Global Payments Reports Third Quarter Earnings

April 8, 2015

 

Increases Annual Fiscal 2015 Outlook

Announces Planned $100 Million Accelerated Share Repurchase

ATLANTA--(BUSINESS WIRE)-- Global Payments Inc. (NYSE: GPN) today announced results for its fiscal third quarter ended February 28, 2015.

"We are pleased to report strong third quarter financial results, reflecting the success of our strategy to deliver technology-enabled payments solutions across an expansive direct customer base worldwide, while continuing to invest in future growth," said Chief Executive Officer Jeff Sloan. "Our acquisition of Realex Payments enhances our international ecommerce offerings, extends our foundation for omni-channel capabilities and accelerates growth in our pan-European payments business."

Third Quarter 2015 Summary

  • Revenues grew 8% to $666.9 million, compared to $616.5 million in the third quarter of fiscal 2014.
  • Cash diluted earnings per share1 grew 19% to $1.14, compared to $0.96 in the third quarter of fiscal 2014.
  • GAAP diluted earnings per share were $0.93, compared to $0.76 in the third quarter of fiscal 2014.

2015 Outlook

"We delivered solid revenue growth and meaningful margin expansion in the third quarter despite the significant strengthening of the U.S. dollar, and we are again increasing our full-year margin and cash earnings per share expectations," stated Cameron Bready, Executive Vice President and Chief Financial Officer. "We are also pleased to announce that we plan to enter into an accelerated share repurchase plan, further demonstrating our ongoing commitment to efficiently return capital to shareholders while investing in our business to increase our future growth potential."

For the full-year of fiscal 2015, the company is maintaining its expectation for annual revenue of $2.75 billion to $2.80 billion, or 8% to 10% growth over fiscal 2014. The company is raising its outlook for annual fiscal 2015 diluted earnings per share on a cash basis to a range of $4.77 to $4.84, or 16% to 18% growth over fiscal 2014, and annual fiscal 2015 GAAP diluted earnings per share is expected to be in the range of $4.01 to $4.08. Our outlook for cash and GAAP diluted earnings per share reflect the impact of share repurchases executed to date only and do not include any benefit from the announced accelerated share repurchase plan. The company also now expects annual fiscal 2015 core cash operating margins to expand by as much as 60 basis points.

Capital Allocation

Global Payments' Board of Directors approved a fiscal 2015 third quarter dividend of $0.02 per share payable May 29, 2015 to shareholders of record as of May 15, 2015. The company intends to enter into an accelerated share repurchase plan this month to repurchase up to $100 million of the company's common stock.

Conference Call

Global Payments' management will host a conference call today, April 8, 2015 at 8:00 a.m. ET 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; or callers in North America may dial 877-674-6428 and callers outside North America may dial 970-315-0457. A replay of the call will be archived on the company's website within two hours of the live call.

About Global Payments

Global Payments Inc. (NYSE: GPN) is a leading worldwide provider of payment technology services that delivers innovative solutions driven by customer needs globally. Our partnerships, technologies and employee expertise enable us to provide a broad range of products and services that allow our customers to accept all payment types across a variety of distribution channels in many markets around the world.

Headquartered in Atlanta, Georgia with more than 4,300 employees worldwide, Global Payments is a Fortune 1000 Company with merchants and partners in 29 countries throughout North America, Europe, the Asia-Pacific region and Brazil. For more information about Global Payments, our Service. Driven. Commerce brand and our technologies, please visit www.globalpaymentsinc.com.

_________________________
1 See Schedule 2 for cash earnings and Schedules 6, 7 and 8 for reconciliations of cash earnings to GAAP.

