GLOBAL PAYMENTS INC. ATLANTA, July 29, 2014 /PRNewswire/ -- Global Payments Inc. (NYSE: GPN), one of the largest worldwide providers of payment solutions, today announced results for its fiscal fourth quarter and year ended May 31, 2014.
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"I am pleased with Global Payments' strong financial performance for the fourth quarter and full fiscal year. During fiscal 2014, we grew cash earnings per share 13 percent, returned over $450 million dollars to shareholders and completed a $420 million acquisition to further diversify distribution in our largest market and complement our focus on differentiated technologies. We achieved key execution milestones, including meaningfully expanding our integrated solutions business in the U.S., delivering solid performance in Canada and adding to our direct distribution channels in Asia," said Jeff Sloan, Chief Executive Officer of Global Payments Inc. "In fiscal 2015, we will continue to focus on our direct distribution strategy by leveraging our global technology platforms to deliver new, innovative products and services, driving operating margin expansion and delivering double-digit cash earnings per share growth."
Full-Year 2014 Summary
-- Revenues grew 8% to $2.55 billion, compared to $2.38 billion in fiscal
2013.
-- Cash diluted earnings per share([1]) grew 13% to $4.12, compared to
$3.65 in the prior fiscal year.
-- GAAP full-year diluted earnings per share of $3.37, compared to $2.76
diluted earnings per share in the prior year.
Fourth Quarter 2014 Summary
-- Revenues grew 9% to $674.0 million, compared to $618.4 million in the
fourth quarter of fiscal 2013.
-- Cash diluted earnings per share grew 11% to $1.09, compared to $0.98 in
the fourth quarter of fiscal 2013.
-- GAAP diluted earnings per share were $0.72, compared to $0.53 in the
fourth quarter of 2013.
2015 Outlook
For the full year of fiscal 2015, the company expects annual revenue of $2.69 billion to $2.76 billion, or 6% to 8% growth over fiscal 2014. The company also expects annual diluted earnings per share on a cash basis of $4.52 to $4.62, reflecting growth of 10% to 12% over fiscal 2014. Annual fiscal 2015 GAAP diluted earnings per share is expected to be $3.76 to $3.86.
Additional Share Repurchase Authorization
Global Payments' board of directors also expanded its share repurchase authorization by an incremental $200 million, bringing its total current authorization to $320 million. Under the company's new authorization, 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.
Conference Call
Global Payments will hold a conference call today, July 29, 2014, 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 on the Global Payments website through August 12, 2014.
About Global Payments
Global Payments Inc. is one of the largest worldwide providers of payment solutions for merchants, value added resellers, enterprise software providers, financial institutions, government agencies, multi-national corporations and independent sales organizations located throughout North America, South America, Europe and the Asia-Pacific region. Global Payments, a Fortune 1000 company, offers a comprehensive line of solutions and services 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 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 Annual Report on Form 10-K for the fiscal year ended May 31, 2014, 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.
