Global Payments Reports Third Quarter Earnings

April 2, 2012
Global Payments Reports Third Quarter EarningsATLANTA, April 2, 2012 /PRNewswire/ -- Global Payments Inc. (NYSE: GPN) today announced results for its fiscal third quarter ended February 29, 2012.  For the third quarter, revenues grew 17% to $533.5 million compared to $456.4 million in the prior fiscal year.  Cash earnings per share grew 17% to $0.83 compared to $0.71 in the prior year (See Schedule 2 for Cash Earnings).  On a GAAP basis, the company reported fiscal 2012 third quarter diluted earnings per share growth of 24% to $0.73 compared to $0.59 in the prior year (See Schedule 1 for GAAP Consolidated Statements of Income).

 

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

Chairman and CEO Paul R. Garcia stated, "We delivered solid third quarter results driven by continued steady performances in our US and International businesses."

David E. Mangum, Senior Executive Vice President and CFO, stated, "We continue to expect our annual revenue for fiscal 2012 to be $2,150 million to $2,200 million, or 16% to 18% growth over fiscal 2011 and fiscal 2012 diluted earnings per share on a cash basis to be a range of $3.50 to $3.58, reflecting 14% to 16% growth over fiscal 2011.  We now expect GAAP diluted earnings per share of $3.10 to $3.18 representing 19% to 22% growth over the prior year and reflecting some planned cost saving initiatives for our fourth quarter."  (See Schedule 9 for Outlook Summary.)

Cash earnings exclude normalized adjustments and acquisition intangible amortization expense from continuing operations.  (See Schedule 6 and 7 for Reconciliations of Cash Earnings to GAAP, Schedule 2 for Cash Earnings and Schedule 3 for Segment Information on GAAP and Cash Earnings).    

Conference Call

Global Payments will discuss financial results and business highlights on today's scheduled call, April 2, 2012 at 8:00 a.m. EDT.  Callers may access the conference call via the investor relations page of 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 April 18, 2012.  

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: the results of the investigation of the unauthorized access of a portion of our processing system announced on March 30, 2012, and the impact on our results of operations; 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, developments in the implementation of debit interchange legislation, 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.

Contact: Jane M. Elliott

770-829-8234 Voice

770-829-8267 Fax

investor.relations@globalpay.com

SCHEDULE 1

 

UNAUDITED GAAP CONSOLIDATED STATEMENTS OF INCOME

 

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

 
                         

(In thousands, except per share data)

 
                         
 

Three Months Ended

     

Nine Months Ended  

     
 

February 29,

2012

 

February 28,

2011

 

% Change

 

February 29,

2012

 

February 28,

2011

 

% Change

 
                         

Revenues

$             533,539

 

$             456,382

 

17%

 

$          1,606,815

 

$          1,340,047

 

20%

 
                         

Operating expenses:

                       

    Cost of service

194,218

 

168,332

 

15%

 

571,685

 

473,578

 

21%

 

    Sales, general and administrative

246,973

 

209,851

 

18%

 

737,593

 

623,019

 

18%

 
 

441,191

 

378,183

 

17%

 

1,309,278

 

1,096,597

 

19%

 
                         

Operating income

92,348

 

78,199

 

18%

 

297,537

 

243,450

 

22%

 
                         

Other income (expense):

                       

    Interest and other income

2,368

 

1,631

 

45%

 

7,128

 

7,239

 

(2%)

 

    Interest and other expense

(3,698)

 

(4,315)

 

(14%)

 

(12,663)

 

(13,455)

 

(6%)

 
 

(1,330)

 

(2,684)

 

(50%)

 

(5,535)

 

(6,216)

 

(11%)

 
                         

Income from continuing operations before income taxes

91,018

 

75,515

 

21%

 

292,002

 

237,234

 

23%

 

Provision for income taxes

(25,328)

 

(20,962)

 

21%

 

(86,082)

 

(70,489)

 

22%

 

Income from continuing operations

65,690

 

54,553

 

20%

 

205,920

 

166,745

 

23%

 

Loss  from discontinued operations, net of tax

-

 

(430)

 

NM

 