This announcement and comments made by Global Payments' management 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 our ability to safeguard our data; increased competition from non-traditional competitors; our ability to update our products and services in a timely manner; potential systems interruptions or failures; software defects or undetected errors; our ability to maintain Visa and MasterCard registration and financial institution sponsorship; our reliance on financial institutions to provide clearing services in connection with our settlement activities; our potential failure to comply with card network requirements; increased attrition of merchants, referral partners or independent sales organizations; our ability to increase our share of existing markets and expand into new markets; unanticipated increases in chargeback liability; increases in credit card network fees; changes in laws, regulations or network rules or interpretations thereof; foreign currency exchange and interest rate risks; political, economic and regulatory changes in the foreign countries in which we operate; future performance, integration and conversion of acquired operations; loss of key personnel; and other risks detailed in our SEC filings, including the most recently filed Annual Report on Form 10-K and subsequently filed Quarterly Reports on Form 10-Q. We undertake 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,
        2015     2014     % Change     2015     2014     % Change
        (unaudited)           (unaudited)      
                                       
Revenues       $ 664,983       $ 616,452       7.9 %     $ 2,067,169       $ 1,880,259       9.9 %
                                       
Operating expenses:                                      
Cost of service         250,255         232,937       7.4 %       767,890         698,852       9.9 %
Sales, general and administrative         310,113         286,224       8.3 %       946,282         871,825       8.5 %
Processing system intrusion                       %               (7,000 )     (100.0 )%
          560,368         519,161               1,714,172         1,563,677        
                                       
Operating income         104,615         97,291       7.5 %       352,997         316,582       11.5 %
                                       
Other income (expense):                                      
Interest and other income         1,160         2,944       (60.6 )%       3,634         11,570       (68.6 )%
Interest and other expense         (13,429 )       (16,457 )     (18.4 )%       (34,789 )       (32,361 )     7.5 %
          (12,269 )       (13,513 )     (9.2 )%       (31,155 )       (20,791 )     49.8 %
                                       
Income before income taxes         92,346         83,778       10.2 %       321,842         295,791       8.8 %
Provision for income taxes         (23,031 )       (23,657 )     (2.6 )%       (82,837 )       (84,105 )     (1.5 )%
Net income         69,315         60,121       15.3 %       239,005         211,686       12.9 %
Less: Net income attributable to noncontrolling interests, net of income tax         (6,747 )       (5,000 )     34.9 %       (26,290 )       (18,025 )     45.9 %
Net income attributable to Global Payments       $ 62,568       $ 55,121       13.5 %     $ 212,715       $ 193,661       9.8 %
                                       
                                       
Earnings per share attributable to Global Payments:                                    
Basic       $ 0.94       $ 0.77       21.9 %     $ 3.15       $ 2.67       18.2 %
Diluted       $ 0.93       $ 0.76       22.2 %     $ 3.13       $ 2.65       18.4 %
                                       
Weighted average shares outstanding:                                      
Basic         66,890         71,835               67,476         72,598        
Diluted         67,306         72,434               67,891         73,152        
 
 
 
 
 
 
SCHEDULE 2
CASH EARNINGS 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,
        2015     2014     % Change     2015     2014     % Change
                                       
Revenues       $ 666,859       $ 616,452       8.2 %     $ 2,069,045       $ 1,880,259       10.0 %
                                       
Operating expenses:                                      
Cost of service         232,188         218,337       6.3 %       713,706         654,720       9.0 %
Sales, general and administrative         308,241         286,224       7.7 %       947,351         866,981       9.3 %
          540,429         504,561       7.1 %       1,661,057         1,521,701       9.2 %
                                       
Operating income         126,430         111,891       13.0 %       407,988         358,558       13.8 %
                                       
Other income (expense):                                      
Interest and other income         1,160         2,944       (60.6 )%       3,634         9,447       (61.5 )%
Interest and other expense         (13,429 )       (8,313 )     61.5 %       (34,789 )       (24,217 )     43.7 %
          (12,269 )       (5,369 )     128.5 %       (31,155 )       (14,770 )     110.9 %
                                       
Income before income taxes         114,161         106,522       7.2 %       376,833         343,788       9.6 %
Provision for income taxes         (29,798 )       (30,373 )     (1.9 )%       (100,748 )       (99,932 )     0.8 %
Net income         84,363         76,149       10.8 %       276,085         243,856       13.2 %
Less: Net income attributable to noncontrolling interests, net of income tax         (7,825 )       (6,421 )     21.9 %       (29,776 )       (22,220 )     34.0 %
Net income attributable to Global Payments       $ 76,538       $ 69,728       9.8 %     $ 246,309       $ 221,636       11.1 %
                                       
