UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
_______________________________________
FORM 8-K
_______________________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
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| | | | |
Date of Report (Date of earliest event reported): January 29, 2016 |
_______________________________________ |
MasterCard Incorporated (Exact name of registrant as specified in its charter) |
_______________________________________ |
Delaware (State or other jurisdiction of incorporation) | 001-32877 (Commission File Number) | 13-4172551 (IRS Employer Identification No.) |
2000 Purchase Street Purchase, New York (Address of principal executive offices) | 10577 (Zip Code) |
(914) 249-2000 (Registrant's telephone number, including area code)
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NOT APPLICABLE (Former name or former address, if changed since last report) |
_______________________________________ |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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o | | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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o | | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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o | | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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o | | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 Results of Operations and Financial Condition
On January 29, 2016, MasterCard Incorporated (“MasterCard”) issued a press release announcing financial results for its fourth quarter and full year 2015.
A copy of the press release is attached hereto as Exhibit 99.1. All information in the press release is furnished but not filed.
Non-GAAP Financial Information
In the attached press release, MasterCard discloses the following non-GAAP financial measures:
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• | During the full year ended December 31, 2015, total operating expenses, operating income, net income and earnings per diluted share (as well as related applicable growth rates), and operating margin, each presented on a pro forma basis giving effect to the exclusion of both a settlement charge relating to the termination of our qualified U.S. defined benefit pension plan (the “U.S. Employee Pension Plan Settlement Charge”) and a charge related to a U.K. merchant litigation settlement (the “U.K. Merchant Litigation Settlement Provision”) recorded during the full-year period. |
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• | During the full year ended December 31, 2015, effective tax rate presented on a pro forma basis giving effect to the exclusion of income tax benefits associated with the after-tax charge related to both the U.S. Employee Pension Plan Settlement Charge and the U.K. Merchant Litigation Settlement Provision. |
MasterCard excludes the U.S. Employee Pension Plan Settlement Charge and the U.K. Merchant Litigation Settlement Provision because its management monitors significant one-time items separately from ongoing operations and evaluates ongoing performance without these amounts. MasterCard’s management believes that the non-GAAP financial measures presented facilitate an understanding of MasterCard’s operating performance and meaningful comparison of its results between periods.
In the attached press release, management also presents growth rates adjusted for currency, which is a non-GAAP financial measure. Due to the impact of foreign currency rate fluctuations on reported results, MasterCard’s management believes the presentation on certain growth rates adjusted for currency, calculated by re-measuring the prior period's results using the current period's exchange rates, provides relevant information.
MasterCard’s management uses non-GAAP financial measures to, among other things, evaluate its ongoing operations in relation to historical results, for internal planning and forecasting purposes and in the calculation of performance-based compensation. The attached press release includes reconciliations of the requisite non-GAAP financial measures to the most directly comparable GAAP financial measures. The presentation of non-GAAP financial measures should not be considered in isolation or as a substitute for the Company’s related financial results prepared in accordance with GAAP.
Item 7.01 Regulation FD Disclosure
On January 29, 2016, MasterCard will host a conference call to discuss its fourth-quarter and full year 2015 financial results. A copy of the presentation to be used during the conference call is attached hereto as Exhibit 99.2. All information in the presentation is furnished but not filed.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits.
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| |
Exhibit Number | Exhibit Description |
99.1 | Press Release issued by MasterCard Incorporated, dated January 29, 2016 |
99.2 | Presentation of MasterCard Incorporated, dated January 29, 2016 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| | | | |
| | MASTERCARD INCORPORATED |
| | | |
Date: | January 29, 2016 | By: | | /s/ Janet McGinness |
| | | | Janet McGinness |
| | | | Corporate Secretary |
EXHIBIT INDEX
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| |
Exhibit Number | Exhibit Description |
99.1 | Press Release issued by MasterCard Incorporated, dated January 29, 2016 |
99.2 | Presentation of MasterCard Incorporated, dated January 29, 2016 |
MasterCard Incorporated Reports
Fourth-Quarter and Full-Year 2015 Financial Results
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• | Fourth-quarter net income of $890 million, or $0.79 per diluted share |
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• | Fourth-quarter net revenue increase of 4%, to $2.5 billion |
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• | Fourth-quarter gross dollar volume up 12% and purchase volume up 12% |
Purchase, NY, January 29, 2016 - MasterCard Incorporated (NYSE: MA) today announced financial results for the fourth quarter of 2015. The company reported net income of $890 million, an increase of 11%, or 18% after adjusting for currency, and earnings per diluted share of $0.79, up 14%, or 22% when adjusted for currency, versus the year-ago period. Acquisitions had a $0.03 dilutive impact on earnings per diluted share in the quarter.
Net revenue for the fourth quarter of 2015 was $2.5 billion, a 4% increase versus the same period in 2014. Adjusted for currency, net revenue increased 9%. Net revenue growth was driven by the impact of the following:
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• | A 12% increase in gross dollar volume, on a local currency basis, to $1.2 trillion; |
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• | An increase in processed transactions of 12%, to 13.0 billion; and |
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• | An increase in cross-border volumes of 12%. |
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 fourth quarter of 2014, to $883 billion. As of December 31, 2015, the company’s customers had issued 2.3 billion MasterCard and Maestro-branded cards.
