Global Payments Reports Second Quarter Earnings

January 8, 2014

ATLANTA, Jan. 8, 2014 /PRNewswire/ -- Global Payments Inc. (NYSE: GPN) today announced results for its fiscal second quarter ended November 30, 2013.  

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

President and CEO Jeff Sloan said, "We are pleased with our results for the quarter driven by strong business performance across all regions, and we now expect double digit cash earnings per share growth for our full-year.  We are making substantial progress on our growth initiatives globally, and we remain focused on being the partner of choice."

Second Quarter 2014 Summary

  • Revenues grew 8% to $634.1 million, compared to $588.5 million in the second quarter of fiscal 2013.
  • Cash diluted earnings per share grew 15% to $1.07, compared to $0.93 in the second quarter of fiscal 2013.
  • GAAP diluted earnings per share were $1.02, compared to $0.89 in the second quarter of 2013.

2014 Outlook

"We are raising our full-year expectations for diluted earnings per share on a cash basis by five cents to a range of $4.03 to $4.10, or growth of 10% to 12% over fiscal 2013," said David E. Mangum, Senior Executive Vice President and CFO.

Annual fiscal 2014 GAAP diluted earnings per share are now expected to be $3.45 to $3.52

The company maintains its expectations for annual revenue of $2.51 billion to $2.56 billion, or 6% to 8% growth over fiscal 2013. 

Conference Call

Global Payments will hold a conference call today, January 8, 2014 at 5:00 p.m. EST to discuss financial results and business highlights.  Callers may access the conference call via the investor relations page of the company's website at 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 website through January 22, 2014.

About Global Payments

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 North America, South America, 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 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: the effect on our results of operations of continued security enhancements to our processing system; foreign currency risks which become increasingly relevant as we expand internationally; the effect of current domestic and worldwide economic conditions, future performance and integration of acquisitions, and other risks detailed in our SEC filings, including the most recently filed Form 10-K.  We undertake no obligation to revise any of these statements to reflect future circumstances or the occurrence of unanticipated events.

 

Investor contact: 

investor.relations@globalpay.com  

Media contact:

media.relations@globalpay.com

 

Jane Elliott

 

Amy Corn

 

770-829-8234

 

770-829-8755

 

 

SCHEDULE 1

GAAP CONSOLIDATED STATEMENTS OF INCOME 

 

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

 
                         

(In thousands, except per share data)

                         
   

Three Months Ended 

November 30,

     

Six Months Ended

November 30,

   
   

2013

 

2012

 

% Change

 

2013

 

2012

 

% Change

   

(unaudited)

     

(unaudited)

   

Revenues

 

$     634,122

 

$      588,538

 

7.7%

 

$  1,263,807

 

$   1,178,825

 

7.2%

Operating expenses:

                       

Cost of service

 

235,170

 

210,268

 

11.8%

 

465,915

 

414,659

 

12.4%

Sales, general and administrative

 

294,045

 

276,177

 

6.5%

 

585,601

 

557,596

 

5.0%

Processing system intrusion

 

(7,000)

 

(14,489)

 

(51.7%)

 

(7,000)

 

9,500

 

(173.7%)

   

522,215

 

471,956

 

10.6%

 

1,044,516

 

981,755

 

6.4%

                         

Operating income

 

111,907

 

116,582

 

(4.0%)

 

219,291

 

197,070

 

11.3%

Other income (expense):

                       

Interest and other income

 

5,288

 

2,187

 

141.8%

 

8,626

 

4,170

 

106.9%

Interest and other expense

 

(8,025)

 

(14,609)

 

(45.1%)

 

(15,904)

 

(18,154)

 

(12.4%)

   

(2,737)

 

(12,422)

 

(78.0%)

 

(7,278)

 

(13,984)

 

(48.0%)

                         

Income before income taxes 

 

109,170

 

104,160

 

4.8%

 

212,013

 

183,086

 

15.8%

Provision for income taxes

 

(29,313)

 

(28,789)

 

1.8%

 

(60,448)

 

(53,553)

 

12.9%

Net income

 

79,857

 

75,371

 

6.0%

 

151,565

 

129,533

 

17.0%

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

 

(5,960)

 

(5,188)

 

14.9%

 

(13,025)

 

(12,675)

 

