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| 8-K - 8-K - GLOBAL PAYMENTS INC | form8-kearningsrelease2017.htm |
Global Payments Reports First Quarter Earnings,
Increases 2017 Outlook and Refinances Debt Facilities
ATLANTA, May 4, 2017 -- Global Payments Inc. (NYSE: GPN) today announced results for
the first quarter ended March 31, 2017.
“We are off to an exceptional start to 2017, producing double digit organic growth across our markets worldwide in the first quarter," said Jeff Sloan, Chief Executive Officer. "In particular, organic growth in our integrated and vertical markets business accelerated, contributing significantly to our strong performance," Sloan continued. "We have completed the first anniversary of our Heartland partnership, and our combined results underscore our consistency of execution and position us as the leading provider of technology-enabled, software-driven solutions worldwide.”
First Quarter 2017 Summary
• | GAAP revenues were $919.8 million, compared to $626.3 million in the first quarter of 2016; diluted earnings per share were $0.32 compared to $0.46 in the prior year; and operating margin was 11.4% compared to 15.1% in the first quarter of 2016. |
• | Adjusted net revenue grew 68% to $803.9 million, compared to $479.6 million in the first quarter of 2016. |
• | Adjusted earnings per share grew 33% to $0.85, compared to $0.64 in the first quarter of 2016. |
• | Adjusted operating margin expanded 110 basis points to 28.5%. |
2017 Outlook
“As a result of our strong first quarter performance and progress with Heartland integration efforts, we are increasing our outlook for 2017,” stated Cameron Bready, Senior Executive Vice President and Chief Financial Officer. “We now expect adjusted net revenue to range from $3.38 billion to $3.46 billion, or growth of 19% to 22% over 2016 and adjusted operating margin to expand by as much as 110 basis
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points. Adjusted earnings per share are now expected to be in a range of $3.78 to $3.95, reflecting growth of 19% to 24% over 2016, which includes the impact of our recent refinancing.”
Debt Refinancing
On May 2, 2017, Global Payments successfully closed an amendment to its credit facility agreement. Under the terms of the amendment, the company increased its aggregate term loan B facilities by $610 million with the proceeds being used to reduce a portion of the term loan A facilities and outstanding revolving credit facility borrowings. The company's total borrowings remain unchanged as a result of the amendment.
The amendment reduced the interest rate spread on all credit facilities by 50 basis points (subject to adjustment based on an amended leveraged-based pricing grid). Further, the amendment extended the maturities of the term loan A facilities and the revolving credit facility to May 2022.
Capital Allocation
Global Payments’ Board of Directors approved a dividend of $0.0133 per share payable June 23, 2017 to shareholders of record as of June 9, 2017. This dividend includes the period from December 1, 2016 through March 31, 2017 to reflect the company’s transition to a calendar year fiscal period.
Conference Call
Global Payments’ management will host a conference call today, May 4, 2017 at 8:00 a.m. ET to discuss financial results and business highlights. Callers may access the conference call via the investor relations page of the company’s website at www.globalpaymentsinc.com; or callers in North America may dial 877-674-6428 and callers outside North America may dial 970-315-0457. A replay of the call will be archived on the company's website within two hours of the live call.
Non-GAAP Financial Measures
Global Payments supplemented revenues, income and earnings per share information determined in accordance with GAAP by providing those measures on an adjusted basis in this earnings release to assist with evaluating performance. In addition to GAAP measures, management uses these non-GAAP measures to focus on the factors the company believes are pertinent to the daily management of our operations.
Reconciliations of the non-GAAP measures to the most directly comparable GAAP measure are included in the schedules to this release.
About Global Payments
Global Payments Inc. (NYSE: GPN) is a leading worldwide provider of payment technology services that delivers innovative solutions driven by customer needs globally. Our technologies,
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partnerships and employee expertise enable us to provide a broad range of products and services that allow our customers to accept all payment types across a variety of distribution channels in many markets around the world.