Earnings per share attributable to Global Payments:                                
Basic       $ 1.14       $ 0.97       17.9 %     $ 3.65       $ 3.05       19.6 %
Diluted       $ 1.14       $ 0.96       18.1 %     $ 3.63       $ 3.03       19.7 %
                                       
Weighted average shares outstanding:                                      
Basic         66,890         71,835               67,476         72,598        
Diluted         67,306         72,434               67,891         73,152        
                                       
See Schedules 6 & 7 for a reconciliation of cash earnings to GAAP.
 
 
 
 
 
 
SCHEDULE 3
SEGMENT INFORMATION
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands)
                                       
        Three Months Ended February 28,            
        2015     2014     % Change
        GAAP    

Cash

Earnings

    GAAP    

Cash

Earnings

    GAAP    

Cash

Earnings

                                       

Revenues:

                                     
United States       $ 404,016       $ 404,016       $ 355,880       $ 355,880       13.5 %     13.5 %
Canada         69,047         69,047         73,467         73,467       (6.0 )%     (6.0 )%
North America merchant services         473,063         473,063         429,347         429,347       10.2 %     10.2 %
                                       
Europe         138,378         140,254         143,832         143,832       (3.8 )%     (2.5 )%
Asia-Pacific         53,542         53,542         43,273         43,273       23.7 %     23.7 %
International merchant services         191,920         193,796         187,105         187,105       2.6 %     3.6 %
                                       
Total revenues       $ 664,983       $ 666,859       $ 616,452       $ 616,452       7.9 %     8.2 %
                                       

Operating income (loss) for segments:

                                     
North America merchant services       $ 66,723       $ 77,746       $ 61,695       $ 68,823       8.1 %     13.0 %
International merchant services         64,902         73,822         58,077         65,549       11.8 %     12.6 %
Corporate         (27,010 )       (25,138 )       (22,481 )       (22,481 )     20.1 %     11.8 %
Operating income       $ 104,615       $ 126,430       $ 97,291       $ 111,891       7.5 %     13.0 %
 
 
 
        Nine Months Ended February 28,            
        2015     2014     % Change
        GAAP    

Cash

Earnings

    GAAP    

Cash

Earnings

    GAAP    

Cash

Earnings

                                       

Revenues:

                                     
United States       $ 1,222,841       $ 1,222,841       $ 1,081,506       $ 1,081,506       13.1 %     13.1 %
Canada         243,004         243,004         245,379         245,379       (1.0 )%     (1.0 )%
North America merchant services         1,465,845         1,465,845         1,326,885         1,326,885       10.5 %     10.5 %
                                       
Europe         461,140         463,016         433,886         433,886       6.3 %     6.7 %
Asia-Pacific         140,184         140,184         119,488         119,488       17.3 %     17.3 %
International merchant services         601,324         603,200         553,374         553,374       8.7 %     9.0 %
                                       
Total revenues       $ 2,067,169       $ 2,069,045       $ 1,880,259       $ 1,880,259       9.9 %     10.0 %
                                       

Operating income (loss) for segments:

                                     
North America merchant services       $ 218,906       $ 252,480       $ 201,831       $ 225,848       8.5 %     11.8 %
International merchant services         214,947         234,492         182,085         204,149       18.0 %     14.9 %
Corporate1         (80,856 )       (78,984 )       (67,334 )       (71,439 )     20.1 %     10.6 %
Operating income       $ 352,997       $ 407,988       $ 316,582       $ 358,558       11.5 %     13.8 %
 
1 GAAP earnings for the nine months ended February 28, 2014 include insurance proceeds of $7.0 million related to the fiscal 2012 processing system intrusion.
 
