Global Payments Reports Third Quarter Earnings for Fiscal 2013, Reaffirms Fiscal 2013 Annual Revenue and Cash Earnings Expectations

April 2, 2013

ATLANTA, April 2, 2013 /PRNewswire/ -- Global Payments Inc. (NYSE: GPN), a leading, worldwide provider of electronic transaction processing solutions, today announced results for its fiscal third quarter ended February 28, 2013. 

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

Third Quarter 2013 Summary

  • Revenue grew 8% to $578.7 million compared to $533.5 million in the third quarter of 2012.
  • Cash diluted earnings per share1 grew 5% to $0.87 compared to $0.83 in the third quarter of 2012.
  • GAAP diluted earnings per share were $0.75, compared to $0.73 in the third quarter of 2012.

Chairman and CEO Paul R. Garcia said, "We are pleased with the progress we have made on our strategic initiatives, and we are on track to achieve our full-year earnings expectations in 2013. These initiatives include focusing on expanding distribution channels through our partner of choice strategy, leveraging our technology infrastructure and driving innovation. We recently launched a number of innovative mobility and loyalty products to our worldwide merchants, and we are fully focused on expanding our unparalleled global footprint."

Data Remediation Expense Update
During the third quarter, the company was returned to the list of PCI DSS compliant service providers and received reports on compliance covering all of the systems that process, store, transmit or otherwise utilize card data.  The company expects that net full-year 2013 expenses for the data intrusion will total approximately $20 million. Based on the assumption that the company will receive an additional  $10 million of insurance proceeds in fiscal 2014, the company estimates that the total cost for the processing system intrusion since inception will be approximately $95 million.

David Mangum, Senior Executive Vice President and CFO, stated,  "Now that the remediation work is behind us, we can turn our undivided attention to driving the business forward. We are grateful to our customers, partners and the card networks for their support as well as the significant efforts of our team."

2013 Outlook
For the full-year of fiscal 2013, the company continues to expect annual revenue of $2,360 million to $2,400 million, or 7% to 9% growth over fiscal 2012 and expected diluted earnings per share on a cash basis continue to be in a range of $3.64 to $3.71, or growth of 3% to 5% over fiscal 2012.

Annual fiscal 2013 GAAP diluted earnings per share have been revised to include the estimated impact of net intrusion remediation costs of $0.17 per share and are now expected to be in a range of $2.87 to $2.94

For reconciliation of expected full-year fiscal 2013 Cash Earnings to GAAP and constant currency, see schedule 9.

Conference Call
Global Payments will hold a conference call today, April 2, 2013 at 5:00 p.m. EDT to discuss financial results and business highlights.  Callers may access the conference call via the investor relations page of the company's website at www.globalpaymentsinc.com by clicking the "Webcast" button; or callers in North America may dial 1-888-895-3550 and callers outside North America may dial 1-706-758-8809.  The pass code is "GPN."  A replay of the call may be accessed through the Global Payments website through April 16, 2013.  

About Global Payments
Global Payments Inc. (NYSE:GPN) is a leading provider of electronic transaction processing services for merchants, Independent Sales Organizations (ISOs), financial institutions, government agencies and multi-national corporations located throughout 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 www.globalpaymentsinc.com for more information about the company and its services.

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

 

 

Investor contact:

investor.relations@globalpay.com

Media contact:

media.relations@globalpay.com

Jane Elliott

Kay Sharpton

 

Amy Corn

770-829-8234

770-829-8870

 

770-829-8755

 

1See Schedule 2 for Cash Earnings and Schedules 6 and 7 for Reconciliations of Cash Earnings to GAAP.

