Global Payments Reports Third Quarter Earnings

March 31, 2011
Global Payments Reports Third Quarter EarningsATLANTA, March 31, 2011 /PRNewswire via COMTEX/ -- Global Payments Inc. (NYSE: GPN) today announced results for its fiscal third quarter ended February 28, 2011. For the third quarter, revenues grew 15% to $456.4 million compared to $398.5 million in the prior fiscal year. Normalized diluted earnings per share from continuing operations for the quarter were $0.63 compared to $0.58 in the prior year (See Schedule 2 Normalized Income Statements). On a GAAP basis, the company reported fiscal 2011 third quarter diluted earnings per share from continuing operations for the quarter of $0.60 compared to $0.58 in the prior year (See Schedule 1 for GAAP Income Statements).

 

 

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

Normalized third quarter results exclude pretax expenses consisting of certain start-up and duplicative costs related to the company's Global Service Center in Manila, Philippines. These results also exclude certain employee termination and relocation benefits. (See Schedule 7 for Reconciliation of Normalized and Cash Earnings to GAAP).

Chairman and CEO Paul R. Garcia stated, "We are pleased with our solid third quarter results, which include our December 2010 acquisition in Spain. Our businesses performed as we expected during the quarter, and I am delighted that we have successfully completed the back-end settlement platform migration of our UK merchant portfolio to our own platform at the end of February as we anticipated."

David E. Mangum, EVP and CFO, stated, "On a cash basis, the company reported fiscal 2011 third quarter diluted earnings per share from continuing operations of $0.71 which represents 9% growth over the prior year quarter of $0.65."

Cash Earnings exclude normalized adjustments and acquisition intangible amortization expense from continuing operations. (See Schedule 3 Cash Earnings Income Statements and Schedule 10 for Cash Earnings by Segment for details).

For the full year of fiscal 2011, including the addition of the "la Caixa" joint venture, the company now expects revenue of $1,800 million to $1,820 million, or 10% to 11% growth over fiscal 2010 which compares to the previous quarter's range of $1,780 million to $1,820 million, or 8% to 10% growth over fiscal 2010. The company now expects diluted earnings per share from continuing operations on a cash basis of $2.99 to $3.06, reflecting 7% to 9% growth over fiscal 2010, this compares to our previous quarter's expectations of $2.95 to $3.06, or 5% to 9% growth over fiscal 2010. Normalized earnings per share from continuing operations expectations are now $2.70 to $2.77, reflecting growth of 6% to 9% compared to previous quarter's range of $2.66 to $2.77, or 5% to 9% growth and GAAP diluted earnings per share from continuing operations of $2.58 to $2.65, which previously was $2.54 to $2.65.

Conference Call

Global Payments will hold a conference call today, March 31, 2011 at 5:00 p.m. EDT 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 Global Payments' Web site through April 21, 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: the effect of current economic conditions in Spain and their anticipated austerity measures on our ability to drive sales and achieve long-term growth in the market; foreign currency risks which become increasingly relevant as we expand internationally, the effect of current worldwide economic conditions, including 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 February 28,

     

Nine Months Ended February 28,

   
   

2011

 

2010

 

% Change

 

2011

 

2010

 

% Change

 
                           

Revenues

 

$ 456,382

 

$ 398,535

 

15%

 

$ 1,340,047

 

$ 1,217,418

 

10%

 
                           

Operating expenses:

                         

Cost of service

 

168,332

 

146,202

 

15%

 

473,578

 

432,287

 

10%

 

Sales, general and administrative

 

209,851

 

178,484

 

18%

 

623,019

 

533,337

 

17%

 
   

378,183

 

324,686

 

16%

 

1,096,597

 

965,624

 

14%

 
                           

Operating income

 

78,199

 

73,849

 

6%

 

243,450

 

251,794

 

(3%)

 
                           

Other income (expense):

                         

Interest and other income

 

1,631

 

1,319

 

24%

 

7,239

 

2,699

 

168%

 

Interest and other expense

 

(4,315)

 

(4,141)

 

4%

 

(13,455)

 

(12,704)

 

6%

 
   

(2,684)

 

(2,822)

 

(5%)

 

(6,216)

 

(10,005)

 

(38%)

 
                           

Income from continuing operations before income taxes

 

75,515

 

71,027

 

6%

 

237,234

 

241,789

 

(2%)

 

Provision for income taxes

 

(20,962)

 

(20,298)

 

3%

 

(70,489)

 

(69,489)

 

1%

 

Income from continuing operations

 

54,553

 

50,729

 

8%

 

166,745

 

172,300

 

(3%)

 

(Loss) income from discontinued operations, net of tax

 

(430)

 

722

 

NM

 

(946)

 

7,778

 

NM

 

Net income including noncontrolling interests

 

54,123

 

51,451

 

5%

 

165,799

 

180,078

 

(8%)

 

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

 

(6,334)

 

(2,990)

 

112%

 

(15,138)

 

(10,951)

 

38%

 

Net income attributable to Global Payments

 

$ 47,789

 

$ 48,461

 

(1%)

 

$ 150,661

 

$ 169,127

 

(11%)

 
                           

Amounts attributable to Global Payments:

                         

Income from continuing operations

 

$ 48,219

 

$ 47,739

 

1%

 

$ 151,607

 

$ 161,349

 

(6%)

 

(Loss) income from discontinued operations, net of tax

 

(430)

 

722

 

NM

 

(946)

 

7,778

 

NM

 

Net income attributable to Global Payments

 

$ 47,789

 

$ 48,461

 

(1%)

 

$ 150,661

 

$ 169,127

 

(11%)

 
                           
                           

Basic earnings per share attributable to Global Payments:

                         

Income from continuing operations

 

$ 0.60

 

$ 0.59

 

2%

 

$ 1.90

 

