Global Payments Inc.
Jan 9, 2017

Global Payments Reports Second Quarter Earnings, Sets Calendar 2017 Growth Targets and Increases Synergy Estimates

ATLANTA--(BUSINESS WIRE)-- Global Payments Inc. (NYSE: GPN) today announced results for its fiscal second quarter ended November 30, 2016.

"The strong momentum from our first quarter accelerated in the second quarter of fiscal 2017. We delivered double digit organic growth across our key markets, including in our U.S. direct business and across most of Europe and Asia Pacific," said Jeff Sloan, Chief Executive Officer. "Our technology enabled businesses continue to spearhead our growth, with particularly strong performance from our integrated payments businesses, OpenEdge and Ezidebit, and from our software led solutions at Heartland Commerce and Campus Solutions. We achieved these results while also making significant progress integrating Heartland. We have raised our expectations for synergies from the merger, highlighting ongoing strength in execution."

Second Quarter Fiscal 2017 Summary

"We exceeded our expectations for organic adjusted net revenue growth, operating margin expansion and adjusted earnings per share growth for the quarter," stated Cameron Bready, Executive Vice President and Chief Financial Officer. "As a result of this strong performance and momentum, we are introducing accelerated growth expectations for calendar 2017. We are also raising our expectation for expense synergies from the Heartland merger to $135 million, a $10 million increase from our prior target."

Calendar 2017 Outlook

For calendar 2017, the company expects reported adjusted net revenue of $3.35 to $3.45 billion, representing estimated growth of 18% to 21% over our calendar 2016 estimate, or 20% to 24% on a constant currency basis. The company further expects reported adjusted earnings per share of $3.70 to $3.90, which represents estimated growth of 16% to 23% over our calendar 2016 estimate, or 21% to 27% on a constant currency basis. Calendar 2017 adjusted earnings per share expectations represents annualized growth of approximately 17% relative to the company's last fiscal 2017 guide, or approximately 20% on a constant currency basis.

Capital Allocation

Global Payments' Board of Directors approved a quarterly dividend of $0.01 per share payable February 24, 2017 to shareholders of record as of February 10, 2017. The board also approved an increase to the existing authorization for the company's share repurchase program, raising the total available authorization to $300 million.

Conference Call

Global Payments' management will host a conference call today, January 9, 2017 at 8:00 a.m. ET to discuss financial results and business highlights. Participants may access the conference call via the investor relations page of the company's website at www.globalpaymentsinc.com; or participants in North America may dial 877-674-6428 and 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.

Non-GAAP Financial Measures

Global Payments supplemented revenues, income and earnings per share information determined in accordance with GAAP by providing those measures on an adjusted basis in this earnings release to assist with evaluating performance. In addition to GAAP measures, management uses these non-GAAP measures to focus on the factors the company believes are pertinent to the daily management of our operations.

Reconciliations of the non-GAAP measures to the most directly comparable GAAP measure are included in the schedules to this release.

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 technologies, partnerships 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 8,500 employees worldwide, Global Payments is a member of the S&P 500 with merchants and partners in 30 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.

Forward-Looking Statements

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 our potential failure to safeguard our data; 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 merchant, referral partner or ISO attrition; our ability to increase our share of existing markets and expand into new markets; political, economic and regulatory changes in the foreign countries in which we operate; system interruptions in service; increases in credit card network fees; future performance, integration and conversion of acquired operations; and other risk factors presented in our most recent Annual Report on Form 10-K and any subsequent SEC filings, which we advise you to review. 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     Six Months Ended

November 30,

2016

   

November 30,

2015

   

%

Change

November 30,

2016

   

November 30,

2015

   

%

Change

 
Revenues $ 941,821 $ 722,350 30.4 % $ 1,881,313 $ 1,471,146 27.9 %
 
Operating expenses:
Cost of service 468,383 270,565 73.1 % 931,009 543,231 71.4 %
Selling, general and administrative 368,171   328,620   12.0 % 723,931   666,978   8.5 %
836,554   599,185   39.6 % 1,654,940   1,210,209  
 