 

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 28, 2013

 

February 29, 2012

 

% Change

 

February 28, 2013

 

February 29, 2012

 

% Change

                       

Revenues

578,746

   

533,539

   

8

%

 

1,757,571

   

1,606,815

   

9

%

                       

Operating expenses:

                     

Cost of service

217,465

   

194,218

   

12

%

 

632,124

   

571,685

   

11

%

Sales, general and administrative

271,696

   

246,973

   

10

%

 

829,292

   

737,593

   

12

%

Processing system intrusion

(1,189)

   

   

NM

   

8,311

   

   

NM

 
 

487,972

   

441,191

   

11

%

 

1,469,727

   

1,309,278

   

12

%

                       

Operating income

90,774

   

92,348

   

(2)

%

 

287,844

   

297,537

   

(3)

%

                       

Other income (expense):

                     

Interest and other income

2,536

   

2,368

   

7

%

 

6,706

   

7,128

   

(6)

%

Interest and other expense

(7,063)

   

(3,698)

   

91

%

 

(25,217)

   

(12,663)

   

99

%

 

(4,527)

   

(1,330)

   

240

%

 

(18,511)

   

(5,535)

   

234

%

                       

Income before income taxes

86,247

   

91,018

   

(5)

%

 

269,333

   

292,002

   

(8)

%

Provision for income taxes

(23,433)

   

(25,328)

   

(7)

%

 

(76,986)

   

(86,082)

   

(11)

%

Net income

62,814

   

65,690

   

(4)

%

 

192,347

   

205,920

   

(7)

%

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

(4,352)

   

(7,770)

   

(44)

%

 

(17,027)

   

(22,845)

   

(25)

%

Net income attributable to Global Payments

58,462

   

57,920

   

1

%

 

175,320

   

183,075

   

(4)

%

                       

Earnings per share attributable to Global Payments:

                     

Basic

$

0.75

   

$

0.74

   

1

%

 

$

2.24

   

$

2.32

   

(3)

%

Diluted

$

0.75

   

$

0.73

   

3

%

 

$

2.23

   

$

2.30

   

(3)

%

                       

Weighted average shares outstanding:

                     

Basic

77,756

   

78,421

       

78,364

   

78,937

     

Diluted

78,324

   

79,065

       

78,747

   

79,511

     

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 28, 2013

 

February 29, 2012

 

% Change

 

February 28, 2013

 

February 29, 2012

 

% Change

                       

Revenues

$

578,746

   

$

533,539

   

8

%

 

$

1,757,571

   

$

1,606,815

   

9

%

                       

Operating expenses:

                     

Cost of service

200,935

   

181,338

   

11

%

 

589,872

   

534,009

   

10

%

Sales, general and administrative

271,696

   

246,973

   

10

%

 

828,492

   

737,593

   

12

%

 

472,631

   

428,311

   

10

%

 

1,418,364

   

1,271,602

   

12

%

                       

Operating income

106,115

   

105,228

   

1

%

 

339,207

   

335,213

   

1

%

                       

Other income (expense):

                     

Interest and other income

2,536

   

2,368

   

7

%

 

6,706

   

7,128

   

(6)

%

Interest and other expense

(7,063)

   

(3,698)

   

91

%

 

(16,834)

   

(12,663)

   

33

%

 

(4,527)

   

(1,330)

   

240

%

 

(10,128)

   

(5,535)

   

83

%

                       

Income before income taxes

101,588

   

103,898

   

(2)

%

 

329,079

   

329,678

   

 

Provision for income taxes

(27,662)

   

(28,912)

   

(4)

%

 

(93,601)

   

(97,163)

   

(4)

%

Net income

73,926

   

74,986

   

(1)

%

 

235,478

   

232,515

   

1

%

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

(5,993)

   

(9,671)

   

(38)

%

 

(25,164)

   

(28,756)

   

(12)

%

Net income attributable to Global Payments

$

67,933

   

$

65,315

   

4

%

 

$

210,314

   

$

203,759

   

3

%

                       
                       

Basic earnings per share

$

0.87

   

$

0.83

   

5

%

 

$

2.68

   

$

2.58

   

4

%

                       

Diluted earnings per share

$

0.87

   

$

0.83

   

5

%

 

$

2.67

   

$

2.56

   

4

%

                       

Weighted average shares outstanding:

                     

Basic

77,756

   

78,421

       

78,364

   

78,937

     

Diluted

78,324

   