$ 1.99

 

(5%)

 

(Loss) income from discontinued operations, net of tax

 

-

 

0.01

 

NM

 

(0.01)

 

0.10

 

NM

 

Net income attributable to Global Payments

 

$ 0.60

 

$ 0.60

 

0%

 

$ 1.89

 

$ 2.09

 

(10%)

 
                           

Diluted earnings per share attributable to Global Payments:

                         

Income from continuing operations

 

$ 0.60

 

$ 0.58

 

3%

 

$ 1.89

 

$ 1.96

 

(4%)

 

(Loss) income from discontinued operations, net of tax

 

(0.01)

 

0.01

 

NM

 

(0.02)

 

0.10

 

NM

 

Net income attributable to Global Payments

 

$ 0.59

 

$ 0.59

 

0%

 

$ 1.87

 

$ 2.06

 

(9%)

 
                           

Weighted average shares outstanding:

                         

Basic

 

79,897

 

81,539

     

79,711

 

81,102

     

Diluted

 

80,733

 

82,636

     

80,413

 

82,181

     
                           
                           

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 February 28,

     

Nine Months Ended February 28,

   
   

2011

 

2010

 

% Change

 

2011

 

2010

 

% Change

 
   

Normalized(1)

 

GAAP(2)

     

Normalized(1)

 

GAAP(2)

     
                           
                           

Revenues

 

$ 456,382

 

$ 398,535

 

15%

 

$ 1,340,047

 

$ 1,217,418

 

10%

 
                           

Operating expenses:

                         

Cost of service

 

167,922

 

146,202

 

15%

 

471,517

 

432,287

 

9%

 

Sales, general and administrative

 

206,694

 

178,484

 

16%

 

614,340

 

533,337

 

15%

 
   

374,616

 

324,686

 

15%

 

1,085,857

 

965,624

 

12%

 
                           

Operating income

 

81,766

 

73,849

 

11%

 

254,190

 

251,794

 

1%

 
                           

Other income (expense):

                         

Interest and other income

 

1,631

 

1,319

 

24%

 

7,239

 

2,699

 

168%

 

Interest and other expense

 

(4,315)

 

(4,141)

 

4%

 

(13,455)

 

(12,704)

 

6%

 
   

(2,684)

 

(2,822)

 

(5%)

 

(6,216)

 

(10,005)

 

(38%)

 
                           

Income from continuing operations before income taxes

 

79,082

 

71,027

 

11%

 

247,974

 

241,789

 

3%

 

Provision for income taxes

 

(21,727)

 

(20,298)

 

7%

 

(71,394)

 

(69,489)

 

3%

 

Income from continuing operations including noncontrolling interests

 

57,355

 

50,729

 

13%

 

176,580

 

172,300

 

2%

 

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

 

(6,334)

 

(2,990)

 

112%

 

(15,138)

 

(10,951)

 

38%

 

Net income from continuing operations attributable to Global Payments

 

$ 51,021

 

$ 47,739

 

7%

 

$ 161,442

 

$ 161,349

 

0%

 
                           
                           

Basic earnings per share

 

$ 0.64

 

$ 0.59

 

8%

 

$ 2.03

 

$ 1.99

 

2%

 
                           

Diluted earnings per share

 

$ 0.63

 

$ 0.58

 

9%

 

$ 2.01

 

$ 1.96

 

3%

 
                           

Weighted average shares outstanding:

                         

Basic

 

79,897

 

81,539

     

79,711

 

81,102

     

Diluted

 

80,733

 

82,636

     

80,413

 

82,181

     
                           
                           

NM - Not Meaningful

 
   

1 Normalized results exclude expenses consisting of $2.4 million and $4.7 million during the three and nine months ended February 28, 2011, respectively, of start-up costs related to our new Global Service Center in Manila, Philippines and expenses of $1.2 million and $6.0 million during the three and nine months ended February 28, 2011, respectively, related to employee termination and relocation benefits. Results for the nine months ended February 28, 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 Schedule 7 for reconciliation of normalized earnings from continuing operations to GAAP.

 
   

2 There were no normalized adjustments during the three and nine months ended February 28, 2010.

 
                         

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 February 28,

     

Nine Months Ended February 28,

   
   

2011

 

2010

 

% Change

 

2011

 

2010

 

% Change

 
                           

Revenues

 

$ 456,382

 

$ 398,535

 

15%

 

$ 1,340,047

 

$ 1,217,418

 

10%

 
                           

Operating expenses:

                         

Cost of service

 

156,082

 

137,840

 

13%

 

444,031

 

407,699

 

9%

 

Sales, general and administrative

 

206,694

 

178,484

 

16%

 

614,340

 

533,337

 

15%

 
   

362,776

 

316,324

 

15%

 

1,058,371

 

941,036

 

12%

 
                           

Operating income

 

93,606

 

82,211

 

14%

 

281,676

 

276,382

 

2%

 
                           

Other income (expense):

                         

Interest and other income

 

1,631

 

1,319

 

24%

 

7,239

 

2,699

 

168%

 

Interest and other expense

 

(4,315)

 

(4,141)

 

4%

 

(13,455)

 

(12,704)

 

6%

 
   

(2,684)

 

(2,822)

 

(5%)

 

(6,216)

 

(10,005)

 

(38%)

 
                           

Income from continuing operations before income taxes

 

90,922

 

79,389

 

15%

 

275,460

 

266,377

 

3%

 

Provision for income taxes

 

(25,214)

 

(22,531)

 

12%

 

(80,027)

 

(77,447)

 

3%

 

Income from continuing operations including noncontrolling interests

 

65,708

 

56,858

 

16%

 

195,433

 

188,930

 

3%

 

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

 

(8,121)

 

(3,343)

 

143%

 

(17,561)

 

(11,966)

 

47%

 