Operating income 105,267   123,165   (14.5 )%

226,373

  260,937   (13.2 )%
 
Interest and other income 1,353 1,292 4.7 % 43,826 2,434 NM
Interest and other expense (52,448 ) (14,126 ) 271.3 % (95,524 ) (27,369 ) 249.0 %
(51,095 ) (12,834 ) 298.1 % (51,698 ) (24,935 ) 107.3 %
 
Income before income taxes 54,172 110,331 (50.9 )% 174,675 236,002 (26.0 )%
Provision for income taxes (1,557 ) (27,253 ) (94.3 )% (29,601 ) (59,876 ) (50.6 )%
Net income 52,615 83,078 (36.7 )% 145,074 176,126 (17.6 )%
Less: Net income attributable to noncontrolling interests, net of income tax (3,163 ) (4,307 ) (26.6 )% (10,529 ) (10,708 ) (1.7 )%
Net income attributable to Global Payments $ 49,452   $ 78,771   (37.2 )% $ 134,545   $ 165,418   (18.7 )%
 
Earnings per share attributable to Global Payments:
Basic $ 0.32 $ 0.61 (47.5 )% $ 0.88 $ 1.27 (30.7 )%
Diluted $ 0.32 $ 0.60 (46.7 )% $ 0.87 $ 1.27 (31.5 )%
 
Weighted-average number of shares outstanding:
Basic 153,173 129,505 153,539 129,919
Diluted 153,991 130,353 154,435 130,752
 

NM - Not meaningful.

 
 
 
 
 
 
 

SCHEDULE 2
NON-GAAP FINANCIAL MEASURES (UNAUDITED)
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands, except per share data)

 
      Three Months Ended     Six Months Ended

November 30,

2016

   

November 30,

2015

   

%

Change

November 30,

2016

   

November 30,

2015

   

%

Change

 
Adjusted net revenue $ 817,188 $ 518,302 57.7 % $ 1,634,443 $ 1,055,255 54.9 %
 
Adjusted operating income $ 240,819 $ 153,208 57.2 % $ 481,536 $ 316,776 52.0 %
 
Adjusted net income $ 136,618 $ 99,501 37.3 % $ 270,300 $ 202,530 33.5 %
 
Adjusted EPS: $ 0.89 $ 0.76 17.1 % $ 1.75 $ 1.55 12.9 %
 

See Schedules 6 and 7 for a reconciliation of each non-GAAP financial measure to the most comparable GAAP measure and Schedule 10 for a discussion of non-GAAP financial measures.

 
 
 
 
 
 
 

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

 
      Three Months Ended        
November 30, 2016     November 30, 2015 % Change
GAAP     Non-GAAP1 GAAP     Non-GAAP1 GAAP Non-GAAP1
 
Revenues:
North America $ 701,300 $ 604,067 $ 511,335 $ 325,889 37.2 % 85.4 %
Europe 174,904 147,504 158,016 139,414 10.7 % 5.8 %
Asia-Pacific   65,617     65,617     52,999     52,999   23.8 % 23.8 %
$ 941,821   $ 817,188   $ 722,350   $ 518,302   30.4 % 57.7 %
 
Operating income:
North America $ 105,746 $ 181,753 $ 79,121 $ 93,034 33.7 % 95.4 %
Europe 60,875 68,899 62,012 68,188 (1.8 )% 1.0 %
Asia-Pacific 16,658 19,406 11,857 14,515 40.5 % 33.7 %
Corporate   (78,012 )   (29,239 )   (29,825 )   (22,529 ) 161.6 % 29.8 %
$ 105,267   $ 240,819   $ 123,165   $ 153,208   (14.5 )% 57.2 %
 
 
Six Months Ended
November 30, 2016 November 30, 2015 % Change
GAAP Non-GAAP1 GAAP

 

