Global Payments Reports Year-End Earnings

July 25, 2013

ATLANTA, July 25, 2013 /PRNewswire/ -- Global Payments Inc. (NYSE: GPN) today announced results for its fiscal fourth quarter and year ended May 31, 2013.  The company delivered revenues of $2.4 billion or 8% growth and cash earnings per share of $3.65 or 3% growth over prior year.

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

Chairman and CEO Paul R. Garcia said, "We are focused on delivering a strong fiscal 2014 with cash earnings per share growth of 8% to 10%.  Importantly, this includes a significant step up in annual security costs.  Excluding these costs, annual cash earnings per share growth for fiscal 2014 would be 12% to 14%.

"I am also delighted to announce that our Spanish partner, CaixaBank, will be taking a 50% share in Global Payments Brazil. This expands our strategic partnership with CaixaBank and will provide us the opportunity to grow more rapidly in this important region with potential further expansion into other Latin American markets over time," continued Garcia.

Full-Year 2013 Summary

  • Revenues grew 8% to $2,375.9 million, compared to $2,203.8 million in fiscal 2012.  
  • Cash diluted earnings per share1 grew 3% to $3.65, compared to $3.53 in the prior fiscal year.
  • GAAP full-year diluted earnings per share of $2.76, compared to $2.37 diluted earnings per share in the prior year.

Fourth Quarter 2013 Summary

  • Revenues grew 4% to $618.4 million, compared to $597.0 million in the fourth quarter of fiscal 2012.
  • Cash diluted earnings per share grew 1% to $0.98, compared to $0.97 in the fourth quarter of fiscal 2012.
  • GAAP diluted earnings per share were $0.53, compared to $0.06 in the fourth quarter of 2012.

2014 Outlook
For the full-year of fiscal 2014, the company expects annual revenue of $2.51 billion to $2.56 billion, or 6% to 8% growth over fiscal 2013 and diluted earnings per share on a cash basis of $3.93 to $4.00, reflecting growth of 8% to 10% over fiscal 2013.  Annual fiscal 2014 GAAP diluted earnings per share is expected to be $3.35 to $3.42

New $250 Million Share Repurchase Authorization
David E. Mangum, Senior Executive Vice President and CFO, stated, "I am pleased that the Board of Directors approved a new $250 million share repurchase authorization of Global Payments' stock. We intend to complete our previous $300 million share authorization in the first quarter of fiscal 2014, and the benefit from the original authorization is factored into our outlook for fiscal 2014."

Under the company's new program, Global Payments may repurchase shares in the open market or as otherwise may be determined by the company, subject to market conditions, business opportunities and other factors.  The company has no obligation to repurchase shares under this program.  This authorization has no expiration date and may be suspended or terminated at any time.  Repurchased shares will be retired but will be available for future issuance.  The company's expectations exclude the impact of any potential share repurchases under the new $250 million authorization.

Conference Call
Global Payments will hold a conference call today, July 25, 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 August 8, 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, Brazil, 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

 

Amy Corn

 

770-829-8234

 

770-829-8755

       

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

 

 

SCHEDULE 1

                       

GAAP CONSOLIDATED STATEMENTS OF INCOME

                       

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

                       
                         

(In thousands, except per share data)

                       
                         
   

Three Months Ended May 31,

     

Year Ended May 31,

   
   

2013

 

2012

 

% Change

 

2013

 

2012

 

% Change

                     

Revenues

 

$        618,352

 

$         597,032

 

4%

 

$      2,375,923

 

$    2,203,847

 

8%

Operating expenses:

                       

  Cost of service

 

229,951

 

213,071

 

8%

 

862,075

 

784,756

 

10%

  Sales, general and administrative

 

290,568

 

289,712

 

0%

 

1,119,860

 

1,027,304

 

9%

  Processing system intrusion

 

28,464

 

84,438

 

(66%)

 

36,775

 

84,438

 

(56%)

   

548,983

 

587,221

 

(7%)

 

2,018,710

 

