Global Payments Reports Fourth Quarter and Year-End 2014 Earnings Establishes Fiscal 2015 Cash Earnings Per Share Growth Expectations of 10% to 12%

Board Expands Total Share Repurchase Authorization to $320 Million

ATLANTA, July 29, 2014 /PRNewswire/ -- Global Payments Inc. (NYSE: GPN), one of the largest worldwide providers of payment solutions, today announced results for its fiscal fourth quarter and year ended May 31, 2014.

"I am pleased with Global Payments' strong financial performance for the fourth quarter and full fiscal year.  During fiscal 2014, we grew cash earnings per share 13 percent, returned over $450 million dollars to shareholders and completed a $420 million acquisition to further diversify distribution in our largest market and complement our focus on differentiated technologies.  We achieved key execution milestones, including meaningfully expanding our integrated solutions business in the U.S., delivering solid performance in Canada and adding to our direct distribution channels in Asia," said Jeff Sloan, Chief Executive Officer of Global Payments Inc.  "In fiscal 2015, we will continue to focus on our direct distribution strategy by leveraging our global technology platforms to deliver new, innovative products and services, driving operating margin expansion and delivering double-digit cash earnings per share growth."

Full-Year 2014 Summary

  • Revenues grew 8% to $2.55 billion, compared to $2.38 billion in fiscal 2013.
  • Cash diluted earnings per share[1] grew 13% to $4.12, compared to $3.65 in the prior fiscal year.
  • GAAP full-year diluted earnings per share of $3.37, compared to $2.76 diluted earnings per share in the prior year.

Fourth Quarter 2014 Summary

  • Revenues grew 9% to $674.0 million, compared to $618.4 million in the fourth quarter of fiscal 2013.
  • Cash diluted earnings per share grew 11% to $1.09, compared to $0.98 in the fourth quarter of fiscal 2013.
  • GAAP diluted earnings per share were $0.72, compared to $0.53 in the fourth quarter of 2013.

2015 Outlook
For the full year of fiscal 2015, the company expects annual revenue of $2.69 billion to $2.76 billion, or 6% to 8% growth over fiscal 2014.  The company also expects annual diluted earnings per share on a cash basis of $4.52 to $4.62, reflecting growth of 10% to 12% over fiscal 2014.  Annual fiscal 2015 GAAP diluted earnings per share is expected to be $3.76 to $3.86.

Additional Share Repurchase Authorization
Global Payments' board of directors also expanded its share repurchase authorization by an incremental $200 million, bringing its total current authorization to $320 million.  Under the company's new authorization, Global Payments may repurchase shares in the open market or as otherwise may be determined by the company, subject to market conditions, business opportunities and other factors.  The company has no obligation to repurchase shares under this program.  This authorization has no expiration date and may be suspended or terminated at any time.  Repurchased shares will be retired but will be available for future issuance.

Conference Call
Global Payments will hold a conference call today, July 29, 2014, at 5:00 p.m. EDT to discuss financial results and business highlights.  Callers may access the conference call via the investor relations page of the company's website at www.globalpaymentsinc.com by clicking the "Webcast" button; or callers in North America may dial 1-888-895-3550 and callers outside North America may dial 1-706-758-8809.  The pass code is "GPN."  A replay of the call may be accessed on the Global Payments website through August 12, 2014.

About Global Payments
Global Payments Inc. is one of the largest worldwide providers of payment solutions for merchants, value added resellers, enterprise software providers, financial institutions, government agencies, multi-national corporations and independent sales organizations located throughout North America, South America, Europe and the Asia-Pacific region.  Global Payments, a Fortune 1000 company, offers a comprehensive line of solutions and services for credit and debit cards, business-to-business purchasing cards, gift cards, electronic check conversion and check guarantee, verification and recovery including electronic check services, as well as terminal management.  Visit www.globalpaymentsinc.com for more information about the company and its services.