-

 

(946)

 

NM

 

Net income including noncontrolling interests

65,690

 

54,123

 

21%

 

205,920

 

165,799

 

24%

 

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

(7,770)

 

(6,334)

 

23%

 

(22,845)

 

(15,138)

 

51%

 

         Net income attributable to Global Payments

$               57,920

 

$               47,789

 

21%

 

$             183,075

 

$             150,661

 

22%

 
                         

Amounts attributable to Global Payments:

                       

   Income from continuing operations

$               57,920

 

$               48,219

 

20%

 

$             183,075

 

$             151,607

 

21%

 

   Loss  from discontinued operations, net of tax

-

 

(430)

 

NM

 

-

 

(946)

 

NM

 

         Net income attributable to Global Payments

$               57,920

 

$               47,789

 

21%

 

$             183,075

 

$             150,661

 

22%

 
                         
                         

Basic earnings per share attributable to Global Payments:

                       

   Income from continuing operations

$                   0.74

 

$                   0.60

 

23%

 

$                   2.32

 

$                   1.90

 

22%

 

   Loss  from discontinued operations, net of tax

-

 

-

 

NM

 

-

 

(0.01)

 

NM

 

         Net income attributable to Global Payments

$                   0.74

 

$                   0.60

 

23%

 

$                   2.32

 

$                   1.89

 

23%

 
                         

Diluted earnings per share attributable to Global Payments:

                       

   Income from continuing operations

$                   0.73

 

$                   0.60

 

22%

 

$                   2.30

 

$                   1.89

 

22%

 

   Loss  from discontinued operations, net of tax

-

 

(0.01)

 

NM

 

-

 

(0.02)

 

NM

 

         Net income attributable to Global Payments

$                   0.73

 

$                   0.59

 

24%

 

$                   2.30

 

$                   1.87

 

23%

 
                         

Weighted average shares outstanding:

                       

         Basic

78,421

 

79,897

     

78,937

 

79,711

     

         Diluted

79,065

 

80,733

     

79,511

 

80,413

     
                         
                         

NM - Not Meaningful

                       
                       

 

SCHEDULE 2

 

CASH EARNINGS ATTRIBUTABLE TO GLOBAL PAYMENTS

 

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

 
   

(In thousands, except per share data)

 
                         
 

Three Months Ended

     

Nine Months Ended

     
 

February 29,

2012

 

February 28,

2011

 

% Change

 

February 29,

2012

 

February 28,

2011

 

% Change

 
                         

Revenues

$             533,539

 

$             456,382

 

17%

 

$          1,606,815

 

$          1,340,047

 

20%

 
                         

Operating expenses:

                       

    Cost of service

181,338

 

156,082

 

16%

 

534,009

 

444,031

 

20%

 

    Sales, general and administrative

246,973

 

206,694

 

19%

 

737,593

 

614,340

 

20%

 
 

428,311

 

362,776

 

18%

 

1,271,602

 

1,058,371

 

20%

 
                         

Operating income

105,228

 

93,606

 

12%

 

335,213

 

281,676

 

19%

 
                         

Other income (expense):

                       

    Interest and other income

2,368

 

1,631

 

45%

 

7,128

 

7,239

 

(2%)

 

    Interest and other expense

(3,698)

 

(4,315)

 

(14%)

 

(12,663)

 

(13,455)

 

(6%)

 
 

(1,330)

 

(2,684)

 

(50%)

 

(5,535)

 

(6,216)

 

(11%)

 
                         

Income from continuing operations before income taxes

103,898

 

90,922

 

14%

 

329,678

 

275,460

 

20%

 

Provision for income taxes

(28,912)

 

(25,214)

 

15%

 

(97,163)

 

(80,027)

 

21%

 

Income from continuing operations including noncontrolling interests

74,986

 

65,708

 

14%

 

232,515

 

195,433

 

19%

 

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

(9,671)

 

(8,121)

 

19%

 

(28,756)

 

(17,561)

 

64%

 

Net income from continuing operations attributable to Global Payments

$               65,315

 

$               57,587

 

13%

 

$             203,759

 