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)
 
        February 28, 2015     May 31, 2014
        (unaudited)      
ASSETS              
Current assets:              
Cash and cash equivalents       $ 610,148     $ 581,872
Accounts receivable, net of allowances for doubtful accounts of $405 and $401, respectively       170,895     214,574
Claims receivable, net       584     809
Settlement processing assets       744,976     780,917
Inventory       5,587     6,636
Deferred income taxes       11,933     12,963
Prepaid expenses and other current assets       49,027     45,673
Total current assets       1,593,150     1,643,444
Goodwill       1,422,900     1,337,285
Other intangible assets, net       516,083     535,173
Property and equipment, net       355,885     369,753
Deferred income taxes       93,549     101,928
Other       36,753     31,067
Total assets       $ 4,018,320     $ 4,018,650
               
LIABILITIES AND EQUITY              
Current liabilities:              
Lines of credit       $ 446,800     $ 440,128
Current portion of long-term debt       62,500     17,677
Accounts payable and accrued liabilities       284,472     290,106
Settlement processing obligations       426,368     451,317
Income taxes payable       22,560     12,390
Total current liabilities       1,242,700     1,211,618
Long-term debt       1,546,000     1,376,002
Deferred income taxes       201,737     209,099
Other long-term liabilities       86,255     89,132
Total liabilities       3,076,692     2,885,851
               
Commitments and contingencies              
Equity:              
Preferred stock, no par value; 5,000,000 shares authorized and none issued          
Common stock, no par value; 200,000,000 shares authorized; 66,457,816 issued and outstanding at February 28, 2015 and 68,845,643 issued and outstanding at May 31, 2014          
Paid-in capital       147,344     183,023
Retained earnings       861,955     815,980
Accumulated other comprehensive loss       (184,226)     (1,776)
Total Global Payments shareholders' equity       825,073     997,227
Noncontrolling interests       116,555     135,572
Total equity       941,628     1,132,799
Total liabilities and equity       $ 4,018,320     $ 4,018,650
 
 
 
 
 
 
SCHEDULE 5
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands)
               
        Nine Months Ended February 28,
        2015     2014
Cash flows from operating activities:              
Net income       $ 239,005       $ 211,686  
Adjustments to reconcile net income to net cash provided by operating activities:        
Depreciation and amortization of property and equipment         48,628         43,645  
Amortization of acquired intangibles         54,184         43,553  
Share-based compensation expense         14,827         17,269  
Provision for operating losses and bad debts         10,530         14,203  
Deferred income taxes         13,479         3,103  
Other, net         469         (1,006 )
Changes in operating assets and liabilities, net of the effects of acquisitions:              
Accounts receivable         32,124         14,442  
Claims receivable         (7,159 )       (9,145 )
Settlement processing assets and obligations, net         (27,948 )       (19,669 )
Inventory         (256 )       3,811  
Prepaid expenses and other assets         (5,431 )       18,980  
Accounts payable and accrued liabilities         (36,044 )       (16,422 )
Income taxes payable         10,677         (10,049 )
Net cash provided by operating activities         347,085         314,401  
Cash flows from investing activities:              
Business, intangible and other asset acquisitions, net of cash acquired         (232,864 )       (2,519 )
Capital expenditures         (56,746 )       (61,270 )
Principal collections on financing receivables         219         1,997  
Net proceeds from sales of investments and business         10,597         3,521  
Net cash used in investing activities         (278,794 )       (58,271 )
Cash flows from financing activities:              
Net borrowings on short-term lines of credit         44,622         74,594  
Proceeds from issuance of long-term debt         1,593,500         2,390,000  
Principal payments under long-term debt         (1,378,679 )       (2,099,869 )
Payment of debt issuance costs                 (5,961 )
Repurchase of common stock         (231,844 )       (258,562 )
Proceeds from stock issued under share-based compensation plans         18,867         29,740  
Common stock repurchased - share-based compensation plans         (16,175 )       (5,682 )
Tax benefit from share-based compensation plans         3,851         4,782  
Distributions to noncontrolling interests         (19,355 )       (33,744 )
Dividends paid         (4,035 )       (4,330 )
Net cash provided by financing activities         10,752         90,968  
Effect of exchange rate changes on cash         (50,767 )       (14,008 )
Increase in cash and cash equivalents         28,276         333,090  
Cash and cash equivalents, beginning of the period         581,872         680,470  
Cash and cash equivalents, end of the period       $ 610,148       $ 1,013,560  
 