Net income from continuing operations attributable to Global Payments

 

$ 57,587

 

$ 53,515

 

8%

 

$ 177,872

 

$ 176,964

 

1%

 
                           
                           

Basic earnings per share

 

$ 0.72

 

$ 0.66

 

9%

 

$ 2.23

 

$ 2.18

 

2%

 
                           

Diluted earnings per share

 

$ 0.71

 

$ 0.65

 

9%

 

$ 2.21

 

$ 2.15

 

3%

 
                           

Weighted average shares outstanding:

                         

Basic

 

79,897

 

81,539

     

79,711

 

81,102

     

Diluted

 

80,733

 

82,636

     

80,413

 

82,181

     
                           
                           

NM - Not Meaningful

 
   

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

 
                         

SCHEDULE 4

 

SEGMENT INFORMATION CONTINUING OPERATIONS

 

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

 
   

(In thousands)

 
                                       
       

Three Months Ended February 28,

             
       

2011

 

2010

 

% Change

 
       

GAAP

 

Normalized

 

Cash Earnings

 

GAAP

 

Cash Earnings

 

GAAP

 

Normalized to GAAP(1)

 

Cash Earnings

 
                                       

Revenues:

                                 

United States

 

$ 249,194

 

$ 249,194

 

$ 249,194

 

$ 216,168

 

$ 216,168

 

15%

 

15%

 

15%

 

Canada

 

81,066

 

81,066

 

81,066

 

77,092

 

77,092

 

5%

 

5%

 

5%

 
 

North America merchant services

 

330,260

 

330,260

 

330,260

 

293,260

 

293,260

 

13%

 

13%

 

13%

 
                                       

Europe

 

90,531

 

90,531

 

90,531

 

78,174

 

78,174

 

16%

 

16%

 

16%

 

Asia-Pacific

 

35,591

 

35,591

 

35,591

 

27,101

 

27,101

 

31%

 

31%

 

31%

 
 

International merchant services

 

126,122

 

126,122

 

126,122

 

105,275

 

105,275

 

20%

 

20%

 

20%

 
                                       
   

Total revenues

 

$ 456,382

 

$ 456,382

 

$ 456,382

 

$ 398,535

 

$ 398,535

 

15%

 

15%

 

15%

 
                                       

Operating income:

                                 

North America merchant services

 

$ 62,916

 

$ 62,916

 

$ 66,122

 

$ 60,855

 

$ 63,667

 

3%

 

3%

 

4%

 

International merchant services

 

35,537

 

35,537

 

44,171

 

28,853

 

34,403

 

23%

 

23%

 

28%

 

Corporate

 

(20,254)

 

(16,687)

 

(16,687)

 

(15,859)

 

(15,859)

 

(28%)

 

(5%)

 

(5%)

 
   

Operating income

 

$ 78,199

 

$ 81,766

 

$ 93,606

 

$ 73,849

 

$ 82,211

 

6%

 

11%

 

14%

 
                                       
                                       
                                       
                                     
                                       
                                       
       

Nine Months Ended February 28,

             
       

2011

 

2010

 

% Change

 
       

GAAP

 

Normalized

 

Cash Earnings

 

GAAP

 

Cash Earnings

 

GAAP

 

Normalized to GAAP(1)

 

Cash Earnings

 
                                       

Revenues:

                                 

United States

 

$ 750,495

 

$ 750,495

 

$ 750,495

 

$ 659,868

 

$ 659,868

 

14%

 

14%

 

14%

 

Canada

 

243,733

 

243,733

 

243,733

 

236,552

 

236,552

 

3%

 

3%

 

3%

 
 

North America merchant services

 

994,228

 

994,228

 

994,228

 

896,420

 

896,420

 

11%

 

11%

 

11%

 
                                       

Europe

 

244,208

 

244,208

 

244,208

 

242,785

 

242,785

 

1%

 

1%

 

1%

 

Asia-Pacific

 

101,611

 

101,611

 

101,611

 

78,213

 

78,213

 

30%

 

30%

 

30%

 
 

International merchant services

 

345,819

 

345,819

 

345,819

 

320,998

 

320,998

 

8%

 

8%

 

8%

 
                                       
   

Total revenues

 

$ 1,340,047

 

$ 1,340,047

 

$ 1,340,047

 

$ 1,217,418

 

$ 1,217,418

 

10%

 

10%

 

10%

 
                                       

Operating income:

                                 

North America merchant services

 

$ 198,415

 

$ 198,415

 

$ 207,793

 

$ 210,419

 

$ 218,140

 

(6%)

 

(6%)

 

(5%)

 

International merchant services

 

102,279

 

102,279

 

120,387

 

88,353

 

105,220

 

16%

 

16%

 

14%

 

Corporate

 

(57,244)

 

(46,504)

 

(46,504)

 

(46,978)

 

(46,978)

 

(22%)

 

1%

 

1%

 
   

Operating income

 

$ 243,450

 

$ 254,190

 

$ 281,676

 

$ 251,794

 

$ 276,382

 

(3%)

 

1%

 

2%

 

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

 

1 There were no normalized adjustments during the three and nine months ended February 28, 2010.

 
                                     

SCHEDULE 5

       

CONSOLIDATED BALANCE SHEETS

       

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

       

(In thousands)

       
           
   

February 28

 

May 31,

 
   

2011

 

2010

 
   

(Unaudited)

     

ASSETS

       

Current assets:

       

Cash and cash equivalents

$ 1,329,065

 

$ 769,946

 

Accounts receivable, net of allowances for doubtful accounts of $348 and $269, respectively

137,653

 

131,817

 

Claims receivable, net of allowance for losses of $4,196 and $4,208, respectively

861

 

664

 

Settlement processing assets

64,973

 

13,741

 

Inventory

9,834

 

9,740

 

Deferred income taxes

4,288

 

