EX-99.1 2 d720800dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

 

LOGO

   LOGO

MasterCard Incorporated Reports

First-Quarter 2014 Financial Results

 

    First-quarter net income of $870 million, or $0.73 per diluted share

 

    First-quarter net revenue increase of 14%, to $2.2 billion

 

    First-quarter gross dollar volume up 14% and purchase volume up 13%

Purchase, NY, May 1, 2014 – MasterCard Incorporated (NYSE: MA) today announced financial results for the first quarter of 2014. The company reported net income of $870 million, up 14%, and earnings per diluted share of $0.73, up 18%, in each case versus the year-ago period.

Net revenue for the first quarter of 2014 was $2.2 billion, a 14% increase versus the same period in 2013, both as-reported and adjusted for currency. Net revenue growth was driven by the impact of the following:

 

    A 14% increase in gross dollar volume, on a local currency basis, to $1.0 trillion;

 

    An increase in processed transactions of 14%, to 9.8 billion; and

 

    An increase in cross-border volumes of 17%.

These factors were partially offset by an increase in rebates and incentives, primarily due to new and renewed agreements and increased volumes.

Worldwide purchase volume during the quarter was up 13% on a local currency basis versus the first quarter of 2013, to $759 billion. As of March 31, 2014, the company’s customers had issued just over 2 billion MasterCard and Maestro-branded cards.

Commenting on the company’s performance, Ajay Banga, president and CEO of MasterCard, said, “We kicked off the year with a strong quarter, despite a mixed global economy. We secured several new agreements, including three of the largest retailers. Wal-Mart and Sam’s Club will flip their co-brand portfolios to MasterCard. Target will also shift its co-brand to MasterCard and use our chip and PIN technology across all of its card products as part of a commitment to provide its customers with the most secure payment product. At the same time, we continue to invest in technology and acquisitions that will speed our development of mobile and online solutions.”

Total operating expenses increased 12%, or 11% after adjusting for currency, to $892 million, during the first quarter of 2014 compared to the same period in 2013. The increase was primarily driven by higher investments, including acquisitions, to support strategic initiatives.

Operating income for the first quarter of 2014 increased 16% over the year-ago period and the company delivered an operating margin of 59.0%.

 

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MasterCard Incorporated – Page 2

 

MasterCard’s effective tax rate was 32.0% in the first quarter of 2014, versus a rate of 30.5% in the comparable period in 2013. The increase was primarily due to a less favorable geographic mix of taxable earnings.

During the first quarter of 2014, MasterCard repurchased approximately 21.3 million shares of Class A common stock at a cost of approximately $1.7 billion. Quarter-to-date through April 24, the company repurchased an additional 6.2 million shares at a cost of approximately $453 million, with $1.5 billion remaining under the current repurchase program authorization.

First-Quarter Financial Results Conference Call Details

At 8:30 a.m. ET today, the company will host a conference call to discuss its first-quarter 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 36946578. 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 36946578.

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 presentation of growth rates adjusted for currency 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 (NYSE: 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 Pioneers Blog and subscribe for the latest news on the Engagement Bureau.


MasterCard Incorporated – Page 3

 

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 with respect to its merchant relationships and mobile and online solutions.

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, 2013, the company’s Quarterly Reports on Form 10-Q and Current Reports on Form 8-K that have been filed with the SEC during 2014, 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.

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Contacts:

Investor Relations: Barbara Gasper or Catherine Murchie, investor_relations@mastercard.com, 914-249-4565

Media Relations: Seth Eisen, Seth_Eisen@mastercard.com, 914-249-3153


MasterCard Incorporated – Page 4

 

MASTERCARD INCORPORATED

CONSOLIDATED STATEMENT OF OPERATIONS

(UNAUDITED)

 

     Three Months Ended
March 31,
 
     2014     2013  
     (in millions, except per share data)  

Net Revenue

   $ 2,177      $ 1,906   

Operating Expenses

    