 
 
 
 
 
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 28, 2015
        GAAP     Other1    

Cash Earnings

Adjustments2

    Cash Earnings
Revenues       $ 664,983       $ 1,876       $       $ 666,859  
Operating expenses:                          
Cost of service         250,255                 (18,067 )       232,188  
Sales, general and administrative         310,113         (1,872 )               308,241  
          560,368         (1,872 )       (18,067 )       540,429  
                           
Operating income         104,615         3,748         18,067         126,430  
                           
Other income (expense):                          
Interest and other income         1,160                         1,160  
Interest and other expense         (13,429 )                       (13,429 )
          (12,269 )                       (12,269 )
                           
Income before income taxes         92,346         3,748         18,067         114,161  
Provision for income taxes         (23,031 )       (1,031 )       (5,736 )       (29,798 )
Net income         69,315         2,717         12,331         84,363  
Less: Net income attributable to noncontrolling interests, net of income tax         (6,747 )               (1,078 )       (7,825 )
Net income attributable to Global Payments       $ 62,568       $ 2,717       $ 11,253       $ 76,538  
                           
Diluted shares         67,306                     67,306  
Diluted earnings per share       $ 0.93       $ 0.04       $ 0.17       $ 1.14  
 
 
 
        Three Months Ended February 28, 2014
        GAAP     Other1    

Cash Earnings

Adjustments2

    Cash Earnings
Revenues       $ 616,452       $       $       $ 616,452  
Operating expenses:                          
Cost of service         232,937                 (14,600 )       218,337  
Sales, general and administrative         286,224                         286,224  
          519,161                 (14,600 )       504,561  
                           
Operating income         97,291                 14,600         111,891  
                           
Other income (expense):                          
Interest and other income         2,944                         2,944  
Interest and other expense         (16,457 )       8,144                 (8,313 )
          (13,513 )       8,144                 (5,369 )
                           
Income before income taxes         83,778         8,144         14,600         106,522  
Provision for from income taxes         (23,657 )       (2,180 )       (4,536 )       (30,373 )
Net income         60,121         5,964         10,064         76,149  
Less: Net income attributable to noncontrolling interests, net of income tax         (5,000 )               (1,421 )       (6,421 )
Net income attributable to Global Payments       $ 55,121       $ 5,964       $ 8,643       $ 69,728  
                           
Diluted shares         72,434                     72,434  
Diluted earnings per share       $ 0.76       $ 0.08       $ 0.12       $ 0.96  
 
1 For the period ended February 28, 2015, the revenue adjustment represents select U.K. customer payments related to a vendor outage and the expense adjustment represents certain business tax assessments in the U.S. for prior periods. For the period ended February 28, 2014, the adjustments represent HSBC's share of GPAP dividends declared and costs associated with the debt refinancing that was completed on February 28, 2014.
 

2 Represents adjustments to cost of service to exclude acquisition intangible amortization expense 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 February 28, 2015 and 2014 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 making the adjustments described above. We exclude these items 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)
                                 
        Nine Months Ended February 28, 2015
        GAAP    

Processing

System

Intrusion

    Other2    

Cash Earnings

Adjustments3

   

Cash

Earnings

Revenues       $ 2,067,169       $       $ 1,876       $       $ 2,069,045  
Operating expenses:                                
Cost of service         767,890                         (54,184 )       713,706  
Sales, general and administrative         946,282                 1,069                 947,351  
Processing system intrusion                                          
          1,714,172                 1,069         (54,184 )       1,661,057  
Operating income         352,997                 807         54,184         407,988  
Other income (expense):                                
Interest and other income         3,634                                 3,634  
Interest and other expense         (34,789 )                               (34,789 )
          (31,155 )                               (31,155 )
Income before income taxes         321,842                 807         54,184         376,833  
Provision for from income taxes         (82,837 )               (443 )       (17,468 )       (100,748 )
Net income         239,005                 364         36,716         276,085  
Less: Net income attributable to noncontrolling interests, net of income tax         (26,290 )                       (3,486 )       (29,776 )
Net income attributable to Global Payments       $ 212,715       $       $ 364       $ 33,230       $ 246,309  
Diluted shares         67,891                           67,891  
Diluted earnings per share       $ 3.13       $       $ 0.01       $ 0.49       $ 3.63  
 
