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MasterCard Incorporated Reports Fourth-Quarter and Full-Year 2006 Financial Results

  • Fourth-quarter net income of $0.30 per share, or $41 million
  • Fourth-quarter net revenues up 17.2% to $839 million
  • Fourth-quarter gross dollar volume up 13.8%, purchase volume up 16.7%
  • Quarterly dividend increase of 66.7%, up from 9 cents to 15 cents per share

PURCHASE, N.Y., Feb. 9 /PRNewswire-FirstCall/ -- MasterCard Incorporated (NYSE: MA) today announced financial results for the fourth quarter and full-year 2006. For the fourth quarter, the company reported net income of $41 million, or $0.30 per share. Excluding the impact of litigation settlements, net income for the quarter was $42 million, or $0.31 per share. Net revenues for the quarter were $839 million, a 17.2% increase versus the same period in 2005. Currency fluctuations (driven by the movement of the euro relative to the US dollar) contributed approximately 1.9% of the increase in revenues for the quarter. For the fourth quarter 2006, total net income, earnings per share and total operating expenses, each of which excludes litigation settlements, are non-U.S. GAAP financial measures that are reconciled to their most directly comparable U.S. GAAP measures in the accompanying financial tables.

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

Fueling the higher revenue in the fourth quarter versus the same period in 2005 was growth in MasterCard's gross dollar volume (GDV), which increased 13.8%, on a local currency basis, to $532 billion; a 17.4% increase in the number of transactions processed to 4.4 billion; and a restructuring of cross- border transaction pricing which was implemented in April 2006. Worldwide purchase volume rose 16.7%, on a local currency basis, during the quarter to $391 billion, driven by increased cardholder spending on a growing number of MasterCard cards. As of December 31, 2006, the company's customers had issued 817 million MasterCard cards, an increase of 12.3% percent over the cards issued at December 31, 2005.

"Cardholders around the world used their MasterCard cards for transactions totaling almost $2 trillion in 2006 -- doubling the GDV we reported only five years ago, as the pace at which we are driving commerce in markets around the world gains momentum," said Robert W. Selander, MasterCard president and chief executive officer. "Our success in displacing paper-based forms of payment reflects the strength of our brand and network as well as the opportunities to implement innovative payment programs in both emerging and developed economies.

"Having invested significantly in our global brand and payments network over the past 40 years, we enter our fifth decade with a leveragable infrastructure that will allow us to provide cutting-edge payment solutions for our financial institution customers as well as merchants, consumers, corporations and governments who are increasingly turning to the convenience and security of electronic payments," Selander noted. "We expect this will enable us to continue to drive value for our shareholders."

Total operating expenses decreased 2.6%, to $793 million, during the fourth quarter of 2006 compared to the same period in 2005. Excluding the impact of litigation settlements, operating expenses increased 0.5%. This was primarily driven by a $14.5 million cash contribution to the MasterCard Foundation, as part of MasterCard's previously disclosed intention to contribute up to $40 million in cash to the Foundation over four years; higher professional fees related to legal costs to defend outstanding litigation; and, an increase in personnel costs related to the hiring of additional staff to strengthen our capability to add value to our customers' businesses. Offsetting this increase was an 8.5% decrease in advertising and market development expenses versus the year-ago period due to a shift in the typical annual pattern of marketing spend to support the 2006 World Cup soccer events earlier in the year. Currency fluctuations contributed approximately 1.5% of the increase in expenses for the quarter.

Total other income was $24 million in the fourth quarter 2006 versus $10 million in the fourth quarter of 2005. The increase was primarily driven by a $20 million increase in investment income.

Full-Year 2006 Results

For the year-ended December 31, 2006, MasterCard reported net income of $50 million or $0.37 per share. Excluding the impact of special items, the company reported net income of $457 million, or $3.37 per share.

Pre-tax special items for full-year 2006 included:

  • A $395 million non-cash expense in the second quarter of 2006, 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 IPO, which was not deductible for tax purposes;
  • A $25 million reserve for litigation settlements; $23 million was recorded in the second quarter of 2006 and $2 million was recorded in the fourth quarter of 2006; and
  • $7 million in interest income in the second quarter of 2006 earned on the IPO proceeds, which were ultimately used for redemption of shares of Class B common stock.