$             177,872

 

15%

 
                         
                         

Basic earnings per share

$                   0.83

 

$                   0.72

 

15%

 

$                   2.58

 

$                   2.23

 

16%

 
                         

Diluted earnings per share

$                   0.83

 

$                   0.71

 

17%

 

$                   2.56

 

$                   2.21

 

16%

 
                         

Weighted average shares outstanding:

                       

         Basic

78,421

 

79,897

     

78,937

 

79,711

     

         Diluted

79,065

 

80,733

     

79,511

 

80,413

     
                         
                         

NM - Not Meaningful

                       
                         

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

 
                       

 

SCHEDULE 3

 

SEGMENT INFORMATION

 

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

 
   

(In thousands)

 
                               
       

Three Months Ended

         
       

February 29, 2012

 

February 28, 2011

 

% Change

 
       

GAAP

 

Cash

Earnings

 

GAAP

 

Cash

Earnings

 

GAAP

 

Cash

Earnings

 
                               
 

Revenues:

                       
 

United States

$    302,105

 

$        302,105

 

$    249,194

 

$        249,194

 

21%

 

21%

 
 

Canada

76,677

 

76,677

 

81,066

 

81,066

 

(5%)

 

(5%)

 
   

North America merchant services

378,782

 

378,782

 

330,260

 

330,260

 

15%

 

15%

 
                               
 

Europe

116,196

 

116,196

 

90,531

 

90,531

 

28%

 

28%

 
 

Asia-Pacific

38,561

 

38,561

 

35,591

 

35,591

 

8%

 

8%

 
   

International merchant services

154,757

 

154,757

 

126,122

 

126,122

 

23%

 

23%

 
                               
     

Total revenues

$    533,539

 

$        533,539

 

$    456,382

 

$        456,382

 

17%

 

17%

 
                               
 

Operating income:

                       
 

North America merchant services

$      62,462

 

$          65,697

 

$      62,916

 

$          66,122

 

(1%)

 

(1%)

 
 

International merchant services

47,911

 

57,556

 

35,537

 

44,171

 

35%

 

30%

 
 

Corporate

(18,025)

 

(18,025)

 

(20,254)

 

(16,687)

 

11%

 

(8%)

 
     

Operating income

$      92,348

 

$        105,228

 

$      78,199

 

$          93,606

 

18%

 

12%

 
                               
                               
       

Nine Months Ended

         
       

February 29, 2012

 

February 28, 2011

 

% Change

 
       

GAAP

 

Cash

Earnings

 

GAAP

 

Cash

Earnings

 

GAAP

 

Cash

Earnings

 
                               
 

Revenues:

                       
 

United States

$    882,946

 

$        882,946

 

$    750,495

 

$        750,495

 

18%

 

18%

 
 

Canada

253,419

 

253,419

 

243,733

 

243,733

 

4%

 

4%

 
   

North America merchant services

1,136,365

 

1,136,365

 

994,228

 

994,228

 

14%

 

14%

 
                               
 

Europe

360,779

 

360,779

 

244,208

 

244,208

 

48%

 

48%

 
 

Asia-Pacific

109,671

 

109,671

 

101,611

 

101,611

 

8%

 

8%

 
   

International merchant services

470,450

 

470,450

 

345,819

 

345,819

 

36%

 

36%

 
                               
     

Total revenues

$ 1,606,815

 

$     1,606,815

 

$ 1,340,047

 

$     1,340,047

 

20%

 

20%

 
                               
 

Operating income:

                       
 

North America merchant services

$    204,893

 

$        213,808

 

$    198,415

 

$        207,793

 

3%

 

3%

 
 

International merchant services

148,063

 

176,824

 

102,279

 

120,387

 

45%

 

47%

 
 

Corporate

(55,419)

 

(55,419)

 

(57,244)

 

(46,504)

 

3%

 

(19%)

 
     

Operating income

$    297,537

 

$        335,213

 

$    243,450

 

$        281,676

 

22%

 

19%

 
                               

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

 
                             

 

SCHEDULE 4

 

CONSOLIDATED BALANCE SHEETS

 

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

 