This announcement and comments made by Global Payments' management during the conference call may contain certain forward-looking statements within the meaning of the "safe-harbor" provisions of the Private Securities Litigation Reform Act of 1995.  Statements that are not historical facts, including revenue and earnings estimates and management's expectations regarding future events and developments, are forward-looking statements and are subject to significant risks and uncertainties.  Important factors that may cause actual events or results to differ materially from those anticipated by such forward-looking statements include our potential failure to safeguard our data; our ability to maintain Visa and MasterCard registration and financial institution sponsorship; our reliance on financial institutions to provide clearing services in connection with our settlement activities; our potential failure to comply with card network requirements; increased merchant, referral partner or ISO attrition; our ability to increase our share of existing markets and expand into new markets; political, economic and regulatory changes in the foreign countries in which we operate; system interruptions in service; increases in credit card network fees; future performance, integration and conversion of acquired operations; and other risk factors presented in our Annual Report on Form 10-K for the fiscal year ended May 31, 2014, which we advise you to review. We undertake no obligation to revise any of these statements to reflect future circumstances or the occurrence of unanticipated events.


Investor contact:

investor.relations@globalpay.com

Media contact:

media.relations@globalpay.com


Jane Elliott


Amy Corn


770-829-8234


770-829-8755

 


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

 

SCHEDULE 1








GAAP CONSOLIDATED STATEMENTS OF INCOME













GLOBAL PAYMENTS INC. AND SUBSIDIARIES

 

(In thousands, except per share data)















Three Months Ended May 31,




Year Ended May 31,





2014


2013


% Change


2014


2013


% Change










Revenues


$     673,977


$      618,352


9.0%


$  2,554,236


$   2,375,923


7.5%

Operating expenses:













Cost of service


253,373


229,951


10.2%


952,225


862,075


10.5%

Sales, general and administrative


331,687


290,568


14.2%


1,203,512


1,119,860


7.5%

Processing system intrusion


-


28,464


NM


(7,000)


36,775


NM



585,060


548,983


6.6%


2,148,737


2,018,710


6.4%














Operating income


88,917


69,369


28.2%


405,499


357,213


13.5%

Other income (expense):













Interest and other income


2,093


3,647


(42.6%)


13,663


10,353


32.0%

Interest and other expense


(9,451)


(8,065)


17.2%


(41,812)


(33,282)


25.6%



(7,358)


(4,418)


66.5%


(28,149)


(22,929)


22.8%














Income before income taxes 


81,559


64,951


25.6%


377,350


334,284


12.9%

Provision for income taxes


(23,293)


(18,585)


25.3%


(107,398)


(95,571)


12.4%

Net income


58,266


46,366


25.7%


269,952


238,713


13.1%

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


(6,641)


(5,561)


19.4%


(24,666)


(22,588)


9.2%

Net income attributable to Global Payments


$        51,625


$         40,805


26.5%


$     245,286


$      216,125


13.5%



























Earnings per share attributable to Global Payments:













    Basic


$            0.73


$             0.54


35.2%


$            3.40


$             2.78


22.3%

    Diluted


$            0.72


$             0.53


35.8%


$            3.37


$             2.76


22.1%














Weighted average shares outstanding:













    Basic


70,707


76,034




72,119


77,767



    Diluted


71,322


76,651




72,688


78,227
















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 May 31,




Year Ended May 31,





2014


2013


% Change


2014


2013


% Change














Revenues


$       673,977


$     618,352


9.0%


$    2,554,236


$  2,375,923


7.5%

Operating expenses:













Cost of service


234,856


214,080


9.7%


889,576


803,952


10.7%

Sales, general and administrative


317,085


285,017


11.3%


1,184,066


1,113,509


6.3%



551,941


499,097


10.6%


2,073,642


1,917,461


8.1%



























Operating income


122,036


119,255


2.3%


480,594


458,462


4.8%

Other income (expense):













Interest and other income


2,093


3,647


(42.6%)


11,540


10,353


11.5%

Interest and other expense


(8,110)


(8,065)


0.6%


(32,327)


(24,899)


29.8%



(6,017)