The company's full year 2006 net income, earnings per share and total operating expenses, each of which excludes special items, are non-U.S. GAAP financial measures that are reconciled to their most directly comparable U.S. GAAP measures in the accompanying financial tables.

Net revenues for the twelve months ended December 31, 2006 were $3.3 billion, a 13.2% increase versus the same period in 2005. Currency fluctuations had a negligible impact on revenues during the year.

Total operating expenses increased 21.7%, to $3.1 billion, for the twelve- month period compared to the same period in 2005. Excluding the impact of the charitable donation of common stock to the MasterCard Foundation, litigation settlements, and an adjustment to reflect an accounting methodology change for cash-based executive incentive plans in the third quarter of 2005, total operating expenses increased 9.2%. This was due to increased personnel costs, professional fees and advertising and marketing expenses, as well as a total of $20 million in cash contributed to the MasterCard Foundation in 2006. Currency fluctuations had a negligible impact on operating expenses during this period.

Total other income was $65 million for the twelve-month period versus $14 million for the same period in 2005. This change was driven by a $64 million increase in investment income, including the $7 million special item of interest income earned on IPO proceeds which were used for redemption. Interest expense also decreased by $9 million primarily due to a refund of interest assessed in connection with an audit of the company's federal income tax return and a reduction of interest reserve requirements related to the company's tax reserves.

MasterCard's effective tax rate of 82.9% for the twelve months ended December 31, 2006 includes the impact of the non-deductible charitable donation of common stock to the MasterCard Foundation. Excluding this donation, the company's tax rate would have been 35.4% vs. 34.5% for the same period in 2005. The company's effective tax rate, excluding the impact of the stock donation, is a non-U.S. GAAP financial measure that is reconciled to the most directly comparable U.S. GAAP measure in the accompanying financial tables.

MasterCard Board of Directors Announces Increase in Quarterly Dividend

At a meeting on February 6, 2007, the MasterCard Incorporated Board of Directors declared an increase to the quarterly cash dividend to holders of shares of its Class A common stock and Class B common stock. A cash dividend of 15 cents per share, which represents a 66.7% increase over the prior dividend level of 9 cents per share, will be paid on May 10, 2007 to holders of record of its Class A common stock and Class B common stock as of April 9, 2007.

"We are pleased that the success of our business and the strength of our capital position has allowed us to increase our dividend, further demonstrating our commitment to drive shareholder value," said Chris A. McWilton, chief financial officer.

Fourth-Quarter and Full-Year 2006 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 financial results.

The dial-in information for this call is 866-383-7989 (within the U.S.) and 617-597-5328 (outside the U.S.) and the passcode is 69019047. A replay of the call will be available for one week following the live call. 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 82233899.

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 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 ability to drive commerce in markets around the world;
  • the company's success in displacing paper-based forms of payments;
  • the company's ability to implement innovative payment programs in both emerging and developed economies;
  • the company's ability to leverage its infrastructure to provide cutting-edge payment solutions for its financial institution customers as well as merchants, consumers, corporations and governments;
  • the company's strong capital position and commitment to drive value for its shareholders.

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, 2005, the company's Quarterly Reports on Form 10-Q and Current Reports on Form 8-K that it has filed with the SEC during 2006 and 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

                                     Three Months Ended   For the Years Ended
                                         December 31,         December 31,
                                       2006      2005       2006       2005
                                   (In thousands, except (In thousands, except
                                       per share data)      per share data)

