MasterCard Incorporated Reports Second Quarter Financial Results.PURCHASE, N.Y. -- MasterCard MasterCard Worldwide (NYSE: MA) is a mutinational corporation based in Purchase, NY in the United States. Throughout the world, its principal business is to process payments between the banks of merchants and the banks of purchasers that use its "Mastercard" branded debit- and Incorporated (NYSE NYSE See: New York Stock Exchange :MA): --Net earnings of $0.74 per share, or $101 million, excluding special items --Net loss of $2.30 per share, or $310 million, including special items --Net revenue up 9.7% to $846 million --Gross dollar volume up 16.4%, purchase volume up 17.5% MasterCard Incorporated (NYSE:MA) today announced performance for the second quarter of 2006. The company reported net income of $101 million, or $0.74 per share, excluding special items, and a net loss of $310 million, or $2.30 per share, including special items. Net revenue for the quarter was $846 million, a 9.7% increase versus the same period in 2005. Currency fluctuations had a negligible  This article or section is written like a personal reflection or and may require .Please [ improve this article] by rewriting this article or section in an . impact on revenue growth for the quarter. Fueling the higher revenue in the second quarter was growth in MasterCard's gross dollar volume (GDV GDV gastric dilatation/volvulus. ), which increased 16.4%, on a local currency basis, to $485 billion; a 17.7% increase in the number of transactions processed; and a restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). of cross-border transaction fees which was implemented in April 2006. Worldwide purchase volume rose 17.5%, on a local currency basis, during the quarter to $351 billion driven by increased cardholder card·hold·er n. One who holds a card, especially a credit card. card  hold spending on a growing number of
MasterCard cards. As expected, significant rebates and incentives in the
quarter, which included a large debit A monetary amount that is subtracted from an account balance. A debit from one account is a credit to another. See credit. portfolio conversion from a
competitive brand, partially offset gross revenue growth. As of June June: see month. 30,
2006, the company's customer banks had issued 796 million
MasterCard cards, an increase of 11.2% percent over the same period in
2005.Special items for the quarter included: --The donation donation n. gift. If made to a qualified non-profit charitable, religious, educational or public service organization, it may be deductible as a contribution in calculating income tax. DONATION, contracts. of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 13.5 million shares of Class A common stock to the MasterCard Foundation that occurred simultaneously si·mul·ta·ne·ous adj. 1. Happening, existing, or done at the same time. See Synonyms at contemporary. 2. Mathematics with the company's initial public offering in May 2006. The impact of this non-cash, non-recurring donation resulted in a $395 million expense that is not deductible That which may be taken away or subtracted. In taxation, an item that may be subtracted from gross income or adjusted gross income in determining taxable income (e.g., interest expenses, charitable contributions, certain taxes). for tax purposes; --A $23 million reserve recorded for litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. settlements; and --$7 million in interest income earned on the IPO (Initial Public Offering) The first time a company offers shares of stock to the public. While not a computer term per se, many founders, employees and insiders of computer companies have found this acronym more exciting than any tech term they ever heard. proceeds ultimately used for redemption The liberation of an estate in real property from a mortgage. Redemption is the process by which land that has been mortgaged or pledged is bought back or reclaimed. It is accomplished through a payment of the debt owed or a fulfillment of the other conditions. of shares of Class B common stock. The company's net income and earnings per share, excluding special items, are non-GAAP financial measures that are reconciled rec·on·cile v. rec·on·ciled, rec·on·cil·ing, rec·on·ciles v.tr. 1. To reestablish a close relationship between. 2. To settle or resolve. 