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Exhibit 99.1

 

LOGO

Global Payments Reports Second Quarter Earnings for Fiscal 2013

Increases EPS Outlook for Full-Year 2013

Doubles Share Repurchase Authorization to $300 Million

ATLANTA, January 8, 2013 — Global Payments Inc. (NYSE: GPN), a leading, worldwide provider of electronic transaction processing solutions, today announced results for its fiscal second quarter ended November 30, 2012.

Second Quarter 2013 Summary

 

Revenue grew 11% to $588.5 million compared to $530.5 million in the second quarter of 2012.

 

Cash diluted earnings per share1 grew 8% to $0.93 compared to $0.86 in the second quarter of 2012.

 

GAAP diluted earnings per share were $0.89, compared to $0.78 in the second quarter of 2012.

Chairman and CEO Paul R. Garcia said, “We are pleased with our solid performance in the quarter and the recent completion of the two previously announced acquisitions, Accelerated Payment Technologies in October, and the remaining 44% ownership interest in the Asia-Pacific joint venture from HSBC in December. We have also increased our full-year cash EPS expectation to a range of $3.61 to $3.68.

“Additionally, I am delighted to announce that we have essentially completed our remediation work as anticipated and the required documentation is in the process of being provided to the Qualified Security Assessor for verification. This verification allows the Networks to evaluate the results and return us to the list of PCI compliant service providers,” concluded Garcia.

Share Repurchase Authorization

The Board of Directors approved an additional $150 million share repurchase authorization of Global Payments’ stock which increased the current $150 million share repurchase authorization to a total of $300 million. As of January 8, 2013, $287 million remains available. Under this program, 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. Repurchased shares will be retired but will be available for future issuance.

 

 

1 

See Schedule 2 for Cash Earnings and Schedules 6 and 7 for Reconciliations of Cash Earnings to GAAP.

 

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David Mangum, Senior Executive Vice President and CFO, stated, “We are pleased with the increase in the share repurchase authorization and we expect to execute on our buyback plans. With the recently increased financing capacity we completed in the second quarter of 2013, we have significant capital flexibility to drive organic growth, acquisitions and on-going share repurchases.”

Acquisition Closings and Funding

Global Payments closed the Accelerated Payment Technologies (APT) acquisition for $413 million on October 1, 2012. APT is an innovative provider of fully-integrated payment technology solutions for small to medium sized merchants. The company also closed on a new five-year senior unsecured term loan facility of $700 million and increased its existing senior unsecured revolving credit facility by $150 million. In addition, effective December 1, 2012, the company completed its previously announced acquisition of the remaining 44% ownership interest in the Asia-Pacific joint venture for $242 million. Global Payments will continue to be HSBC’s preferred strategic partner for card acquiring services in Asia-Pacific, covering 11 markets.

2013 Outlook

For the full-year of fiscal 2013, the company continues to expect annual revenue of $2,360 million to $2,400 million, or 7% to 9% growth over fiscal 2012.

Annual expectations for fiscal 2013 diluted earnings per share on a cash basis are now increased to a range of $3.61 to $3.68, or growth of 2% to 4% over fiscal 2012. On a constant currency basis, the company continues to expect revenue to grow 8% to 10% and diluted earnings per share on a cash basis to grow 5% to 7%.

Annual fiscal 2013 GAAP diluted earnings per share, excluding the impact of all intrusion remediation costs, are expected to be in a range of $3.01 to $3.08.

Both cash and GAAP diluted earnings per share expectations exclude the impact of any potential future share repurchases.

For reconciliation of Cash Earnings to GAAP and constant currency, see schedule 9.

Conference Call

Global Payments will hold a conference call today, January 8, 2013 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 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 through the Global Payments website through January 21, 2013.

 

-- More --


About Global Payments

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: the effect on our results of operations of the remediation efforts resulting from the unauthorized access to our processing system announced in March 2012; foreign currency risks which become increasingly relevant as we expand internationally; the effect of current domestic and worldwide economic conditions, including sovereign insolvency situations and a decline in the value of the U.S. dollar, and future performance and integration of acquisitions including APT, and other risks detailed in the company’s SEC filings, including the most recently filed Form 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.