2,752

 

Prepaid expenses and other current assets

23,038

 

39,604

 

Total current assets

1,569,712

 

968,264

 
           

Goodwill

765,714

 

569,090

 

Other intangible assets, net of accumulated amortization of $181,472 and $145,076, respectively

347,639

 

205,110

 

Property and equipment, net of accumulated depreciation of $155,699 and $119,402, respectively

244,349

 

183,938

 

Deferred income taxes

101,252

 

90,470

 

Other

23,752

 

22,454

 
           

Total assets

$ 3,052,418

 

$ 2,039,326

 
           

LIABILITIES AND EQUITY

       

Current liabilities:

       

Lines of credit

$ 188,961

 

$ 79,187

 

Current portion of long-term debt

79,771

 

148,169

 

Accounts payable and accrued liabilities

200,179

 

173,575

 

Settlement processing obligations

765,020

 

265,110

 

Income taxes payable

3,987

 

6,430

 

Total current liabilities

1,237,918

 

672,471

 
           

Long-term debt

301,319

 

272,965

 

Deferred income taxes

101,702

 

88,265

 

Other long-term liabilities

45,571

 

31,436

 

Total liabilities

1,686,510

 

1,065,137

 
           

Commitments and contingencies

       
           

Redeemable noncontrolling interest

126,559

 

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; 82,793,925 issued

       

and 80,066,188 outstanding at February 28, 2011 and 82,028,945 issued and

       

79,646,055 outstanding at May 31, 2010

-

 

-

 

Paid-in capital

484,757

 

460,747

 

Retained earnings

675,182

 

544,772

 

Treasury stock; 2,727,737 and 2,382,890 shares at February 28, 2011 and May 31, 2010,

       

respectively

(112,980)

 

(100,000)

 

Accumulated other comprehensive income (loss)

49,283

 

(44,255)

 

Total Global Payments shareholders' equity

1,096,242

 

861,264

 

Noncontrolling interest

143,107

 

10,253

 

Total equity

1,239,349

 

871,517

 
           

Total liabilities and equity

$ 3,052,418

 

$ 2,039,326

 
         

SCHEDULE 6

         

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

         

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

         
                 
                 

(In thousands)

         
                 
         

Nine Months Ended February 28,

 
         

2011

 

2010

 
                 

Cash flows from operating activities:

         
 

Net income including noncontrolling interests

 

$ 165,799

 

$ 180,078

 
 

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

         
   

Depreciation and amortization of property and equipment

 

29,033

 

25,798

 
   

Amortization of acquired intangibles

 

27,486

 

24,627

 
   

Share-based compensation expense

 

11,748

 

11,843

 
   

Provision for operating losses and bad debts

 

15,301

 

18,713

 
   

Deferred income taxes

 

3,639

 

(21,023)

 
   

Loss on disposal of discontinued operations

 

602

 

15,770

 
   

Other, net

 

(3,362)

 

947

 
 

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

         
   

Accounts receivable

 

(5,836)

 

1,942

 
   

Claims receivable

 

(11,534)

 

(11,552)

 
   

Settlement processing assets and obligations, net

 

444,174

 

51,930

 
   

Inventory

 

(69)

 

(6,785)

 
   

Prepaid expenses and other assets

 

(7,997)

 

(2,474)

 
   

Payables to money transfer beneficiaries

 

-

 

(532)

 
   

Accounts payable and other accrued liabilities

 

45,182

 

25,607

 
   

Income taxes payable

 

19,125

 

3,308

 
     

Net cash provided by operating activities

 

733,291

 

318,197

 
                 

Cash flows from investing activities:

         
 

Business and intangible asset acquisitions, net of cash acquired

 

(167,775)

 

(17,059)

 
 

Capital expenditures

 

(77,095)

 

(36,520)

 
 

Preliminary settlement of working capital adjustments from disposition of business

 

(1,921)

 

-

 
 

Net decrease (increase) in financing receivables

 

1,514

 

(649)

 
 

Proceeds from sale of investment and contractual rights, net

 

-

 

297

 
     

Net cash used in investing activities

 

(245,277)

 

(53,931)

 
                 

Cash flows from financing activities:

         
 

Net borrowings on lines of credit

 

109,774

 

339

 
 

Proceeds from issuance of long-term debt

 

202,155

 

304,964

 
 

Principal payments under long-term debt

 

(248,996)

 

(50,958)

 
 

Acquisition of redeemable noncontrolling interests

 

-

 

(307,675)

 
 

Proceeds from stock issued under share-based compensation plans

 

12,072

 

20,699

 
 

Repurchase of common stock

 

(14,900)

 

-

 
 

Tax benefit from share-based compensation

 

1,335

 

4,579

 
 

Distribution to noncontrolling interests

 

(6,650)

 

(18,461)

 
 

Dividends paid

 

(4,782)

 

(4,877)

 
     

Net cash provided by (used in) financing activities

 

50,008

 

(51,390)

 
                 

Effect of exchange rate changes on cash

 

21,097

 

1,965

 
                 

Increase in cash and cash equivalents

 

559,119

 

214,841

 

Cash and cash equivalents, beginning of period

 

769,946

 

426,935

 

Cash and cash equivalents of discontinued operations

 

-

 

(52,156)

 

Cash and cash equivalents, end of period

 

$1,329,065

 

$ 589,620

 
               

SCHEDULE 7

           

RECONCILIATION OF 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 February 28,

 
   

2011

 

2010(4)

 
   

GAAP

Employee Termination and Other(1)

 

Normalized

Cash Earnings Adjustments(3)

Cash Earnings

 

GAAP

Cash Earnings Adjustments(3)

Cash Earnings

 
                         

Revenues

 

$ 456,382

$ -

 

$ 456,382

$ -

$ 456,382

 

