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Form 8-K MASTERCARD INC For: Apr 28

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April 28, 2016 8:03 AM EDT




UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
_______________________________________
FORM 8-K
_______________________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 28, 2016
_______________________________________
MasterCard Incorporated 
(Exact name of registrant as specified in its charter) 
_______________________________________
Delaware 
(State or other jurisdiction
of incorporation)
001-32877
(Commission
File Number)
13-4172551 
(IRS Employer
Identification No.)
 
2000 Purchase Street
Purchase, New York 
(Address of principal executive offices)
10577 
(Zip Code)
(914) 249-2000
(Registrant's telephone number, including area code)

NOT APPLICABLE 
(Former name or former address, if changed since last report)
_______________________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
o
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

1



Item 2.02 Results of Operations and Financial Condition

On April 28, 2016, MasterCard Incorporated (“MasterCard”) issued a press release announcing financial results for its first quarter 2016.

A copy of the press release is attached hereto as Exhibit 99.1. All information in the press release is furnished but not filed.

Non-GAAP Financial Information

In the attached press release, MasterCard presents growth rates on a currency-neutral basis, which is a non-GAAP financial measure. Currency-neutral growth rates are calculated by remeasuring the prior period’s results using the current period’s exchange rates for both the translational and transactional impacts on our operating results. The impact of foreign currency translation represents the effect of translating operating results where the functional currency is different than our U.S. dollar reporting currency. The impact of the transactional foreign currency represents the effect of converting revenue and expenses occurring in a currency other than the functional currency. MasterCard’s management believes the presentation of certain currency-neutral growth rates provides relevant information. MasterCard’s management uses non-GAAP financial measures to, among other things, evaluate its ongoing operations in relation to historical results, for internal planning and forecasting purposes and in the calculation of performance-based compensation. The presentation of non-GAAP financial measures should not be considered in isolation or as a substitute for MasterCard’s related financial results prepared in accordance with GAAP.


Item 7.01 Regulation FD Disclosure

On April 28, 2016, MasterCard will host a conference call to discuss its first-quarter 2016 financial results. A copy of the presentation to be used during the conference call is attached hereto as Exhibit 99.2. All information in the presentation is furnished but not filed.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits.

Exhibit Number
Exhibit Description
99.1
Press Release issued by MasterCard Incorporated, dated April 28, 2016
99.2
Presentation of MasterCard Incorporated, dated April 28, 2016

2


SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
 
MASTERCARD INCORPORATED
 
 
 
 
Date:
April 28, 2016
By:
 
/s/ Janet McGinness
 
 
 
 
Janet McGinness
 
 
 
 
Corporate Secretary

3



EXHIBIT INDEX

Exhibit Number
Exhibit Description
99.1
Press Release issued by MasterCard Incorporated, dated April 28, 2016
99.2
Presentation of MasterCard Incorporated, dated April 28, 2016


4
 


MasterCard Incorporated Reports
First-Quarter 2016 Financial Results

•
First-quarter net income of $959 million, or $0.86 per diluted share
•
First-quarter net revenue increase of 10%, to $2.4 billion
•
First-quarter gross dollar volume up 13% and purchase volume up 12%

Purchase, NY, April 28, 2016 - MasterCard Incorporated (NYSE: MA) today announced financial results for the first quarter of 2016. The company reported net income of $959 million, a decrease of 6%, or 2% on a currency-neutral basis, and earnings per diluted share of $0.86, down 3%, or up 1% on a currency-neutral basis, versus the year-ago period. As expected, earnings per diluted share were unfavorably impacted by $0.08 due to the non-recurrence of a discrete tax credit and balance sheet remeasurement related to Venezuela in last year’s first quarter.

Net revenue for the first quarter of 2016 was $2.4 billion, a 10% increase versus the same period in 2015. On a currency-neutral basis, net revenue increased 14%. Net revenue growth was driven by the impact of the following:

•
An increase in processed transactions of 14%, to 12.6 billion;
•
A 13% increase in gross dollar volume, on a local currency basis, to $1.1 trillion; and
•
An increase in cross-border volumes of 12%.