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,
-------------------------- ------------------
2014 2013 % Change 2014 2013 % Change
---- ---- -------- ---- ---- --------
Revenues $673,977 $618,352 9.0% $2,554,236 $2,375,923 7.5%
Operating expenses:
Cost of service 253,373 229,951 10.2% 952,225 862,075 10.5%
Sales, general and administrative 331,687 290,568 14.2% 1,203,512 1,119,860 7.5%
Processing system intrusion - 28,464 NM (7,000) 36,775 NM
585,060 548,983 6.6% 2,148,737 2,018,710 6.4%
------- ------- --------- ---------
Operating income 88,917 69,369 28.2% 405,499 357,213 13.5%
Other income (expense):
Interest and other income 2,093 3,647 (42.6%) 13,663 10,353 32.0%
Interest and other expense (9,451) (8,065) 17.2% (41,812) (33,282) 25.6%
------ ------ ------- -------
(7,358) (4,418) 66.5% (28,149) (22,929) 22.8%
------ ------ ------- -------
Income before income taxes 81,559 64,951 25.6% 377,350 334,284 12.9%
Provision for income taxes (23,293) (18,585) 25.3% (107,398) (95,571) 12.4%
------- ------- -------- -------
Net income 58,266 46,366 25.7% 269,952 238,713 13.1%
Less: Net income attributable to noncontrolling interests, net of income tax (6,641) (5,561) 19.4% (24,666) (22,588) 9.2%
------ ------ ------- -------
Net income attributable to Global Payments $51,625 $40,805 26.5% $245,286 $216,125 13.5%
======= ======= ======== ========
Earnings per share attributable to Global Payments:
Basic $0.73 $0.54 35.2% $3.40 $2.78 22.3%
Diluted $0.72 $0.53 35.8% $3.37 $2.76 22.1%
Weighted average shares outstanding:
Basic 70,707 76,034 72,119 77,767
Diluted 71,322 76,651 72,688 78,227
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 May 31, Year Ended May 31,
-------------------------- ------------------
2014 2013 % Change 2014 2013 % Change
---- ---- -------- ---- ---- --------
Revenues $673,977 $618,352 9.0% $2,554,236 $2,375,923 7.5%
Operating expenses:
Cost of service 234,856 214,080 9.7% 889,576 803,952 10.7%
Sales, general and administrative 317,085 285,017 11.3% 1,184,066 1,113,509 6.3%
551,941 499,097 10.6% 2,073,642 1,917,461 8.1%
------- ------- --------- ---------
Operating income 122,036 119,255 2.3% 480,594 458,462 4.8%
Other income (expense):
Interest and other income 2,093 3,647 (42.6%) 11,540 10,353 11.5%
Interest and other expense (8,110) (8,065) 0.6% (32,327) (24,899) 29.8%
------ ------ ------- -------
(6,017) (4,418) 36.2% (20,787) (14,546) 42.9%
------ ------ ------- -------
Income before income taxes 116,019 114,837 1.0% 459,807 443,916 3.6%
Provision for income taxes (30,249) (32,693) (7.5%) (130,181) (126,294) 3.1%
------- ------- -------- --------
Net income 85,770 82,144 4.4% 329,626 317,622 3.8%
Less: Net income attributable to noncontrolling interests, net of income tax (8,075) (7,042) 14.7% (30,295) (32,206) (5.9%)
Net income attributable to Global Payments $77,695 $75,102 3.5% $299,331 $285,416 4.9%
======= ======= ======== ========
Earnings per share attributable to Global Payments:
Basic $1.10 $0.99 11.1% $4.15 $3.67 13.1%
Diluted $1.09 $0.98 11.2% $4.12 $3.65 12.9%
Weighted average shares outstanding:
Basic 70,707 76,034 72,119 77,767
Diluted 71,322 76,651 72,688 78,227
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,
--------------------------
2014 2013 % Change
---- ---- --------
GAAP Cash Earnings GAAP Cash Earnings GAAP Cash Earnings
---- ------------- ---- ------------- ---- -------------
Revenues:
United States $407,153 $407,153 $372,425 $372,425 9.3% 9.3%
Canada 74,954 74,954 77,115 77,115 (2.8%) (2.8%)
------ ------ ------ ------
North America merchant services 482,107 482,107 449,540 449,540 7.2% 7.2%
Europe 153,577 153,577 132,217 132,217 16.2% 16.2%
Asia-Pacific 38,293 38,293 36,595 36,595 4.6% 4.6%
------ ------ ------ ------
International merchant services 191,870 191,870 168,812 168,812 13.7% 13.7%
Total revenues $673,977 $673,977 $618,352 $618,352 9.0% 9.0%
======== ======== ======== ========
Operating income (loss) for segments:
North America merchant services $70,420 $82,722 $69,101 $80,229 1.9% 3.1%