$ 398,535

$ -

$ 398,535

 
                         

Operating expenses:

                       

Cost of service

 

168,332

(410)

 

167,922

(11,840)

156,082

 

146,202

(8,362)

137,840

 

Sales, general and administrative

 

209,851

(3,157)

 

206,694

-

206,694

 

178,484

-

178,484

 
   

378,183

(3,567)

 

374,616

(11,840)

362,776

 

324,686

(8,362)

316,324

 
                         

Operating income

 

78,199

3,567

 

81,766

11,840

93,606

 

73,849

8,362

82,211

 
                         

Other income (expense):

                       

Interest and other income

 

1,631

-

 

1,631

-

1,631

 

1,319

-

1,319

 

Interest and other expense

 

(4,315)

-

 

(4,315)

-

(4,315)

 

(4,141)

-

(4,141)

 
   

(2,684)

-

 

(2,684)

-

(2,684)

 

(2,822)

-

(2,822)

 
                         

Income from continuing operations before income taxes

 

75,515

3,567

 

79,082

11,840

90,922

 

71,027

8,362

79,389

 

Provision for income taxes

 

(20,962)

(765)

 

(21,727)

(3,487)

(25,214)

 

(20,298)

(2,233)

(22,531)

 

Income from continuing operations

 

54,553

2,802

 

57,355

8,353

65,708

 

50,729

6,129

56,858

 

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

 

(6,334)

-

 

(6,334)

(1,787)

(8,121)

 

(2,990)

(353)

(3,343)

 

Net income from continuing operations attributable to Global Payments

 

$ 48,219

$ 2,802

 

$ 51,021

$ 6,566

$ 57,587

 

$ 47,739

$ 5,776

$ 53,515

 
                         

Diluted shares

 

80,733

   

80,733

 

80,733

 

82,636

 

82,636

 

Diluted earnings per share

 

$ 0.60

$ 0.03

 

$ 0.63

$ 0.08

$ 0.71

 

$ 0.58

$ 0.07

$ 0.65

 
                         
                         
                         
   

Nine Months Ended February 28,

 
   

2011

 

2010(4)

 
   

GAAP

Employee Termination and Other(1)

Foreign Tax Rate(2)

Normalized

Cash Earnings Adjustments(3)

Cash Earnings

 

GAAP

Cash Earnings Adjustments

Cash Earnings

 
                         

Revenues

 

$ 1,340,047

$ -

$ -

$ 1,340,047

$ -

$ 1,340,047

 

$ 1,217,418

$ -

$ 1,217,418

 
                         

Operating expenses:

                       

Cost of service

 

473,578

(2,061)

-

471,517

(27,486)

444,031

 

432,287

(24,588)

407,699

 

Sales, general and administrative

 

623,019

(8,679)

-

614,340

-

614,340

 

533,337

-

533,337

 
   

1,096,597

(10,740)

-

1,085,857

(27,486)

1,058,371

 

965,624

(24,588)

941,036

 
                         

Operating income

 

243,450

10,740

-

254,190

27,486

281,676

 

251,794

24,588

276,382

 
                         

Other income (expense):

                       

Interest and other income

 

7,239

-

-

7,239

-

7,239

 

2,699

-

2,699

 

Interest and other expense

 

(13,455)

-

-

(13,455)

-

(13,455)

 

(12,704)

-

(12,704)

 
   

(6,216)

-

-

(6,216)

-

(6,216)

 

(10,005)

-

(10,005)

 
                         

Income from continuing operations before income taxes

 

237,234

10,740

-

247,974

27,486

275,460

 

241,789

24,588

266,377

 

Provision for income taxes

 

(70,489)

(3,384)

2,479

(71,394)

(8,633)

(80,027)

 

(69,489)

(7,958)

(77,447)

 

Income from continuing operations

 

166,745

7,356

2,479

176,580

18,853

195,433

 

172,300

16,630

188,930

 

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

 

(15,138)

-

-

(15,138)

(2,423)

(17,561)

 

(10,951)

(1,015)

(11,966)

 

Net income from continuing operations attributable to Global Payments

 

$ 151,607

$ 7,356

$ 2,479

$ 161,442

$ 16,430

$ 177,872

 

$ 161,349

$ 15,615

$ 176,964

 
                         

Diluted shares

 

80,413

   

80,413

 

80,413

 

82,181

 

82,181

 

Diluted earnings per share

 

$ 1.89

$ 0.09

$ 0.03

$ 2.01

$ 0.20

$ 2.21

 

$ 1.96

$ 0.19

$ 2.15

 

 
                       
                       
                         

1 Reflects expenses of $2.4 million and $4.7 million during the three and nine months ended February 28, 2011, respectively, of start-up costs related to our new Global Service Center in Manila, Philippines and expenses of $1.2 million and $6.0 million during the three and nine months ended February 28, 2011, 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.

 
   

4 There were no normalized adjustments during the three and nine months ended February 28, 2010.

 
   

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 and nine months ended February 28, 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 8

             

RECONCILIATION OF NORMALIZED AND CASH EARNINGS SEGMENT INFORMATION TO GAAP

             

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

             
                             

(In thousands)

                     
                             
         

Three Months Ended February 28,

 
         

2011

 

2010

 
                             
         

GAAP

Employee Termination
and Other(1)

Normalized

Cash Earnings Adjustments(2)

Cash Earnings

 

GAAP

Cash Earnings Adjustments(2)

Cash Earnings

 
                             
 

Revenues:

                     
 

United States

 

$ 249,194

$ -

$ 249,194

$ -

$ 249,194

 

$ 216,168

$ -

$ 216,168

 
 

Canada

 

81,066

-

81,066

-

81,066

 

77,092

-

77,092

 
   

North America merchant services

 

330,260

-

330,260

-

330,260

 

293,260

-

293,260

 
                             
 