3. to their most directly comparable GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). measure in the accompanying ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. financial tables. "Our solid operational performance for the quarter demonstrates that through our strengths as a franchisor, processor and advisor, we are successfully delivering on our commitment to bring our customers innovative products and value-added services A value-added service (VAS) is a telecommunications industry term for non-core services or, in short, all services beyond standard voice calls and fax transmissions. to help them enhance the profitability of their payments businesses," said Robert Robert, Henry Martyn 1837-1923. American army engineer and parliamentary authority. He designed the defenses for Washington, D.C., during the Civil War and later wrote Robert's Rules of Order (1876). Noun 1. W. Selander, MasterCard president and chief executive officer. "Our customers around the world are increasingly recognizing MasterCard as their brand of choice because of the strength of our unified global organization, advanced transaction processing Updating the appropriate database records as soon as a transaction (order, payment, etc.) is entered into the computer. It may also imply that confirmations are sent at the same time. Transaction processing systems are the backbone of an organization because they update constantly. network, powerful brand and our ability to provide them with unique payment solutions," he said. "This quarter's strong performance in emerging markets such as our Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. and South Asia/Middle East Africa regions illustrates our ability to displace dis·place tr.v. dis·placed, dis·plac·ing, dis·plac·es 1. To move or shift from the usual place or position, especially to force to leave a homeland: paper-based forms of payment by bringing the benefits of electronic payments to every corner of the world." Total operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. increased 93.4%, to $1.1 billion, during the quarter compared to the same period in 2005. This increase was primarily driven by the contributions to the MasterCard Foundation, an increase in advertising and market development expenses related to the sponsorship of the 2006 FIFA FIFA International Association Football Federation [French Fédération Internationale de Football Association] FIFA n abbr (= Fédération Internationale de Football Association) → FIFA f World Cup, and an increase in personnel expenses to support the company's strategic initiatives. Currency fluctuations had a negligible impact on expense growth for the quarter. Total other income/(expense) was $13 million in the second quarter 2006 versus ($5) million in last year's second quarter. The increase was driven by interest income from higher cash balances related to proceeds received from the IPO, as well as increases in interest rates and dividends received. MasterCard's effective tax rate was significantly impacted by the share donation to the MasterCard Foundation. Excluding the impact of the share donation, the effective tax rate would have been 33.6% and 34.0%, in the three and six months ended June 30, 2006, respectively, down from the comparable periods in 2005. The rates in 2006 were lower than 2005 primarily due to favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. tax audit developments and the tax benefit related to qualified domestic production activities as allowed under the American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of Jobs Creation Act of 2004. The company's effective tax rate, excluding the impact of the share donation, is a non-GAAP financial measure that is reconciled to the most directly comparable GAAP measure in the accompanying financial tables. Commenting on the company's financial performance, Chris CHRIS Chemical Hazards Response Information System (US DoD) CHRIS California Historical Resources Information System CHRIS Computerized Human Resources Information System CHRIS Command Human Resources Intelligence System A. McWilton, MasterCard's chief financial officer, noted that "During the second quarter, MasterCard continued to deliver solid revenue growth and good operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: reflecting our globally competitive business model. Our capital position remains strong with $2.1 billion of cash, cash equivalents and available-for-sale securities." Year-to-Date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. 2006 Results For the six months ended June 30, 2006, MasterCard reported net income of $227 million, or $1.68 per share, excluding the impact of the special items described above. Including the impact of the special items, the company reported a net loss of $184 million, or $1.36 per share. Net revenue for the six months ended June 30, 2006 was $1.6 billion, a 10.8% increase versus the same period in 2005. Currency fluctuations negatively impacted this growth by approximately 1%. Total operating expenses increased 54.3%, to $1.7 billion, for the six-month period compared to the same period in 2005. Currency fluctuations reduced this growth by approximately 1% in the year-to-date period. Total other income/(expense) was $24 million for the six-month period versus ($12) million for the same period in 2005. This change was driven by a $26 million increase in investment income, including the $7 million special item earned on IPO proceeds. Interest expense