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U.S. Technology Company News from the Inside
Global Payments Reports Second Quarter Earnings
Submitted by admin on 1/5/2012 @ 1:01 PM
Companies mentioned in this article:
Global Payments Inc.
ATLANTA, Jan. 5, 2012 /PRNewswire/ -- Global Payments Inc. (NYSE: GPN) today announced results for its fiscal second quarter ended November 30, 2011. For the second quarter, revenues grew 20% to $530.5 million compared to $443.5 million in the prior fiscal year. Cash earnings per share grew 13% to $0.86 compared to $0.76 in the prior year (See Schedule 2 for Cash Earnings). On a GAAP basis, the company reported fiscal 2012 second quarter diluted earnings per share of $0.78 compared to $0.67 in the prior year (See Schedule 1 for GAAP Consolidated Statements of Income).
(Logo: http://photos.prnewswire.com/prnh/20010221/ATW031LOGO )
GAAP and cash earnings per share results include approximately $15 million of revenue and nearly $0.02 of earnings per share related to debit interchange legislation with corresponding unfavorable impact on operating margin.
Chairman and CEO Paul R. Garcia stated, "We delivered solid second quarter results driven by continued steady performances in all of our businesses and the December 2010 addition of Spain. I am also pleased to announce three targeted merchant portfolio acquisitions which will expand our international footprint and U.S. ecommerce presence. First, we increased our distribution in Russia by acquiring a merchant business with more than 6,000 merchants from Alfa-Bank. Secondly, we have agreed to acquire HSBC's merchant business in Malta consisting of nearly 4,000 merchants, which is pending regulatory approval, and thirdly we have signed an agreement to acquire CyberSource's U.S. merchant acquiring portfolio from Visa.
"I am pleased to note that we continue to expect overall total company cash margin expansion of as much as 50 basis points in fiscal 2012 excluding the effect of recent debit legislation and the acquisitions," continued Mr. Garcia.
David E. Mangum, Senior Executive Vice President and CFO, stated, "Including the effect of the debit legislation as well as the three recent acquisitions, we are increasing our annual revenue expectations for fiscal 2012 to $2,150 million to $2,200 million, or 16% to 18% growth over fiscal 2011. We are also increasing fiscal 2012 diluted earnings per share expectations on a cash basis to a range of $3.50 to $3.58, reflecting 14% to 16% growth over fiscal 2011 and annual fiscal 2012 GAAP diluted earnings per share to $3.14 to $3.22, reflecting 20% to 23% growth over the prior year." (See Schedule 9 for Outlook Summary.)
Cash earnings exclude normalized adjustments and acquisition intangible amortization expense from continuing operations. (See Schedule 6 and 7 for Reconciliations of Cash Earnings to GAAP, Schedule 2 for Cash Earnings and Schedule 3 for Segment Information on GAAP and Cash Earnings).
Conference Call
Global Payments will hold a conference call today, January 5, 2012 at 5:00 p.m. EST to discuss financial results and business highlights. Callers may access the conference call via the investor relations page of the Company's Web site at www.globalpaymentsinc.com by clicking the "Webcast" button; or callers in North America may dial 1-888-895-3550 and callers outside North America may dial 1-706-758-8809. The pass code is "GPN." A replay of the call may be accessed through the Global Payments Web site through January 19, 2012.
Global Payments Inc. (NYSE: GPN) is a leading provider of electronic transaction processing services for merchants, Independent Sales Organizations (ISOs), financial institutions, government agencies and multi-national corporations located throughout the United States, Canada, Europe and the Asia-Pacific region. Global Payments, a Fortune 1000 company, offers a comprehensive line of processing solutions for credit and debit cards, business-to-business purchasing cards, gift cards, electronic check conversion and check guarantee, verification and recovery including electronic check services, as well as terminal management. Visit www.globalpaymentsinc.com for more information about the company and its services.