Europe

 

90,531

-

90,531

-

90,531

 

78,174

-

78,174

 
 

Asia-Pacific

 

35,591

-

35,591

-

35,591

 

27,101

-

27,101

 
   

International merchant services

 

126,122

-

126,122

-

126,122

 

105,275

-

105,275

 
                             
     

Total revenues

 

$ 456,382

$ -

$ 456,382

$ -

$ 456,382

 

$ 398,535

$ -

$ 398,535

 
                             
 

Operating income:

                     
 

North America merchant services

 

$ 62,916

$ -

$ 62,916

$ 3,206

$ 66,122

 

$ 60,855

$ 2,812

$ 63,667

 
 

International merchant services

 

35,537

-

35,537

8,634

44,171

 

28,853

5,550

34,403

 
 

Corporate

 

(20,254)

3,567

(16,687)

-

(16,687)

 

(15,859)

-

(15,859)

 
   

Operating income

 

$ 78,199

$ 3,567

$ 81,766

$ 11,840

$ 93,606

 

$ 73,849

$ 8,362

$ 82,211

 

 
                           
                           
                             
         

Nine Months Ended February 28,

 
         

2011

 

2010

 
                             
         

GAAP

Employee Termination and Other(1)

Normalized

Cash Earnings Adjustments(2)

Cash Earnings

 

GAAP

Cash Earnings Adjustments(2)

Cash Earnings

 
                             
 

Revenues:

                     
 

United States

 

$ 750,495

$ -

$ 750,495

$ -

$ 750,495

 

$ 659,868

$ -

$ 659,868

 
 

Canada

 

243,733

-

243,733

-

243,733

 

236,552

-

236,552

 
   

North America merchant services

 

994,228

-

994,228

-

994,228

 

896,420

-

896,420

 
                             
 

Europe

 

244,208

-

244,208

-

244,208

 

242,785

-

242,785

 
 

Asia-Pacific

 

101,611

-

101,611

-

101,611

 

78,213

-

78,213

 
   

International merchant services

 

345,819

-

345,819

-

345,819

 

320,998

-

320,998

 
                             
     

Total revenues

 

$ 1,340,047

$ -

$ 1,340,047

$ -

$ 1,340,047

 

$ 1,217,418

$ -

$ 1,217,418

 
                             
 

Operating income:

                     
 

North America merchant services

 

$ 198,415

$ -

$ 198,415

$ 9,378

$ 207,793

 

$ 210,419

$ 7,721

$ 218,140

 
 

International merchant services

 

102,279

-

102,279

18,108

120,387

 

88,353

16,867

105,220

 
 

Corporate

 

(57,244)

10,740

(46,504)

-

(46,504)

 

(46,978)

-

(46,978)

 
   

Operating income

 

$ 243,450

$ 10,740

$ 254,190

$ 27,486

$ 281,676

 

$ 251,794

$ 24,588

$ 276,382

 
                             
                             

1 Normalized results exclude expenses consisting of $2.4 million and $4.7 million during the three and nine months ended February 28, 2011, respectively, of start-up costs related to our new Global Service Center in Manila, Philippines and expenses of $1.2 million and $6.0 million during the three and nine months ended February 28, 2011, respectively, related to employee termination and relocation benefits. There were no normalized adjustments during the three and nine months ended February 28, 2010.

 
                             

2 Represents acquisition intangible amortization expense from continuing operations.

 
                           

SCHEDULE 9

                     

OUTLOOK SUMMARY

                     

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

                     
                           

(In millions, except per share data)

                     
                           
       

Fiscal 2010 Actual

 

Fiscal 2011 Outlook Before "la Caixa" JV

 

Fiscal 2011 Outlook "la Caixa" JV

 

Fiscal 2011 Outlook Including "la Caixa" JV

 

% Change FY10

 
                           
 

Revenue Outlook

                     
 

Revenues

 

$ 1,642

 

$1,755 to $1,790

 

$25 to $30

 

$1,780 to 1,820

 

8% to 11%

 
                           
                           
 

EPS Outlook

                     
 

GAAP diluted EPS from continuing operations

 

$ 2.52

 

$2.62 to $2.67

 

($0.04) to ($0.02)

 

$2.58 to $2.65

 

2% to 5%

 
 

Employee Termination

 

0.02

 

$0.12

 

--

 

$0.12

     
 

Normalized diluted EPS from continuing operations

 

$ 2.54

 

$2.74 to $2.79

 

($0.04) to ($0.02)

 

$2.70 to $2.77

 

6% to 9%

 
 

Acquisition-related intangibles

 

0.26

 

$0.23

 

$0.06

 

$0.29

 

---

 
 

Cash EPS from continuing operations

 

$ 2.80

 

$2.97 to $3.02

 

$0.02 to $0.04

 

$2.99 to $3.06

 

7% to 9%

 
                         

SCHEDULE 10

                                 

CASH EARNINGS - HISTORICAL SEGMENT INFORMATION

                             

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

                                 
                                         

(In thousands)

                                 
                                         
         

Three Months Ended

 

Fiscal Year Ended

 

Three Months Ended

 
         

8/31/09

 

11/30/09

 

2/28/10

 

5/31/10

 

5/31/10

 

8/31/10

 

11/30/10

 

2/28/11

 
                                         
 

Revenues:

                                 
 

United States

 

$ 222,767

 

$ 220,934

 

$ 216,168

 

$ 242,975

 

$ 902,844

 

$ 255,630

 

$ 245,671

 

$ 249,194

 
 

Canada

 

81,225

 

78,236

 

77,092

 

80,720

 

317,272

 

81,213

 

81,453

 

81,066

 
   

North America merchant services

 

303,992

 

299,170

 

293,260

 

323,695

 

1,220,116

 

336,843

 

327,124

 

330,260

 
                                         
 

