Global Payments Reports Fourth Quarter and Year End Earnings

July 21, 2011
Global Payments Reports Fourth Quarter and Year End EarningsATLANTA, July 21, 2011 /PRNewswire via COMTEX/ -- Global Payments Inc. (NYSE: GPN) today announced results for its fiscal fourth quarter and year ended May 31, 2011. For the full year, revenues grew 13% to $1,859.8 million compared to $1,642.5 million in the prior fiscal year. Normalized diluted earnings per share from continuing operations grew 9% to $2.77 compared to $2.54 in the prior year (See Schedule 2 for Normalized Earnings). On a GAAP basis, the company reported fiscal 2011 full year diluted earnings per share from continuing operations of $2.61 compared to $2.52 in the prior year (See Schedule 1 for GAAP Consolidated Statements of Income).

 

 

(Logo: http://photos.prnewswire.com/prnh/20010221/ATW031LOGO )

For the fourth quarter, revenues grew 22% to $519.8 million compared to $425.1 million in the prior year. Normalized diluted earnings per share from continuing operations grew 31% to $0.76 compared to $0.58 in the prior year quarter. On a GAAP basis, the company reported fourth quarter diluted earnings per share from continuing operations of $0.72 compared to $0.56 in the prior year quarter.

Normalized fourth quarter and full year results exclude expenses related to certain start-up and duplicative costs for the company's Global Service Center in Manila, Philippines. These results also exclude certain employee termination and relocation benefits. (See Schedules 7 and 8 for Reconciliations of Normalized and Cash Earnings to GAAP).

Chairman and CEO Paul R. Garcia stated, "We are pleased with our strong fiscal year 2011 financial performance which was driven by solid execution of our business strategy across our regions and the December 2010 addition of Spain. We delivered exceptional results in the fourth quarter, driven by strong performance in North America and outstanding results in our International segment. Our execution during fiscal 2011 established a basis from which we expect to drive margin expansion of as much as 30 basis points in fiscal 2012."

David E. Mangum, Senior Executive Vice President and CFO, stated, "On a cash basis, the company reported fiscal 2011 fourth quarter and full year diluted earnings per share from continuing operations of $0.86 and $3.08, respectively, which represents 32% and 10% growth over the respective prior year periods.

For the full year of fiscal 2012, the company expects annual revenue of $2,100 million to $2,150 million, or 13% to 16% growth over fiscal 2011. The company expects annual fiscal 2012 diluted earnings per share on a cash basis of $3.35 to $3.43, reflecting 9% to 11% growth over fiscal 2011. Annual fiscal 2012 GAAP diluted earnings per share is expected to be $3.02 to $3.09," said Mangum.

Cash earnings exclude normalized adjustments and acquisition intangible amortization expense from continuing operations. (See Schedule 3 for Cash Earnings and Schedule 4 for Segment Information).

Conference Call

Global Payments will hold a conference call today, July 21, 2011 at 5:00 p.m. ET to discuss financial results and business highlights. Callers may access the conference call via the company's Web site at http://www.globalpaymentsinc.com/ by clicking the "Webcast" button; or callers in North America may dial 1-888-895-3550 and callers outside North America may dial 1-706-758-8809. The pass code is "GPN." A replay of the call may be accessed through the Global Payments Web site through August 5, 2011.

Global Payments Inc. (NYSE: GPN) is a leading provider of electronic transaction processing services for merchants, Independent Sales Organizations (ISOs), financial institutions, government agencies and multi-national corporations located throughout the United States, Canada, Europe, and the Asia-Pacific region. Global Payments, a Fortune 1000 company, offers a comprehensive line of processing solutions for credit and debit cards, business-to-business purchasing cards, gift cards, electronic check conversion and check guarantee, verification and recovery including electronic check services, as well as terminal management. Visit http://www.globalpaymentsinc.com/ for more information about the company and its services.

This announcement and comments made by Global Payments' management during the conference call may contain certain forward-looking statements within the meaning of the "safe-harbor" provisions of the Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including revenue and earnings estimates and management's expectations regarding future events and developments, are forward-looking statements and are subject to significant risks and uncertainties. Important factors that may cause actual events or results to differ materially from those anticipated by such forward-looking statements include the following: foreign currency risks which become increasingly relevant as we expand internationally, the effect of current worldwide economic conditions, including sovereign insolvency situations and a decline in the value of the U.S. dollar, and future performance and integration of recent acquisitions, and other risks detailed in the company's SEC filings, including the most recently filed Form 10-Q or Form 10-K, as applicable. The company undertakes no obligation to revise any of these statements to reflect future circumstances or the occurrence of unanticipated events.

