MasterCard, Post IPO, Swings to a Loss on Extraordinary Items

MasterCard Inc., reporting quarterly results for the first time since its initial public offering in May, said it lost $310.5 million in the three-month period ended June 30, compared to a gain of $120.2 million in the second quarter of 2005. One-time expenses, including a $400.3 million cost for 13.5 million shares of stock contributed to the MasterCard Foundation, a charitable enterprise, pushed the bank card network into the red. Also among these one-time costs was a $23.3 million reserve against litigation settlements (the Purchase, N.Y.-based company last week settled a lawsuit concerning currency-conversion fees but faces at least two other major suits, including a consolidated action by merchants over interchange pricing). MasterCard's revenue for the quarter jumped 9.7% to $846 million, an increase it attributed to rises in transactions and gross dollar volume. For the first half of 2006, MasterCard recorded a $183.7 million loss on revenue of $1.58 billion, with results again affected by the extraordinary items. In the first six months of 2005, it reported a $213.5 million profit on revenue of $1.43 million. MasterCard reported 1.48 billion U.S. credit card transactions in the quarter, resulting in $129 billion in purchase volume, a rise of nearly 10%. Signature-based debit card volume in the U.S. reached $54 billion, up 47.5%, on 1.26 billion transactions (MasterCard's Maestro and Cirrus PIN-based debit cards are not included in its quarterly statistics). The company claims 282 million credit cards and 90 million debit cards in the U.S. on 232 million and 84 million accounts, respectively.