MasterCard Incorporated Reports Fourth-Quarter and Full-Year 2011 Financial Results

February 2, 2012
  • 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, N.Y.–(BUSINESS WIRE)–Feb. 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.

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.

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.

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.

             

MASTERCARD INCORPORATED

CONSOLIDATED STATEMENT OF OPERATIONS

(UNAUDITED)

             
        Three Months Ended  

Twelve Months Ended

        December 31,  

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

CONSOLIDATED BALANCE SHEET

(UNAUDITED)

               
        December 31,     December 31,
        2011     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

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 OPERATING PERFORMANCE

         
  For the 3 Months ended December 31, 2011  

All MasterCard Credit,
Charge and Debit
Programs

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.)

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  

 

 

 

 

 

 

 

 

 

 

 

 

 

All MasterCard Credit,
Charge and Debit
Programs

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.)

 
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  

All MasterCard Credit,
Charge and Debit
Programs

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.)

 
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  

All MasterCard Credit,
Charge and Debit
Programs

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.)

 
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

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.

             

GAAP Reconciliations

($ millions, except per share data)

             
    Three Months Ended   Three Months Ended
    December 31, 2011   December 31, 2010
          Special            
    Actual     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  

For the Year Ended

    December 31, 2011  

December 31, 2010

          Special            
    Actual     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

 

Reconciliation to Effective Tax Rate

($ millions)

              Provision for    
          GAAP   Litigation   Non-GAAP
          Actual   Settlement   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 the figures in the preceding tables may not sum / calculate due to rounding

Source: MasterCard Incorporated

MasterCard
Investor Relations:
Barbara Gasper, 914-249-4565
investor_relations@mastercard.com
or
Media Relations:
Jim Issokson, 914-249-6286
james_issokson@mastercard.com

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