SCHEDULE 1

 

UNAUDITED GAAP CONSOLIDATED STATEMENTS OF INCOME

 

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

 
   

(In thousands, except per share data)

 
                           
   

Three Months Ended May 31,

     

Year Ended May 31,

   
   

2011

 

2010

 

% Change

 

2011

 

2010

 

% Change

 
                           

Revenues

 

$ 519,754

 

$ 425,050

 

22%

 

$ 1,859,802

 

$ 1,642,468

 

13%

 
                           

Operating expenses:

                         

Cost of service

 

191,440

 

152,322

 

26%

 

665,017

 

584,609

 

14%

 

Sales, general and administrative

 

240,171

 

201,243

 

19%

 

863,191

 

734,580

 

18%

 
   

431,611

 

353,565

 

22%

 

1,528,208

 

1,319,189

 

16%

 
                           

Operating income

 

88,143

 

71,485

 

23%

 

331,594

 

323,279

 

3%

 
                           

Other income (expense):

                         

Interest and other income

 

3,534

 

1,930

 

83%

 

10,774

 

4,629

 

133%

 

Interest and other expense

 

(4,706)

 

(4,814)

 

(2%)

 

(18,161)

 

(17,519)

 

4%

 
   

(1,172)

 

(2,884)

 

(59%)

 

(7,387)

 

(12,890)

 

(43%)

 
                           

Income from continuing operations before income taxes

 

86,971

 

68,601

 

27%

 

324,207

 

310,389

 

4%

 

Provision for income taxes

 

(24,587)

 

(17,890)

 

37%

 

(95,076)

 

(87,379)

 

9%

 

Income from continuing operations

 

62,384

 

50,711

 

23%

 

229,131

 

223,010

 

3%

 

Loss from discontinued operations, net of tax

 

(29)

 

(11,679)

 

NM

 

(975)

 

(3,901)

 

(75%)

 

Net income including noncontrolling interests

 

62,355

 

39,032

 

60%

 

228,156

 

219,109

 

4%

 

Less: Net income attributable to noncontrolling interests, net of tax

 

(3,779)

 

(4,842)

 

(22%)

 

(18,918)

 

(15,792)

 

20%

 

Net income attributable to Global Payments

 

$ 58,576

 

$ 34,190

 

71%

 

$ 209,238

 

$ 203,317

 

3%

 
                           

Amounts attributable to Global Payments:

                         

Income from continuing operations

 

$ 58,605

 

$ 45,869

 

28%

 

$ 210,213

 

$ 207,218

 

1%

 

Loss from discontinued operations, net of tax

 

(29)

 

(11,679)

 

NM

 

(975)

 

(3,901)

 

(75%)

 

Net income attributable to Global Payments

 

$ 58,576

 

$ 34,190

 

71%

 

$ 209,238

 

$ 203,317

 

3%

 
                           
                           

Basic earnings per share attributable to Global Payments:

                         

Income from continuing operations

 

$ 0.73

 

$ 0.56

 

30%

 

$ 2.63

 

$ 2.56

 

3%

 

Loss from discontinued operations, net of tax

 

-

 

(0.14)

 

NM

 

(0.01)

 

(0.05)

 

(80%)

 

Net income attributable to Global Payments

 

$ 0.73

 

$ 0.42

 

74%

 

$ 2.62

 

$ 2.51

 

4%

 
                           

Diluted earnings per share attributable to Global Payments:

                         

Income from continuing operations

 

$ 0.72

 

$ 0.56

 

29%

 

$ 2.61

 

$ 2.52

 

4%

 

Loss from discontinued operations, net of tax

 

-

 

(0.14)

 

NM

 

(0.01)

 

(0.04)

 

(75%)

 

Net income attributable to Global Payments

 

$ 0.72

 

$ 0.42

 

71%

 

$ 2.60

 

$ 2.48

 

5%

 
                           

Weighted average shares outstanding:

                         

Basic

 

80,222

 

81,203

     

79,837

 

81,075

     

Diluted

 

81,045

 

82,142

     

80,478

 

82,120

     
                           
                           

NM - Not Meaningful

 
                         

SCHEDULE 2

 

NORMALIZED EARNINGS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO GLOBAL PAYMENTS

 

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

 
   

(In thousands, except per share data)

 
                           
   

Three Months Ended May 31,

     

Year Ended May 31,

   
   

2011

 

2010

 

% Change

 

2011

 

2010

 

% Change

 
                           
                           

Revenues

 

$ 519,754

 

$ 425,050

 

22%

 

$ 1,859,802

 

$ 1,642,468

 

13%

 
                           

Operating expenses:

                         

Cost of service

 

190,103

 

152,322

 

25%

 

661,619

 

584,609

 

13%

 

Sales, general and administrative

 

237,087

 

198,660

 

19%

 

851,428

 

731,997

 

16%

 
   

427,190

 

350,982

 

22%

 

1,513,047

 

1,316,606

 

15%

 
                           

Operating income

 

92,564

 

74,068

 

25%

 

346,755

 

325,862

 

6%

 
                           

Other income (expense):

                         

Interest and other income

 

3,534

 

1,930

 

83%

 

10,774

 

4,629

 

133%

 

Interest and other expense

 

(4,706)

 

(4,814)

 

(2%)

 

(18,161)

 

(17,519)

 

4%

 
   

(1,172)

 

(2,884)

 

(59%)

 

(7,387)

 

(12,890)

 

(43%)

 
                           

Income from continuing operations before income taxes

 

91,392

 

71,184

 

28%

 

339,368

 

312,972

 

8%

 

Provision for income taxes

 

(26,062)

 

(18,836)

 

38%

 

(97,546)

 

(88,325)

 

10%

 

Income from continuing operations including noncontrolling interests

 

65,330

 

52,348

 

25%

 

241,822

 

224,647

 

8%

 

Less: Net income attributable to noncontrolling interests, net of tax

 

(3,779)

 

(4,842)

 

(22%)