also decreased by $8 million due to a refund TO REFUND. To pay back by the party who has received it, to the party who has paid it, money which ought not to have been paid. 2. On a deficiency of assets, executors and administrators cum testamento annexo, are entitled to have refunded to them legacies of interest assessed in connection with an audit of the company's federal income tax return and a reduction of interest reserve requirements Reserve Requirements Requirements regarding the amount of funds that banks must hold in reserve against deposits made by their customers. This money must be in the bank's vaults or at the closest Federal Reserve Bank. related to the company's tax reserves. Second Quarter Results Conference Call Details On Wednesday Wednesday: see week. , August 2, the company will host a conference call to discuss its second quarter financial results beginning at 9:00 a.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT . The dial-in information for this call is 800-299-7098 (within the US) and 617-801-9715 (outside the US) and the passcode is 64899002. A replay of the call will be available through August 9. The replay can be accessed by dialing 888-286-8010 (within the US) and 617-801-6888 (outside the US) and using passcode 65688882. The live call and the replay, along with supporting materials, can also be accessed through the company's website at www.mastercard.com. About MasterCard Incorporated MasterCard Incorporated advances global commerce by providing a critical economic link among financial institutions, businesses, cardholders and merchants worldwide. As a franchisor, processor and advisor, MasterCard develops and markets payment solutions, processes close to 14 billion transactions each year, and provides industry-leading analysis and consulting services Noun 1. consulting service - service provided by a professional advisor (e.g., a lawyer or doctor or CPA etc.) service - work done by one person or group that benefits another; "budget separately for goods and services" to financial institution customers and merchants. Through its family of brands, including MasterCard(R), Maestro (1) (Maestro NT) An earlier name for scheduling software for Windows NT from Tivoli Systems, Inc. When IBM acquired Tivoli in 1996, the program was renamed IBM Tivoli Workload Scheduler. (R) and Cirrus(R), MasterCard serves consumers and businesses in more than 210 countries and territories. For more information go to www.mastercard.com. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Statements in this press release which are not historical facts, including statements about MasterCard's plans, strategies, beliefs and expectations, are forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. and subject to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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 CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or arising and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. existing since the preparation of this press release or to reflect the occurrence of any unanticipated events. Such forward-looking statements include, without limitation: --the company's commitment to bring its customers innovative products and value-added services to enhance the profitability of their payments businesses; --the company's ability to provide unique payment solutions; --the company's ability to displace paper-based forms of payment through the benefits of electronic payments; and --the company's continued strong capital position. 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 Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December December: see month. 31, 2005, the company's Quarterly Reports on Form 10-Q Form 10-Q See 10-Q. and Current Reports on Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. that it has filed with the SEC during 2006, as well as reasons including difficulties, delays or the inability of the company to achieve its strategic initiatives set forth above. Factors other than those listed above could also cause the company's results to differ materially from expected results.
MASTERCARD INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Six Months
Ended June 30, Ended June 30,
----------------------- -----------------------
2006 2005 2006 2005
----------- ----------- ----------- -----------
(In thousands, except per share data)
Revenues, net $846,489 $771,867 $1,584,942 $1,430,105
Operating Expenses
General and
administrative 365,161 319,187 712,998 625,803
Advertising and market
development 307,066 231,578 489,749 403,257
Litigation settlements 23,250 - 23,250 -
Charitable
contributions to the
MasterCard Foundation 400,285 - 400,285 -
Depreciation and
amortization 24,693 28,666 49,913 57,096
----------- ----------- ----------- -----------
Total operating
expenses 1,120,455 579,431 1,676,195 1,086,156
----------- ----------- ----------- -----------