79,065

       

78,747

   

79,511

     

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

 

SCHEDULE 3
SEGMENT INFORMATION
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands)

   

Three Months Ended

       
   

February 28, 2013

 

February 29, 2012

 

% Change

 
   

GAAP

 

Cash
Earnings

 

GAAP

 

Cash
Earnings

 

GAAP

 

Cash Earnings

                         

Revenues:

                       

United States

 

$

336,354

   

$

336,354

   

$

302,105

   

$

302,105

   

11

%

 

11

%

Canada

 

72,218

   

72,218

   

76,677

   

76,677

   

(6)

%

 

(6)

%

North America merchant services

 

408,572

   

408,572

   

378,782

   

378,782

   

8

%

 

8

%

                         

Europe

 

130,750

   

130,750

   

116,196

   

116,196

   

13

%

 

13

%

Asia-Pacific

 

39,424

   

39,424

   

38,561

   

38,561

   

2

%

 

2

%

International merchant services

 

170,174

   

170,174

   

154,757

   

154,757

   

10

%

 

10

%

                         

Total revenues

 

$

578,746

   

$

578,746

   

$

533,539

   

$

533,539

   

8

%

 

8

%

                         

Operating income:

                       

North America merchant services

 

$

55,478

   

$

63,210

   

$

62,462

   

$

65,697

   

(11)

%

 

(4)

%

International merchant services

 

51,820

   

60,618

   

47,911

   

57,556

   

8

%

 

5

%

Corporate1

 

(16,524)

   

(17,713)

   

(18,025)

   

(18,025)

   

8

%

 

2

%

Operating income

 

$

90,774

   

$

106,115

   

$

92,348

   

$

105,228

   

(2)

%

 

1

%

                         
                         
   

Nine Months Ended

       
   

February 28, 2013

 

February 29, 2012

 

% Change

 
   

GAAP

 

Cash
Earnings

 

GAAP

 

Cash
Earnings

 

GAAP

 

Cash Earnings

                         

Revenues:

                       

United States

 

$

1,022,250

   

$

1,022,250

   

$

882,946

   

$

882,946

   

16

%

 

16

%

Canada

 

233,885

   

233,885

   

253,419

   

253,419

   

(8)

%

 

(8)

%

North America merchant services

 

1,256,135

   

1,256,135

   

1,136,365

   

1,136,365

   

11

%

 

11

%

                         

Europe

 

390,376

   

390,376

   

360,779

   

360,779

   

8

%

 

8

%

Asia-Pacific

 

111,060

   

111,060

   

109,671

   

109,671

   

1

%

 

1

%

International merchant services

 

501,436

   

501,436

   

470,450

   

470,450

   

7

%

 

7

%

                         

Total revenues

 

$

1,757,571

   

$

1,757,571

   

$

1,606,815

   

$

1,606,815

   

9

%

 

9

%

                         

Operating income:

                       

North America merchant services

 

$

189,809

   

$

207,933

   

$

204,893

   

$

213,808

   

(7)

%

 

(3)

%

International merchant services

 

162,947

   

187,819

   

148,063

   

176,824

   

10

%

 

6

%

Corporate1

 

(64,912)

   

(56,545)

   

(55,419)

   

(55,419)

   

(17)

%

 

(2)

%

Operating income

 

$

287,844

   

$

339,207

   

297,537

   

$

335,213

   

(3)

%

 

1

%

1 Fiscal 2013 GAAP amounts include a processing intrusion credit of $1.2 million for the three months ended February 28, 2013 and processing intrusion costs of $8.3 million for the nine months ended February 28, 2013.