 

(18,918)

 

(15,792)

 

20%

 

Net income from continuing operations attributable to Global Payments

 

$ 61,551

 

$ 47,506

 

30%

 

$ 222,904

 

$ 208,855

 

7%

 
                           
                           

Basic earnings per share

 

$ 0.77

 

$ 0.59

 

31%

 

$ 2.79

 

$ 2.58

 

8%

 
                           

Diluted earnings per share

 

$ 0.76

 

$ 0.58

 

31%

 

$ 2.77

 

$ 2.54

 

9%

 
                           

Weighted average shares outstanding:

                         

Basic

 

80,222

 

81,203

     

79,837

 

81,075

     

Diluted

 

81,045

 

82,142

     

80,478

 

82,120

     
                           
                           

Normalized results exclude expenses consisting of $2.6 million and $7.4 million during the three and twelve months ended May 31, 2011, respectively, of start-up costs related to our new Global Service Center in Manila, Philippines and expenses of $1.8 million and $7.8 million during the three and twelve months ended May 31, 2011, respectively, related to employee termination and relocation benefits. During the three and twelve months ended May 31, 2010, normalized results exclude amounts due to our former President and Chief Operating Officer pursuant to his termination agreement dated April 21, 2010. Results for the twelve months ended May 31, 2011 also exclude a $2.5 million one-time, non-cash write-down of a deferred tax asset we established in July 2009 when we purchased the remaining 49% of our UK business. The write-down resulted from a legislated reduction to the tax rate of 1%. See Schedules 7 and 8 for reconciliations of normalized earnings from continuing operations to GAAP.

 
                         

SCHEDULE 3

 

CASH EARNINGS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO GLOBAL PAYMENTS

 

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

 
   

(In thousands, except per share data)

 
                           
   

Three Months Ended May 31,

     

Year Ended May 31,

     
   

2011

 

2010

 

% Change

 

2011

 

2010

 

% Change

 
                           

Revenues

 

$ 519,754

 

$ 425,050

 

22%

 

$ 1,859,802

 

$ 1,642,468

 

13%

 
                           

Operating expenses:

                         

Cost of service

 

175,897

 

144,146

 

22%

 

619,927

 

551,845

 

12%

 

Sales, general and administrative

 

237,087

 

198,660

 

19%

 

851,428

 

731,997

 

16%

 
   

412,984

 

342,806

 

20%

 

1,471,355

 

1,283,842

 

15%

 
                           

Operating income

 

106,770

 

82,244

 

30%

 

388,447

 

358,626

 

8%

 
                           

Other income (expense):

                         

Interest and other income

 

3,534

 

1,930

 

83%

 

10,774

 

4,629

 

133%

 

Interest and other expense

 

(4,706)

 

(4,814)

 

(2%)

 

(18,161)

 

(17,519)

 

4%

 
   

(1,172)

 

(2,884)

 

(59%)

 

(7,387)

 

(12,890)

 

(43%)

 
                           

Income from continuing operations before income taxes

 

105,598

 

79,360

 

33%

 

381,060

 

345,736

 

10%

 

Provision for income taxes

 

(29,432)

 

(21,143)

 

39%

 

(109,459)

 

(98,590)

 

11%

 

Income from continuing operations including noncontrolling interests

 

76,166

 

58,217

 

31%

 

271,601

 

247,146

 

10%

 

Less: Net income attributable to noncontrolling interests, net of tax

 

(6,315)

 

(5,177)

 

22%

 

(23,876)

 

(17,142)

 

39%

 

Net income from continuing operations attributable to Global Payments

 

$ 69,851

 

$ 53,040

 

32%

 

$ 247,725

 

$ 230,004

 

8%

 
                           
                           

Basic earnings per share

 

$ 0.87

 

$ 0.65

 

34%

 

$ 3.10

 

$ 2.84

 

9%

 
                           

Diluted earnings per share

 

$ 0.86

 

$ 0.65

 

32%

 

$ 3.08

 

$ 2.80

 

10%

 
                           

Weighted average shares outstanding:

                         

Basic

 

80,222

 

81,203

     

79,837

 

81,075

     

Diluted

 

81,045

 

82,142

     

80,478

 

82,120

     
                           
                           

NM - Not Meaningful

 
   

Cash earnings exclude normalized adjustments and acquisition intangible amortization expense from continuing operations and the related income tax benefit. See Schedules 7 and 8 for reconciliations of cash earnings from continuing operations to GAAP.

 
                         

SCHEDULE 4

 

SEGMENT INFORMATION CONTINUING OPERATIONS

 

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

 
   

(In thousands)

 
                                           
       

Three Months Ended May 31,

             
       

2011

 

2010

 

% Change

 
       

GAAP

 

Normalized

 

Cash Earnings

 

GAAP

 

Normalized

 

Cash Earnings

 

GAAP

 

Normalized

 

Cash Earnings

 
                                           
 

Revenues:

                                   
 

United States

$ 281,500

 

$ 281,500

 

$ 281,500

 

$ 242,975

 

$ 242,975

 

$ 242,975

 

16%

 

16%

 

16%

 
 

Canada

87,140

 

87,140

 

87,140

 

80,720

 

80,720

 

80,720

 

8%

 

8%

 

8%

 
   

North America merchant services

368,640

 

368,640

 