International merchant services 58,094 66,402 48,295 57,460 20.3% 15.6%
Corporate(1) (39,597) (27,088) (48,027) (18,434) 17.6% (46.9%)
Operating income $88,917 $122,036 $69,369 $119,255 28.2% 2.3%
======= ======== ======= ========
Year Ended May 31,
------------------
2014 2013 % Change
---- ---- --------
GAAP Cash Earnings GAAP Cash Earnings GAAP Cash Earnings
---- ------------- ---- ------------- ---- -------------
Revenues:
United States $1,488,659 $1,488,659 $1,394,675 $1,394,675 6.7% 6.7%
Canada 320,333 320,333 311,000 311,000 3.0% 3.0%
------- ------- ------- -------
North America merchant services 1,808,992 1,808,992 1,705,675 1,705,675 6.1% 6.1%
Europe 587,463 587,463 522,593 522,593 12.4% 12.4%
Asia-Pacific 157,781 157,781 147,655 147,655 6.9% 6.9%
------- ------- ------- -------
International merchant services 745,244 745,244 670,248 670,248 11.2% 11.2%
Total revenues $2,554,236 $2,554,236 $2,375,923 $2,375,923 7.5% 7.5%
========== ========== ========== ==========
Operating income (loss) for segments:
North America merchant services $272,251 $308,570 $258,910 $288,162 5.2% 7.1%
International merchant services 240,179 270,551 211,242 245,279 13.7% 10.3%
Corporate(1) (106,931) (98,527) (112,939) (74,979) 5.3% (31.4%)
Operating income $405,499 $480,594 $357,213 $458,462 13.5% 4.8%
======== ======== ======== ========
(1)GAAP and cash earnings include incremental security spend for the three and twelve months ended May 31, 2014. GAAP earnings for the twelve months ended May 31, 2014 include insurance proceeds of ($7M) related to the FY 2012 data intrusion. GAAP earnings for the three and twelve months ended May 31, 2013 include a data intrusion
charge of $28.5 million and $36.8 million, respectively.
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, 2014 May 31, 2013
------------ ------------
Assets
Current assets:
Cash and cash equivalents $581,872 $680,470
Accounts receivable, net of allowances for doubtful accounts of $401 and $509, respectively 214,574 189,435
Claims receivable, net 809 1,156
Settlement processing assets 780,917 259,204
Inventory 6,636 11,057
Deferred income taxes 12,963 6,485
Prepaid expenses and other current assets 45,673 66,685
Total current assets 1,643,444 1,214,492
Goodwill 1,337,285 1,044,222
Other intangible assets, net 535,173 400,848
Property and equipment, net 369,753 348,064
Deferred income taxes 101,928 95,178
Other 31,067 22,252
------ ------
Total assets $4,018,650 $3,125,056
========== ==========
Liabilities and Equity
Current liabilities:
Lines of credit 440,128 $187,461
Current portion of long-term debt 17,677 72,335
Accounts payable and accrued liabilities 290,106 262,890
Settlement processing obligations 451,317 162,558
Income taxes payable 12,390 18,870
Total current liabilities 1,211,618 704,114
Long-term debt 1,376,002 891,134
Deferred income taxes 209,099 170,723
Other long-term liabilities 89,132 72,478
Total liabilities 2,885,851 1,838,449
--------- ---------
Commitment 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; 68,845,643 and 75,426,099
issued and outstanding at May 31, 2014 and 2013, respectively - -
Paid-in capital 183,023 202,396
Retained earnings 815,980 958,751
Accumulated other comprehensive loss (1,776) (15,062)
Total Global Payments shareholders' equity 997,227 1,146,085
Noncontrolling interests 135,572 140,522
Total equity 1,132,799 1,286,607
--------- ---------
Total liabilities and equity $4,018,650 $3,125,056
========== ==========
SCHEDULE 5
CONSOLIDATED STATEMENTS OF CASH FLOWS
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands)
Year Ended May 31,
------------------
2014 2013
---- ----
Cash flows from operating activities:
Net income $269,952 $238,713
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property and equipment 60,124 55,023
Amortization of acquired intangibles 61,945 56,765
Share-based compensation expense 29,793 18,427
Provision for operating losses and bad debts 20,574 21,659
Deferred income taxes (1,799) 33,112
Other, net (1,484) (4,878)