Operating income
(loss) (273,966) 192,436 (91,253) 343,949
----------- ----------- ----------- -----------
Other Income (Expense)
Investment income, net 28,999 13,479 49,691 23,528
Interest expense (16,068) (17,477) (26,708) (34,333)
Other income
(expense), net 443 (1,044) 595 (1,555)
----------- ----------- ----------- -----------
Total other income
(expense) 13,374 (5,042) 23,578 (12,360)
----------- ----------- ----------- -----------
Income (loss) before
income taxes (260,592) 187,394 (67,675) 331,589
Income tax expense 49,868 67,146 116,041 118,047
----------- ----------- ----------- -----------
Net Income (Loss) $(310,460) $120,248 $(183,716) $213,542
=========== =========== =========== ===========
Basic Net Income
(Loss) per Share $(2.30) $.89 $(1.36) $1.58
=========== =========== =========== ===========
Basic Weighted average
shares outstanding 135,252 134,969 135,127 134,969
=========== =========== =========== ===========
Diluted Net Income
(Loss) per Share $(2.30) $.89 $(1.36) $1.58
=========== =========== =========== ===========
Diluted Weighted
average shares
outstanding 135,252 134,969 135,127 134,969
=========== =========== =========== ===========
MASTERCARD INCORPORATED
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
June 30, December 31,
2006 2005
------------ ------------
(In thousands, except
share data)
ASSETS
Cash and cash equivalents $1,209,856 $545,273
Investment securities, at fair value:
Trading 17,824 22,472
Available-for-sale 853,592 714,147
Accounts receivable 410,321 347,754
Settlement due from members 241,230 211,775
Restricted security deposits held for
members 111,168 97,942
Prepaid expenses 185,577 167,209
Other current assets 132,200 121,326
------------ ------------
Total Current Assets 3,161,768 2,227,898
Property, plant and equipment, at cost (less
accumulated depreciation of $392,322 and
$373,319) 227,900 230,614
Deferred income taxes 229,085 225,034
Goodwill 208,131 196,701
Other intangible assets (less accumulated
amortization of $309,034 and $272,913) 272,310 273,854
Municipal bonds held-to-maturity 193,940 194,403
Prepaid expenses 198,331 201,132
Other assets 150,474 150,908
------------ ------------
Total Assets $4,641,939 $3,700,544
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $202,816 $185,021
Settlement due to members 205,688 175,021
Restricted security deposits held for
members 111,168 97,942
Obligations under U.S. merchant lawsuit and
other litigation settlements -- current 212,630 189,380
Accrued expenses 754,768 850,657
Other current liabilities 76,353 58,682
------------ ------------
Total Current Liabilities 1,563,423 1,556,703
Deferred income taxes 64,408 61,188
Obligations under U.S. merchant lawsuit and
other litigation settlements 436,484 415,620
Long-term debt 229,580 229,489
Other liabilities 226,418 263,776
------------ ------------
Total Liabilities 2,520,313 2,526,776
Commitments and Contingencies
Minority interest 4,620 4,620
Stockholders' Equity
Class A common stock, $.0001 par value;
authorized 3,000,000,000 shares, 79,631,922
and no shares issued and outstanding,
respectively 8 -
Class B common stock, $.0001 par value;
authorized 1,200,000,000 shares, 55,337,407
and 134,969,329 shares issued and
outstanding, respectively 6 14
Class M common stock, $.0001 par value,
authorized 1,000,000 shares, 1,572 and no
shares issued and outstanding, respectively - -
Additional paid-in capital 3,302,298 974,605
Retained earnings (accumulated deficit) (1,263,102) 145,515
Accumulated other comprehensive income, net
of tax:
Cumulative foreign currency translation
adjustments 87,290 50,818
Net unrealized loss on investment
securities available-for-sale (6,835) (2,543)
Net unrealized gain (loss) on derivatives
accounted for as hedges (2,659) 739
------------ ------------
Total accumulated other comprehensive
income, net of tax 77,796 49,014
------------ ------------
Total Stockholders' Equity 2,117,006 1,169,148
------------ ------------
Total Liabilities and Stockholders' Equity $4,641,939 $3,700,544
============ ============
MASTERCARD INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months
Ended June 30,
-----------------------
2006 2005
----------- -----------
(In thousands)
Operating Activities
Net income (loss) $(183,716) $213,542
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Depreciation and amortization 49,913 57,096
Charitable contribution of common stock to
the MasterCard Foundation 394,785 -
Stock-based compensation expense 6,825 -
Impairment of assets 428 1,348
Deferred income taxes (7,370) (12,156)
Other 4,537 4,437
Changes in operating assets and liabilities:
Trading securities 4,648 4,012
Accounts receivable (57,398) (39,854)
Settlement due from members (16,842) (4,648)
Prepaid expenses (14,295) 14,587
Other current assets (5,082) (1,091)
Prepaid expenses, non-current 3,998 (2,520)
Accounts payable 15,818 (3,538)
Settlement due to members 20,014 1,086
Litigation settlement accruals, including