Headquartered in Atlanta, Georgia with more than 8,500 employees worldwide, Global Payments is a member of the S&P 500 with merchants and partners in 30 countries throughout North America, Europe, the Asia-Pacific region and Brazil. For more information about Global Payments, our Service. Driven. Commerce brand and our technologies, please visit www.globalpaymentsinc.com.
Forward-Looking Statements
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 Transition Report on Form 10-K for the seven months ended December 31, 2016 and any subsequent SEC filings, 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 | |
Isabel Janci | Amy Corn | |||
770-829-8478 | 770-829-8755 | |||
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SCHEDULE 1
UNAUDITED GAAP CONSOLIDATED STATEMENTS OF INCOME
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands, except per share data)
Three Months Ended | ||||||||||
March 31, 2017 | March 31, 2016 | % Change | ||||||||
Revenues | $ | 919,762 | $ | 626,259 | 46.9 | % | ||||
Operating expenses: | ||||||||||
Cost of service | 455,936 | 248,187 | 83.7 | % | ||||||
Selling, general and administrative | 358,856 | 283,499 | 26.6 | % | ||||||
814,792 | 531,686 | 53.2 | % | |||||||
Operating income | 104,970 | 94,573 | 11.0 | % | ||||||
Interest and other income | 1,607 | 1,282 | 25.4 | % | ||||||
Interest and other expense | (41,297 | ) | (13,075 | ) | 215.8 | % | ||||
(39,690 | ) | (11,793 | ) | 236.6 | % | |||||
Income before income taxes | 65,280 | 82,780 | (21.1 | )% | ||||||
Provision for income taxes | (12,321 | ) | (19,333 | ) | (36.3 | )% | ||||
Net income | 52,959 | 63,447 | (16.5 | )% | ||||||
Less: Net income attributable to noncontrolling interests, net of income tax | (4,146 | ) | (3,536 | ) | 17.3 | % | ||||
Net income attributable to Global Payments | $ | 48,813 | $ | 59,911 | (18.5 | )% | ||||
Earnings per share attributable to Global Payments: | ||||||||||
Basic | $ | 0.32 | $ | 0.46 | (30.4 | )% | ||||
Diluted | $ | 0.32 | $ | 0.46 | (30.4 | )% | ||||
Weighted-average number of shares outstanding: | ||||||||||
Basic | 152,304 | 129,268 | ||||||||
Diluted | 153,255 | 130,137 | ||||||||
SCHEDULE 2
NON-GAAP FINANCIAL MEASURES (UNAUDITED)
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands, except per share data)
Three Months Ended | ||||||||||
March 31, 2017 | March 31, 2016 | % Change | ||||||||
Adjusted net revenue | $ | 803,879 | $ | 479,599 | 67.6 | % | ||||
Adjusted operating income | $ | 228,749 | $ | 131,635 | 73.8 | % | ||||
Adjusted net income | $ | 130,034 | $ | 83,547 | 55.6 | % | ||||
Adjusted EPS: | $ | 0.85 | $ | 0.64 | 32.8 | % | ||||
See Schedule 6 for a reconciliation of each non-GAAP financial measure to the most comparable GAAP measure and Schedule 8 for a discussion of non-GAAP financial measures.
