Mastercard Inc - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - April 29, 2015

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MasterCard Incorporated Reports
First-Quarter 2015 Financial Results

•
First-quarter net income of $1.0 billion, or $0.89 per diluted share
•
First-quarter net revenue increase of 3%, to $2.2 billion
•
First-quarter gross dollar volume up 12% and purchase volume up 12%

Purchase, NY, April 29, 2015 - MasterCard Incorporated (NYSE: MA) today announced financial results for the first quarter of 2015. The company reported net income of $1.0 billion, an increase of 17% or 24% adjusted for currency, and earnings per diluted share of $0.89, up 22% or 29% adjusted for currency, in each case versus the year-ago period. Acquisitions had a $0.02 dilutive impact on earnings per diluted share.

Net revenue for the first quarter of 2015 was $2.2 billion, a 3% increase versus the same period in 2014 as-reported and an 8% increase adjusted for currency. Net revenue growth was driven by the impact of the following:

•
An increase in cross-border volumes of 19%;
•
A 12% increase in gross dollar volume, on a local currency basis, to $1.1 trillion; and
•
An increase in processed transactions of 12%, to 11.0 billion.

These factors were partially offset by an increase in rebates and incentives, primarily due to new and renewed agreements and increased volumes. Acquisitions contributed 2 percentage points to total net revenue growth.

Worldwide purchase volume during the quarter was up 12% on a local currency basis versus the first quarter of 2014, to $783 billion. As of March 31, 2015, the company’s customers had issued 2.2 billion MasterCard and Maestro-branded cards.

“We are managing well, despite a mixed economic environment and challenging currency situation,” said Ajay Banga, president and CEO, MasterCard. “The underlying fundamentals of our business remain unchanged, driving our ability to sign new agreements with Citi and Itaú, work with digital giants and expand our support of the merchant community. This, combined with our focus on costs, allowed us to continue to deliver solid results in the first quarter.”

Total operating expenses decreased 1%, or increased 3% when adjusted for currency, to $879 million during the first quarter of 2015 compared to the same period in 2014. While the company continued to make strategic investments, foreign exchange gains and ongoing cost management helped to moderate overall expenses, despite the 9 percentage points contributed by acquisitions. The foreign exchange gains related to currency hedging and balance sheet remeasurement, including the impact of devaluation of the Venezuelan Bolivar.

-more-


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Operating income for the first quarter of 2015 increased 5%, or 12% adjusted for currency, versus the year-ago period and the company delivered an operating margin of 60.6%.

MasterCard reported other expense of $11 million in the first quarter of 2015 versus $4 million in the first quarter of 2014. The change was mainly driven by higher interest expense related to the company’s inaugural debt issuance in March 2014.

MasterCard’s effective tax rate was 23.9% in the first quarter of 2015, versus a rate of 32.0% in the comparable period in 2014. The decrease was primarily due to the recognition of a discrete U.S. foreign tax credit benefit, a larger repatriation benefit and a more favorable mix of taxable earnings.

During the first quarter of 2015, MasterCard repurchased approximately 11 million shares of Class A common stock at a cost of approximately $947 million. Quarter-to-date through April 22nd, the company repurchased an additional 2.7 million shares at a cost of approximately $240 million, with $2.8 billion remaining under the current repurchase program authorization.

First-Quarter Financial Results Conference Call Details

At 9:00 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 866-393-4306 (within the U.S.) and 734-385-2616 (outside the U.S.), and the passcode is 10371164. A replay of the call will be available for 30 days and can be accessed by dialing 855-859-2056 (within the U.S.) and 404-537-3406 (outside the U.S.), and using passcode 10371164.

This call can also be accessed through the Investor Relations section of the company’s website at  www.mastercard.com/investor.

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 our results and how we are managing our business, including our relationships with our stakeholders and other partners.

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, 2014, the company’s Quarterly Reports on Form 10-Q and Current Reports on Form 8-K that have been filed with the SEC during 2015, 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.

###

Contacts:

Investor Relations: Barbara Gasper or Matt Lanford, investor_relations@mastercard.com, 914-249-4565
Media Relations: Seth Eisen, Seth_Eisen@mastercard.com, 914-249-3153




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MASTERCARD INCORPORATED
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)

 
 
Three Months Ended March 31,
 
2015
 
2014
 
(in millions, except per share data)
Net Revenue
$
2,230

 
$
2,172

Operating Expenses
 
 
 
General and administrative
650

 
665

Advertising and marketing
142

 
149

Depreciation and amortization
87

 
73

Total operating expenses
879

 
887

Operating income
1,351

 
1,285

Other Income (Expense)
 
 
 
Investment income
9

 
7

Interest expense
(17
)
 
(6
)
Other income (expense), net
(3
)
 
(5
)
Total other income (expense)
(11
)
 
(4
)
Income before income taxes
1,340

 
1,281

Income tax expense
320

 
411

Net Income
$
1,020

 
$
870

 
 
 
 