"Despite a challenging economy, we were able to deliver solid results for the quarter and the full year in 2015," said Ajay Banga, president and CEO, MasterCard. “Entering 2016, while uncertainty in the global economy persists, the fundamentals of our business and our approach remain unchanged. We continue to be laser focused on our strategy to lead payment innovation in an increasingly digital world with solutions such as MasterPass, while growing the use of electronic payments through our products, partnerships and increased acceptance at the point-of-sale."
Total operating expenses increased 1%, or 4% when adjusted for currency, to $1.4 billion during the fourth quarter of 2015 compared to the same period in 2014. The increase was primarily due to continued investments to support strategic initiatives, as well as the impact of acquisitions, which contributed 4 percentage points of the FX-adjusted growth, partially offset by ongoing cost management initiatives.
MasterCard Incorporated - Page 2
Operating income for the fourth quarter of 2015 increased 9%, or 17% adjusted for currency, versus the year-ago period. The company delivered an operating margin of 44.0%.
MasterCard reported other expense of $82 million in the fourth quarter of 2015 versus $11 million in the fourth quarter of 2014. The change was mainly driven by impairment charges on certain investments and by higher interest expense related to the company’s Euro debt offering in November 2015, partially offset by tax reserve adjustments and investment gains.
MasterCard’s effective tax rate was 13.1% in the fourth quarter of 2015, versus a rate of 20.3% in the comparable period in 2014. The decrease was primarily due to the recognition of discrete tax benefits in the fourth quarter of 2015 resulting from the impact of settlements with tax authorities during the quarter.
During the fourth quarter of 2015, MasterCard repurchased approximately 8 million shares of Class A common stock at a cost of $793 million. Quarter-to-date through January 22nd, the company repurchased an additional 3.1 million shares at a cost of $283 million, with $4.2 billion remaining under current repurchase program authorizations.
Full-Year 2015 Results
For the full-year 2015, excluding special items, MasterCard reported net income of $3.9 billion, an increase of 8%, or 15% after adjusting for currency, versus the year-ago period and earnings per diluted share of $3.43, up 11%, or 18% after adjusting for currency compared to the same period in 2014. The special items included after-tax charges of $44 million related to a U.K. merchant litigation settlement and $50 million related to the termination of the U.S. employee pension plan, recorded in the second and third quarters of 2015, respectively. Including the special items, net income was $3.8 billion and earnings per diluted share was $3.35. Acquisitions had an $0.11 dilutive impact on earnings per diluted share in the full-year period.
Net revenue for the full-year 2015 was $9.7 billion, an increase of 2%, or 8% after adjusting for currency, versus the same period in 2014. Gross dollar volume growth of 13%, transaction processing growth of 12% and cross-border volume growth of 16% contributed to the net revenue growth in the full-year period. These factors were partially offset by an increase in rebates and incentives. Acquisitions contributed 2 percentage points to total net revenue growth.
Excluding the special items, total operating expenses increased 3%, or 6% after adjusting for currency, to $4.4 billion for the full-year 2015, compared to the same period in 2014. The increase was primarily due to continued investments to support strategic initiatives as well as the impact of acquisitions, which contributed 6 percentage points of the FX-adjusted growth, partially offset by ongoing cost management initiatives and foreign exchange gains. Including the special items, total operating expenses increased 6%, or 10% after adjusting for currency, from the year-ago period.
Excluding the special items, operating income was $5.2 billion, an increase of 2% for full-year 2015 versus the same period in 2014, or an increase of 10% after adjusting for currency. The company delivered an operating margin of 54.0%.
MasterCard Incorporated - Page 3
MasterCard reported other expense of $120 million for the full-year 2015 versus $27 million compared to the same period in 2014. The change was mainly driven by impairment charges on certain investments and by higher interest expense resulting from debt issued in 2014 and 2015.
MasterCard’s effective tax rate was 23.4% for full-year 2015 versus a rate of 28.8% in the same period in 2014, excluding the special items. The decrease was primarily due to the recognition of discrete tax benefits in 2015 resulting from the impact of settlements with tax authorities, the recognition of a U.S. foreign tax credit and a more favorable geographic mix of taxable earnings.
Fourth-Quarter Financial Results Conference Call Details
At 9:00 a.m. ET today, the company will host a conference call to discuss its fourth-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 12827852. 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 12827852.
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 company has presented certain financial data that are considered non-GAAP financial measures that are reconciled to their most directly comparable GAAP measures in the accompanying tables.
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 Beyond the Transaction Blog and subscribe for the latest news on the Engagement Bureau.
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
MasterCard Incorporated - Page 4
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 business performance and the execution of our strategy to lead payment innovation and grow electronic payments use.