Non-GAAP1

GAAP Non-GAAP1
 
Revenues:
North America $ 1,413,064 $ 1,212,737 $ 1,042,192 $ 666,320 35.6 % 82.0 %
Europe 344,469 297,926 326,373 286,354 5.5 % 4.0 %
Asia-Pacific 123,780   123,780     102,581     102,581   20.7 % 20.7 %
$ 1,881,313   $ 1,634,443   $ 1,471,146   $ 1,055,255   27.9 % 54.9 %
 
Operating income:
North America $ 211,446 $ 360,115 $ 162,635 $ 190,002 30.0 % 89.5 %
Europe 126,414 141,012 134,745 145,219 (6.2 )% (2.9 )%
Asia-Pacific 30,680 35,895 24,089 28,325 27.4 % 26.7 %
Corporate   (142,167 )   (55,486 )   (60,532 )   (46,770 ) 134.9 % 18.6 %
$ 226,373   $ 481,536   $ 260,937   $ 316,776   (13.2 )% 52.0 %
 

1 See Schedules 8 and 9 for a reconciliation of adjusted net revenue and adjusted operating income by segment to the most comparable GAAP measures and Schedule 10 for a discussion of non-GAAP financial measures.

 
 
 
 
 
 
 

SCHEDULE 4
UNAUDITED CONSOLIDATED BALANCE SHEETS
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands, except share data)

 
      November 30, 2016     May 31, 2016
 
ASSETS
Current assets:
Cash and cash equivalents $ 995,816 $ 1,044,728
Accounts receivable, net of allowances for doubtful accounts of $294 and $353, respectively 266,245 281,612
Claims receivable, net of allowances for doubtful accounts of $4,771 and $4,868, respectively 8,772 6,799
Settlement processing assets 1,117,666 1,336,326
Prepaid expenses and other current assets 186,464   181,848  
Total current assets 2,574,963 2,851,313
Goodwill 4,823,756 4,829,405
Other intangible assets, net 2,115,842 2,264,708
Property and equipment, net 520,714 493,678
Deferred income taxes 20,419 22,719
Other 57,420   48,129  
Total assets $ 10,113,114   $ 10,509,952  
 
LIABILITIES AND EQUITY
Current liabilities:
Settlement lines of credit $ 467,293 $ 378,436
Current portion of long-term debt 177,759 135,542
Accounts payable and accrued liabilities 681,356 696,414
Settlement processing obligations 883,447   1,220,315  
Total current liabilities 2,209,855 2,430,707
Long-term debt 4,316,391 4,379,744
Deferred income taxes 695,258 744,862
Other noncurrent liabilities 89,773   77,235  
Total liabilities 7,311,277   7,632,548  
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; 152,267,428 issued and outstanding at November 30, 2016 and 154,421,585 issued and outstanding at May 31, 2016
Paid-in capital 1,818,487 1,976,715
Retained earnings 1,146,844 1,015,811
Accumulated other comprehensive loss (309,717 ) (246,050 )
Total Global Payments shareholders' equity 2,655,614 2,746,476
Noncontrolling interests 146,223   130,928  
Total equity 2,801,837   2,877,404  
Total liabilities and equity $ 10,113,114   $ 10,509,952  
 
 
 
 
 
 
 

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

 
      Six Months Ended

November 30,

2016

   