Basic Earnings per Share
$
0.89

 
$
0.73

Basic Weighted-Average Shares Outstanding
1,148

 
1,185

Diluted Earnings per Share
$
0.89

 
$
0.73

Diluted Weighted-Average Shares Outstanding
1,152

 
1,189




MasterCard Incorporated - Page 5

MASTERCARD INCORPORATED
CONSOLIDATED BALANCE SHEET
(UNAUDITED)

 
 
March 31, 2015
 
December 31, 2014
 
(in millions, except share data)
ASSETS
 
 
 
Cash and cash equivalents
$
4,207

 
$
5,137

Restricted cash for litigation settlement
540

 
540

Investment securities available-for-sale, at fair value
1,589

 
1,168

Accounts receivable
1,072

 
1,109

Settlement due from customers
1,070

 
1,052

Restricted security deposits held for customers
953

 
950

Prepaid expenses and other current assets
644

 
741

Deferred income taxes
273

 
300

Total Current Assets
10,348

 
10,997

Property, plant and equipment, net of accumulated depreciation of $451 and $437, respectively
602

 
615

Deferred income taxes
76

 
96

Goodwill
1,469

 
1,522

Other intangible assets, net of accumulated amortization of $703 and $663, respectively
648

 
714

Other assets
1,490

 
1,385

Total Assets
$
14,633

 
$
15,329

LIABILITIES AND EQUITY
 
 
 
Accounts payable
$
406

 
$
419

Settlement due to customers
1,201

 
1,142

Restricted security deposits held for customers
953

 
950

Accrued litigation
731

 
771

Accrued expenses
2,169

 
2,439

Other current liabilities
477

 
501

Total Current Liabilities
5,937

 
6,222

Long-term debt
1,495

 
1,494

Deferred income taxes
102

 
115

Other liabilities
765

 
674

Total Liabilities
8,299

 
8,505

Commitments and Contingencies

 

Stockholders’ Equity
 
 

Class A common stock, $0.0001 par value; authorized 3,000,000,000 shares, 1,366,722,923 and 1,352,378,383 shares issued and 1,118,832,686 and 1,115,369,640 outstanding, respectively
—

 
—

Class B common stock, $0.0001 par value; authorized 1,200,000,000 shares, 24,123,365 and 37,192,165 issued and outstanding, respectively
—

 
—

Additional paid-in-capital
3,883

 
3,876

Class A treasury stock, at cost, 247,890,237 and 237,008,743 shares, respectively
(10,949
)
 
(9,995
)
Retained earnings
14,006

 
13,169

Accumulated other comprehensive income (loss)
(639
)
 
(260
)
Total Stockholders’ Equity
6,301

 
6,790

Non-controlling interests
33

 
34

Total Equity
6,334

 
6,824

Total Liabilities and Equity
$
14,633

 
$
15,329




MasterCard Incorporated - Page 6

MASTERCARD INCORPORATED
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
 
Three Months Ended March 31,
 
2015
 
2014
 
(in millions)
Operating Activities
 
 
 
Net income
$
1,020

 
$
870

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Amortization of customer and merchant incentives
184

 
164

Depreciation and amortization
87

 
73

Share-based payments
(53
)
 
(74
)
Deferred income taxes
37

 
(67
)
Other
(37
)
 
2

Changes in operating assets and liabilities:
 
 
 
Accounts receivable
(30
)
 
(15
)
Income taxes receivable
(63
)
 
—

Settlement due from customers
(108
)
 
(129
)
Prepaid expenses
(57
)
 
(180
)
Accrued litigation and legal settlements
(40
)
 
(27
)
Accounts payable
1

 
(46
)
Settlement due to customers
158

 
(55
)
Accrued expenses
(214
)
 
29

Net change in other assets and liabilities
26

 
23

Net cash provided by operating activities
911

 
568

Investing Activities
 
 
 
Purchases of investment securities available-for-sale
(1,123
)
 
(619
)
Acquisition of businesses, net of cash acquired
(12
)
 
(146
)
Purchases of property, plant and equipment
(31
)
 
(25
)
Capitalized software
(26
)
 
(24
)
Proceeds from sales of investment securities available-for-sale
516

 
341

Proceeds from maturities of investment securities available-for-sale
166

 
425

Decrease in restricted cash for litigation settlement
—

 
183

Other investing activities
(9
)
 
(5
)
Net cash (used in) provided by investing activities
(519
)
 
130

Financing Activities
 
 
 
Purchases of treasury stock
(947
)
 
(1,669
)
Proceeds from debt
—

 
1,487

Dividends paid
(184
)
 
(131
)
Tax benefit for share-based payments
27

 
38

Cash proceeds from exercise of stock options
10

 
8

Other financing activities
(6
)
 
(12
)
Net cash used in financing activities
(1,100
)
 
(279
)
Effect of exchange rate changes on cash and cash equivalents
(222
)
 
1

Net (decrease) increase in cash and cash equivalents
(930
)
 
420

Cash and cash equivalents - beginning of period
5,137

 
3,599

Cash and cash equivalents - end of period
$
4,207

 
$
4,019

 
 
 
 
