01—Abstract
Summary
Summary of the 10-K filed February 14, 2013. Cited figures are marked; the original filing is the authoritative source.
MasterCard's 2013 10-K filing for the year ended December 30, 2012, highlights robust performance driven by a 25%a increase in processed transactions and a 15% rise in Gross Dollar Volume (GDV) in local currency.
This growth reflects the ongoing shift from paper-based to electronic payments globally and MasterCard's strategic focus on expanding its core businesses and innovating in emerging payment areas like e-commerce and mobile. The company faced significant legal and regulatory scrutiny, particularly concerning interchange fees, which are a major focus of litigation and legislative action worldwide.
MasterCard dedicated substantial resources to defending these fees. Despite these challenges, the company demonstrated strong financial health, with net income increasing by 45%b year-over-year, partly due to a significant reduction in provisions for litigation settlements compared to the prior year.
02—Key points
Key Highlights
- MasterCard experienced significant transaction volume growth, with processed transactions increasing by 25% and Gross Dollar Volume (GDV) rising by 15% in local currency for 2012.
- Net revenues grew by 10% to $7.39 billion, driven by increased transaction volumes and pricing actions.
- The company actively managed its capital through a new $1.5 billion share repurchase program approved in June 2012 and paid quarterly dividends, signaling a commitment to shareholder returns.
- MasterCard is investing in innovation, focusing on digital infrastructure, mobile money, and chip and contactless payment solutions to drive future growth.
- The company is heavily involved in legal and regulatory matters, particularly concerning interchange fees, which are subject to scrutiny and litigation globally. A substantial provision for litigation settlements was made in 2011, with a significantly lower provision in 2012.
- Despite a challenging global economic environment, MasterCard maintained strong operational performance and liquidity, with net cash provided by operating activities at $2.9 billion.
- MasterCard's brand strength and global acceptance network remain key competitive advantages, with cards accepted at 35.9 million locations worldwide.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2012filed February 14, 2013Financial Statements
FY2012 against FY2011
| Line item | FY2012FY2011 | Change |
|---|---|---|
| Revenue | $7.39B$6.71B | +10.1% |
| Operating Expenses | $3.45B$4.00B | −13.7% |
| Operating Income | $3.94B$2.71B | +45.1% |
| Interest Expense | $20.00M$25.00M | −20.0% |
| Net Income | $2.76B$1.91B | +44.8% |
| EPS (Basic) | $2.20$1.49 | +47.7% |
| EPS (Diluted) | $2.19$1.48 | +48.0% |
| Shares Outstanding (Basic) | 1.25B1.28B | −2.0% |
| Shares Outstanding (Diluted) | 1.26B1.28B | −2.0% |
05—Questions
Frequently Asked Questions
What were the main drivers of MasterCard's revenue growth in 2012?
MasterCard's revenue growth in 2012 was primarily driven by an increase in the volume of transactions and the number of transactions processed. Specifically, processed transactions increased by 25%, and MasterCard-branded Gross Dollar Volume (GDV) grew by 15% in local currency. Pricing actions also contributed to revenue growth.
What is the status of the legal and regulatory challenges facing MasterCard, particularly regarding interchange fees?
MasterCard faces significant legal and regulatory scrutiny worldwide concerning interchange fees. These fees are subject to legislative action, regulatory proceedings, and litigation in various jurisdictions. The company has dedicated substantial resources to defending these fees. While a significant provision for litigation settlements was recorded in 2011, the company's 2012 filing indicates ongoing legal and regulatory engagement on these matters.
How is MasterCard returning value to its shareholders?
MasterCard returned value to shareholders through a combination of share repurchases and dividend payments. The company approved a new $1.5 billion share repurchase program in June 2012 and continued to pay quarterly cash dividends. These actions demonstrate a commitment to enhancing shareholder value.
What is MasterCard's strategy for future growth?
MasterCard's future growth strategy is focused on three key drivers: growth in personal consumption expenditure, the shift from paper to electronic payments, and increasing its share in electronic payments through innovation. The company is investing in new areas such as e-commerce, mobile payments, and chip and contactless technology, while also strengthening its core credit, debit, prepaid, and commercial payment solutions globally.
06—Continue