MasterCard Incorporated (NYSE:MA) today announced financial results for
the fourth quarter of 2013. Excluding a special item, the company
reported net income of $684 million, up 13%, and earnings per diluted
share of $0.57 (adjusted for the company's ten-for-one stock split), up
16%, versus the year-ago period. Including the special item, a $61
million after-tax charge related to the opt-outs in the U.S. merchant
litigations, the company reported net income of $623 million, or $0.52
per diluted share. The net income and earnings per diluted share,
excluding the special item, are reconciled to their comparable GAAP
measures in the accompanying tables.
Net revenue for the fourth quarter of 2013 was $2.1 billion, a 12%
increase versus the same period in 2012. Adjusted for currency, net
revenue increased 11%. Net revenue growth was driven by the impact of
These factors were partially offset by an increase in rebates and
incentives, primarily due to new and renewed agreements and increased
Worldwide purchase volume during the quarter was up 12% on a local
currency basis versus the fourth quarter of 2012, to $805 billion. As of
December 31, 2013, the company's customers had issued almost 2 billion
MasterCard and Maestro-branded cards.
"We are very pleased with our performance this quarter and our full-year
2013 results reflect the overall strength of our global business," said
Ajay Banga, MasterCard president and CEO. "In addition to signing
several significant deals last quarter, we made new investments in
processing and person-to person payments while expanding our MasterPass
digital platform - all supporting safe and seamless payment experiences."
Excluding the special item, total operating expenses increased 11%, both
before and after adjusting for currency, to $1.1 billion for the fourth
quarter of 2013 compared to the same period in 2012. The increase was
primarily driven by higher investments in people and marketing to
support strategic initiatives. Including the special item, total
operating expenses increased 21% from the year-ago period.
Operating income for the fourth quarter of 2013 increased 13% over the
year-ago period, excluding the special item, and the company delivered
an operating margin of 47.7%.
MasterCard reported total other expense of $9 million in the fourth
quarter of 2013 versus $5 million in the fourth quarter of 2012. The
increase was primarily driven by joint venture-related expenses.
MasterCard's effective tax rate was 32.0% in the fourth quarter of 2013,
versus a rate of 32.4% in the comparable period of 2012, excluding the
special item. The decrease in the effective tax rate for the period was
primarily due to a more favorable geographic mix of earnings and a lower
state effective tax rate, partially offset by higher discrete benefits
During the fourth quarter of 2013, MasterCard repurchased 9.8 million
shares of Class A common stock at a cost of approximately $751 million.
Quarter-to-date through January 24th, the company repurchased
an additional 4.2 million shares at a cost of approximately $351
million, with $3.3 billion remaining under the current repurchase
Full-Year 2013 Results
For the year ended December 31, 2013, MasterCard reported net income of
$3.2 billion, up 15%, and earnings per diluted share of $2.61, up 19%,
in each case versus the year-ago period and excluding the special items
representing charges related to the U.S. merchant litigations taken in
both 2012 and 2013. Including the 2013 special item, full-year 2013 net
income was $3.1 billion and earnings per diluted share was $2.56.
Net revenue for full-year 2013 was $8.3 billion, an increase of 13%
versus 2012 both before and after adjusting for currency. Gross dollar
volume growth of 14%, cross-border volume growth of 18% and processed
transaction growth of 13%, contributed to the net revenue growth in the
full-year period. These increases were partially offset by an increase
in rebates and incentives.
Excluding special items in both years, total operating expenses
increased 9%, compared to 2012, both before and after adjusting for
currency, to $3.7 billion, primarily due to higher personnel costs
related to strategic initiatives. Including special items, total
operating expenses increased 11%, to $3.8 billion, versus 2012.
Excluding special items, operating income increased 16% for 2013 versus
2012, delivering an operating margin of 55.1% for full-year 2013.
Total other expense was $3 million for full-year 2013 versus $4 million
MasterCard's effective tax rate was 30.9% for full-year 2013, versus a
rate of 29.9% for full-year 2012, excluding special items. The increase
was primarily due to higher discrete benefits in 2012, partially offset
by a more favorable geographic mix of earnings in 2013. Including
special items, the effective tax rate was 30.8% for full-year 2013,
versus a rate of 29.9% for full-year 2012.
For full-year 2013, MasterCard repurchased 41 million shares at a cost
of approximately $2.4 billion.
Fourth-Quarter and Full-Year Financial Results Conference Call Details
At 9:00 a.m. ET today, the company will host a conference call to
discuss its fourth-quarter and full-year financial results.
The dial-in information for this call is 800-708-4540 (within the U.S.)
and 847-619-6397 (outside the U.S.), and the passcode is 36351326. A
replay of the call will be available for one week and can be accessed by
dialing 888-843-7419 (within the U.S.) and 630-652-3042 (outside the
U.S.), and using passcode 36351326.
This call can also be accessed through the Investor Relations section of
the company's website at www.mastercard.com.
Non-GAAP Financial Information
The company's total operating expenses, operating income, effective tax
rate, net income and earnings per diluted share, excluding special
items, are non-GAAP financial measures that are reconciled to their most
directly comparable GAAP measures in the accompanying tables.
The presentation of growth rates adjusted for currency also represent a
non-GAAP measure and are calculated by remeasuring the prior period's
results using the current period's exchange rates.