November 30,

2015

Cash flows from operating activities:
Net income $ 145,074 $ 176,126
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property and equipment 45,681 35,697
Amortization of acquired intangibles 166,188 41,809
Share-based compensation expense 16,366 13,472
Provision for operating losses and bad debts 19,024 11,257
Amortization of capitalized customer acquisition costs 12,291
Deferred income taxes (52,710 ) 2,900
Gain on sale of investments (41,150 )
Other, net 18,784 2,198
Changes in operating assets and liabilities, net of the effects of acquisitions:
Accounts receivable 9,693 (4,271 )
Claims receivable (14,067 ) (18,723 )
Settlement processing assets and obligations, net (113,359 ) 208,446
Prepaid expenses and other assets (5,846 ) (14,097 )
Accounts payable and other liabilities (12,426 ) (744 )
Net cash provided by operating activities 193,543   454,070  
Cash flows from investing activities:
Business acquisitions, net of cash acquired (35,260 ) (241,934 )
Capital expenditures (83,268 ) (36,246 )
Proceeds from sale of investments 37,717    
Net cash used in investing activities (80,811 ) (278,180 )
Cash flows from financing activities:
Net borrowings on settlement lines of credit 94,757 101,464
Proceeds from issuance of long-term debt 1,289,000 3,030,175
Principal payments of long-term debt (1,314,799 ) (2,852,175 )
Payment of debt issuance costs (9,279 ) (4,934 )
Repurchase of common stock (172,405 ) (71,748 )
Proceeds from stock issued under share-based compensation plans 4,882 6,317
Common stock repurchased - share-based compensation plans (20,390 ) (11,579 )
Tax benefit from share-based compensation plans 13,017 6,521
Purchase of subsidiary shares from noncontrolling interest (7,550 )
Distributions to noncontrolling interests (12,365 ) (8,158 )
Dividends paid (3,069 ) (2,602 )
Net cash (used in) provided by financing activities (130,651 ) 185,731  
Effect of exchange rate changes on cash (30,993 ) (23,903 )
(Decrease) increase in cash and cash equivalents (48,912 ) 337,718
Cash and cash equivalents, beginning of the period 1,044,728   650,739  
Cash and cash equivalents, end of the period $ 995,816   $ 988,457  
 
 
 
 
 
 
 

SCHEDULE 6
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP MEASURES (UNAUDITED)
THREE MONTHS ENDED NOVEMBER 30, 2016 AND 2015
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands, except per share data)

 
      Three Months Ended November 30, 2016
GAAP    

Net Revenue

Adjustments1

   

Earnings

Adjustments2

   

Income Taxes on

Adjustments3

    Non-GAAP
Revenues $ 941,821     $ (124,633 )     $     $     $ 817,188
 
Operating income $ 105,267 $ $ 135,552 $ $ 240,819
 
Net income attributable to Global Payments $ 49,452 $ $ 141,499 $ (54,333 ) $ 136,618
 
Diluted earnings per share attributable to Global Payments4 $ 0.32 $ 0.89
 
Three Months Ended November 30, 2015
GAAP    

Net Revenue

Adjustments1

   

Earnings

Adjustments2

   

Income Taxes on

Adjustments3

   

Non-GAAP

Revenues $ 722,350 $ (204,048 ) $ $ $ 518,302
 
Operating income $ 123,165 $ $ 30,043 $ $ 153,208
 
Net income attributable to Global Payments $ 78,771 $ $ 29,114 $ (8,384 ) $ 99,501
 
Diluted earnings per share attributable to Global Payments4 $ 0.60 $ 0.76
 

1Represents adjustments to revenues for gross-up related payments (included in operating expenses) associated with certain wholesale lines of business to reflect economic benefits to the company.

2 Earnings adjustments to operating income for the three months ended November 30, 2016 include $86.5 million and $49.0 million in cost of service and selling, general and administrative expenses, respectively. Adjustments to cost of service include amortization of acquired intangibles of $86.2 million and employee termination expenses of $0.3 million. Adjustments to selling, general and administrative expenses include share-based compensation expense of $8.7 million, merger-related costs of $36.6 million, litigation settlement of $2.7 million and employee termination expenses of $1.0 million. Net income attributable to Global Payments also reflects an adjustment for a non-cash charge of $8.2 million for previously deferred issuance costs written off in connection with the refinancing of our corporate debt.

Earnings adjustments to operating income for the three months ended November 30, 2015 include $21.7 million and $8.3 million in cost of service and selling, general and administrative expenses, respectively. Adjustments to cost of service represent amortization of acquired intangibles of $21.5 million and other adjustments of $0.2 million. Adjustments to selling, general and administrative expenses include share-based compensation expense of $7.0 million and $1.3 million of other adjustments.