 

Investor contact:

   investor.relations@globalpay.com    Media contact:    media.relations@globalpay.com

Jane Elliott

   Kay Sharpton    Amy Corn   

770-829-8234

   770-829-8870    770-829-8755   

 

###


SCHEDULE 1

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,
       
     2012     2011     % Change     2012     2011     % Change  
     (unaudited)                          

Revenues

   $     588,538      $     530,505        11%      $     1,178,825      $     1,073,276        10%   

Operating expenses:

            

Cost of service

     210,268        185,931        13%        414,659        377,467        10%   

Sales, general and administrative

     276,177        247,994        11%        557,596        490,619        14%   

Processing system intrusion

     (14,489     —          NM        9,500        —          NM   
  

 

 

   

 

 

     

 

 

   

 

 

   
     471,956        433,925        9%        981,755        868,086        13%   
  

 

 

   

 

 

     

 

 

   

 

 

   

Operating income

     116,582        96,580        21%        197,070        205,190        (4%

Other income (expense):

            

Interest and other income

     2,187        2,259        (3%     4,170        4,760        (12%

Interest and other expense

     (14,609     (4,878     199%        (18,154     (8,965     102%   
  

 

 

   

 

 

     

 

 

   

 

 

   
     (12,422     (2,619     374%        (13,984     (4,205     233%   
  

 

 

   

 

 

     

 

 

   

 

 

   

Income before income taxes

     104,160        93,961        12%        183,086        200,985        (9%

Provision for income taxes

     (28,789     (25,812     12%        (53,553     (60,755     (12%
  

 

 

   

 

 

     

 

 

   

 

 

   

Net income

     75,371        68,149        11%        129,533        140,230        (8%

Less:  Net income attributable to noncontrolling interests, net of tax

     (5,188     (6,968     (26%     (12,675     (15,075     (16%
  

 

 

   

 

 

     

 

 

   

 

 

   

Net income attributable to Global Payments

   $ 70,183      $ 61,181        15%      $ 116,858      $ 125,155        (7%
  

 

 

   

 

 

     

 

 

   

 

 

   

Earnings per share attributable to Global Payments:

            

Basic

   $ 0.89      $ 0.78        14%      $ 1.49      $ 1.58        (6%

Diluted

   $ 0.89      $ 0.78        14%      $ 1.48      $ 1.57        (6%

Weighted average shares outstanding:

            

Basic

     78,751        78,348          78,669        79,207     

Diluted

     79,144        78,876          79,062        79,831     

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
November 30,
          Six Months Ended
November 30,
       
     2012     2011     % Change     2012     2011     % Change  

Revenues

   $     588,538      $     530,505        11%      $     1,178,825      $     1,073,276        10%   

Operating expenses:

            

Cost of service

     195,932        173,778        13%        388,937        352,671        10%   

Sales, general and administrative

     276,177        247,994        11%        556,796        490,619        13%   
  

 

 

   

 

 

     

 

 

   

 

 

   
     472,109        421,772        12%        945,733        843,290        12%   
  

 

 

   

 

 

     

 

 

   

 

 

   

Operating income

     116,429        108,733        7%        233,092        229,986        1%   

Other income (expense):

            

Interest and other income

     2,187        2,259        (3%     4,170        4,760        (12%

Interest and other expense

     (6,226     (4,878     28%        (9,771     (8,965     9%   
  

 

 

   

 

 

     

 

 

   

 

 

   
     (4,039     (2,619     54%        (5,601     (4,205     33%   
  

 

 

   

 

 

     

 

 

   

 

 

   

Income before income taxes

     112,390        106,114        6%        227,491        225,781        1%   

Provision for income taxes

     (29,385     (29,569     (1%     (65,938     (68,251     (3%
  

 

 

   

 

 

     

 

 

   

 

 

   

Net income

     83,005        76,545        8%        161,553        157,530        3%   

Less:  Net income attributable to noncontrolling interests, net of tax

     (9,419     (8,913     6%        (19,171     (19,085     0%   
  

 

 

   

 

 

     

 

 

   

 

 

   

Net income attributable to Global Payments

   $ 73,586      $ 67,632        9%      $ 142,382      $ 138,445        3%   
  

 

 

   

 

 

     

 

 

   

 

 

   

Basic earnings per share

   $ 0.93      $ 0.86        8%      $ 1.81      $ 1.75        3%   
  

 

 

   

 

 

     

 

 

   

 

 

   

