GLOBAL PAYMENTS INC. 
By ATLANTA, April 3, 2014 /PRNewswire/ -- Global Payments Inc. (NYSE: GPN), one of the largest worldwide providers of payment solutions, today announced results for its fiscal third quarter ended February 28, 2014.
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President and CEO Jeff Sloan said, "We are very pleased with our third quarter financial performance driven by strong execution across all of our businesses and expanding operating margins in North America. As a result we are increasing our full-year expectations for diluted earnings per share on a cash basis. We are also delighted with our strategic accomplishments this quarter including the recent closing of our PayPros acquisition and the substantial expansion of our financing capacity."
Third Quarter 2014 Summary
-- Revenues grew 7% to $616.5 million, compared to $578.7 million in the
third quarter of fiscal 2013.
-- Cash diluted earnings per share grew 10% to $0.96, compared to $0.87 in
the third quarter of fiscal 2013.
-- GAAP diluted earnings per share were $0.76, compared to $0.75 in the
third quarter of 2013.
2014 Outlook
For the full-year of fiscal 2014, the company maintains its expectations for annual revenue of $2.51 billion to $2.56 billion, or 6% to 8% growth over fiscal 2013. The company is raising its diluted earnings per share on a cash basis and narrowing its range to $4.06 to $4.11, reflecting growth of 11% to 13% over fiscal 2013. Annual fiscal 2014 GAAP diluted earnings per share are now expected to be $3.48 to $3.53.
Additional Share Repurchase Authorization
David E. Mangum, Senior Executive Vice President and CFO, stated, "We are delighted with the new share repurchase authorization which, combined with the remaining authorization, now totals $365 million. With the recently increased financing capacity, we have significant capital flexibility to drive organic growth, acquisitions and ongoing share repurchases."
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, April 3, 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 April 17, 2014.
About Global Payments
Global Payments Inc. is one of the largest worldwide providers of payment solutions for merchants, value added resellers, 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, 2013 and any subsequent Quarterly Reports on Form 10-Q, 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 770-829-8755
770-829-8234
SCHEDULE 1
UNAUDITED GAAP CONSOLIDATED STATEMENTS OF INCOME
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands, except per share data)
Three Months Ended Nine Months Ended
February 28, February 28,
------------ ------------
2014 2013 % Change 2014 2013 % Change
---- ---- -------- ---- ---- --------
(unaudited) (unaudited)
Revenues $616,452 $578,746 6.5% $1,880,259 $1,757,571 7.0%
Operating expenses:
Cost of service 232,937 217,465 7.1% 698,852 632,124 10.6%
Sales, general and administrative 286,224 271,696 5.3% 871,825 829,292 5.1%
Processing system intrusion - (1,189) NM (7,000) 8,311 (184.2%)
519,161 487,972 6.4% 1,563,677 1,469,727 6.4%
------- ------- --------- ---------
Operating income 97,291 90,774 7.2% 316,582 287,844 10.0%
Other income (expense):
Interest and other income 2,944 2,536 16.1% 11,570 6,706 72.5%
Interest and other expense (16,457) (7,063) 133.0% (32,361) (25,217) 28.3%
------- ------ ------- -------
(13,513) (4,527) 198.5% (20,791) (18,511) 12.3%
------- ------ ------- -------
Income before income taxes 83,778 86,247 (2.9%) 295,791 269,333 9.8%
Provision for income taxes (23,657) (23,433) 1.0% (84,105) (76,986) 9.2%
------- ------- ------- -------
Net income 60,121 62,814 (4.3%) 211,686 192,347 10.1%
Less: Net income attributable to noncontrolling (5,000) (4,352) 14.9% (18,025) (17,027) 5.9%
interests, net of income tax
Net income attributable to Global Payments $55,121 $58,462 (5.7%) $193,661 $175,320 10.5%
======= ======= ======== ========