3 Income taxes on adjustments reflect the tax effect of earnings adjustments to income before income taxes. The tax rate used in determining the tax impact of earnings adjustments is either the jurisdictional statutory rate in effect at the time of the adjustment or the jurisdictional expected annual effective tax rate for the period, depending on the nature and timing of the adjustment. Income tax adjustments for the three months ended November 30, 2016 include the removal of a $5.1 million tax benefit associated with a change in estimate of certain U.S. inclusion items relating to the gain on sale of Visa Europe.

4 Adjusted EPS is calculated by dividing adjusted net income attributable to Global Payments by the diluted weighted-average number of shares outstanding.

See "Non-GAAP Financial Measures" discussion on Schedule 10.

 
 
 
 
 
 
 

SCHEDULE 7
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP MEASURES (UNAUDITED)
SIX MONTHS ENDED NOVEMBER 30, 2016 AND 2015
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands, except per share data)

 
      Six Months Ended November 30, 2016
GAAP    

Net Revenue

Adjustments1

   

Earnings

Adjustments2

   

Income Taxes on

Adjustments3

    Non-GAAP
               
Revenues $ 1,881,313 $ (246,870 ) $ $ $ 1,634,443
 
Operating income $ 226,373 $ $ 255,163 $ $ 481,536
 
Net income attributable to Global Payments $ 134,545 $ $ 218,490 $ (82,735 ) $ 270,300
 
Diluted earnings per share attributable to Global Payments4 $ 0.87 $ 1.75
 
 
Six Months Ended November 30, 2015
GAAP    

Net Revenue

Adjustments1

   

Earnings

Adjustments2

   

Income Taxes on

Adjustments3

 

    Non-GAAP
 
Revenues $ 1,471,146 $ (415,891 ) $ $ $ 1,055,255
 
Operating income $ 260,937 $ $ 55,839 $ $ 316,776
 
Net income attributable to Global Payments $ 165,418 $ $ 54,032 $ (16,920 ) $ 202,530
 
Diluted earnings per share attributable to Global Payments4 $ 1.27 $ 1.55
 

1Represents adjustments to revenues for gross-up related payments (included in operating expenses) associated with certain wholesale lines of business to reflect economic benefits to the company.

2 Earnings adjustments to operating income for the six months ended November 30, 2016 include $168.2 million and $87.0 million in cost of service and selling, general and administrative expenses, respectively. Adjustments to cost of service include amortization of acquired intangibles of $167.3 million and employee termination expenses of $0.9 million. Adjustments to selling, general and administrative expenses include share-based compensation expense of $16.1 million, merger-related costs of $67.2 million, litigation settlement of $2.7 million and employee termination expenses of $1.0 million. Net income attributable to Global Payments also reflects an adjustment of $41.2 million to remove a gain on the sale of membership interests in Visa Europe and an adjustment for a non-cash charge of $8.2 million for previously deferred issuance costs written off in connection with the refinancing of our corporate debt.

Earnings adjustments to operating income for the six months ended November 30, 2015 include $41.0 million and $14.8 million in cost of service and selling, general and administrative expenses, respectively. Adjustments to cost of service represent amortization of acquired intangibles of $42.9 million and offsetting other adjustments of $1.9 million. Adjustments to selling, general and administrative expenses include share-based compensation expense of $13.5 million and $1.3 million of other adjustments.

3 Income taxes on adjustments reflect the tax effect of earnings adjustments to income before income taxes. The tax rate used in determining the tax impact of earnings adjustments is either the jurisdictional statutory rate in effect at the time of the adjustment or the jurisdictional expected annual effective tax rate for the period, depending on the nature and timing of the adjustment.

4 Adjusted EPS is calculated by dividing adjusted net income attributable to Global Payments by the diluted weighted-average number of shares outstanding.