Diluted earnings per share

   $ 0.93      $ 0.86        8%      $ 1.80      $ 1.73        4%   
  

 

 

   

 

 

     

 

 

   

 

 

   

Weighted average shares outstanding:

            

Basic

     78,751        78,348          78,669        79,207     

Diluted

     79,144        78,876          79,062        79,831     

NM—Not Meaningful

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 November 30,              
     2012     2011     % Change  
     GAAP     Cash
Earnings
    GAAP     Cash
Earnings
    GAAP     Cash
Earnings
 

Revenues:

            

United States

   $ 339,998      $ 339,998      $ 293,416      $ 293,416        16%        16%   

Canada

     80,770        80,770        85,521        85,521        (6%     (6%
  

 

 

   

 

 

   

 

 

   

 

 

     

North America merchant services

     420,768        420,768        378,937        378,937        11%        11%   

Europe

     131,161        131,161        115,169        115,169        14%        14%   

Asia-Pacific

     36,609        36,609        36,399        36,399        1%        1%   
  

 

 

   

 

 

   

 

 

   

 

 

     

International merchant services

     167,770        167,770        151,568        151,568        11%        11%   
  

 

 

   

 

 

   

 

 

   

 

 

     

Total revenues

   $ 588,538      $ 588,538      $ 530,505      $ 530,505        11%        11%   
  

 

 

   

 

 

   

 

 

   

 

 

     

Operating income:

            

North America merchant services

   $ 67,114      $ 73,280      $ 70,673      $ 73,495        (5%     (0%

International merchant services

     53,987        62,157        44,494        53,825        21%        15%   

Corporate1

     (4,519     (19,008     (18,587     (18,587     76%        (2%
  

 

 

   

 

 

   

 

 

   

 

 

     

Operating income

   $ 116,582      $ 116,429      $ 96,580      $ 108,733        21%        7%   
  

 

 

   

 

 

   

 

 

   

 

 

     
     Six Months Ended November 30,              
     2012     2011     % Change  
     GAAP     Cash
Earnings
    GAAP     Cash
Earnings
    GAAP     Cash
Earnings
 

Revenues:

            

United States

   $ 685,896      $ 685,896      $ 580,841      $ 580,841        18%        18%   

Canada

     161,667        161,667        176,742        176,742        (9%     (9%
  

 

 

   

 

 

   

 

 

   

 

 

     

North America merchant services

     847,563        847,563        757,583        757,583        12%        12%   

Europe

     259,626        259,626        244,583        244,583        6%        6%   

Asia-Pacific

     71,636        71,636        71,110        71,110        1%        1%   
  

 

 

   

 

 

   

 

 

   

 

 

     

International merchant services

     331,262        331,262        315,693        315,693        5%        5%   
  

 

 

   

 

 

   

 

 

   

 

 

     

Total revenues

   $ 1,178,825      $ 1,178,825      $ 1,073,276      $ 1,073,276        10%        10%   
  

 

 

   

 

 

   

 

 

   

 

 

     

Operating income:

            

North America merchant services

   $ 134,331      $ 144,723      $ 142,431      $ 148,111        (6%     (2%

International merchant services

     111,127        127,201        100,152        119,268        11%        7%   

Corporate1

     (48,388     (38,832     (37,393     (37,393     (29%     (4%
  

 

 

   

 

 

   

 

 

   

 

 

     

Operating income

   $ 197,070      $ 233,092      $ 205,190      $ 229,986        (4%     1%   
  

 

 

   

 

 

   

 

 

   

 

 

     

1 Fiscal 2013 GAAP amounts include a processing intrusion credit of $14.5 million for the three months ended November 30, 2012 and processing system intrusion costs of $9.5 million for the six months ended November 30, 2012.

