As Its IPO Awaits, MasterCard Logs Strong Results, Names Directors

With its long-expected initial public offering of stock fast approaching, MasterCard Inc. reported strong results for the first quarter and indicated it expects its stock to sell for between $40 and $43 per share. It also named six new directors who will join its board of directors after it becomes a publicly held company. In a filing with the Securities and Exchange Commission today, the world's second-largest bank card network said it plans to sell 61.5 million shares of its stock in its IPO. At the low end of the indicated target-price range, this would reap about $2.44 billion for MasterCard, not much different from the $2.45 billion it said it expected in an SEC filing it made in September. Earlier, the Purchase, N.Y., company reported first-quarter revenue and net income rose 12.3% and 37%, respectively, on strong growth in cards and transactions. Income for the quarter was $127 million on revenue of $739 million. “MasterCard's performance demonstrates our true force as a global payments company,” said Robert Selander, president and chief executive, in a statement. “By leveraging our strengths, we are delivering on our commitment to bring our customers innovative products and value-added services to help them build, manage, and enhance the profitability of their payments businesses.” MasterCard's credit card programs in the U.S. registered $141.5 billion in dollar volume in the quarter, up 7.5% from the year-ago period. Of this sum, purchase volume accounted for $115 billion, up 9.3%, on 1.33 billion transactions, with cash volume making up the balance. The company's U.S. signature-debit program, however, recorded growth of 25.2% in overall dollar volume, to $54.1 billion, including $33.9 billion in point-of-sale volume, up 28.7% on 801 million transactions. The network reported 278.8 million U.S. credit cards, linked to 228.9 million accounts. On the debit side, it claimed 84.1 million cards on 77.8 million accounts. U.S. cards account for nearly two-thirds of all MasterCard signature debit cards in the world, according to these figures. On the acquiring side of its business, MasterCard reported 24.9 million worldwide acceptance outlets, with 6.1 million, or nearly 25%, in the U.S. MasterCard's initial public offering, originally expected in the first quarter, was delayed earlier this year to allow Selander to recover from surgery for prostate cancer. The offering is now expected in the second quarter, though a spokesperson told news services the company would not comment on any specific dates. Nor did today's SEC filing indicate any timing for the IPO. Today, however, MasterCard named six new directors who it expects will join current board memebers Selander and Norman McLuskie after the completion of the IPO. All other current directors will resign, the company says. Those named today are: Manoel Anorim, managing director of the residential business unit for Brazil's Telefonica International S.A.; David R. Carlucci, chairman and chief executive of IMS Health Inc.; Richard Haythornthwaite, managing partner of Star Capital Partners in the U.K.; Marc Olivie, president and chief executive of Agfa-Gevaert Group, Belgium; Mark Schwartz, former chief executive of Soros Fund Management LLC; and Edward Suning Tian, vice chairman and chief executive of China Netcom Group Ltd. Four more directors will be named within the coming year, MasterCard said. Two of these will be elected by public shareholders, with the other two being named by the company's bank shareholders. MasterCard in 2002 switched from a member-association structure to a private-share corporation owned by banks and other financial institutions, and has been filing reports with the Securities and Exchange Commission since then. Its largest member is JPMorgan Chase & Co., which owns 11.7% of the common stock. MasterCard derives most of its revenue from network fees and dues from members. Its rival Visa USA last week revamped its governance in a sweeping boardroom change that included switching four seats from members to independent directors. Visa, however, has given no indication it plans to go public.