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, and subsequent reports on Forms 10-Q and 8-K, 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
MasterCard Incorporated - Page 5
MASTERCARD INCORPORATED
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
|
| | | | | | | | | | | | | | | |
| Three Months Ended December 31, | | Twelve Months Ended December 31, |
| 2015 | | 2014 | | 2015 | | 2014 |
| (in millions, except per share data) |
Net Revenue | $ | 2,517 |
| | $ | 2,411 |
| | $ | 9,667 |
| | $ | 9,441 |
|
Operating Expenses | | | | | | | |
General and administrative | 998 |
| | 972 |
| | 3,341 |
| | 3,152 |
|
Advertising and marketing | 319 |
| | 337 |
| | 821 |
| | 862 |
|
Depreciation and amortization | 93 |
| | 84 |
| | 366 |
| | 321 |
|
Provision for litigation settlement | — |
| | — |
| | 61 |
| | — |
|
Total operating expenses | 1,410 |
| | 1,393 |
| | 4,589 |
| | 4,335 |
|
Operating income | 1,107 |
| | 1,018 |
| | 5,078 |
| | 5,106 |
|
Other Income (Expense) | | | | | | | |
Investment income | 5 |
| | 7 |
| | 25 |
| | 28 |
|
Interest expense | (12 | ) | | (16 | ) | | (61 | ) | | (48 | ) |
Other income (expense), net | (75 | ) | | (2 | ) | | (84 | ) | | (7 | ) |
Total other income (expense) | (82 | ) | | (11 | ) | | (120 | ) | | (27 | ) |
Income before income taxes | 1,025 |
| | 1,007 |
| | 4,958 |
| | 5,079 |
|
Income tax expense | 135 |
| | 206 |
| | 1,150 |
| | 1,462 |
|
Net Income | $ | 890 |
| | $ | 801 |
| | $ | 3,808 |
| | $ | 3,617 |
|
| | | | | | | |
Basic Earnings per Share | $ | 0.79 |
| | $ | 0.70 |
| | $ | 3.36 |
| | $ | 3.11 |
|
Basic Weighted-Average Shares Outstanding | 1,121 |
| | 1,153 |
| | 1,134 |
| | 1,165 |
|
Diluted Earnings per Share | $ | 0.79 |
| | $ | 0.69 |
| | $ | 3.35 |
| | $ | 3.10 |
|
Diluted Weighted-Average Shares Outstanding | 1,124 |
| | 1,157 |
| | 1,137 |
| | 1,169 |
|
MasterCard Incorporated - Page 6
MASTERCARD INCORPORATED
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
|
| | | | | | | |
| December 31, |
| 2015 | | 2014 |
| (in millions, except per share data) |
ASSETS | | | |
Cash and cash equivalents | $ | 5,747 |
| | $ | 5,137 |
|
Restricted cash for litigation settlement | 541 |
| | 540 |
|
Investments | 991 |
| | 1,238 |
|
Accounts receivable | 1,079 |
| | 1,109 |
|
Settlement due from customers | 1,068 |
| | 1,052 |
|
Restricted security deposits held for customers | 895 |
| | 950 |
|
Prepaid expenses and other current assets | 664 |
| | 671 |
|
Deferred income taxes | — |
| | 300 |
|
Total Current Assets | 10,985 |
| | 10,997 |
|
Property, plant and equipment, net | 675 |
| | 615 |
|
Deferred income taxes | 317 |
| | 96 |
|
Goodwill | 1,891 |
| | 1,522 |
|
Other intangible assets, net | 803 |
| | 714 |
|
Other assets | 1,598 |
| | 1,385 |
|
Total Assets | $ | 16,269 |
| | $ | 15,329 |
|
LIABILITIES AND EQUITY | | | |
Accounts payable | $ | 472 |
| | $ | 419 |
|
Settlement due to customers | 866 |
| | 1,142 |
|
Restricted security deposits held for customers | 895 |
| | 950 |
|
Accrued litigation | 709 |
| | 771 |
|
Accrued expenses | 2,763 |
| | 2,439 |
|
Other current liabilities | 564 |
| | 501 |
|
Total Current Liabilities | 6,269 |
| | 6,222 |
|
Long-term debt | 3,287 |
| | 1,494 |
|
Deferred income taxes | 79 |
| | 115 |
|
Other liabilities | 572 |
| | 674 |
|
Total Liabilities | 10,207 |
| | 8,505 |
|
Commitments and Contingencies |
| |
|
Stockholders’ Equity | | |
|
Class A common stock, $0.0001 par value; authorized 3,000 shares, 1,370 and 1,352 shares issued and 1,095 and 1,115 outstanding, respectively | — |
| | — |
|
Class B common stock, $0.0001 par value; authorized 1,200 shares, 21 and 37 issued and outstanding, respectively | — |
| | — |
|
Additional paid-in-capital | 4,004 |
| | 3,876 |
|
Class A treasury stock, at cost, 275 and 237 shares, respectively | (13,522 | ) | | (9,995 | ) |
Retained earnings | 16,222 |
