MasterCard 2015 Annual Report Download - page 44

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The following table summarizes the primary drivers of changes in adjusted operating expenses, excluding Special Items, in 2015
and 2014:
For the Years Ended December 31,
Acquisitions Foreign Currency 1Other Total - Non-GAAP
2015 2014 2015 2014 2015 2014 2015 2014
General and administrative. . . . . . . . . . . . . . 7% 7% (3)% — % (1)% 14% 3 % 21%
Advertising and marketing . . . . . . . . . . . . . . —% —% (7)% (1)% 2 % 4% (5)% 3%
Depreciation and amortization. . . . . . . . . . . 11% 13% (1)% — % 4 % 11% 14 % 24%
Provision for litigation settlement . . . . . . . . ** ** ** ** ** ** ** **
Total operating expenses. . . . . . . . . . . . . . . . 6% 6% (4)% (1)% 1 % 12% 3 % 17%
1 Reflects translation from the euro and Brazilian real to the U.S. dollar.
General and Administrative
General and administrative expenses increased 6% in 2015 compared to 2014, and increased 21% in 2014 compared to 2013.
Excluding the impact of the Special Items, adjusted general and administrative expenses increased 3% in 2015 compared to 2014,
primarily due to acquisitions and higher data processing costs, partially offset by improved cost controls, the favorable impact
of foreign currency translation, lapping of the impact of the restructuring charge taken in 2014 and foreign exchange activity
gains. General and administrative expenses increased 21% in 2014 compared to 2013, due to the impact of investments in our
strategic initiatives, acquisitions and the restructuring charge of $87 million taken in 2014.
The significant components of our general and administrative expenses were as follows:
For the Years Ended December 31, Percent Increase (Decrease)
2015 2014 2013 2015 2014
(in millions, except percentages)
Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,105 $ 2,064 $ 1,739 2% 19%
Professional fees . . . . . . . . . . . . . . . . . . . . . 310 307 251 1% 22%
Data processing and telecommunications. 362 273 226 33% 21%
Foreign exchange activity . . . . . . . . . . . . . . (82) (30) 2 ** **
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 646 538 397 20% 36%
General and administrative expenses . . . . 3,341 3,152 2,615 6% 21%
Special Items 1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . (79) — —
Non-GAAP general and administrative
expenses (excluding Special Items) . . . . . . $ 3,262 $ 3,152 $ 2,615 3% 21%
1 Includes the impact of the U.S. Employee Pension Plan Settlement Charge, which was recognized in personnel expenses. See Non-GAAP Financial
Information.
* Tables may not sum due to rounding.
** Not meaningful.
The primary drivers of changes in general and administrative expenses in 2015 and 2014 were:
• The increase in personnel expense in 2015 is due to an increase in the number of employees resulting
from our acquisitions as well as the U.S. Employee Pension Plan Settlement Charge of $79 million recognized
in 2015, partially offset by the lapping of the restructuring charge of $87 million recorded in 2014 and
improved cost controls. The increase in personnel expenses in 2014 compared to 2013 was due to an
increase in the number of employees from acquisitions and employees required to support our strategic
initiatives and a restructuring charge of $87 million recorded in 2014.
• Professional fees consist primarily of third-party services, legal costs to defend our outstanding litigation
and the evaluation of regulatory developments that impact our industry and brand. Professional fees
remained consistent in 2015 and increased in 2014, primarily due to higher third-party service expenses.
• Data processing and telecommunication expense consists of expenses to support our global payments
network infrastructure, expenses to operate and maintain our computer systems and other