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MasterCard Incorporated Reports Third-Quarter 2013 Financial Results

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 September 30, Nine Months Ended September 30,
2013       2012 2013       2012
(in millions, except per share data)
Net Revenue $   2,218 $   1,918 $   6,220 $   5,496
Operating Expenses
General and administrative 701 620 1,930 1,790
Advertising and marketing 205 176 520 480
Depreciation and amortization 64 58 187 168
Provision for litigation settlement       20  
Total operating expenses 970   854   2,637   2,458  
Operating income 1,248 1,064 3,583 3,038
Other Income (Expense)
Investment income 11 9 30 27
Interest expense 3 (4 ) (7 ) (13 )
Other income (expense) (8 ) (3 ) (17 ) (13 )
Total other income (expense) 6   2   6   1  
Income before income taxes 1,254 1,066 3,589 3,039
Income tax expense 375   294   1,096   885  
Net Income $   879   $   772   $   2,493   $   2,154  
 
Basic Earnings per Share $   7.30   $   6.19   $   20.52   $   17.13  
Basic Weighted-Average Shares Outstanding 121   125   121   126  
Diluted Earnings per Share $   7.27   $   6.17   $   20.46   $   17.07  
Diluted Weighted-Average Shares Outstanding 121   125   122   126  
 
                   
MASTERCARD INCORPORATED
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
 

September 30, 2013

December 31, 2012
(in millions, except share data)
ASSETS
Cash and cash equivalents $ 3,413 $ 2,052
Restricted cash for litigation settlement 727 726
Investment securities available-for-sale, at fair value 2,594 2,951
Accounts receivable 990 925
Settlement due from customers 1,333 1,117
Restricted security deposits held for customers 878 777
Prepaid expenses and other current assets 502 681
Deferred income taxes 122   128  
Total Current Assets 10,559 9,357
Property, plant and equipment, net 474 472
Deferred income taxes 89 60
Goodwill 1,101 1,092
Other intangible assets, net of accumulated amortization of $716 and $596, respectively 655 672
Other assets 852   809  
Total Assets $ 13,730   $ 12,462  
LIABILITIES AND EQUITY
Accounts payable $ 280 $ 357
Settlement due to customers 1,218 1,064
Restricted security deposits held for customers 878 777
Accrued litigation 727 726
Accrued expenses 2,004 1,748
Other current liabilities 313   234  
Total Current Liabilities 5,420 4,906
Deferred income taxes 93 104
Other liabilities 549   523  
Total Liabilities 6,062 5,533
Commitments and Contingencies
Stockholders’ Equity

Class A common stock, $0.0001 par value; authorized 3,000,000,000 shares, 134,083,998 and

133,604,903 shares issued and 115,796,250 and 118,405,075 outstanding, respectively

Class B common stock, $0.0001 par value; authorized 1,200,000,000 shares, 4,577,623 and

4,838,840 issued and outstanding, respectively

Additional paid-in-capital 3,733 3,641
Class A treasury stock, at cost, 18,287,748 and 15,199,828 shares, respectively (5,826 ) (4,139 )
Retained earnings 9,630 7,354
Accumulated other comprehensive income (loss) 120   61  
Total Stockholders’ Equity 7,657 6,917
Non-controlling interests 11   12  
Total Equity 7,668   6,929  
Total Liabilities and Equity $ 13,730   $ 12,462  
 
               
MASTERCARD INCORPORATED
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
 
Nine Months Ended September 30,
2013         2012  
(in millions)
Operating Activities  
Net income $   2,493 $   2,154
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 187 168
Share-based payments 27 (21 )
Deferred income taxes (34 ) (40 )
Other 48 34
Changes in operating assets and liabilities:
Accounts receivable (67 ) (112 )
Income taxes receivable 158 (53 )
Settlement due from customers (192 ) (213 )
Prepaid expenses (44 ) (122 )
Obligations under litigation settlements 20
Accounts payable (76 ) (36 )
Settlement due to customers 126 140
Accrued expenses 209 129
Net change in other assets and liabilities 101   34  
Net cash provided by operating activities 2,936   2,082  
Investing Activities
Purchases of investment securities available-for-sale (1,936 ) (2,123 )
Acquisition of businesses, net of cash acquired (70 )
Purchases of property, plant and equipment (65 ) (68 )
Capitalized software (88 ) (96 )
Proceeds from sales of investment securities available-for-sale 1,349 195
Proceeds from maturities of investment securities available-for-sale 959 576
Proceeds from maturities of investment securities held-to-maturity 36
Investment in nonmarketable equity investments (12 ) (25 )
Other investing activities (8 ) (1 )
Net cash provided by (used in) investing activities 235   (1,612 )
Financing Activities
Purchases of treasury stock (1,692 ) (1,135 )
Dividends paid (182 ) (94 )
Tax benefit for share-based compensation 23 46
Cash proceeds from exercise of stock options 22 28
Other financing activities (8 ) 4  
Net cash used in financing activities (1,837 ) (1,151 )
Effect of exchange rate changes on cash and cash equivalents 27   (8 )
Net increase (decrease) in cash and cash equivalents 1,361 (689 )
Cash and cash equivalents - beginning of period 2,052   3,734  
Cash and cash equivalents - end of period $   3,413   $   3,045  
 
