MasterCard Incorporated Reports Third-Quarter 2012 Financial Results

October 31, 2012
  • Net income of $772 million, or $6.17 per diluted share
  • Net revenue increase of 5%, to $1.9 billion
  • Gross dollar volume up 14% and purchase volume up 12%

PURCHASE, N.Y.–(BUSINESS WIRE)–Oct. 31, 2012– MasterCard Incorporated (NYSE:MA) today announced financial results for the third quarter of 2012. The company reported net income of $772 million, up 8%, and earnings per diluted share of $6.17, up 10%, in each case versus the year-ago period.

Net revenue for the third quarter of 2012 was $1.9 billion, a 5% increase versus the same period in 2011. Adjusted for currency, net revenue increased 10% compared to the same period in 2011. Net revenue growth was driven by the impact of the following:

  • A 14% increase in gross dollar volume on a local currency basis, to $918 billion;
  • An increase in processed transactions of 24%, to 8.7 billion; and
  • An increase in cross-border volumes of 14%.

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 12% on a local currency basis versus the third quarter of 2011, to $676 billion. As of September 30, 2012, the company’s customers had issued 1.9 billion MasterCard and Maestro-branded cards.

“MasterCard continues to drive solid financial performance and focus on executing key deals, investments and partnerships,” said Ajay Banga, MasterCard president and CEO. “We won significant business in Europe this quarter with Nordea, Credit Agricole and CSOB in the Czech Republic and, in the U.S., we acquired loyalty reward provider Truaxis to better connect consumers with targeted, relevant offers.

“Additionally, emerging geographies and governments continue to provide great opportunities for growth. In Africa, our win with Nakumatt, the largest supermarket chain in East Africa, is expected to deliver more than a million multi-currency prepaid loyalty cards to consumers. We also continue to support governments around the world, including new programs in the U.S. and Mexico with several large government agencies that help save money and deliver more effective and efficient programs and benefits,” Banga concluded.

Total operating expenses increased 5%, to $854 million in the third quarter of 2012. Adjusted for currency, operating expenses increased 8%. The increase in total operating expenses was primarily driven by higher personnel costs related to strategic initiatives.

Operating income for the third quarter of 2012 increased 6% over the year-ago period, and the company delivered an operating margin of 55.5%.

MasterCard reported other income of $2 million in the third quarter of 2012 versus other income of $28 million in the third quarter of 2011. The decrease was primarily driven by lower realized gains on sales of investments, an adjustment to acquisition-related provisions in last year’s third quarter and increased expenses from investments in joint ventures.

The effective tax rate was 27.6% in the third quarter of 2012, versus a rate of 30.5% in the comparable period in 2011. The decrease was primarily due to a discrete benefit related to additional export incentives and a benefit from a deduction related to the Company’s authorization software.

During the third quarter of 2012, MasterCard repurchased approximately 500,000 shares of Class A common stock at a cost of $216 million. Quarter-to-date through October 25, the company repurchased approximately 255,000 additional shares at a cost of approximately $119 million, with $1.1 billion remaining under the most recent $1.5 billion repurchase program authorization.

Year-to-Date 2012 Results

For the nine months ended September 30, 2012, MasterCard reported net income of $2.2 billion, or $17.18 per diluted share, excluding a special item taken in the second quarter for an incremental $13 million after-tax charge related to the U.S. merchant litigations. Including the special item, diluted earnings per share was $17.07.

Net revenue for the nine months ended September 30, 2012 was $5.5 billion, an increase of 10% versus the same period in 2011, or 14% adjusted for currency. Gross dollar volume growth of 16%, transaction processing growth of 27% and cross-border volume growth of 16% contributed to the net revenue growth in the year-to-date period. These factors were partially offset by an increase in rebates and incentives, primarily due to new and renewed customer agreements and increased volumes.

Excluding the special item, operating expenses increased 8%, to $2.4 billion, for the nine months ended September 30, 2012, primarily due to higher personnel costs related to strategic initiatives. Excluding currency fluctuations and the special item, total operating expenses increased 10%. Including the special item in the second quarter, total operating expenses increased 9%.

Excluding the special item, operating income increased 12% for the nine months ended September 30, 2012 versus the same period in 2011, delivering an operating margin of 55.6%.

MasterCard reported no other income/expense for the nine months ended September 30, 2012, versus other income of $35 million in the same period last year. This decrease was primarily driven by lower realized gains on sales of investments, increased expenses from investments in joint ventures and an adjustment to acquisition-related provisions made in last year’s third quarter.