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 first quarter of 2015, to $838 billion. As of March 31, 2016, the company’s customers had issued 2.3 billion MasterCard and Maestro-branded cards.

“The year is off to a good start with solid growth in revenue due to strong volume and transaction levels this quarter,” said Ajay Banga, president and CEO, MasterCard. “We continue to deliver against our strategy, looking to our investments and acquisitions to create a better cardholder experience, supported by a relentless commitment to security. Our encryption and token services are helping to support new ways to pay in an increasingly digital world, while our APT and Pinpoint businesses are helping to drive stronger connections between merchants and their customers.”

Total operating expenses increased 25%, or 29% on a currency-neutral basis, to $1.1 billion during the first quarter of 2016 compared to the same period in 2015. The increase was primarily due to the difference between foreign exchange gains related to currency hedging and balance sheet remeasurement which occurred in last year’s first quarter versus foreign exchange losses on currency hedging in the first

-more-


MasterCard Incorporated - Page 2

quarter of 2016. Additionally, this year’s period included the impact of higher investments to support our strategic initiatives.

Operating income for the first quarter of 2016 was flat, or up 4% on a currency-neutral basis, versus the year-ago period. The company delivered an operating margin of 55.1%.

MasterCard reported other expense of $11 million in the first quarter of 2016, the same as the first quarter of 2015.

MasterCard’s effective tax rate was 28.3% in the first quarter of 2016, versus a rate of 23.9% in the comparable period in 2015. The increase was primarily due to the non-recurrence of a discrete U.S. foreign tax credit benefit which occurred in the first quarter of 2015.

During the first quarter of 2016, MasterCard repurchased approximately 15 million shares of Class A common stock at a cost of almost $1.4 billion. Quarter-to-date through April 21st, the company repurchased an additional 3.0 million shares at a cost of $288 million, with $2.9 billion remaining under current repurchase program authorizations.

First-Quarter Financial Results Conference Call Details

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

The dial-in information for this call is 866-393-4306 (within the U.S.) and 734-385-2616 (outside the U.S.), and the passcode is 81063498. A replay of the call will be available for 30 days and can be accessed by dialing 855-859-2056 (within the U.S.) and 404-537-3406 (outside the U.S.), and using passcode 81063498.

This call can also be accessed through the Investor Relations section of the company’s website at  www.mastercard.com/investor.

Non-GAAP Financial Information

The presentation of growth rates on a currency-neutral basis represent a non-GAAP measure and are calculated by remeasuring the prior period’s results using the current period’s exchange rates for both the translational and transactional impacts in our operating results.

About MasterCard Incorporated

MasterCard (NYSE: MA), www.mastercard.com, is a technology company in the global payments industry. We operate 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



MasterCard Incorporated - Page 3

us on Twitter @MasterCardNews, join the discussion on the Beyond the Transaction Blog and subscribe for the latest news on the Engagement Bureau.

Forward-Looking Statements
This press release contains forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts may be forward-looking statements. When used in this press release, the words “believe”, “expect”, “could”, “may”, “would”, “will”, “trend” and similar words are intended to identify forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements that relate to the MasterCard’s future prospects, developments and business strategies. We caution you to not place undue reliance on these forward-looking statements, as they speak only as of the date they are made. 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.
Many factors and uncertainties relating to our operations and business environment, all of which are difficult to predict and many of which are outside of our control, influence whether any forward-looking statements can or will be achieved. Any one of those factors could cause our actual results to differ materially from those expressed or implied in writing in any forward-looking statements made by MasterCard or on its behalf, including, but not limited to, the following factors:
•
payments system-related legal and regulatory challenges (including interchange fees, surcharging and the extension of current regulatory activity to additional jurisdictions or products);
•
the impact of preferential or protective government actions;
•
regulation to which we are subject based on our participation in the payments industry;
•
regulation of privacy, data protection and security;
•
the impact of competition in the global payments industry (including disintermediation and pricing pressure);
•
the challenges relating to rapid technological developments and changes;
•
the impact of information security failures, breaches or service disruptions on our business;
•
issues related to our relationships with our customers (including loss of substantial business from significant customers, competitor relationships with our customers and banking industry consolidation);
•
the impact of our relationships with stakeholders, including issuers and acquirers, merchants and governments;