SCHEDULE 3
SEGMENT INFORMATION (UNAUDITED)
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands)
Three Months Ended | ||||||||||||||||||||||
March 31, 2017 | March 31, 2016 | % Change | ||||||||||||||||||||
GAAP | Non-GAAP1 | GAAP | Non-GAAP1 | GAAP | Non-GAAP1 | |||||||||||||||||
Revenues: | ||||||||||||||||||||||
North America | $ | 687,044 | $ | 597,482 | $ | 427,860 | $ | 297,957 | 60.6 | % | 100.5 | % | ||||||||||
Europe | 165,549 | 139,228 | 144,119 | 127,362 | 14.9 | % | 9.3 | % | ||||||||||||||
Asia-Pacific | 67,169 | 67,169 | 54,280 | 54,280 | 23.7 | % | 23.7 | % | ||||||||||||||
$ | 919,762 | $ | 803,879 | $ | 626,259 | $ | 479,599 | 46.9 | % | 67.6 | % | |||||||||||
Operating income: | ||||||||||||||||||||||
North America | $ | 94,083 | $ | 172,377 | $ | 65,190 | $ | 78,649 | 44.3 | % | 119.2 | % | ||||||||||
Europe | 54,507 | 63,908 | 55,778 | 61,638 | (2.3 | )% | 3.7 | % | ||||||||||||||
Asia-Pacific | 19,754 | 20,970 | 14,559 | 16,597 | 35.7 | % | 26.3 | % | ||||||||||||||
Corporate | (63,374 | ) | (28,506 | ) | (40,954 | ) | (25,249 | ) | 54.7 | % | 12.9 | % | ||||||||||
$ | 104,970 | $ | 228,749 | $ | 94,573 | $ | 131,635 | 11.0 | % | 73.8 | % | |||||||||||
1 See Schedule 7 for a reconciliation of adjusted net revenue and adjusted operating income by segment to the most comparable GAAP measures and Schedule 8 for a discussion of non-GAAP financial measures.
SCHEDULE 4
UNAUDITED CONSOLIDATED BALANCE SHEETS
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands, except share data)
March 31, 2017 | December 31, 2016 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 1,261,845 | $ | 1,162,779 | |||
Accounts receivable, net of allowances for doubtful accounts of $1,280 and $1,092 respectively | 264,042 | 275,032 | |||||
Claims receivable, net of allowances for doubtful accounts of $5,740 and $5,786, respectively | 7,961 | 8,202 | |||||
Settlement processing assets | 751,509 | 1,546,854 | |||||
Prepaid expenses and other current assets | 113,823 | 123,139 | |||||
Total current assets | 2,399,180 | 3,116,006 | |||||
Goodwill | 4,859,387 | 4,807,594 | |||||
Other intangible assets, net | 1,997,420 | 2,085,292 | |||||
Property and equipment, net | 551,951 | 526,370 | |||||
Deferred income taxes | 15,838 | 15,789 | |||||
Other | 135,940 | 113,299 | |||||
Total assets | $ | 9,959,716 | $ | 10,664,350 | |||
LIABILITIES AND EQUITY | |||||||
Current liabilities: | |||||||
Settlement lines of credit | $ | 276,403 | $ | 392,072 | |||
Current portion of long-term debt | 179,004 | 177,785 | |||||
Accounts payable and accrued liabilities | 824,319 | 804,887 | |||||
Settlement processing obligations | 813,136 | 1,477,212 | |||||
Total current liabilities | 2,092,862 | 2,851,956 | |||||
Long-term debt | 4,221,258 | 4,260,827 | |||||
Deferred income taxes | 636,908 | 676,472 | |||||
Other noncurrent liabilities | 132,397 | 95,753 | |||||
Total liabilities | 7,083,425 | 7,885,008 | |||||
Commitments and contingencies | |||||||
Equity: | |||||||
Preferred stock, no par value; 5,000,000 shares authorized and none issued | — | — | |||||
Common stock, no par value; 200,000,000 shares authorized; 152,502,543 issued and outstanding at March 31, 2017 and 152,185,616 issued and outstanding at December 31, 2016 | — | — | |||||
Paid-in capital | 1,826,166 | 1,816,278 | |||||
Retained earnings | 1,192,519 | 1,137,230 | |||||
Accumulated other comprehensive loss | (287,806 | ) | (322,717 | ) | |||
Total Global Payments shareholders’ equity | 2,730,879 | 2,630,791 | |||||
Noncontrolling interests | 145,412 | 148,551 | |||||
Total equity | 2,876,291 | 2,779,342 | |||||
Total liabilities and equity | $ | 9,959,716 | $ | 10,664,350 | |||
SCHEDULE 5
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands)
Three Months Ended | |||||||