(4,418)


36.2%


(20,787)


(14,546)


42.9%














Income before income taxes 


116,019


114,837


1.0%


459,807


443,916


3.6%

Provision for income taxes


(30,249)


(32,693)


(7.5%)


(130,181)


(126,294)


3.1%

Net income


85,770


82,144


4.4%


329,626


317,622


3.8%

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


(8,075)


(7,042)


14.7%


(30,295)


(32,206)


(5.9%)

Net income attributable to Global Payments


$         77,695


$       75,102


3.5%


$       299,331


$     285,416


4.9%



























Earnings per share attributable to Global Payments:













    Basic


$              1.10


$            0.99


11.1%


$              4.15


$            3.67


13.1%

    Diluted


$              1.09


$            0.98


11.2%


$              4.12


$            3.65


12.9%














Weighted average shares outstanding:













    Basic


70,707


76,034




72,119


77,767



    Diluted


71,322


76,651




72,688


78,227
















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 May 31, 







2014


2013


 % Change 



 GAAP 


 Cash Earnings 


 GAAP 


 Cash Earnings 


 GAAP 


 Cash Earnings 














Revenues:













United States


$     407,153


$     407,153


$     372,425


$     372,425


9.3%


9.3%

Canada


74,954


74,954


77,115


77,115


(2.8%)


(2.8%)

North America merchant services


482,107


482,107


449,540


449,540


7.2%


7.2%














Europe


153,577


153,577


132,217


132,217


16.2%


16.2%

Asia-Pacific


38,293


38,293


36,595


36,595


4.6%


4.6%

International merchant services


191,870


191,870


168,812


168,812


13.7%


13.7%














Total revenues


$     673,977


$     673,977


$     618,352


$     618,352


9.0%


9.0%














Operating income (loss) for segments:













North America merchant services


$       70,420


$       82,722


$       69,101


$       80,229


1.9%


3.1%

International merchant services


58,094


66,402


48,295


57,460


20.3%


15.6%

Corporate1


(39,597)


(27,088)


(48,027)


(18,434)


17.6%


(46.9%)

Operating income


$       88,917


$     122,036


$       69,369


$     119,255


28.2%


2.3%





























 Year Ended May 31, 







2014


2013


 % Change 



 GAAP 


 Cash Earnings 


 GAAP 


 Cash Earnings 


 GAAP 


 Cash Earnings 














Revenues:













United States


$ 1,488,659


$ 1,488,659


$ 1,394,675


$ 1,394,675


6.7%


6.7%

Canada


320,333


320,333


311,000


311,000


3.0%


3.0%

North America merchant services


1,808,992


1,808,992


1,705,675


1,705,675


6.1%


6.1%














Europe


587,463


587,463


522,593


522,593


12.4%


12.4%

Asia-Pacific


157,781


157,781


147,655


147,655


6.9%


6.9%

International merchant services


745,244


745,244


670,248


670,248


11.2%


11.2%














Total revenues


$ 2,554,236


$ 2,554,236


$ 2,375,923


$ 2,375,923


7.5%


7.5%














Operating income (loss) for segments:













North America merchant services


$     272,251


$     308,570


$     258,910


$     288,162


5.2%


7.1%

International merchant services


240,179


270,551


211,242


245,279


13.7%


10.3%

Corporate1


(106,931)


(98,527)


(112,939)


(74,979)


5.3%


(31.4%)

Operating income


$     405,499


$     480,594


$     357,213


$     458,462


13.5%


4.8%








































1GAAP and cash earnings include incremental security spend for the three and twelve months ended May 31, 2014. GAAP earnings for the twelve months ended May 31, 2014 include insurance proceeds of ($7M) related to the FY 2012 data intrusion.  GAAP earnings for the three and twelve months ended May 31, 2013 include a data intrusion charge of $28.5 million and $36.8 million, respectively.














See Schedule 8 for reconciliation of cash earnings segment information to GAAP. 