2.8%

Net income attributable to Global Payments

 

$        73,897

 

$         70,183

 

5.3%

 

$     138,540

 

$      116,858

 

18.6%

                         
                         

Earnings per share attributable to Global Payments:

                       

    Basic

 

$            1.02

 

$             0.89

 

14.6%

 

$            1.90

 

$             1.49

 

27.5%

    Diluted

 

$            1.02

 

$             0.89

 

14.6%

 

$            1.88

 

$             1.48

 

27.0%

                         

Weighted average shares outstanding:

                       

    Basic

 

72,174

 

78,751

     

72,974

 

78,669

   

    Diluted

 

72,706

 

79,144

     

73,504

 

79,062

   

 

 

SCHEDULE 2

 

CASH EARNINGS ATTRIBUTABLE TO GLOBAL PAYMENTS

 

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

 
                         

(In thousands, except per share data)

 
                         
   

Three Months Ended 

November 30,

     

Six Months Ended 

November 30,

   
   

2013

 

2012

 

% Change

 

2013

 

2012

 

% Change

                         

Revenues

 

$       634,122

 

$     588,538

 

7.7%

 

$    1,263,807

 

$  1,178,825

 

7.2%

Operating expenses:

                       

Cost of service

 

220,610

 

195,932

 

12.6%

 

436,383

 

388,937

 

12.2%

Sales, general and administrative

 

290,697

 

276,177

 

5.3%

 

580,757

 

556,796

 

4.3%

   

511,307

 

472,109

 

8.3%

 

1,017,140

 

945,733

 

7.6%

                         
                         

Operating income

 

122,815

 

116,429

 

5.5%

 

246,667

 

233,092

 

5.8%

Other income (expense):

                       

Interest and other income

 

3,165

 

2,187

 

44.7%

 

6,503

 

4,170

 

55.9%

Interest and other expense

 

(8,025)

 

(6,226)

 

28.9%

 

(15,904)

 

(9,771)

 

62.8%

   

(4,860)

 

(4,039)

 

20.3%

 

(9,401)

 

(5,601)

 

67.8%

                         

Income before income taxes 

 

117,955

 

112,390

 

5.0%

 

237,266

 

227,491

 

4.3%

Provision for income taxes

 

(32,873)

 

(29,385)

 

11.9%

 

(69,559)

 

(65,938)

 

5.5%

Net income

 

85,082

 

83,005

 

2.5%

 

167,707

 

161,553

 

3.8%

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

 

(7,197)

 

(9,419)

 

(23.6%)

 

(15,633)

 

(19,171)

 

(18.5%)

Net income attributable to Global Payments

 

$         77,885

 

$       73,586

 

5.8%

 

$       152,074

 

$     142,382

 

6.8%

                         
                         

Earnings per share attributable to Global Payments:

                       

    Basic

 

$              1.08

 

$            0.93

 

16.1%

 

$              2.08

 

$            1.81

 

14.9%

    Diluted

 

$              1.07

 

$            0.93

 

15.1%

 

$              2.07

 

$            1.80

 

15.0%

                         

Weighted average shares outstanding:

                       

    Basic

 

72,174

 

78,751

     

72,974

 

78,669

   

    Diluted

 

72,706

 

79,144

     

73,504

 

79,062

   
                         

See Schedules 6 and 7 for a reconciliation of cash earnings to GAAP.

           

 

 

SCHEDULE 3

SEGMENT INFORMATION 

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

                         

(In thousands)

                         
   

 Three Months Ended November 30, 

       
   

2013

 

2012

 

 % Change 

   

 GAAP 

 

 Cash Earnings 

 

 GAAP 

 

 Cash Earnings 

 

 GAAP 

 

 Cash Earnings 

                         

Revenues:

                       

United States

 

$    361,793

 

$    361,793

 

$    339,998

 

$    339,998

 

6.4%

 

6.4%

Canada

 

85,240

 

85,240

 

80,770

 

80,770

 

5.5%

 

5.5%

North America merchant services

 

447,033

 

447,033

 

420,768

 

420,768

 

6.2%

 

6.2%

                         

Europe

 

146,866

 

146,866

 

131,161

 

131,161

 

12.0%

 

12.0%

Asia-Pacific

 

40,223

 

40,223

 