    Revenues, net                   $839,163  $715,918  $3,326,074 $2,937,628
    Operating Expenses
    General and administrative       399,304   375,215   1,505,185  1,351,082
    Advertising and marketing        352,934   385,821   1,051,870  1,008,268
    Litigation settlements             1,707    26,970      24,957     75,158
    Charitable contributions to
     the MasterCard Foundation        14,500         -     414,785          -
    Depreciation and amortization     24,730    26,570      99,782    109,936
      Total operating expenses       793,175   814,576   3,096,579  2,544,444
    Operating income (expense)        45,988   (98,658)    229,495    393,184
    Other Income (Expense)
    Investment income, net            40,905    21,255     124,994     60,867
    Interest expense                 (17,686)  (18,252)    (61,151)   (70,158)
    Other income, net                    531     7,447         834     23,445
      Total other income              23,750    10,450      64,677     14,154
    Income (loss) before income
     taxes                            69,738   (88,208)    294,172    407,338
    Income tax expense (benefit)      28,836   (35,300)    243,982    140,619
    Net Income (Loss)                $40,902  $(52,908)    $50,190   $266,719
    Basic Net Income (Loss)
     per Share                         $0.30    $(0.39)     $ 0.37      $1.98
    Basic Weighted average shares
     outstanding                     135,700   134,969     135,411    134,969
    Diluted Net Income (Loss)
     per Share                         $0.30    $(0.39)     $ 0.37      $1.98
    Diluted Weighted average shares
     outstanding                     136,461   134,969     135,779    134,969


                           MASTERCARD INCORPORATED
                         CONSOLIDATED BALANCE SHEETS

                                                    December 31,  December 31,
                                                        2006         2005
     (In thousands, except share data)

               ASSETS
    Cash and cash equivalents                        $1,185,080     $545,273
    Investment securities, at fair value:
      Trading                                            12,261       22,472
      Available-for-sale                              1,286,580      714,147
    Accounts receivable                                 451,261      347,754
    Settlement due from members                         311,953      211,775
    Restricted security deposits held for members       109,897       97,942
    Prepaid expenses                                    130,849      167,209
    Other current assets                                 89,348      121,326
      Total Current Assets                            3,577,229    2,227,898
    Property, plant and equipment, at cost (less
     accumulated depreciation of $220,720 and
     $373,319)                                          252,731      230,614
    Deferred income taxes                               216,782      225,034
    Goodwill                                            217,013      196,701
    Other intangible assets (less accumulated
     amortization of $309,110 and $272,913)             271,373      273,854
    Municipal bonds held-to-maturity                    193,477      194,403
    Prepaid expenses                                    235,654      201,132
    Other assets                                        118,211      150,908
    Total Assets                                     $5,082,470   $3,700,544

           LIABILITIES AND STOCKHOLDERS' EQUITY
    Accounts payable                                   $278,656     $185,021
    Settlement due to members                           286,059      175,021
    Restricted security deposits held for members       109,897       97,942
    Obligations under U.S. merchant lawsuit and other
     litigation settlements -- current                  117,275      189,380
    Accrued expenses                                    936,427      850,657
    Other current liabilities                            83,276       58,682
      Total Current Liabilities                       1,811,590    1,556,703
    Deferred income taxes                                66,198       61,188
    Obligations under U.S. merchant lawsuit and
     other litigation settlements                       359,640      415,620
    Long-term debt                                      229,668      229,489
    Other liabilities                                   246,395      263,776
      Total Liabilities                               2,713,491    2,526,776
    Commitments and Contingencies
    Minority interest                                     4,620        4,620
    Stockholders' Equity
    Class A common stock, $.0001 par value;
     authorized 3,000,000,000 shares, 79,631,983 and
     no shares issued and outstanding, respectively           8            -
    Class B common stock, $.0001 par value;
     authorized 1,200,000,000 shares, 55,337,407 and
     134,969,329 shares issued and outstanding,
     respectively                                             6           14
    Class M common stock, $.0001 par value, authorized
     1,000,000 shares, 1,600 and no shares issued and
     outstanding, respectively                                -            -
    Additional paid-in capital                        3,289,879      974,605
    Retained earnings (accumulated deficit)          (1,029,196)     145,515
    Accumulated other comprehensive income,
     net of tax:
     Cumulative foreign currency translation
      adjustments                                        96,851       50,818
     Defined benefit pension and other postretirement
      plans                                              11,402            -
     Investment securities available-for-sale            (3,065)      (2,543)
     Derivatives accounted for as hedges                 (1,526)         739
    Total accumulated other comprehensive income,
     net of tax                                         103,662       49,014
    Total Stockholders' Equity                        2,364,359    1,169,148
    Total Liabilities and Stockholders' Equity       $5,082,470   $3,700,544