368,640

 

323,695

 

323,695

 

323,695

 

14%

 

14%

 

14%

 
                                           
 

Europe

115,359

 

115,359

 

115,359

 

72,238

 

72,238

 

72,238

 

60%

 

60%

 

60%

 
 

Asia-Pacific

35,755

 

35,755

 

35,755

 

29,117

 

29,117

 

29,117

 

23%

 

23%

 

23%

 
   

International merchant services

151,114

 

151,114

 

151,114

 

101,355

 

101,355

 

101,355

 

49%

 

49%

 

49%

 
                                           
     

Total revenues

$ 519,754

 

$ 519,754

 

$ 519,754

 

$ 425,050

 

$ 425,050

 

$ 425,050

 

22%

 

22%

 

22%

 
                                           
 

Operating income:

                                   
 

North America merchant services

$ 69,816

 

$ 69,816

 

$ 73,085

 

$ 64,966

 

$ 64,966

 

$ 67,848

 

7%

 

7%

 

8%

 
 

International merchant services

41,632

 

41,632

 

52,569

 

25,346

 

25,346

 

30,640

 

64%

 

64%

 

72%

 
 

Corporate

(23,305)

 

(18,884)

 

(18,884)

 

(18,827)

 

(16,244)

 

(16,244)

 

(24%)

 

(16%)

 

(16%)

 
     

Operating income

$ 88,143

 

$ 92,564

 

$ 106,770

 

$ 71,485

 

$ 74,068

 

$ 82,244

 

23%

 

25%

 

30%

 
                                         
       

Year Ended May 31,

             
       

2011

 

2010

 

% Change

 
       

GAAP

 

Normalized

 

Cash Earnings

 

GAAP

 

Normalized

 

Cash Earnings

 

GAAP

 

Normalized

 

Cash Earnings

 
                                           
 

Revenues:

                                   
 

United States

$ 1,031,997

 

$ 1,031,997

 

$ 1,031,997

 

$ 902,844

 

$ 902,844

 

$ 902,844

 

14%

 

14%

 

14%

 
 

Canada

330,872

 

330,872

 

330,872

 

317,272

 

317,272

 

317,272

 

4%

 

4%

 

4%

 
   

North America merchant services

1,362,869

 

1,362,869

 

1,362,869

 

1,220,116

 

1,220,116

 

1,220,116

 

12%

 

12%

 

12%

 
                                           
 

Europe

359,567

 

359,567

 

359,567

 

315,023

 

315,023

 

315,023

 

14%

 

14%

 

14%

 
 

Asia-Pacific

137,366

 

137,366

 

137,366

 

107,329

 

107,329

 

107,329

 

28%

 

28%

 

28%

 
   

International merchant services

496,933

 

496,933

 

496,933

 

422,352

 

422,352

 

422,352

 

18%

 

18%

 

18%

 
                                           
     

Total revenues

$ 1,859,802

 

$ 1,859,802

 

$ 1,859,802

 

$ 1,642,468

 

$ 1,642,468

 

$ 1,642,468

 

13%

 

13%

 

13%

 
                                           
 

Operating income:

                                   
 

North America merchant services

$ 268,233

 

$ 268,233

 

$ 280,880

 

$ 275,386

 

$ 275,386

 

$ 285,989

 

(3%)

 

(3%)

 

(2%)

 
 

International merchant services

143,911

 

143,911

 

172,956

 

113,699

 

113,699

 

135,860

 

27%

 

27%

 

27%

 
 

Corporate

(80,550)

 

(65,389)

 

(65,389)

 

(65,806)

 

(63,223)

 

(63,223)

 

(22%)

 

(3%)

 

(3%)

 
     

Operating income

$ 331,594

 

$ 346,755

 

$ 388,447

 

$ 323,279

 

$ 325,862

 

$ 358,626

 

3%

 

6%

 

8%

 
                                           
                                           

See Schedule 9 for reconciliation of normalized and cash earnings segment information to GAAP.

 
                                         

SCHEDULE 5

       

CONSOLIDATED BALANCE SHEETS

       

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

       

(In thousands)

       
           
   

May 31,

 

May 31,

 
   

2011

 

2010

 
           

ASSETS

         

Current assets:

       

Cash and cash equivalents

$ 1,354,285

 

$ 769,946

 

Accounts receivable, net of allowances for doubtful accounts of $472 and $269, respectively

166,540

 

131,817

 

Claims receivable, net of allowance for losses of $3,870 and $4,208, respectively

914

 

664

 

Settlement processing assets

280,359

 

13,741

 

Inventory

 

7,640

 

9,740

 

Deferred income taxes

2,946

 

2,752

 

Prepaid expenses and other current assets

35,291

 

39,604

 

Total current assets

1,847,975

 

968,264

 
           

Goodwill

 

779,637

 

569,090

 

Other intangible assets, net of accumulated amortization of $197,066 and $145,076, respectively

341,500

 

205,110

 

Property and equipment, net of accumulated depreciation of $147,670 and $119,402, respectively

256,301

 

183,938

 

Deferred income taxes

104,140

 

90,470

 

Other

 

20,978

 

22,454

 
           

Total assets

$ 3,350,531

 

$ 2,039,326

 
           

LIABILITIES AND EQUITY

       

Current liabilities:

       