 

 

SCHEDULE 4
CONSOLIDATED BALANCE SHEETS





GLOBAL PAYMENTS INC. AND SUBSIDIARIES

 





(In thousands, except share data)







May 31, 2014


May 31, 2013






Assets





Current assets:





Cash and cash equivalents


$       581,872


$       680,470

Accounts receivable, net of allowances for doubtful accounts of $401 and $509, respectively


214,574


189,435

Claims receivable, net


809


1,156

Settlement processing assets


780,917


259,204

Inventory


6,636


11,057

Deferred income taxes


12,963


6,485

Prepaid expenses and other current assets


45,673


66,685

Total current assets


1,643,444


1,214,492






Goodwill


1,337,285


1,044,222

Other intangible assets, net


535,173


400,848

Property and equipment, net


369,753


348,064

Deferred income taxes


101,928


95,178

Other


31,067


22,252






Total assets


$    4,018,650


$    3,125,056






Liabilities and Equity





Current liabilities:





Lines of credit


440,128


$       187,461

Current portion of long-term debt


17,677


72,335

Accounts payable and accrued liabilities


290,106


262,890

Settlement processing obligations


451,317


162,558

Income taxes payable


12,390


18,870

  Total current liabilities


1,211,618


704,114






Long-term debt


1,376,002


891,134

Deferred income taxes


209,099


170,723

Other long-term liabilities


89,132


72,478

Total liabilities


2,885,851


1,838,449






Commitment 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; 68,845,643 and 75,426,099





 issued and outstanding at May 31, 2014 and 2013, respectively


-


-

Paid-in capital


183,023


202,396

Retained earnings


815,980


958,751

Accumulated other comprehensive loss


(1,776)


(15,062)

      Total Global Payments shareholders' equity


997,227


1,146,085

Noncontrolling interests


135,572


140,522

Total equity


1,132,799


1,286,607






Total liabilities and equity


$    4,018,650


$    3,125,056






 

SCHEDULE 5



CONSOLIDATED STATEMENTS OF CASH FLOWS



GLOBAL PAYMENTS INC. AND SUBSIDIARIES






 (In thousands)

 








Year Ended May 31,






2014


2013









Cash flows from operating activities:





Net income


$         269,952


$      238,713

Adjustments to reconcile net income to net cash provided by operating activities:






Depreciation and amortization of property and equipment


60,124


55,023


Amortization of acquired intangibles


61,945


56,765


Share-based compensation expense


29,793


18,427


Provision for operating losses and bad debts


20,574


21,659


Deferred income taxes


(1,799)


33,112


Other, net


(1,484)


(4,878)

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






Accounts receivable


(18,539)


(5,458)


Claims receivable


(11,569)


(11,858)


Settlement processing assets and obligations, net


(241,431)


(104,007)


Inventory


4,793


(1,187)


Prepaid expenses and other assets


18,995


(22,978)


Accounts payable and other accrued liabilities


9,224


(39,374)


Income taxes payable


(6,480)


6,587



Net cash provided by operating activities


194,098


240,546









Cash flows from investing activities:






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


(426,524)


(434,016)


Capital expenditures


(81,411)


(98,590)


Principal collections on financing receivables


2,658


2,812


Net proceeds from sale of investments and business


3,607


1,227



Net cash used in investing activities


(501,670)


(528,567)









Cash flows from financing activities:






Net borrowings (payments) on short-term lines of credit


252,667


(27,930)


Proceeds from issuance of long-term debt


2,690,000


1,135,327


Principal payments under long-term debt


(2,260,597)


(482,349)


Acquisition of redeemable noncontrolling interest


-


(242,000)


Payment of debt issuance costs


(5,961)


(3,987)


Repurchase of common stock


(447,307)


(175,297)


Proceeds from stock issued under share-based compensation plans


31,727


10,543


Common stock repurchased - share-based compensation plans


(5,681)


(10,244)


Tax benefit from share-based compensation plans


6,475


1,863


Distributions to noncontrolling interests


(36,670)


(16,206)


Dividends paid


(5,757)


