Mastercard Inc - FORM 8-K - EX-99.1 - PRESS RELEASE

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8-K - FORM 8-K - Mastercard Inc	d287778d8k.htm
EX-99.2 - PRESENTATION OF MASTERCARD INCORPORATED - Mastercard Inc	d287778dex992.htm

Exhibit 99.1

LOGO

MasterCard Incorporated Reports

Fourth-Quarter and Full-Year 2011

Financial Results

•

Quarter net income of $514 million, or $4.03 per diluted share, excluding a special item

•

Quarter net income of $19 million, or $0.15 per diluted share, including a special item

•

Fourth-quarter net revenue increase of 20.2%, to $1.7 billion

•

Fourth-quarter gross dollar volume up 16.3% and purchase volume up 15.2%

Purchase, NY, February 2, 2012 – MasterCard Incorporated (NYSE: MA) today announced financial results for the fourth quarter of 2011. Excluding a special item, the company reported net income of $514 million, up 23.7%, and earnings per diluted share of $4.03, up 27.5%, in each case versus the year-ago period. Including the special item, a $495 million after-tax charge related to the U.S. merchant litigations, the company reported net income of $19 million, or $0.15 per diluted share. The company’s total operating expenses, operating income, effective tax rate, net income and earnings per share, excluding the special item, are non-GAAP financial measures that are reconciled to their most directly comparable GAAP measures in the accompanying financial tables.

Net revenue for the fourth quarter of 2011 was $1.7 billion, a 20.2% increase versus the same period in 2010. On a constant currency basis, net revenue increased 20.8% compared to the same period in 2010. Net revenue growth was driven by the impact of the following:

•

An increase in cross-border volumes of 17.5%;

•

A 16.3% increase in gross dollar volume on a local currency basis, to $863 billion; and

•

An increase in processed transactions of 23.2%, to 7.7 billion.

These factors were partially offset by an increase in rebates and incentives primarily due to new and renewed agreements and increased volumes.

Worldwide purchase volume during the quarter was up 15.2% on a local currency basis versus the fourth quarter of 2010, to $648 billion. As of December 31, 2011, the company’s customers had issued 1.8 billion MasterCard and Maestro-branded cards.

“We are pleased with our strong fourth quarter results as we are seeing sustained momentum driven by new deals and the ongoing shift away from paper-based payments,” said Ajay Banga, MasterCard president and chief executive officer. “For the full year, despite ongoing economic uncertainties, we posted strong performance ahead of our long-term objectives.

“Solid execution at the local level continued to result in new business wins in 2011, with a recent agreement from KeyBank that includes PIN debit and our IPS platform, as well as credit and debit deals with nearly 150 U.S.-based independent banks and credit unions. Additionally, we continue to lay the foundation for growth through strategic partnerships with Western Union, Telefónica and Intel to provide consumers in developed and emerging markets with access to more efficient and safer forms of electronic payments,” Banga concluded.

-more-

MasterCard Incorporated – Page 2

Based on progress to date in mediation related to the U.S. merchant litigations, the company recorded a $770 million pre-tax charge, or $495 million on an after-tax basis, in the fourth quarter of 2011. This special item represents the company’s financial portion of a potential settlement in these cases.

Excluding the special item, total operating expenses increased 11.5%, to $968 million, during the fourth quarter of 2011 compared to the same period in 2010. Currency fluctuations had a minimal impact on operating expense growth. The increase in total operating expenses was driven by:

•

A 14.3% increase in general and administrative expenses, primarily due to higher personnel costs in support of strategic growth initiatives and the inclusion of expenses related to acquisitions.

•

A 4.8% increase in advertising and marketing expenses to $319 million, primarily due to support of strategic initiatives and sponsorship activities.

Including the special item, total operating expenses for the fourth quarter of 2011 increased 100.1% versus the year-ago period, to $1.7 billion.

Excluding the special item, operating income for the fourth quarter of 2011 increased 33.5% over the year-ago period and the company delivered an operating margin of 44.0%.

In the fourth quarter of 2011, excluding acquisitions, net revenue grew approximately 18%; excluding acquisitions and the special item, operating expenses grew approximately 8%.

MasterCard reported other expense of $2 million in the fourth quarter of 2011 versus other income of $13 million in the fourth quarter of 2010. The change was primarily driven by a decrease in interest income, lower realized gains on sales of investments and equity losses in joint ventures versus the year-ago period.