See "Non-GAAP Financial Measures" discussion on Schedule 10.

 
 
 
 
 
 
 

SCHEDULE 8
RECONCILIATION OF SEGMENT NON-GAAP FINANCIAL MEASURES TO GAAP MEASURES (UNAUDITED)
THREE MONTHS ENDED NOVEMBER 30, 2016 AND 2015
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands, except per share data)

 
      Three Months Ended November 30, 2016     Three Months Ended November 30, 2015
GAAP    

Net Revenue

Adjustments1

   

Earnings

Adjustments2

    Non-GAAP     GAAP    

Net Revenue

Adjustments1

   

Earnings

Adjustments2

    Non-GAAP
Revenues:                        
North America $ 701,300 $ (97,233 ) $ $ 604,067 $ 511,335 $ (185,446 ) $ $ 325,889
Europe 174,904 (27,400 ) 147,504 158,016 (18,602 ) 139,414
Asia-Pacific 65,617       65,617   52,999       52,999  
$ 941,821   $ (124,633 ) $   $ 817,188   $ 722,350   $ (204,048 ) $   $ 518,302  
 
Operating income:
North America $ 105,746 $ $ 76,007 $ 181,753 $ 79,121 $ $ 13,913 $ 93,034
Europe 60,875 8,024 68,899 62,012 6,176 68,188
Asia-Pacific 16,658 2,748 19,406 11,857 2,658 14,515
Corporate (78,012 )   48,773   (29,239 ) (29,825 )   7,296   (22,529 )
$ 105,267   $   $ 135,552   $ 240,819   $ 123,165   $   $ 30,043   $ 153,208  
 

1 Represents adjustments to revenues for gross-up related payments (included in operating expenses) associated with certain wholesale lines of business to reflect economic benefits to the company.

2 Earnings adjustments to operating income for the three months ended November 30, 2016 include $86.5 million and $49.0 million in cost of service and selling, general and administrative expenses, respectively. Adjustments to cost of service include amortization of acquired intangibles of $86.2 million and employee termination expenses of $0.3 million. Adjustments to selling, general and administrative expenses include share-based compensation expense of $8.7 million, merger-related costs of $36.6 million, litigation settlement of $2.7 million and employee termination expenses of $1.0 million.

Earnings adjustments to operating income for the three months ended November 30, 2015 include $21.7 million and $8.3 million in cost of service and selling, general and administrative expenses, respectively. Adjustments to cost of service represent amortization of acquired intangibles of $21.5 million and other adjustments of $0.2 million. Adjustments to selling, general and administrative expenses include share-based compensation expense of $7.0 million and $1.3 million of other adjustments.

See "Non-GAAP Financial Measures" discussion on Schedule 10.

 
 
 
 
 
 
 

SCHEDULE 9
RECONCILIATION OF SEGMENT NON-GAAP FINANCIAL MEASURES TO GAAP MEASURES (UNAUDITED)
SIX MONTHS ENDED NOVEMBER 30, 2016 AND 2015
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands, except per share data)

 
      Six Months Ended November 30,
2016     2015
GAAP    

Net Revenue

Adjustments1

   

Earnings

Adjustments2

    Non-GAAP     GAAP    

Net Revenue

Adjustments1

   

Earnings

Adjustments2

    Non-GAAP
Revenues:                        
North America $ 1,413,064 $ (200,327 ) $ $ 1,212,737 $ 1,042,192 $ (375,872 ) $ $ 666,320
Europe 344,469 (46,543 ) 297,926 326,373 (40,019 ) 286,354
Asia-Pacific 123,780       123,780   102,581       102,581  
$ 1,881,313   $ (246,870 ) $   $ 1,634,443   $ 1,471,146   $ (415,891 ) $   $ 1,055,255  
 
Operating income:
North America $ 211,446 $ $ 148,669 $ 360,115 $ 162,635 $ $ 27,367 $ 190,002
Europe 126,414 14,598 141,012 134,745 10,474 145,219
Asia-Pacific 30,680 5,215 35,895 24,089 4,236 28,325
Corporate (142,167 )   86,681   (55,486 ) (60,532 )   13,762   (46,770 )
$ 226,373   $   $ 255,163   $ 481,536   $ 260,937   $   $ 55,839   $ 316,776  
 

1 Represents adjustments to revenues for gross-up related payments (included in operating expenses) associated with certain wholesale lines of business to reflect economic benefits to the company.