Changes in operating assets and liabilities, net of the effects of acquisitions:
Accounts receivable (18,539) (5,458)
Claims receivable (11,569) (11,858)
Settlement processing assets and obligations, net (241,431) (104,007)
Inventory 4,793 (1,187)
Prepaid expenses and other assets 18,995 (22,978)
Accounts payable and other accrued liabilities 9,224 (39,374)
Income taxes payable (6,480) 6,587
Net cash provided by operating activities 194,098 240,546
------- -------
Cash flows from investing activities:
Business, intangible and other asset acquisitions, net of cash
acquired (426,524) (434,016)
Capital expenditures (81,411) (98,590)
Principal collections on financing receivables 2,658 2,812
Net proceeds from sale of investments and business 3,607 1,227
Net cash used in investing activities (501,670) (528,567)
-------- --------
Cash flows from financing activities:
Net borrowings (payments) on short-term lines of credit 252,667 (27,930)
Proceeds from issuance of long-term debt 2,690,000 1,135,327
Principal payments under long-term debt (2,260,597) (482,349)
Acquisition of redeemable noncontrolling interest - (242,000)
Payment of debt issuance costs (5,961) (3,987)
Repurchase of common stock (447,307) (175,297)
Proceeds from stock issued under share-based compensation plans 31,727 10,543
Common stock repurchased - share-based compensation plans (5,681) (10,244)
Tax benefit from share-based compensation plans 6,475 1,863
Distributions to noncontrolling interests (36,670) (16,206)
Dividends paid (5,757) (6,198)
Net cash provided by financing activities 218,896 183,522
------- -------
Effect of exchange rate changes on cash (9,922) 3,694
------ -----
Decrease in cash and cash equivalents (98,598) (100,805)
Cash and cash equivalents, beginning of period 680,470 781,275
------- -------
Cash and cash equivalents, end of period $581,872 $680,470
======== ========
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, 2014
-------------------------------
GAAP Processing System Intrusion Other(1) Cash Cash Earnings
Earnings
Adjustments(2)
-------------
Revenues $673,977 $ - $ - $ - $673,977
Operating expenses:
Cost of service 253,373 - (125) (18,392) 234,856
Sales, general and administrative 331,687 - (14,602) - 317,085
Processing system intrusion - - - - -
585,060 - (14,727) (18,392) 551,941
------- --- ------- ------- -------
Operating income 88,917 - 14,727 18,392 122,036
Other income (expense):
Interest and other income 2,093 - - - 2,093
Interest and other expense (9,451) - 1,341 - (8,110)
--- ----- --- ------
(7,358) - 1,341 - (6,017)
------ --- ----- --- ------
Income before income taxes 81,559 - 16,068 18,392 116,019
Provision for income taxes (23,293) - (1,237) (5,719) (30,249)
------- --- ------ ------ -------
Net income 58,266 - 14,831 12,673 85,770
Less: Net income attributable to noncontrolling interests, net of income tax (6,641) - - (1,434) (8,075)
------ --- --- ------ ------
Net income attributable to Global Payments $51,625 $ - $14,831 $11,239 $77,695
======= ====================== ======= ======= =======
Diluted shares 71,322 71,322
Diluted earnings per share $0.72 $ - $0.21 $0.16 $1.09
===== ====================== ===== ===== =====
Three Months Ended May 31, 2013
-------------------------------
GAAP Processing System Intrusion Other(1) Cash Earnings Adjustments(2) 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 income 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
===== ===== ===== ===== =====
1 For the period ended May 31, 2014, represents acceleration of equity awards and other costs associated with the retirement of our former Chairman and CEO, a nonrecurring charge associated with our retained interest in Brazil, an adjustment to the costs associated with the debt refinancing we completed in February 2014, non-cash losses from the retirement of fixed
assets and charges related to employee termination benefits. For the prior period, represents one-time charges primarily related to employee termination benefits and certain contract settlement and related costs.