                           MASTERCARD INCORPORATED
                    CONSOLIDATED STATEMENTS OF CASH FLOWS


                                              For the Years Ended December 31,
                                                       2006          2005
                                                         (In thousands)
    Operating Activities
    Net income                                         $50,190      $266,719

    Adjustments to reconcile net income to net
     cash provided by operating activities:
     Depreciation and amortization                      99,782       109,936
     Charitable contribution of common stock to
      the MasterCard Foundation                        394,785             -
     Share based payments                               19,181             -
     Deferred income taxes                              32,267       (54,036)
     Other                                               9,746        12,182
     Changes in operating assets and liabilities:
      Trading securities                                10,211         4,935
      Accounts receivable                              (93,428)      (64,189)
      Settlement due from members                      (75,553)      (15,496)
      Prepaid expenses                                  42,623       (52,170)
      Other current assets                               7,813       (17,123)
      Prepaid expenses, non-current                    (30,555)     (123,692)
      Accounts payable                                  89,382         4,111
      Settlement due to members                         89,739        11,471
      Litigation settlement accruals, including
       accretion of imputed interest                  (128,085)        7,406
      Accrued expenses                                  86,859       220,789
      Net change in other assets and liabilities        45,204       (37,995)

    Net cash provided by operating activities          650,161       272,848

    Investing Activities
     Purchases of property, plant and equipment        (61,204)      (43,866)

     Capitalized software                              (33,264)      (38,137)

     Purchases of investment securities available-
      for-sale                                      (3,815,115)   (2,834,321)
     Proceeds from sales and maturities of
      investment securities available-for-sale       3,233,725     2,883,709

     Acquisition of businesses, net of cash acquired         -             -

     Other investing activities                           (368)       (1,040)

     Net cash used in investing activities            (676,226)      (33,655)

    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                                    (12,373)            -
    Net cash provided by financing activities          637,600             -
    Effect of exchange rate changes on cash and
     cash equivalents                                   28,272       (22,916)
    Net increase in cash and cash equivalents          639,807       216,277
    Cash and cash equivalents - beginning of year      545,273       328,996
    Cash and cash equivalents - end of year         $1,185,080      $545,273



                MASTERCARD INCORPORATED OPERATING PERFORMANCE

                   For the 3 Months ended December 31, 2006

                                      Purchase           Purchase     Cash
                     GDV     Growth    Volume   Growth  Transactions  Volume
                 (Billions)  (Local) (Billions) (Local)  (Millions) (Billions)

    All MasterCard
     Credit, Charge
      and Debit
      Programs
    Asia / Pacific   $77      6.8%       $46     17.2%       588        $31
    Canada            20     13.2%        18     14.0%       208          3
    Europe           145     12.9%       108     13.8%     1,343         37
    Latin America     37     24.8%        18     27.5%       374         19
    South Asia /
     Middle East
     Africa            9     38.3%         5     32.0%        82          3
    United States    244     14.5%       197     17.1%     3,060         48
    Worldwide        532     13.8%       391     16.7%     5,655        140

    MasterCard Credit
     and Charge
     Programs
    United States    159      3.0%       135      5.8%     1,593         24
    Worldwide        391      7.8%       308     11.5%     3,812         83

    MasterCard Debit
     Programs
    United States     85     44.6%        61     53.4%     1,467         24
    Worldwide        140     34.6%        83     40.8%     1,844         57


                     For the Year ended December 31, 2006

                                      Purchase           Purchase     Cash
                     GDV     Growth    Volume   Growth  Transactions  Volume
                 (Billions)  (Local) (Billions) (Local)  (Millions) (Billions)

    All MasterCard
     Credit, Charge
     and Debit
     Programs
    Asia / Pacific  $286      7.7%      $166     16.4%     2,121       $120
    Canada            75     14.2%        64     15.2%       768         11
    Europe           520     13.9%       384     14.1%     4,989        136
    Latin America    126     26.1%        60     29.0%     1,320         66
    South Asia /
     Middle East
     Africa           30     46.0%        18     34.0%       288         12
    United States    919     15.7%       725     17.3%    11,039        195
    Worldwide      1,956     14.9%     1,417     16.9%    20,524        539