Earnings per share attributable to Global Payments:
Basic $0.77 $0.75 2.7% $2.67 $2.24 19.2%
Diluted $0.76 $0.75 1.3% $2.65 $2.23 18.8%
Weighted average shares outstanding:
Basic 71,835 77,756 72,598 78,364
Diluted 72,434 78,324 73,152 78,747
NM - Not meaningful
SCHEDULE 2
CASH EARNINGS ATTRIBUTABLE TO GLOBAL PAYMENTS
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands, except per share data)
Three Months Ended Nine Months Ended
February 28, February 28,
------------ ------------
2014 2013 % Change 2014 2013 % Change
---- ---- -------- ---- ---- --------
Revenues $616,452 $578,746 6.5% $1,880,259 $1,757,571 7.0%
Operating expenses:
Cost of service 218,337 200,935 8.7% 654,720 589,872 11.0%
Sales, general and administrative 286,224 271,696 5.3% 866,981 828,492 4.6%
504,561 472,631 6.8% 1,521,701 1,418,364 7.3%
------- ------- --------- ---------
Operating income 111,891 106,115 5.4% 358,558 339,207 5.7%
Other income (expense):
Interest and other income 2,944 2,536 16.1% 9,447 6,706 40.9%
Interest and other expense (8,313) (7,063) 17.7% (24,217) (16,834) 43.9%
------ ------ ------- -------
(5,369) (4,527) 18.6% (14,770) (10,128) 45.8%
------ ------ ------- -------
Income before income taxes 106,522 101,588 4.9% 343,788 329,079 4.5%
Provision for income taxes (30,373) (27,662) 9.8% (99,932) (93,601) 6.8%
------- ------- ------- -------
Net income 76,149 73,926 3.0% 243,856 235,478 3.6%
Less: Net income attributable to noncontrolling interests, net of income tax (6,421) (5,993) 7.1% (22,220) (25,164) (11.7%)
Net income attributable to Global Payments $69,728 $67,933 2.6% $221,636 $210,314 5.4%
======= ======= ======== ========
Earnings per share attributable to Global Payments:
Basic $0.97 $0.87 11.5% $3.05 $2.68 13.8%
Diluted $0.96 $0.87 10.3% $3.03 $2.67 13.5%
Weighted average shares outstanding:
Basic 71,835 77,756 72,598 78,364
Diluted 72,434 78,324 73,152 78,747
See Schedules 6 and 7 for a reconciliation of cash earnings to GAAP.
SCHEDULE 3
SEGMENT INFORMATION
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands)
Three Months Ended February 28,
-------------------------------
2014 2013 % Change
---- ---- --------
GAAP Cash GAAP Cash GAAP Cash
Earnings Earnings Earnings
-------- -------- --------
Revenues:
United States $355,880 $355,880 $336,354 $336,354 5.8% 5.8%
Canada 73,467 73,467 72,218 72,218 1.7% 1.7%
------ ------ ------ ------
North America merchant services 429,347 429,347 408,572 408,572 5.1% 5.1%
Europe 143,832 143,832 130,750 130,750 10.0% 10.0%
Asia-Pacific 43,273 43,273 39,424 39,424 9.8% 9.8%
------ ------ ------ ------
International merchant services 187,105 187,105 170,174 170,174 9.9% 9.9%
Total revenues $616,452 $616,452 $578,746 $578,746 6.5% 6.5%
======== ======== ======== ========
Operating income (loss) for segments:
North America merchant services $61,695 $68,823 $55,478 $63,210 11.2% 8.9%
International merchant services 58,077 65,549 51,820 60,618 12.1% 8.1%
Corporate(1) (22,481) (22,481) (16,524) (17,713) (36.1%) (26.9%)
Operating income $97,291 $111,891 $90,774 $106,115 7.2% 5.4%
======= ======== ======= ========
Nine Months Ended February 28,
------------------------------
2014 2013 % Change
---- ---- --------
GAAP Cash GAAP Cash GAAP Cash
Earnings Earnings Earnings
-------- -------- --------
Revenues:
United States $1,081,506 $1,081,506 $1,022,250 $1,022,250 5.8% 5.8%
Canada 245,379 245,379 233,885 233,885 4.9% 4.9%
------- ------- ------- -------
North America merchant services 1,326,885 1,326,885 1,256,135 1,256,135 5.6% 5.6%
Europe 433,886 433,886 390,376 390,376 11.1% 11.1%
Asia-Pacific 119,488 119,488 111,060 111,060 7.6% 7.6%
------- ------- ------- -------
International merchant services 553,374 553,374 501,436 501,436 10.4% 10.4%
Total revenues $1,880,259 $1,880,259 $1,757,571 $1,757,571 7.0% 7.0%
========== ========== ========== ==========
Operating income (loss) for segments:
North America merchant services $201,831 $225,848 $189,809 $207,933 6.3% 8.6%
International merchant services 182,085 204,149 162,947 187,819 11.7% 8.7%
Corporate(1) (67,334) (71,439) (64,912) (56,545) (3.7%) (26.3%)
Operating income $316,582 $358,558 $287,844 $339,207 10.0% 5.7%
======== ======== ======== ========
(1)GAAP and cash earnings include incremental security spend for the three and nine months ended February 28, 2014. GAAP earnings for the nine months ended February 28, 2014 include insurance proceeds of ($7M)
related to the FY2012 data intrusion. GAAP earnings for the three and nine months ended February 28, 2013 include a data intrusion (credit)/charge of ($1.2) million and $8.3M, 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)
February 28, 2014 May 31, 2013
----------------- ------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $1,013,560 $680,470
Accounts receivable, net of allowances for doubtful accounts of $411 and $509, respectively 174,993 189,435
Claims receivable, net 743 1,156
Settlement processing assets 283,414 259,204
Inventory 7,315 11,057
Deferred income taxes 6,282 6,485
Prepaid expenses and other current assets 46,948 66,685
Total current assets 1,533,255 1,214,492
Goodwill 1,064,868 1,044,222
Other intangible assets, net 364,513 400,848
Property and equipment, net 364,725 348,064
Deferred income taxes 103,182 95,178
Other 25,172 22,252
------ ------
Total assets $3,455,715 $3,125,056
========== ==========
Liabilities and Equity
Current liabilities:
Lines of credit 262,055 $187,461
Current portion of long-term debt 2,351 72,335
Accounts payable and accrued liabilities 243,212 262,890
Settlement processing obligations 171,563 162,558
Income taxes payable 8,821 18,870
Total current liabilities 688,002 704,114
Long-term debt 1,252,056 891,134
Deferred income taxes 165,697 170,723
Other long-term liabilities 86,251 72,478
Total liabilities 2,192,006 1,838,449
--------- ---------
Equity:
Preferred stock, no par value; 5,000,000 shares authorized and none issued - -
Common stock, no par value; 200,000,000 shares authorized; 71,660,707 issued and outstanding
at February 28, 2014 and 75,426,099 issued and outstanding at May 31, 2013 - -
Paid-in capital 195,308 202,396
Retained earnings 940,545 958,751
Accumulated other comprehensive loss (5,745) (15,062)
Total Global Payments shareholders' equity 1,130,108 1,146,085
Noncontrolling interests 133,601 140,522
Total equity 1,263,709 1,286,607
--------- ---------
Total liabilities and equity $3,455,715 $3,125,056
========== ==========
SCHEDULE 5
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands)
Nine Months Ended
February 28,
------------------
2014 2013
---- ----
Cash flows from operating activities:
Net income $211,686 $192,347
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property and equipment 43,645 40,856
Amortization of acquired intangibles 43,553 42,091
Share-based compensation expense 17,269 14,063
Provision for operating losses and bad debts 14,203 16,681
Deferred income taxes 3,103 27,282
Other, net (1,006) (3,692)
Changes in operating assets and liabilities, net of the effects of acquisitions:
Accounts receivable 14,442 17,706
Claims receivable (9,145) (9,235)
Settlement processing assets and obligations, net (19,669) (12,028)
Inventory 3,811 (1,535)
Prepaid expenses and other assets 18,980 (34,898)
Accounts payable and other accrued liabilities (16,422) (78,375)
Income taxes payable (10,049) (6,496)
Net cash provided by operating activities 314,401 204,767
------- -------
Cash flows from investing activities:
Business, intangible and other asset acquisitions, net of cash
acquired (2,519) (433,427)
Capital expenditures (61,270) (75,016)
Net decrease in financing receivables 1,997 2,158
Net proceeds from sales of investments and business 3,521 -
Net cash used in investing activities (58,271) (506,285)
------- --------
Cash flows from financing activities:
Net borrowings (payments) on short-term lines of credit 74,594 (48,239)
Proceeds from issuance of long-term debt 2,390,000 1,085,327
Principal payments under long-term debt (2,099,869) (439,789)
Acquisition of redeemable noncontrolling interest - (242,000)
Payment of debt issuance costs (5,961) (3,987)
Repurchase of common stock (258,562) (137,653)
Proceeds from stock issued under share-based compensation plans 29,740 9,257
Common stock repurchased - share-based compensation plans (5,682) (10,215)
Tax benefit from share-based compensation plans 4,782 1,791
Distributions to noncontrolling interests (33,744) (13,656)
Dividends paid (4,330) (4,688)
Net cash provided by financing activities 90,968 196,148
------ -------
Effect of exchange rate changes on cash (14,008) 7,055
------- -----
Increase (decrease) in cash and cash equivalents 333,090 (98,315)
Cash and cash equivalents, beginning of period 680,470 781,275
------- -------
Cash and cash equivalents, end of period $1,013,560 $682,960
========== ========
SCHEDULE 6
RECONCILIATION OF QUARTERLY CASH EARNINGS ATTRIBUTABLE TO GLOBAL PAYMENTS TO GAAP
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands, except per share data)
Three Months Ended February 28, 2014
------------------------------------
GAAP Processing Other(1) Cash Earnings Cash Earnings
System Adjustments(2)
Intrusion
---------
Revenues $616,452 $ - $ - $ - $616,452
Operating expenses:
Cost of service 232,937 - - (14,600) 218,337
Sales, general and administrative 286,224 - - - 286,224
Processing system intrusion - - - - -
519,161 - - (14,600) 504,561
------- --- --- ------- -------
Operating income 97,291 - - 14,600 111,891
Other income (expense):
Interest and other income 2,944 - - - 2,944
Interest and other expense (16,457) - 8,144 - (8,313)
--- ----- --- ------
(13,513) - 8,144 - (5,369)
------- --- ----- --- ------
Income (loss) before income taxes 83,778 - 8,144 14,600 106,522
(Provision) benefit for income taxes (23,657) - (2,180) (4,536) (30,373)
------- --- ------ ------ -------
Net income (loss) 60,121 - 5,964 10,064 76,149
Less: Net income attributable to noncontrolling (5,000) - - (1,421) (6,421)
interests, net of income tax
Net income (loss) attributable to Global Payments $55,121 $ - $5,964 $8,643 $69,728
======= ====================== ====== ====== =======
Diluted shares 72,434 72,434
Diluted earnings (loss) per share $0.76 $ - $0.08 $0.12 $0.96
===== ====================== ===== ===== =====
Three Months Ended February 28, 2013
------------------------------------
GAAP Processing Other Cash Earnings Cash Earnings
System Adjustments(2)
Intrusion
---------
Revenues $578,746 $ - $ - $ - $578,746
Operating expenses:
Cost of service 217,465 - - (16,530) 200,935
Sales, general and administrative 271,696 - - - 271,696
Processing system intrusion (1,189) 1,189 - - -
487,972 1,189 - (16,530) 472,631
------- ----- --- ------- -------
Operating income 90,774 (1,189) - 16,530 106,115
Other income (expense):
Interest and other income 2,536 - - - 2,536
Interest and other expense (7,063) - - - (7,063)
--- --- --- ------
(4,527) - - - (4,527)
------ --- --- --- ------
Income (loss) before income taxes 86,247 (1,189) - 16,530 101,588
(Provision) benefit for income taxes (23,433) 232 - (4,461) (27,662)
------- --- --- ------ -------
Net income (loss) 62,814 (957) - 12,069 73,926
Less: Net income attributable to noncontrolling interests, net of income tax (4,352) - - (1,641) (5,993)
------ --- --- ------ ------
Net income (loss) attributable to Global Payments $58,462 $(957) $ - $10,428 $67,933
======= ===== ==================== ======= =======
Diluted shares 78,324 78,324
Diluted earnings (loss) per share $0.75 $(0.01) $ - $0.13 $0.87
===== ====== ==================== ===== =====
1 For the period ended February 28, 2014, represents HSBC's share of GPAP dividends declared and costs associated with the debt refinancing that was completed on February 28, 2014.