| | 13,169 |
|
Accumulated other comprehensive income (loss) | (676 | ) | | (260 | ) |
Total Stockholders’ Equity | 6,028 |
| | 6,790 |
|
Non-controlling interests | 34 |
| | 34 |
|
Total Equity | 6,062 |
| | 6,824 |
|
Total Liabilities and Equity | $ | 16,269 |
| | $ | 15,329 |
|
MasterCard Incorporated - Page 7
MASTERCARD INCORPORATED
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
|
| | | | | | | | | | | |
| For the Years Ended December 31, |
| 2015 | | 2014 | | 2013 |
| (in millions) |
Operating Activities | | | | | |
Net income | $ | 3,808 |
| | $ | 3,617 |
| | $ | 3,116 |
|
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | |
Amortization of customer and merchant incentives | 764 |
| | 691 |
| | 603 |
|
Depreciation and amortization | 366 |
| | 321 |
| | 258 |
|
Share-based payments | 22 |
| | (15 | ) | | 63 |
|
Deferred income taxes | (16 | ) | | (91 | ) | | (119 | ) |
Other | (81 | ) | | 52 |
| | 67 |
|
Changes in operating assets and liabilities: | | | | | |
Accounts receivable | (35 | ) | | (164 | ) | | (42 | ) |
Income taxes receivable | (14 | ) | | (8 | ) | | 153 |
|
Settlement due from customers | (98 | ) | | 185 |
| | (194 | ) |
Prepaid expenses | (802 | ) | | (1,316 | ) | | (598 | ) |
Accrued litigation and legal settlements | (63 | ) | | (115 | ) | | 160 |
|
Accounts payable | 49 |
| | 61 |
| | (20 | ) |
Settlement due to customers | (186 | ) | | (165 | ) | | 322 |
|
Accrued expenses | 325 |
| | 389 |
| | 315 |
|
Net change in other assets and liabilities | 4 |
| | (35 | ) | | 51 |
|
Net cash provided by operating activities | 4,043 |
| | 3,407 |
| | 4,135 |
|
Investing Activities | | | | | |
Purchases of investment securities available-for-sale | (974 | ) | | (2,385 | ) | | (2,526 | ) |
Purchases of other short-term investments held-to-maturity | (918 | ) | | — |
| | — |
|
Proceeds from sales of investment securities available-for-sale | 703 |
| | 2,477 |
| | 1,488 |
|
Proceeds from maturities of investment securities available-for-sale | 542 |
| | 1,358 |
| | 1,321 |
|
Proceeds from maturities of investment securities held-to-maturity | 857 |
| | — |
| | 36 |
|
Purchases of property, plant and equipment | (177 | ) | | (175 | ) | | (155 | ) |
Capitalized software | (165 | ) | | (159 | ) | | (144 | ) |
Acquisition of businesses, net of cash acquired | (584 | ) | | (525 | ) | | — |
|
(Increase) decrease in restricted cash for litigation settlement | (1 | ) | | 183 |
| | 3 |
|
Other investing activities | 2 |
| | (84 | ) | | (27 | ) |
Net cash (used in) provided by investing activities | (715 | ) | | 690 |
| | (4 | ) |
Financing Activities | | | | | |
Purchases of treasury stock | (3,518 | ) | | (3,386 | ) | | (2,443 | ) |
Proceeds from debt | 1,735 |
| | 1,530 |
| | 35 |
|
Dividends paid | (727 | ) | | (515 | ) | | (255 | ) |
Tax benefit for share-based payments | 42 |
| | 54 |
| | 19 |
|
Cash proceeds from exercise of stock options | 27 |
| | 28 |
| | 26 |
|
Other financing activities | (17 | ) | | (50 | ) | | (11 | ) |
Net cash used in financing activities | (2,458 | ) | | (2,339 | ) | | (2,629 | ) |
Effect of exchange rate changes on cash and cash equivalents | (260 | ) | | (220 | ) | | 45 |
|
Net increase in cash and cash equivalents | 610 |
| | 1,538 |
| | 1,547 |
|
Cash and cash equivalents - beginning of period | 5,137 |
| | 3,599 |
| | 2,052 |
|
Cash and cash equivalents - end of period | $ | 5,747 |
| | $ | 5,137 |
| | $ | 3,599 |
|
| | | | | |
Non-Cash Investing and Financing Activities | | | | | |
Fair value of assets acquired, net of cash acquired | $ | 626 |
| | $ | 768 |
| | $ | — |
|
Fair value of liabilities assumed related to acquisitions | $ | 42 |
| | $ | 141 |
| | $ | — |
|
MasterCard Incorporated - Page 8
MASTERCARD INCORPORATED OPERATING PERFORMANCE
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the 3 Months Ended December 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 | $ | 363 |