MasterCard’s effective tax rate was 29.1% in the nine months ended September 30, 2012, including the special item, compared to a rate of 31.6% in the comparable period in 2011. The decrease was primarily due to discrete benefits related to additional export incentives and the conclusion of tax examinations in certain jurisdictions.

Third-Quarter Financial Results Conference Call Details

At 10:00 a.m. ET today, the company will host a conference call to discuss its third-quarter results. The dial-in information for this call is 888-771-4371 (within the U.S.) and 847-585-4405 (outside the U.S.) and the passcode is 33358414. A replay of the call will be available for one week following the meeting. The replay can be accessed by dialing 888-843-7419 (within the U.S.) and 630-652-3042 (outside the U.S.) and using passcode 33358414.

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.

Non-GAAP Financial Information

The company’s total operating expenses, operating income, 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. Presentation of growth rates adjusted for currency also represents a non-GAAP measure.

About MasterCard Incorporated

MasterCard (NYSE: MA), www.mastercard.com, 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. Follow us on Twitter @MasterCardNews, join the discussion on the Cashless Conversations Blog and subscribe for the latest news.

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 the Company’s ability to execute on key deals, investments and partnerships globally, including in emerging markets, in order to benefit consumers and support governments around the world to deliver more effective and efficient programs and benefits.

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, 2011, the company’s Quarterly Reports on Form 10-Q and Current Reports on Form 8-K that have been filed with the SEC during 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
September 30,

 

Nine Months Ended
September 30,

    2012   2011   2012   2011
    (in millions, except per share data)
                 
Revenues, net   $ 1,918     $ 1,818     $ 5,496     $ 4,986  
Operating Expenses                
General and administrative     620       565       1,790       1,599  
Advertising and marketing     176       200       480       522  
Depreciation and amortization     58       51       168       142  
Provision for litigation settlement     -       -       20       -  
Total operating expenses     854       816       2,458       2,263  
Operating income     1,064       1,002       3,038       2,723  
Other Income (Expense)                
Investment income     9       17       27       40  
Interest expense     (4 )     (6 )     (13 )     (18 )
Other income (expense), net     (3 )     17       (14 )     13  
Total other income (expense)     2       28       -       35  
Income before income taxes     1,066       1,030       3,038       2,758  
Income tax expense     294       314       885       872  
Net income     772       716       2,153       1,886  
Loss attributable to non-controlling interests     -       1       1       1  
Net Income Attributable to MasterCard   $ 772     $ 717     $ 2,154     $ 1,887  
                 
Basic Earnings per Share   $ 6.19     $ 5.65     $ 17.13     $ 14.71  
Basic Weighted Average Shares Outstanding     125       127       126       128  
Diluted Earnings per Share   $ 6.17     $ 5.63     $ 17.07     $ 14.66  
Diluted Weighted Average Shares Outstanding     125       127       126       129  
                                 

MASTERCARD INCORPORATED

CONSOLIDATED BALANCE SHEET

(UNAUDITED)

         
    September 30,
2012
  December 31,
2011
    (in millions, except share data)
ASSETS        
Cash and cash equivalents   $ 3,045     $ 3,734  
Investment securities available-for-sale     2,594       1,215  
Accounts receivable     912       808  
Settlement due from customers     815       601  
Restricted security deposits held for customers     775       636  
Prepaid expenses and other current assets     575       404  
Deferred income taxes     356       343  
Total Current Assets     9,072       7,741  
Property, plant and equipment, net     465       449  
Deferred income taxes     101       88  
Goodwill     1,087       1,014  
Other intangible assets, net of accumulated amortization     676       665  
Other assets     719       736  
Total Assets   $ 12,120     $ 10,693  
LIABILITIES AND EQUITY        

Accounts payable

  $ 319     $ 360  
Settlement due to customers     839       699  
Restricted security deposits held for customers     775       636  
Accrued litigation     790       770  
Accrued expenses     1,620       1,610  
Other current liabilities     205       142  
Total Current Liabilities     4,548       4,217  
Deferred income taxes     103       113  
Other liabilities     545       486  
Total Liabilities     5,196       4,816  
Commitments and Contingencies        
Stockholders’ Equity        

Class A common stock, $0.0001 par value; authorized 3,000,000,000 shares, 133,420,992 and 132,771,392 shares issued and 119,503,347 and 121,618,059 outstanding, respectively