(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 February 28, 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, HSBC's share of dividends declared and costs associated with 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)
Nine Months Ended February 28, 2014
-----------------------------------
GAAP Processing Other(2) Cash Earnings Cash Earnings
System Intrusion (1) Adjustments(3)
------------------- -------------
Revenues $1,880,259 $ - $ - $ - $1,880,259
Operating expenses:
Cost of service 698,852 - (579) (43,553) 654,720
Sales, general and administrative 871,825 - (4,844) - 866,981
Processing system intrusion (7,000) 7,000 - - -
1,563,677 7,000 (5,423) (43,553) 1,521,701
--------- ----- ------ ------- ---------
Operating income 316,582 (7,000) 5,423 43,553 358,558
Other income (expense):
Interest and other income 11,570 - (2,123) - 9,447
Interest and other expense (32,361) - 8,144 - (24,217)
--- ----- --- -------
(20,791) - 6,021 - (14,770)
------- --- ----- --- -------
Income (loss) before income taxes 295,791 (7,000) 11,444 43,553 343,788
(Provision) benefit for income taxes (84,105) 2,393 (4,114) (14,106) (99,932)
------- ----- ------ ------- -------
Net income (loss) 211,686 (4,607) 7,330 29,447 243,856
Less: Net income attributable to noncontrolling (18,025) - - (4,195) (22,220)
interests, net of income tax
Net income (loss) attributable to Global Payments $193,661 $(4,607) $7,330 $25,252 $221,636
======== ======= ====== ======= ========
Diluted shares 73,152 73,152
Diluted earnings (loss) per share $2.65 $(0.07) $0.10 $0.35 $3.03
===== ====== ===== ===== =====
Nine Months Ended February 28, 2013
-----------------------------------
GAAP Processing Other(2) Cash Earnings Cash Earnings
System Intrusion Adjustments(3)
---------------- -------------
Revenues $1,757,571 $ - $ - $ - $1,757,571
Operating expenses:
Cost of service 632,124 - (161) (42,091) 589,872
Sales, general and administrative 829,292 - (800) - 828,492
Processing system intrusion 8,311 (8,311) - - -
1,469,727 (8,311) (961) (42,091) 1,418,364
--------- ------ ---- ------- ---------
Operating income 287,844 8,311 961 42,091 339,207
Other income (expense):
Interest and other income 6,706 - - - 6,706
Interest and other expense (25,217) - 8,383 - (16,834)
--- ----- --- -------
(18,511) - 8,383 - (10,128)
------- --- ----- --- -------
Income (loss) before income taxes 269,333 8,311 9,344 42,091 329,079
Provision for income taxes (76,986) (3,048) (1,533) (12,034) (93,601)
------- ------ ------ ------- -------
Net income (loss) 192,347 5,263 7,811 30,057 235,478
Less: Net income attributable to noncontrolling interests, net of income tax (17,027) - (3,594) (4,543) (25,164)
------- --- ------ ------ -------
Net income attributable to Global Payments $175,320 $5,263 $4,217 $25,514 $210,314
======== ====== ====== ======= ========
Diluted shares 78,747 78,747
Diluted earnings (loss) per share $2.23 $0.07 $0.05 $0.32 $2.67
===== ===== ===== ===== =====
(1)Represents insurance proceeds associated with processing system intrusion charges incurred in FY 2012.
2 For the period ended February 28, 2014, represents one-time charges primarily related to employee termination benefits, resolution of a contract related contingency, a one-time credit related to the gain on the sale of an
interest in a business, HSBC's share of dividends declared, and costs associated with debt refinancing. For the prior period, represents HSBC's share of GPAP dividends declared and one-time charges primarily related to
employee termination benefits.