| | 4.5 | % | | 13.7 | % | | $ | 245 |
| | 13.3 | % | | 3,324 |
| | $ | 118 |
| | 14.5 | % | | 1,214 |
| | 520 |
| | 555 |
|
Canada | 34 |
| | -3.2 | % | | 13.8 | % | | 33 |
| | 14.5 | % | | 487 |
| | 2 |
| | 1.1 | % | | 6 |
| | 43 |
| | 49 |
|
Europe | 341 |
| | -1.3 | % | | 15.1 | % | | 234 |
| | 13.5 | % | | 4,933 |
| | 108 |
| | 18.8 | % | | 824 |
| | 393 |
| | 410 |
|
Latin America | 83 |
| | -14.6 | % | | 15.2 | % | | 47 |
| | 16.0 | % | | 1,513 |
| | 36 |
| | 14.1 | % | | 251 |
| | 150 |
| | 172 |
|
Worldwide less United States | 821 |
| | -0.5 | % | | 14.4 | % | | 558 |
| | 13.7 | % | | 10,257 |
| | 263 |
| | 16.1 | % | | 2,294 |
| | 1,106 |
| | 1,186 |
|
United States | 378 |
| | 8.4 | % | | 8.4 | % | | 324 |
| | 8.8 | % | | 5,891 |
| | 53 |
| | 6.5 | % | | 332 |
| | 341 |
| | 377 |
|
Worldwide | 1,199 |
| | 2.2 | % | | 12.5 | % | | 883 |
| | 11.8 | % | | 16,147 |
| | 316 |
| | 14.3 | % | | 2,626 |
| | 1,447 |
| | 1,563 |
|
MasterCard Credit and Charge Programs | | | | | | | | | | | | | | | | | | | | | |
Worldwide less United States | 456 |
| | -4.1 | % | | 9.5 | % | | 417 |
| | 10.5 | % | | 6,011 |
| | 39 |
| | 0.3 | % | | 190 |
| | 524 |
| | 588 |
|
United States | 181 |
| | 9.3 | % | | 9.3 | % | | 174 |
| | 8.9 | % | | 1,995 |
| | 7 |
| | 21.3 | % | | 9 |
| | 160 |
| | 192 |
|
Worldwide | 637 |
| | -0.6 | % | | 9.5 | % | | 591 |
| | 10.0 | % | | 8,006 |
| | 47 |
| | 3.1 | % | | 199 |
| | 683 |
| | 780 |
|
MasterCard Debit Programs | | | | | | | | | | | | | | | | | | | | | |
Worldwide less United States | 365 |
| | 4.4 | % | | 21.2 | % | | 142 |
| | 24.2 | % | | 4,246 |
| | 223 |
| | 19.4 | % | | 2,104 |
| | 582 |
| | 598 |
|
United States | 197 |
| | 7.6 | % | | 7.6 | % | | 151 |
| | 8.6 | % | | 3,896 |
| | 46 |
| | 4.5 | % | | 323 |
| | 182 |
| | 185 |
|
Worldwide | 562 |
| | 5.5 | % | | 16.1 | % | | 292 |
| | 15.7 | % | | 8,141 |
| | 269 |
| | 16.5 | % | | 2,427 |
| | 764 |
| | 783 |
|
| For the 12 Months Ended December 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 | $ | 1,387 |
| | 5.7 | % | | 14.5 | % | | $ | 934 |
| | 14.6 | % | | 12,037 |
| | $ | 453 |
| | 14.1 | % | | 4,453 |
| | 520 |
| | 555 |
|
Canada | 131 |
| | — | % | | 16.0 | % | | 124 |
| | 17.5 | % | | 1,801 |
| | 7 |
| | -5.2 | % | | 22 |
| | 43 |
| | 49 |
|
Europe | 1,279 |
| | -5.6 | % | | 15.9 | % | | 882 |
| | 14.1 | % | | 17,900 |
| | 397 |
| | 20.0 | % | | 3,046 |
| | 393 |
| | 410 |
|
Latin America | 320 |
| | -10.8 | % | | 15.4 | % | | 187 |
| | 17.7 | % | | 5,666 |
| | 133 |
| | 12.3 | % | | 919 |
| | 150 |
| | 172 |
|
Worldwide less United States | 3,118 |
| | -1.2 | % | | 15.2 | % | | 2,127 |
| | 14.8 | % | | 37,403 |
| | 990 |
| | 16.0 | % | | 8,440 |
| | 1,106 |
| | 1,186 |
|
United States | 1,446 |
| | 7.5 | % | | 7.5 | % | | 1,233 |
| | 7.7 | % | | 22,260 |
| | 213 |
| | 6.2 | % | | 1,341 |
| | 341 |
| | 377 |
|
Worldwide | 4,564 |
| | 1.4 | % | | 12.6 | % | | 3,360 |
| | 12.1 | % | | 59,663 |
| | 1,204 |
| | 14.1 | % | | 9,782 |
| | 1,447 |
| | 1,563 |
|
MasterCard Credit and Charge Programs | | | | | | | | | | | | | | | | | | | | | |
Worldwide less United States | 1,771 |
| | -3.8 | % | | 10.6 | % | | 1,612 |
| | 11.8 | % | | 22,492 |
| | 159 |
| | — | % | | 748 |
| | 524 |
| | 588 |
|
United States | 681 |
| | 7.6 | % | | 7.6 | % | | 653 |
| | 7.4 | % | | 7,349 |
| | 28 |
| | 11.2 | % | | 34 |
| | 160 |
| | 192 |
|
Worldwide | 2,452 |
| | -0.9 | % | | 9.7 | % | | 2,264 |
| | 10.5 | % | | 29,841 |
| | 187 |
| | 1.5 | % | | 782 |
| | 683 |
| | 780 |
|
MasterCard Debit Programs | | | | | | | | | | | | | | | | | | | | | |
Worldwide less United States | 1,347 |
| | 2.3 | % | | 21.9 | % | | 516 |
| | 25.6 | % | | 14,911 |
| | 831 |
| | 19.6 | % | | 7,693 |
| | 582 |
| | 598 |
|
United States | 765 |
| | 7.4 | % | | 7.4 | % | | 580 |
| | 8.0 | % | | 14,911 |
| | 185 |