March 31, 2017 | March 31, 2016 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 52,959 | $ | 63,447 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization of property and equipment | 24,984 | 18,767 | |||||
Amortization of acquired intangibles | 84,049 | 20,545 | |||||
Share-based compensation expense | 8,816 | 7,047 | |||||
Provision for operating losses and bad debts | 13,482 | 6,553 | |||||
Amortization of capitalized customer acquisition costs | 8,948 | — | |||||
Deferred income taxes | (19,391 | ) | (2,328 | ) | |||
Other, net | 4,692 | 2,598 | |||||
Changes in operating assets and liabilities, net of the effects of acquisitions: | |||||||
Accounts receivable | 11,929 | 52,461 | |||||
Claims receivable | (6,557 | ) | (4,970 | ) | |||
Settlement processing assets and obligations, net | 122,948 | 66,233 | |||||
Prepaid expenses and other assets | 4,644 | (12,587 | ) | ||||
Capitalized customer acquisition costs | (4,559 | ) | — | ||||
Accounts payable and other liabilities | (12,979 | ) | (9,553 | ) | |||
Net cash provided by operating activities | 293,965 | 208,213 | |||||
Cash flows from investing activities: | |||||||
Capital expenditures | (46,219 | ) | (24,367 | ) | |||
Other, net | (422 | ) | (74 | ) | |||
Net cash used in investing activities | (46,641 | ) | (24,441 | ) | |||
Cash flows from financing activities: | |||||||
Net payments on settlement lines of credit | (117,789 | ) | (135,071 | ) | |||
Proceeds from long-term debt | 149,000 | 142,000 | |||||
Repayments of long-term debt | (189,732 | ) | (157,000 | ) | |||
Payment of debt issuance costs | (896 | ) | (2,099 | ) | |||
Repurchase of common stock | — | (2,901 | ) | ||||
Proceeds from stock issued under share-based compensation plans | 1,149 | 179 | |||||
Common stock repurchased - share-based compensation plans | (167 | ) | (527 | ) | |||
Distributions to noncontrolling interests | (8 | ) | (4,740 | ) | |||
Dividends paid | (1,522 | ) | (1,293 | ) | |||
Net cash used in financing activities | (159,965 | ) | (161,452 | ) | |||
Effect of exchange rate changes on cash | 11,707 | 17,849 | |||||
Increase in cash and cash equivalents | 99,066 | 40,169 | |||||
Cash and cash equivalents, beginning of the period | 1,162,779 | 587,751 | |||||
Cash and cash equivalents, end of the period | $ | 1,261,845 | $ | 627,920 | |||
SCHEDULE 6
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP MEASURES (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 2017 AND 2016
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands, except per share data)
Three Months Ended March 31, 2017 | ||||||||||||||||
GAAP | Net Revenue Adjustments1 | Earnings Adjustments2 | Income Taxes on Adjustments3 | Non-GAAP | ||||||||||||
Revenues | $ | 919,762 | $ | (115,883 | ) | $ | — | $ | — | $ | 803,879 | |||||
Operating income | $ | 104,970 | $ | — | $ | 123,779 | $ | — | $ | 228,749 | ||||||
Net income attributable to Global Payments | $ | 48,813 | $ | — | $ | 121,992 | $ | (40,771 | ) | $ | 130,034 | |||||
Diluted earnings per share attributable to Global Payments4 | $ | 0.32 | $ | 0.85 | ||||||||||||
Three Months Ended March 31, 2016 | ||||||||||||||||
GAAP | Net Revenue Adjustments1 | Earnings Adjustments2 | Income Taxes on Adjustments3 | Non-GAAP | ||||||||||||
Revenues | $ | 626,259 | $ | (146,660 | ) | $ | — | $ | — | $ | 479,599 | |||||
Operating income | $ | 94,573 | $ | — | $ | 37,062 | $ | — | $ | 131,635 | ||||||
Net income attributable to Global Payments | $ | 59,911 | $ | — | $ | 35,996 | $ | (12,360 | ) | $ | 83,547 | |||||
Diluted earnings per share attributable to Global Payments4 | $ | 0.46 | $ | 0.64 | ||||||||||||
1Represents adjustments to revenues for gross-up related payments (included in operating expenses) associated with certain lines of business to reflect economic benefits to the company.