Lines of credit

$ 270,745

 

$ 79,187

 

Current portion of long-term debt

85,802

 

148,169

 

Accounts payable and accrued liabilities

241,578

 

173,575

 

Settlement processing obligations

838,565

 

265,110

 

Income taxes payable

7,674

 

6,430

 

Total current liabilities

1,444,364

 

672,471

 
           

Long-term debt

268,217

 

272,965

 

Deferred income taxes

116,432

 

88,265

 

Other long-term liabilities

49,843

 

31,436

 

Total liabilities

1,878,856

 

1,065,137

 
           

Commitments and contingencies

       
           

Redeemable noncontrolling interest

133,858

 

102,672

 
           

Equity:

         

Preferred stock, no par value; 5,000,000 shares authorized and none issued

-

 

-

 

Common stock, no par value; 200,000,000 shares authorized; 83,062,518 issued

       

and 80,334,781 outstanding at May 31, 2011 and 82,028,945 issued and

       

79,646,055 outstanding at May 31, 2010

-

 

-

 

Paid-in capital

502,993

 

460,747

 

Retained earnings

715,202

 

544,772

 

Treasury stock; 2,727,737 and 2,382,890 shares at May 31, 2011 and May 31, 2010,

       

respectively

(112,980)

 

(100,000)

 

Accumulated other comprehensive income (loss)

79,320

 

(44,255)

 

Total Global Payments shareholders' equity

1,184,535

 

861,264

 

Noncontrolling interest

153,282

 

10,253

 

Total equity

1,337,817

 

871,517

 
           

Total liabilities and equity

$ 3,350,531

 

$ 2,039,326

 
         

SCHEDULE 6

         

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

       

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

       
               
               

(In thousands)

         
               
       

Year Ended May 31,

 
       

2011

 

2010

 
               

Cash flows from operating activities:

       
 

Net income including noncontrolling interests

$ 228,156

 

$ 219,109

 
 

Adjustments to reconcile net income to net cash provided by operating activities:

       
   

Depreciation and amortization of property and equipment

40,545

 

35,864

 
   

Amortization of acquired intangibles

41,692

 

32,803

 
   

Provision for operating losses and bad debts

20,577

 

25,025

 
   

Share-based compensation expense

15,885

 

18,072

 
   

Deferred income taxes

19,154

 

2,722

 
   

Loss on disposal of discontinued operations

602

 

24,310

 
   

Other, net

(3,576)

 

2,443

 
 

Changes in operating assets and liabilities, net of the effects of acquisitions:

       
   

Accounts receivable

(34,723)

 

(11,689)

 
   

Claims receivable

(14,425)

 

(14,936)

 
   

Settlement processing assets and obligations, net

299,895

 

140,962

 
   

Inventory

1,979

 

(4,727)

 
   

Prepaid expenses and other assets

3,537

 

(13,710)

 
   

Accounts payable and other accrued liabilities

89,230

 

18,803

 
   

Payables to money transfer beneficiaries

-

 

(6,107)

 
   

Income taxes payable

1,244

 

(3,183)

 
     

Net cash provided by operating activities

709,772

 

465,761

 
               

Cash flows from investing activities:

       
 

Business and intangible asset acquisitions, net of cash acquired

(167,968)

 

(29,513)

 
 

Disposition of business, net of cash

(2,577)

 

60,231

 
 

Capital expenditures

(98,537)

 

(56,054)

 
 

Net decrease (increase) in financing receivables

2,062

 

(179)

 
 

Proceeds from sale of investment and contractual rights, net

-

 

311

 
     

Net cash used in investing activities

(267,020)

 

(25,204)

 
               

Cash flows from financing activities:

       
 

Net borrowings on lines of credit

191,558

 

69,013

 
 

Proceeds from issuance of long-term debt

205,298

 

305,744

 
 

Principal payments under long-term debt

(280,198)

 

(75,205)

 
 

Acquisition of redeemable noncontrolling interests

-

 

(307,675)

 
 

Proceeds from stock issued under share-based compensation plans, net

18,364

 

30,248

 
 

Repurchase of common stock

(14,900)

 

(98,080)

 
 

Tax benefit from share-based compensation

9,141

 

7,186

 
 

Distribution to noncontrolling interests

(8,752)

 

(20,484)

 
 

Dividends paid

(6,388)

 

(6,497)

 
     

Net cash provided by (used in) financing activities

114,123

 

(95,750)

 
               

Effect of exchange rate changes on cash

27,464

 

(1,796)

 
               

Increase in cash and cash equivalents

584,339

 

343,011

 

Cash and cash equivalents, beginning of period

769,946

 

426,935

 

Cash and cash equivalents, end of period

$ 1,354,285

 

$ 769,946

 
             

SCHEDULE 7

             

RECONCILIATION OF QUARTERLY NORMALIZED AND CASH EARNINGS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO GLOBAL PAYMENTS TO GAAP

 

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

             
               
               

(In thousands, except per share data)

             
               
   

Three Months Ended May 31,

 
   

2011

 
   

GAAP

Employee Termination
and Other(1)

Normalized

Cash Earnings Adjustments(2)

Cash Earnings

 
               

Revenues

 

$ 519,754

$ -

$ 519,754

$ -

$ 519,754

 
               

Operating expenses:

             

Cost of service

 

