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MasterCard Incorporated Reports Third Quarter Results


Sharon Gamsin MasterCard International 1-914-249-5622

  • Achieved Double-Digit Revenue Growth, Up 18.6% to $792 Million
  • Net Income Up 8.2% to $106 Million, or $1.06 Per Share
  • Gross Dollar Volume up 12.5% and Purchase Volume Up 14.5%

  • Purchase, NY, November 03, 2005 - MasterCard Incorporated today reported double-digit revenue growth for the third quarter of 2005. MasterCard's revenue grew 18.6% to $792 million and its net income grew 8.2% to $106 million or $1.06 per share on a basic and diluted basis from the same period in 2004.

    For the nine months ended September 30, 2005, revenue grew approximately 16.3% to $2,222 million and net income grew 35.0% to $320 million or $3.20 on a basic and diluted basis, from the same period in 2004.

    Revenue growth in the three months ended September 30, 2005 was not significantly impacted by currency fluctuations. The impact of currency fluctuations contributed 1% to revenue growth in the nine months ended September 30, 2005.

    Driving the revenue growth in the third quarter was: growth in MasterCard's gross dollar volume, which increased 12.5%, on a local currency basis, to $424.4 billion; a 16.2% increase in the number of transactions processed globally by MasterCard; higher cross-border travel by cardholders using our cards; and, certain pricing changes that went into effect in the second quarter of 2005. Worldwide purchase volume rose 14.5%, on a local currency basis, during the quarter to $300 billion driven by increased cardholder spending on a growing number of MasterCard cards. As of September 30, 2005, MasterCard's customer banks issued 725.2 million MasterCard cards, an increase of 10.6% over the same period in 2004.

    "We are achieving success by implementing our customer-focused strategy globally and delivering innovative products and value-added processing, information and related services," said Robert W. Selander, president and chief executive officer. "We believe the trend within the global payments industry of moving away from paper-based forms of payment such as cash and checks toward electronic forms of payment creates opportunities for continued growth in our business."

    Commenting on the company's financial performance, Chris McWilton, MasterCard's chief financial officer noted that “the third quarter of 2005 represents the seventh consecutive quarter of double-digit revenue growth for MasterCard.”

    Operating expenses as a percentage of total revenues increased to 81% from 78% in the three months ended September 30, 2005, and decreased to 78% from 81% in the nine months ended September 30, 2005, in each case from the comparable period in 2004. Operating expenses increased 24.3% and 12.1% respectively in the three and nine months ended September 30, 2005 versus the same period in 2004. Operating expenses in the third quarter of 2005 included a $48 million pre-tax charge in connection with our currency conversion litigation and a $19 million pre-tax adjustment to costs related to the accounting for the company's performance award programs. Operating expense growth in the three months ended September 30, 2005 was not significantly impacted by currency fluctuations. Foreign currency fluctuations contributed 1% to overall operating expense growth in the nine months ended September 30.

    In the third quarter of 2005, the company also recognized $17 million of other income relating to the settlement of a contractual dispute with a customer.

    MasterCard's effective tax rate was 35.3%, up from 30.7%, and 35.5%, up from 31.3%, in the three and nine months ending September 30, 2005 respectively, from the comparable periods in 2004. The rates in 2004 were lower than 2005 primarily due to the settlement and reassessment of various tax audit matters.

    This press release contains forward-looking information. Although MasterCard believes that its expectations are based on reasonable assumptions, it can give no assurance that its objectives will be achieved. Important factors that could cause actual results to differ materially from forward-looking information contained in this press release include: global political and economic conditions; MasterCard's ability to achieve its strategic objectives; the performance of MasterCard's member financial institutions and the nature of MasterCard's business relationships with these institutions; substantial and increasingly intense competition in the global payments industry; the success of MasterCard's global advertising, sponsorship, promotion and merchant acceptance initiatives; the functionality and security of MasterCard's transaction processing systems; MasterCard's ability to adapt to industry trends with technological and payment program innovations; the resolution of certain legal proceedings and regulatory actions; changing market dynamics and the other risk factors disclosed in MasterCard Incorporated's most recent Annual Report on Form 10-K. MasterCard disclaims any obligation to publicly update or revise any forward-looking information.

    About MasterCard Incorporated
    MasterCard Incorporated is a leading global payments solutions company that provides a broad variety of innovative services in support of our global members' credit, deposit access, electronic cash, business-to-business and related payment programs. MasterCard, through its principal operating subsidiary, MasterCard International Incorporated, manages a family of well-known, widely accepted payment card brands including MasterCard®, Maestro® and Cirrus® and serves financial institutions, consumers and businesses in over 210 countries and territories. The MasterCard award-winning Priceless® advertising campaign is now seen in 105 countries and in 48 languages, giving the MasterCard brand a truly global reach and scope. For more information go to or refer to the filings of MasterCard Incorporated with the U.S. Securities and Exchange Commission.