Europe

 

80,467

 

84,143

 

78,174

 

72,238

 

315,023

 

73,796

 

79,881

 

90,531

 
 

Asia-Pacific

 

25,473

 

25,638

 

27,101

 

29,117

 

107,329

 

29,499

 

36,521

 

35,591

 
   

International merchant services

 

105,940

 

109,781

 

105,275

 

101,355

 

422,352

 

103,295

 

116,402

 

126,122

 
                                         
     

Total revenues

 

$ 409,932

 

$ 408,951

 

$ 398,535

 

$ 425,050

 

$ 1,642,468

 

$ 440,138

 

$ 443,526

 

$ 456,382

 
                                         
 

Operating income:

                                 
 

North America merchant services

 

$ 78,168

 

$ 76,305

 

$ 63,667

 

$ 67,848

 

$ 285,989

 

$ 71,384

 

$ 70,287

 

$ 66,122

 
 

International merchant services

 

34,386

 

36,430

 

34,403

 

30,640

 

135,860

 

36,051

 

40,165

 

44,171

 
 

Corporate

 

(15,427)

 

(15,691)

 

(15,859)

 

(16,244)

 

(63,223)

 

(14,464)

 

(15,354)

 

(16,687)

 
     

Operating income

 

$ 97,127

 

$ 97,044

 

$ 82,211

 

$ 82,244

 

$ 358,626

 

$ 92,971

 

$ 95,098

 

$ 93,606

 
                                         
                                         
                                         

See Schedules 11, 12 and 13 for reconciliation of normalized and cash earnings segment information to GAAP.

 
                                       

SCHEDULE 11

                 

RECONCILIATION OF HISTORICAL CASH EARNINGS SEGMENT INFORMATION TO GAAP - FISCAL 2010 QUARTERLY

 

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

             
                         

(In thousands)

                 
                         
         

Three Months Ended

 
         

August 31, 2009

 

November 30, 2009

 
         

GAAP

Cash Earnings Adjustments(1)

Cash Earnings

 

GAAP

Cash Earnings Adjustments(1)

Cash Earnings

 
                         
 

Revenues:

                 
 

United States

 

$ 222,767

$ -

$ 222,767

 

$ 220,934

$ -

$ 220,934

 
 

Canada

 

81,225

-

81,225

 

78,236

-

78,236

 
   

North America merchant services

 

303,992

-

303,992

 

299,170

-

299,170

 
                         
 

Europe

 

80,467

-

80,467

 

84,143

-

84,143

 
 

Asia-Pacific

 

25,473

-

25,473

 

25,638

-

25,638

 
   

International merchant services

 

105,940

-

105,940

 

109,781

-

109,781

 
                         
     

Total revenues

 

$ 409,932

$ -

$ 409,932

 

$ 408,951

$ -

$ 408,951

 
                         
 

Operating income:

                 
 

North America merchant services

 

$ 75,921

$ 2,247

$ 78,168

 

$ 73,643

$ 2,662

$ 76,305

 
 

International merchant services

 

28,749

5,637

34,386

 

30,750

5,680

36,430

 
 

Corporate

 

(15,427)

-

(15,427)

 

(15,691)

-

(15,691)

 
   

Operating income

 

$ 89,243

$ 7,884

$ 97,127

 

$ 88,702

$ 8,342

$ 97,044

 
                       
             
         

Three Months Ended

 
         

February 28, 2010

 

May 31, 2010

 
         

GAAP

Cash Earnings Adjustments(1)

Cash Earnings

 

GAAP

Employee Termination(2)

Normalized

Cash Earnings Adjustments(1)

Cash Earnings

 
                             
 

Revenues:

                     
 

United States

 

$ 216,168

$ -

$ 216,168

 

$ 242,975

$ -

$ 242,975

$ -

$ 242,975

 
 

Canada

 

77,092

-

77,092

 

80,720

-

80,720

-

80,720

 
   

North America merchant services

 

293,260

-

293,260

 

323,695

-

323,695

-

323,695

 
                             
 

Europe

 

78,174

-

78,174

 

72,238

-

72,238

-

72,238

 
 

Asia-Pacific

 

27,101

-

27,101

 

29,117

-

29,117

-

29,117

 
   

International merchant services

 

105,275

-

105,275

 

101,355

-

101,355

-

101,355

 
                             
     

Total revenues

 

$ 398,535

$ -

$ 398,535

 

$ 425,050

$ -

$ 425,050

$ -

$ 425,050

 
                             
 

Operating income:

                     
 

North America merchant services

 

$ 60,855

$ 2,812

$ 63,667

 

$ 64,966

$ -

$ 64,966

$ 2,882

$ 67,848

 
 

International merchant services

 

28,853

5,550

34,403

 

25,346

-

25,346

5,294

30,640

 
 

Corporate

 

(15,859)

-

(15,859)

 

(18,827)

2,583

(16,244)

-

(16,244)

 

 
 

Operating income

 

$ 73,849

$ 8,362

$ 82,211

 

$ 71,485

$ 2,583

$ 74,068

$ 8,176

$ 82,244

 
                           

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

2 Represents amounts due to our former President and Chief Operating Officer pursuant to his termination agreement dated April 21, 2010. Also reflects the related income tax benefit.

There were no normalized adjustments during the three months ended August 30, 2009, November 30, 2009 and February 28, 2010.