191,440

(1,337)

190,103

(14,206)

175,897

 

Sales, general and administrative

 

240,171

(3,084)

237,087

-

237,087

 
   

431,611

(4,421)

427,190

(14,206)

412,984

 
               

Operating income

 

88,143

4,421

92,564

14,206

106,770

 
               

Other income (expense):

             

Interest and other income

 

3,534

-

3,534

-

3,534

 

Interest and other expense

 

(4,706)

-

(4,706)

-

(4,706)

 
   

(1,172)

-

(1,172)

-

(1,172)

 
               

Income from continuing operations before income taxes

 

86,971

4,421

91,392

14,206

105,598

 

Provision for income taxes

 

(24,587)

(1,475)

(26,062)

(3,370)

(29,432)

 

Income from continuing operations

 

62,384

2,946

65,330

10,836

76,166

 

Less: Net income attributable to noncontrolling interests, net of tax

 

(3,779)

-

(3,779)

(2,536)

(6,315)

 

Net income from continuing operations attributable to Global Payments

 

$ 58,605

$ 2,946

$ 61,551

$ 8,300

$ 69,851

 
               

Diluted shares

 

81,045

 

81,045

 

81,045

 

Diluted earnings per share

 

$ 0.72

$ 0.04

$ 0.76

$ 0.10

$ 0.86

 
               
               
   

Three Months Ended May 31,

 
   

2010

 
   

GAAP

Employee Termination
and Other(1)

Normalized

Cash Earnings Adjustments(2)

Cash Earnings

 
               

Revenues

 

$ 425,050

$ -

$ 425,050

$ -

$ 425,050

 
               

Operating expenses:

             

Cost of service

 

152,322

-

152,322

(8,176)

144,146

 

Sales, general and administrative

 

201,243

(2,583)

198,660

-

198,660

 
   

353,565

(2,583)

350,982

(8,176)

342,806

 
               

Operating income

 

71,485

2,583

74,068

8,176

82,244

 
               

Other income (expense):

             

Interest and other income

 

1,930

-

1,930

-

1,930

 

Interest and other expense

 

(4,814)

-

(4,814)

-

(4,814)

 
   

(2,884)

-

(2,884)

-

(2,884)

 
               

Income from continuing operations before income taxes

 

68,601

2,583

71,184

8,176

79,360

 

Provision for income taxes

 

(17,890)

(946)

(18,836)

(2,307)

(21,143)

 

Income from continuing operations

 

50,711

1,637

52,348

5,869

58,217

 

Less: Net income attributable to noncontrolling interests, net of tax

 

(4,842)

-

(4,842)

(335)

(5,177)

 

Net income from continuing operations attributable to Global Payments

 

$ 45,869

$ 1,637

$ 47,506

$ 5,534

$ 53,040

 
               

Diluted shares

 

82,142

 

82,142

 

82,142

 

Diluted earnings per share

 

$ 0.56

$ 0.02

$ 0.58

$ 0.07

$ 0.65

 
             
               

(1) Reflects expenses of $2.6 million during the three months ended May 31, 2011, of start-up costs related to our new Global Service Center in Manila, Philippines and expenses of $1.8 million and $2.6 million during the three months ended May 31, 2011 and 2010, respectively, related to employee termination and relocation benefits, and the related income tax benefits

 


(2) Represents adjustments to cost of service to exclude acquisition intangible amortization expense from continuing operations and the related income tax benefit.

 
   

We supplemented our reporting of income from continuing operations and the related earnings per share information determined in accordance with GAAP by reporting income from continuing operations and the related earnings per share for the three months ended May 31, 2011 and 2010 on a "normalized" and "cash earnings" basis in this earnings release as a measure to help evaluate performance. We calculated income from continuing operations and earnings per share on a normalized basis by excluding charges related to employee termination and relocation benefits, and certain one-time costs related to our Global Service Center. We calculated income from continuing operations on a cash earnings basis by excluding acquisition intangible amortization expense from our normalized results. We exclude these charges in order to more clearly focus on the factors we believe are pertinent to the daily management of our operations. Our income from continuing operations and earnings per share reported on a normalized and cash earnings basis should be considered in addition to, and not as a substitute for, income from continuing operations and earnings per share determined in accordance with GAAP. Our measures of income from continuing operations and earnings per share on a normalized and cash earnings basis reflect management's judgment of particular items, and may not be comparable to similarly titled measures reported by other companies.

 
             

SCHEDULE 8

               

RECONCILIATION OF ANNUAL NORMALIZED AND CASH EARNINGS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO GLOBAL PAYMENTS TO GAAP

 

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

               
                 
                 

(In thousands, except per share data)

               
                 
   

Year Ended May 31,

 
   

2011

 
   

GAAP

Employee Termination and
Other(1)

Foreign Tax Rate(2)

Normalized

Cash Earnings Adjustments(3)

Cash Earnings

 
                 

Revenues

 

$ 1,859,802

$ -

$ -

$ 1,859,802

$ -

$ 1,859,802

 
                 

Operating expenses:

               

Cost of service

 

665,017

(3,398)

-

661,619

(41,692)

619,927

 

Sales, general and administrative

 

863,191

(11,763)

-

851,428

-

851,428

 
   

1,528,208

(15,161)

-

1,513,047

(41,692)