This announcement and comments made by Global Payments' management during the conference call may contain certain forward-looking statements within the meaning of the "safe-harbor" provisions of the Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including revenue and earnings estimates and management's expectations regarding future events and developments, are forward-looking statements and are subject to significant risks and uncertainties. Important factors that may cause actual events or results to differ materially from those anticipated by such forward-looking statements include the following: foreign currency risks which become increasingly relevant as we expand internationally, the effect of current worldwide economic conditions, including sovereign insolvency situations and a decline in the value of the U.S. dollar, developments in the implementation of debit interchange legislation, and future performance and integration of recent acquisitions, and other risks detailed in the company's SEC filings, including the most recently filed Form 10-Q or Form 10-K, as applicable. The company undertakes no obligation to revise any of these statements to reflect future circumstances or the occurrence of unanticipated events.
Contact: Jane M. Elliott
770-829-8234 Voice
770-829-8267 Fax
investor.relations@globalpay.com
SCHEDULE 1
UNAUDITED GAAP CONSOLIDATED STATEMENTS OF INCOME
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands, except per share data)
-------------------------------------
Three Months Ended Six Months Ended
November 30, November 30,
------------------- -----------------
2011 2010 % Change 2011 2010 % Change
---- ---- -------- ---- ---- --------
Revenues $530,505 $443,526 20% $1,073,276 $883,665 21%
-------- -------- -------- --- ---------- -------- ---
Operating expenses:
Cost of service 185,931 154,205 21% 377,467 305,246 24%
Sales, general and
administrative 247,994 206,178 20% 490,619 413,168 19%
433,925 360,383 20% 868,086 718,414 21%
------- ------- ------- -------
Operating income 96,580 83,143 16% 205,190 165,251 24%
---------------- ------ ------ --- ------- ------- ---
Other income (expense):
Interest and other income 2,259 4,072 (45%) 4,760 5,608 (15%)
Interest and other expense (4,878) (4,299) 13% (8,965) (9,140) (2%)
------ ------ ------ ------
(2,619) (227) 1054% (4,205) (3,532) 19%
------ ---- ------ ------
Income from continuing
operations before income
taxes 93,961 82,916 13% 200,985 161,719 24%
Provision for income taxes (25,812) (24,546) 5% (60,755) (49,527) 23%
------- ------- ------- -------
Income from continuing
operations 68,149 58,370 17% 140,230 112,192 25%
Loss from discontinued
operations, net of tax - (487) NM - (515) NM
--- ---- --- ----
Net income including
noncontrolling interests 68,149 57,883 18% 140,230 111,677 26%
Less: Net income attributable
to noncontrolling interests,
net of tax (6,968) (4,378) 59% (15,075) (8,804) 71%
------ ------ ------- ------
Net income attributable to
Global Payments $61,181 $53,505 14% $125,155 $102,873 22%
------- ------- -------- --------
Amounts attributable to
Global Payments:
Income from continuing
operations $61,181 $53,992 13% $125,155 $103,388 21%
Loss from discontinued
operations, net of tax - (487) NM - (515) NM
--- ---- --- ----
Net income attributable to
Global Payments $61,181 $53,505 14% $125,155 $102,873 22%
------- ------- -------- --------
Basic earnings per share
attributable to Global
Payments:
Income from continuing
operations $0.78 $0.68 15% $1.58 $1.30 22%
Loss from discontinued
operations, net of tax - (0.01) NM - (0.01) NM
--- ----- --- -----
Net income attributable to
Global Payments $0.78 $0.67 16% $1.58 $1.29 22%
----- ----- ----- -----
Diluted earnings per share
attributable to Global
Payments:
Income from continuing
operations $0.78 $0.67 16% $1.57 $1.29 22%
Loss from discontinued
operations, net of tax - - NM - (0.01) NM
--- --- --- -----
Net income attributable to
Global Payments $0.78 $0.67 16% $1.57 $1.28 23%
----- ----- ----- -----
Weighted average shares
outstanding:
Basic 78,348 79,701 79,207 79,642
Diluted 78,876 80,344 79,831 80,310