36,609

 

36,609

 

9.9%

 

9.9%

International merchant services

 

187,089

 

187,089

 

167,770

 

167,770

 

11.5%

 

11.5%

                         

Total revenues

 

$    634,122

 

$    634,122

 

$    588,538

 

$    588,538

 

7.7%

 

7.7%

                         

Operating income (loss) for segments:

                       

North America merchant services

 

$      70,437

 

$      77,621

 

$      67,114

 

$      73,280

 

5.0%

 

5.9%

International merchant services

 

62,467

 

69,843

 

53,987

 

62,157

 

15.7%

 

12.4%

Corporate1

 

(20,997)

 

(24,649)

 

(4,519)

 

(19,008)

 

(364.6%)

 

(29.7%)

Operating income

 

$    111,907

 

$    122,815

 

$    116,582

 

$    116,429

 

(4.0%)

 

5.5%

                         
                         
   

 Six Months Ended November 30, 

       
   

2013

 

2012

 

 % Change 

   

 GAAP 

 

 Cash Earnings 

 

 GAAP 

 

 Cash Earnings 

 

 GAAP 

 

 Cash Earnings 

                         

Revenues:

                       

United States

 

$    725,626

 

$    725,626

 

$    685,896

 

$    685,896

 

5.8%

 

5.8%

Canada

 

171,912

 

171,912

 

161,667

 

161,667

 

6.3%

 

6.3%

North America merchant services

 

897,538

 

897,538

 

847,563

 

847,563

 

5.9%

 

5.9%

                         

Europe

 

290,054

 

290,054

 

259,626

 

259,626

 

11.7%

 

11.7%

Asia-Pacific

 

76,215

 

76,215

 

71,636

 

71,636

 

6.4%

 

6.4%

International merchant services

 

366,269

 

366,269

 

331,262

 

331,262

 

10.6%

 

10.6%

                         

Total revenues

 

$ 1,263,807

 

$ 1,263,807

 

$ 1,178,825

 

$ 1,178,825

 

7.2%

 

7.2%

                         

Operating income (loss) for segments:

                       

North America merchant services

 

$    140,136

 

$    157,025

 

$    134,331

 

$    144,723

 

4.3%

 

8.5%

International merchant services

 

124,008

 

138,600

 

111,127

 

127,201

 

11.6%

 

9.0%

Corporate1

 

(44,853)

 

(48,958)

 

(48,388)

 

(38,832)

 

7.3%

 

(26.1%)

Operating income

 

$    219,291

 

$    246,667

 

$    197,070

 

$    233,092

 

11.3%

 

5.8%

                         
                         
                         

1GAAP and cash earnings include incremental security spend for the three and six months ended November 30, 2013. GAAP earnings for the three and six months ended November 30, 2013 include insurance proceeds of ($7M) related to the FY2012 data intrusion.  GAAP earnings for the three and six months ended November 30, 2012 include a data intrusion (credit)/charge of ($14.5) million and $9.5M, respectively.

                         

See Schedule 8 for reconciliation of cash earnings segment information to GAAP. 

             

 

 

SCHEDULE 4

CONSOLIDATED BALANCE SHEETS

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

         

(In thousands, except share data)

       
         
   

November 30, 2013

 

May 31, 2013

   

(unaudited)

   

Assets

       

Current assets:

       

Cash and cash equivalents

 

$    1,096,833

 

$       680,470

Accounts receivable, net of allowances for doubtful accounts of $353 and $509, respectively

 

195,788

 

189,435

Claims receivable, net

 

662

 

1,156

Settlement processing assets

 

688,003

 

259,204

Inventory

 

8,886

 

11,057

Deferred income taxes

 

6,459

 

6,485

Prepaid expenses and other current assets

 

61,677

 

66,685

Total current assets

 

2,058,308

 

1,214,492

         

Goodwill

 

1,063,310

 

1,044,222

Other intangible assets, net

 

379,350

 

400,848

Property and equipment, net

 

357,880

 

348,064

Deferred income taxes

 

100,332

 

95,178

Other

 

22,384

 

22,252

         

Total assets

 

$    3,981,564

 

$    3,125,056

         

Liabilities and Equity

       

Current liabilities:

       

Lines of credit

 

$       446,508

 