(6,198)




Net cash provided by financing activities


218,896


183,522









Effect of exchange rate changes on cash


(9,922)


3,694









Decrease in cash and cash equivalents


(98,598)


(100,805)

Cash and cash equivalents, beginning of period


680,470


781,275

Cash and cash equivalents, end of period


$         581,872


$      680,470

 

 

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 May 31, 2014



GAAP


Processing System Intrusion 


Other1


Cash

Earnings

Adjustments2


Cash Earnings












Revenues


$       673,977


$                    -


$                  -


$                  -


$       673,977

Operating expenses:











   Cost of service


253,373


-


(125)


(18,392)


234,856

   Sales, general and administrative


331,687


-


(14,602)


-


317,085

   Processing system intrusion


-


-


-


-


-



585,060


-


(14,727)


(18,392)


551,941












Operating income


88,917


-


14,727


18,392


122,036

Other income (expense):











   Interest and other income


2,093


-


-


-


2,093

   Interest and other expense


(9,451)


-


1,341


-


(8,110)



(7,358)


-


1,341


-


(6,017)












Income before income taxes 


81,559


-


16,068


18,392


116,019

Provision for income taxes


(23,293)


-


(1,237)


(5,719)


(30,249)

Net income


58,266


-


14,831


12,673


85,770

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


(6,641)


-


-


(1,434)


(8,075)

Net income attributable to Global Payments


$         51,625


$                    -


$         14,831


$         11,239


$         77,695












Diluted shares


71,322








71,322

Diluted earnings per share


$             0.72


$                    -


$             0.21


$             0.16


$             1.09

























Three Months Ended May 31, 2013



GAAP


Processing System Intrusion


Other1


Cash Earnings Adjustments2


Cash Earnings












Revenues


$       618,352


$                    -


$                  -


$                  -


$       618,352

Operating expenses:











   Cost of service


229,951


-


(1,197)


(14,674)


214,080

   Sales, general and administrative


290,568


-


(5,551)


-


285,017

   Processing system intrusion


28,464


(28,464)


-


-


-



548,983


(28,464)


(6,748)


(14,674)


499,097












Operating income


69,369


28,464


6,748


14,674


119,255

Other income (expense):











   Interest and other income


3,647


-


-


-


3,647

   Interest and other expense


(8,065)


-


-


-


(8,065)



(4,418)


-


-


-


(4,418)












Income before income taxes 


64,951


28,464


6,748


14,674


114,837

Provision for income taxes


(18,585)


(8,865)


(1,053)


(4,190)


(32,693)

Net income


46,366


19,599


5,695


10,484


82,144

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


(5,561)


-


-


(1,481)


(7,042)

Net income attributable to Global Payments


$         40,805


$           19,599


$           5,695


$           9,003


$         75,102












Diluted shares


76,651








76,651

Diluted earnings per share


$             0.53


$               0.26


$             0.07


$             0.12


$             0.98


































1 For the period ended May 31, 2014, represents acceleration of equity awards and other costs associated with the retirement of our former Chairman and CEO, a nonrecurring charge associated with our retained interest in Brazil, an adjustment to the costs associated with the debt refinancing we completed in February 2014, non-cash losses from the retirement of fixed assets and charges related to employee termination benefits.  For the prior period, represents one-time charges primarily related to employee termination benefits and certain contract settlement and related costs.












2Represents adjustments to cost of service to exclude acquisition intangible amortization expense from net income and the related income tax benefit.


We supplemented our reporting of income and the related earnings per share information determined in accordance with GAAP by reporting income and the related earnings per share for the three months ended May 31, 2014 and 2013 on a "cash earnings" basis in this earnings release as a measure to help evaluate performance. We calculated income and earnings per share on a cash basis by excluding amounts related to the processing system intrusion, acquisition intangible amortization, acceleration of equity awards and other costs associated with the retirement of our former Chairman and CEO, a nonrecurring charge associated with our retained interest in Brazil, non-cash losses from the retirement of fixed assets, employee termination benefits and an adjustment to the costs associated with the debt refinancing.We exclude these charges in order to more clearly focus on the factors we believe are pertinent to the daily management of our operations. Our income and earnings per share reported on a cash earnings basis should be considered in addition to, and not as a substitute for, income and earnings per share determined in accordance with GAAP. Our measures of income and earnings per share on a cash earnings basis reflect management's judgment of particular items, and may not be comparable to similarly titled measures reported by other companies.