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 Six Months Ended
November 30, November 30,
------------------- -----------------
2011 2010 % Change 2011 2010 % Change
---- ---- -------- ---- ---- --------
Revenues $530,505 $443,526 20% $1,073,276 $883,665 21%
-------- -------- -------- --- ---------- -------- ---
Operating expenses:
Cost of service 173,778 145,003 20% 352,671 287,774 23%
Sales, general and
administrative 247,994 203,425 22% 490,619 407,821 20%
421,772 348,428 21% 843,290 695,595 21%
------- ------- ------- -------
Operating income 108,733 95,098 14% 229,986 188,070 22%
---------------- ------- ------ --- ------- ------- ---
Other income (expense):
Interest and other income 2,259 4,072 (45%) 4,760 5,608 (15%)
Interest and other expense (4,878) (4,299) 13% (8,965) (9,140) (2%)
------ ------ ------ ------
(2,619) (227) 1054% (4,205) (3,532) 19%
------ ---- ------ ------
Income from continuing
operations before income taxes 106,114 94,871 12% 225,781 184,538 22%
Provision for income taxes (29,569) (28,843) 3% (68,251) (54,793) 25%
------- ------- ------- -------
Income from continuing
operations including
noncontrolling interests 76,545 66,028 16% 157,530 129,745 21%
Less: Net income attributable to
noncontrolling interests, net
of tax (8,913) (4,701) 90% (19,085) (9,440) 102%
------ ------ ------- ------
Net income from continuing
operations attributable to
Global Payments $67,632 $61,327 10% $138,445 $120,305 15%
------- ------- -------- --------
Basic earnings per share $0.86 $0.77 12% $1.75 $1.51 16%
----- ----- ----- -----
Diluted earnings per share $0.86 $0.76 13% $1.73 $1.50 15%
----- ----- ----- -----
Weighted average shares
outstanding:
Basic 78,348 79,701 79,207 79,642
Diluted 78,876 80,344 79,831 80,310
NM - Not Meaningful
See Schedules 6 and 7 for a reconciliation of cash earnings from continuing operations to GAAP.
SCHEDULE 3
SEGMENT INFORMATION
GLOBAL PAYMENTS INC. AND
SUBSIDIARIES
(In
thousands)
-----------
Three Months Ended November 30,
-------------------------------
2011 2010 % Change
--- --- --------
Cash Cash Cash
GAAP Earnings GAAP Earnings GAAP Earnings
---- --------- ---- --------- ---- ---------
Revenues:
---------
United
States $293,416 $293,416 $245,671 $245,671 19% 19%
Canada 85,521 85,521 81,453 81,453 5% 5%
------ ------ ------ ------
North
America
merchant
services 378,937 378,937 327,124 327,124 16% 16%
Europe 115,169 115,169 79,881 79,881 44% 44%
Asia-
Pacific 36,399 36,399 36,521 36,521 (0%) (0%)
------ ------ ------ ------
International
merchant
services 151,568 151,568 116,402 116,402 30% 30%
Total
revenues $530,505 $530,505 $443,526 $443,526 20% 20%
======== ======== ======== ========
Operating
income:
---------
North
America
merchant
services $70,673 $73,495 $67,131 $70,287 5% 5%
International
merchant
services 44,494 53,825 35,349 40,165 26% 34%
Corporate (18,587) (18,587) (19,337) (15,354) 4% (21%)
------- ------- ------- -------
Operating
income $96,580 $108,733 $83,143 $95,098 16% 14%
======= ======== ======= =======
Six Months Ended November 30,
-----------------------------
2011 2010 % Change
--- --- --------
Cash Cash Cash
GAAP Earnings GAAP Earnings GAAP Earnings
---- --------- ---- --------- ---- ---------
Revenues:
---------
United
States $580,841 $580,841 $501,302 $501,302 16% 16%
Canada 176,742 176,742 162,666 162,666 9% 9%
------- ------- ------- -------
North
America
merchant
services 757,583 757,583 663,968 663,968 14% 14%
Europe 244,583 244,583 153,677 153,677 59% 59%
Asia-
Pacific 71,110 71,110 66,020 66,020 8% 8%
------ ------ ------ ------
International
merchant
services 315,693 315,693 219,697 219,697 44% 44%
Total
revenues $1,073,276 $1,073,276 $883,665 $883,665 21% 21%
========== ========== ======== ========
Operating
income:
---------
North
America
merchant
services $142,431 $148,111 $135,499 $141,672 5% 5%
International
merchant
services 100,152 119,268 66,742 76,215 50% 56%
Corporate (37,393) (37,393) (36,990) (29,817) (1%) (25%)
------- ------- ------- -------
Operating
income $205,190 $229,986 $165,251 $188,070 24% 22%
======== ======== ======== ========
See Schedule 8 for reconciliation of cash earnings segment information to GAAP.