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,
2012
     May 31,
2012
 
     (unaudited)         

ASSETS

     

Current assets:

     

Cash and cash equivalents

   $ 998,261       $ 781,275   

Accounts receivable, net of allowances for doubtful accounts of $833 and $532, respectively

     183,256         182,962   

Claims receivable, net of allowance for losses of $3,786 and $3,435, respectively

     968         1,029   

Settlement processing assets

     237,640         217,994   

Inventory

     14,147         9,864   

Deferred income taxes

     6,464         21,969   

Prepaid expenses and other current assets

     49,184         33,646   
  

 

 

    

 

 

 

Total current assets

     1,489,920         1,248,739   
  

 

 

    

 

 

 

Goodwill

     1,059,520         724,687   

Other intangible assets, net of accumulated amortization of $267,956 and $235,296, respectively

     416,170         290,188   

Property and equipment, net of accumulated depreciation of $179,846 and $161,911, respectively

     338,195         305,848   

Deferred income taxes

     97,966         97,235   

Other

     26,950         21,446   
  

 

 

    

 

 

 

Total assets

   $     3,428,721       $     2,688,143   
  

 

 

    

 

 

 

LIABILITIES AND EQUITY

     

Current liabilities:

     

Lines of credit

   $ 212,399       $ 215,391   

Current portion of long-term debt

     102,425         76,420   

Commitment to purchase redeemable noncontrolling interest

     242,000         —     

Accounts payable and accrued liabilities

     244,499         316,313   

Settlement processing obligations

     228,711         216,878   

Income taxes payable

     7,436         12,283   
  

 

 

    

 

 

 

Total current liabilities

     1,037,470         837,285   
  

 

 

    

 

 

 

Long-term debt

     777,988         236,565   

Deferred income taxes

     167,365         106,644   

Other long-term liabilities

     71,097         62,306   
  

 

 

    

 

 

 

Total liabilities

     2,053,920         1,242,800   
  

 

 

    

 

 

 

Commitments and contingencies

     

Redeemable noncontrolling interest

     —           144,422   

Equity:

     

Preferred stock, no par value; 5,000,000 shares authorized and none issued

     —           —     

Common stock, no par value; 200,000,000 shares authorized; 78,724,622 and 78,551,297 issued and outstanding at November 30, 2012 and May 31, 2012, respectively.

     —           —     

Paid-in capital

     257,554         358,728   

Retained earnings

     957,978         843,456   

Accumulated other comprehensive income (loss)

     18,432         (30,000
  

 

 

    

 

 

 

Total Global Payments shareholders’ equity

     1,233,964         1,172,184   
  

 

 

    

 

 

 

Noncontrolling interest

     140,837         128,737   
  

 

 

    

 

 

 

Total equity

     1,374,801         1,300,921   
  

 

 

    

 

 

 

Total liabilities and equity

   $ 3,428,721       $ 2,688,143   
  

 

 

    

 

 

 


SCHEDULE 5

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands)

 

 

     Six Months Ended November 30,  
     2012      2011  

Cash flows from operating activities:

     

Net income

   $ 129,533       $ 140,230   

Adjustments to reconcile net income to net cash used in operating activities:

     

Depreciation and amortization of property and equipment

     26,494         23,444   

Amortization of acquired intangibles

     25,561         24,796   

Share-based compensation expense

     9,178         8,425   

Provision for operating losses and bad debts

     11,970         13,061   

Deferred income taxes

     30,055         5,915   

Other, net

     (2,231      (100

Changes in operating assets and liabilities, net of the effects of acquisitions:

     

Accounts receivable

     721         3,897   

Claims receivable

     (6,600      (7,880

Settlement processing assets and obligations, net

     (11,671      (499,849

Inventory

     (4,297      (4,212

Prepaid expenses and other assets

     (11,204      62   

Accounts payable and other accrued liabilities

     (67,869      (31,257

Income taxes payable

     (4,847      9,402   
  

 

 

    

 

 

 

Net cash provided by (used in) operating activities

     124,793         (314,066
  

 

 

    

 

 

 

Cash flows from investing activities:

     

Business, intangible and other asset acquisitions, net of cash acquired

     (409,731      (7,000

Capital expenditures

     (54,393      (35,146

Net decrease in financing receivables

     1,485         1,203   
  

 

 

    

 

 

 

Net cash used in investing activities

     (462,639      (40,943
  

 

 

    

 

 

 

Cash flows from financing activities:

     

Net payments on short-term lines of credit

     (2,992      (45,069

Proceeds from issuance of long-term debt

     910,327         71,374   

Principal payments under long-term debt

     (343,133      (131,345

Payment of debt issuance costs

     (3,987      —     

Proceeds from stock issued under employee stock plans

     7,080         (768

Common stock repurchased—share-based compensation plans

     (10,224      —     

Repurchase of common stock

     (12,653      (99,604

Tax benefit from employee share-based compensation

     1,791         1,436   

Distribution to noncontrolling interests

     (5,740      (4,660

Dividends paid

     (3,153      (3,169
  

 