| | 5.5 | % | | 1,308 |
| | 182 |
| | 185 |
|
Worldwide | 2,112 |
| | 4.1 | % | | 16.2 | % | | 1,096 |
| | 15.6 | % | | 29,823 |
| | 1,016 |
| | 16.8 | % | | 9,000 |
| | 764 |
| | 783 |
|
| For the 3 months ended December 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 | $ | 347 |
| | 11.0 | % | | 15.4 | % | | $ | 234 |
| | 14.9 | % | | 2,764 |
| | $ | 114 |
| | 16.5 | % | | 1,037 |
| | 451 |
| | 482 |
|
Canada | 35 |
| | 1.9 | % | | 10.4 | % | | 33 |
| | 12.5 | % | | 420 |
| | 2 |
| | -16.3 | % | | 5 |
| | 37 |
| | 44 |
|
Europe | 346 |
| | 1.6 | % | | 15.9 | % | | 234 |
| | 12.2 | % | | 4,041 |
| | 111 |
| | 24.7 | % | | 718 |
| | 358 |
| | 374 |
|
Latin America | 97 |
| | 3.4 | % | | 16.1 | % | | 59 |
| | 22.0 | % | | 1,369 |
| | 38 |
| | 7.9 | % | | 226 |
| | 136 |
| | 156 |
|
Worldwide less United States | 825 |
| | 5.6 | % | | 15.5 | % | | 561 |
| | 14.3 | % | | 8,594 |
| | 265 |
| | 18.1 | % | | 1,986 |
| | 982 |
| | 1,057 |
|
United States | 348 |
| | 7.6 | % | | 7.6 | % | | 298 |
| | 8.2 | % | | 5,307 |
| | 50 |
| | 3.6 | % | | 325 |
| | 318 |
| | 353 |
|
Worldwide | 1,174 |
| | 6.2 | % | | 13.0 | % | | 859 |
| | 12.1 | % | | 13,901 |
| | 315 |
| | 15.5 | % | | 2,312 |
| | 1,300 |
| | 1,410 |
|
MasterCard Credit and Charge Programs | | | | | | | | | | | | | | | | | | | | | |
Worldwide less United States | 476 |
| | 2.1 | % | | 10.5 | % | | 429 |
| | 11.7 | % | | 5,402 |
| | 46 |
| | 0.3 | % | | 198 |
| | 505 |
| | 568 |
|
United States | 166 |
| | 6.9 | % | | 6.9 | % | | 160 |
| | 7.9 | % | | 1,781 |
| | 6 |
| | -14.9 | % | | 8 |
| | 150 |
| | 181 |
|
Worldwide | 641 |
| | 3.3 | % | | 9.5 | % | | 589 |
| | 10.6 | % | | 7,183 |
| | 52 |
| | -1.8 | % | | 206 |
| | 655 |
| | 749 |
|
MasterCard Debit Programs | | | | | | | | | | | | | | | | | | | | | |
Worldwide less United States | 350 |
| | 10.7 | % | | 23.1 | % | | 131 |
| | 23.8 | % | | 3,192 |
| | 218 |
| | 22.7 | % | | 1,788 |
| | 477 |
| | 489 |
|
United States | 183 |
| | 8.2 | % | | 8.2 | % | | 139 |
| | 8.6 | % | | 3,526 |
| | 44 |
| | 6.8 | % | | 318 |
| | 168 |
| | 172 |
|
Worldwide | 532 |
| | 9.8 | % | | 17.5 | % | | 270 |
| | 15.5 | % | | 6,718 |
| | 262 |
| | 19.7 | % | | 2,106 |
| | 645 |
| | 661 |
|
| For the 12 Months ended December 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 | $ | 1,312 |
| | 13.6 | % | | 17.2 | % | | $ | 879 |
| | 16.6 | % | | 9,990 |
| | $ | 434 |
| | 18.4 | % | | 3,863 |
| | 451 |
| | 482 |
|
Canada | 131 |
| | -0.2 | % | | 6.9 | % | | 122 |
| | 8.7 | % | | 1,529 |
| | 9 |
| | -13.0 | % | | 23 |
| | 37 |
| | 44 |
|
Europe | 1,355 |
| | 9.4 | % | | 13.9 | % | | 917 |
| | 10.6 | % | | 14,627 |
| | 438 |
| | 21.5 | % | | 2,665 |
| | 358 |
| | 374 |
|
Latin America | 359 |
| | 4.9 | % | | 14.7 | % | | 219 |
| | 20.6 | % | | 5,072 |
| | 140 |
| | 6.5 | % | | 838 |
| | 136 |
| | 156 |
|
Worldwide less United States | 3,157 |
| | 10.1 | % | | 15.0 | % | | 2,137 |
| | 13.9 | % | | 31,218 |
| | 1,020 |
| | 17.5 | % | | 7,388 |
| | 982 |
| | 1,057 |
|
United States | 1,346 |
| | 8.2 | % | | 8.2 | % | | 1,145 |
| | 8.9 | % | | 20,352 |
| | 201 |
| | 4.6 | % | | 1,300 |
| | 318 |
| | 353 |
|
Worldwide | 4,503 |
| | 9.6 | % | | 12.9 | % | | 3,282 |
| | 12.1 | % | | 51,570 |
| | 1,221 |
| | 15.2 | % | | 8,688 |
| | 1,300 |
| | 1,410 |
|
MasterCard Credit and Charge Programs | | | | | | | | | | | | | | | | | | | | | |
Worldwide less United States | 1,840 |
| | 6.7 | % | | 10.8 | % | | 1,647 |
| | 12.1 | % | | 20,159 |
| | 193 |
| | 1.2 | % | | 809 |
| | 505 |
| | 568 |
|
United States | 633 |
| | 7.8 | % | | 7.8 | % | | 607 |
| | 8.4 | % | | 6,729 |
| | 26 |
| | -4.8 | % | | 28 |
| | 150 |
| | 181 |
|
Worldwide | 2,473 |
| | 7.0 | % | | 10.0 | % | | 2,254 |
| | 11.1 | % | | 26,888 |
| | 219 |
| | 0.4 | % | | 838 |
| | 655 |
| | 749 |
|
MasterCard Debit Programs | | | | | | | | | | | | | | | | | | | | | |