(2)Represents 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, 2014 and 2013 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 amounts related to the processing system intrusion, acquisition intangible amortization, acceleration of equity awards and other costs associated with the retirement of our former Chairman and CEO, a nonrecurring charge associated with our retained interest in Brazil, non-cash losses from the retirement of fixed assets, employee termination
benefits and an adjustment to the costs associated with the debt refinancing.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, 2014
-----------------------
GAAP Processing Other(2) Cash Earnings Adjustments(3) Cash Earnings
System Intrusion (1)
-------------------
Revenues $2,554,236 $ - $ - $ - $2,554,236
Operating expenses:
Cost of service 952,225 - (704) (61,945) 889,576
Sales, general and administrative 1,203,512 - (19,446) - 1,184,066
Processing system intrusion (7,000) 7,000 - - -
2,148,737 7,000 (20,150) (61,945) 2,073,642
--------- ----- ------- ------- ---------
Operating income 405,499 (7,000) 20,150 61,945 480,594
Other income (expense):
Interest and other income 13,663 - (2,123) - 11,540
Interest and other expense (41,812) - 9,485 - (32,327)
--- ----- --- -------
(28,149) - 7,362 - (20,787)
------- --- ----- --- -------
Income (loss) before income taxes 377,350 (7,000) 27,512 61,945 459,807
(Provision) benefit for income taxes (107,398) 2,393 (5,351) (19,825) (130,181)
-------- ----- ------ ------- --------
Net income (loss) 269,952 (4,607) 22,161 42,120 329,626
Less: Net income attributable to noncontrolling interests, net of income tax (24,666) - - (5,629) (30,295)
------- --- --- ------ -------
Net income (loss) attributable to Global Payments $245,286 $(4,607) $22,161 $36,491 $299,331
======== ======= ======= ======= ========
Diluted shares 72,688 72,688
Diluted earnings (loss) per share $3.37 $(0.07) $0.31 $0.51 $4.12
===== ====== ===== ===== =====
Year Ended May 31, 2013
-----------------------
GAAP Processing System Intrusion Other(2) Cash Earnings Adjustments(3) 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 income 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
===== ===== ===== ===== =====
(1)Represents insurance proceeds associated with processing system intrusion charges incurred in FY 2012.
2 For the year ended May 31, 2014, represents acceleration of equity awards and other costs associated with the retirement of our former Chairman and CEO, a credit related to the sale of an interest in our Brazil business and a subsequent charge associated with our retained interest, cost associated with the debt refinancing we completed in February 2014, non-cash losses from
the retirement of fixed assets, charges related to employee termination benefits and HSBC's share of dividends declared. For the prior year, represents HSBC's share of GPAP dividends declared, one-time charges primarily related to employee termination benefits and certain contract settlement and related costs.
(3)Represents 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 years ended May 31, 2014 and 2013 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 amounts related to the processing system intrusion, acquisition intangible amortization, acceleration of equity awards and other costs associated with the retirement of our former Chairman and CEO, a nonrecurring charge associated with our retained interest in Brazil, non-cash losses from the retirement of fixed assets, employee termination benefits and resolution
of a contract related contingency and an adjustment to the costs associated with the debt refinancing. In the twelve months ended May 2013, we also adjusted the net income attributable to noncontrolling interests to include HSBC's share of GPAP net income.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,
--------------------------
2014 2013
---- ----
GAAP Processing Other(2) Cash Cash Earnings GAAP Processing System Intrusion Other(2) Cash Cash Earnings
System
Intrusion Earnings Adjustments(3) Earnings Adjustments(3)
--------- ---------------------- ----------------------
Revenues:
United States $407,153 $ - $ - $ - $407,153 $372,425 $ - $ - $ - $372,425
Canada 74,954 - - - 74,954 77,115 - - - 77,115
------ --- --- --- ------ ------ --- --- --- ------
North America merchant services 482,107 - - - 482,107 449,540 - - - 449,540
Europe 153,577 - - - 153,577 132,217 - - - 132,217
Asia-Pacific 38,293 - - - 38,293 36,595 - - - 36,595
------ --- --- --- ------ ------ --- --- --- ------
International merchant services 191,870 - - - 191,870 168,812 - - - 168,812
Total revenues $673,977 $ - $ - $ - $673,977 $618,352 $ - $ - $ - $618,352