MasterCard Incorporated - Page 4

•
exposure to loss or illiquidity due to settlement guarantees and other significant third-party obligations;
•
the impact of global economic and political events and conditions, including global financial market activity, declines in cross-border activity; negative trends in consumer spending and the effect of adverse currency fluctuation;
•
reputational impact, including impact related to brand perception, account data breaches and fraudulent activity;
•
issues related to acquisition integration, strategic investments and entry into new businesses; and
•
potential or incurred liability and limitations on business resulting from litigation.
For additional information on these and other factors that could cause MasterCard’s actual results to differ materially from expected results, please see the company’s filings with the Securities and Exchange Commission, including the company’s Annual Report on Form 10-K for the year ended December 31, 2015 and any subsequent reports on Forms 10-Q and 8-K.


###

Contacts:

Investor Relations: Barbara Gasper or Matt Lanford, [email protected], 914-249-4565
Media Relations: Seth Eisen, [email protected], 914-249-3153




MasterCard Incorporated - Page 5


MASTERCARD INCORPORATED
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)

 
 
Three Months Ended March 31,
 
2016
 
2015
 
(in millions, except per share data)
Net Revenue
$
2,446

 
$
2,230

Operating Expenses
 
 
 
General and administrative
868

 
650

Advertising and marketing
135

 
142

Depreciation and amortization
95

 
87

Total operating expenses
1,098

 
879

Operating income
1,348

 
1,351

Other Income (Expense)
 
 
 
Investment income
10

 
9

Interest expense
(20
)
 
(17
)
Other income (expense), net
(1
)
 
(3
)
Total other income (expense)
(11
)
 
(11
)
Income before income taxes
1,337

 
1,340

Income tax expense
378

 
320

Net Income
$
959

 
$
1,020

 
 
 
 
Basic Earnings per Share
$
0.86

 
$
0.89

Basic Weighted-Average Shares Outstanding
1,109

 
1,148

Diluted Earnings per Share
$
0.86

 
$
0.89

Diluted Weighted-Average Shares Outstanding
1,112

 
1,152




MasterCard Incorporated - Page 6

MASTERCARD INCORPORATED
CONSOLIDATED BALANCE SHEET
(UNAUDITED)

 
 
March 31, 2016
 
December 31, 2015
 
(in millions, except per share data)
ASSETS
 
 
 
Cash and cash equivalents
$
4,894

 
$
5,747

Restricted cash for litigation settlement
542

 
541

Investments
1,314

 
991

Accounts receivable
1,186

 
1,079

Settlement due from customers
1,020

 
1,068

Restricted security deposits held for customers
937

 
895

Prepaid expenses and other current assets
713

 
663

Total Current Assets
10,606

 
10,984

Property, plant and equipment, net of accumulated depreciation of $526 and $491, respectively
669

 
675

Deferred income taxes
353

 
317

Goodwill
1,886

 
1,891

Other intangible assets, net of accumulated amortization of $871 and $816, respectively
788

 
803

Other assets
1,603

 
1,580

Total Assets
$
15,905

 
$
16,250

LIABILITIES AND EQUITY
 
 
 
Accounts payable
$
409

 
$
472

Settlement due to customers
849

 
866

Restricted security deposits held for customers
937

 
895

Accrued litigation
710

 
709

Accrued expenses
2,876

 
2,763

Other current liabilities
659

 
564

Total Current Liabilities
6,440

 
6,269

Long-term debt
3,333

 
3,268

Deferred income taxes
76

 
79

Other liabilities
545

 
572

Total Liabilities
10,394

 
10,188

Commitments and Contingencies

 

Stockholders’ Equity
 
 

Class A common stock, $0.0001 par value; authorized 3,000 shares, 1,372 and 1,370 shares issued and 1,082 and 1,095 outstanding, respectively
—

 
—

Class B common stock, $0.0001 par value; authorized 1,200 shares, 20 and 21 issued and outstanding, respectively
—

 
—

Additional paid-in-capital
4,009

 
4,004

Class A treasury stock, at cost, 291 and 275 shares, respectively
(14,882
)
 