(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 nine months ended February 28, 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, one-time charges related to employee termination benefits and resolution of a contract related contingency, a one-time credit related to the sale of an interest in a business, HSBC's share
of GPAP dividends declared, and costs associated with debt refinancing. In the nine months ended February 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 February 28,
-------------------------------
2014 2013
---- ----
GAAP Processing System Other Cash Earnings Cash Earnings GAAP Processing System Other Cash Earnings
Intrusion Adjustments(3) Intrusion Adjustments(3) Cash Earnings
---- ------------------ ----- -------------- ------------- ---- ------------------ ----- -------------- -------------
Revenues:
United States $355,880 $ - $ - $ - $355,880 $336,354 $ - $ - $ - $336,354
Canada 73,467 - - - 73,467 72,218 - - - 72,218
------ --- --- --- ------ ------ --- --- --- ------
North America merchant services 429,347 - - - 429,347 408,572 - - - 408,572
Europe 143,832 - - - 143,832 130,750 - - - 130,750
Asia-Pacific 43,273 - - - 43,273 39,424 - - - 39,424
------ --- --- --- ------ ------ --- --- --- ------
International merchant services 187,105 - - - 187,105 170,174 - - - 170,174
Total revenues $616,452 $ - $ - $ - $616,452 $578,746 $ - $ - $ - $578,746
======== ================= ================= ================= ======== ======== ================= ================= ================= ========
Operating income (loss) for segments:
North America merchant services $61,695 $ - $ - $7,128 $68,823 $55,478 $ - $ - $7,732 $63,210
International merchant services 58,077 - - 7,472 65,549 51,820 - - 8,798 60,618
Corporate (22,481) - - - (22,481) (16,524) (1,189) - - (17,713)
Operating income (loss) $97,291 $ - $ - $14,600 $111,891 $90,774 $(1,189) $ - $16,530 $106,115
======= ================= ================= ======= ======== ======= ======= ================= ======= ========
Nine Months Ended February 28,
------------------------------
2014 2013
---- ----
GAAP Processing System Other(2) Cash Earnings Cash Earnings GAAP Processing System Other(2) Cash Earnings
Intrusion (1) Adjustments(3) Intrusion Adjustments(3) Cash Earnings
---- ------------------ ------- -------------- ------------- ---- ------------------ ------- -------------- -------------
Revenues:
United States $1,081,506 $ - $ - $ - $1,081,506 $1,022,250 $ - $ - $ - $1,022,250
Canada 245,379 - - - 245,379 233,885 - - - 233,885
------- --- --- --- ------- ------- --- --- --- -------
North America merchant services 1,326,885 - - - 1,326,885 1,256,135 - - - 1,256,135
Europe 433,886 - - - 433,886 390,376 - - - 390,376
Asia-Pacific 119,488 - - - 119,488 111,060 - - - 111,060
------- --- --- --- ------- ------- --- --- --- -------
International merchant services 553,374 - - - 553,374 501,436 - - - 501,436
Total revenues $1,880,259 $ - $ - $ - $1,880,259 $1,757,571 $ - $ - $ - $1,757,571
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Operating income (loss) for segments:
North America merchant services $201,831 $ - $2,518 $21,499 $225,848 $189,809 $ - $905 $17,219 $207,933
International merchant services 182,085 - 10 22,054 204,149 162,947 - - 24,872 187,819
Corporate (67,334) (7,000) 2,895 - (71,439) (64,912) 8,311 56 - (56,545)
Operating income (loss) $316,582 $(7,000) $5,423 $43,553 $358,558 $287,844 $8,311 $961 $42,091 $339,207
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(1)Represents insurance proceeds associated with processing system intrusion charges incurred in FY 2012.
(2)Represents one-time charges primarily related to employee termination benefits and resolution of a contract related contingency for the period ending February 28, 2014 and the prior year
represents one-time charges primarily related to employee termination benefits.
(3)Represents acquisition intangible amortization expense.
SCHEDULE 9
OUTLOOK SUMMARY
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In millions, except per share data)
Fiscal 2013 Fiscal 2014 % Change
Actual Outlook FY13
------ ------- ----
Revenue Outlook
---------------
Total Revenues $2,376 $2,510 to $2,560 6% to 8%
EPS Outlook
-----------
Cash EPS $3.65 $4.06 to $4.11 11% to 13%
Acquisition-related intangibles assets, non-recurring items and
processing system intrusion (1) (0.89) (0.58) (35%)
----- ----- ----
GAAP Diluted EPS $2.76 $3.48 to $3.53 26% to 28%
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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 nine
months ended February 28, 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, one-time charges related to employee termination benefits and resolution of a
contract related contingency, a one-time credit related to the sale of an interest in a business, HSBC's share of GPAP dividends declared, and costs associated with debt refinancing. In the
nine months ended February 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 2014 reflects $0.48 of acquisition-related intangibles amortization and $0.10 of one-time charges (refer to Schedule 7, footnote 2 for details). Acquisition-related intangibles
amortization and non-recurring items accounted for $0.57 in fiscal 2013 and processing intrusion costs were $0.32. Intangible amortization does not include amortization related to the recent
March 4, 2014 PayPros acquisition as the allocation of the purchase price has not yet been finalized.
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SOURCE Global Payments Inc.
