MasterCard Inc. Earnings Up 16% Excluding Special Item

Today, MasterCard (NYSE: MA  ) -- excluding a special item related to its U.S. merchant litigations -- reported earnings of $0.57 per share in the fourth quarter of 2013, representing a 16% increase over the fourth quarter of 2012.

In total, MasterCard grew its net income by 13%, excluding the special item, to $684 million in the fourth quarter. Including the $61 million after-tax charge, earnings per share were up 6% to $0.52, and net income stood at $623 million, a gain of 3%.

"We are very pleased with our performance this quarter and our full-year 2013 results reflect the overall strength of our global business," said CEO and president of MasterCard Ajay Banga in a statement. "In addition to signing several significant deals last quarter, we made new investments in processing and person-to person payments while expanding our MasterPass digital platform -- all supporting safe and seamless payment experiences."

MasterCard did highlight that its revenue in the fourth quarter was up 11% year over year after adjusting for currency impacts. This was driven by a 14% increase in the gross dollar volume to $1.1 trillion, an 18% increase in its cross-border volumes, and its processed transactions growing to 10.4 billion, an increase of 13%. The company noted the total impact of this growth was offset by a greater number of rebates and incentives, which was largely due to new and renewed agreements as well as increased volumes.

The company did see its expenses grow by 11% after excluding the litigation settlement, and 21% with it included. MasterCard said the reason for the heightened expenses "was primarily driven by higher investments in people and marketing to support strategic initiatives."

For the full year 2013 excluding the special item, MasterCard reported earnings per share of $2.62, an 18.6% increase over the $2.21 seen in 2012. In addition the company had an operating margin of 55.1% on a non-GAAP basis, versus 53.5% in 2012.

MasterCard repurchased $2.4 billion worth of its common stock (41 million shares) in 2013, and through the first 24 days of 2014 it repurchased an additional 4.2 million shares for $351 million. It still has $3.3 billion remaining on its repurchase authorization.

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