 
 
        Nine Months Ended February 28, 2014
        GAAP    

Processing

System

Intrusion1

    Other2    

Cash Earnings

Adjustments3

   

Cash

Earnings

Revenues       $ 1,880,259       $       $       $       $ 1,880,259  
Operating expenses:                                
Cost of service         698,852                 (579 )       (43,553 )       654,720  
Sales, general and administrative         871,825                 (4,844 )               866,981  
Processing system intrusion         (7,000 )       7,000                          
          1,563,677         7,000         (5,423 )       (43,553 )       1,521,701  
Operating income         316,582         (7,000 )       5,423         43,553         358,558  
Other income (expense):                                
Interest and other income         11,570                 (2,123 )               9,447  
Interest and other expense         (32,361 )               8,144                 (24,217 )
          (20,791 )               6,021                 (14,770 )
Income (loss) before income taxes         295,791         (7,000 )       11,444         43,553         343,788  
(Provision for) benefit from income taxes         (84,105 )       2,393         (4,114 )       (14,106 )       (99,932 )
Net income (loss)         211,686         (4,607 )       7,330         29,447         243,856  
Less: Net income attributable to noncontrolling interests, net of income tax         (18,025 )                       (4,195 )       (22,220 )
Net income (loss) attributable to Global Payments       $ 193,661       $ (4,607 )     $ 7,330       $ 25,252       $ 221,636  
Diluted shares         73,152                           73,152  
Diluted earnings (loss) per share       $ 2.65       $ (0.07 )     $ 0.10       $ 0.35       $ 3.03  
 
1 Represents insurance proceeds associated with the fiscal 2012 processing system intrusion.
 

2 For the period ended February 28, 2015, the revenue adjustment represents select U.K. customer payments related to a vendor outage and the expense adjustments represent certain business tax assessments in the U.S. for prior periods and a gain on the sale of a component of our Russia business that leased ATMs to our sponsor bank in Russia. For the period ended February 28, 2014, the adjustments represent one-time charges primarily related to employee termination benefits, resolution of a contract related contingency, a one-time credit related to the gain on the sale of an interest in a business, HSBC's share of GPAP dividends declared, and costs associated with the debt refinancing that was completed on February 28, 2014.

 
3 Represents adjustments to cost of service to exclude acquisition intangible amortization expense 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 nine months ended February 28, 2015 and 2014 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 making the adjustments described above. We exclude these items 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 February 28,
        2015       2014
        GAAP     Other    

Cash Earnings

Adjustments3

    Cash Earnings       GAAP    

Processing

System

Intrusion

    Other    

Cash Earnings

Adjustments3

    Cash Earnings
                                                           
Revenues:                                                          
United States       $ 404,016       $       $     $ 404,016         $ 355,880       $       $     $     $ 355,880  
Canada         69,047                       69,047           73,467                             73,467  
North America merchant services         473,063                       473,063           429,347                             429,347  
                                                           
Europe         138,378         1,876               140,254           143,832                             143,832  
Asia-Pacific         53,542                       53,542           43,273                             43,273  
International merchant services         191,920         1,876               193,796           187,105                             187,105  
                                                           
Total revenues       $ 664,983       $ 1,876       $     $ 666,859         $ 616,452       $       $     $     $ 616,452  
                                                           
Operating income (loss) for segments:                                                    
North America merchant services       $ 66,723       $       $ 11,023     $ 77,746         $ 61,695       $       $     $ 7,128     $ 68,823  
International merchant services         64,902         1,876         7,044       73,822           58,077                       7,472       65,549  
Corporate         (27,010 )       1,872               (25,138 )         (22,481 )                           (22,481 )
Operating income (loss)       $ 104,615       $ 3,748       $ 18,067     $ 126,430         $ 97,291       $       $     $ 14,600     $ 111,891  
 
 
 