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 28, 2013

 

May 31, 2012

 

(Unaudited)

   

ASSETS

     

Current assets:

     

Cash and cash equivalents

$

682,960

   

$

781,275

 

Accounts receivable, net of allowances for doubtful accounts of $478 and $532, respectively

166,271

   

182,962

 

Claims receivable, net of allowances for losses of $3,438 and $3,435, respectively

897

   

1,029

 

Settlement processing assets

208,471

   

217,994

 

Inventory

11,349

   

9,864

 

Deferred income taxes

6,350

   

21,969

 

Prepaid expenses and other current assets

70,564

   

33,646

 

Total current assets

1,146,862

   

1,248,739

 

Goodwill

1,051,614

   

724,687

 

Other intangible assets, net

412,995

   

290,188

 

Property and equipment, net of accumulated depreciation of $185,722 and $161,911, respectively

341,573

   

305,848

 

Deferred income taxes

93,626

   

97,235

 

Other

29,554

   

21,446

 

Total assets

$

3,076,224

   

$

2,688,143

 
       

LIABILITIES AND EQUITY

     

Current liabilities:

     

Lines of credit

$

167,152

   

$

215,391

 

Current portion of long-term debt

72,332

   

76,420

 

Accounts payable and accrued liabilities

227,367

   

316,313

 

Settlement processing obligations

201,190

   

216,878

 

Income taxes payable

5,787

   

12,283

 

Total current liabilities

673,828

   

837,285

 

Long-term debt

883,462

   

236,565

 

Deferred income taxes

162,389

   

106,644

 

Other long-term liabilities

71,307

   

62,306

 

Total liabilities

1,790,986

   

1,242,800

 

Commitments and contingencies

     

Redeemable noncontrolling interest

   

144,422

 

Equity:

     

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

   

 

Common stock, no par value; 200,000,000 shares authorized; 76,749,164 and 78,551,297 issued and
outstanding at February 28, 2013 and May 31, 2012, respectively

   

 

Paid-in capital

207,666

   

358,728

 

Retained earnings

946,195

   

843,456

 

Accumulated other comprehensive income (loss)

(6,774)

   

(30,000)

 

Total Global Payments shareholders' equity

1,147,087

   

1,172,184

 

Noncontrolling interest

138,151

   

128,737

 

Total equity

1,285,238

   

1,300,921

 

Total liabilities and equity

$

3,076,224

   

$

2,688,143

 

 

SCHEDULE 5
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands)

 

Nine Months Ended

 

February 28, 2013

 

February 29, 2012

Cash flows from operating activities:

     

Net income

$

192,347

   

$

205,920

 

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

     

Depreciation and amortization of property and equipment

40,856

   

35,821

 

Amortization of acquired intangibles

42,091

   

37,676

 

Share-based compensation expense

14,063

   

12,796

 

Provision for operating losses and bad debts

16,681

   

18,833

 

Deferred income taxes

27,282

   

5,858

 

Other, net

(3,692)

   

(949)

 

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

     

Accounts receivable

17,706

   

10,502

 

Claims receivable

(9,235)

   

(11,744)

 

Settlement processing assets and obligations, net

(12,028)

   

(523,802)

 

Inventory

(1,535)

   

(4,773)

 

Prepaid expenses and other assets

(34,898)

   

(2,388)

 

Accounts payable and other accrued liabilities

(78,375)

   

(22,211)

 

Income taxes payable

(6,496)

   

11,615

 

Net cash provided by (used in) operating activities

204,767

   

(226,846)

 

Cash flows from investing activities:

     

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

(433,427)

   

(44,245)

 

Capital expenditures

(75,016)

   

(71,084)

 

Net decrease in financing receivables

2,158

   

1,862

 

Net cash used in investing activities

(506,285)

   

(113,467)

 

Cash flows from financing activities:

     

Net payments on short-term lines of credit

(48,239)

   

(55,029)

 

Proceeds from issuance of long-term debt

1,085,327

   

71,374

 

Principal payments under long-term debt

(439,789)

   

(162,482)

 

Payment of debt issuance cost

(3,987)

   

 

Acquisition of redeemable noncontrolling interests

(242,000)

   

 

Proceeds from stock issued under share-based compensation plans

9,257

   

9,630

 

Common stock repurchased - share-based compensation plans

(10,215)

   

(4,847)

 

Repurchase of common stock

(137,653)

   

(99,604)

 