Excluding the special item, MasterCard’s effective tax rate was 32.3% in the fourth quarter of 2011, versus a rate of 28.7% in the comparable period in 2010. The increase was primarily due to a benefit recorded in connection with the repatriation of foreign earnings in the fourth quarter of 2010, partially offset by a more favorable geographic mix of earnings in the current period. Including the special item, the effective tax rate for the fourth quarter of 2011 was a 251.6% benefit, as the charge related to the U.S. merchant litigations is tax deductible in the U.S. and thus impacted the geographic mix of pre-tax income.

During the fourth quarter of 2011, MasterCard repurchased 84,300 shares at a cost of approximately $30 million. Quarter-to-date through January 27, the company repurchased an additional 304,600 shares of class A common stock at a cost of approximately $106 million, with $746 million remaining under the current repurchase program authorization.

MasterCard Incorporated – Page 3

Full-Year 2011 Results

For the year ended December 31, 2011, MasterCard reported net income of $2.4 billion, or $18.70 per diluted share, excluding a special item, and net income of $1.9 billion, or $14.85 per diluted share, including the special item. The special item represents the charge related to the U.S. merchant litigations taken in the fourth quarter of 2011.

Net revenue for full-year 2011 was $6.7 billion, an increase of 21.2% versus 2010. On a constant currency basis, net revenue increased 19.5%. Cross-border volume growth of 18.7%, gross dollar volume growth of 16.1% and processed transaction growth of 18.3%, contributed to the net revenue growth in the full-year period. These increases were partially offset by an increase in rebates and incentives due to increased volumes and new and renewed customer agreements.

Excluding the special item, total operating expenses increased 16.0%, to $3.2 billion, for 2011 compared to 2010, primarily due to higher personnel costs related to strategic initiatives and the inclusion of expenses related to acquisitions. Excluding currency fluctuations, total operating expenses increased 14.5%. Including the special item, operating expenses in 2011 increased 43.6%, to $4.0 billion, versus 2010.

For the full-year 2011, excluding acquisitions, net revenue grew approximately 19%; excluding acquisitions and the special item, operating expenses grew approximately 10%.

Excluding the special item, operating income increased 26.6% for 2011 versus 2010 delivering an operating margin of 51.9% for the full-year period. Including the special item, the operating margin was 40.4% for full-year 2011.

Total other income was $33 million for full-year 2011 versus total other income of $5 million in 2010. This was primarily driven by a decrease in interest expense due to lower interest accretion related to previous litigation settlements.

MasterCard’s effective tax rate, excluding the special item, was 31.8% for full-year 2011, versus a rate of 33.0% for full-year 2010. Including the special item, the effective tax rate was 30.6% for full-year 2011. The decrease in the 2011 effective tax rate was primarily due to a more favorable geographic mix of earnings, including the tax benefit related to the special item, and the recognition of discrete adjustments in 2011 and 2010.

For full-year 2011, MasterCard repurchased 4.4 million shares at a cost of approximately $1.1 billion.

Fourth-Quarter and Full-Year Financial Results Conference Call Details

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

MasterCard Incorporated – Page 4

The dial-in information for this call is 866-362-4666 (within the U.S.) and 617-597-5313 (outside the U.S.) and the passcode is 24950634. 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 U.S.) and 617-801-6888 (outside the U.S.) and using passcode 66051474.

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 mastercard.com.

About MasterCard Incorporated

MasterCard (NYSE: MA) is a global payments and technology company. It operates the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Learn more at 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, statements related to sustained momentum in the business, the continuing shift away from paper-based payments, and the Company’s ability to achieve growth through the foundation set by its strategic partnerships.

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, 2010, the company’s Quarterly Reports on Form 10-Q and Current Reports on Form 8-K that have been filed with the SEC during 2011 and 2012, as well as reasons including difficulties, delays or the inability of the company to achieve its strategic initiatives set forth above. Factors other than those listed above could also cause the company’s results to differ materially from expected results.