           

MASTERCARD INCORPORATED OPERATING PERFORMANCE

 
For the 3 Months ended September 30, 2013
All MasterCard Credit, GDV   Growth   Growth   Purchase

Volume

  Growth   Purchase

Trans.

  Cash

Volume

  Growth Cash

Trans.

Accounts Cards
Charge and Debit Programs (Bil.)   (USD)   (Local)   (Bil.)   (Local)   (Mil.)   (Bil.)   (Local)   (Mil.)   (Mil.)   (Mil.)
APMEA $291 15.8% 21.7% $196 21.0% 2,126 $95 23.2% 794 381 410
Canada 34 4.3% 8.9% 31 9.6% 370 3 1.1% 6 45 55
Europe 322 18.8% 16.6% 218 13.6% 3,244 103 23.4% 597 293 310
Latin America

83

10.9% 16.6%

50

23.6%

1,150

33

7.1%

191

120

140

Worldwide less United States 729 15.9% 18.2% 496 17.1% 6,890 233 20.4% 1,588 840 914
United States

316

8.7% 8.7%

267

9.2%

4,840

49

6.2%

321

289

326

Worldwide 1,045 13.6% 15.2% 763 14.2% 11,730 282 17.7% 1,910 1,128 1,240
 
MasterCard Credit and Charge Programs

 

Worldwide less United States 439 12.3% 15.3% 387 15.9% 4,672 52 11.3% 213 492 557
United States

151

6.8% 6.8%

144

7.2%

1,642

7

-1.9%

7

143

176

Worldwide 590 10.8% 13.0% 532 13.4% 6,314 59 9.5% 220 635 734
 
MasterCard Debit Programs
Worldwide less United States 290 21.9% 22.8% 109 21.9% 2,218 181 23.3% 1,375 347 357
United States

164

10.6% 10.6%

123

11.6%

3,198

42

7.6%

315

146

150

Worldwide 454 17.5% 18.1% 231 16.2% 5,416 223 20.1% 1,690 494 506
 
 
For the 9 Months ended September 30, 2013
All MasterCard Credit, GDV Growth Growth Purchase

Volume

Growth Purchase

Trans.

Cash

Volume

Growth Cash

Trans.

Accounts Cards
Charge and Debit Programs (Bil.)   (USD)   (Local)   (Bil.)   (Local)   (Mil.)   (Bil.)   (Local)   (Mil.)   (Mil.)   (Mil.)
APMEA $837 18.1% 21.5% $559 19.7% 5,940 $279 25.4% 2,236 381 410
Canada 97 4.5% 6.7% 89 7.2% 1,030 8 1.5% 18 45 55
Europe 898 15.7% 14.6% 616 11.9% 9,017 282 21.2% 1,654 293 310
Latin America

246

12.8% 16.1%

147

20.4%

3,253

99

10.2%

565

120

140

Worldwide less United States 2,079 15.7% 17.1% 1,411 15.4% 19,241 668 20.8% 4,473 840 914
United States

921

6.4% 6.4%

777

7.0%

13,946

144

3.6%

940

289

326

Worldwide 3,000 12.7% 13.6% 2,188 12.3% 33,187 812 17.3% 5,412 1,128 1,240
 
MasterCard Credit and Charge Programs
Worldwide less United States 1,258 11.8% 13.9% 1,108 14.3% 13,180 150 11.4% 614 492 557
United States

432

3.9% 3.9%

412

4.6%

4,674

20

-8.1%

19

143

176

Worldwide 1,690 9.7% 11.2% 1,520 11.5% 17,853 170 8.7% 633 635 734
 
MasterCard Debit Programs
Worldwide less United States 821 22.2% 22.3% 303 19.8% 6,061 518 23.8% 3,858 347 357
United States

489

8.8% 8.8%

365

9.8%

9,273

124

5.7%

921

146

150

Worldwide 1,310 16.8% 16.9% 667 14.1% 15,333 642 19.8% 4,779 494 506
 
 
For the 3 Months ended September 30, 2012
All MasterCard Credit, GDV Growth Growth Purchase

Volume

Growth Purchase

Trans.