    MasterCard Credit
     and Charge
     Programs
    United States    610      6.0%       509      7.7%     5,912        102
    Worldwide      1,455      9.9%     1,124     12.5%    14,009        331

    MasterCard Debit
     Programs
    United States    309     41.3%       216     48.4%     5,127         93
    Worldwide        501     32.5%       292     37.3%     6,516        208


                   For the 3 Months ended December 31, 2005

                                      Purchase           Purchase     Cash
                     GDV     Growth    Volume   Growth  Transactions  Volume
                 (Billions)  (Local) (Billions) (Local)  (Millions) (Billions)

    All MasterCard
     Credit, Charge
     and Debit
     Programs
    Asia / Pacific   $69      10.6%     $38      15.1%       479        $31
    Canada            17      12.7%      15      14.7%       186          2
    Europe           119      14.5%      88      13.4%     1,213         31
    Latin America     30      27.1%      14      29.9%       309         16
    South Asia /
     Middle East
     Africa            7      53.3%       4      33.8%        67          2
     United States   213       9.0%     168      11.9%     2,434         45
     Worldwide       455      12.3%     327      13.7%     4,687        128

    MasterCard Credit
     and Charge
     Programs
    United States    154       5.1%     128       9.0%     1,511         26
    Worldwide        353      10.4%     270      12.7%     3,439         83

    MasterCard Debit
     Programs
    United States     59      20.8%      40      22.6%       923         19
    Worldwide        102      19.3%      57      18.6%     1,247         45


                     For the Year ended December 31, 2005

                                      Purchase           Purchase     Cash
                     GDV     Growth    Volume   Growth  Transactions  Volume
                 (Billions)  (Local) (Billions) (Local)  (Millions) (Billions)

    All MasterCard
     Credit, Charge
     and Debit
     Programs
    Asia / Pacific  $262       8.7%      $142     15.0%     1,773      $120
    Canada            61      13.7%        52     16.0%       684         9
    Europe           453      13.5%       334     13.7%     4,530       119
    Latin America     98      32.3%        44     31.2%     1,073        54
    South Asia /
     Middle East
     Africa           22      39.9%        14     28.3%       228         7
    United States    795      11.6%       618     14.6%     9,004       177
    Worldwide      1,690      13.0%     1,205     15.1%    17,291       485

    MasterCard
     Credit and
     Charge
     Programs
    United States    576       5.1%       472      9.0%     5,597       104
    Worldwide      1,314       9.4%       993     12.6%    12,669       321

    MasterCard
     Debit
     Programs
    United States    219      33.4%       146     37.2%     3,407        73
    Worldwide        377      28.2%       212     28.5%     4,622       164


                   For the 3 Months ended December 31, 2006

                                     Cash                           Acceptance
                          Growth  Transactions Accounts    Cards    Locations
                         (Local)   (Millions) (Millions) (Millions) (Millions)

    All MasterCard
     Credit, Charge and
     Debit Programs
    Asia / Pacific        -6.0%       143         143       155        7.2
    Canada                 8.7%         5          26        32        0.7
    Europe                10.2%       229         141       152        7.7
    Latin America         22.4%       123          71        86        2.2
    South Asia /
     Middle East
     Africa               49.0%        32          22        25        0.8
    United States          5.0%       235         311       366        6.6
    Worldwide              6.5%       766         714       817       25.3

    MasterCard Credit
     and Charge Programs
    United States        -10.1%        17         211       260
    Worldwide             -3.9%       281         563       656

    MasterCard Debit
     Programs
    United States         26.1%       219         100       106
    Worldwide             26.5%       485         152       161


                     For the Year ended December 31, 2006

                                     Cash
                          Growth  Transactions Accounts    Cards
                         (Local)   (Millions) (Millions) (Millions)

    All MasterCard
     Credit, Charge and
     Debit Programs
    Asia / Pacific        -2.3%       548         143       155
    Canada                 8.3%        19          26        32
    Europe                13.1%       878         141       152
    Latin America         23.5%       456          71        86
    South Asia /
     Middle East
     Africa               69.5%       107          22        25
    United States         10.1%       924         311       366
    Worldwide             10.0%     2,932         714       817

    MasterCard Credit
     and Charge Programs
    United States         -2.0%        65         211       260
    Worldwide              1.8%     1,116         563       656