Tax benefit from employee share-based compensation

1,791

   

2,036

 

Distributions to noncontrolling interest

(13,656)

   

(24,334)

 

Dividends paid

(4,688)

   

(4,740)

 

Net cash provided by (used in) financing activities

196,148

   

(267,996)

 

Effect of exchange rate changes on cash

7,055

   

(10,243)

 

Decrease in cash and cash equivalents

(98,315)

   

(618,552)

 

Cash and cash equivalents, beginning of the period

781,275

   

1,354,285

 

Cash and cash equivalents, end of the period

$

682,960

   

$

735,733

 

 

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, 2013

   

GAAP

Processing System
Intrusion

Cash Earnings
Adjustments1

Cash Earnings

Revenues

 

$

578,746

 

 

 

$

578,746

 

Operating expenses:

         

Cost of service

 

217,465

 

 

(16,530)

 

200,935

 

Sales, general and administrative

 

271,696

 

 

 

271,696

 

Processing system intrusion

 

(1,189)

 

1,189

 

 

 
   

487,972

 

1,189

 

(16,530)

 

472,631

 

Operating income

 

90,774

 

(1,189)

 

16,530

 

106,115

 

Other income (expense):

         

Interest and other income

 

2,536

 

 

 

2,536

 

Interest and other expense

 

(7,063)

 

 

 

(7,063)

 
   

(4,527)

 

 

 

(4,527)

 

Income before income taxes

 

86,247

 

(1,189)

 

16,530

 

101,588

 

Provision for income taxes

 

(23,433)

 

232

 

(4,461)

 

(27,662)

 

Net income

 

62,814

 

(957)

 

12,069

 

73,926

 

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

 

(4,352)

 

 

(1,641)

 

(5,993)

 

Net income attributable to Global Payments

 

$

58,462

 

$

(957)

 

$

10,428

 

$

67,933

 

Diluted shares

 

78,324

     

78,324

 

Diluted earnings per share

 

$

0.75

 

$

(0.01)

 

$

0.13

 

$

0.87

 
           
   

Three Months Ended February 29, 2012

   

GAAP

 

Cash Earnings
Adjustments1

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 before income taxes

 

91,018

   

12,880

 

103,898

 

Provision for income taxes

 

(25,328)

   

(3,584)

 

(28,912)

 

Net income

 

65,690

   

9,296

 

74,986

 

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

 

(7,770)

   

(1,901)

 

(9,671)

 

Net income 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

 

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

We supplemented our reporting of net income and the related earnings per share information determined in accordance with GAAP by reporting net income and the related earnings per share for the three months ended February 28, 2013 and February 29, 2012 on a "cash earnings" basis in this earnings release as a measure to help evaluate performance. We calculated February 28, 2013 net income and earnings per share on a cash basis by excluding credits related to the processing system intrusion and acquisition intangible amortization.  We calculated February 29, 2012 net income and earnings per share on a cash basis by excluding acquisition intangible amortization from our results. 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 net income and earnings per share reported on a cash earnings basis should be considered in addition to, and not as a substitute for, net income and earnings per share determined in accordance with GAAP. Our measures of net 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, 2013

   

GAAP

Processing System Intrusion

Other2

Cash Earnings Adjustments1

Cash Earnings

Revenues

 

$

1,757,571

 

 

 

 

$

1,757,571

 

Operating expenses:

           

Cost of service

 

632,124

 

 

(161)

 

(42,091)

 

589,872

 

Sales, general and administrative

 

829,292

 

 

(800)

 

 

828,492

 

Processing system intrusion

 

8,311

 

(8,311)

 

 

 

 
   

1,469,727

 

(8,311)

 

(961)

 

(42,091)

 

1,418,364

 

Operating income

 

287,844

 

8,311

 

961

 

42,091

 

339,207

 

Other income (expense):

           

Interest and other income

 

6,706

 

 

 

 

6,706

 

Interest and other expense

 

(25,217)

 

 

8,383

 

 

(16,834)

 
   

(18,511)

 

 

8,383

 

 