$       187,461

Current portion of long-term debt

 

72,351

 

72,335

Accounts payable and accrued liabilities

 

235,361

 

262,890

Settlement processing obligations

 

798,671

 

162,558

Income taxes payable

 

20,114

 

18,870

  Total current liabilities

 

1,573,005

 

704,114

         

Long-term debt

 

922,545

 

891,134

Deferred income taxes

 

172,988

 

170,723

Other long-term liabilities

 

81,342

 

72,478

Total liabilities

 

2,749,880

 

1,838,449

         

Equity:

       

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

 

-

 

-

Common stock, no par value; 200,000,000 shares authorized; 71,908,829 issued and outstanding

       

 at November 30, 2013 and 75,426,099 issued and outstanding at May 31, 2013

 

-

 

-

Paid-in capital

 

188,281

 

202,396

Retained earnings

 

896,597

 

958,751

Accumulated other comprehensive income (loss)

 

2,235

 

(15,062)

      Total Global Payments shareholders' equity

 

1,087,113

 

1,146,085

Noncontrolling interest

 

144,571

 

140,522

Total equity

 

1,231,684

 

1,286,607

         

Total liabilities and equity

 

$    3,981,564

 

$    3,125,056

 

 

SCHEDULE 5

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

               

(In thousands)

       
               
         

Six Months Ended November 30,

         

2013

 

2012

               

Cash flows from operating activities:

       

Net income

 

$         151,565

 

$      129,533

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

       
 

Depreciation and amortization of property and equipment

 

28,439

 

26,494

 

Amortization of acquired intangibles

 

28,953

 

25,561

 

Share-based compensation expense

 

11,965

 

9,178

 

Provision for operating losses and bad debts

 

10,249

 

11,970

 

Deferred income taxes

 

6,073

 

30,055

 

Other, net

 

(4,345)

 

(2,231)

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

       
 

Accounts receivable

 

(6,353)

 

721

 

Claims receivable

 

(6,567)

 

(6,600)

 

Settlement processing assets and obligations, net

 

204,307

 

(11,671)

 

Inventory

 

2,237

 

(4,297)

 

Prepaid expenses and other assets

 

5,761

 

(11,204)

 

Accounts payable and other accrued liabilities

 

(21,845)

 

(67,869)

 

Income taxes payable

 

1,244

 

(4,847)

   

Net cash provided by operating activities

 

411,683

 

124,793

               

Cash flows from investing activities:

       
 

Business, intangible and other asset acquisitions, net of cash acquired

 

(2,324)

 

(409,731)

 

Capital expenditures

 

(41,178)

 

(54,393)

 

Net decrease in financing receivables

 

1,328

 

1,485

 

Net proceeds from sales of investment and business

 

3,102

 

-

   

Net cash used in investing activities

 

(39,072)

 

(462,639)

               

Cash flows from financing activities:

       
 

Net borrowings (payments) on short-term lines of credit

 

259,047

 

(2,992)

 

Proceeds from issuance of long-term debt

 

810,000

 

910,327

 

Principal payments under long-term debt

 

(779,380)

 

(343,133)

 

Payment of debt issuance costs

 

-

 

(3,987)

 

Repurchase of common stock

 

(250,183)

 

(12,653)

 

Proceeds from stock issued under share-based compensation plans

 

27,366

 

7,080

 

Common stock repurchased - share-based compensation plans

 

(5,260)

 

(10,224)

 

Tax benefit from share-based compensation plans

 

4,415

 

1,791

 

Distribution to noncontrolling interests

 

(15,593)

 

(5,740)

 

Dividends paid

 

(2,894)

 

(3,153)

     

Net cash provided by financing activities

 

47,518

 

537,316

               

Effect of exchange rate changes on cash

 

(3,766)

 

17,516

               

Increase in cash and cash equivalents

 

416,363

 

216,986

Cash and cash equivalents, beginning of period

 

680,470

 

781,275

Cash and cash equivalents, end of period

 

$      1,096,833

 

$      998,261

 

 

SCHEDULE 6

RECONCILIATION OF QUARTERLY CASH EARNINGS ATTRIBUTABLE TO GLOBAL PAYMENTS TO GAAP

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

                     

(In thousands, except per share data)

                     
   

Three Months Ended November 30, 2013

   