General and administrative

     670        608   

Advertising and marketing

     149        129   

Depreciation and amortization

     73        62   
  

 

 

   

 

 

 

Total operating expenses

     892        799   
  

 

 

   

 

 

 

Operating income

     1,285        1,107   

Other Income (Expense)

    

Investment income

     7        8   

Interest expense

     (6     (5

Other income (expense), net

     (5     (8
  

 

 

   

 

 

 

Total other income (expense)

     (4     (5
  

 

 

   

 

 

 

Income before income taxes

     1,281        1,102   

Income tax expense

     411        336   
  

 

 

   

 

 

 

Net Income

   $ 870      $ 766   
  

 

 

   

 

 

 

Basic Earnings per Share

   $ 0.73      $ 0.62   
  

 

 

   

 

 

 

Basic Weighted-Average Shares Outstanding

     1,185        1,226   
  

 

 

   

 

 

 

Diluted Earnings per Share

   $ 0.73      $ 0.62   
  

 

 

   

 

 

 

Diluted Weighted-Average Shares Outstanding

     1,189        1,230   
  

 

 

   

 

 

 


MasterCard Incorporated – Page 5

 

MASTERCARD INCORPORATED

CONSOLIDATED BALANCE SHEET

(UNAUDITED)

 

     March 31, 2014     December 31, 2013  
     (in millions, except share data)  
ASSETS     

Cash and cash equivalents

   $ 4,019      $ 3,599   

Restricted cash for litigation settlement

     540        723   

Investment securities available-for-sale, at fair value

     2,543        2,696   

Accounts receivable

     995        966   

Settlement due from customers

     1,476        1,351   

Restricted security deposits held for customers

     913        911   

Prepaid expenses and other current assets

     552        471   

Deferred income taxes

     304        233   
  

 

 

   

 

 

 

Total Current Assets

     11,342        10,950   

Property, plant and equipment, net of accumulated depreciation of $398 and $394, respectively

     528        526   

Deferred income taxes

     65        70   

Goodwill

     1,286        1,122   

Other intangible assets, net of accumulated amortization of $576 and $534, respectively

     723        672   

Other assets

     858        902   
  

 

 

   

 

 

 

Total Assets

   $ 14,802      $ 14,242   
  

 

 

   

 

 

 
LIABILITIES AND EQUITY     

Accounts payable

   $ 297      $ 338   

Settlement due to customers

     1,374        1,433   

Restricted security deposits held for customers

     913        911   

Accrued litigation

     859        886   

Accrued expenses

     2,128        2,101   

Other current liabilities

     423        363   
  

 

 

   

 

 

 

Total Current Liabilities

     5,994        6,032   

Long-term debt

     1,494        —     

Deferred income taxes

     117        117   

Other liabilities

     619        598   
  

 

 

   

 

 

 

Total Liabilities

     8,224        6,747   

Commitments and Contingencies

    

Stockholders’ Equity

    

Class A common stock, $0.0001 par value; authorized 3,000,000,000 shares, 1,343,844,152 and 1,341,541,110 shares issued and 1,129,877,235 and 1,148,838,370 outstanding, respectively

     —          —     

Class B common stock, $0.0001 par value; authorized 1,200,000,000 shares, 44,716,100 and 45,350,070 issued and outstanding, respectively

     —          —     

Additional paid-in-capital

     3,769        3,762   

Class A treasury stock, at cost, 213,966,917 and 192,702,740 shares, respectively

     (8,243     (6,577

Retained earnings

     10,861        10,121   

Accumulated other comprehensive income

     180        178   
  

 

 

   

 

 

 

Total Stockholders’ Equity

     6,567        7,484   

Non-controlling interests

     11        11   
  

 

 

   

 

 

 

Total Equity

     6,578        7,495   
  

 

 

   

 

 

 

Total Liabilities and Equity

   $ 14,802      $ 14,242   
  

 

 

   

 

 

 


MasterCard Incorporated – Page 6

 