SCHEDULE 4
CONSOLIDATED BALANCE SHEETS
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands)
--------------
November
30, May 31,
2011 2011
---- ----
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $770,860 $1,354,285
Accounts receivable, net of allowances for
doubtful accounts of $548 and $472,
respectively 162,643 166,540
Claims receivable, net of allowance for
losses of $4,169 and $3,870, respectively 1,024 914
Settlement processing assets 206,642 280,359
Inventory 11,790 7,640
Deferred income taxes 2,893 2,946
Prepaid expenses and other current assets 34,558 35,291
Total current assets 1,190,410 1,847,975
--------- ---------
Goodwill 741,081 779,637
Other intangible assets, net of accumulated
amortization of $214,435 and $197,066,
respectively 299,680 341,500
Property and equipment, net of accumulated
depreciation of $161,672 and $147,670,
respectively 258,041 256,301
Deferred income taxes 96,508 104,140
Other 28,619 20,978
------ ------
Total assets $2,614,339 $3,350,531
========== ==========
LIABILITIES AND EQUITY
Current liabilities:
Lines of credit $225,676 $270,745
Current portion of long-term debt 87,962 85,802
Accounts payable and accrued liabilities 206,420 241,578
Settlement processing obligations 270,290 838,565
Income taxes payable 17,076 7,674
Total current liabilities 807,424 1,444,364
------- ---------
Long-term debt 203,222 268,217
Deferred income taxes 115,157 116,432
Other long-term liabilities 54,788 49,843
Total liabilities 1,180,591 1,878,856
--------- ---------
Commitments and contingencies
Redeemable noncontrolling interest 139,934 133,858
Equity:
Preferred stock, no par value; 5,000,000
shares authorized and none issued - -
Common stock, no par value; 200,000,000
shares authorized; 78,355,001 issued
and outstanding at November 30, 2011 and
80,334,781 issued and
outstanding at May 31, 2011 - -
Paid-in capital 342,914 419,591
Retained earnings 790,532 685,624
Accumulated other comprehensive income 12,909 79,320
Total Global Payments shareholders' equity 1,146,355 1,184,535
--------- ---------
Noncontrolling interest 147,459 153,282
Total equity 1,293,814 1,337,817
--------- ---------
Total liabilities and equity $2,614,339 $3,350,531
========== ==========
SCHEDULE 5
UNAUDITED CONSOLIDATED STATEMENTS OF
CASH FLOWS
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands)
--------------
Six Months Ended
November 30,
-----------------
2011 2010
---- ----
Cash flows from operating activities:
Net income including noncontrolling
interests $140,230 $111,677
Adjustments to reconcile net income to
net cash used in operating activities:
Depreciation and amortization of
property and equipment 23,444 19,082
Amortization of acquired intangibles 24,796 15,646
Provision for operating losses and bad
debts 13,061 10,146
Share-based compensation expense 8,425 7,690
Deferred income taxes 5,915 3,287
Other, net (100) (3,556)
Changes in operating assets and
liabilities, net of the effects of
acquisitions:
Accounts receivable 3,897 (17,549)
Claims receivable (7,880) (8,095)
Settlement processing assets and
obligations, net (499,849) (239,970)
Inventory (4,212) 1,954
Prepaid expenses and other assets 62 (4,600)
Accounts payable and other accrued
liabilities (31,257) 18,990
Income taxes payable 9,402 24,382
----- ------
Net cash used in operating activities (314,066) (60,916)
-------- -------
Cash flows from investing activities:
Business and intangible asset
acquisitions, net of cash acquired (7,000) (3,488)
Capital expenditures (35,146) (51,709)
Preliminary settlement of working
capital adjustments from disposition
of business - (1,921)
Net decrease in financing receivables 1,203 991
----- ---
Net cash used in investing activities (40,943) (56,127)
------- -------
Cash flows from financing activities:
Net (payments) borrowings on lines of
credit (45,069) 101,694
Proceeds from issuance of long-term
debt 71,374 4,410
Principal payments under long-term
debt (131,345) (83,331)
Proceeds from stock issued under
employee stock plans, net of
repurchases (768) 1,962
Repurchase of common stock (99,604) (14,900)
Tax benefit from employee share-based
compensation 1,436 118
Distribution to noncontrolling
interests (4,660) (4,385)
Dividends paid (3,169) (3,180)
------ ------
Net cash (used in) provided by
financing activities (211,805) 2,388
-------- -----
Effect of exchange rate changes on cash (16,611) 8,369
------- -----
Decrease in cash and cash equivalents (583,425) (106,286)
Cash and cash equivalents, beginning of
period 1,354,285 769,946
Cash and cash equivalents, end of
period $770,860 $663,660
-------- --------
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, 2011
------------------------------------
Cash
GAAP Cash Earnings Earnings
---- ------------- ---------
Adjustments(1)
--------------
Revenues $530,505 $- $530,505
-------- -------- --- --------
Operating
expenses:
Cost of
service 185,931 (12,153) 173,778
Sales,
general
and
administrative 247,994 - 247,994
433,925 (12,153) 421,772
------- ------- -------
Operating
income 96,580 12,153 108,733
--------- ------ ------ -------
Other
income
(expense):
Interest
and other
income 2,259 - 2,259
Interest
and other
expense (4,878) - (4,878)
--- ------
(2,619) - (2,619)
------ --- ------
Income from
continuing
operations
before
income
taxes 93,961 12,153 106,114
Provision
for income
taxes (25,812) (3,757) (29,569)
------- ------ -------
Income from
continuing
operations 68,149 8,396 76,545
Less: Net
income
attributable
to
noncontrolling
interests,
net of tax (6,968) (1,945) (8,913)
------ ------ ------
Net income
from
continuing
operations
attributable
to Global
Payments $61,181 $6,451 $67,632
======= ====== =======
Diluted
shares 78,876 78,876
Diluted
earnings
per share $0.78 $0.08 $0.86
===== ===== =====
Three Months Ended November 30, 2010
------------------------------------
Foreign Tax Cash
GAAP Employee Rate Cash Earnings Earnings
---- -------- ------------ ------------- ---------
Termination and Adjustments(1)
--------------- --------------
Other(2)
--------
Revenues $443,526 $- $- $- $443,526
-------- -------- --- --- --- --------
Operating expenses:
Cost of service 154,205 (1,230) - (7,972) 145,003
Sales, general and administrative 206,178 (2,753) - - 203,425
360,383 (3,983) - (7,972) 348,428
------- ------ --- ------ -------
Operating income 83,143 3,983 - 7,972 95,098
---------------- ------ ----- --- ----- ------
Other income (expense):
Interest and other income 4,072 - - - 4,072
Interest and other expense (4,299) - - - (4,299)
--- --- --- ------
(227) - - - (227)
---- --- --- --- ----
Income from continuing operations
before income taxes 82,916 3,983 - 7,972 94,871
Provision for income taxes (24,546) (1,436) (2,861) (28,843)
------- ------ ------ -------
Income from continuing operations 58,370 2,547 - 5,111 66,028
Less: Net income attributable to
noncontrolling interests, net of
tax (4,378) - - (323) (4,701)
------ --- --- ---- ------
Net income from continuing
operations attributable to Global
Payments $53,992 $2,547 $- $4,788 $61,327
======= ====== === ====== =======
Diluted shares 80,344 80,344
Diluted earnings per share $0.67 $0.03 $- $0.06 $0.76
===== ===== === ===== =====
(1) Represents adjustments to cost of service to exclude acquisition intangible amortization expense
from continuing operations and the related income tax benefit.
(2) Reflects expenses of start-up costs related to our new Global Service Center in Manila,
Philippines and employee termination and relocation benefits and the related income tax benefits.