        Nine Months Ended February 28,
        2015       2014
        GAAP     Other2    

Cash Earnings

Adjustments3

    Cash Earnings       GAAP    

Processing

System

Intrusion1

   

Other2

   

Cash Earnings

Adjustments3

    Cash Earnings
                                                           
Revenues:                                                          
United States       $ 1,222,841       $       $     $ 1,222,841         $ 1,081,506       $       $     $     $ 1,081,506  
Canada         243,004                       243,004           245,379                             245,379  
North America merchant services         1,465,845                       1,465,845           1,326,885                             1,326,885  
                                                           
Europe         461,140         1,876               463,016           433,886                             433,886  
Asia-Pacific         140,184                       140,184           119,488                             119,488  
International merchant services         601,324         1,876               603,200           553,374                             553,374  
                                                           
Total revenues       $ 2,067,169       $ 1,876       $     $ 2,069,045         $ 1,880,259       $       $     $     $ 1,880,259  
                                                           
Operating income (loss) for segments:                                                    
North America merchant services       $ 218,906       $       $ 33,574     $ 252,480         $ 201,831       $       $ 2,518     $ 21,499     $ 225,848  
International merchant services         214,947         (1,065 )       20,610       234,492           182,085                 10       22,054       204,149  
Corporate         (80,856 )       1,872               (78,984 )         (67,334 )       (7,000 )       2,895             (71,439 )
Operating income (loss)       $ 352,997       $ 807       $ 54,184     $ 407,988         $ 316,582       $ (7,000 )     $ 5,423     $ 43,553     $ 358,558  
 

1 Represents insurance proceeds associated with the fiscal 2012 processing system intrusion.

 
2 For the three months ended February 28, 2015, the revenue adjustment represents select U.K. customer payments related to a vendor outage and the expense adjustment represent certain business tax assessments in the U.S. for prior periods. The adjustments for the nine months ended February 28, 2015, include the revenue and business tax adjustments described for the three-month period and a gain on the sale of a component of our Russia business that leased ATMs to our sponsor bank in Russia. For the nine months ended February 28, 2014, the adjustments represent one-time charges primarily related to employee termination benefits and resolution of a contract related contingency.
 
3 Represents acquisition intangible amortization expense.
 
 
 
 
 
 
SCHEDULE 9
OUTLOOK SUMMARY
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In billions, except per share data)
                       
       

Fiscal 2014

Actual

   

Fiscal 2015

Outlook

   

% Change

FY14

                       

Revenue Outlook

                     
Total Revenues       $ 2.55       $2.75 to $2.80    

8% to 10

%

                       

EPS Outlook

                     
Cash EPS       $ 4.12       $4.77 to $4.84    

16% to 18

%

Acquisition-related intangibles assets, non-recurring items and processing system intrusion1         (0.75 )     (0.76)     1 %
GAAP Diluted EPS       $ 3.37       $4.01 to $4.08    

19% to 21

%

       
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 fiscal years 2015 and 2014 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 making the adjustments described below. We exclude these items 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 2015 reflects $0.72 of acquisition intangible amortization and $0.04 of non-recurring items, including a revenue adjustment for select U.K. customer payments related to a vendor outage and expense adjustments for certain business tax assessments in the U.S. for prior periods and a gain on the sale of a component of our Russia business that leased ATMs to our sponsor bank in Russia. Fiscal 2014 reflects acquisition intangible amortization of $0.51, a processing system intrusion credit of ($0.07) and non-recurring items of $0.31. Other non-recurring items for fiscal 2014 include acceleration of equity awards and other costs associated with the retirement of our former Chairman and CEO, a credit related to the sale of an interest in our Brazil business and a subsequent charge associated with our retained interest, non-cash losses from the retirement of fixed assets, employee termination benefits, resolution of a contract related contingency, costs associated with debt refinancing and HSBC's share of dividends declared by Global Payments Asia-Pacific.
 
 
 

 

Global Payments Inc.
Investor contact:
Jane Elliott, 770-829-8234
investor.relations@globalpay.com
or
Media contact:
Amy Corn, 770-829-8755
media.relations@globalpay.com

Source: Global Payments Inc.

 

 

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