(10,128)

 

Income before income taxes

 

269,333

 

8,311

 

9,344

 

42,091

 

329,079

 

Provision for income taxes

 

(76,986)

 

(3,048)

 

(1,533)

 

(12,034)

 

(93,601)

 

Net income

 

192,347

 

5,263

 

7,811

 

30,057

 

235,478

 

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

 

(17,027)

   

(3,594)

 

(4,543)

 

(25,164)

 

Net income attributable to Global Payments

 

$

175,320

 

$

5,263

 

$

4,217

 

$

25,514

 

$

210,314

 

Diluted shares

 

78,747

       

78,747

 

Diluted earnings per share

 

$

2.23

 

$

0.07

 

$

0.05

 

$

0.32

 

$

2.67

 
             
   

Nine Months Ended February 29, 2012

   

GAAP

   

Cash Earnings Adjustments1

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 before income taxes

 

292,002

     

37,676

 

329,678

 

Provision for income taxes

 

(86,082)

     

(11,081)

 

(97,163)

 

Net income

 

205,920

     

26,595

 

232,515

 

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

 

(22,845)

     

(5,911)

 

(28,756)

 

Net income 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

 

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

2 Represents HSBC's share of GPAP dividends declared and one-time charges primarily related to employee termination benefits.

We supplemented our reporting of net income and the related earnings per share information determined in accordance with GAAP by reporting net income and the related earnings per share for the nine months ended February 28, 2013 and February 29, 2012 on a "cash earnings" basis in this earnings release as a measure to help evaluate performance. We calculated February 28, 2013 net income and earnings per share on a cash basis by excluding costs related to the processing system intrusion, acquisition intangible amortization, the dividend paid to HSBC that was classified as interest expense, and one-time charges related to employee termination benefits. We also adjusted the net income attributable to noncontrolling interests to include HSBC's share of August 2012 through November 2012 GPAP net income. We calculated February 29, 2012 net income and earnings per share on a cash basis by excluding 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 net income and earnings per share reported on a cash earnings basis should be considered in addition to, and not as a substitute for, net income and earnings per share determined in accordance with GAAP. Our measures of net 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, except per share data)

 

Three Months Ended February 28, 2013

 

Three Months Ended February 29, 2012

 

GAAP

Processing System
Intrusion

Other

Cash Earnings Adjustments1

Cash Earnings

 

GAAP

Cash Earnings Adjustments1

Cash Earnings

                   

Revenues:

                 

United States

$

336,354

 

$

 

$

 

$

 

$

336,354

   

$

302,105

 

$

 

$

302,105

 

Canada

72,218

 

 

 

 

72,218

   

76,677

 

 

76,677

 

North America merchant services

408,572

 

 

 

 

408,572

   

378,782

 

 

378,782

 
                   

Europe

130,750

 

 

 

 

130,750

   

116,196

 

 

116,196

 

Asia-Pacific

39,424

 

 

 

 

39,424

   

38,561

 

 

38,561

 

International merchant services

170,174

 

 

 

 

170,174

   

154,757

 

 

154,757

 
                   

Total revenues

$

578,746

 

$

 

$

 

$

 

$

578,746

   

$

533,539

 

$

 

$

533,539

 
                   

Operating income:

                 

North America merchant services

$

55,478

 

$

 

$

 

$

7,732

 

$

63,210

   

62,462

 

$

3,235

 

$

65,697

 

International merchant services

51,820

 

 

 

8,798

 

60,618

   

47,911

 

9,645

 

57,556

 

Corporate

(16,524)

 

(1,189)

 

 

 

(17,713)

   

(18,025)

 

 

(18,025)

 

Operating income

$

90,774

 

$

(1,189)

 

$

 

$

16,530

 

$

106,115

   

92,348

 

$

12,880

 

$

105,228

 
                   
 

Nine Months Ended February 28, 2013

 

Nine Months Ended February 29, 2012

 

GAAP

Processing System
Intrusion

Other2

Cash Earnings Adjustments1

Cash Earnings

 