 

    

 

 

 

Net cash provided by (used in) financing activities

     537,316         (211,805
  

 

 

    

 

 

 

Effect of exchange rate changes on cash

     17,516         (16,611
  

 

 

    

 

 

 

Increase (decrease) in cash and cash equivalents

     216,986         (583,425

Cash and cash equivalents, beginning of period

     781,275         1,354,285   
  

 

 

    

 

 

 

Cash and cash equivalents, end of period

   $ 998,261       $ 770,860   
  

 

 

    

 

 

 


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, 2012  
     GAAP     Processing
System
Intrusion
    Other2     Cash Earnings
Adjustments1
    Cash Earnings  
  

 

 

 

Revenues

   $     588,538      $      $      $      $ 588,538   

Operating expenses:

          

Cost of service

     210,268        —          —          (14,336     195,932   

Sales, general and administrative

     276,177        —          —          —          276,177   

Processing system intrusion

     (14,489     14,489        —          —          —     
  

 

 

 
     471,956        14,489        —          (14,336     472,109   
  

 

 

 

Operating income

     116,582        (14,489     —          14,336        116,429   

Other income (expense):

          

Interest and other income

     2,187        —          —          —          2,187   

Interest and other expense

     (14,609     —          8,383        —          (6,226
  

 

 

 
     (12,422     —          8,383        —          (4,039
  

 

 

 

Income before income taxes

     104,160        (14,489     8,383        14,336        112,390   

Provision for income taxes

     (28,789     5,000        (1,383     (4,213     (29,385
  

 

 

 

Net income

     75,371        (9,489     7,000        10,123        83,005   

Less: Net income attributable to noncontrolling interests, net of tax

     (5,188     —          (2,853     (1,378     (9,419
  

 

 

 

Net income attributable to Global Payments

   $ 70,183      $ (9,489   $ 4,147      $ 8,745      $ 73,586   
  

 

 

 

Diluted shares

     79,144              79,144   

Diluted earnings per share

   $ 0.89      $ (0.12   $ 0.05      $ 0.11      $ 0.93   
  

 

 

 
     Three Months Ended November 30, 2011  
     GAAP                 Cash Earnings
Adjustments1
    Cash Earnings  
  

 

 

 

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 before income taxes

     93,961            12,153        106,114   

Provision for income taxes

     (25,812         (3,757     (29,569
  

 

 

 

Net income

     68,149            8,396        76,545   

Less: Net income attributable to noncontrolling interests, net of tax

     (6,968         (1,945     (8,913
  

 

 

 

Net income 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   
  

 

 

 

1 Represents adjustments to cost of service to exclude acquisition intangible amortization expense and the related income tax benefit.

2 Represents HSBC’s share of GPAP dividends declared.

We supplemented our reporting of net income and the related earnings per share information determined in accordance with GAAP by reporting net income and the related earnings per share for the three months ended November 30, 2012 and 2011 on a “cash earnings” basis in this earnings release as a measure to help evaluate performance. We calculated November 30,2012 net income and earnings per share on a cash basis by excluding credits related to the processing system intrusion and acquisition intangible amortization. We also adjusted the net income attributable to noncontrolling interests to include HSBC’s share of second quarter 2013 GPAP net income. We calculated November 30, 2011 net income and earnings per share on a cash basis by excluding 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 net income and earnings per share reported on a cash earnings basis should be considered in addition to, and not as a substitute for, net income and earnings per share determined in accordance with GAAP. Our measures of net 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, 2012  
     GAAP     Processing
System
Intrusion
    Other2     Cash Earnings
Adjustments1
    Cash Earnings  
  

 

 

 

Revenues

   $ 1,178,825      $      $      $      $ 1,178,825   

Operating expenses:

          

Cost of service

     414,659        —          (161     (25,561     388,937   

Sales, general and administrative

     557,596        —          (800     —          556,796   

Processing system intrusion

     9,500        (9,500     —          —          —     
  

 

 

 
     981,755        (9,500     (961     (25,561     945,733   
  

 

 

 

Operating income

     197,070        9,500        961        25,561        233,092   

Other income (expense):

          

Interest and other income

     4,170        —          —          —          4,170   

Interest and other expense

     (18,154     —          8,383        —          (9,771
  

 