Worldwide less United States | 1,317 |
| | 15.3 | % | | 21.4 | % | | 490 |
| | 20.2 | % | | 11,058 |
| | 827 |
| | 22.2 | % | | 6,579 |
| | 477 |
| | 489 |
|
United States | 713 |
| | 8.6 | % | | 8.6 | % | | 537 |
| | 9.4 | % | | 13,623 |
| | 175 |
| | 6.1 | % | | 1,271 |
| | 168 |
| | 172 |
|
Worldwide | 2,030 |
| | 12.9 | % | | 16.6 | % | | 1,027 |
| | 14.3 | % | | 24,682 |
| | 1,002 |
| | 19.0 | % | | 7,850 |
| | 645 |
| | 661 |
|
| | | | | | | | | | | | | | | | | | | | | |
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 9
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 2015 Q3, several customers purged inactive MasterCard cards and accounts. Data for the comparable periods has been revised to be consistent with this approach.
Performance information for prior periods can be found in the “Investor Relations” section of the MasterCard website at www.mastercard.com/investor.
MasterCard Incorporated - Page 10
Non-GAAP Reconciliations
($ in millions, except per share data)
|
| | | | | | | | | | | | | | | | | | | | | |
| Twelve Months Ended December 31, 2015 | | Twelve Months Ended December 31, 2014 | | Percent Increase / (Decrease) |
| Actual | | Special Items1 | | Non-GAAP | | Actual | | Actual | | Special Items1 | | Non-GAAP |
Total operating expenses | $ | 4,589 |
| | $ | (140 | ) | | $ | 4,449 |
| | $ | 4,335 |
| | 6% | | 3% | | 3% |
Operating income | $ | 5,078 |
| | $ | 140 |
| | $ | 5,218 |
| | $ | 5,106 |
| | (1)% | | (3)% | | 2% |
Operating Margin | 52.5 | % | | | | 54.0 | % | | 54.1 | % | | | | | | |
Income tax expense | $ | 1,150 |
| | $ | 45 |
| | $ | 1,195 |
| | $ | 1,462 |
| | (21)% | | (3)% | | (18)% |
Effective Tax Rate | 23.2 | % | | | | 23.4 | % | | 28.8 | % | | | | | | |
Net Income | $ | 3,808 |
| | $ | 95 |
| | $ | 3,903 |
| | $ | 3,617 |
| | 5% | | (3)% | | 8% |
Diluted Earnings per Share | $ | 3.35 |
| | $ | 0.08 |
| | $ | 3.43 |
| | $ | 3.10 |
| | 8% | | (3)% | | 11% |
| | | | | | | | | | | | | |
Note: Figures may not sum due to rounding |
1 Represents effect of termination of the U.S. employee pension plan of $79 million ($50 million after tax or $0.04 per diluted share) and U.K. Merchant Litigation Settlement of $61 million ($44 million after tax or $0.04 per diluted share). |
MasterCard Incorporated Fourth‐Quarter and Full‐Year 2015 Financial Results Conference Call January 29, 2016
©2016 MasterCard. Proprietary Business Update Financial & Operational Overview Economic Update Business Highlights January 29, 20162
©2016 MasterCard. Proprietary 4th Quarter Selected Financial Performance 4Q 15 4Q 14 Net revenue 2,517$ 2,411$ 4% 9% Total operating expenses 1,410 1,393 1% 4% Operating income 1,107 1,018 9% 17% Operating margin 44.0% 42.2% 1.8 ppts 2.7 ppts Net income 890$ 801$ 11% 18% Diluted EPS 0.79$ 0.69$ 14% 22% Effective tax rate 13.1% 20.3% FX Adjusted YOY Growth As Reported ($ in millions, except per share data) Note: Figures may not sum due to rounding. January 29, 20163
©2016 MasterCard. Proprietary $641 $637 $166 $181 $476 $456 $532 $562 $183 $197 $350 $365 $0 $400 $800 $1,200 4Q 14 4Q 15 4Q 14 4Q 15 4Q 14 4Q 15 Credit Debit Worldwide 12% Growth ($ in billions) 4th Quarter Gross Dollar Volume (GDV) $1,174 $1,199 $348 $378 $825 $821 United States 8% Growth Rest of World 14% Growth Notes: 1. Growth rates are shown in local currency 2. Figures may not sum due to rounding January 29, 20164
©2016 MasterCard. Proprietary 4th Quarter Processed Transactions and Cards Cards 7% Growth 1,410 1,563 697 693 0 500 1,000 1,500 2,000 2,500 4Q 14 4Q 15 C a r d s ( i n m i l l i o n s ) MasterCard Cards Maestro Cards 2,10611,562 12,971 0 2,500 5,000 7,500 10,000 12,500 15,000 4Q 14 4Q 15 T r a n s a c t i o n s ( i n m i l l i o n s ) Processed Transactions 12% Growth 2,256 Note: Figures may not sum due to rounding January 29, 20165
