Global Payments Inc. (NYSE: GPN) today announced results for its fiscal second quarter ended November 30, 2014.

“We are very pleased to deliver another quarter of solid performance across our direct businesses,” said Chief Executive Officer Jeff Sloan. “We also continue to successfully expand our worldwide footprint, one of our key strategies to accelerate growth. During the quarter, we completed the acquisition of Ezidebit, a technology company with direct distribution in Australia and New Zealand and an expanding presence throughout Asia. We also announced an agreement to establish a new joint venture with Bank of the Philippine Islands. This partnership will increase our existing distribution in the highly attractive Philippines market. These transactions help fulfill the vision we set forth in 2012 with the purchase of the minority interest in our then joint venture in Asia.”

Second Quarter 2015 Summary

  • Revenues grew 10% to $697.3 million, compared to $634.1 million in the second quarter of fiscal 2014.
  • Cash diluted earnings per share1 grew 19% to $1.27, compared to $1.07 in the second quarter of fiscal 2014.
  • GAAP diluted earnings per share were $1.10, compared to $1.02 in the second quarter of fiscal 2014.

2015 Outlook

Cameron Bready, Executive Vice President and Chief Financial Officer, stated, “We experienced strong organic revenue growth and margin expansion during the quarter, despite the strengthening of the U.S. dollar, and we continue to see solid performance from our recent acquisitions. Based on these results and our outlook for the remainder of the fiscal year, we are increasing our revenue, margin and cash earnings per share guidance.”

The company is raising its annual fiscal 2015 revenue outlook to $2.75 billion to $2.80 billion, or 8% to 10% growth. In addition, Global Payments is increasing its outlook for annual fiscal 2015 diluted earnings per share on a cash basis to a range of $4.75 to $4.83, reflecting growth of 15% to 17% over fiscal 2014, and annual fiscal 2015 GAAP diluted earnings per share is expected to be in the range of $3.99 to $4.07. The company also now expects annual fiscal 2015 core cash operating margins to expand by as much as 50 basis points.

Capital Allocation

Global Payments’ Board of Directors approved a fiscal 2015 second quarter dividend of $0.02 per share payable February 27, 2015 to shareholders of record as of February 13, 2015 and 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 8, 2015 at 8:00 a.m. ET to discuss financial results and business highlights. Callers may access the conference call via the investor relations page of the company’s website at www.globalpaymentsinc.com; or callers in North America may dial 877-674-6428 and callers outside North America may dial 970-315-0457. A replay of the call will be archived on the company's website within two hours of the live call.

About Global Payments

Global Payments Inc. 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, Brazil, 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.

_________________________

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

This announcement and comments made by Global Payments' management may contain certain forward-looking statements within the meaning of the “safe-harbor” provisions of the Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including revenue and earnings estimates and management’s expectations regarding future events and developments, are forward-looking statements and are subject to significant risks and uncertainties. Important factors that may cause actual events or results to differ materially from those anticipated by such forward-looking statements include our ability to safeguard our data; increased competition from non-traditional competitors; our ability to update our products and services in a timely manner; potential systems interruptions or failures; software defects or undetected errors; our ability to maintain Visa and MasterCard registration and financial institution sponsorship; our reliance on financial institutions to provide clearing services in connection with our settlement activities; our potential failure to comply with card network requirements; increased attrition of merchants, referral partners or independent sales organizations; our ability to increase our share of existing markets and expand into new markets; unanticipated increases in chargeback liability; increases in credit card network fees; changes in laws, regulations or network rules or interpretations thereof; foreign currency exchange and interest rate risks; political, economic and regulatory changes in the foreign countries in which we operate; future performance, integration and conversion of acquired operations; loss of key personnel; and other risks detailed in our SEC filings, including the most recently filed Annual Report on Form 10-K and subsequently filed Quarterly Report on Form 10-Q. We undertake no obligation to revise any of these statements to reflect future circumstances or the occurrence of unanticipated events.

