Slide 1: MasterCard Incorporated 2nd Quarter 2008 Financial Results Conference Call
MasterCard Incorporated 2nd Quarter 2008 Financial Results Conference Call July 31, 2008
Slide 2: 2nd Quarter Financial Results
2nd Quarter Financial Results • Net income of $276 million, or $2.11 per diluted share, excluding a special item related to the American Express settlement* • Net loss of $747 million, or $5.74 per diluted share, including the special item • Net revenue of $1.2 billion, representing growth of 25.0%
Slide 3: Business Update
Business Update • Economic Overview • IPS Debit Processing • Legal and Regulatory Update • Share Repurchase and Conversion Programs 3
Slide 4: 2nd Quarter Selected Financial Performance
2nd Quarter Selected Financial Performance ($ in millions, except percentages and per share data) 2Q 2008 2Q 2007 YOY 2Q 2008 adjusted for adjusted for adjusted Actual special items* special items* Growth % Net revenue $ 1, 247 $ 1,247 $ 997 25.0 Total operating expenses 2,480 830 725 14.6 Operating
Slide 5: MasterCard Branded Volume (GDV) 2nd Quarter 2008
MasterCard Branded Volume (GDV) 2nd Quarter 2008 YOY Growth Rate % GDV U.S. Local ($ billions) Dollar Currency Asia Pacific 93 26.6 18.8 Canada 27 22.2 12.4 Europe 204 30.7 17.8 Latin America 47 26.5 17.4 South Asia/Middle East/Africa (SAMEA) 13 28.3 31.9 United States 271 6.2 6.2 Worldwide 655 18.2
Slide 6: 2nd Quarter Revenue - Operations Fees
2nd Quarter Revenue - Operations Fees ($ in millions) • Net operations fees increased $1,050 $938 100% 28.7%, or $209 to $938 $900 • Gross operations fees increased $729 97% $750 27.5%, or $222 to $1,029. Key drivers included: $600 94% – Processed transactions $450 91% growth of 13.6% $300 – Cross-b
Slide 7: 2nd Quarter Revenue - Assessments
2nd Quarter Revenue - Assessments ($ in millions) $350 $308 80% • Net assessments increased $300 $268 14.9%, or $40, to $308 70% $250 60% $200 • Gross assessments increased 50% 15.9%, or $80 to $583 due to $150 40% strong GDV growth of 18.2%* $100 $50 30% • Net assessments as a % of $0 20% gross ass
Slide 8: 2nd Quarter Operating Expenses
2nd Quarter Operating Expenses ($ in Millions) Excluding the special items*: $499 $510 • Total operating expenses $432 increased 14.6%, or $106, to $410 $830 $310 $303 • G&A increased 15.7%, or $67, $268 to $499 primarily due to: $210 – Higher personnel costs for new hires $110 – Higher severance co
Slide 9: Cash Flow Statement and Balance Sheet Highlights
Cash Flow Statement and Balance Sheet Highlights • Generated $319 million in cash flow from operations during the quarter • Cash, cash equivalents and available-for-sale securities of $2.7 billion at June 30, 2008 • Available-for-sale securities decreased $84 million during the quarter primarily due
Slide 10: Items for Consideration
Items for Consideration Thoughts for 2008 • Net revenue – continue to expect double-digit growth, excluding FX impact, but lower than 2007 growth rate • G&A – continue to expect: – Full-year growth to be lower than both 2008 top line growth and 2007 G&A growth rate of 16.8%, excluding FX impact • A&
Slide 11: MasterCard Worldwide: The Heart of Commerce
MasterCard Worldwide The Heart of Commerce”
Slide 12: Appendix A: GAAP Reconciliation
Appendix A: GAAP Reconciliation ($ million) For the three months ended 6/30/08 For the three months ended 6/30/07 YOY Grow Special Special As Actual Items As Adjusted Actual Items Adjusted As Adjuste Revenues, net $1,247 - $1,247 $997 - $997 25.0% Operating Expenses General and administrative 499 -
Slide 13: Appendix B: Amortization Schedule for the American Express Settlement
Appendix B: Amortization Schedule for the American Express Settlement ($ million) June '08 Sept '08 Dec '08 March '09 June '09 Sept '09 Dec '09 Beginning Principal Balance $ 1,649 $ 1,649 $ 1,522 $ 1,394 $ 1,263 $ 1,130 $ 996 Debt Paydown $ - $ 127 $ 129 $ 131 $ 133 $ 134 $ 136 Imputed Interest $ -