(13,522
)
Retained earnings
16,972

 
16,222

Accumulated other comprehensive income (loss)
(620
)
 
(676
)
Total Stockholders’ Equity
5,479

 
6,028

Non-controlling interests
32

 
34

Total Equity
5,511

 
6,062

Total Liabilities and Equity
$
15,905

 
$
16,250






MasterCard Incorporated - Page 7

MASTERCARD INCORPORATED
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
 
Three Months Ended March 31,
 
2016
 
2015
 
(in millions)
Operating Activities
 
 
 
Net income
$
959

 
$
1,020

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Amortization of customer and merchant incentives
204

 
184

Depreciation and amortization
95

 
87

Share-based payments
(40
)
 
(53
)
Deferred income taxes
(20
)
 
37

Other
(15
)
 
(37
)
Changes in operating assets and liabilities:
 
 
 
Accounts receivable
(87
)
 
(30
)
Income taxes receivable
(3
)
 
(63
)
Settlement due from customers
69

 
(108
)
Prepaid expenses
(180
)
 
(57
)
Accrued litigation and legal settlements
6

 
(40
)
Accounts payable
(75
)
 
1

Settlement due to customers
(41
)
 
158

Accrued expenses
27

 
(214
)
Net change in other assets and liabilities
109

 
26

Net cash provided by operating activities
1,008

 
911

Investing Activities
 
 
 
Purchases of investment securities available-for-sale
(446
)
 
(691
)
Purchases of other short-term investments held-to-maturity
(60
)
 
—

Proceeds from sales of investment securities available-for-sale
69

 
84

Proceeds from maturities of investment securities available-for-sale
55

 
166

Proceeds from maturities of investment securities held-to-maturity
80

 
—

Acquisition of businesses, net of cash acquired
—

 
(12
)
Purchases of property, plant and equipment
(37
)
 
(31
)
Capitalized software
(38
)
 
(26
)
Other investing activities
(8
)
 
(9
)
Net cash used in investing activities
(385
)
 
(519
)
Financing Activities
 
 
 
Purchases of treasury stock
(1,357
)
 
(947
)
Dividends paid
(212
)
 
(184
)
Tax benefit for share-based payments
22

 
27

Cash proceeds from exercise of stock options
4

 
10

Other financing activities
(2
)
 
(6
)
Net cash used in financing activities
(1,545
)
 
(1,100
)
Effect of exchange rate changes on cash and cash equivalents
69

 
(222
)
Net decrease in cash and cash equivalents
(853
)
 
(930
)
Cash and cash equivalents - beginning of period
5,747

 
5,137

Cash and cash equivalents - end of period
$
4,894

 
$
4,207

 
 
 
 
Non-Cash Investing and Financing Activities
 
 
 
Fair value of assets acquired, net of cash acquired
$
—

 
$
13

Fair value of liabilities assumed related to acquisitions
$
—

 
$
—




MasterCard Incorporated - Page 8


MASTERCARD INCORPORATED OPERATING PERFORMANCE
 
For the 3 Months Ended March 31, 2016
 
GDV (Bil.)
 
Growth (USD)
 
Growth (Local)
 
Purchase Volume (Bil.)
 
Growth (Local)
 
Purchase Trans. (Mil.)
 
Cash Volume (Bil.)
 
Growth (Local)
 
Cash Trans (Mil.)
 
Accounts (Mil.)
 
Cards (Mil.)
All MasterCard Credit, Charge and Debit Programs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
APMEA
$
350

 
6.1
 %
 
13.2
%
 
$
234

 
12.5
%
 
3,261

 
$
117

 
14.9
 %
 
1,219

 
535

 
572

Canada
29

 
-2.0
 %
 
8.6
%
 
27

 
9.5
%
 
446

 
2

 
-4.6
 %
 
5

 
42

 
49

Europe
316

 
10.8
 %
 
17.7
%
 
218

 
14.5
%
 
4,857

 
99

 
25.4
 %
 
796

 
401

 
416

Latin America
73

 
-8.7
 %
 
14.4
%
 
42

 
15.0
%
 
1,482

 
31

 
13.6
 %
 
238

 
152

 
174

Worldwide less United States
769

 
6.0
 %
 
15.0
%
 
521

 
13.4
%
 
10,046

 
248

 
18.5
 %
 
2,259

 
1,131

 
1,210

United States
372

 
9.8
 %
 
9.8
%
 
316

 
10.3
%
 
5,773

 
56

 
7.0
 %
 
337

 
346

 
383

Worldwide
1,141

 
7.2
 %
 
13.2
%
 
838

 
12.2
%
 
15,819

 
303

 
16.2
 %
 
2,596

 
1,477

 
1,593

MasterCard Credit and Charge Programs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Worldwide less United States
423