SCHEDULE 1
UNAUDITED GAAP CONSOLIDATED STATEMENTS OF INCOME
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands, except per share data)
                 
 
Three Months Ended November 30, Six Months Ended November 30,
  2014     2013   % Change   2014       2013   % Change  
(unaudited) (unaudited)
 
Revenues $ 697,291 $ 634,122 10.0 % $ 1,402,186 $ 1,263,807 10.9 %
 
Operating expenses:
Cost of service 257,796 235,170 9.6 % 517,635 465,915 11.1 %
Sales, general and administrative 315,511 294,045 7.3 % 636,169 585,601 8.6 %
Processing system intrusion   —     (7,000 )   —     (7,000 )
  573,307     522,215     1,153,804     1,044,516  
 
Operating income 123,984 111,907 10.8 % 248,382 219,291 13.3 %
 
Other income (expense):
Interest and other income 1,282 5,288 (75.8 )% 2,474 8,626 (71.3 )%
Interest and other expense   (10,350 )   (8,025 ) 29.0 %   (21,360 )   (15,904 ) 34.3 %
  (9,068 )   (2,737 ) 231.3 %   (18,886 )   (7,278 ) 159.5 %
 
Income before income taxes 114,916 109,170 5.3 % 229,496 212,013 8.2 %
Provision for income taxes   (29,660 )   (29,313 ) 1.2 %   (59,806 )   (60,448 ) (1.1 )%
Net income 85,256 79,857 6.8 % 169,690 151,565 12.0 %
Less: Net income attributable to noncontrolling interests, net of income tax   (10,475 )   (5,960 ) 75.8 %   (19,543 )   (13,025 ) 50.0 %
Net income attributable to Global Payments $ 74,781   $ 73,897   1.2 % $ 150,147   $ 138,540   8.4 %
 
 
Earnings per share attributable to Global Payments:
Basic $ 1.11 $ 1.02 8.4 % $ 2.22 $ 1.90 16.7 %
Diluted $ 1.10 $ 1.02 8.6 % $ 2.20 $ 1.88 16.8 %
 
Weighted average shares outstanding:
Basic 67,377 72,174 67,764 72,974
Diluted 67,737 72,706 68,179 73,504
 
 
SCHEDULE 2
CASH EARNINGS ATTRIBUTABLE TO GLOBAL PAYMENTS
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands, except per share data)
                               
 
Three Months Ended November 30, Six Months Ended November 30,
  2014     2013   % Change     2014     2013   % Change  
 
Revenues $ 697,291 $ 634,122 10.0 % $ 1,402,186 $ 1,263,807 10.9 %
 
Operating expenses:
Cost of service 239,533 220,610 8.6 % 481,518 436,383 10.3 %
Sales, general and administrative   315,511     290,697   8.5 %   639,110     580,757   10.0 %
  555,044     511,307   8.6 %   1,120,628     1,017,140   10.2 %
 
Operating income 142,247 122,815 15.8 % 281,558 246,667 14.1 %
 
Other income (expense):
Interest and other income 1,282 3,165 (59.5 )% 2,474 6,503 (62.0 )%
Interest and other expense   (10,350 )   (8,025 ) 29.0 %   (21,360 )   (15,904 ) 34.3 %
  (9,068 )   (4,860 ) 86.6 %   (18,886 )   (9,401 ) 100.9 %
 
Income before income taxes 133,179 117,955 12.9 % 262,672 237,266 10.7 %
Provision for income taxes   (35,520 )   (32,873 ) 8.1 %   (70,950 )   (69,559 ) 2.0 %
Net income 97,659 85,082 14.8 % 191,722 167,707 14.3 %
Less: Net income attributable to noncontrolling interests, net of income tax   (11,648 )   (7,197 ) 61.8 %   (21,951 )   (15,633 ) 40.4 %
Net income attributable to Global Payments $ 86,011   $ 77,885   10.4 % $ 169,771   $ 152,074   11.6 %
 
Earnings per share attributable to Global Payments:
Basic $ 1.28 $ 1.08 18.3 % $ 2.51 $ 2.08 20.2 %
Diluted $ 1.27 $ 1.07 18.5 % $ 2.49 $ 2.07 20.4 %
 
Weighted average shares outstanding:
Basic 67,377 72,174 67,764 72,974
Diluted 67,737 72,706 68,179 73,504
 
See Schedules 6 & 7 for a reconciliation of cash earnings to GAAP.
 