    MasterCard Debit
     Programs
    United States         27.2%       859         100       106
    Worldwide             26.3%     1,816         152       161


                   For the 3 Months ended December 31, 2005

                                     Cash
                          Growth  Transactions Accounts    Cards
                         (Local)   (Millions) (Millions) (Millions)

    All MasterCard
     Credit, Charge and
     Debit Programs
    Asia / Pacific        5.6%        131         132       144
    Canada                1.0%          5          24        30
    Europe               17.7%        208         120       129
    Latin America        24.8%        109          62        74
    South Asia /
     Middle East
     Africa             105.3%         20          16        18
    United States        -0.6%        192         279       331
    Worldwide             8.9%        663         632       727

    MasterCard Credit
     and Charge Programs
    United States       -10.4%         17         208       254
    Worldwide             3.6%        283         521       607

    MasterCard Debit
     Programs
    United States        17.3%        175          72        77
    Worldwide            20.4%        381         111       121


                     For the Year ended December 31, 2005

                                     Cash
                          Growth  Transactions Accounts    Cards
                         (Local)   (Millions) (Millions) (Millions)

    All MasterCard
     Credit, Charge and
     Debit Programs
    Asia / Pacific        2.0%        455         132        144
    Canada                1.7%         19          24         30
    Europe               12.8%        795         120        129
    Latin America        33.3%        398          62         74
    South Asia /
     Middle East
      Africa             70.3%         59          16         18
    United States         2.5%        770         279        331
    Worldwide             8.2%      2,496         632        727

    MasterCard Credit
     and Charge
      Programs
    United States        -9.6%         67         208        254
    Worldwide             0.3%      1,048         521        607

    MasterCard Debit
     Programs
    United States        26.5%        703          72         77
    Worldwide            27.8%      1,448         111        121

Note that the figures in the preceding tables may not sum due to rounding; growth represents change from the comparable year-ago period.

Footnote

Set forth above is information regarding the performance results for the three months and year ended December 31, 2006 and December 31, 2005 for the payment programs of MasterCard International Incorporated and MasterCard Europe sprl (collectively, "MasterCard"), the principal operating subsidiaries of MasterCard Incorporated.

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 (including PIN point-of-sale) 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 Personal Identification Number (PIN).

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 GDV, purchase volume and cash volume solely 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.

The table includes 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, including PIN point- of-sale volumes for MasterCard-branded debit programs in the U.S. region and credit programs in the Asia/Pacific region.

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


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

    ($ million)                           For the three months ended 12/31/06
                                                        Special        As
                                              Actual     Items     Adjusted
    Revenues, net                              $839          -       $839
    Operating Expenses
    General and administrative                  399          -        399
    Advertising and marketing                   353          -        353
    Litigation settlements                        2          2 a        -
    Charitable contributions to the
     MasterCard Foundation                       14          -         14 b
    Depreciation and amortization                25          -         25
      Total operating expenses                  793          2        791
    Operating income (expense)                   46          2         48
      Operating Margin                         5.5%          -       5.7%
    Other Income (Expense)
    Investment income, net                       41          -         41
    Interest expense                            (17)         -        (17)
    Other income, net                             -          -          -
      Total other income                         24          -         24
    Income (loss) before income taxes            70          2         72
    Income tax expense (benefit)                 29          1         30
    Net Income (loss)                           $41          1        $42

    Basic Net Income (Loss) per Share         $0.30      $0.01      $0.31
    Diluted Net Income (Loss) per Share       $0.30      $0.01      $0.31



                                          For the three months ended    YOY
    ($ million)                                   12/31/05             Growth
                                                   Special     As        As
                                            Actual   Items  Adjusted  Adjusted
    Revenues, net                            $716       -     $716     17.2%
    Operating Expenses
    General and administrative                375       -      375      6.4%
    Advertising and marketing                 386       -      386     (8.5%)
    Litigation settlements                     27      27 a      -        NM
    Charitable contributions to the
     MasterCard Foundation                      -       -        -        NM
    Depreciation and amortization              26       -       26     (3.8%)
      Total operating expenses                814      27      787      0.5%
    Operating income (expense)                (98)     27      (71)   167.6%
      Operating Margin                     (13.7%)      -    (9.9%)       NM
    Other Income (Expense)
    Investment income, net                     21       -       21     95.2%
    Interest expense                          (18)      -      (18)    (5.6%)
    Other income, net                           7       -        7        NM
      Total other income                       10       -       10    140.0%
    Income (loss) before income taxes         (88)     27      (61)   218.0%
    Income tax expense (benefit)              (35)      9      (26)       NM
    Net Income (loss)                        ($53)    $18     ($35)   218.5%