###

Contacts:

Investor Relations: Barbara Gasper, investor_relations@mastercard.com, 914-249-4565

Media Relations: Jim Issokson, james_issokson@mastercard.com, 914-249-6286

MasterCard Incorporated – Page 5

MASTERCARD INCORPORATED

CONSOLIDATED STATEMENT OF OPERATIONS

(UNAUDITED)


	Three Months Ended December 31,						Twelve Months Ended December 31,
	2011			2010			2011			2010
	(in millions, except per share data)
Revenues, net	$	1,728		$	1,438		$	6,714		$	5,539
Operating Expenses
General and administrative		597			522			2,196			1,857
Advertising and marketing		319			305			841			782
Provision for litigation settlement		770			—			770			—
Depreciation and amortization		52			42			194			148

Total operating expenses		1,738			869			4,001			2,787

Operating income (loss)		(10	)		569			2,713			2,752
Other Income (Expense)
Investment income		12			23			52			57
Interest expense		(7	)		(9	)		(25	)		(52	)
Other income (expense), net		(7	)		(1	)		6			—

Total other income (expense)		(2	)		13			33			5

Income (loss) before income taxes		(12	)		582			2,746			2,757
Income tax expense (benefit)		(30	)		167			842			910

Net income		18			415			1,904			1,847
Loss (income) attributable to non-controlling interests		1			—			2			(1	)

Net Income Attributable to MasterCard	$	19		$	415		$	1,906		$	1,846

Basic Earnings per Share	$	0.15		$	3.17		$	14.90		$	14.10

Basic Weighted Average Shares Outstanding		127			131			128			131

Diluted Earnings per Share	$	0.15		$	3.16		$	14.85		$	14.05

Diluted Weighted Average Shares Outstanding		127			131			128			131

MasterCard Incorporated – Page 6

MASTERCARD INCORPORATED

CONSOLIDATED BALANCE SHEET

(UNAUDITED)


	December 31, 2011			December 31, 2010
	(in millions, except share data)
ASSETS
Cash and cash equivalents	$	3,734		$	3,067
Investment securities available-for-sale, at fair value		1,215			831
Investment securities held-to-maturity		—			300
Accounts receivable		808			650
Settlement due from customers		601			497
Restricted security deposits held for customers		636			493
Prepaid expenses and other current assets		404			400
Deferred income taxes		343			216

Total Current Assets		7,741			6,454
Property, plant and equipment, at cost, net of accumulated depreciation		449			439
Deferred income taxes		88			5
Goodwill		1,014			677
Other intangible assets, net of accumulated amortization		665			530
Auction rate securities available-for-sale, at fair value		70			106
Investment securities held-to-maturity		36			36
Other assets		630			590

Total Assets	$	10,693		$	8,837

LIABILITIES AND EQUITY
Accounts payable	$	360		$	272
Settlement due to customers		699			636
Restricted security deposits held for customers		636			493
Obligations under litigation settlements		4			298
Accrued litigation		770			—
Accrued expenses		1,610			1,315
Other current liabilities		138			129

Total Current Liabilities		4,217			3,143
Deferred income taxes		113			74
Other liabilities		486			404

Total Liabilities		4,816			3,621
Commitments and Contingencies
Stockholders’ Equity
Class A common stock, $0.0001 par value; authorized 3,000,000,000 shares, 132,771,392 and 129,436,818 shares issued and 121,618,059 and 122,696,228 outstanding, respectively		—			—
Class B common stock, $0.0001 par value; authorized 1,200,000,000 shares, 5,245,676 and 8,202,380 issued and outstanding, respectively		—			—
Additional paid-in-capital		3,519			3,445
Class A treasury stock, at cost, 11,153,333 and 6,740,590 shares, respectively		(2,394	)		(1,250	)
Retained earnings		4,745			2,915
Accumulated other comprehensive (loss) income:
Cumulative foreign currency translation adjustments		30			105
Defined benefit pension and other postretirement plans, net of tax		(32	)		(12	)
Investment securities available-for-sale, net of tax		—			2

Total accumulated other comprehensive (loss) income		(2	)		95

Total Stockholders’ Equity		5,868			5,205
Non-controlling interests		9			11

Total Equity		5,877			5,216

Total Liabilities and Equity	$	10,693		$	8,837

MasterCard Incorporated – Page 7

MASTERCARD INCORPORATED

CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED)