 
SCHEDULE 3
SEGMENT INFORMATION
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands)
                             
 
Three Months Ended November 30,
2014   2013   % Change  
GAAP

Cash
Earnings

GAAP

Cash
Earnings

GAAP

Cash
Earnings

 

Revenues:

United States $ 404,784 $ 404,784 $ 361,793 $ 361,793 11.9 % 11.9 %
Canada   83,992     83,992     85,240     85,240   (1.5 )% (1.5 )%
North America merchant services 488,776 488,776 447,033 447,033 9.3 % 9.3 %
 
Europe 159,974 159,974 146,866 146,866 8.9 % 8.9 %
Asia-Pacific   48,541     48,541     40,223     40,223   20.7 % 20.7 %
International merchant services 208,515 208,515 187,089 187,089 11.5 % 11.5 %
       
Total revenues $ 697,291   $ 697,291   $ 634,122   $ 634,122   10.0 % 10.0 %
 

Operating income (loss) for segments:

North America merchant services $ 74,246 $ 85,419 $ 70,437 $ 77,621 5.4 % 10.0 %
International merchant services 76,443 83,533 62,467 69,843 22.4 % 19.6 %
Corporate1   (26,705 )   (26,705 )   (20,997 )   (24,649 ) 27.2 % 8.3 %
Operating income $ 123,984   $ 142,247   $ 111,907   $ 122,815   10.8 % 15.8 %
 
Six Months Ended November 30,
2014   2013   % Change  
GAAP

Cash
Earnings

GAAP

Cash
Earnings

GAAP

Cash
Earnings

 

Revenues:

United States $ 818,825 $ 818,825 $ 725,626 $ 725,626 12.8 % 12.8 %
Canada   173,957     173,957     171,912     171,912   1.2 % 1.2 %
North America merchant services 992,782 992,782 897,538 897,538 10.6 % 10.6 %
 
Europe 322,762 322,762 290,054 290,054 11.3 % 11.3 %
Asia-Pacific   86,642     86,642     76,215     76,215   13.7 % 13.7 %
International merchant services 409,404 409,404 366,269 366,269 11.8 % 11.8 %
       
Total revenues $ 1,402,186   $ 1,402,186   $ 1,263,807   $ 1,263,807   10.9 % 10.9 %
 

Operating income (loss) for segments:

North America merchant services $ 152,183 $ 174,734 $ 140,136 $ 157,025 8.6 % 11.3 %
International merchant services 150,045 160,670 124,008 138,600 21.0 % 15.9 %
Corporate1   (53,846 )   (53,846 )   (44,853 )   (48,958 ) 20.0 % 10.0 %
Operating income $ 248,382   $ 281,558   $ 219,291   $ 246,667   13.3 % 14.1 %
 
 
1 GAAP earnings for the three and six months ended November 30, 2013 include insurance proceeds of $7.0 million related to the fiscal 2012 processing system intrusion.
 
See Schedule 8 for reconciliation of cash earnings segment information to GAAP.
 
 
SCHEDULE 4
CONSOLIDATED BALANCE SHEETS
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands, except share data)
       
 
November 30, 2014 May 31, 2014
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 644,469 $ 581,872
Accounts receivable, net of allowances for doubtful accounts of $469 and $401, respectively 197,053 214,574
Claims receivable, net 577 809
Settlement processing assets 1,122,321 780,917
Inventory 8,002 6,636
Deferred income taxes 12,761 12,963
Prepaid expenses and other current assets   40,072     45,673  
Total current assets 2,025,255 1,643,444
Goodwill 1,483,615 1,337,285
Other intangible assets, net 542,992 535,173
Property and equipment, net 362,809 369,753
Deferred income taxes 95,161 101,928
Other   31,755     31,067  
Total assets $ 4,541,587   $ 4,018,650  
 
LIABILITIES AND EQUITY
Current liabilities:
Lines of credit $ 530,721 $ 440,128
Current portion of long-term debt 46,875 17,677
Accounts payable and accrued liabilities 303,008 290,106
Settlement processing obligations 781,262 451,317
Income taxes payable   14,267     12,390  
Total current liabilities 1,676,133 1,211,618
Long-term debt 1,554,125 1,376,002
Deferred income taxes 200,848 209,099
Other long-term liabilities   88,245     89,132  
Total liabilities   3,519,351     2,885,851  
 
