MasterCard 2008 Annual Report Download - page 57

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the consolidated financial statements and notes
of MasterCard Incorporated and its consolidated subsidiaries, including MasterCard International Incorporated
(“MasterCard International”) and MasterCard Europe sprl (“MasterCard Europe”) (together, “MasterCard”
or the “Company”) included elsewhere in this Report.
Non-GAAP Financial Information
Non-GAAP financial information is defined as a numerical measure of a company’s performance that
excludes or includes amounts so as to be different than the most comparable measure calculated and presented in
accordance with accounting principles generally accepted in the United States (“GAAP”). Pursuant to the
requirements of Regulation S-K, portions of this “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” include a comparison of certain non-GAAP financial measures to the most directly
comparable GAAP financial measures. The presentation of non-GAAP financial measures should not be
considered in isolation or as a substitute for the Company’s related financial results prepared in accordance with
GAAP.
MasterCard has presented non-GAAP financial measures to enhance an investor’s evaluation of
MasterCard’s ongoing operating results and to aid in forecasting future periods. MasterCard’s management uses
these 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. More specifically, with respect to the non-GAAP financial measures presented in this discussion:
• Operating expenses—Litigation settlements have been excluded since MasterCard monitors litigation
settlements separately from ongoing operations and evaluates ongoing operating performance without
these settlements. See “—Operating Expenses” for a table which provides a reconciliation of operating
expenses excluding litigation settlements to the most directly comparable GAAP measure to allow for a
more meaningful comparison of results between periods.
• Operating expenses—The non-cash charge associated with the donation of shares of Class A common
stock to the MasterCard Foundation (the “Foundation”) have been excluded to provide a comparison of
the ongoing operating expenses of the business and since MasterCard evaluates operations of the
business without these expenses.
• Effective income tax rate—The income tax impacts associated with litigation settlements and the stock
donation to the MasterCard Foundation have been excluded to provide a comparison of the effective
income tax rate associated with ongoing operations of the business. See “—Income Taxes” for a table
which provides a reconciliation of the effective income tax rate excluding litigation settlements and the
stock donation to the MasterCard Foundation to the most directly comparable GAAP measure to allow
for a more meaningful comparison of results between periods.
• Gross assessments growth rate—The 2007 gross assessments growth rate is presented excluding a
reclassification from assessments to currency conversion and cross-border revenues and Single
European Payment Area (“SEPA”) pricing increases. The gross assessments growth rate excluding these
items allows for a more meaningful comparison of assessment revenues between periods.
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