GAAP

 

Processing System Intrusion1

 

Other2

 

Cash Earnings Adjustments3

 

Cash Earnings

                     

Revenues

 

$       634,122

 

$                    -

 

$                  -

 

$                  -

 

$       634,122

Operating expenses:

                   

   Cost of service

 

235,170

 

-

 

-

 

(14,560)

 

220,610

   Sales, general and administrative

 

294,045

 

-

 

(3,348)

 

-

 

290,697

   Processing system intrusion

 

(7,000)

 

7,000

 

-

 

-

 

-

   

522,215

 

7,000

 

(3,348)

 

(14,560)

 

511,307

                     

Operating income

 

111,907

 

(7,000)

 

3,348

 

14,560

 

122,815

Other income (expense):

                   

   Interest and other income

 

5,288

 

-

 

(2,123)

 

-

 

3,165

   Interest and other expense

 

(8,025)

 

-

 

-

 

-

 

(8,025)

   

(2,737)

 

-

 

(2,123)

 

-

 

(4,860)

                     

Income (loss) before income taxes 

 

109,170

 

(7,000)

 

1,225

 

14,560

 

117,955

(Provision) benefit  for income taxes

 

(29,313)

 

2,393

 

(1,145)

 

(4,808)

 

(32,873)

Net income (loss)

 

79,857

 

(4,607)

 

80

 

9,752

 

85,082

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

 

(5,960)

 

-

 

-

 

(1,237)

 

(7,197)

Net income (loss) attributable to Global Payments

 

$         73,897

 

$           (4,607)

 

$                 80

 

$           8,515

 

$         77,885

                     

Diluted shares

 

72,706

             

72,706

Diluted earnings (loss) per share

 

$             1.02

 

$              (0.07)

 

$             0.00

 

$             0.12

 

$             1.07

                     
                     
   

Three Months Ended November 30, 2012

   

GAAP

 

Processing System Intrusion

 

Other2

 

Cash Earnings Adjustments3

 

Cash Earnings

                     

Revenues

 

$       588,538

 

$                    -

 

$                  -

 

$                  -

 

$       588,538

Operating expenses:

                   

   Cost of service

 

210,268

 

-

 

-

 

(14,336)

 

195,932

   Sales, general and administrative

 

276,177

 

-

 

-

 

-

 

276,177

   Processing system intrusion

 

(14,489)

 

14,489

 

-

 

-

 

-

   

471,956

 

14,489

 

-

 

(14,336)

 

472,109

                     

Operating income

 

116,582

 

(14,489)

 

-

 

14,336

 

116,429

Other income (expense):

                   

   Interest and other income

 

2,187

 

-

 

-

 

-

 

2,187

   Interest and other expense

 

(14,609)

 

-

 

8,383

 

-

 

(6,226)

   

(12,422)

 

-

 

8,383

 

-

 

(4,039)

                     

Income (loss) before income taxes 

 

104,160

 

(14,489)

 

8,383

 

14,336

 

112,390

(Provision) benefit  for income taxes

 

(28,789)

 

5,000

 

(1,383)

 

(4,213)

 

(29,385)

Net income (loss)

 

75,371

 

(9,489)

 

7,000

 

10,123

 

83,005

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

 

(5,188)

 

-

 

(2,853)

 

(1,378)

 

(9,419)

Net income (loss) attributable to Global Payments

 

$         70,183

 

$           (9,489)

 

$           4,147

 

$           8,745

 

$         73,586

                     

Diluted shares

 

79,144

             

79,144

Diluted earnings (loss) per share

 

$             0.89

 

$              (0.12)

 

$             0.05

 

$             0.11

 

$             0.93

                     
                     

1Represents insurance proceeds associated with processing system intrusion charges incurred in FY 2012.

                     

2 For the period ended November 30, 2013, represents one-time charges primarily related to employee termination benefits and a one-time credit related to the gain on the sale of an interest in a business.  For the prior period, represents HSBC's share of GPAP dividends declared and the net income attributable to our Asia-Pacific redeemable noncontrolling interest.