1,896,498

 

6%

                         

Operating income

 

69,369

 

9,811

 

607%

 

357,213

 

307,349

 

16%

Other income (expense):

                       

  Interest and other income

 

3,647

 

2,818

 

29%

 

10,353

 

9,946

 

4%

  Interest and other expense

 

(8,065)

 

(4,185)

 

93%

 

(33,282)

 

(16,848)

 

98%

   

(4,418)

 

(1,367)

 

223%

 

(22,929)

 

(6,902)

 

232%

                         

Income before income taxes 

 

64,951

 

8,444

 

669%

 

334,284

 

300,447

 

11%

Income tax (provision) benefit

 

(18,585)

 

3,202

 

(680%)

 

(95,571)

 

(82,881)

 

15%

Net income

 

46,366

 

11,646

 

298%

 

238,713

 

217,566

 

10%

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

 

(5,561)

 

(6,560)

 

(15%)

 

(22,588)

 

(29,405)

 

(23%)

Net income attributable to Global Payments

 

$          40,805

 

$             5,086

 

702%

 

$         216,125

 

$       188,161

 

15%

                         
                         

Earnings per share attributable to Global Payments:

                       

    Basic

 

$              0.54

 

$               0.06

 

800%

 

$               2.78

 

$             2.39

 

16%

    Diluted

 

$              0.53

 

$               0.06

 

783%

 

$               2.76

 

$             2.37

 

16%

                         

Weighted average shares outstanding:

                       

    Basic

 

76,034

 

78,539

     

77,767

 

78,829

   

    Diluted

 

76,651

 

79,192

     

78,227

 

79,431

   

 

 

 

SCHEDULE 2

                       

CASH EARNINGS ATTRIBUTABLE TO GLOBAL PAYMENTS

                   

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

                       
                         

(In thousands, except per share data)

                       
                         
   

Three Months Ended May 31,

     

Year Ended May 31,

   
   

2013

 

2012

 

% Change

 

2013

 

2012

 

% Change

                         

Revenues

 

$         618,352

 

$       597,032

 

4%

 

$      2,375,923

 

$    2,203,847

 

8%

Operating expenses:

                       

  Cost of service

 

214,080

 

200,051

 

7%

 

803,952

 

734,060

 

10%

  Sales, general and administrative

 

285,017

 

274,390

 

4%

 

1,113,509

 

1,011,982

 

10%

   

499,097

 

474,441

 

5%

 

1,917,461

 

1,746,042

 

10%

                         

Operating income

 

119,255

 

122,591

 

(3%)

 

458,462

 

457,805

 

0%

Other income (expense):

                       

  Interest and other income

 

3,647

 

2,818

 

29%

 

10,353

 

9,946

 

4%

  Interest and other expense

 

(8,065)

 

(4,185)

 

93%

 

(24,899)

 

(16,848)

 

48%

   

(4,418)

 

(1,367)

 

223%

 

(14,546)

 

(6,902)

 

111%

                         

Income before income taxes 

 

114,837

 

121,224

 

(5%)

 

443,916

 

450,903

 

(2%)

Provision for income taxes

 

(32,693)

 

(36,318)

 

(10%)

 

(126,294)

 

(133,455)

 

(5%)

Net income

 

82,144

 

84,906

 

(3%)

 

317,622

 

317,448

 

0%

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

 

(7,042)

 

(8,437)

 

(17%)

 

(32,206)

 

(37,193)

 

(13%)

Net income attributable to Global Payments

 

$           75,102

 

$         76,469

 

(2%)

 

$         285,416

 

$       280,255

 

2%

                         
                         

Basic earnings per share

 

$               0.99

 

$             0.97

 

2%

 

$               3.67

 

$             3.56

 

3%

                         

Diluted earnings per share

 

$               0.98

 

$             0.97

 

1%

 

$               3.65

 

$             3.53

 

3%

                         

Weighted average shares outstanding:

                       

    Basic

 

76,034

 

78,539

     

77,767

 

78,829

   

