MasterCard Incorporated Reports Second-Quarter 2013 Financial Results

Before you go, we thought you'd like these...
Before you go close icon

MasterCard Incorporated Reports Second-Quarter 2013 Financial Results

  • Second-quarter net income of $848 million, or $6.96 per diluted share
  • Second-quarter net revenue increase of 15%, to $2.1 billion
  • Second-quarter gross dollar volume up 13% and purchase volume up 12%

PURCHASE, N.Y.--(BUSINESS WIRE)-- MasterCard Incorporated (NYS: MA) today announced financial results for the second quarter of 2013. The company reported net income of $848 million, up 19%, and earnings per diluted share of $6.96, up 23%, in each case versus the year-ago period, excluding a special item representing a charge related to the U.S. merchant litigations taken in the second quarter of 2012. These net income and earnings per diluted share growth figures are reconciled to their comparable GAAP measures in the accompanying financial tables.


Net revenue for the second quarter of 2013 was $2.1 billion, a 15% increase versus the same period in 2012, both on an as-reported basis and adjusted for currency. Net revenue growth was driven by the impact of the following:

  • A 13% increase in gross dollar volume, on a local currency basis, to just over $1 trillion;
  • An increase in cross-border volumes of 17%; and
  • An increase in processed transactions of 11%, to 9.5 billion.

These factors were partially offset by an increase in rebates and incentives.

Worldwide purchase volume during the quarter grew 12% on a local currency basis versus the second quarter of 2012, to $734 billion. As of June 30, 2013, the company's customers had issued 1.9 billion MasterCard and Maestro-branded cards.

"We had a very good second quarter supported by increases in volume and transactions in all regions of the world despite slow economic growth globally," said Ajay Banga, MasterCard president and CEO. "In addition to solid business performance, I am also pleased to report that our financial inclusion initiatives are having a meaningful impact. This year alone, we have launched nine programs in tandem with government entities and other partners in emerging markets which are designed to bring much needed financial access, convenience and security to more than 350 million people globally who previously would not have had access to financial products."

Total operating expenses increased 5%, to $868 million, during the second quarter of 2013 compared to the same period in 2012, excluding the special item. The increase was primarily driven by higher personnel expenses in support of strategic initiatives. Including the special item from 2012, total operating expenses increased 2% from the year-ago period.

Operating income for the second quarter of 2013 increased 24% over the year-ago period, excluding the special item, and the company delivered an operating margin of 58.6%.

MasterCard's effective tax rate was 31.2% in the second quarter of 2013, versus a rate of 28.0% in the comparable period in 2012, including the special item. The increase was primarily due to higher discrete benefits in 2012.

During the second quarter of 2013, MasterCard repurchased approximately 1.1 million shares of Class A common stock at a cost of approximately $581 million. Quarter-to-date through July 25, the company repurchased an additional 296,000 shares at a cost of approximately $174 million, with $1.1 billion remaining under the current repurchase program authorization.

Year-to-Date 2013 Results

For the six months ended June 30, 2013, MasterCard reported net income of $1.6 billion, up 16%, excluding the special item and up 17%, including the special item from the second quarter of 2012. Earnings per diluted share was $13.19, up 20%, excluding the special item and up 21%, including the special item from the second quarter of 2012.

Net revenue for the six months ended June 30, 2013 was $4.0 billion, an increase of 12% versus the same period in 2012. Gross dollar volume growth of 13%, cross-border volume growth of 17% and transaction processing growth of 12% contributed to the net revenue growth in the year-to-date period. These factors were partially offset by an increase in rebates and incentives.

Excluding the special item, total operating expenses increased 5%, to $1.7 billion, for the six months ended June 30, 2013, primarily due to higher personnel costs related to strategic initiatives. Including the special item, total operating expenses increased 4%.

Excluding the special item, operating income increased 17% for the first half of 2013 versus the first half of 2012, delivering an operating margin of 58.4%.

MasterCard's effective tax rate was 30.9% in the six months ended June 30, 2013, versus a rate of 30.0%, including and excluding the special item in the comparable period in 2012. The increase was primarily due to higher discrete benefits in 2012.

Second-Quarter Financial Results Conference Call Details

At 9:00 a.m. ET today, the company will host a conference call to discuss its second-quarter financial results. The dial-in information for this call is 888-771-4371 (within the U.S.) and 847-585-4405 (outside the U.S.), and the passcode is 35050120. 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 35050120.

The live call and the replay, along with supporting materials, 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, net income and earnings per share, excluding special items, are non-GAAP financial measures that are reconciled to their most directly comparable GAAP measures in the accompanying financial 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

MasterCard (NYS: MA) , www.mastercard.com,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 Conversations Blog and subscribe for the latest news.