©2016 MasterCard. Proprietary 4th Quarter Revenue ($ in millions) $1,018 $774 $1,063 $495 ($939) $2,411 $1,067 $844 $1,148 $598 ($1,140) $2,517 Domestic Assessments Cross‐Border Volume Fees Transaction Processing Fees Other Revenue Rebates and Incentives Total Net Revenue ‐$2,000 ‐$1,000 $0 $1,000 $2,000 $3,000 4Q 14 4Q 15 Note: Figures may not sum due to rounding. 5% 9% 8% 21% 21% 4%As‐reported 9%27%26%13%13%FX‐adjusted 10% Growth January 29, 20166
©2016 MasterCard. Proprietary Note: Figures may not sum due to rounding See Appendix A for Operating Expenses Growth Non‐GAAP reconciliations 4th Quarter Operating Expenses ($ in millions) $972 $337 $84 $1,393 $998 $319 $93 $1,410 General & Administrative Advertising & Marketing Depreciation & Amortization Total Operating Expenses $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 4Q 14 4Q 15 5% (1)% 11% 4%Including Acquisitions ‐‐% FX‐adjusted Growth ‐‐% (1)% 3%Excluding Acquisitions 3% (5)% 10% 1% January 29, 20167
©2016 MasterCard. Proprietary Looking Ahead Business update through January 21st Long-Term Performance Objectives Thoughts for 2016 January 29, 20168
Appendices
©2016 MasterCard. Proprietary 1 Impact from 2014 and 2015 acquisitions 2 Impact of foreign currency translation calculated by remeasuring the prior period’s results using the current period’s exchange rates Note: Figures may not sum due to rounding Q4 2015 Growth Rate - Increase / (Decrease) As-Reported Acquisitions1 FX2 Excluding All Impacts General and administrative 3% 5% (3)% 0% Advertising and marketing (5)% —% (5)% (1)% Depreciation and amortization 10% 8% (1)% 3% Total operating expenses 1% 4% (3)% 0% APPENDIX A 4Q15 Operating Expenses Growth Non‐GAAP Reconciliation January 29, 201610
©2016 MasterCard. Proprietary Three Months Ended December 31 Dollar Increase (Decrease) Percent Increase (Decrease) 2015 2014 2015 vs 2014 2015 vs 2014 Personnel $565 $618 $(53) (8)% Professional fees 111 112 (1) (1)% Data processing and telecommunications 107 77 30 39% Foreign exchange activity (2) (10) 8 ** Other 217 175 42 23% General and administrative expenses $998 $972 $26 3% Note: Figures may not sum due to rounding ** Not meaningful ($ in millions) APPENDIX B 4th Quarter G&A Detail January 29, 201611
©2016 MasterCard. Proprietary APPENDIX C Non‐GAAP CAGR Reconciliation 2012-2015 3-Year CAGR Net Revenue 9.5% Acquisitions2 (1.1) Foreign Currency (EUR/BRL)3 2.0 Net Revenue Non-GAAP 10.5% Note: Figures may not sum due to rounding 2012 EPS 2015 EPS 2012-2015 3-Year CAGR Diluted Earnings Per Share GAAP $2.19 $3.35 15.2% Special Items1 0.01 0.08 0.7 Acquisitions2 — 0.11 1.3 Foreign Currency (EUR/BRL)3 — 0.21 2.4 Tax Items4 (0.06) (0.13) (0.4) Diluted Earnings Per Share Non-GAAP $2.14 $3.62 19.2% 1 Impact of U.S. merchant litigation settlement of $0.01 recorded in 2012, U.S. employee pension plan termination of $0.04 and U.K. merchant litigation settlement of $0.04 recorded in 2015, all per diluted share 2 Impact of 2014 and 2015 acquisitions 3 Impact of the euro and Brazilian real translation for current period results at 2012 exchange rates 4 Impact of taxable discrete items in 2012 and settlements with tax authorities recorded in 2015 January 29, 201612
©2016 MasterCard. Proprietary 2015 Diluted Earnings Per Share GAAP $3.35 Significant Tax Items2 (0.31) U.S. Employee Pension Plan Settlement Charge3 0.04 Provision for Litigation Settlement4 0.04 2015 Diluted Earnings Per Share Non-GAAP $3.12 1 Proforma EPS utilized to measure 3‐year EPS target performance (2015‐2018) 2 Represents effect of discrete tax benefits and the tax impact of non‐recurring repatriation benefits 3 Represents effect of the termination of the U.S. employee pension plan 4 Represents effect of the U.K. Merchant Litigation Settlement Note: Figures may not sum due to rounding APPENDIX D FY2015 Proforma EPS1 January 29, 201613
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