
Total other income (expense) 295 - 295 (105.9%)
--- --- ---
Income before income taxes 467 - 467 (3.4%)
Income tax expense 163 - 163 27.6%
--- --- ---
Net Income $304 - $304 (20.1%)
==== === ====
Basic Net Income per Share $2.28 - $2.28 (17.5%)
===== === =====
Diluted Net Income per Share $2.26 - $2.26 (17.3%)
===== === =====
($million except
percentages) For the year ended 12/31/08
Actual Special Items As Adjusted
------ ------------- -----------
Revenues, net $4,992 $- $4,992
Operating Expenses
General and administrative 1,914 - 1,914
Advertising and
marketing 1,018 - 1,018
Litigation settlements 2,483 2,483 (a) -
Charitable contributions
to the MasterCard
Foundation - - -
Depreciation and
amortization 112 - 112
--- --- ---
Total operating expenses 5,526 2,483 3,043
----- ----- -----
Operating income (535) 2,483 1,948
Operating Margin (10.7%) - 39.0%
Other Income (Expense)
Investment income, net 183 - 183
Interest expense (104) - (104)
Other expense, net 72 75 (b) (3)
--- --- ---
Total other income
(expense) 151 75 76
--- --- ---
Income before income
taxes (383) 2,408 2,025
Income tax expense (129) 914 785
---- --- ---
Net Income $(254) $1,494 $1,239
===== ====== ======
Basic Net Income per
Share $(1.95) $11.47 $9.52
====== ====== =====
Diluted Net Income per
Share $(1.95) $11.40 $9.45
====== ====== =====
($million except percentages) For the year ended YOY
12/31/07 Growth
Special As As
Actual Items Adjusted Adjusted
------ ----- -------- --------
Revenues, net $4,068 - $4,068 22.7%
Operating Expenses
General and administrative 1,758 - 1,758 8.8%
Advertising and marketing 1,080 - 1,080 (5.8%)
Litigation settlements 3 3 (a) - NM
Charitable contributions to
the MasterCard Foundation 20 - 20 (100.0%)
Depreciation and amortization 98 - 98 14.7%
--- --- ---
Total operating expenses 2,959 3 2,956 2.9%
----- --- -----
Operating income 1,108 3 1,111 75.3%
Operating Margin 27.2% - 27.3% 11.7 ppt.
Other Income (Expense)
Investment income, net 530 - 530 (65.5%)
Interest expense (57) - (57) 80.9%
Other expense, net 90 90 (c) - NM
--- --- ---
Total other income (expense) 563 90 473 (83.9%)
--- --- ---
Income before income taxes 1,671 (87) 1,584 27.8%
Income tax expense 586 30 556 41.2%
--- --- ---
Net Income $1,086 ($57) $1,029 20.4%
====== ==== ======
Basic Net Income per Share $8.05 ($0.42) $7.63 24.8%
===== ====== =====
Diluted Net Income per Share $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
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. SOURCE MasterCard Incorporated http://www.mastercard.com |
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