	Twelve Months Ended December 31,
	2011			2010
	(in millions)
Operating Activities
Net income	$	1,904		$	1,847
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		194			148
Share based payments		80			63
Stock units withheld for taxes		(33	)		(126	)
Tax benefit for share based compensation		(12	)		(85	)
Accretion of imputed interest on litigation settlements		5			35
Deferred income taxes		(175	)		248
Other		14			6
Changes in operating assets and liabilities:
Accounts receivable		(162	)		(115	)
Income taxes receivable		—			(50	)
Settlement due from customers		(114	)		(61	)
Prepaid expenses		27			(48	)
Obligations under litigation settlements		(303	)		(603	)
Accrued litigation		770			—
Accounts payable		67			(19	)
Settlement due to customers		74			186
Accrued expenses		296			265
Net change in other assets and liabilities		52			6

Net cash provided by operating activities		2,684			1,697

Investing Activities
Acquisition of business, net of cash acquired		(460	)		(498	)
Purchases of property, plant and equipment		(77	)		(61	)
Capitalized software		(100	)		(90	)
Purchases of investment securities available-for-sale		(899	)		(329	)
Proceeds from sales of investment securities available-for-sale		485			297
Proceeds from maturities of investment securities available-for-sale		63			110
Proceeds from maturities of investment securities held-to-maturity		300			—
Investment in nonmarketable equity investments		(74	)		(67	)
Other investing activities		14			(3	)

Net cash used in investing activities		(748	)		(641	)

Financing Activities
Purchases of treasury stock		(1,148	)		—
Payment of debt		(21	)		—
Dividends paid		(77	)		(79	)
Tax benefit for share based compensation		12			85
Investment in non-controlling interest		—			2
Cash proceeds from exercise of stock options		19			11

Net cash (used in) provided by financing activities		(1,215	)		19

Effect of exchange rate changes on cash and cash equivalents		(54	)		(63	)

Net increase in cash and cash equivalents		667			1,012
Cash and cash equivalents - beginning of period		3,067			2,055

Cash and cash equivalents - end of period	$	3,734		$	3,067

MasterCard Incorporated – Page 8

MASTERCARD INCORPORATED OPERATING PERFORMANCE


	For the 3 Months ended December 31, 2011
	GDV (Bil.)		Growth (USD)			Growth (Local)			Purchase Volume (Bil.)		Growth (Local)			Purchase Trans. (Mil.)		Cash Volume (Bil.)		Growth (Local)			Cash Trans. (Mil.)		Accounts (Mil.)		Cards (Mil.)		Acceptance Locations (Mil.)
All MasterCard Credit, Charge and Debit Programs
APMEA	$	219		22.8	%		21.8	%	$	152		23.5	%		1,563	$	67		18.1	%		486		304		330		9.8
Canada		31		5.5	%		6.5	%		29		9.3	%		316		2		-17.2	%		6		41		50		0.9
Europe		257		13.6	%		16.7	%		184		12.6	%		2,455		72		28.6	%		425		225		241		9.4
Latin America		74		12.6	%		20.4	%		45		24.8	%		777		29		14.3	%		180		108		131		4.7

Worldwide less United States		581		16.3	%		18.4	%		410		17.4	%		5,111		172		20.8	%		1,096		678		751		24.7
United States		282		12.1	%		12.1	%		239		11.5	%		4,242		43		15.6	%		280		276		308		8.6

Worldwide		863		14.9	%		16.3	%		648		15.2	%		9,353		215		19.7	%		1,377		953		1,059		33.3

MasterCard Credit and Charge Programs
Worldwide less United States		405		14.9	%		16.4	%		346		16.8	%		3,967		59		13.9	%		260		469		530
United States		143		6.6	%		6.6	%		134		6.3	%		1,616		9		10.7	%		8		146		176

Worldwide		549		12.6	%		13.6	%		481		13.7	%		5,584		68		13.5	%		268		615		705

MasterCard Debit Programs
Worldwide less United States		176		19.6	%		23.4	%		63		21.0	%		1,144		113		24.8	%		836		209		221
United States		139		18.4	%		18.4	%		104		19.0	%		2,625		35		16.9	%		272		129		133