Commitments and contingencies
Equity:
Preferred stock, no par value; 5,000,000 shares authorized and none issued — —
Common stock, no par value; 200,000,000 shares authorized; 67,031,081 issued and outstanding at November 30, 2014 and 68,845,643 issued and outstanding at May 31, 2014 — —
Paid-in capital 144,419 183,023
Retained earnings 852,972 815,980
Accumulated other comprehensive loss   (102,726 )   (1,776 )
Total Global Payments shareholders’ equity 894,665 997,227
Noncontrolling interests   127,571     135,572  
Total equity   1,022,236     1,132,799  
Total liabilities and equity $ 4,541,587   $ 4,018,650  
 
 
SCHEDULE 5
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands)
       
 
Six Months Ended November 30,
  2014     2013  
Cash flows from operating activities:
Net income $ 169,690 $ 151,565
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property and equipment 33,055 28,439
Amortization of acquired intangibles 36,117 28,953
Share-based compensation expense 9,145 11,965
Provision for operating losses and bad debts 7,432 10,249
Deferred income taxes (982 ) 6,073
Other, net (387 ) (4,345 )
Changes in operating assets and liabilities, net of the effects of acquisitions:
Accounts receivable 17,521 (6,353 )
Claims receivable (4,881 ) (6,567 )
Settlement processing assets and obligations, net (13,778 ) 204,307
Inventory (1,506 ) 2,237
Prepaid expenses and other assets 5,409 5,761
Accounts payable and other accrued liabilities (31,503 ) (21,845 )
Income taxes payable   1,604     1,244  
Net cash provided by operating activities   226,936     411,683  
Cash flows from investing activities:
Business, intangible and other asset acquisitions, net of cash acquired (223,651 ) (2,324 )
Capital expenditures (33,290 ) (41,178 )
Principal collections on financing receivables 219 1,328
Net proceeds from sales of investments and business   10,528     3,102  
Net cash used in investing activities   (246,194 )   (39,072 )
Cash flows from financing activities:
Net borrowings on short-term lines of credit 90,593 259,047
Proceeds from issuance of long-term debt 1,080,000 810,000
Principal payments under long-term debt (872,679 ) (779,380 )
Repurchase of common stock (179,724 ) (250,183 )
Proceeds from stock issued under share-based compensation plans 17,099 27,366
Common stock repurchased - share-based compensation plans (15,705 ) (5,260 )
Tax benefit from share-based compensation plans 3,599 4,415
Distributions to noncontrolling interests (15,485 ) (15,593 )
Dividends paid   (2,693 )   (2,894 )
Net cash provided by financing activities   105,005     47,518  
Effect of exchange rate changes on cash   (23,150 )   (3,766 )
Increase in cash and cash equivalents 62,597 416,363
Cash and cash equivalents, beginning of the period   581,872     680,470  
Cash and cash equivalents, end of the period $ 644,469   $ 1,096,833  
 
 
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 November 30, 2014
GAAP  

Processing
System
Intrusion

  Other  

Cash Earnings
Adjustments3

  

Cash
Earnings

Revenues $ 697,291 $ — $ — $ — $ 697,291
Operating expenses:
Cost of service 257,796 — — (18,263 ) 239,533
Sales, general and administrative 315,511 — — — 315,511
Processing system intrusion   —       —       —       —       —  
  573,307       —       —       (18,263 )     555,044  
 
Operating income 123,984 — — 18,263 142,247
 
Other income (expense):
Interest and other income 1,282 — — — 1,282
Interest and other expense   (10,350 )     —       —       —       (10,350 )
  (9,068 )     —       —       —       (9,068 )
 
Income before income taxes 114,916 — — 18,263 133,179
Provision for income taxes   (29,660 )     —       —       (5,860 )     (35,520 )
Net income 85,256 — — 12,403 97,659
Less: Net income attributable to noncontrolling interests, net of income tax   (10,475 )     —       —       (1,173 )     (11,648 )
Net income attributable to Global Payments $ 74,781     $ —     $ —     $ 11,230     $ 86,011  
 