We supplemented our historical reporting of segment operating income determined in accordance with GAAP by reporting segment operating income for the four quarters of fiscal 2010 on a "cash earnings" basis in this earnings release as a measure to help evaluate performance. We calculated segment operating income 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 segment operating income reported on a cash earnings basis should be considered in addition to, and not as a substitute for, segment operating income determined in accordance with GAAP. Our measures of segment operating income 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 12

             

RECONCILIATION OF HISTORICAL CASH EARNINGS SEGMENT INFORMATION TO GAAP - FISCAL 2010

   

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

             
                     

(In thousands)

             
                     
                     
         

Fiscal Year Ended May 31, 2010

 
         

GAAP

Employee Termination(1)

Normalized

Cash Earnings Adjustments(2)

Cash Earnings

 
                     
 

Revenues:

             
 

United States

 

$ 902,844

$ -

$ 902,844

$ -

$ 902,844

 
 

Canada

 

317,272

-

317,272

-

317,272

 
   

North America merchant services

 

1,220,116

-

1,220,116

-

1,220,116

 
                     
 

Europe

 

315,023

-

315,023

-

315,023

 
 

Asia-Pacific

 

107,329

-

107,329

-

107,329

 
   

International merchant services

 

422,352

-

422,352

-

422,352

 
                     
     

Total revenues

 

$ 1,642,468

$ -

$ 1,642,468

$ -

$ 1,642,468

 
                     
 

Operating income:

             
 

North America merchant services

 

$ 275,386

$ -

$ 275,386

$ 10,603

$ 285,989

 
 

International merchant services

 

113,699

-

113,699

22,161

135,860

 
 

Corporate

 

(65,806)

2,583

(63,223)

-

(63,223)

 
   

Operating income

 

$ 323,279

$ 2,583

$ 325,862

$ 32,764

$ 358,626

 
                     
                   

1 Represents amounts due to our former President and Chief Operating Officer pursuant to his termination agreement dated April 21, 2010. Also reflects the related income tax benefit.

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 historical reporting of segment operating income determined in accordance with GAAP by reporting segment operating income for fiscal year 2010 on a "cash earnings" basis in this earnings release as a measure to help evaluate performance. We calculated segment operating income 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 segment operating income reported on a cash earnings basis should be considered in addition to, and not as a substitute for, segment operating income determined in accordance with GAAP. Our measures of segment operating income 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 13

                         

RECONCILIATION OF HISTORICAL CASH EARNINGS SEGMENT INFORMATION TO GAAP - FISCAL 2011 QUARTERLY

             

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

               
                                 

(In thousands)

                         
                                 
             
         

Three Months Ended August 31, 2010

 

Three Months Ended November 30, 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

 

$ 255,630

$ -

$ 255,630

$ -

$ 255,630

 

$ 245,671

$ -

$ 245,671

$ -

$ 245,671

 
 

Canada

 

81,213

-

81,213

-

81,213

 

81,453

-

81,453

-

81,453

 
   

North America merchant services

 

336,843

-

336,843

-

336,843

 

327,124

-

327,124

-

327,124

 
                                 
 

Europe

 

73,796

-

73,796

-

73,796

 

79,881

-

79,881

-

79,881

 
 

Asia-Pacific

 

29,499

-

29,499

-

29,499

 

36,521

-

36,521

-

36,521

 
   

International merchant services

 

103,295

-

103,295

-

103,295

 

116,402

-

116,402

-

116,402

 
                                 
     

Total revenues

 

$ 440,138

$ -

$ 440,138

$ -

$ 440,138

 

$ 443,526

$ -

$ 443,526

$ -

$ 443,526

 
                                 
 

Operating income:

                         
 

North America merchant services

 

$ 68,368

$ -

$ 68,368

$ 3,016

$ 71,384

 

$ 67,131

$ -

$ 67,131

$ 3,156

$ 70,287

 
 

International merchant services

 

31,393

-

31,393

4,658

36,051

 

35,349

-

35,349

4,816

40,165

 
 

Corporate

 

(17,654)

3,190

(14,464)

-

(14,464)

 

(19,337)

3,983

(15,354)

-

(15,354)

 
   

Operating income

 

$ 82,107

$ 3,190

$ 85,297

$ 7,674

$ 92,971

 

$ 83,143

$ 3,983

$ 87,126

$ 7,972

$ 95,098

 
                               
             
         

Three Months Ended February 28, 2011

 
         

GAAP

Employee Termination and Other(1)

Normalized

Cash Earnings Adjustments(2)

Cash Earnings

 
                     
 

Revenues:

             
 

United States

 

$ 249,194

$ -

$ 249,194

$ -

$ 249,194

 
 

Canada

 

81,066

-

81,066

-

81,066

 
   

North America merchant services

 

330,260

-

330,260

-

330,260

 
                     
 

Europe

 

90,531

-

90,531

-

90,531

 
 

Asia-Pacific

 

35,591

-

35,591

-

35,591

 
   

International merchant services

 

126,122

-

126,122

-

126,122

 
                     
     

Total revenues

 

$ 456,382

$ -

$ 456,382

$ -

$ 456,382

 
                     
 

Operating income:

             
 

North America merchant services

 

$ 62,916

$ -

$ 62,916

$ 3,206

$ 66,122

 
 

International merchant services

 

35,537

-

35,537

8,634

44,171

 
 

Corporate

 

(20,254)

3,567

(16,687)

-

(16,687)

 
   

Operating income

 

$ 78,199

$ 3,567

$ 81,766

$ 11,840

$ 93,606

 
                     

1 Reflects expenses of start-up costs related to our new Global Service Center in Manila, Philippines and employee termination and relocation 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 historical reporting of segment operating income determined in accordance with GAAP by reporting segment operating income for the three months ended August 31, 2010, November 30, 2010 and February 28, 2011 on a "cash earnings" basis in this earnings release as a measure to help evaluate performance.We calculated segment operating income 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 segment operating income reported on a cash earnings basis should be considered in addition to, and not as a substitute for, segment operating income determined in accordance with GAAP. Our measures of segment operating income 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.

 
                   

Contact:
Jane M. Elliott
770-829-8234 Voice
770-829-8267 Fax
investor.relations@globalpay.com

SOURCE Global Payments Inc.