 

 
     (13,984     —          8,383        —          (5,601
  

 

 

 

Income before income taxes

     183,086        9,500        9,344        25,561        227,491   

Provision for income taxes

     (53,553     (3,279     (1,533     (7,573     (65,938
  

 

 

 

Net income

     129,533        6,221        7,811        17,988        161,553   

Less: Net income attributable to noncontrolling interests, net of tax

     (12,675     —          (3,594     (2,902     (19,171
  

 

 

 

Net income attributable to Global Payments

   $ 116,858      $ 6,221      $ 4,217      $ 15,086      $ 142,382   
  

 

 

 

Diluted shares

     79,062              79,062   

Diluted earnings per share

   $ 1.48      $ 0.08      $ 0.05      $ 0.19      $ 1.80   
  

 

 

 
     Six Months Ended November 30, 2011  
     GAAP                 Cash Earnings
Adjustments1
    Cash Earnings  
  

 

 

 

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 before income taxes

     200,985            24,796        225,781   

Provision for income taxes

     (60,755         (7,496     (68,251
  

 

 

 

Net income

     140,230            17,300        157,530   

Less: Net income attributable to noncontrolling interests, net of tax

     (15,075         (4,010     (19,085
  

 

 

 

Net income 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   
  

 

 

 

1 Represents adjustments to cost of service to exclude acquisition intangible amortization expense and the related income tax benefit.

2 Represents HSBC’s share of GPAP dividends declared and one-time charges primarily related to employee termination benefits.

We supplemented our reporting of net income and the related earnings per share information determined in accordance with GAAP by reporting net income and the related earnings per share for the six months ended November 30, 2012 and 2011 on a “cash earnings” basis in this earnings release as a measure to help evaluate performance. We calculated November 30,2012 net income and earnings per share on a cash basis by excluding costs related to the processing system intrusion, acquisition intangible amortization and one-time charges related to employee termination benefits. We also adjusted the net income attributable to noncontrolling interests to include HSBC’s share of August 2012 through November 2012 GPAP net income. We calculated November 30, 2011 net income and earnings per share on a cash basis by excluding 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 net income and earnings per share reported on a cash earnings basis should be considered in addition to, and not as a substitute for, net income and earnings per share determined in accordance with GAAP. Our measures of net 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,  
     2012     2011  
     GAAP     Processing
System
Intrusion
    Other      Cash
Earnings
Adjustments1
     Cash
Earnings
    GAAP     Cash
Earnings
Adjustments1
     Cash
Earnings
 
  

 

 

   

 

 

 

Revenues:

                   

United States

   $ 339,998      $ —        $ —         $ —         $ 339,998      $ 293,416      $ —         $ 293,416   

Canada

     80,770        —          —           —           80,770        85,521        —           85,521   
  

 

 

   

 

 

 

North America merchant services

     420,768        —          —           —           420,768        378,937        —           378,937   

Europe

     131,161        —          —           —           131,161        115,169        —           115,169   

Asia-Pacific

     36,609        —          —           —           36,609        36,399        —           36,399   
  

 

 

   

 

 

 

International merchant services

     167,770        —          —           —           167,770        151,568        —           151,568   
  

 

 

   

 

 

 

Total revenues

   $ 588,538      $ —        $ —         $ —         $ 588,538      $ 530,505      $ —         $ 530,505   
  

 

 

   

 

 

 

Operating income:

                   

North America merchant services

   $ 67,114      $ —           $ 6,166       $ 73,280      $ 70,673      $ 2,822       $ 73,495   

International merchant services

     53,987        —             8,170         62,157        44,494        9,331         53,825   

Corporate

     (4,519     (14,489        —           (19,008     (18,587     —           (18,587
  

 

 

   

 

 

 

Operating income

   $ 116,582      $ (14,489   $ —         $ 14,336       $ 116,429      $ 96,580      $ 12,153       $ 108,733   
  

 

 

   

 

 

 
     Six Months Ended November 30,  
     2012     2011  
     GAAP     Processing
System
Intrusion
    Other2      Cash
Earnings
Adjustments1
     Cash
Earnings
    GAAP     Cash
Earnings
Adjustments1
     Cash
Earnings
 
  

 

 

   

 

 

 

Revenues:

                   