    Basic Net Income (Loss) per Share      ($0.39)  $0.13    ($0.26)  218.5%
    Diluted Net Income (Loss) per Share    ($0.39)  $0.13    ($0.26)  218.5%


    ($ million)                               For the year ended 12/31/06
                                                        Special      As
                                             Actual      Items    Adjusted
    Revenues, net                            $3,326          -     $3,326
    Operating Expenses
    General and administrative                1,505          -      1,505
    Advertising and marketing                 1,052          -      1,052
    Litigation settlements                       25         25 a        -
    Charitable contributions to the
     MasterCard Foundation                      415        395 d       20 b
    Depreciation and amortization               100          -        100
      Total operating expenses                3,097        420      2,677
    Operating income                            229        420        649
      Operating Margin                         6.9%          -      19.5%
    Other Income (Expense)
    Investment income, net                      125         (7)e      118
    Interest expense                            (61)         -        (61)
    Other income, net                             1          -          1
      Total other income (expense)               65         (7)        58
    Income before income taxes                  294        413        707
    Income tax expense                          244          6        250
    Net Income                                  $50       $407       $457

    Basic Net Income per Share                $0.37      $3.00      $3.37
    Diluted Net Income per Share              $0.37      $3.00      $3.37


    ($ million)                          For the year ended 12/31/05    YOY
                                                                       Growth
                                                   Special     As        As
                                           Actual    Items  Adjusted  Adjusted
    Revenues, net                          $2,938        -   $2,938    13.2%
    Operating Expenses
    General and administrative              1,352       19 c  1,333    12.9%
    Advertising and marketing               1,008        -    1,008     4.4%
    Litigation settlements                     75       75 a      -       NM
    Charitable contributions to the
     MasterCard Foundation                      -        -        -       NM
    Depreciation and amortization             110        -      110    (9.1%)
      Total operating expenses              2,545       94    2,451     9.2%
    Operating income                          393       94      487    33.3%
      Operating Margin                      13.4%        -    16.6%    2.9 ppt
    Other Income (Expense)
    Investment income, net                     61        -       61    93.4%
    Interest expense                          (70)       -      (70)  (12.9%)
    Other income, net                          23      (17)f      6   (83.3%)
      Total other income (expense)             14      (17)      (3)      NM
    Income before income taxes                407       77      484    46.1%
    Income tax expense                        140       27      167    49.9%
    Net Income                               $267      $50     $317    44.2%

    Basic Net Income per Share              $1.98    $0.37    $2.35    43.4%
    Diluted Net Income per Share            $1.98    $0.37    $2.35    43.4%

    a Litigation settlements
    b Contribution of cash to the MasterCard Foundation
    c Adjustment to reflect accounting methodology change for cash-
      based executive incentive plans
    d Contribution of common stock to the MasterCard Foundation
    e Interest income on IPO proceeds which were used for redemption
    f Gains from the settlement of a contractual dispute

    NM = not meaningful

    Reconciliation to Effective Tax Rate


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

    Twelve months ended
     December 31, 2006:
    Income before income
     taxes                   $294       82.9%      $395      $689     35.4%
    Income tax expense (1)    244                             244
    Net Income                $50                            $445

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


For more information about these reconciliations, refer to MasterCard Incorporated's Form 8-K furnished with the Securities and Exchange Commission on February 9, 2007.

SOURCE MasterCard Incorporated
CONTACT: Media Relations: Sharon Gamsin, sgamsin@mastercard.com,
+1-914-249-5622; or Investor Relations: Barbara Gasper,
investor_relations@mastercard.com, +1-914-249-4565, both of MasterCard Incorporated