    Diluted

 

76,651

 

79,192

     

78,227

 

79,431

   
                         
                         
                         

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 May 31, 

       
   

2013

 

2012

 

 % Change 

   

 GAAP 

 

Cash

Earnings

 

 GAAP 

 

Cash

Earnings

 

 GAAP 

 

Cash

Earnings

                         

Revenues:

                       

United States

 

$    372,425

 

$    372,425

 

$    351,872

 

$    351,872

 

6%

 

6%

Canada

 

77,115

 

77,115

 

79,015

 

79,015

 

(2%)

 

(2%)

  North America merchant services

449,540

 

449,540

 

430,887

 

430,887

 

4%

 

4%

                         

Europe

 

132,217

 

132,217

 

128,521

 

128,521

 

3%

 

3%

Asia-Pacific

 

36,595

 

36,595

 

37,624

 

37,624

 

(3%)

 

(3%)

  International merchant services

 

168,812

 

168,812

 

166,145

 

166,145

 

2%

 

2%

                         

  Total revenues

 

$    618,352

 

$    618,352

 

$    597,032

 

$    597,032

 

4%

 

4%

                         

Operating income (loss) for segments:

                     

North America merchant services

$      69,101

 

$      80,229

 

$      76,412

 

$      81,194

 

(10%)

 

(1%)

International merchant services

 

48,295

 

57,460

 

48,074

 

61,664

 

0%

 

(7%)

Corporate1

 

(48,027)

 

(18,434)

 

(114,675)

 

(20,267)

 

58%

 

9%

  Operating income

 

$      69,369

 

$    119,255

 

$        9,811

 

$    122,591

 

607%

 

(3%)

                         
                         
   

 Year Ended May 31, 

       
   

2013

 

2012

 

 % Change 

   

 GAAP 

 

Cash

Earnings

 

 GAAP 

 

Cash

Earnings

 

 GAAP 

 

Cash

Earnings

                         

Revenues:

                       

United States

 

$ 1,394,675

 

$ 1,394,675

 

$ 1,234,818

 

$ 1,234,818

 

13%

 

13%

Canada

 

311,000

 

311,000

 

332,434

 

332,434

 

(6%)

 

(6%)

  North America merchant services

1,705,675

 

1,705,675

 

1,567,252

 

1,567,252

 

9%

 

9%

                         

Europe

 

522,593

 

522,593

 

489,300

 

489,300

 

7%

 

7%

Asia-Pacific

 

147,655

 

147,655

 

147,295

 

147,295

 

0%

 

0%

  International merchant services

 

670,248

 

670,248

 

636,595

 

636,595

 

5%

 

5%

                         

  Total revenues

 

$ 2,375,923

 

$ 2,375,923

 

$ 2,203,847

 

$ 2,203,847

 

8%

 

8%

                         

Operating income (loss) for segments:

                     

North America merchant services

$    258,910

 

$    288,162

 

$    281,305

 

$    295,003

 

(8%)

 

(2%)

International merchant services

 

211,242

 

245,279

 

196,137

 

238,487

 

8%

 

3%

Corporate1

 

(112,939)

 

(74,979)

 

(170,093)

 

(75,685)

 

34%

 

1%

Operating income

 

$    357,213

 

$    458,462

 

$    307,349

 

$    457,805

 

16%

 

0%

                         

1GAAP results include data intrusion charges of $28.5 million and $36.8 million for the three and twelve months ended  May 31, 2013 respectively and $84.4 million for the three and twelve months ended May 31, 2012

                         

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)

       
         
   

May 31, 2013

 

May 31,2012

         

Assets

       

Current assets:

       

Cash and cash equivalents

 

$         680,470

 

$       781,275

Accounts receivable, net of allowances for doubtful accounts of $509 and $532, respectively

 

189,435

 

182,962

Claims receivable, net of allowance for losses of $3,144 and $3,435, respectively

 

1,156

 

1,029

Settlement processing assets

 

259,204

 

217,994

Inventory

 