Worldwide		315		19.1	%		21.2	%		168		19.7	%		3,769		147		22.9	%		1,109		338		354

	For the 12 Months ended December 31, 2011
	GDV (Bil.)		Growth (USD)			Growth (Local)			Purchase Volume (Bil.)		Growth (Local)			Purchase Trans. (Mil.)		Cash Volume (Bil.)		Growth (Local)			Cash Trans. (Mil.)		Accounts (Mil.)		Cards (Mil.)
All MasterCard Credit, Charge and Debit Programs
APMEA	$	805		30.1	%		22.9	%	$	549		24.9	%		5,734	$	256		18.9	%		1,803		304		330
Canada		119		11.7	%		7.3	%		108		9.4	%		1,171		11		-9.6	%		22		41		50
Europe		979		21.0	%		16.7	%		709		13.3	%		9,027		271		26.6	%		1,573		225		241
Latin America		277		25.5	%		22.6	%		164		27.2	%		2,750		113		16.4	%		683		108		131

Worldwide less United States		2,180		24.2	%		19.1	%		1,529		18.3	%		18,682		651		20.9	%		4,081		678		751
United States		1,069		10.4	%		10.4	%		901		11.0	%		15,917		168		7.8	%		1,080		276		308

Worldwide		3,249		19.3	%		16.1	%		2,430		15.5	%		34,599		819		17.9	%		5,161		953		1,059

MasterCard Credit and Charge Programs
Worldwide less United States		1,521		21.2	%		16.0	%		1,296		17.3	%		14,614		225		9.3	%		972		469		530
United States		543		6.0	%		6.0	%		508		6.1	%		6,065		35		5.2	%		31		146		176

Worldwide		2,064		16.8	%		13.2	%		1,804		13.9	%		20,680		260		8.7	%		1,003		615		705

MasterCard Debit Programs
Worldwide less United States		659		31.8	%		26.8	%		233		24.7	%		4,068		426		28.0	%		3,108		209		221
United States		526		15.4	%		15.4	%		393		17.9	%		9,852		133		8.5	%		1,050		129		133

Worldwide		1,185		24.0	%		21.5	%		626		20.4	%		13,920		559		22.7	%		4,158		338		354

	For the 3 Months ended December 31, 2010
	GDV (Bil.)		Growth (USD)			Growth (Local)			Purchase Volume (Bil.)		Growth (Local)			Purchase Trans. (Mil.)		Cash Volume (Bil.)		Growth (Local)			Cash Trans. (Mil.)		Accounts (Mil.)		Cards (Mil.)
All MasterCard Credit, Charge and Debit Programs
APMEA	$	178		25.9	%		19.2	%	$	121		19.5	%		1,323	$	58		18.6	%		410		269		294
Canada		29		11.9	%		7.1	%		26		6.4	%		291		3		14.3	%		5		40		49
Europe		226		8.6	%		14.3	%		168		13.1	%		2,132		58		18.0	%		340		199		214
Latin America		66		21.7	%		19.8	%		38		25.0	%		627		28		13.3	%		172		100		123

Worldwide less United States		500		16.2	%		16.3	%		353		15.9	%		4,372		147		17.2	%		928		609		679
United States		252		1.9	%		1.9	%		214		3.4	%		3,775		38		-6.0	%		244		263		294

Worldwide		752		11.0	%		11.0	%		568		10.8	%		8,147		184		11.6	%		1,172		871		972

MasterCard Credit and Charge Programs
Worldwide less United States		353		11.5	%		11.7	%		300		13.4	%		3,455		53		2.6	%		234		447		507
United States		134		2.4	%		2.4	%		127		3.2	%		1,547		8		-9.1	%		7		143		171

Worldwide		487		8.8	%		9.0	%		427		10.2	%		5,001		61		0.9	%		241		590		678

MasterCard Debit Programs
Worldwide less United States		147		29.0	%		28.9	%		53		31.7	%		917		94		27.4	%		694		162		172
United States		117		1.4	%		1.4	%		88		3.7	%		2,228		30		-5.1	%		237		119		123