Diluted shares 67,737 67,737
Diluted earnings per share $ 1.10     $ —     $ —     $ 0.17     $ 1.27  
 
 
Three Months Ended November 30, 2013
GAAP  

Processing
System
Intrusion1

   Other2  

Cash Earnings
Adjustments3

  

Cash
Earnings

Revenues $ 634,122 $ — $ — $ — $ 634,122
Operating expenses:
Cost of service 235,170 — — (14,560 ) 220,610
Sales, general and administrative 294,045 — (3,348 ) — 290,697
Processing system intrusion   (7,000 )     7,000       —       —       —  
  522,215       7,000       (3,348 )     (14,560 )     511,307  
 
Operating income 111,907 (7,000 ) 3,348 14,560 122,815
 
Other income (expense):
Interest and other income 5,288 — (2,123 ) — 3,165
Interest and other expense   (8,025 )     —       —       —       (8,025 )
  (2,737 )     —       (2,123 )     —       (4,860 )
 
Income before income taxes 109,170 (7,000 ) 1,225 14,560 117,955
(Provision for) benefit from income taxes   (29,313 )     2,393       (1,145 )     (4,808 )     (32,873 )
Net income (loss) 79,857 (4,607 ) 80 9,752 85,082
Less: Net income attributable to noncontrolling interests, net of income tax   (5,960 )     —       —       (1,237 )     (7,197 )
Net income (loss) attributable to Global Payments $ 73,897     $ (4,607 )   $ 80     $ 8,515     $ 77,885  
 
Diluted shares 72,706 72,706
Diluted earnings (loss) per share $ 1.02     $ (0.07 )   $ 0.00     $ 0.12     $ 1.07  
 
1 Represents insurance proceeds associated with the fiscal 2012 processing system intrusion.
 
2 For the three months ended November 30, 2013, represents one-time charges primarily related to employee termination benefits and a one-time credit related to the gain on the sale of an interest in a business.
 
3 Represents adjustments to cost of service to exclude acquisition intangible amortization expense and the related income tax benefit.
 
We supplemented our reporting of income and the related earnings per share information determined in accordance with GAAP by reporting income and the related earnings per share for the three months ended November 30, 2014 and 2013 on a "cash earnings" basis in this earnings release as a measure to help evaluate performance. In the three months ended November 30, 2014, we calculated income and earnings per share on a cash basis by excluding amounts related to acquisition intangible amortization. In the three months ended November 30, 2013, we calculated income and earnings per share on a cash basis by excluding amounts related to acquisition intangible amortization, the processing system intrusion, one-time charges related to employee termination benefits and a one-time credit related to the gain on the sale of an interest in a business. 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)
         
Six Months Ended November 30, 2014
GAAP  

Processing
System Intrusion

  Other2  

Cash Earnings
Adjustments3

  

Cash Earnings

Revenues $ 1,402,186 $ — $ — $ — $ 1,402,186
Operating expenses:
Cost of service 517,635 — — (36,117 ) 481,518
Sales, general and administrative 636,169 — 2,941 — 639,110
Processing system intrusion   —       —       —       —       —  
  1,153,804       —       2,941       (36,117 )     1,120,628  
Operating income 248,382 — (2,941 ) 36,117 281,558
Other income (expense):
Interest and other income 2,474 — — — 2,474
Interest and other expense   (21,360 )     —       —       —       (21,360 )
  (18,886 )     —       —       —       (18,886 )
Income (loss) before income taxes 229,496 — (2,941 ) 36,117 262,672
(Provision for) benefit from income taxes   (59,806 )     —       588       (11,732 )     (70,950 )
Net income (loss) 169,690 — (2,353 ) 24,385 191,722
Less: Net income attributable to noncontrolling interests, net of income tax   (19,543 )     —       —       (2,408 )     (21,951 )
Net income (loss) attributable to Global Payments $ 150,147     $ —     $ (2,353 )   $ 21,977     $ 169,771  
Diluted shares 68,179 68,179
Diluted earnings (loss) per share $ 2.20     $ —     $ (0.03 )   $ 0.32     $ 2.49  
 