(In thousands)

 
         
 

February 29,

 

May 31,

 
 

2012

 

2011

 
 

(unaudited)

     
         

ASSETS

       

Current assets:

       

Cash and cash equivalents

$    735,733

 

$ 1,354,285

 

Accounts receivable, net of allowances for doubtful accounts of $424 and $472, respectively

156,038

 

166,540

 

Claims receivable, net of allowance for losses of $4,417 and $3,870, respectively

1,153

 

914

 

Settlement processing assets

179,515

 

280,359

 

Inventory

12,380

 

7,640

 

Deferred income taxes

3,943

 

2,946

 

Prepaid expenses and other current assets

37,737

 

35,291

 

Total current assets

1,126,499

 

1,847,975

 
         

Goodwill

760,972

 

779,637

 

Other intangible assets, net of accumulated amortization of $230,173 and $197,066, respectively

318,843

 

341,500

 

Property and equipment, net of accumulated depreciation of $176,696 and $147,670, respectively

288,428

 

256,301

 

Deferred income taxes

98,585

 

104,140

 

Other

23,644

 

20,978

 
         

Total assets

$ 2,616,971

 

$ 3,350,531

 
         

LIABILITIES AND EQUITY

       

Current liabilities:

       

Lines of credit

$    215,716

 

$    270,745

 

Current portion of long-term debt

82,505

 

85,802

 

Accounts payable and accrued liabilities

213,613

 

241,578

 

Settlement processing obligations

221,247

 

838,565

 

Income taxes payable

19,289

 

7,674

 

 Total current liabilities

752,370

 

1,444,364

 
         

Long-term debt

177,846

 

268,217

 

Deferred income taxes

120,748

 

116,432

 

Other long-term liabilities

56,803

 

49,843

 

Total liabilities

1,107,767

 

1,878,856

 
         

Commitments and contingencies

       
         

Redeemable noncontrolling interest

141,897

 

133,858

 
         

Equity:

       

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

-

 

-

 

Common stock, no par value; 200,000,000 shares authorized; 78,545,273 issued

       

and outstanding at February 29, 2012 and 80,334,781 issued and

       

outstanding at May 31, 2011

-

 

-

 

Paid-in capital

354,191

 

419,591

 

Retained earnings

842,487

 

685,624

 

Accumulated other comprehensive income

33,299

 

79,320

 

     Total Global Payments shareholders' equity

1,229,977

 

1,184,535

 

Noncontrolling interest

137,330

 

153,282

 

Total equity

1,367,307

 

1,337,817

 
         

Total liabilities and equity

$ 2,616,971

 

$ 3,350,531

 
       

 

SCHEDULE 5

 

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

 
   
   

(In thousands)

 
               
       

Nine Months Ended

 
       

February 29, 2012

 

February 28, 2011

 
               

Cash flows from operating activities:

       
 

Net income including noncontrolling interests

$             205,920

 

$             165,799

 
 

Adjustments to reconcile net income to net cash used in operating activities:

       
   

Depreciation and amortization of property and equipment

35,821

 

29,033

 
   

Amortization of acquired intangibles

37,676

 

27,486

 
   

Provision for operating losses and bad debts

18,833

 

15,301

 
   

Share-based compensation expense

12,796

 

11,748

 
   

Deferred income taxes

5,858

 

3,639

 
   

Loss on disposal of discontinued operations

-

 

602

 
   

Other, net

(949)

 

(3,362)

 
 

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

       
   

Accounts receivable

10,502

 

(5,836)

 
   

Claims receivable

(11,744)

 

(11,534)

 
   

Settlement processing assets and obligations, net

(523,802)

 

444,174

 
   

Inventory

(4,773)

 

(69)

 
   

Prepaid expenses and other assets

(2,388)

 

(7,997)

 
   

Accounts payable and other accrued liabilities

(22,211)

 

45,182

 
   

Income taxes payable

11,615

 

19,125

 
     

Net cash (used in) provided by operating activities

(226,846)

 

733,291

 
               

Cash flows from investing activities:

       
 

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

(44,245)

 

(167,775)

 
 