11,057

 

9,864

Deferred income taxes

 

6,485

 

21,969

Prepaid expenses and other current assets

 

66,685

 

33,646

Total current assets

 

1,214,492

 

1,248,739

         

Goodwill

 

1,044,222

 

724,687

Other intangible assets, net of accumulated amortization of $290,660 and $235,296, respectively

 

400,848

 

290,188

Property and equipment, net of accumulated depreciation of $156,948 and $161,911, respectively

 

348,064

 

305,848

Deferred income taxes

 

95,178

 

97,235

Other

 

22,252

 

21,446

         

Total assets

 

$      3,125,056

 

$    2,688,143

         

Liabilities and Equity

       

Current liabilities:

       

Lines of credit

 

$         187,461

 

$       215,391

Current portion of long-term debt

 

72,335

 

76,420

Accounts payable and accrued liabilities

 

262,890

 

316,313

Settlement processing obligations

 

162,558

 

216,878

Income taxes payable

 

18,870

 

12,283

  Total current liabilities

 

704,114

 

837,285

         

Long-term debt

 

891,134

 

236,565

Deferred income taxes

 

170,723

 

106,644

Other long-term liabilities

 

72,478

 

62,306

Total liabilities

 

1,838,449

 

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; 75,426,099 and

       

 78,551,297 issued and outstanding at May 31, 2013 and 2012, respectively

       

 Paid-in capital

 

202,396

 

358,728

 Retained earnings

 

958,751

 

843,456

 Accumulated other comprehensive loss

 

(15,062)

 

(30,000)

      Total Global Payments shareholders' equity

 

1,146,085

 

1,172,184

 Noncontrolling interest

 

140,522

 

128,737

 Total equity

 

1,286,607

 

1,300,921

         

Total liabilities and equity

 

$      3,125,056

 

$    2,688,143

 

 

SCHEDULE 5

       

CONSOLIDATED STATEMENTS OF CASH FLOWS

       

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

       
               

(In thousands)

       
               
         

Year Ended May 31,

         

2013

 

2012

               

Cash flows from operating activities:

       

Net income

   

$  238,713

 

$  217,566

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

     
 

Depreciation and amortization of property and equipment

 

55,023

 

48,403

 

Amortization of acquired intangibles

 

56,765

 

50,696

 

Share-based compensation expense

 

18,427

 

16,391

 

Provision for operating losses and bad debts

 

21,659

 

22,417

 

Deferred income taxes

 

33,112

 

(19,498)

 

Other, net

 

(4,878)

 

(2,775)

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

     
 

Accounts receivable

 

(5,458)

 

(16,422)

 

Claims receivable

 

(11,858)

 

(13,519)

 

Settlement processing assets and obligations, net

 

(104,007)

 

(568,335)

 

Inventory

 

(1,187)

 

(2,394)

 

Prepaid expenses and other assets

 

(22,978)

 

3,511

 

Accounts payable and other accrued liabilities

 

(39,374)

 

85,875

 

Income taxes payable

 

6,587

 

4,609

   

Net cash provided by (used in) operating activities

 

240,546

 

(173,475)

               

Cash flows from investing activities:

       
 

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

 

(434,016)

 

(44,274)

 

Capital expenditures

 

(98,590)

 

(109,876)

 

Net decrease in financing receivables

 

2,812

 

2,565

 

Proceeds from sale of investment and contractual rights

 

1,227

 

1,152

   

Net cash used in investing activities

 

(528,567)

 

(150,433)

               

Cash flows from financing activities:

       
 

Net payments on short-term lines of credit

 

(27,930)

 

(55,354)

 

Proceeds from issuance of long-term debt

 

1,135,327

 

146,374

 

Principal payments under long-term debt

 

(482,349)

 

(184,235)

 

Acquisition of redeemable noncontrolling interest

 

(242,000)

 

-

 

Payment of debt issuance cost

 

(3,987)

 

-

 

Proceeds from stock issued under employee stock plans

 

10,543

 