    -       -  

Class B common stock, $0.0001 par value; authorized 1,200,000,000 shares, 5,010,762 and 5,245,676 issued and outstanding, respectively

    -       -  
Additional paid-in-capital     3,619       3,519  
Class A treasury stock, at cost, 13,917,645 and 11,153,333 shares, respectively     (3,527 )     (2,394 )
Retained earnings     6,786       4,745  
Accumulated other comprehensive income (loss)     34       (2 )
Total Stockholders’ Equity     6,912       5,868  
Non-controlling interests     12       9  
Total Equity     6,924       5,877  
Total Liabilities and Equity   $ 12,120     $ 10,693  
                 

MASTERCARD INCORPORATED

CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED)

     
    Nine Months Ended September 30,
    2012   2011
    (in millions)
Operating Activities        
Net income   $ 2,153     $ 1,886  
Adjustments to reconcile net income to net cash provided by operating activities:        
Depreciation and amortization     168       142  
Share-based payments     66       53  
Stock units withheld for taxes     (41 )     (33 )
Tax benefit for share-based compensation     (46 )     (11 )
Deferred income taxes     (40 )     136  
Other     35       7  
Changes in operating assets and liabilities:        
Accounts receivable     (112 )     (100 )
Income taxes receivable     (53 )     -  
Settlement due from customers     (213 )     (16 )
Prepaid expenses     (122 )     39  
Obligations under litigation settlements     20       (302 )
Accounts payable     (36 )     (8 )
Settlement due to customers     140       (84 )
Accrued expenses     129       163  
Net change in other assets and liabilities     34       28  
Net cash provided by operating activities     2,082       1,900  
Investing Activities        
Acquisition of businesses, net of cash acquired     (70 )     (460 )
Purchases of investment securities available-for-sale     (2,123 )     (188 )
Purchases of property, plant and equipment     (68 )     (51 )
Capitalized software     (96 )     (65 )
Proceeds from sales of investment securities available-for-sale     195       371  
Proceeds from maturities of investment securities available-for-sale     576       36  
Proceeds from maturities of investment securities held-to-maturity     -       301  
Investment in nonmarketable equity investments     (25 )     (8 )
Other investing activities     (1 )     9  
Net cash used in investing activities     (1,612 )     (55 )
Financing Activities        
Purchases of treasury stock     (1,135 )     (1,118 )
Dividends paid     (94 )     (58 )
Payment of debt     -       (21 )
Tax benefit for share-based compensation     46       11  
Cash proceeds from exercise of stock options     28       15  
Contribution by non-controlling interest     4       -  
Net cash used in financing activities     (1,151 )     (1,171 )
Effect of exchange rate changes on cash and cash equivalents     (8 )     12  
Net (decrease) increase in cash and cash equivalents     (689 )     686  
Cash and cash equivalents – beginning of period     3,734       3,067  
Cash and cash equivalents – end of period   $ 3,045     $ 3,753  
         
Non-Cash Investing and Financing Activities        
Fair value of assets acquired, net of cash acquired   $ 73     $ 549  
Fair value of liabilities assumed related to acquisitions   $ 3     $ 89  
                 

MASTERCARD INCORPORATED OPERATING PERFORMANCE

         
    For the 3 Months ended September 30, 2012    
All MasterCard Credit,   GDV   Growth   Growth   Purchase

Volume

  Growth   Purchase

Trans.

  Cash

Volume

  Growth   Cash

Trans.

  Accounts   Cards   Acceptance

Locations

Charge and Debit Programs   (Bil.)   (USD)   (Local)   (Bil.)   (Local)   (Mil.)   (Bil.)   (Local)   (Mil.)   (Mil.)   (Mil.)   (Mil.)
APMEA   $251   18.0 %   21.2 %   $170   19.5 %   1,760   $81   25.2 %   614   331   359   10.3
Canada   32   4.1 %   5.6 %   30   6.0 %   331   3   1.9 %   6   41   50   0.9
Europe   271   4.6 %   14.5 %   188   10.9 %   2,683   82   24.0 %   492   249   265   9.9
Latin America   74   4.0 %   16.4 %   44   18.8 %   968   30   13.1 %   178   115   133   4.9
Worldwide less United States   628   9.4 %   16.8 %   432   14.5 %   5,743   196   22.3 %   1,291   736   808   26.1
United States   290   7.0 %   7.0 %   244   7.4 %   4,399   46   5.2 %   308   279   313   8.8
Worldwide   918   8.7 %   13.5 %   676   11.8 %   10,142   241   18.6 %   1,598   1,015   1,121   34.9
                                                 