Forward-Looking Statements

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 business prospects, including the ability to deliver financial inclusion initiatives with government entities and other partners in emerging markets.

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 have been 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.

 

MASTERCARD INCORPORATED

CONSOLIDATED STATEMENT OF OPERATIONS

(UNAUDITED)

 
    

Three Months Ended

June 30,

   

Six Months Ended

June 30,

2013   20122013   2012
(in millions, except per share data)
Net Revenue$2,096$1,820$4,002$3,578
Operating Expenses
General and administrative6215911,2291,170
Advertising and marketing186179315304
Depreciation and amortization6156123110
Provision for litigation settlement 20  20 
Total operating expenses868 846 1,667 1,604 
Operating income1,2289742,3351,974
Other Income (Expense)
Investment income1191918
Interest expense(5)(3)(10)(9)
Other income (expense)(1)(7)(9)(10)
Total other income (expense)5 (1) (1)
Income before income taxes1,2339732,3351,973
Income tax expense385 273 721 591 
Net Income$848 $700 $1,614 $1,382 
 
Basic Earnings per Share$6.98 $5.56 $13.23 $10.95 
Basic Weighted-Average Shares Outstanding121 126 122 126 
Diluted Earnings per Share$6.96 $5.55 $13.19 $10.91 
Diluted Weighted-Average Shares Outstanding122 126 122 127 
 
 

MASTERCARD INCORPORATED

CONSOLIDATED BALANCE SHEET

(UNAUDITED)

 
    June 30, 2013   December 31, 2012
(in millions, except share data)
ASSETS
Cash and cash equivalents$2,348$2,052
Restricted cash for litigation settlement724726
Investment securities available-for-sale, at fair value2,7422,951
Accounts receivable949925
Settlement due from customers6681,117
Restricted security deposits held for customers840777
Prepaid expenses and other current assets565681
Deferred income taxes126 128 
Total Current Assets8,9629,357
Property, plant and equipment, net471472
Deferred income taxes8560
Goodwill1,0501,092

Other intangible assets, net of accumulated amortization of $663 and $596,

respectively

637672
Other assets816 809 
Total Assets$12,021 $12,462 
LIABILITIES AND EQUITY
Accounts payable$259$357
Settlement due to customers6071,064
Restricted security deposits held for customers840777
Accrued litigation724726
Accrued expenses1,6161,748
Other current liabilities281 234 
Total Current Liabilities4,3274,906
Deferred income taxes98104
Other liabilities567 523 
Total Liabilities4,9925,533
Commitments and Contingencies
Stockholders' Equity

Class A common stock, $0.0001 par value; authorized 3,000,000,000 shares,

   133,997,233 and 133,604,903 shares issued and 116,280,684 and 118,405,075

   outstanding, respectively

Class B common stock, $0.0001 par value; authorized 1,200,000,000 shares, 4,639,219

   and 4,838,840 issued and outstanding, respectively

Additional paid-in-capital3,6923,641
Class A treasury stock, at cost, 17,716,549 and 15,199,828 shares, respectively(5,482)(4,139)
Retained earnings8,8237,354
Accumulated other comprehensive income (loss)(15)61 
Total Stockholders' Equity7,0186,917
Non-controlling interests11 12 
Total Equity7,029 6,929 
Total Liabilities and Equity$12,021 $12,462 
 
 

MASTERCARD INCORPORATED

CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED)

 
    

Six Months Ended

June 30,

2013   2012
(in millions)
Operating Activities
Net income$1,614$1,382
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization123110
Share-based payments(1)(30)
Deferred income taxes(32)(55)
Other2923
Changes in operating assets and liabilities:
Accounts receivable(36)(51)
Income taxes receivable158(31)
Settlement due from customers444(213)
Prepaid expenses(112)(140)
Obligations under litigation settlements20
Accounts payable(97)(27)
Settlement due to customers(451)112
Accrued expenses
Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners

20 Folks Recall Shocking Interview Moments That Made Them NOT Want the Job 20 Folks Recall Shocking Interview Moments That Made Them NOT Want the Job
Man Suspects His Wife Is Cheating On Him - Then His Daughter Reveals What's Really Going Man Suspects His Wife Is Cheating On Him - Then His Daughter Reveals What's Really Going
Nature Gets Revenge On Safari Hunter Who Killed Elephants And Lions For Sport Nature Gets Revenge On Safari Hunter Who Killed Elephants And Lions For Sport
More to Explore
Sun, Apr 30
Set Your Location
City, State, or Zip