Cash

Volume

Growth Cash

Trans.

Accounts Cards
Charge and Debit Programs (Bil.)   (USD)   (Local)   (Bil.)   (Local)   (Mil.)   (Bil.)   (Local)   (Mil.)   (Mil.)   (Mil.)
APMEA $251 18.2% 21.4% $170 19.4% 1,762 $82 26.0% 618 329 357
Canada 32 4.0% 5.5% 30 5.9% 331 3 1.8% 6 40 48
Europe 271 4.6% 14.5% 188 10.9% 2,684 82 23.9% 493 248 263
Latin America

75

4.6% 17.2%

45

19.4%

975

30

14.1%

179

110

128

Worldwide less United States 629 9.6% 17.0% 432 14.5% 5,752 197 22.8% 1,296 726 796
United States

290

7.0% 7.0%

244

7.4%

4,404

46

5.0%

307

267

305

Worldwide 919 8.8% 13.7% 677 11.9% 10,156 243 18.9% 1,603 993 1,101
 
MasterCard Credit and Charge Programs
Worldwide less United States 391 7.4% 13.3% 344 13.8% 4,069 47 10.3% 192 465 526
United States

142

0.9% 0.9%

134

3.2%

1,576

7

-28.8%

7

141

175

Worldwide 533 5.6% 9.8% 479 10.6% 5,644 54 2.9% 199 607 701
 
MasterCard Debit Programs
Worldwide less United States 238 13.4% 23.5% 88 17.6% 1,683 150 27.3% 1,104 260 270
United States

149

13.6% 13.6%

110

13.1%

2,828

39

15.0%

300

126

130

Worldwide 387 13.5% 19.5% 198 15.1% 4,511 189 24.5% 1,404 386 400
 
 
For the 9 Months ended September 30, 2012
All MasterCard Credit, GDV Growth Growth Purchase

Volume

Growth Purchase

Trans.

Cash

Volume

Growth Cash

Trans.

Accounts Cards
Charge and Debit Programs (Bil.)   (USD)   (Local)   (Bil.)   (Local)   (Mil.)   (Bil.)   (Local)   (Mil.)   (Mil.)   (Mil.)
APMEA $709 20.8% 22.7% $479 21.5% 4,983 $230 25.4% 1,720 329 357
Canada 93 5.2% 7.8% 84 8.8% 944 8 -1.7% 17 40 48
Europe 777 7.4% 16.5% 546 12.4% 7,623 231 27.3% 1,390 248 263
Latin America

218

8.1% 19.9%

131

24.3%

2,823

87

13.9%

531

110

128

Worldwide less United States 1,797 12.3% 18.8% 1,241 16.7% 16,372 557 23.7% 3,658 726 796
United States

865

9.9% 9.9%

726

9.7%

12,977

139

11.4%

911

267

305

Worldwide 2,662 11.5% 15.8% 1,967 14.0% 29,349 695 21.0% 4,569 993 1,101
 
MasterCard Credit and Charge Programs
Worldwide less United States 1,125 10.3% 15.5% 990 16.2% 11,687 136 10.6% 549 465 526
United States

416

3.9% 3.9%

394

5.4%

4,608

21

-18.1%

21

 

141

175

Worldwide 1,541 8.5% 12.1% 1,384 12.9% 16,295 157 5.6% 570 607 701
 
MasterCard Debit Programs
Worldwide less United States 672 15.6% 24.7% 251 18.7% 4,686 421 28.6% 3,109 260 270
United States

449

16.2% 16.2%

332

15.2%

8,368

118

19.2%

890

126

130

Worldwide 1,121 15.9% 21.2% 583 16.7% 13,054 539 26.4% 3,999 386 400
 
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
 

Footnote

The tables set forth the gross dollar volume (“GDV”), purchase volume, cash volume and the number of purchase transactions, cash transactions, accounts and 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.

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