1,471,355

 
                 

Operating income

 

331,594

15,161

-

346,755

41,692

388,447

 
                 

Other income (expense):

               

Interest and other income

 

10,774

-

-

10,774

-

10,774

 

Interest and other expense

 

(18,161)

-

-

(18,161)

-

(18,161)

 
   

(7,387)

-

-

(7,387)

-

(7,387)

 
                 

Income from continuing operations before income taxes

 

324,207

15,161

-

339,368

41,692

381,060

 

Provision for income taxes

 

(95,076)

(4,949)

2,479

(97,546)

(11,913)

(109,459)

 

Income from continuing operations

 

229,131

10,212

2,479

241,822

29,779

271,601

 

Less: Net income attributable to noncontrolling interests, net of tax

 

(18,918)

-

-

(18,918)

(4,958)

(23,876)

 

Net income from continuing operations attributable to Global Payments

 

$ 210,213

$ 10,212

$ 2,479

$ 222,904

$ 24,821

$ 247,725

 
                 

Diluted shares

 

80,478

   

80,478

 

80,478

 

Diluted earnings per share

 

$ 2.61

$ 0.13

$ 0.03

$ 2.77

$ 0.31

$ 3.08

 
                 
                 
   

Year Ended May 31,

 
   

2010

 
   

GAAP

Employee Termination and
Other(1)

 

Normalized

Cash Earnings Adjustments(3)

Cash Earnings

 
                 

Revenues

 

$ 1,642,468

$ -

 

$ 1,642,468

$ -

$ 1,642,468

 
                 

Operating expenses:

               

Cost of service

 

584,609

-

 

584,609

(32,764)

551,845

 

Sales, general and administrative

 

734,580

(2,583)

 

731,997

-

731,997

 
   

1,319,189

(2,583)

 

1,316,606

(32,764)

1,283,842

 
                 

Operating income

 

323,279

2,583

 

325,862

32,764

358,626

 
                 

Other income (expense):

               

Interest and other income

 

4,629

-

 

4,629

-

4,629

 

Interest and other expense

 

(17,519)

-

 

(17,519)

-

(17,519)

 
   

(12,890)

-

 

(12,890)

-

(12,890)

 
                 

Income from continuing operations before income taxes

 

310,389

2,583

 

312,972

32,764

345,736

 

Provision for income taxes

 

(87,379)

(946)

 

(88,325)

(10,265)

(98,590)

 

Income from continuing operations

 

223,010

1,637

 

224,647

22,499

247,146

 

Less: Net income attributable to noncontrolling interests, net of tax

 

(15,792)

-

 

(15,792)

(1,350)

(17,142)

 

Net income from continuing operations attributable to Global Payments

 

$ 207,218

$ 1,637

 

$ 208,855

$ 21,149

$ 230,004

 
                 

Diluted shares

 

82,120

   

82,120

 

82,120

 

Diluted earnings per share

 

$ 2.52

$ 0.02

$ -

$ 2.54

$ 0.26

$ 2.80

 
                 
                 

(1)Reflects expenses of $7.4 million during the year ended May 31, 2011, of start-up costs related to our Global Service Center in Manila, Philippines and expenses of $7.8 million and $2.6 million during the years ended May 31, 2011 and 2010, respectively, related to employee termination and relocation benefits, and the related income tax benefits.

 


(2) Represents a one-time, non-cash write-down of a deferred tax asset we established in July 2009 when we purchased the remaining 49% of our UK business. The write-down resulted from a legislated reduction to the tax rate of 1%.

 
                 

(3) Represents adjustments to cost of service to exclude acquisition intangible amortization expense from continuing operations and the related income tax benefit.

 
                 

We supplemented our reporting of income from continuing operations and the related earnings per share information determined in accordance with GAAP by reporting income from continuing operations and the related earnings per share for the years ended May 31, 2011 and 2010 on a "normalized" and "cash earnings" basis in this earnings release as a measure to help evaluate performance. We calculated income from continuing operations and earnings per share on a normalized basis by excluding charges related to employee termination and relocation benefits, certain one-time costs related to our new Global Service Center and the legislated tax rate reduction. We calculated income from continuing operations on a cash earnings basis by excluding acquisition intangible amortization expense from our normalized results. We exclude these charges in order to more clearly focus on the factors we believe are pertinent to the daily management of our operations. Our income from continuing operations and earnings per share reported on a normalized and cash earnings basis should be considered in addition to, and not as a substitute for, income from continuing operations and earnings per share determined in accordance with GAAP. Our measures of income from continuing operations and earnings per share on a normalized and cash earnings basis reflect management's judgment of particular items, and may not be comparable to similarly titled measures reported by other companies.