 












SCHEDULE 7
RECONCILIATION OF YEAR TO DATE CASH EARNINGS ATTRIBUTABLE TO GLOBAL PAYMENTS TO GAAP





GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands, except per share data)





Year Ended May 31, 2014



GAAP


Processing
System Intrusion 1


Other2


Cash Earnings Adjustments3


Cash Earnings












Revenues


$   2,554,236


$                       -


$                  -


$                  -


$   2,554,236

Operating expenses:











   Cost of service


952,225


-


(704)


(61,945)


889,576

   Sales, general and administrative


1,203,512


-


(19,446)


-


1,184,066

   Processing system intrusion


(7,000)


7,000


-


-


-



2,148,737


7,000


(20,150)


(61,945)


2,073,642












Operating income


405,499


(7,000)


20,150


61,945


480,594

Other income (expense):











   Interest and other income


13,663


-


(2,123)


-


11,540

   Interest and other expense


(41,812)


-


9,485


-


(32,327)



(28,149)


-


7,362


-


(20,787)












Income (loss) before income taxes 


377,350


(7,000)


27,512


61,945


459,807

(Provision) benefit  for income taxes


(107,398)


2,393


(5,351)


(19,825)


(130,181)

Net income (loss)


269,952


(4,607)


22,161


42,120


329,626

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


(24,666)


-


-


(5,629)


(30,295)

Net income (loss) attributable to Global Payments


$       245,286


$               (4,607)


$         22,161


$         36,491


$       299,331












Diluted shares


72,688








72,688

Diluted earnings (loss) per share


$             3.37


$                 (0.07)


$             0.31


$             0.51


$             4.12

























Year Ended May 31, 2013



GAAP


Processing System Intrusion


Other2


Cash Earnings Adjustments3


Cash Earnings












Revenues


$   2,375,923


$                       -


$                  -


$                  -


$   2,375,923

Operating expenses:











   Cost of service


862,075


-


(1,358)


(56,765)


803,952

   Sales, general and administrative


1,119,860


-


(6,351)


-


1,113,509

   Processing system intrusion


36,775


(36,775)


-


-


-



2,018,710


(36,775)


(7,709)


(56,765)


1,917,461












Operating income


357,213


36,775


7,709


56,765


458,462

Other income (expense):











   Interest and other income


10,353


-


-


-


10,353

   Interest and other expense


(33,282)


-


8,383


-


(24,899)



(22,929)


-


8,383


-


(14,546)












Income before income taxes 


334,284


36,775


16,092


56,765


443,916

Provision for income taxes


(95,571)


(11,913)


(2,586)


(16,224)


(126,294)

Net income


238,713


24,862


13,506


40,541


317,622

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


(22,588)


-


(3,594)


(6,024)


(32,206)

Net income attributable to Global Payments


$       216,125


$              24,862


$           9,912


$         34,517


$       285,416












Diluted shares


78,227








78,227

Diluted earnings per share


$             2.76


$                   0.32


$             0.13


$             0.44


$             3.65























1Represents insurance proceeds associated with processing system intrusion charges incurred in FY 2012.












2 For the year ended May 31, 2014, represents acceleration of equity awards and other costs associated with the retirement of our former Chairman and CEO, a credit related to the sale of an interest in our Brazil business and a subsequent charge associated with our retained interest, cost associated with the debt refinancing we completed in February 2014, non-cash losses from the retirement of fixed assets, charges related to employee termination benefits and HSBC's share of dividends declared.  For the prior year, represents HSBC's share of GPAP dividends declared, one-time charges primarily related to employee termination benefits and certain contract settlement and related costs.