Non-Cash Investing and Financing Activities
 
 
 
Fair value of assets acquired, net of cash acquired
$
13

 
$
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, 2015
 
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
$
329

 
8.8
 %
 
15.0
%
 
$
220

 
15.2
%
 
2,659

 
$
109

 
14.5
 %
 
1,005

 
463

 
494

Canada
30

 
2.2
 %
 
15.0
%
 
28

 
17.2
%
 
393

 
2

 
-9.6
 %
 
5

 
45

 
53

Europe
286

 
-8.4
 %
 
15.1
%
 
200

 
13.1
%
 
3,939

 
85

 
19.9
 %
 
666

 
365

 
382

Latin America
80

 
-3.6
 %
 
14.2
%
 
48

 
18.4
%
 
1,340

 
32

 
8.4
 %
 
212

 
138

 
158

Worldwide less United States
724

 
-0.3
 %
 
14.9
%
 
496

 
14.8
%
 
8,331

 
228

 
15.3
 %
 
1,888

 
1,010

 
1,088

United States
339

 
6.6
 %
 
6.6
%
 
287

 
7.1
%
 
5,116

 
52

 
3.8
 %
 
326

 
328

 
365

Worldwide
1,063

 
1.8
 %
 
12.1
%
 
783

 
11.8
%
 
13,448

 
280

 
12.9
 %
 
2,215

 
1,338

 
1,452

MasterCard Credit and Charge Programs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Worldwide less United States
422

 
-1.6
 %
 
11.1
%
 
383

 
12.4
%
 
5,169

 
39

 
-0.6
 %
 
182

 
514

 
579

United States
152

 
5.4
 %
 
5.4
%
 
146

 
6.1
%
 
1,609

 
6

 
-10.2
 %
 
7

 
153

 
184

Worldwide
574

 
0.2
 %
 
9.5
%
 
529

 
10.6
%
 
6,778

 
45

 
-2.0
 %
 
190

 
667

 
763

MasterCard Debit Programs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Worldwide less United States
302

 
1.6
 %
 
20.8
%
 
113

 
23.5
%
 
3,163

 
189

 
19.2
 %
 
1,706

 
496

 
508

United States
187

 
7.6
 %
 
7.6
%
 
141

 
8.1
%
 
3,507

 
46

 
6.0
 %
 
319

 
175

 
181

Worldwide
489

 
3.8
 %
 
15.4
%
 
254

 
14.5
%
 
6,670

 
235

 
16.4
 %
 
2,025

 
671

 
689

 
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

 
12.5
 %
 
19.0
%
 
$
202

 
18.5
%
 
2,200

 
$
100

 
20.2
 %
 
883

 
401

 
430

Canada
29

 
-2.0
 %
 
7.2
%
 
27

 
9.0
%
 
336

 
2

 
-9.7
 %
 
5

 
40

 
48

Europe
312

 
13.6
 %
 
14.7
%
 
213

 
11.0
%
 
3,250

 
99

 
23.3
 %
 
596

 
319

 
335

Latin America
83

 
2.8
 %
 
15.4
%
 
49

 
21.8
%
 
1,195

 
33

 
7.1
 %
 
199

 
125

 
144

Worldwide less United States
726

 
11.1
 %
 
16.2
%
 
491

 
14.9
%
 
6,979

 
235

 
19.0
 %
 
1,684

 
885

 
958

United States
318

 
8.3
 %
 
8.3
%
 
268

 
8.8
%
 
4,718

 
50

 
5.8
 %
 
311

 
300

 
337

Worldwide
1,044

 
10.2
 %
 
13.7
%
 
759

 
12.7
%
 
11,697

 
286

 
16.5
 %
 
1,995

 
1,185

 
1,295

MasterCard Credit and Charge Programs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Worldwide less United States
429

 
7.6
 %
 
12.4
%
 
381

 
13.4
%
 
4,624

 
48

 
4.7
 %
 
198

 
493

 
557

United States
144

 
8.0
 %
 
8.0
%
 
138

 
8.0
%
 
1,510

 
7

 
8.0
 %
 
6

 
145

 
176

Worldwide
573

 
7.7
 %
 
11.2
%
 
518

 
11.9
%
 
6,134

 
55

 
5.1
 %
 
204

 
638

 
733

MasterCard Debit Programs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Worldwide less United States
298

 
16.6
 %
 
22.2
%
 
110

 
20.3
%
 
2,356

 
187

 
23.4
 %
 
1,486

 
392

 
401

United States
174

 
8.5
 %
 
8.5
%
 
130

 
9.6
%
 
3,208

 
43

 
5.4
 %
 
305

 
155

 
161

Worldwide
471

 
13.5
 %
 
16.8
%
 
240

 
14.3
%
 
5,563

 
231

 
19.5
 %
 
1,791

 
547

 
562

 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 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.

Debit transactions on Maestro® and Cirrus®-branded cards 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 2014 Q2, a large customer revised their number of MasterCard credit cards to exclude inactive cards. Data for the comparable periods in 2013 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 the MasterCard website at www.mastercard.com/investor.



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