This summary is based on the third quarter fiscal 2007 earnings call conducted by MasterCard Inc. (MA: chart) on October 31, 2007.

Management:

President, Chief Executive Officer and Director: Robert W. Selander
Chief Financial Officer: Chris A. McWilton
Investor Relations: Barbara Gasper

Key Investors Issues

- Net income rose 63% to $314 million or $2.31 a share.
- Revenues were up a record 20% to $1.08 billion.
- The second Class B shares conversion program approved.

Year-to-date Results

- Net income was $782 million or $5.73 per share, 83% up from $9.3 million or 7 cents a share in the prior year.
- Net revenue was $3 billion, a 20.4% increase from $2.5 billion in 2006 driven by a restructuring of pricing, including cross-border transaction pricing.
- Total operating expenses increased 9.1%, to $2.1 billion.

Third Quarter Highlights

The firm delivered net income of $314 million or $2.31 a share, including after-tax gains of $70 million, or 51 cents a share from the sale of a 25% investment in Redecard, up 62.9% from $193 million or $1.42 a share in 2006.

- Operating expenses increased 16.3% to $730 million, following a rise in advertising and marketing expenses, up 26.4% or $55 million resulting from a change in the timing of 2007 initiatives.
- General and administrative expenses increased 10.2% due to an increase in personnel costs related to the hiring of additional staff and contractors to support the customer focus strategy.
- The increase expenses was also driven by a $10 million cash contribution for the MasterCard foundation, bring contribution to date to $30 million.

Net revenues increased by 20.1% from $902 million in 2006 to $1.1 billion, driven by strong growth in dollar volume and process transactions, including cross-border volumes, which grew 20.6%.

- Currency fluctuation on the Euro relative to the U.S. dollar contributed 2.3 percentage points of the net revenue increase.
- GDV grew 12.8% on a local currency basis and 16.6% on a U.S. dollar converted basis to $577 billion.
- Purchase volume was up 14.1% on a local currency basis, cash volume was up 9.1% on a local currency basis.
- Cross-border volume, or the volume generated from cardholders who travel outside of the country where their card is issued, was up 20.6%, mainly driven by Europe, Asia-Pacific, and Latin America.
- Process transactions, or the transactions processed across MasterCard''s networks, increased 13.3% to $4.8 billion.

Revenue yield, or the net revenue per $1,000 of GDV, was 18.8 basis points, from 18.2 basis points in 2006 reflecting the strength of the business.

- The global diversification of the business results and ability to generate significant volume and revenue from non-U.S. economies remain very strong.
- Net assessments increased 20.7% or $50 million to $291 million, due to strong GDV growth.
- Net operations fees increased 19.8% or $131 million to $792 million driven by growth in process transactions, gross dollar volume, and cross border volumes.
- Growth in fees was also a result of pricing adjustments and new programs, including growth in authorization, settlement, and switch revenue, driven by higher utilization of stand-in authorization services.
- In addition, acceptance development fees were driven by increased volumes and a new fee associated with Rewards programs implemented in June 2007.

The firm repurchased 2 million shares of Class A common stock at a cost of $277 million, as the board authorized a further incremental $750 million.

- Cash and cash equivalents amounted to $3.3 billion and investment securities available for sale increased $299 million, due to a mark-to-market adjustment of the remaining Redecard investment.
- A total of 5 million Class B shares were converted into Class A common stock as part of the initial conversion program.
- The board approved a second program allowing for the conversion of the balance of the initially approved 13.4 million shares or up to 5.8 million, before 14 December 2007.

Macro-environment Outlook

The firm does not have exposure to consumer credit receivables, hence may not benefit from the upside when credit trends are favorable but do not suffer the downside during tough times.

While consumer credit volume growth is slowing in the U.S., the company is making progress in the debit arena and is working with Banc of America on the introduction of a new debit affinity product tied to Major League Baseball and National Football League sports teams.

The firm sees opportunities in Latin America, South Asia, Middle East, and Africa to penetrate the emerging middle class and young consumer markets, as well as expanding merchants’ acceptance.
In Europe, the company is making progress with securing SAPA related business through the flexible, commercially driven approach for customers and has secured Maestro agreements with many banks in Germany, Belgium, The Netherlands, and Austria.