 
Six Months Ended November 30, 2013
GAAP  

Processing
System Intrusion1

   Other2  

Cash Earnings
Adjustments3

   Cash Earnings
                 
Revenues $ 1,263,807 $ — $ — $ — $ 1,263,807
Operating expenses:
Cost of service 465,915 — (579 ) (28,953 ) 436,383
Sales, general and administrative 585,601 — (4,844 ) — 580,757
Processing system intrusion   (7,000 )     7,000       —       —       —  
  1,044,516       7,000       (5,423 )     (28,953 )     1,017,140  
Operating income 219,291 (7,000 ) 5,423 28,953 246,667
Other income (expense):
Interest and other income 8,626 — (2,123 ) — 6,503
Interest and other expense   (15,904 )     —       —       —       (15,904 )
  (7,278 )     —       (2,123 )     —       (9,401 )
Income (loss) before income taxes 212,013 (7,000 ) 3,300 28,953 237,266
(Provision for) benefit from income taxes   (60,448 )     2,393       (1,934 )     (9,570 )     (69,559 )
Net income (loss) 151,565 (4,607 ) 1,366 19,383 167,707
Less: Net income attributable to noncontrolling interests, net of income tax   (13,025 )     —       —       (2,608 )     (15,633 )
Net income (loss) attributable to Global Payments $ 138,540     $ (4,607 )   $ 1,366     $ 16,775     $ 152,074  
Diluted shares 73,504 73,504
Diluted earnings (loss) per share $ 1.88     $ (0.07 )   $ 0.02     $ 0.24     $ 2.07  
 
1 Represents insurance proceeds associated with the fiscal 2012 processing system intrusion.
 
2 For the six months ended November 30, 2014, represents a gain on the sale of a component of our Russia business that leased ATMs to our sponsor bank in Russia. For the six months ended November 30, 2013, represents one-time charges primarily related to employee termination benefits, resolution of a contract related contingency and a one-time credit related to the gain on the sale of an interest in a business.
 
3 Represents adjustments to cost of service to exclude acquisition intangible amortization expense and the related income tax benefit.
 
We supplemented our reporting of income and the related earnings per share information determined in accordance with GAAP by reporting income and the related earnings per share for the six months ended November 30, 2014 and 2013 on a "cash earnings" basis in this earnings release as a measure to help evaluate performance. For the six months ended November 30, 2014, we calculated income and earnings per share on a cash basis by excluding amounts related to acquisition intangible amortization and a gain on the sale of a component of our Russia business that leased ATMs to our sponsor bank in Russia. In the six months ended November 30, 2013, we calculated income and earnings per share on a cash basis by excluding amounts related to acquisition intangible amortization, the processing system intrusion, one-time charges related to employee termination benefits and resolution of a contract related contingency, and a one-time credit related to the gain on the sale of an interest in a business. 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 November 30,
2014 2013  
GAAP  

Processing
System
Intrusion

  Other  

Cash Earnings
Adjustments3

   Cash Earnings GAAP  

Processing
System
Intrusion1

   Other2  

Cash Earnings
Adjustments3

   Cash Earnings
 
Revenues:
United States $ 404,784 $ — $ — $ — $ 404,784 $ 361,793 $ — $ — $ — $ 361,793
Canada   83,992       —     —       —     83,992     85,240       —       —     —     85,240  
North America merchant services 488,776 — — — 488,776 447,033 — — — 447,033
 
Europe 159,974 — — — 159,974 146,866 — — — 146,866
Asia-Pacific   48,541       —     —       —     48,541     40,223       —       —     —     40,223  
International merchant services 208,515 — — — 208,515 187,089 — — — 187,089
                                   
Total revenues $ 697,291     $ —   $ —     $ —   $ 697,291   $ 634,122     $ —     $ —   $ —   $ 634,122  
 
Operating income (loss) for segments:
North America merchant services $ 74,246 $ — $ — $ 11,173 $ 85,419 $ 70,437 $ — $ — $ 7,184 $ 77,621
International merchant services 76,443 — — 7,090 83,533 62,467 — — 7,376 69,843
Corporate   (26,705 )     —     —       —     (26,705 )   (20,997 )     (7,000 )     3,348     —     (24,649 )
Operating income (loss) $ 123,984     $ —   $ —     $ 18,263   $ 142,247   $ 111,907     $ (7,000 )   $ 3,348   $ 14,560   $ 122,815  
 