MasterCard Credit and Charge Programs                                          
Worldwide less United States   394   7.3 %   13.3 %   346   13.8 %   4,085   48   10.2 %   202   470   532    
United States   142   0.9 %   0.9 %   134   3.2 %   1,576   7   -28.7 %   7   148   177    
Worldwide   536   5.6 %   9.8 %   480   10.6 %   5,660   55   3.0 %   209   619   710    
                                                 
MasterCard Debit Programs                                                
Worldwide less United States   234   13.2 %   23.3 %   86   17.6 %   1,658   147   26.8 %   1,088   266   276    
United States   149   13.5 %   13.5 %   110   12.9 %   2,823   39   15.3 %   301   131   135    
Worldwide   382   13.3 %   19.3 %   196   15.0 %   4,482   186   24.2 %   1,389   397   411    
                                                 
    For the 9 Months ended September 30, 2012    
All MasterCard Credit,   GDV   Growth   Growth   Purchase

Volume

  Growth   Purchase

Trans.

  Cash

Volume

  Growth   Cash

Trans.

  Accounts   Cards    
Charge and Debit Programs   (Bil.)   (USD)   (Local)   (Bil.)   (Local)   (Mil.)   (Bil.)   (Local)   (Mil.)   (Mil.)   (Mil.)    
APMEA   $707   20.6 %   22.6 %   $479   21.6 %   4,981   $228   24.7 %   1,710   331   359    
Canada   93   5.2 %   7.8 %   85   8.8 %   944   8   -1.7 %   17   41   50    
Europe   776   7.3 %   16.4 %   545   12.4 %   7,617   230   27.3 %   1,389   249   265    
Latin America   218   7.6 %   19.5 %   131   24.0 %   2,814   86   13.1 %   528   115   133    
Worldwide less United States   1,794   12.1 %   18.6 %   1,241   16.7 %   16,356   553   23.3 %   3,644   736   808    
United States   864   9.8 %   9.8 %   726   9.6 %   12,972   138   10.9 %   912   279   313    
Worldwide   2,658   11.4 %   15.6 %   1,967   14.0 %   29,327   691   20.6 %   4,556   1,015   1,121    
                                                 
MasterCard Credit and Charge Programs                                                
Worldwide less United States   1,134   10.3 %   15.5 %   995   16.2 %   11,739   139   10.5 %   582   470   532    
United States   415   3.7 %   3.7 %   394   5.4 %   4,608   21   -20.8 %   20   148   177    
Worldwide   1,549   8.4 %   12.1 %   1,389   12.9 %   16,348   160   5.1 %   602   619   710    
                                                 
MasterCard Debit Programs                                                
Worldwide less United States   660   15.5 %   24.5 %   246   18.7 %   4,616   414   28.2 %   3,063   266   276    
United States   449   16.2 %   16.2 %   332   15.1 %   8,363   118   19.3 %   892   131   135    
Worldwide   1,109   15.7 %   21.0 %   578   16.6 %   12,980   531   26.1 %   3,955   397   411    
                                                 
    For the 3 Months ended September 30, 2011    
All MasterCard Credit,   GDV   Growth   Growth   Purchase

Volume

  Growth   Purchase

Trans.

  Cash

Volume

  Growth   Cash

Trans.

  Accounts   Cards    
Charge and Debit Programs   (Bil.)   (USD)   (Local)   (Bil.)   (Local)   (Mil.)   (Bil.)   (Local)   (Mil.)   (Mil.)   (Mil.)    
APMEA   $212   35.4 %   25.4 %   $144   27.2 %   1,483   $68   21.7 %   474   288   313    
Canada   31   14.7 %   8.0 %   28   10.7 %   305   3   -13.8 %   6   40   48    
Europe   259   25.1 %   17.3 %   185   13.7 %   2,328   74   27.6 %   412   213   228    
Latin America   71   31.0 %   25.1 %   43   30.5 %   856   28   17.5 %   170   106   129    
Worldwide less United States   574   28.8 %   20.6 %   401   19.7 %   4,971   172   22.6 %   1,062   646   719    
United States   271   13.7 %   13.7 %   227   13.5 %   4,043   44   15.1 %   276   271   304    
Worldwide   845   23.5 %   18.3 %   629   17.4 %   9,014   216   21.0 %   1,338   917   1,023    
                                                 