 
               

SCHEDULE 9

 

RECONCILIATION OF CASH EARNINGS SEGMENT INFORMATION TO GAAP

 

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

 
   

(In thousands)

 
                               
       

Three Months Ended May 31,

 
       

2011

 

2010

 
       

GAAP

Employee Termination and Other(1)

Normalized

Cash Earnings Adjustments (2)

Cash Earnings

 

GAAP

Employee Termination and Other(1)

Normalized

Cash Earnings Adjustments (2)

Cash Earnings

 
                               
 

Revenues:

                       
 

United States

$ 281,500

$ -

$ 281,500

$ -

$ 281,500

 

$ 242,975

$ -

$ 242,975

$ -

$ 242,975

 
 

Canada

87,140

-

87,140

-

87,140

 

80,720

-

80,720

-

80,720

 
   

North America merchant services

368,640

-

368,640

-

368,640

 

323,695

-

323,695

-

323,695

 
                               
 

Europe

115,359

-

115,359

-

115,359

 

72,238

-

72,238

-

72,238

 
 

Asia-Pacific

35,755

-

35,755

-

35,755

 

29,117

-

29,117

-

29,117

 
   

International merchant services

151,114

-

151,114

-

151,114

 

101,355

-

101,355

-

101,355

 
                               
     

Total revenues

$ 519,754

$ -

$ 519,754

$ -

$ 519,754

 

$ 425,050

$ -

$ 425,050

$ -

$ 425,050

 
                               
 

Operating income:

                       
 

North America merchant services

$ 69,816

$ -

$ 69,816

$ 3,269

$ 73,085

 

$ 64,966

$ -

$ 64,966

$ 2,882

$ 67,848

 
 

International merchant services

41,632

-

41,632

10,937

52,569

 

25,346

-

25,346

5,294

30,640

 
 

Corporate

(23,305)

4,421

(18,884)

-

(18,884)

 

(18,827)

2,583

(16,244)

-

(16,244)

 
   

Operating income

$ 88,143

$ 4,421

$ 92,564

$ 14,206

$ 106,770

 

$ 71,485

$ 2,583

$ 74,068

$ 8,176

$ 82,244

 
                             
       

Year Ended May 31,

 
       

2011

 

2010

 
       

GAAP

Employee Termination and Other(1)

Normalized

Cash Earnings Adjustments (2)

Cash Earnings

 

GAAP

Employee Termination and Other(1)

Normalized

Cash Earnings Adjustments (2)

Cash Earnings

 
                               
 

Revenues:

                       
 

United States

$ 1,031,997

$ -

$ 1,031,997

$ -

$ 1,031,997

 

$ 902,844

$ -

$ 902,844

$ -

$ 902,844

 
 

Canada

330,872

-

330,872

-

330,872

 

317,272

-

317,272

-

317,272

 
   

North America merchant services

1,362,869

-

1,362,869

-

1,362,869

 

1,220,116

-

1,220,116

-

1,220,116

 
                               
 

Europe

359,567

-

359,567

-

359,567

 

315,023

-

315,023

-

315,023

 
 

Asia-Pacific

137,366

-

137,366

-

137,366

 

107,329

-

107,329

-

107,329

 
   

International merchant services

496,933

-

496,933

-

496,933

 

422,352

-

422,352

-

422,352

 
                               
     

Total revenues

$ 1,859,802

$ -

$ 1,859,802

$ -

$ 1,859,802

 

$ 1,642,468

$ -

$ 1,642,468

$ -

$ 1,642,468

 
                               
 

Operating income:

                       
 

North America merchant services

$ 268,233

$ -

$ 268,233

$ 12,647

$ 280,880

 

$ 275,386

$ -

$ 275,386

$ 10,603

$ 285,989

 
 

International merchant services

143,911

-

143,911

29,045

172,956

 

113,699

-

113,699

22,161

135,860

 
 

Corporate

(80,550)

15,161

(65,389)

-

(65,389)

 

(65,806)

2,583

(63,223)

-

(63,223)

 
   

Operating income

$ 331,594

$ 15,161

$ 346,755

$ 41,692

$ 388,447

 

$ 323,279

$ 2,583

$ 325,862

$ 32,764

$ 358,626

 
                             

(1) Normalized results exclude expenses consisting of $2.6 million and $7.4 million during the three and twelve months ended May 31, 2011, respectively, of start-up costs related to our new Global Service Center in Manila, Philippines and expenses of $1.8 million and $7.8 million during the three and twelve months ended May 31, 2011, respectively, related to employee termination and relocation benefits. During the three and twelve months ended May 31, 2010, normalized results exclude amounts due to our former President and Chief Operating Officer pursuant to his termination agreement dated April 21, 2010.

 

(2) Represents acquisition intangible amortization expense from continuing operations.

 
                             

SCHEDULE 10

               

OUTLOOK SUMMARY

               

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

               
                   

(In millions, except per share data)

               
                   
     

Fiscal 2011 Actual

   

Fiscal 2012 Outlook

 

% Change FY11

 
                   
 

Revenue Outlook

               
 

Revenues

 

$ 1,860

   

$2,100 to 2,150

 

13% to 16%

 
                   
                   
 

EPS Outlook

               
 

GAAP diluted EPS from continuing operations

 

$ 2.61

   

$3.02 to $3.09

 

16% to 18%

 
 

Non-recurring items and acquisition-related intangibles

 

0.47

(1)

 

$0.34

 

---

 
 

Cash EPS from continuing operations

 

$ 3.08

   

$3.35 to $3.43

 

9% to 11%

 
                   
                   

(1) Non-recurring items accounted for $0.16 and acquisition-related intangibles accounted for $0.31 in Fiscal 2011 results.

 
                 

Contact:

Jane M. Elliott

 
 

770-829-8234 Voice

 
 

770-829-8267 Fax

 
 

investor.relations@globalpay.com

 
   

SOURCE Global Payments Inc.