2 Earnings adjustments to operating income for the three months ended March 31, 2017 include $86.3 million and $37.5 million in cost of service and selling, general and administrative expenses, respectively. Adjustments to cost of service include amortization of acquired intangibles of $84.6 million and employee termination expenses of $1.7 million. Adjustments to selling, general and administrative expenses include share-based compensation expense of $8.8 million, merger-related costs of $26.1 million, and employee termination expenses of $2.6 million.
Earnings adjustments to operating income for the three months ended March 31, 2016 include $21.1 million and $16.0 million in cost of service and selling, general and administrative expenses, respectively. Adjustments to cost of service represent amortization of acquired intangibles of $21.1 million. Adjustments to selling, general and administrative expenses include share-based compensation expense of $7.0 million, merger-related costs of $8.7 million and $0.3 million of other adjustments.
3 Income taxes on adjustments reflect the tax effect of earnings adjustments to income before income taxes. The tax rate used in determining the tax impact of earnings adjustments is either the jurisdictional statutory rate in effect at the time of the adjustment or the jurisdictional expected annual effective tax rate for the period, depending on the nature and timing of the adjustment.
4 Adjusted EPS is calculated by dividing adjusted net income attributable to Global Payments by the diluted weighted-average number of shares outstanding.
See "Non-GAAP Financial Measures" discussion on Schedule 8.
SCHEDULE 7
RECONCILIATION OF SEGMENT NON-GAAP FINANCIAL MEASURES TO GAAP MEASURES (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 2017 AND 2016
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands, except per share data)
Three Months Ended March 31, 2017 | Three Months Ended March 31, 2016 | |||||||||||||||||||||||||||||||
GAAP | Net Revenue Adjustments1 | Earnings Adjustments2 | Non-GAAP | GAAP | Net Revenue Adjustments1 | Earnings Adjustments2 | Non-GAAP | |||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||||
North America | $ | 687,044 | $ | (89,562 | ) | $ | — | $ | 597,482 | $ | 427,860 | $ | (129,903 | ) | $ | — | $ | 297,957 | ||||||||||||||
Europe | 165,549 | (26,321 | ) | — | 139,228 | 144,119 | (16,757 | ) | — | 127,362 | ||||||||||||||||||||||
Asia-Pacific | 67,169 | — | — | 67,169 | 54,280 | — | — | 54,280 | ||||||||||||||||||||||||
$ | 919,762 | $ | (115,883 | ) | $ | — | $ | 803,879 | $ | 626,259 | $ | (146,660 | ) | $ | — | $ | 479,599 | |||||||||||||||
Operating income: | ||||||||||||||||||||||||||||||||
North America | $ | 94,083 | $ | — | $ | 78,294 | $ | 172,377 | $ | 65,190 | $ | — | $ | 13,459 | $ | 78,649 | ||||||||||||||||
Europe | 54,507 | — | 9,401 | 63,908 | 55,778 | — | 5,860 | 61,638 | ||||||||||||||||||||||||
Asia-Pacific | 19,754 | — | 1,216 | 20,970 | 14,559 | — | 2,038 | 16,597 | ||||||||||||||||||||||||
Corporate | (63,374 | ) | — | 34,868 | (28,506 | ) | (40,954 | ) | — | 15,705 | (25,249 | ) | ||||||||||||||||||||
$ | 104,970 | $ | — | $ | 123,779 | $ | 228,749 | $ | 94,573 | $ | — | $ | 37,062 | $ | 131,635 | |||||||||||||||||
1 Represents adjustments to revenues for gross-up related payments (included in operating expenses) associated with certain lines of business to reflect economic benefits to the company.