Six Months Ended November 30,
2014 2013  
GAAP  

Processing
System
Intrusion

  Other2  

Cash Earnings
Adjustments3

   Cash Earnings GAAP  

Processing
System
Intrusion1

   Other 2  

Cash Earnings
Adjustments3

   Cash Earnings
 
Revenues:
United States $ 818,825 $ — $ — $ — $ 818,825 $ 725,626 $ — $ — $ — $ 725,626
Canada   173,957       —     —       —     173,957     171,912       —       —     —     171,912  
North America merchant services 992,782 — — — 992,782 897,538 — — — 897,538
 
Europe 322,762 — — — 322,762 290,054 — — — 290,054
Asia-Pacific   86,642       —     —       —     86,642     76,215       —       —     —     76,215  
International merchant services 409,404 — — — 409,404 366,269 — — — 366,269
                                   
Total revenues $ 1,402,186     $ —   $ —     $ —   $ 1,402,186   $ 1,263,807     $ —     $ —   $ —   $ 1,263,807  
 
Operating income (loss) for segments:
North America merchant services $ 152,183 $ — $ — $ 22,551 $ 174,734 $ 140,136 $ — $ 2,518 $ 14,371 $ 157,025
International merchant services 150,045 — (2,941 ) 13,566 160,670 124,008 — 10 14,582 138,600
Corporate   (53,846 )     —     —       —     (53,846 )   (44,853 )     (7,000 )     2,895     —     (48,958 )
Operating income (loss) $ 248,382     $ —   $ (2,941 )   $ 36,117   $ 281,558   $ 219,291     $ (7,000 )   $ 5,423   $ 28,953   $ 246,667  
 
1 Represents insurance proceeds associated with the fiscal 2012 processing system intrusion.
 
2 For the six months ended November 30, 2014, represents a gain on the sale of a component of our Russia business that leased ATMs to our sponsor bank in Russia. For the three and six months ended November 30, 2013, represents one-time charges primarily related to employee termination benefits and resolution of a contract related contingency.
 
 
3 Represents acquisition intangible amortization expense.
 
SCHEDULE 9
OUTLOOK SUMMARY
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In billions, except per share data)
     

Fiscal 2014
Actual

Fiscal 2015
Outlook

% Change FY14
 

Revenue Outlook

Total Revenues $2.55 $2.75 to $2.80 8% to 10%
 

EPS Outlook

Cash EPS $4.12 $4.75 to $4.83 15% to 17%
Acquisition-related intangibles assets, non-recurring items and processing system intrusion1 (0.75) (0.76) 1 %
GAAP Diluted EPS $3.37 $3.99 to $4.07 18% to 21%
 
We supplemented our reporting of income and the related earnings per share information determined in accordance with GAAP by reporting income and the related earnings per share for the fiscal years 2015 and 2014 on a "cash earnings" basis in this earnings release as a measure to help evaluate performance. We calculated income and earnings per share on a cash basis by excluding amounts related to acquisition intangible amortization, the processing system intrusion, acceleration of equity awards and other costs associated with the retirement of our former Chairman and CEO, a credit related to the sale of an interest in our Brazil business and a subsequent charge associated with our retained interest, non-cash losses from the retirement of fixed assets, employee termination benefits, resolution of a contract related contingency, costs associated with debt refinancing and HSBC's share of dividends declared by Global Payments Asia-Pacific. 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 intangible amortization and $0.04 of one-time charges. Fiscal 2014 reflects acquisition intangible amortization of $0.51, a processing system intrusion credit of ($0.07) and non-recurring items of $0.31. Other non-recurring items include acceleration of equity awards and other costs associated with the retirement of our former Chairman and CEO, a credit related to the sale of an interest in our Brazil business and a subsequent charge associated with our retained interest, non-cash losses from the retirement of fixed assets, employee termination benefits, resolution of a contract related contingency, costs associated with debt refinancing and HSBC's share of dividends declared by Global Payments Asia-Pacific.