MasterCard Credit and Charge Programs                                              
Worldwide less United States   367   25.2 %   17.5 %   321   19.6 %   3,644   46   4.9 %   184   446   507    
United States   140   7.2 %   7.2 %   130   7.0 %   1,556   10   10.3 %   8   145   175    
Worldwide   507   19.6 %   14.5 %   451   15.6 %   5,200   56   5.8 %   192   592   682    
                                                 
MasterCard Debit Programs                                                
Worldwide less United States   207   35.8 %   26.4 %   81   20.2 %   1,327   126   30.8 %   878   199   212    
United States   131   21.6 %   21.6 %   97   23.5 %   2,487   34   16.6 %   268   126   129    
Worldwide   337   29.9 %   24.5 %   178   22.0 %   3,814   160   27.5 %   1,146   325   341    
                                                 
    For the 9 Months ended September 30, 2011    
All MasterCard Credit,   GDV   Growth   Growth   Purchase

Volume

  Growth   Purchase

Trans.

  Cash

Volume

  Growth   Cash

Trans.

  Accounts   Cards    
Charge and Debit Programs   (Bil.)   (USD)   (Local)   (Bil.)   (Local)   (Mil.)   (Bil.)   (Local)   (Mil.)   (Mil.)   (Mil.)    
APMEA   $586   33.1 %   23.5 %   $397   25.4 %   4,171   $190   19.7 %   1,324   288   313    
Canada   88   14.1 %   7.6 %   80   9.5 %   855   9   -7.3 %   16   40   48    
Europe   723   23.9 %   16.7 %   524   13.6 %   6,573   198   25.9 %   1,148   213   228    
Latin America   202   31.0 %   23.3 %   119   28.1 %   2,381   83   17.0 %   503   106   129    
Worldwide less United States   1,600   27.4 %   19.4 %   1,120   18.7 %   13,980   480   21.1 %   2,990   646   719    
United States   787   9.9 %   9.9 %   662   10.8 %   11,675   125   5.3 %   800   271   304    
Worldwide   2,387   21.0 %   16.1 %   1,782   15.6 %   25,655   605   17.4 %   3,790   917   1,023    
                                                 
MasterCard Credit and Charge Programs                                                
Worldwide less United States   1,028   23.3 %   15.5 %   896   17.9 %   10,292   132   1.8 %   528   446   507    
United States   400   5.8 %   5.8 %   374   6.0 %   4,448   26   3.3 %   22   145   175    
Worldwide   1,428   17.8 %   12.6 %   1,270   14.1 %   14,740   158   2.0 %   551   592   682    
                                                 
MasterCard Debit Programs                                                
Worldwide less United States   572   35.7 %   27.0 %   224   21.9 %   3,688   348   30.5 %   2,462   199   212    
United States   387   14.4 %   14.4 %   288   17.6 %   7,227   99   5.8 %   778   126   129    
Worldwide   958   26.2 %   21.6 %   512   19.4 %   10,915   446   24.1 %   3,240   325   341    
                                                 
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 that do not generally have physical cards associated with them. 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.

In 2012, certain MasterCard Debit and Credit Programs in the Europe region have changed due to a reclassification of programs. There is no impact at the All MasterCard Programs level. In addition, Purchase Transactions for certain Credit Programs in the Latin America region have been restated due to revisions from several customers. MasterCard revenue is not impacted from these changes. Data for the comparable periods in 2012, 2011 and 2010 have been restated to be consistent with these approaches.

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

GAAP Reconciliation

($ in millions, except per share data)

           
   

Nine Months Ended
September 30, 2012

 

Nine Months Ended
September 30, 2011

    Actual   Special Item   Non-GAAP   Actual
                 
Provision for litigation settlement   $ 20   $ (20)   $ -   $ -
                 
Total operating expenses   2,458   (20)   2,438   2,263
                 
Operating income   3,038   20   3,058   2,723
                 
Operating Margin   55.3%       55.6%   54.6%
                 
Income before income taxes   3,038   20   3,058   2,758
                 
Income tax expense   885   7

 a 

892   872
                 
Net Income Attributable to MasterCard   2,154   13   2,167   1,887
                 
                 
Basic Net Income per Share   $17.13   $0.10   $17.23   $14.71
                 
Diluted Net Income per Share   $17.07   $0.11   $17.18   $14.66
                 
a- Tax effect of provision for litigation settlement

Source: MasterCard Incorporated

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

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