MASTERCARD INCORPORATED

CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED)

 

     Three Months Ended
March 31,
 
     2014     2013  
     (in millions)  

Operating Activities

    

Net income

   $ 870      $ 766   

Adjustments to reconcile net income to net cash provided by operating activities:

    

Depreciation and amortization

     73        62   

Share-based payments

     (74     (23

Deferred income taxes

     (67     (5

Other

     2        16   

Changes in operating assets and liabilities:

    

Accounts receivable

     (15     (25

Income taxes receivable

     —          149   

Settlement due from customers

     (129     433   

Prepaid expenses

     (43     (7

Accrued litigation and legal settlements

     (27     —     

Accounts payable

     (46     (93

Settlement due to customers

     (55     (423

Accrued expenses

     29        (30

Net change in other assets and liabilities

     50        52   
  

 

 

   

 

 

 

Net cash provided by operating activities

     568        872   
  

 

 

   

 

 

 

Investing Activities

    

Purchases of investment securities available-for-sale

     (619     (934

Acquisition of businesses, net of cash acquired

     (146     —     

Purchases of property, plant and equipment

     (25     (20

Capitalized software

     (24     (22

Proceeds from sales of investment securities available-for-sale

     341        576   

Proceeds from maturities of investment securities available-for-sale

     425        257   

Decrease in restricted cash for litigation settlement

     183        2   

Proceeds from maturities of investment securities held-to-maturity

     —          36   

Other investing activities

     (5     (2
  

 

 

   

 

 

 

Net cash provided by (used in) investing activities

     130        (107
  

 

 

   

 

 

 

Financing Activities

    

Purchases of treasury stock

     (1,669     (766

Proceeds from debt

     1,487        —     

Dividends paid

     (131     (37

Tax benefit for share-based compensation

     38        14   

Cash proceeds from exercise of stock options

     8        5   

Other financing activities

     (12     1   
  

 

 

   

 

 

 

Net cash used in financing activities

     (279     (783
  

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     1        (50
  

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     420        (68

Cash and cash equivalents - beginning of period

     3,599        2,052   
  

 

 

   

 

 

 

Cash and cash equivalents - end of period

   $ 4,019      $ 1,984   
  

 

 

   

 

 

 

Non-Cash Investing and Financing Activities

    

Fair value of assets acquired, net of cash acquired

   $ 246      $ —     
  

 

 

   

 

 

 

Fair value of liabilities assumed related to acquisitions

   $ 42      $ —     
  

 

 

   

 

 

 


MasterCard Incorporated – Page 7

 

MASTERCARD INCORPORATED OPERATING PERFORMANCE

 

 

     For the 3 Months ended March 31, 2014  
     GDV
(Bil.)
     Growth
(USD)
    Growth
(Local)
    Purchase
Volume
(Bil.)
     Growth
(Local)
    Purchase
Trans.
(Mil.)
     Cash
Volume
(Bil.)
     Growth
(Local)
    Cash
Trans.
(Mil.)
     Accounts
(Mil.)
     Cards
(Mil.)
 

All MasterCard Credit, Charge and Debit Programs

                            

APMEA

   $ 302         12.4     18.9   $ 202         18.6     2,199       $ 99         19.6     861         402         433   

Canada

     29         -2.0     7.3     27         9.0     336         2         -9.7     5         46         56   

Europe

     312         13.6     14.7     212         11.0     3,247         100         23.6     597         317         334   

Latin America

     83         2.9     15.6     49         21.7     1,184         33         7.6     198         125         145   
  

 

 

        

 

 

      

 

 

    

 

 

      

 

 

    

 

 

    

 

 

 

Worldwide less United States

     726         11.1     16.2     491         14.9     6,967         235         19.0     1,662         890         967   

United States

     319         8.6     8.6     268         8.8     4,720         51         7.4     311         305         343   
  

 

 

        

 

 

      

 

 

    

 

 

      

 

 

    

 

 

    

 

 

 

