8-KEarnings & ResultsExhibits & Filings

Mastercard Inc 8-K Report, Financial Results (Oct 28, 2016)

Filed October 28, 2016For Securities:MA

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.

Frequently Asked Questions

Mastercard excluded provisions for litigation related to UK merchant disputes in both the second quarter of 2016 and the second quarter of 2015, as well as a settlement charge from the termination of its U.S. qualified defined benefit pension plan in the third quarter of 2015. These are considered significant one-time events by management.

Mastercard's management uses non-GAAP financial measures to provide a clearer understanding of its operating performance and to enable more meaningful comparisons of its results between different periods. These measures exclude the impact of significant, non-recurring events that may distort the underlying business trends.

Currency-neutral growth rates are calculated by restating the prior period's results using the current period's exchange rates. This adjustment accounts for both translational (differences in reporting currency) and transactional (conversion of non-functional currencies) foreign currency impacts, aiming to show growth independent of foreign exchange rate fluctuations.

No, the information in the press release, including the non-GAAP financial measures, is furnished and not filed with the SEC. Investors should refer to the reconciliations provided in the press release to understand how these non-GAAP figures relate to the official GAAP financial statements.