11,446

 

Common stock repurchased - share-based compensation plans

 

(10,244)

 

(4,861)

 

Repurchase of common stock

 

(175,297)

 

(99,604)

 

Tax benefit from employee share-based compensation 

 

1,863

 

1,441

 

Distribution to noncontrolling interests

 

(16,206)

 

(27,082)

 

Dividends paid

 

(6,198)

 

(6,311)

     

Net cash provided by (used in) financing activities

 

183,522

 

(218,186)

               

Effect of exchange rate changes on cash

 

3,694

 

(30,916)

               

(Decrease) increase in cash and cash equivalents

 

(100,805)

 

(573,010)

Cash and cash equivalents, beginning of period

 

781,275

 

1,354,285

Cash and cash equivalents, end of period

 

$  680,470

 

$  781,275

 

 

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 May 31, 2013

   

GAAP

 

Processing

System Intrusion

 

Other1

 

Cash Earnings Adjustments2

 

Cash Earnings

                     

Revenues

 

$         618,352

 

$                   -

 

$                   -

 

$                   -

 

$         618,352

Operating expenses:

                   

   Cost of service

 

229,951

 

-

 

(1,197)

 

(14,674)

 

214,080

   Sales, general and administrative

 

290,568

 

-

 

(5,551)

 

-

 

285,017

   Processing system intrusion

 

28,464

 

(28,464)

 

-

 

-

 

-

   

548,983

 

(28,464)

 

(6,748)

 

(14,674)

 

499,097

                     

Operating income

 

69,369

 

28,464

 

6,748

 

14,674

 

119,255

Other income (expense):

                   

   Interest and other income

 

3,647

 

-

 

-

 

-

 

3,647

   Interest and other expense

 

(8,065)

 

-

 

-

 

-

 

(8,065)

   

(4,418)

 

-

 

-

 

-

 

(4,418)

                     

Income before income taxes 

 

64,951

 

28,464

 

6,748

 

14,674

 

114,837

Provision for income taxes

 

(18,585)

 

(8,865)

 

(1,053)

 

(4,190)

 

(32,693)

Net income

 

46,366

 

19,599

 

5,695

 

10,484

 

82,144

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

 

(5,561)

 

-

 

-

 

(1,481)

 

(7,042)

Net income attributable to Global Payments

 

$           40,805

 

$           19,599

 

$             5,695

 

$             9,003

 

$           75,102

                     

Diluted shares

 

76,651

             

76,651

Diluted earnings per share

 

$               0.53

 

$               0.26

 

$               0.07

 

$               0.12

 

$               0.98

                     
                     
   

Three Months Ended May 31, 2012

   

GAAP

 

Processing System Intrusion

 

Other1

 

Cash Earnings Adjustments2

 

Cash Earnings

                     

Revenues

 

$         597,032

 

$                   -

 

$                   -

 

$                   -

 

$         597,032

Operating expenses:

                   

   Cost of service

 

213,071

 

-

 

-

 

(13,020)

 

200,051

   Sales, general and administrative

 

289,712

 

-

 

(15,322)

 

-

 

274,390

   Processing system intrusion

 

84,438

 

(84,438)

 

-

 

-

 

-

   

587,221

 

(84,438)

 

(15,322)

 

(13,020)

 

474,441

                     

Operating income

 

9,811

 

84,438

 

15,322

 

13,020

 

122,591

Other income (expense):

                   

   Interest and other income

 

2,818

 

-

 

-

 

-

 

2,818

   Interest and other expense

 

(4,185)

 

-

 

-

 

-

 

(4,185)

   

(1,367)

 

-

 

-

 

-

 

(1,367)

                     

Income before income taxes 

 

8,444

 

84,438

 

15,322

 

13,020

 

121,224

Benefit (provision) for income taxes

 

3,202

 

(30,666)

 

(5,034)

 

(3,820)

 

(36,318)

Net income

 

11,646

 

53,772

 

10,288

 

9,200

 

84,906

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

 

(6,560)

 

-

 

-

 

(1,877)

 

(8,437)

Net income attributable to Global Payments

 

$             5,086

 

$           53,772

 

$           10,288

 

$             7,323

 

$           76,469

                     

Diluted shares

 

79,192

             

79,192

Diluted earnings per share

 

$               0.06

 

$               0.68

 

$               0.13

 

$               0.10

 

$               0.97

                     
                     

1Represents one-time charges primarily related to employee termination benefits and certain contract settlement and related costs.