Worldwide		264		15.1	%		15.0	%		141		12.7	%		3,145		124		17.7	%		931		281		295

	For the 12 Months ended December 31, 2010
	GDV (Bil.)		Growth (USD)			Growth (Local)			Purchase Volume (Bil.)		Growth (Local)			Purchase Trans. (Mil.)		Cash Volume (Bil.)		Growth (Local)			Cash Trans. (Mil.)		Accounts (Mil.)		Cards (Mil.)
All MasterCard Credit, Charge and Debit Programs
APMEA	$	619		27.3	%		18.8	%	$	411		17.1	%		4,848	$	207		22.2	%		1,507		269		294
Canada		107		14.9	%		4.2	%		95		5.3	%		1,078		12		-3.2	%		20		40		49
Europe		809		10.9	%		13.6	%		604		13.2	%		7,867		205		14.6	%		1,272		199		214
Latin America		220		23.0	%		17.3	%		125		22.4	%		2,208		95		11.3	%		641		100		123

Worldwide less United States		1,755		17.9	%		15.2	%		1,236		14.7	%		16,000		520		16.4	%		3,440		609		679
United States		968		-0.4	%		-0.4	%		812		1.1	%		14,317		156		-7.4	%		1,003		263		294

Worldwide		2,723		10.7	%		9.1	%		2,048		8.9	%		30,317		676		9.9	%		4,443		871		972

MasterCard Credit and Charge Programs
Worldwide less United States		1,255		12.9	%		10.1	%		1,058		12.3	%		12,808		197		-0.6	%		919		447		507
United States		512		-1.9	%		-1.9	%		479		0.5	%		5,853		33		-26.7	%		29		143		171

Worldwide		1,767		8.2	%		6.3	%		1,537		8.3	%		18,661		230		-5.4	%		949		590		678

MasterCard Debit Programs
Worldwide less United States		500		32.7	%		30.4	%		178		31.2	%		3,192		323		29.9	%		2,521		162		172
United States		456		1.3	%		1.3	%		333		1.9	%		8,464		123		-0.2	%		974		119		123

Worldwide		956		15.6	%		14.7	%		510		10.5	%		11,656		446		19.9	%		3,495		281		295

APMEA = Asia Pacific / Middle East / Africa

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

MasterCard Incorporated – Page 9

Footnote

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

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

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

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

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

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

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

###

MasterCard Incorporated – Page 10

GAAP Reconciliations

($ millions, except per share data)


	Three Months Ended December 31, 2011									Three Months Ended December 31, 2010
	Actual			Special Item			Non -GAAP			Actual
Provision for litigation settlement	$	770		$	(770	)a	$	—		$	—
Total operating expenses		1,738			(770	)		968			869
Operating income (loss)		(10	)		770			760			569
Operating Margin		(0.6	%)					44.0	%		39.6	%
Income (loss) before income taxes		(12	)		770			758			582
Income tax expense (benefit)		(30	)		275	b		245			167
Net Income Attributable to MasterCard		19			495			514			415

Basic Net Income per Share	$	0.15		$	3.90		$	4.05		$	3.17
Diluted Net Income per Share	$	0.15		$	3.88		$	4.03		$	3.16

	For the Year Ended December 31, 2011									For the Year Ended December 31, 2010
	Actual			Special Item			Non -GAAP			Actual
Provision for litigation settlement	$	770		$	(770	)a	$	—		$	—
Total operating expenses		4,001			(770	)		3,231			2,787
Operating income		2,713			770			3,483			2,752
Operating Margin		40.4	%					51.9	%		49.7	%
Income before income taxes		2,746			770			3,516			2,757
Income tax expense		842			275	b		1,117			910
Net Income Attributable to MasterCard		1,906			495			2,401			1,846

Basic Net Income per Share	$	14.90		$	3.87		$	18.77		$	14.10
Diluted Net Income per Share	$	14.85		$	3.85		$	18.70		$	14.05

a-	Provision for U.S. merchant litigation settlement

b-	Tax effect of provision for litigation settlement

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

MasterCard Incorporated – Page 11

Reconciliation to Effective Tax Rate

($ millions)


	GAAP Actual			Provision for Litigation Settlement		Non-GAAP Adjusted
Three months ended December 31, 2011:
Income (loss) before income taxes	$	(12	)	$	770	$	758
Income tax expense (benefit)		(30	)		275		245
Net income attributable to MasterCard		19			495		514

Effective Tax Rate		251.6	%				32.3	%

Twelve months ended December 31, 2011:
Income before income taxes	$	2,746		$	770	$	3,516
Income tax expense		842			275		1,117
Net income attributable to MasterCard		1,906			495		2,401

Effective Tax Rate		30.6	%				31.8	%

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

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