======== ================= ================= ================= ======== ======== ================= ================= ================= ========
Operating income (loss) for segments:
North America merchant services $70,420 $ - $1,428 $10,874 $82,722 $69,101 $ - $4,688 $6,440 $80,229
International merchant services 58,094 - 790 7,518 66,402 48,295 53 878 8,234 57,460
Corporate (39,597) - 12,509 - (27,088) (48,027) 28,411 1,182 - (18,434)
Operating income $88,917 $ - $14,727 $18,392 $122,036 $69,369 $28,464 $6,748 $14,674 $119,255
======= ================= ======= ======= ======== ======= ======= ====== ======= ========
Year Ended May 31,
------------------
2014 2013
---- ----
GAAP Processing Other(2) Cash Cash Earnings GAAP Processing System Intrusion Other(2) Cash Cash Earnings
System Earnings Adjustments(3) Earnings Adjustments(3)
Intrusion(1)
-----------
Revenues:
United States $1,488,659 $ - $ - $ - $1,488,659 $1,394,675 $ - $ - $ - $1,394,675
Canada 320,333 - - - 320,333 311,000 - - - 311,000
------- --- --- --- ------- ------- --- --- --- -------
North America merchant services 1,808,992 - - - 1,808,992 1,705,675 - - - 1,705,675
Europe 587,463 - - - 587,463 522,593 - - - 522,593
Asia-Pacific 157,781 - - - 157,781 147,655 - - - 147,655
------- --- --- --- ------- ------- --- --- --- -------
International merchant services 745,244 - - - 745,244 670,248 - - - 670,248
Total revenues $2,554,236 $ - $ - $ - $2,554,236 $2,375,923 $ - $ - $ - $2,375,923
========== ================= ================= ================= ========== ========== ================= ================= ================= ==========
Operating income (loss) for segments:
North America merchant services $272,251 $ - $3,945 $32,374 $308,570 $258,910 $ - $5,593 $23,659 $288,162
International merchant services 240,179 - 801 29,571 270,551 211,242 53 878 33,106 245,279
Corporate (106,931) (7,000) 15,404 - (98,527) (112,939) 36,722 1,238 - (74,979)
Operating income (loss) $405,499 $(7,000) $20,150 $61,945 $480,594 $357,213 $36,775 $7,709 $56,765 $458,462
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(1)Represents insurance proceeds associated with processing system intrusion charges incurred in FY 2012.
2 Represents acceleration of equity awards and other costs associated with the retirement of our former CEO and Chairman, non-cash losses from the retirement of fixed assets, and charges related to employee termination benefits and certain contract settlement and related costs.
(3)Represents acquisition intangible amortization expense.
SCHEDULE 9
OUTLOOK SUMMARY
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In billions, except per share data)
Fiscal 2014 Actual Fiscal 2015 % Change
Outlook FY14
------- ----
Revenue Outlook
---------------
Total Revenues $2.55 $2.69 to $2.76 6% to 8%
EPS Outlook
-----------
Cash EPS $4.12 $4.52 to $4.62 10% to 12%
Acquisition-related intangibles assets, non-recurring items and
processing system intrusion (1) (0.75) (0.76) 1%
----- ----- ---
GAAP Diluted EPS $3.37 $3.76 to $3.86 12% to 15%
===== ============== =========
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 years ended May 31, 2014 and 2013 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 amounts related to the processing system intrusion, acquisition intangible amortization, acceleration of equity
awards and other costs associated with the retirement of our former Chairman and CEO, a nonrecurring charge associated with our retained interest in Brazil, non-cash losses from the retirement of fixed assets, employee termination benefits and
resolution of a contract related contingency and an adjustment to the costs associated with the debt refinancing. In the twelve months ended May 2013, we also adjusted the net income attributable to noncontrolling interests to include HSBC's share
of GPAP net income.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 2015 reflects $0.72 of acquisition-related intangibles amortization and $0.04 of one-time charges. Fiscal 2014 reflects acquisition-related intangibles amortization of $0.51, processing-intrusion of ($0.07), and non-recurring items
accounted for $0.31 relating to acceleration of equity awards and other costs associated with the retirement of our former Chairman and CEO, a credit related to the sale of an interest in our Brazil business and a subsequent charge associated with
our retained interest, cost associated with the debt refinancing we completed in February 2014, non-cash losses from the retirement of fixed assets, charges related to employee termination benefits and HSBC's share of dividends declared.
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SOURCE Global Payments Inc.