                     

2Represents adjustments to cost of service to exclude acquisition intangible amortization expense from net income and the related income tax benefit.

                     

We supplemented our reporting of income and the related earnings per share information determined in accordance with GAAP by reporting income and the related earnings per share for the three months ended May 31, 2013 and 2012 on a "cash earnings" basis in this earnings release as a measure to help evaluate performance. We calculated income and earnings per share on a cash basis by excluding costs related to the processing system intrusion, acquisition intangible amortization and one-time charges related to employee termination benefits and certain contract settlement and related costs. We exclude these charges in order to more clearly focus on the factors we believe are pertinent to the daily management of our operations. Our income and earnings per share reported on a cash earnings basis should be considered in addition to, and not as a substitute for, income and earnings per share determined in accordance with GAAP. Our measures of income and earnings per share on a cash earnings basis reflect management's judgment of particular items, and may not be comparable to similarly titled measures reported by other companies.

 

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)

                   
                     
   

Year Ended May 31, 2013

   

GAAP

 

Processing

System Intrusion

 

Other1

 

Cash Earnings Adjustments2

 

Cash Earnings

                     

Revenues

 

$      2,375,923

 

$                   -

 

$                   -

 

$                   -

 

$      2,375,923

Operating expenses:

                   

   Cost of service

 

862,075

 

-

 

(1,358)

 

(56,765)

 

803,952

   Sales, general and administrative

 

1,119,860

 

-

 

(6,351)

 

-

 

1,113,509

   Processing system intrusion

 

36,775

 

(36,775)

 

-

 

-

 

-

   

2,018,710

 

(36,775)

 

(7,709)

 

(56,765)

 

1,917,461

                     

Operating income

 

357,213

 

36,775

 

7,709

 

56,765

 

458,462

Other income (expense):

                   

   Interest and other income

 

10,353

 

-

 

-

 

-

 

10,353

   Interest and other expense

 

(33,282)

 

-

 

8,383

 

-

 

(24,899)

   

(22,929)

 

-

 

8,383

 

-

 

(14,546)

                     

Income before income taxes 

 

334,284

 

36,775

 

16,092

 

56,765

 

443,916

Provision for income taxes

 

(95,571)

 

(11,913)

 

(2,586)

 

(16,224)

 

(126,294)

Net income

 

238,713

 

24,862

 

13,506

 

40,541

 

317,622

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

 

(22,588)

 

-

 

(3,594)

 

(6,024)

 

(32,206)

Net income attributable to Global Payments

 

$         216,125

 

$           24,862

 

$             9,912

 

$           34,517

 

$         285,416

                     

Diluted shares

 

78,227

             

78,227

Diluted earnings per share

 

$               2.76

 

$               0.32

 

$               0.13

 

$               0.44

 

$               3.65

                     
                     
   

Year Ended May 31, 2012

   

GAAP

 

Processing System Intrusion

 

Other1

 

Cash Earnings Adjustments2

 

Cash Earnings

                     

Revenues

 

$      2,203,847

 

$                   -

 

$                   -

 

$                   -

 

$      2,203,847

Operating expenses:

                   

   Cost of service

 

784,756

 

-

 

-

 

(50,696)

 

734,060

   Sales, general and administrative

 

1,027,304

 

-

 

(15,322)

 

-

 

1,011,982

   Processing system intrusion

 

84,438

 

(84,438)

 

-

 

-

 

-

   

1,896,498

 

(84,438)

 

(15,322)

 

(50,696)

 

1,746,042

                     