accretion of imputed interest 44,114 8,187
Accrued expenses (85,614) (37,643)
Net change in other assets and liabilities 8,818 (5,566)
----------- -----------
Net cash provided by operating activities 183,581 197,279
----------- -----------
Investing Activities
Purchases of property, plant and equipment (15,670) (18,925)
Capitalized software (15,886) (22,024)
Purchases of investment securities available-
for-sale (1,506,806) (1,265,993)
Proceeds from sales and maturities of
investment securities available-for-sale 1,356,768 1,320,205
Other investing activities (1,403) (265)
----------- -----------
Net cash provided by (used in) investing
activities (182,997) 12,998
----------- -----------
Financing Activities
Cash received from sale of common stock, net
of issuance costs 2,449,910 -
Cash payment for redemption of common stock (1,799,937) -
----------- -----------
Net cash provided by financing activities 649,973 -
----------- -----------
Effect of exchange rate changes on cash and
cash equivalents 14,026 (19,192)
----------- -----------
Net increase in cash and cash equivalents 664,583 191,085
Cash and cash equivalents -- beginning of
period 545,273 328,996
----------- -----------
Cash and cash equivalents -- end of period $1,209,856 $520,081
=========== ===========
MASTERCARD INCORPORATED OPERATING PERFORMANCE
For the 3 Months ended June 30, 2006
------------------------------------------------
GDV Growth Purchase Growth Purchase
All MasterCard Volume Transactions
Credit, Charge and (Billions) (Local)(Billions) (Local) (Millions)
Debit Programs ------------------------------------------------
South Asia / Middle
East Africa $7 49.4% $4 35.2% 68
Asia / Pacific 70 10.1% 40 16.0% 510
Europe 127 14.2% 94 14.1% 1,232
Latin America 29 26.9% 14 30.6% 316
Canada 19 13.8% 16 15.6% 193
United States 232 17.9% 182 18.6% 2,741
Worldwide 485 16.4% 351 17.5% 5,059
MasterCard Credit and
Charge Programs
United States 154 8.8% 129 9.7% 1,483
Worldwide 362 12.0% 279 13.6% 3,469
MasterCard Debit
Programs
United States 78 41.2% 54 47.5% 1,258
Worldwide 124 31.8% 72 36.0% 1,591
For the 3 Months ended June 30, 2006
---------------------------------------------------------
Cash Growth Cash Accounts Cards Acceptance
All Volume Trans- Locations
MasterCard actions
Credit, (Billions)(Local)(Millions)(Millions)(Millions)(Millions)
Charge and
Debit,
Programs ---------------------------------------------------------
South Asia
/ Middle
East Africa $3 78.7% 25 20 23 0.7
Asia /
Pacific 30 3.1% 135 136 149 6.9
Europe 34 14.4% 222 126 139 8.1
Latin
America 15 23.8% 112 66 79 2.1
Canada 3 3.7% 5 27 33 0.7
United
States 50 15.5% 240 317 372 6.3
Worldwide 135 13.6% 738 692 796 24.9
MasterCard
Credit and
Charge
Programs
United
States 25 4.6% 16 232 282
Worldwide 83 6.9% 283 563 655
MasterCard
Debit
Programs
United
States 24 29.3% 224 84 90
Worldwide 52 26.4% 455 130 141
Note that columns in the table above may not add due to rounding;
growth represents change from the comparable year-ago period.
Footnote Text that appears at the bottom of a page that adds explanation. It is often used to give credit to the source of information. When accumulated and printed at the end of a document, they are called "endnotes." Set forth above is information regarding the performance results for the three month period ended June 30, 2006 for the payment programs of MasterCard International Incorporated and MasterCard Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). sprl
(collectively, "MasterCard"), the principal operating
subsidiaries An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. of MasterCard Incorporated.The table sets 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 basis for MasterCard(R)-branded and MasterCard Electronic(TM)-branded cards. Growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. over prior periods are provided for volume-based data. Debit transactions on Maestro(R) and Cirrus(R) -branded cards, Mondex Mondex is a smart card electronic cash system which was developed originally by National Westminster Bank and subsequently sold to MasterCard International. Mondex launched in a number of markets during the 1990s, expanding from an original trial in Swindon, UK to Hong Kong, (R) transactions and other branded transactions are not included in the preceding tables. For purposes of the table: GDV represents purchase volume plus cash volume and includes the impact of balance transfers and convenience checks; "purchase volume" means the aggregate dollar amount of purchases made (including PIN point-of-sale point of sale n. pl. points of sale A business or place where a product or service can be purchased. Also called point of purchase. point ) 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 relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc each type of program is included in the tables. Debit programs include MasterCard-branded debit