 
0.6
 %
 
9.1
%
 
387

 
9.9
%
 
5,774

 
36

 
2.1
 %
 
178

 
526

 
588

United States
170

 
11.5
 %
 
11.5
%
 
162

 
11.2
%
 
1,843

 
7

 
19.0
 %
 
9

 
161

 
195

Worldwide
593

 
3.5
 %
 
9.8
%
 
549

 
10.2
%
 
7,617

 
44

 
4.5
 %
 
187

 
687

 
783

MasterCard Debit Programs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Worldwide less United States
345

 
13.5
 %
 
23.0
%
 
134

 
24.7
%
 
4,272

 
211

 
21.9
 %
 
2,081

 
605

 
622

United States
203

 
8.5
 %
 
8.5
%
 
154

 
9.5
%
 
3,930

 
49

 
5.4
 %
 
329

 
185

 
188

Worldwide
548

 
11.6
 %
 
17.2
%
 
289

 
16.1
%
 
8,201

 
260

 
18.4
 %
 
2,409

 
790

 
810

 
For the 3 months ended March 31, 2015
 
GDV (Bil.)
 
Growth (USD)
 
Growth (Local)
 
Purchase Volume (Bil.)
 
Growth (Local)
 
Purchase Trans. (Mil.)
 
Cash Volume (Bil.)
 
Growth (Local)
 
Cash Trans (Mil.)
 
Accounts (Mil.)
 
Cards (Mil.)
All MasterCard Credit, Charge and Debit Programs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
APMEA
$
330

 
8.9
 %
 
15.1
%
 
$
220

 
15.2
%
 
2,681

 
$
110

 
15.0
 %
 
1,025

 
465

 
498

Canada
30

 
2.2
 %
 
15.0
%
 
28

 
17.2
%
 
393

 
2

 
-9.6
 %
 
5

 
38

 
44

Europe
285

 
-8.5
 %
 
15.0
%
 
200

 
13.1
%
 
3,938

 
85

 
19.8
 %
 
671

 
365

 
382

Latin America
80

 
-2.9
 %
 
15.0
%
 
48

 
19.2
%
 
1,338

 
32

 
9.3
 %
 
214

 
137

 
157

Worldwide less United States
725

 
-0.1
 %
 
15.1
%
 
496

 
14.8
%
 
8,350

 
229

 
15.6
 %
 
1,915

 
1,005

 
1,081

United States
339

 
6.5
 %
 
6.5
%
 
287

 
7.0
%
 
5,117

 
52

 
3.7
 %
 
326

 
321

 
356

Worldwide
1,064

 
1.9
 %
 
12.2
%
 
783

 
11.8
%
 
13,467

 
281

 
13.2
 %
 
2,241

 
1,326

 
1,436

MasterCard Credit and Charge Programs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Worldwide less United States
421

 
-1.7
 %
 
10.9
%
 
382

 
12.3
%
 
5,160

 
39

 
-1.2
 %
 
179

 
506

 
569

United States
152

 
5.3
 %
 
5.3
%
 
146

 
6.1
%
 
1,609

 
6

 
-10.2
 %
 
7

 
151

 
182

Worldwide
573

 
0.1
 %
 
9.4
%
 
528

 
10.5
%
 
6,770

 
45

 
-2.5
 %
 
186

 
658

 
752

MasterCard Debit Programs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Worldwide less United States
304

 
2.1
 %
 
21.3
%
 
114

 
24.1
%
 
3,190

 
190

 
19.8
 %
 
1,736

 
499

 
512

United States
187

 
7.5
 %
 
7.5
%
 
141

 
8.0
%
 
3,507

 
46

 
5.9
 %
 
319

 
170

 
173

Worldwide
491

 
4.1
 %
 
15.7
%
 
255

 
14.7
%
 
6,697

 
236

 
16.8
 %
 
2,055

 
669

 
685

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 APMEA = Asia Pacific / Middle East / Africa
 Note that the figures in the preceding tables may not sum due to rounding; growth represents change from the comparable year-ago period



MasterCard Incorporated - Page 9

Footnote

The tables set forth the gross dollar volume (“GDV”), purchase volume, cash volume and the number of purchase transactions, cash transactions, accounts and cards 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 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.