Operating income

 

307,349

 

84,438

 

15,322

 

50,696

 

457,805

Other income (expense):

                   

   Interest and other income

 

9,946

 

-

 

-

 

-

 

9,946

   Interest and other expense

 

(16,848)

 

-

 

-

 

-

 

(16,848)

   

(6,902)

 

-

 

-

 

-

 

(6,902)

                     

Income before income taxes 

 

300,447

 

84,438

 

15,322

 

50,696

 

450,903

Provision for income taxes

 

(82,881)

 

(30,640)

 

(5,034)

 

(14,900)

 

(133,455)

Net income

 

217,566

 

53,798

 

10,288

 

35,796

 

317,448

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

 

(29,405)

 

-

 

-

 

(7,788)

 

(37,193)

Net income attributable to Global Payments

 

$         188,161

 

$           53,798

 

$           10,288

 

$           28,008

 

$         280,255

                     

Diluted shares

 

79,431

             

79,431

Diluted earnings per share

 

$               2.37

 

$               0.68

 

$               0.13

 

$               0.35

 

$               3.53

                     
                     
                     
                     

1Represents one-time charges primarily related to employee termination benefits and certain contract settlement and related costs.

                     

2Represents adjustments to cost of service to exclude acquisition intangible amortization expense from net income and the related income tax benefit.

                     

We supplemented our reporting of income and the related earnings per share information determined in accordance with GAAP by reporting income and the related earnings per share for the three months ended May 31, 2013 and 2012 on a "cash earnings" basis in this earnings release as a measure to help evaluate performance. We calculated income and earnings per share on a cash basis by excluding costs related to the processing system intrusion, acquisition intangible amortization and one-time charges related to employee termination benefits and certain contract settlement and related costs. We exclude these charges in order to more clearly focus on the factors we believe are pertinent to the daily management of our operations. Our income and earnings per share reported on a cash earnings basis should be considered in addition to, and not as a substitute for, income and earnings per share determined in accordance with GAAP. Our measures of income and earnings per share on a cash earnings basis reflect management's judgment of particular items, and may not be comparable to similarly titled measures reported by other companies.

 

 

SCHEDULE 8

                                       

RECONCILIATION OF CASH EARNINGS SEGMENT INFORMATION TO GAAP

                   

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

                                   
                                             

(In thousands)

                                       
                                             
       

 Three Months Ended May 31, 

       

2013

 

2012

       

 GAAP 

 

Processing System Intrusion

 

Other1

 

Cash
Earnings Adjustments2

 

 Cash Earnings 

 

 GAAP 

 

Processing System Intrusion

 

Other1

 

Cash
Earnings Adjustments2

 

 Cash Earnings 

                                             

Revenues:

                                       

United States

 

$      372,425

 

$               -

 

$               -

 

$               -

 

$      372,425

 

$      351,872

 

$               -

 

$               -

 

$               -

 

$      351,872

Canada

 

77,115

 

-

 

-

 

-

 

77,115

 

79,015

 

-

 

-

 

-

 

79,015

 

North America merchant services

 

449,540

 

-

 

-

 

-

 

449,540

 

430,887

 

-

 

-

 

-

 

430,887

                                             

Europe

 

132,217

 

-

 

-

 

-

 

132,217

 

128,521

 

-

 

-

 

-

 

128,521

Asia-Pacific

 

36,595

 

-

 

-

 

-

 

36,595

 

37,624

 

-

 

-

 

-

 

37,624

 

International merchant services

 

168,812

 

-

 

-

 

-

 

168,812

 

166,145

 

-

 

-

 

-

 

166,145

                                             
   

Total revenues

 

$      618,352

 

$               -

 

$               -

 

$               -

 

$      618,352

 

$      597,032

 

$               -

 

$               -

 

$               -

 

$      597,032

                                             

Operating income:

                                       

North America merchant services

 

$        69,101

 

$               -

 

$          4,688

 

$          6,440

 

$        80,229

 

$        76,412

 