GAAP

Cash Earnings Adjustments1

Cash Earnings

                   

Revenues:

                 

United States

$

1,022,250

 

$

 

$

 

$

 

$

1,022,250

   

$

882,946

 

$

 

$

882,946

 

Canada

233,885

 

 

 

 

233,885

   

253,419

 

 

253,419

 

North America merchant services

1,256,135

 

 

 

 

1,256,135

   

1,136,365

 

 

1,136,365

 
                   

Europe

390,376

 

 

 

 

390,376

   

360,779

 

 

360,779

 

Asia-Pacific

111,060

 

 

 

 

111,060

   

109,671

 

 

109,671

 

International merchant services

501,436

 

 

 

 

501,436

   

470,450

 

 

470,450

 
                   

Total revenues

$

1,757,571

 

$

 

$

 

$

 

$

1,757,571

   

$

1,606,815

 

$

 

$

1,606,815

 
                   

Operating income:

                 

North America merchant services

$

189,809

 

$

 

$

905

 

$

17,219

 

$

207,933

   

$

204,893

 

$

8,915

 

$

213,808

 

International merchant services

162,947

 

 

 

24,872

 

187,819

   

148,063

 

28,761

 

176,824

 

Corporate

(64,912)

 

8,311

 

56

 

 

(56,545)

   

(55,419)

 

 

(55,419)

 

Operating income

$

287,844

 

$

8,311

 

$

961

 

$

42,091

 

$

339,207

   

$

297,537

 

$

37,676

 

$

335,213

 

1 Represents acquisition intangible amortization expense.

2 Represents one-time charges primarily related to employee termination benefits.

 

SCHEDULE 9
OUTLOOK SUMMARY
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In millions, except per share data)

   

Fiscal 2012 Actual

 

Fiscal 2013 Outlook

 

% Change FY12

             

Revenue Outlook

           

Constant currency1

 

$

2,204

   

$2,385 to $2,425

 

8% to 10%

Foreign currency impact2

 

NA

 

$(25)

   

Total Revenues

 

$

2,204

   

$2,360 to $2,400

 

7% to 9%

             

EPS Outlook

           

Constant currency1

 

$

3.53

   

$3.70 to $3.77

 

5% to 7%

Foreign currency impact2

 

NA

 

$(0.06)

   

Cash EPS

 

$

3.53

   

$3.64 to $3.71

 

3% to 5%

Acquisition-related intangible assets, non-recurring items and processing system intrusion3

 

(1.16)

   

$(0.77)

 

(34)%

GAAP Diluted EPS

 

$

2.37

   

$2.87 to $2.94

 

21% to 24%

We supplement our fiscal 2013 outlook of total revenues and earnings per share information determined in accordance with GAAP by reporting revenues and earnings per share on a "constant currency" basis in this earnings release as a measure to help evaluate performance.  We calculated revenues and earnings per share on a constant currency basis by converting our fiscal 2013 expected revenues and expenses at fiscal 2012 exchange rates.  We exclude the impact of exchange rate fluctuations in order to more clearly focus on the factors we believe are pertinent to the daily management of our operations, and our management uses constant currency measures to evaluate the impact of operational business decisions.  Our revenues and earnings per share reported on a constant currency basis should be considered in addition to, and not as a substitute for, revenues and earnings per share determined in accordance with GAAP. Our measures of revenues and earnings per share on a constant currency basis reflect management's judgment of particular items, and may not be comparable to similarly titled measures reported by other companies.

1 Reflects current period and forecasted results on a pro forma basis as if foreign currency rates did not change from the comparable prior year period.

2 Reflects the impact of actual and forecasted changes in foreign currency rates from the comparable prior year period.

3 Fiscal 2013 reflects $0.60 of acquisition-related intangibles and non-recurring items and $0.17 of processing system intrusion costs.  Acquisition-related intangibles accounted and non-recurring items accounted for $0.48 in fiscal 2012 and processing intrusion costs $0.68

NA=Not Applicable

 

SOURCE Global Payments Inc.

 

 

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