Capital expenditures

(71,084)

 

(77,095)

 
 

Preliminary settlement of working capital adjustments from disposition of business

-

 

(1,921)

 
 

Net decrease in financing receivables

1,862

 

1,514

 
     

Net cash used in investing activities

(113,467)

 

(245,277)

 
               

Cash flows from financing activities:

       
 

Net (payments) borrowings on lines of credit

(55,029)

 

109,774

 
 

Proceeds from issuance of long-term debt

71,374

 

202,155

 
 

Principal payments under long-term debt

(162,482)

 

(248,996)

 
 

Proceeds from stock issued under employee stock plans

9,630

 

12,072

 
 

Common stock repurchased - share-based compensation plans

(4,847)

 

-

 
 

Repurchase of common stock

(99,604)

 

(14,900)

 
 

Tax benefit from employee share-based compensation

2,036

 

1,335

 
 

Distribution to noncontrolling interests

(24,334)

 

(6,650)

 
 

Dividends paid

(4,740)

 

(4,782)

 
     

Net cash (used in) provided by financing activities

(267,996)

 

50,008

 
               

Effect of exchange rate changes on cash

(10,243)

 

21,097

 
               

Decrease in cash and cash equivalents

(618,552)

 

559,119

 

Cash and cash equivalents, beginning of period

1,354,285

 

769,946

 

Cash and cash equivalents, end of period

$             735,733

 

$          1,329,065

 
             

 

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 February 29, 2012

 
 

GAAP

   

Cash Earnings

Adjustments(1)

Cash Earnings

 
             

Revenues

$ 533,539

   

$                -

$       533,539

 
             

Operating expenses:

           

  Cost of service

194,218

   

(12,880)

181,338

 

  Sales, general and administrative

246,973

   

-

246,973

 
 

441,191

   

(12,880)

428,311

 
             

Operating income

92,348

   

12,880

105,228

 
             

Other income (expense):

           

  Interest and other income

2,368

   

-

2,368

 

  Interest and other expense

(3,698)

   

-

(3,698)

 
 

(1,330)

   

-

(1,330)

 
             

Income from continuing operations before income taxes

91,018

   

12,880

103,898

 

Provision for income taxes

(25,328)

   

(3,584)

(28,912)

 

Income from continuing operations

65,690

   

9,296

74,986

 

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

(7,770)

   

(1,901)

(9,671)

 

Net income from continuing operations attributable to Global Payments

$   57,920

   

$           7,395

$         65,315

 
             

Diluted shares

79,065

     

79,065

 

Diluted earnings per share

$       0.73

   

$             0.10

$             0.83

 
             
             
 

Three Months Ended February 28, 2011

 
 

GAAP

Employee

Termination and

Other(2)

Foreign Tax Rate

Cash Earnings

Adjustments(1)

Cash Earnings

 
             

Revenues

$ 456,382

$                            -

$                    -

$                -

$       456,382

 
             

Operating expenses:

           

  Cost of service

168,332

(410)

-

(11,840)

156,082

 

  Sales, general and administrative

209,851

(3,157)

-

-

206,694

 
 

378,183

(3,567)

-

(11,840)

362,776

 
             

Operating income

78,199

3,567

-

11,840

93,606

 
             

Other income (expense):

           

  Interest and other income

1,631

-

-

-

1,631

 

  Interest and other expense

(4,315)

-

-

-

(4,315)

 
 

(2,684)

-

-

-

(2,684)

 
             

Income from continuing operations before income taxes

75,515

3,567

-

11,840

90,922

 

Provision for income taxes

(20,962)

(765)

 

(3,487)

(25,214)

 

Income from continuing operations

54,553

2,802

-

8,353

65,708

 

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

(6,334)

-

-

(1,787)

(8,121)

 

Net income from continuing operations attributable to Global Payments

$   48,219

$                      2,802

$                    -

$           6,566

$         57,587

 
             

Diluted shares

80,733

     

80,733

 

Diluted earnings per share

$       0.60

$                        0.03

$                    -

$             0.08

$             0.71

 
             
           

 

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

 
             

(2) Reflects expenses of start-up costs related to our new Global Service Center in Manila, Philippines and employee termination and relocation benefits and the related income tax benefits.