$               -

 

$          1,538

 

$          3,244

 

$        81,194

International merchant services

 

48,295

 

53

 

878

 

8,234

 

57,460

 

48,074

 

-

 

3,814

 

9,776

 

61,664

Corporate

 

(48,027)

 

28,411

 

1,182

 

-

 

(18,434)

 

(114,675)

 

84,438

 

9,970

 

-

 

(20,267)

 

Operating income

 

$        69,369

 

$        28,464

 

$          6,748

 

$        14,674

 

$      119,255

 

$          9,811

 

$        84,438

 

$        15,322

 

$        13,020

 

$      122,591

                                             
                                             
       

 Year Ended May 31, 

       

2013

 

2012

       

 GAAP 

 

Processing System Intrusion

 

Other1

 

Cash
Earnings Adjustments2

 

 Cash Earnings 

 

 GAAP 

 

Processing System Intrusion

 

Other1

 

Cash
Earnings Adjustments2

 

 Cash Earnings 

                                             

Revenues:

                                       

United States

 

$   1,394,675

 

$               -

 

$               -

 

$               -

 

$   1,394,675

 

$   1,234,818

 

$               -

 

$               -

 

$               -

 

$   1,234,818

Canada

 

311,000

 

-

 

-

 

-

 

311,000

 

332,434

 

-

 

-

 

-

 

332,434

 

North America merchant services

 

1,705,675

 

-

 

-

 

-

 

1,705,675

 

1,567,252

 

-

 

-

 

-

 

1,567,252

                                             

Europe

 

522,593

 

-

 

-

 

-

 

522,593

 

489,300

 

-

 

-

 

-

 

489,300

Asia-Pacific

 

147,655

 

-

 

-

 

-

 

147,655

 

147,295

 

-

 

-

 

-

 

147,295

 

International merchant services

 

670,248

 

-

 

-

 

-

 

670,248

 

636,595

 

-

 

-

 

-

 

636,595

                                             
   

Total revenues

 

$   2,375,923

 

$               -

 

$               -

 

$               -

 

$   2,375,923

 

$   2,203,847

 

$               -

 

$               -

 

$               -

 

$   2,203,847

                                             

Operating income (loss) for segments:

                                     

North America merchant services

 

$      258,910

 

$               -

 

$          5,593

 

$        23,659

 

$      288,162

 

$      281,305

 

$               -

 

$          1,538

 

$        12,160

 

$      295,003

International merchant services

 

211,242

 

53

 

878

 

33,106

 

245,279

 

196,137

 

-

 

3,814

 

38,536

 

238,487

Corporate

 

(112,939)

 

36,722

 

1,238

 

-

 

(74,979)

 

(170,093)

 

84,438

 

9,970

 

-

 

(75,685)

 

Operating income

 

$      357,213

 

$        36,775

 

$          7,709

 

$        56,765

 

$      458,462

 

$      307,349

 

$        84,438

 

$        15,322

 

$        50,696

 

$      457,805

                                             
                                             

1Represents one-time charges primarily related to employee termination benefits and certain contract settlement and related costs.

                   
                                             

2 Represents acquisition intangible amortization expense.

                                   

 

 

SCHEDULE 9

           

OUTLOOK SUMMARY

           

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

           
               

(In millions, except per share data)

           
               
     

Fiscal 2013

Actual

 

Fiscal 2014

Outlook

 

% Change

FY13

               

Revenue Outlook

           

Total Revenues

 

$ 2,376

 

$2,510 to $2,560

 

6% to 8%

               

EPS Outlook

           

Cash EPS 

 

$         3.65

 

$3.93 to $4.00

 

8% to 10%

Acquisition-related intangibles assets, non-recurring items and 

           

    processing system intrusion 1

 

(0.89)

 

($0.58)

 

35%

GAAP Diluted EPS 

 

$         2.76

 

 $3.35 to $3.42 

 

21% to 24%

               
               

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

 

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

 

 

 

SOURCE Global Payments Inc.

 

 

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