Worldwide

     1,045         10.3     13.8     759         12.7     11,687         286         16.7     1,973         1,194         1,309   

MasterCard Credit and Charge Programs

                            

Worldwide less United States

     429         7.9     12.7     381         13.6     4,622         48         5.5     198         500         566   

United States

     145         8.1     8.1     138         8.1     1,511         7         8.1     6         147         181   
  

 

 

        

 

 

      

 

 

    

 

 

      

 

 

    

 

 

    

 

 

 

Worldwide

     574         7.9     11.5     519         12.1     6,133         55         5.8     204         647         746   

MasterCard Debit Programs

                            

Worldwide less United States

     296         16.1     21.7     110         19.6     2,344         186         23.0     1,464         390         401   

United States

     174         9.0     9.0     130         9.6     3,209         44         7.3     305         157         162   
  

 

 

        

 

 

      

 

 

    

 

 

      

 

 

    

 

 

    

 

 

 

Worldwide

     471         13.4     16.7     240         14.0     5,553         231         19.7     1,769         548         563   
     For the 3 Months ended March 31, 2013  
     GDV
(Bil.)
     Growth
(USD)
    Growth
(Local)
    Purchase
Volume
(Bil.)
     Growth
(Local)
    Purchase
Trans.
(Mil.)
     Cash
Volume
(Bil.)
     Growth
(Local)
    Cash
Trans.
(Mil.)
     Accounts
(Mil.)
     Cards
(Mil.)
 

All MasterCard Credit, Charge and Debit Programs

                            

APMEA

   $ 268         20.2     22.2   $ 178         19.4     1,839       $ 90         28.0     700         355         384   

Canada

     30         2.8     3.5     27         3.8     304         3         -0.2     6         41         50   

Europe

     275         13.3     13.0     191         10.2     2,728         84         19.8     493         267         283   

Latin America

     80         10.8     14.9     48         18.2     1,020         33         10.5     185         112         131   
  

 

 

        

 

 

      

 

 

    

 

 

      

 

 

    

 

 

    

 

 

 

Worldwide less United States

     653         15.2     16.3     443         14.2     5,891         210         21.2     1,384         775         848   

United States

     294         3.6     3.6     246         4.5     4,361         48         -0.7     301         280         318   
  

 

 

        

 

 

      

 

 

    

 

 

      

 

 

    

 

 

    

 

 

 

Worldwide

     947         11.3     12.1     690         10.5     10,252         257         16.5     1,685         1,054         1,166   

MasterCard Credit and Charge Programs

                            

Worldwide less United States

     398         11.1     12.8     350         13.1     4,083         48         10.8     191         474         538   

United States

     134         1.5     1.5     127         2.4     1,438         6         -13.7     6         140         175   
  

 

 

        

 

 

      

 

 

    

 

 

      

 

 

    

 

 

    

 

 

 

Worldwide

     532         8.5     9.7     478         10.0     5,521         54         7.3     197         614         712   

MasterCard Debit Programs

                            

Worldwide less United States

     255         22.0     22.3     93         18.4     1,808         162         24.7     1,193         301         310   

United States

     160         5.5     5.5     119         6.9     2,923         41         1.6     295         140         143   
  

 

 

        

 

 

      

 

 

    

 

 

      

 

 

    

 

 

    

 

 

 

Worldwide

     415         15.1     15.2     212         11.7     4,731         203         19.2     1,488         440         454   

APMEA = Asia Pacific / Middle East / Africa

Note that the figures in the preceding tables may not sum due to rounding; growth represents change from the comparable year-ago period

 


MasterCard Incorporated – Page 8

 

Footnote

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 change.

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 2013Q4, a large Maestro customer revised their number of Maestro cards to exclude inactive cards. Data for the comparable periods in 2013 and 2012 have been revised to be consistent with this approach. MasterCard revenue is not impacted from these historical changes.

Performance information for prior periods can be found in the “Investor Relations” section of MasterCard’s website at www.mastercard.com.

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