programs where the primary means of cardholder validation See validate. validation - The stage in the software life-cycle at the end of the development process where software is evaluated to ensure that it complies with the requirements. at the point of sale is for cardholders either to sign a sales receipt or enter a Personal Identification Number (PIN). Information denominated in U.S. dollars is calculated by applying an established U.S. dollar/local currency exchange rate for each local currency in which MasterCard volumes are reported. These exchange rates are calculated on a quarterly basis using the average exchange rate for each quarter. However, MasterCard reports period-over-period rates of change in GDV, purchase volume and cash volume solely on the basis of local currency information, in order to eliminate the impact of changes in the value of foreign currencies against the U.S. dollar in calculating such rates of change. The data set forth in the GDV, purchase volume, purchase transactions, cash volume and cash transactions columns is derived de·rive v. de·rived, de·riv·ing, de·rives v.tr. 1. To obtain or receive from a source. 2. from information provided by MasterCard members that is subject to verification See verify. verification - The process of determining whether or not the products of a given phase in the life-cycle fulfil a set of established requirements. by MasterCard and partial cross-checking against information provided by MasterCard's transaction processing systems A Transaction Processing System (TPS) is a type of information system. TPSs collect, store, modify, and retrieve the transactions of an organization. A transaction is an event that generates or modifies data that is eventually stored in an information system. . The data set forth in the accounts, cards and acceptance locations columns is derived from information provided by MasterCard members and is subject to certain limited verification by MasterCard. Certain information with respect to acceptance locations is provided by third parties and has not been independently verified ver·i·fy tr.v. ver·i·fied, ver·i·fy·ing, ver·i·fies 1. To prove the truth of by presentation of evidence or testimony; substantiate. 2. by MasterCard. All data is subject to revision (programming) revision - A release of a piece of software which is not a major release or a bugfix, but only introduces small changes or new features. and amendment by MasterCard's members subsequent to the date of its release. Volumes for the period indicated in the table above for MasterCard-branded debit programs in the U.S. region and credit programs in the Asia/Pacific region are higher due to expanded data collection of PIN point-of-sale volumes. A portion of the data set forth in the accounts and cards columns reflects the impact of routine portfolio changes among members and other practices that may lead to over counting of the underlying data in certain circumstances. The table includes information with respect to MasterCard-branded transactions that are not processed by MasterCard and transactions for which MasterCard does not earn significant revenues.
Reconciliation to Net Income (Loss) and Earnings (Loss) Per Share
($ million) For the three months For the six months
ended June 30, 2006 ended June 30, 2006
Special As Special As
Actual Items Adjusted Actual Items Adjusted
------ ----- -------- ------ ----- --------
Revenue $846 - $846 $1,585 - $1,585
General Admin. and
Litigation 388 23 a 365 736 23 a 713
Advertising and
Marketing 307 - 307 490 - 490
Charitable
Contributions 400 395 b 5 c 400 395 b 5 c
Operating Income (Loss) (274) 418 144 (91) 418 327
Investment Income 29 (7)d 22 50 (7)d 43
Net Income (Loss) (310) 411 e 101 (184) 411 e 227
Earnings (Loss) Per
Share (2.30) 3.04 e 0.74 (1.36) 3.04 e 1.68
(a) Litigation settlements
(b) Contribution of stock to the MasterCard Foundation
(c) Contribution of cash to the MasterCard Foundation
(d) Interest income on IPO proceeds held for redemption
(e) Net tax effect of all special items is negligible
Reconciliation to Effective Tax Rate
Non-
GAAP Non- GAAP
($ million) GAAP Effective Stock GAAP Effective
Actual Tax Rate Donation Adjusted Tax Rate
------ -------- -------- -------- --------
Three months ended June
30, 2006:
Income (Loss) before
income taxes $(261) 19.1% $395 $134 33.6%
Income tax expense (a) 50 45
------ --------
Net Income (Loss) $(311) $89
====== ========
Six months ended June 30,
2006:
Income (Loss) before
income taxes $(68) 171.5% $395 $327 34.0%
Income tax expense (a) 116 111
------ --------
Net Income (Loss) $(184) $216
====== ========
(a) Income tax expense has been calculated with and without the impact
of the stock donation
For more information about these reconciliations, refer to MasterCard Incorporated's Form 8-K filed with the Securities and Exchange Commission on August 2, 2006. |
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