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. All data is subject to revision and amendment by MasterCard’s customers subsequent to the date of its release.

In 2015 Q3, several customers purged inactive MasterCard cards and accounts. Data for the comparable periods has been revised to be consistent with this approach.

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



MasterCard Incorporated First-Quarter 2016 Financial Results Conference Call April 28, 2016

 
©2016 MasterCard. Proprietary Business Update Financial & Operational Overview Economic Update Business Highlights April 28, 20162

 
©2016 MasterCard. Proprietary 1st Quarter Selected Financial Performance 1Q 16 1Q 15 Net revenue 2,446$ 2,230$ 10% 14% Total operating expenses 1,098 879 25% 29% Operating income 1,348 1,351 (0%) 4% Operating margin 55.1% 60.6% (5.5) ppts (5.2) ppts Net income 959$ 1,020$ (6%) (2%) Diluted EPS 0.86$ 0.89$ (3%) 1% Effective tax rate 28.3% 23.9% Currency Neutral YOY Growth As Reported ($ in millions, except per share data) Note: Figures may not sum due to rounding. April 28, 20163

 
©2016 MasterCard. Proprietary $573 $593 $152 $170 $421 $423 $491 $548 $187 $203 $304 $345 $0 $400 $800 $1,200 1Q 15 1Q 16 1Q 15 1Q 16 1Q 15 1Q 16 Credit Debit Worldwide 13% Growth ($ in billions) 1st Quarter Gross Dollar Volume (GDV) $1,064 $1,141 $339 $372 $725 $769 United States 10% Growth Rest of World 15% Growth Notes: 1. Growth rates are shown in local currency 2. Figures may not sum due to rounding April 28, 20164

 
©2016 MasterCard. Proprietary 1st Quarter Processed Transactions and Cards Cards 7% Growth 1,436 1,593 687 685 0 500 1,000 1,500 2,000 2,500 1Q 15 1Q 16 Ca rd s (in m ill io ns ) MasterCard Cards Maestro Cards 2,12311,035 12,601 0 2,500 5,000 7,500 10,000 12,500 15,000 1Q 15 1Q 16 Tr an sa ct io ns (i n m ill io ns ) Processed Transactions 14% Growth 2,278 Note: Figures may not sum due to rounding April 28, 20165

 
©2016 MasterCard. Proprietary 1st Quarter Revenue ($ in millions) $963 $724 $1,006 $418 ($881) $2,230 $1,027 $796 $1,165 $497 ($1,039) $2,446 Domestic Assessments Cross-Border Volume Fees Transaction Processing Fees Other Revenue Rebates and Incentives Total Net Revenue -$2,000 -$1,000 $0 $1,000 $2,000 $3,000 1Q 15 1Q 16 Note: Figures may not sum due to rounding. 7% 10% 16% 19% 18% 10%As-reported 14%22%22%18%14%Currency-Neutral 13% Growth April 28, 20166

 
©2016 MasterCard. Proprietary Note: Figures may not sum due to rounding 1st Quarter Operating Expenses ($ in millions) $650 $142 $87 $879$868 $135 $95 $1,098 General & Administrative Advertising & Marketing Depreciation & Amortization Total Operating Expenses $0 $200 $400 $600 $800 $1,000 $1,200 1Q 15 1Q 16 34% (5)% 9% 25%As-reported 29% Growth 38% (2)% 10%Currency-Neutral April 28, 20167

 
©2016 MasterCard. Proprietary Looking Ahead Business update through April 21st Long-Term Performance Objectives Thoughts for 2016 April 28, 20168

 

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