 
             

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 February 29, 2012 and February 28, 2011 on a "cash earnings" basis in this earnings release as a measure to help evaluate performance. We calculated February 29, 2012 income from continuing operations and earnings per share on a cash basis by excluding acquisition intangible amortization from our results.  We calculated February 28, 2011 income from continuing operations and earnings per share on a cash basis by excluding charges related to employee termination and relocation benefits, certain one-time costs related to our Global Service Center, and acquisition intangible amortization from our 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 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 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)

 
             
 

Nine Months Ended February 29, 2012

 
 

GAAP

   

Cash Earnings

Adjustments(1)

Cash Earnings

 
             

Revenues

$ 1,606,815

   

$                -

$    1,606,815

 
             

Operating expenses:

           

  Cost of service

571,685

   

(37,676)

534,009

 

  Sales, general and administrative

737,593

   

-

737,593

 
 

1,309,278

   

(37,676)

1,271,602

 
             

Operating income

297,537

   

37,676

335,213

 
             

Other income (expense):

           

  Interest and other income

7,128

   

-

7,128

 

  Interest and other expense

(12,663)

   

-

(12,663)

 
 

(5,535)

   

-

(5,535)

 
             

Income from continuing operations before income taxes

292,002

   

37,676

329,678

 

Provision for income taxes

(86,082)

   

(11,081)

(97,163)

 

Income from continuing operations

205,920

   

26,595

232,515

 

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

(22,845)

   

(5,911)

(28,756)

 

Net income from continuing operations attributable to Global Payments

$    183,075

   

$         20,684

$       203,759

 
             

Diluted shares

79,511

     

79,511

 

Diluted earnings per share

$          2.30

   

$             0.26

$             2.56

 
             
             
 

Nine Months Ended February 28, 2011

 
 

GAAP

Employee

Termination and

Other(2)

Foreign Tax

Rate(3)

Cash Earnings

Adjustments(1)

Cash Earnings

 
             

Revenues

$ 1,340,047

$                            -

$                      -

$                -

$    1,340,047

 
             

Operating expenses:

           

  Cost of service

473,578

(2,061)

-

(27,486)

444,031

 

  Sales, general and administrative

623,019

(8,679)

-

-

614,340

 
 

1,096,597

(10,740)

-

(27,486)

1,058,371

 
             

Operating income

243,450

10,740

-

27,486

281,676

 
             

Other income (expense):

           

  Interest and other income

7,239

-

-

-

7,239

 

  Interest and other expense

(13,455)

-

-

-

(13,455)

 
 

(6,216)

-

-

-

(6,216)

 
             

Income from continuing operations before income taxes

237,234

10,740

-

27,486

275,460

 

Provision for income taxes

(70,489)

(3,384)

2,479

(8,633)

(80,027)

 

Income from continuing operations

166,745

7,356

2,479

18,853

195,433

 

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

(15,138)

-

-

(2,423)

(17,561)

 

Net income from continuing operations attributable to Global Payments

$    151,607

$                      7,356

$                2,479

$         16,430

$       177,872

 
             

Diluted shares

80,413

     

80,413

 

Diluted earnings per share

$          1.89

$                        0.09

$                  0.03

$             0.20

$             2.21

 
             
           

 

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

 
             

(2) Reflects expenses of start-up costs related to our new Global Service Center in Manila, Philippines and employee termination and relocation benefits and the related income tax benefits.

 
             

(3) 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%.  