We supplemented our reporting of income from continuing operations and the related earnings per share
information determined in accordance with GAAP by reporting income from continuing operations and
the related earnings per share for the three months ended November 30, 2011 and 2010 on a "cash
earnings" basis in this earnings release as a measure to help evaluate performance. We calculated
November 30, 2011 income from continuing operations and earnings per share on a cash basis by
excluding acquisition intangible amortization from our results. We calculated November 30, 2010
income from continuing operations and earnings per share on a cash basis by excluding charges
related to employee termination and relocation benefits, certain one-time costs related to our
Global Service Center, and acquisition intangible amortization from our results. 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 from continuing operations and earnings per share reported
on a cash earnings basis should be considered in addition to, and not as a substitute for, income
from continuing operations and earnings per share determined in accordance with GAAP. Our measures
of income from continuing operations 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, 2011
----------------------------------
Cash
GAAP Cash Earnings Earnings
---- ------------- ---------
Adjustments(1)
--------------
Revenues $1,073,276 $- $1,073,276
-------- ---------- --- ----------
Operating expenses:
Cost of service 377,467 (24,796) 352,671
Sales, general and
administrative 490,619 - 490,619
868,086 (24,796) 843,290
------- ------- -------
Operating income 205,190 24,796 229,986
---------------- ------- ------ -------
Other income (expense):
Interest and other income 4,760 - 4,760
Interest and other expense (8,965) - (8,965)
--- ------
(4,205) - (4,205)
------ --- ------
Income from continuing
operations before income
taxes 200,985 24,796 225,781
Provision for income taxes (60,755) (7,496) (68,251)
------- ------ -------
Income from continuing
operations 140,230 17,300 157,530
Less: Net income attributable
to noncontrolling interests,
net of tax (15,075) (4,010) (19,085)
------- ------ -------
Net income from continuing
operations attributable to
Global Payments $125,155 $13,290 $138,445
======== ======= ========
Diluted shares 79,831 79,831
Diluted earnings per share $1.57 $0.18 $1.73
===== ===== =====
Six Months Ended November 30, 2010
----------------------------------
Cash Cash
GAAP Employee Foreign Tax Earnings Earnings
---- -------- ----------- --------- ---------
Termination and Rate(3) Adjustments(1)
--------------- ------- --------------
Other(2)
--------
Revenues $883,665 $- $- $- $883,665
-------- -------- --- --- --- --------
Operating expenses:
Cost of service 305,246 (1,826) - (15,646) 287,774
Sales, general and administrative 413,168 (5,347) - - 407,821
718,414 (7,173) - (15,646) 695,595
------- ------ --- ------- -------
Operating income 165,251 7,173 - 15,646 188,070
---------------- ------- ----- --- ------ -------
Other income (expense):
Interest and other income 5,608 - - - 5,608
Interest and other expense (9,140) - - - (9,140)
--- --- --- ------
(3,532) - - - (3,532)
------ --- --- --- ------
Income from continuing operations
before income taxes 161,719 7,173 - 15,646 184,538
Provision for income taxes (49,527) (2,598) 2,479 (5,147) (54,793)
------- ------ ----- ------ -------
Income from continuing operations 112,192 4,575 2,479 10,499 129,745
Less: Net income attributable to
noncontrolling interests, net of
tax (8,804) - - (636) (9,440)
------ --- --- ---- ------
Net income from continuing
operations attributable to Global
Payments $103,388 $4,575 $2,479 $9,863 $120,305
======== ====== ====== ====== ========
Diluted shares 80,310 80,310
Diluted earnings per share $1.29 $0.06 $0.03 $0.12 $1.50
===== ===== ===== ===== =====
(1) Represents adjustments to cost of service to exclude acquisition intangible amortization
expense from continuing operations and the related income tax benefit.
(2) Reflects expenses of start-up costs related to our new Global Service Center in Manila,
Philippines and employee termination and relocation benefits and the related income tax
benefits.
(3) Represents a one-time, non-cash write-down of a deferred tax asset we established in July
2009 when we purchased the remaining 49% of our UK business. The write-down resulted from a
legislated reduction to the tax rate of 1%.