                     

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

                     

We supplemented our reporting of income and the related earnings per share information determined in accordance with GAAP by reporting income and the related earnings per share for the three months ended November 30, 2013 and 2012 on a "cash earnings" basis in this earnings release as a measure to help evaluate performance. We calculated income and earnings per share on a cash basis by excluding amounts related to the processing system intrusion, acquisition intangible amortization, one-time charges related to employee termination benefits, and a one-time credit related to the gain on the sale of an interest in a business.  In November 2012, we also adjusted the net income attributable to noncontrolling interests to include HSBC's share of second quarter 2013 GPAP net income and for HSBC's share of GPAP dividends. 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 and earnings per share reported on a cash earnings basis should be considered in addition to, and not as a substitute for, income and earnings per share determined in accordance with GAAP. Our measures of income and earnings per share on a cash earnings basis reflect management's judgment of particular items, and may not be comparable to similarly titled measures reported by other companies.

 

 

SCHEDULE 7

RECONCILIATION OF YEAR TO DATE CASH EARNINGS ATTRIBUTABLE TO GLOBAL PAYMENTS TO GAAP

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

                     

(In thousands, except per share data)

                     
   

Six Months Ended November 30, 2013

   

GAAP

 

Processing System Intrusion 1

 

Other2

 

Cash Earnings Adjustments3

 

Cash Earnings

                     

Revenues

 

$   1,263,807

 

$                       -

 

$                  -

 

$                  -

 

$   1,263,807

Operating expenses:

                   

   Cost of service

 

465,915

 

-

 

(579)

 

(28,953)

 

436,383

   Sales, general and administrative

 

585,601

 

-

 

(4,844)

 

-

 

580,757

   Processing system intrusion

 

(7,000)

 

7,000

 

-

 

-

 

-

   

1,044,516

 

7,000

 

(5,423)

 

(28,953)

 

1,017,140

                     

Operating income

 

219,291

 

(7,000)

 

5,423

 

28,953

 

246,667

Other income (expense):

                   

   Interest and other income

 

8,626

 

-

 

(2,123)

 

-

 

6,503

   Interest and other expense

 

(15,904)

 

-

 

-

 

-

 

(15,904)

   

(7,278)

 

-

 

(2,123)

 

-

 

(9,401)

                     

Income (loss) before income taxes 

 

212,013

 

(7,000)

 

3,300

 

28,953

 

237,266

(Provision) benefit  for income taxes

 

(60,448)

 

2,393

 

(1,934)

 

(9,570)

 

(69,559)

Net income (loss)

 

151,565

 

(4,607)

 

1,366

 

19,383

 

167,707

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

 

(13,025)

 

-

 

-

 

(2,608)

 

(15,633)

Net income (loss) attributable to Global Payments

 

$       138,540

 

$               (4,607)

 

$           1,366

 

$         16,775

 

$       152,074

                     

Diluted shares

 

73,504

             

73,504

Diluted earnings (loss) per share

 

$             1.88

 

$                 (0.07)

 

$             0.02

 

$             0.24

 

$             2.07

                     
                     
   

Six Months Ended November 30, 2012

   

GAAP

 

Processing System Intrusion

 

Other2

 

Cash Earnings Adjustments3

 

Cash Earnings

                     

Revenues

 

$   1,178,825

 

$                       -

 

$                  -

 

$                  -

 

$   1,178,825

Operating expenses:

                   

   Cost of service

 

414,659

 

-

 

(161)

 

(25,561)

 

388,937

   Sales, general and administrative

 

557,596

 

-

 

(800)

 

-

 

556,796

   Processing system intrusion

 

9,500

 

(9,500)

 

-

 

-

 

-

   

981,755

 

(9,500)

 

(961)

 

(25,561)

 

945,733

                     

Operating income

 

197,070

 

9,500

 

961

 

25,561

 

233,092

Other income (expense):

                   

   Interest and other income

 

4,170

 

-

 

-

 

-

 

4,170

   Interest and other expense

 

(18,154)

 

-

 

8,383

 

-

 

(9,771)

   

(13,984)

 

-

 

8,383

 

-

 

(5,601)

                     

Income (loss) before income taxes 

 

183,086

 

9,500

 

9,344

 

25,561

 

227,491

(Provision) benefit  for income taxes

 

(53,553)

 

(3,279)

 

(1,533)

 

(7,573)

 

(65,938)

Net income (loss)

 

129,533

 

6,221

 

7,811

 

17,988

 

161,553

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

 

(12,675)

 

-

 

(3,594)

 

(2,902)

 

(19,171)

Net income (loss) attributable to Global Payments

 

$       116,858

 

$                6,221

 

$           4,217

 

$         15,086

 

$       142,382

                     

Diluted shares

 

79,062

             

79,062

Diluted earnings (loss) per share

 

$             1.48

 

$                   0.08

 

$             0.05

 

$             0.19

 

$             1.80

                     
                     

1Represents insurance proceeds associated with processing system intrusion charges incurred in FY 2012.