About MasterCard Incorporated
is a technology company in the global payments industry. We
operate the world's fastest payments processing network, connecting
consumers, financial institutions, merchants, governments and businesses
in more than 210 countries and territories. MasterCard's products and
solutions make everyday commerce activities - such as shopping,
traveling, running a business and managing finances - easier, more
secure and more efficient for everyone. Follow us on Twitter @MasterCardNews,
join the discussion on the Cashless
Pioneers Blog and subscribe
for the latest news on the Engagement
Statements in this press release which are not historical facts,
including statements about MasterCard's plans, strategies, beliefs and
expectations, are forward-looking and subject to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements speak only as of the date they are made.
Accordingly, except for the company's ongoing obligations under the U.S.
federal securities laws, the company does not intend to update or
otherwise revise the forward-looking information to reflect actual
results of operations, changes in financial condition, changes in
estimates, expectations or assumptions, changes in general economic or
industry conditions or other circumstances arising and/or existing since
the preparation of this press release or to reflect the occurrence of
any unanticipated events. Such forward-looking statements include,
without limitation, statements related to the company's continued
ability to invest in processing and person-to-person payments, as well
as expand its MasterPass digital platform.
Actual results may differ materially from such forward-looking
statements for a number of reasons, including those set forth in the
company's filings with the Securities and Exchange Commission (SEC),
including the company's Annual Report on Form 10-K for the year ended
December 31, 2012, the company's Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K that were filed with the SEC during 2013, as
well as reasons including difficulties, delays or the inability of the
company to achieve its strategic initiatives set forth above. Factors
other than those listed above could also cause the company's results to
differ materially from expected results.
CONSOLIDATED STATEMENT OF OPERATIONS
Three Months Ended
Twelve Months Ended
CONSOLIDATED BALANCE SHEET
Class A common stock, $0.0001 par value; authorized 3,000,000,000
1,341,541,110 and 1,336,049,030 shares issued and 1,148,838,370 and
1,184,050,750 outstanding, respectively
Class B common stock, $0.0001 par value; authorized 1,200,000,000
CONSOLIDATED STATEMENT OF CASH FLOWS
MASTERCARD INCORPORATED OPERATING PERFORMANCE
All MasterCard Credit,
The tables set forth the gross dollar volume ("GDV"), purchase volume,
cash volume and the number of purchase transactions, cash transactions,
accounts, cards on a regional and global basis for MasterCard®-branded
and MasterCard Electronic™-branded cards. Growth rates over prior
periods are provided for volume-based data.
Debit transactions on Maestro® and Cirrus®-branded cards, Mondex®
transactions and transactions involving brands other than MasterCard are
not included in the preceding tables.
For purposes of the table: GDV represents purchase volume plus cash
volume and includes the impact of balance transfers and convenience
checks; "purchase volume" means the aggregate dollar amount of purchases
made with MasterCard-branded cards for the relevant period; and "cash
volume" means the aggregate dollar amount of cash disbursements obtained
with MasterCard-branded cards for the relevant period. The number of
cards includes virtual cards, which are MasterCard-branded payment
accounts that do not generally have physical cards associated with them.
The MasterCard payment product is comprised of credit, charge and debit
programs, and data relating to each type of program is included in the
tables. Debit programs include MasterCard-branded debit programs where
the primary means of cardholder validation at the point of sale is for
cardholders either to sign a sales receipt or enter a PIN. The tables
include information with respect to transactions involving
MasterCard-branded cards that are not processed by MasterCard and
transactions for which MasterCard does not earn significant revenues.
Information denominated in U.S. dollars is calculated by applying an
established U.S. dollar/local currency exchange rate for each local
currency in which MasterCard volumes are reported. These exchange rates
are calculated on a quarterly basis using the average exchange rate for
each quarter. MasterCard reports period-over-period rates of change in
purchase volume and cash volume on the basis of local currency
information, in order to eliminate the impact of changes in the value of
foreign currencies against the U.S. dollar in calculating such rates of
The data set forth in the GDV, purchase volume, purchase transactions,
cash volume and cash transactions columns is provided by MasterCard
customers and is subject to verification by MasterCard and partial
cross-checking against information provided by MasterCard's transaction
processing systems. The data set forth in the accounts and cards columns
is provided by MasterCard customers and is subject to certain limited
verification by MasterCard. A portion of the data set forth in the
accounts and cards columns reflects the impact of routine portfolio
changes among customers and other practices that may lead to over
counting of the underlying data in certain circumstances. All data is
subject to revision and amendment by MasterCard's customers subsequent
to the date of its release.
In 2012, certain MasterCard Debit and Credit Programs in the Europe
region have changed due to a reclassification of programs. There is no
impact at the All MasterCard Programs level. In addition, Purchase
Transactions for certain Credit Programs in the Latin America region
have been restated due to revisions from several customers. MasterCard
revenue is not impacted from these changes. Data for the comparable
periods in 2012, 2011 and 2010 have been restated to be consistent with
In 2013Q4, a large Maestro customer revised their number of Maestro
cards to exclude inactive cards. Data for the comparable periods in
2013, 2012, and 2011 have been revised to be consistent with this
approach. MasterCard revenue is not impacted from these historical
Performance information for prior periods can be found in the "Investor
Relations" section of MasterCard's website at www.mastercard.com.
($ in millions, except per share data)
December 31, 2013
December 31, 2012
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