United States

   $ 685,896      $ —        $ —         $ —         $ 685,896      $ 580,841      $ —         $ 580,841   

Canada

     161,667        —          —           —           161,667        176,742        —           176,742   
  

 

 

   

 

 

 

North America merchant services

     847,563        —          —           —           847,563        757,583        —           757,583   

Europe

     259,626        —          —           —           259,626        244,583        —           244,583   

Asia-Pacific

     71,636        —          —           —           71,636        71,110        —           71,110   
  

 

 

   

 

 

 

International merchant services

     331,262        —          —           —           331,262        315,693        —           315,693   
  

 

 

   

 

 

 

Total revenues

   $ 1,178,825      $ —        $ —         $ —         $ 1,178,825      $ 1,073,276      $ —         $ 1,073,276   
  

 

 

   

 

 

 

Operating income:

                   

North America merchant services

   $ 134,331      $ —        $ 905       $ 9,487       $ 144,723      $ 142,431      $ 5,680       $ 148,111   

International merchant services

     111,127        —          —           16,074         127,201        100,152        19,116         119,268   

Corporate

     (48,388     9,500        56         —           (38,832     (37,393     —           (37,393
  

 

 

   

 

 

 

Operating income

   $ 197,070      $ 9,500      $ 961       $ 25,561       $ 233,092      $ 205,190      $ 24,796       $ 229,986   
  

 

 

   

 

 

 

1 Represents acquisition intangible amortization expense.

2 Represents one-time charges primarily related to employee termination benefits.


SCHEDULE 9

OUTLOOK SUMMARY

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In millions, except per share data)

 

 

     Fiscal 2012
Actual
    Fiscal 2013
Outlook
  % Change
FY12

Revenue Outlook

      

Constant currency1

   $     2,204      $2,385 to $2,425   8% to 10%

Foreign currency impact2

     NA      ($25)  
  

 

 

   

 

 

 

Total Revenues

   $ 2,204      $2,360 to $2,400   7% to 9%

EPS Outlook

      

Constant currency1

   $ 3.53      $3.69 to $3.76   5% to 7%

Foreign currency impact2

     NA      ($0.08)  
  

 

 

   

 

 

 

Cash EPS

   $ 3.53      $3.61 to $3.68   2% to 4%

Acquisition-related intangibles and non-recurring items3

     (0.48   ($0.60)   25%

Processing system intrusion

     (0.68   TBD*   NM
  

 

 

   

 

 

 

GAAP Diluted EPS

   $ 2.37      $3.01 to $3.08   27% to 30%
  

 

 

   

 

 

 

We supplement our fiscal 2013 outlook of total revenues and earnings per share information determined in accordance with GAAP by reporting revenues and earnings per share on a “constant currency” basis in this earnings release as a measure to help evaluate performance. We calculated revenues and earnings per share on a constant currency basis by converting our fiscal 2013 expected revenues and expenses at fiscal 2012 exchange rates. We exclude the impact of exchange rate fluctuations in order to more clearly focus on the factors we believe are pertinent to the daily management of our operations, and our management uses constant currency measures to evaluate the impact of operational business decisions. Our revenues and earnings per share reported on a constant currency basis should be considered in addition to, and not as a substitute for, revenues and earnings per share determined in accordance with GAAP. Our measures of revenues and earnings per share on a constant currency basis reflect management’s judgment of particular items, and may not be comparable to similarly titled measures reported by other companies.

1 Reflects current period and forecasted results on a pro forma basis as if foreign currency rates did not change from the comparable prior year period.

2 Reflects the impact of actual and forecasted changes in foreign currency rates from the comparable prior year period.

3 Fiscal 2013 reflects $0.56 of acquisition-related intangibles and $0.04 of non-recurring items. Acquisition-related intangibles accounted for $0.35 in fiscal 2012 and non-recurring items $0.13.

* Not able to accurately estimate 2013 charges for processing system intrusion, remediation, true-ups, etc. We currently anticipate that such additional costs may be $25 to $35 million in fiscal 2013 which reflects a $31.5 million reduction of the Company’s original estimate of fraud losses, fines and other charges resulting in total processing system intrusion costs for six months ended November 30, 2012 of $9.5 million. Insurance proceeds of up to $28 million may possibly occur in fiscal 2014 rather than 2013.

NA = Not Applicable

NM = Not Meaningful