                     

2 For the period ended November 30, 2013, represents one-time charges primarily related to employee termination benefits and resolution of a contract related contingency, and a one-time credit related to the gain on the sale of an interest in a business.  For the prior period, represents HSBC's share of GPAP dividends declared and the net income attributable to our Asia-Pacific redeemable noncontrolling interest.

                     

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

                     

We supplemented our reporting of income and the related earnings per share information determined in accordance with GAAP by reporting income and the related earnings per share for the six months ended November 30, 2013 and 2012 on a "cash earnings" basis in this earnings release as a measure to help evaluate performance. We calculated income and earnings per share on a cash basis by excluding amounts related to the processing system intrusion, acquisition intangible amortization, one-time charges related to employee termination benefits and resolution of a contract related contingency, and a one-time credit related to the sale of an interest in a business.  In the six months ended November 2012, we also adjusted the net income attributable to noncontrolling interests to include HSBC's share of second quarter 2013 GPAP net income and for HSBC's share of GPAP dividends declared.  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 and earnings per share reported on a cash earnings basis should be considered in addition to, and not as a substitute for, income and earnings per share determined in accordance with GAAP. Our measures of income and earnings per share on a 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 CASH EARNINGS SEGMENT INFORMATION TO GAAP

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

                                         

(In thousands)

                                         
   

 Three Months Ended November 30,  

   

2013

 

2012

   

 GAAP 

 

Processing System Intrusion 1

 

Other2

 

Cash Earnings Adjustments3

 

 Cash Earnings 

 

 GAAP 

 

Processing System Intrusion

 

Other2

 

Cash Earnings Adjustments3

 

 Cash Earnings 

                                         

Revenues:

                                       

United States

 

$   361,793

 

$               -

 

$               -

 

$               -

 

$   361,793

 

$    339,998

 

$               -

 

$               -

 

$               -

 

$   339,998

Canada

 

85,240

 

-

 

-

 

-

 

85,240

 

80,770

 

-

 

-

 

-

 

80,770

  North America merchant services

 

447,033

 

-

 

-

 

-

 

447,033

 

420,768

 

-

 

-

 

-

 

420,768

                                         

Europe

 

146,866

 

-

 

-

 

-

 

146,866

 

131,161

 

-

 

-

 

-

 

131,161

Asia-Pacific

 

40,223

 

-

 

-

 

-

 

40,223

 

36,609

 

-

 

-

 

-

 

36,609

  International merchant services

 

187,089

 

-

 

-

 

-

 

187,089

 

167,770

 

-

 

-

 

-

 

167,770

                                         

     Total revenues

 

$   634,122

 

$               -

 

$               -

 

$               -

 

$   634,122

 

$    588,538

 

$               -

 

$               -

 

$               -

 

$   588,538

                                         

Operating income (loss) for segments:

                                       

North America merchant services

 

$      70,437

 

$               -

 

$               -

 

$        7,184

 

$      77,621

 

$      67,114

 

$               -

 

$               -

 

$        6,166

 

$      73,280

International merchant services

 

62,467

 

-

 

-

 

7,376

 

69,843

 

53,987

 

-

 

-

 

8,170

 

62,157

Corporate

 

(20,997)

 

(7,000)

 

3,348

 

-

 

(24,649)

 

(4,519)

 

(14,489)

 

-

 

-

 

(19,008)

     Operating income (loss)

 

$   111,907

 

$       (7,000)

 

$        3,348

 

$      14,560

 

$   122,815

 

$    116,582

 

$    (14,489)

 

$               -

 

$      14,336

 

$   116,429

                                         
                                         
   

 Six Months Ended November 30,  

   

2013

 

2012

   

 GAAP 

 