We supplemented our reporting of income from continuing operations and the related earnings per
share information determined in accordance with GAAP by reporting income from continuing
operations and the related earnings per share for the six months ended November 30, 2011 and
2010 on a "cash earnings" basis in this earnings release as a measure to help evaluate
performance. We calculated November 30, 2011 income from continuing operations and earnings per
share on a cash basis by excluding acquisition intangible amortization from our results. We
calculated November 30, 2010 income from continuing operations and earnings per share on a cash
basis by excluding charges related to employee termination and relocation benefits, certain
one-time costs related to our Global Service Center, the legislated tax rate reduction and
acquisition intangible amortization from our results. 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 from continuing operations and earnings per share reported on a cash
earnings basis should be considered in addition to, and not as a substitute for, income from
continuing operations and earnings per share determined in accordance with GAAP. Our measures
of income from continuing operations 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,
-------------------------------
2011 2010
---- ----
Cash Cash Cash Cash
GAAP Earnings Earnings GAAP Employee Earnings Earnings
---- --------- --------- ---- -------- --------- ---------
Adjustments(1) Termination Adjustments(1)
-------------- ----------- --------------
and Other(2)
------------
Revenues:
---------
United
States $293,416 $- $293,416 $245,671 $- $- $245,671
Canada 85,521 - 85,521 81,453 - - 81,453
------ --- ------ ------ --- --- ------
North
America
merchant
services 378,937 - 378,937 327,124 - - 327,124
Europe 115,169 - 115,169 79,881 - - 79,881
Asia-
Pacific 36,399 - 36,399 36,521 - - 36,521
------ --- ------ ------ --- --- ------
International
merchant
services 151,568 - 151,568 116,402 - - 116,402
Total
revenues $530,505 $- $530,505 $443,526 $- $- $443,526
======== === ======== ======== === === ========
Operating
income:
---------
North
America
merchant
services $70,673 $2,822 $73,495 $67,131 $- $3,156 $70,287
International
merchant
services 44,494 9,331 53,825 35,349 - 4,816 40,165
Corporate (18,587) - (18,587) (19,337) 3,983 - (15,354)
------- --- ------- ------- ----- --- -------
Operating
income $96,580 $12,153 $108,733 $83,143 $3,983 $7,972 $95,098
======= ======= ======== ======= ====== ====== =======
Six Months Ended November 30,
-----------------------------
2011 2010
--- ---
Cash Cash Cash Cash
GAAP Earnings Earnings GAAP Employee Earnings Earnings
---- --------- --------- ---- -------- --------- ---------
Termination
Adjustments(1) and Adjustments(1)
-------------- ------------ --------------
Other(2)
--------
Revenues:
---------
United
States $580,841 $- $580,841 $501,302 $- $- $501,302
Canada 176,742 - 176,742 162,666 - - 162,666
---
North
America
merchant
services 757,583 - 757,583 663,968 - - 663,968
Europe 244,583 - 244,583 153,677 - - 153,677
Asia-
Pacific 71,110 71,110 66,020 66,020
------ --- ------ ------ --- --- ------
International
merchant
services 315,693 - 315,693 219,697 - - 219,697
Total
revenues $1,073,276 $- $1,073,276 $883,665 $- $- $883,665
========== === ========== ======== === === ========
Operating
income:
---------
North
America
merchant
services $142,431 $5,680 $148,111 $135,499 $- $6,173 $141,672
International
merchant
services 100,152 19,116 119,268 66,742 - 9,473 76,215
Corporate (37,393) - (37,393) (36,990) 7,173 - (29,817)
------- ------- ------- -------
Operating
income $205,190 $24,796 $229,986 $165,251 $7,173 $15,646 $188,070
======== ======= ======== ======== ====== ======= ========
(1) Represents acquisition intangible amortization expense.
(2) Represents start-up costs related to our Global Service Center in Manila, Philippines and
expenses related to employee termination and relocation benefits.
SCHEDULE 9
OUTLOOK
SUMMARY
GLOBAL
PAYMENTS
INC.
AND
SUBSIDIARIES
(In
millions,
except
per
share
data)
----------
Fiscal 2011 Fiscal 2012 % Change
----------- ----------- --------
Actual Outlook FY11
------ ------- ----
Revenue
Outlook
--------
Revenues $1,860 $2,150 to $2,200 16% to 18%
EPS
Outlook
--------
GAAP
diluted
EPS $2.61 $3.14 to $3.22 20% to 23%
Acquisition-
related
intangibles
and
non-
recurring
items
(1) 0.47 $0.36 ---
---- ----- ---
Cash EPS $3.08 $3.50 to $3.58 14% to 16%
===== ============== ==========
(1) Fiscal 2012 reflects $0.36 in acquisition-related
intangibles and currently no non-recurring items.
Acquisition-related intangibles accounted for $0.31 in
fiscal 2011 and non-recurring items $0.16.
SOURCE Global Payments Inc.