 
             

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 nine months ended February 29, 2012 and February 28, 2011 on a "cash earnings" basis in this earnings release as a measure to help evaluate performance. We calculated February 29, 2012 income from continuing operations and earnings per share on a cash basis by excluding acquisition intangible amortization from our results.  We calculated February 28, 2011 income from continuing operations and earnings per share on a cash basis by excluding charges related to employee termination and relocation benefits, certain one-time costs related to our Global Service Center, the legislated tax rate reduction and acquisition intangible amortization from our 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 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 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 February 29, 2012

 

Three Months Ended February 28, 2011

 
       

GAAP

Cash Earnings

Adjustments(1)

Cash Earnings

 

GAAP

Employee

Termination

and Other(2)

Cash Earnings

Adjustments(1)

Cash Earnings

 
                         
 

Revenues:

                 
 

United States

$                   302,105

$                          -

$                  302,105

 

$                   249,194

$                           -

$                     -

$                  249,194

 
 

Canada

76,677

-

76,677

 

81,066

-

-

81,066

 
   

North America merchant services

378,782

-

378,782

 

330,260

-

-

330,260

 
                         
 

Europe

116,196

-

116,196

 

90,531

-

-

90,531

 
 

Asia-Pacific

38,561

-

38,561

 

35,591

-

-

35,591

 
   

International merchant services

154,757

-

154,757

 

126,122

-

-

126,122

 
                         
     

Total revenues

$                   533,539

$                           -

$                  533,539

 

$                   456,382

$                           -

$                     -

$                  456,382

 
                         
 

Operating income:

                 
 

North America merchant services

$                     62,462

$                   3,235

$                    65,697

 

$                     62,916

$                           -

$             3,206

$                    66,122

 
 

International merchant services

47,911

9,645

57,556

 

35,537

-

8,634

44,171

 
 

Corporate

(18,025)

-

(18,025)

 

(20,254)

3,567

-

(16,687)

 
   

Operating income

$                     92,348

$                 12,880

$                  105,228

 

$                     78,199

$                      3,567

$          11,840

$                    93,606

 
                         
                         
       

Nine Months Ended February 29, 2012

 

Nine Months Ended February 28, 2011

 
       

GAAP

Cash Earnings

Adjustments(1)

Cash Earnings

 

GAAP

Employee

Termination

and Other(2)

Cash Earnings

Adjustments(1)

Cash Earnings

 
                         
 

Revenues:

                 
 

United States

$                   882,946

$                         -

$                  882,946

 

$                   750,495

$                           -

$                  -

$                  750,495

 
 

Canada

253,419

-

253,419

 

243,733

-

-

243,733

 
   

North America merchant services

1,136,365

-

1,136,365

 

994,228

-

-

994,228

 
                         
 

Europe

360,779

-

360,779

 

244,208

-

-

244,208

 
 

Asia-Pacific

109,671

-

109,671

 

101,611

-

-

101,611

 
   

International merchant services

470,450

-

470,450

 

345,819

-

-

345,819

 
                         
     

Total revenues

$                1,606,815

$                          -

$               1,606,815

 

$                1,340,047

$                           -

$                 -

$               1,340,047

 
                         
 

Operating income:

                 
 

North America merchant services

$                   204,893

$                  8,915

$                  213,808

 

$                   198,415

$                           -

$         9,378

$                  207,793

 
 

International merchant services

148,063

28,761

176,824

 

102,279

-

18,108

120,387

 
 

Corporate

(55,419)

-

(55,419)

 

(57,244)

10,740

-

(46,504)

 
   

Operating income

$                   297,537

$                37,676

$                  335,213

 

$                   243,450

$                    10,740

$       27,486

$                  281,676

 
                         
                         

(1) Represents acquisition intangible amortization expense.

           
                         

(2) Represents start-up costs related to our Global Service Center in Manila, Philippines and expenses related to employee termination and relocation benefits.

 
                       

 

SCHEDULE 9

 

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

   

$2,150 to $2,200

 

16% to 18%

 
                 
                 
 

EPS Outlook

             
 

GAAP diluted EPS

$                   2.61

   

$3.10 to $3.18

 

19% to 22%

 
 

Acquisition-related intangibles and non-recurring items(1)

0.47

   

$0.40

 

---

 
 

Cash EPS

$                   3.08

   

$3.50 to $3.58

 

14% to 16%

 
                 
                 

(1)  Fiscal 2012 reflects $0.36 of acquisition-related intangibles and $0.04 of non-recurring items.  Acquisition-related intangibles accounted for $0.31 in fiscal 2011 and non-recurring items $0.16.  

 
               

 

SOURCE Global Payments Inc.