MasterCard Incorporated announced financial results for the fourth quarter of 2014. The company reported net income of $801 million, an increase of 17% or 21% adjusted for currency.
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Earnings per diluted share were $0.69, up 21% or 25% adjusted for currency, in each case versus the year-ago period and excluding the special item related to the U.S. merchant litigation taken in that period. Acquisitions had a $0.03 dilutive impact on earnings per diluted share.
Worldwide purchase volume during the quarter was up 12% on a local currency basis versus the fourth quarter of 2013, to $858 billion. As of December 31, 2014, the company’s customers had issued 2.1 billion MasterCard and Maestro-branded cards.
Total operating expenses increased 26%, or 29% adjusted for currency, to $1.4 billion, during the fourth quarter of 2014 compared to the same period in 2013, excluding that period’s special item. The primary driver of this quarter’s expense growth was an $87 million restructuring charge taken in this year’s period.
The charge is related to actions to better position ourselves for the future, such as realigning some roles within the company’s business groups, redeploying resources geographically and consolidating all processing assets under one organization. The remainder of the increase was primarily driven by G&A expenses, continuing our investments in strategic initiatives, similar to recent quarters.
Acquisitions contributed 9 percentage points to the growth. Including last year’s special item, total operating expense increased 16%, or 18% adjusted for currency, from the year-ago period.
Operating income for the fourth quarter of 2014 was flat or increased 3% adjusted for currency versus the year-ago period, excluding the special item, and the company delivered an operating margin of 42.1%.
MasterCard reported other expense of $11 million in the fourth quarter of 2014 versus $9 million in the fourth quarter of 2013. The change was mainly driven by higher interest expense related to the company’s inaugural debt issuance in March 2014.
MasterCard’s effective tax rate was 20.3% in the fourth quarter of 2014, versus a rate of 32.0% in the comparable period in 2013, excluding the special item. The decrease was primarily due to the impact of our continued efforts to better align our tax structure with our business footprint outside of the U.S.
During the fourth quarter of 2014, MasterCard repurchased approximately 2.1 million shares of Class A common stock at a cost of approximately $155 million. Quarter-to-date through January 23rd, the company repurchased an additional 2.5 million shares at a cost of approximately $215 million, with $3.8 billion remaining under the current repurchase program authorizations. ■