2 Earnings adjustments to operating income for the six months ended November 30, 2016 include $168.2 million and $87.0 million in cost of service and selling, general and administrative expenses, respectively. Adjustments to cost of service include amortization of acquired intangibles of $167.3 million and employee termination expenses of $0.9 million. Adjustments to selling, general and administrative expenses include share-based compensation expense of $16.1 million, merger-related costs of $67.2 million, litigation settlement of $2.7 million and employee termination expenses of $1.0 million.

Earnings adjustments to operating income for the six months ended November 30, 2015 include $41.0 million and $14.8 million in cost of service and selling, general and administrative expenses, respectively. Adjustments to cost of service represent amortization of acquired intangibles of $42.9 million and offsetting other adjustments of $1.9 million. Adjustments to selling, general and administrative expenses include share-based compensation expense of $13.5 million and $1.3 million of other adjustments.

See "Non-GAAP Financial Measures" discussion on Schedule 10.

 
 
 
 
 
 
 

SCHEDULE 10
OUTLOOK SUMMARY (UNAUDITED)
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In billions, except per share data)

 
        Calendar 2017 Outlook
Revenues:
GAAP revenue $3.76 to $3.86
Adjustments1 (0.41)
Adjusted net revenue $3.35 to $3.45
 
Earnings Per Share ("EPS"):
GAAP diluted EPS $2.20 to $2.40
Acquisition-related amortization expense, share-based compensation expense and non-recurring items 1.50

 

Adjusted EPS $3.70 to $3.90
 

1Represents adjustments to revenues for gross-up related payments (included in operating expenses) associated with certain wholesale lines of business to reflect economic benefits to the company.

NON-GAAP FINANCIAL MEASURES

Global Payments supplements revenues, income and earnings per share ("EPS") information determined in accordance with U.S. GAAP by providing these measures with certain adjustments (such measures being non-GAAP financial measures) in this document to assist with evaluating our performance. In addition to GAAP measures, management uses these non-GAAP financial measures to focus on the factors the company believes are pertinent to the daily management of our operations. Management believes adjusted net revenue more closely reflects the economic benefits to the company's core business and allows for better comparisons with industry peers. Management uses these non-GAAP financial measures, together with other metrics, to set goals for and measure the performance of the business and to determine incentive compensation. Adjusted net revenue, adjusted operating income, adjusted net income and adjusted EPS should be considered in addition to, and not as substitutes for, revenues, operating income, net income and EPS determined in accordance with GAAP. The non-GAAP financial measures reflect management's judgment of particular items, and may not be comparable to similarly titled measures reported by other companies.

Adjusted net revenue excludes gross-up related payments associated with certain wholesale lines of business to reflect economic benefits to the company. On a GAAP basis, these payments are presented gross in both revenues and operating expenses.

Adjusted operating income, adjusted net income and adjusted EPS exclude acquisition-related amortization expense, share-based compensation and certain other items specific to each reporting period as more fully described in the accompanying reconciliations in Schedules 6, 7, 8 and 9. The tax rate used in determining the net income impact of earnings adjustments is either the jurisdictional statutory rate in effect at the time of the adjustment or the jurisdictional expected annual effective tax rate for the period, depending on the nature and timing of the adjustment.

Global Payments Inc.
Investor contact:
Isabel Janci, 770-829-8478
investor.relations@globalpay.com
or
Media contact:
Amy Corn, 770-829-8755
media.relations@globalpay.com

Source: Global Payments Inc.

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