Processing System Intrusion 1

 

Other2

 

Cash Earnings Adjustments3

 

 Cash Earnings 

 

 GAAP 

 

Processing System Intrusion

 

Other2

 

Cash Earnings Adjustments3

 

 Cash Earnings 

                                         

Revenues:

                                       

United States

 

$   725,626

 

$               -

 

$               -

 

$               -

 

$   725,626

 

$    685,896

 

$               -

 

$               -

 

$               -

 

$   685,896

Canada

 

171,912

 

-

 

-

 

-

 

171,912

 

161,667

 

-

 

-

 

-

 

161,667

  North America merchant services

 

897,538

 

-

 

-

 

-

 

897,538

 

847,563

 

-

 

-

 

-

 

847,563

                                         

Europe

 

290,054

 

-

 

-

 

-

 

290,054

 

259,626

 

-

 

-

 

-

 

259,626

Asia-Pacific

 

76,215

 

-

 

-

 

-

 

76,215

 

71,636

 

-

 

-

 

-

 

71,636

  International merchant services

 

366,269

 

-

 

-

 

-

 

366,269

 

331,262

 

-

 

-

 

-

 

331,262

                                         

     Total revenues

 

$1,263,807

 

$               -

 

$               -

 

$               -

 

$1,263,807

 

$ 1,178,825

 

$               -

 

$               -

 

$               -

 

$1,178,825

                                         

Operating income (loss) for segments:

                                       

North America merchant services

 

$   140,136

 

$               -

 

$        2,518

 

$      14,371

 

$   157,025

 

$    134,331

 

$               -

 

$           905

 

$        9,487

 

$   144,723

International merchant services

 

124,008

 

-

 

10

 

14,582

 

138,600

 

111,127

 

-

 

-

 

16,074

 

127,201

Corporate

 

(44,853)

 

(7,000)

 

2,895

 

-

 

(48,958)

 

(48,388)

 

9,500

 

56

 

-

 

(38,832)

     Operating income (loss)

 

$   219,291

 

$       (7,000)

 

$        5,423

 

$      28,953

 

$   246,667

 

$    197,070

 

$        9,500

 

$           961

 

$      25,561

 

$   233,092

                                         
                                         

1Represents insurance proceeds associated with processing system intrusion charges incurred in FY 2012.

                       
                                         

2Represents one-time charges primarily related to employee termination benefits and resolution of a contract related contingency for the period ending November 30, 2013 and the prior year represents one-time charges primarily related to employee termination benefits.

                   
                                         

3Represents acquisition intangible amortization expense.

                                   

 

 

SCHEDULE 9

OUTLOOK SUMMARY

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

               

(In millions, except per share data)

               
     

Fiscal 2013 Actual

 

Fiscal 2014 Outlook

 

% Change FY13

               

Revenue Outlook

         

Total Revenues

$      2,376

 

$2,510 to $2,560

 

6% to 8%

               

EPS Outlook

         

Cash EPS 

$        3.65

 

$4.03 to $4.10

 

10% to 12%

Acquisition-related intangibles assets, non-recurring items and 

         

    processing system intrusion1

(0.89)

 

(0.58)

 

(35%)

GAAP Diluted EPS 

$        2.76

 

 $3.45 to $3.52 

 

25% to 28%

               
               
               

We supplemented our reporting of income and the related earnings per share information determined in accordance with GAAP by reporting income and the related earnings per share on a "cash earnings" basis in this earnings release as a measure to help evaluate performance. We calculated income and earnings per share on a cash basis by excluding costs related to the processing system intrusion, acquisition intangible amortization and one-time charges related to employee termination benefits and certain contract settlement and related costs. 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 and earnings per share reported on a cash earnings basis should be considered in addition to, and not as a substitute for, income and earnings per share determined in accordance with GAAP. Our measures of income and earnings per share on a cash earnings basis reflect management's judgment of particular items, and may not be comparable to similarly titled measures reported by other companies.

               

1  Fiscal 2014 reflects $0.48 of acquisition-related intangibles and $0.10 of non-recurring items.  Acquisition-related intangibles accounted and non-recurring items accounted for $0.57 in fiscal 2013 and processing intrusion costs were $0.32.  

 

 

 

SOURCE Global Payments Inc.

 

 

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