2 Earnings adjustments to operating income for the three months ended March 31, 2017 include $86.3 million and $37.5 million in cost of service and selling, general and administrative expenses, respectively. Adjustments to cost of service include amortization of acquired intangibles of $84.6 million and employee termination expenses of $1.7 million. Adjustments to selling, general and administrative expenses include share-based compensation expense of $8.8 million, merger-related costs of $26.1 million, and employee termination expenses of $2.6 million.
Earnings adjustments to operating income for the three months ended March 31, 2016 include $21.1 million and $16.0 million in cost of service and selling, general and administrative expenses, respectively. Adjustments to cost of service represent amortization of acquired intangibles of $21.1 million. Adjustments to selling, general and administrative expenses include share-based compensation expense of $7.0 million, merger-related costs of $8.7 million and $0.3 million of other adjustments.
See "Non-GAAP Financial Measures" discussion on Schedule 8.
SCHEDULE 8
OUTLOOK SUMMARY (UNAUDITED)
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In billions, except per share data)
2016 Actual | 2017 Outlook | % Change | ||||||
Revenues: | ||||||||
GAAP revenue | $3.37 | $3.81 to $3.89 | 13% to 15% | |||||
Adjustments1 | (0.53 | ) | (0.43 | ) | ||||
Adjusted net revenue | $2.84 | $3.38 to $3.46 | 19% to 22% | |||||
Earnings Per Share ("EPS"): | ||||||||
GAAP diluted EPS | $1.37 | $1.91 to $2.08 | 39% to 52% | |||||
Acquisition-related amortization expense, share-based compensation expense and other items2 | 1.82 | 1.87 | ||||||
Adjusted EPS | $3.19 | $3.78 to $3.95 | 19% to 24% | |||||
1 Represents adjustments to revenues for gross-up related payments (included in operating expenses) associated with certain lines of business to reflect economic benefits to the company.
2 Adjustments to Calendar 2016 GAAP diluted EPS include acquisition related amortization expense of $1.17, share-based compensation expense of $0.14 and net other items of $0.51, including merger-related costs of $0.62 and a $0.16 adjustment to remove a gain on the sale of membership interests in Visa Europe.
NON-GAAP FINANCIAL MEASURES
Global Payments supplements revenues, income and earnings per share ("EPS") information determined in accordance with U.S. GAAP by providing these measures with certain adjustments (such measures being non-GAAP financial measures) in this document to assist with evaluating our performance. In addition to GAAP measures, management uses these non-GAAP financial measures to focus on the factors the company believes are pertinent to the daily management of our operations. Management believes adjusted net revenue more closely reflects the economic benefits to the company's core business and allows for better comparisons with industry peers. Management uses these non-GAAP financial measures, together with other metrics, to set goals for and measure the performance of the business and to determine incentive compensation. Adjusted net revenue, adjusted operating income, adjusted net income and adjusted EPS should be considered in addition to, and not as substitutes for, revenues, operating income, net income and EPS determined in accordance with GAAP. The non-GAAP financial measures reflect management's judgment of particular items, and may not be comparable to similarly titled measures reported by other companies.
Adjusted net revenue excludes gross-up related payments associated with certain lines of business to reflect economic benefits to the company. On a GAAP basis, these payments are presented gross in both revenues and operating expenses.
Adjusted operating income, adjusted net income and adjusted EPS exclude acquisition-related amortization expense, share-based compensation and certain other items specific to each reporting period as more fully described in the accompanying reconciliations in Schedules 6 and 7. The tax rate used in determining the net income impact of earnings adjustments is either the jurisdictional statutory rate in effect at the time of the adjustment or the jurisdictional expected annual effective tax rate for the period, depending on the nature and timing of the adjustment.