MasterCard 2011 Annual Report Download - page 53

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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”) (together, “MasterCard” or the “Company”), included elsewhere in this Report.
Percentage changes provided throughout “Management’s Discussion and Analysis of Financial Condition and
Results of Operations” were calculated on amounts rounded to the nearest thousand.
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 presents non-GAAP financial measures to enhance an investor’s evaluation of MasterCard’s
ongoing operating results, to aid in forecasting future periods and to facilitate meaningful comparison of its
results between 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, the following non-GAAP
financial measures are presented in Management’s Discussion and Analysis of Financial Condition and Results
of Operations:
• Operating expenses—The provision for the Company’s estimate for the financial portion of a potential
settlement related to the U.S. merchant litigation, based on progress in the mediation process (the “MDL
Provision”), has been excluded from operating expenses because MasterCard monitors provisions for
material litigation settlements separately from ongoing operations and evaluates ongoing operating
performance without these amounts. See “—Operating Expenses” for the table which provides a
reconciliation of operating expenses excluding the MDL Provision to the most directly comparable
GAAP measure.
• Effective income tax rate—The income tax impact associated with the MDL Provision has 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 the MDL Provision to the most directly comparable GAAP measure.
Overview
MasterCard is a global payments and technology company that connects billions of consumers, thousands of
financial institutions, millions of merchants, governments and businesses worldwide, enabling them to use
electronic forms of payment instead of cash and checks. We envision an environment where electronic payment
is the predominant means of payment. We use our technology and expertise to make payments more convenient,
secure and efficient to enable consumers to meet their needs and to provide value to all stakeholders in the
payments system.
We offer a wide range of payment solutions that enable our customers and partners to develop and
implement credit, debit, prepaid and related payment programs and solutions to deliver value to consumers. Our
customers and partners include financial institutions and other entities that act as “issuers” and “acquirers”,
merchants, government entities, telecommunications companies and other businesses. We manage a family of
well-known, widely-accepted payment brands, including MasterCard, Maestro and Cirrus, which we license to
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