Summary
Mastercard Inc. (MA) filed an 8-K on October 28, 2016, reporting its third-quarter 2016 financial results. The key focus for investors in this filing is the company's disclosure of non-GAAP financial measures, which exclude the impact of significant one-time items. These items include provisions for litigation related to UK merchant disputes in both 2015 and 2016, as well as a settlement charge from the termination of its U.S. qualified defined benefit pension plan in the third quarter of 2015. Management's use of these non-GAAP measures aims to provide a clearer view of ongoing operational performance and facilitate period-over-period comparisons by removing the volatility of these specific charges. Investors should pay attention to both the GAAP and non-GAAP figures to fully understand the company's underlying financial health and the impact of these exceptional items on reported earnings and expenses. The filing also highlights the use of currency-neutral growth rates, another non-GAAP measure, to better reflect operational performance independent of foreign exchange fluctuations.
Key Highlights
- 1Mastercard reported its third-quarter 2016 financial results via an 8-K filing.
- 2The company presented non-GAAP financial measures excluding specific 'special items' to illustrate ongoing operational performance.
- 3Key exclusions from non-GAAP measures include litigation provisions from UK merchant disputes (2015 & 2016) and a U.S. employee pension plan settlement charge (Q3 2015).
- 4Management believes these non-GAAP measures offer a more meaningful comparison of results between periods.
- 5Currency-neutral growth rates are also presented as a non-GAAP measure to mitigate foreign currency impacts.
- 6Reconciliations between GAAP and non-GAAP financial measures are included in the accompanying press release (Exhibit 99.1).
- 7The filing emphasizes that non-GAAP measures are supplementary and should not replace GAAP results.