3Represents adjustments to cost of service to exclude acquisition intangible amortization expense from net income and the related income tax benefit.












We supplemented our reporting of income and the related earnings per share information determined in accordance with GAAP by reporting income and the related earnings per share for the years ended May 31, 2014 and 2013 on a "cash earnings" basis in this earnings release as a measure to help evaluate performance. We calculated income and earnings per share on a cash basis by excluding amounts related to the processing system intrusion, acquisition intangible amortization, acceleration of equity awards and other costs associated with the retirement of our former Chairman and CEO, a nonrecurring charge associated with our retained interest in Brazil, non-cash losses from the retirement of fixed assets, employee termination benefits and resolution of a contract related contingency and an adjustment to the costs associated with the debt refinancing.  In the twelve months ended May 2013, we also adjusted the net income attributable to noncontrolling interests to include HSBC's share of GPAP net income.We exclude these charges in order to more clearly focus on the factors we believe are pertinent to the daily management of our operations. Our income and earnings per share reported on a cash earnings basis should be considered in addition to, and not as a substitute for, income and earnings per share determined in accordance with GAAP. Our measures of income and earnings per share on a cash earnings basis reflect management's judgment of particular items, and may not be comparable to similarly titled measures reported by other companies.

 

SCHEDULE 8
RECONCILIATION OF CASH EARNINGS SEGMENT INFORMATION TO GAAP













GLOBAL PAYMENTS INC. AND SUBSIDIARIES




 (In thousands)





 Three Months Ended May 31,  



2014


2013



 GAAP 


Processing 
System
Intrusion 


Other2


Cash

Earnings Adjustments3


 Cash Earnings 


 GAAP 


Processing System Intrusion


Other2


Cash

Earnings Adjustments3


 Cash Earnings 






















Revenues:





















United States


$     407,153


$               -


$               -


$               -


$      407,153


$     372,425


$               -


$               -


$               -


$      372,425

Canada


74,954


-


-


-


74,954


77,115


-


-


-


77,115

  North America merchant services


482,107


-


-


-


482,107


449,540


-


-


-


449,540






















Europe


153,577


-


-


-


153,577


132,217


-


-


-


132,217

Asia-Pacific


38,293


-


-


-


38,293


36,595


-


-


-


36,595

  International merchant services


191,870


-


-


-


191,870


168,812


-


-


-


168,812






















     Total revenues


$     673,977


$               -


$               -


$               -


$      673,977


$     618,352


$               -


$               -


$               -


$      618,352






















Operating income (loss) for segments:





















North America merchant services


$       70,420


$               -


$        1,428


$      10,874


$        82,722


$       69,101


$               -


$        4,688


$        6,440


$        80,229

International merchant services


58,094


-


790


7,518


66,402


48,295


53


878


8,234


57,460

Corporate


(39,597)


-


12,509


-


(27,088)


(48,027)


28,411


1,182


-


(18,434)

     Operating income


$       88,917


$               -


$      14,727


$      18,392


$      122,036


$       69,369


$      28,464


$        6,748


$      14,674


$      119,255













































 Year Ended May 31,  



2014


2013



 GAAP 


Processing

System

Intrusion1


Other2


Cash

Earnings Adjustments3


 Cash Earnings 


 GAAP 


Processing System Intrusion


Other2


Cash

Earnings Adjustments3


 Cash Earnings 






















Revenues:





















United States


$ 1,488,659


$               -


$               -


$               -


$   1,488,659


$  1,394,675


$               -


$               -


$               -


$   1,394,675

Canada


320,333


-


-


-


320,333


311,000


-


-


-


311,000

  North America merchant services


1,808,992


-


-


-


1,808,992


1,705,675


-


-


-


1,705,675






















Europe


587,463


-


-


-


587,463


522,593


-


-


-


522,593

Asia-Pacific


157,781


-


-


-


157,781


147,655


-


-


-


147,655

  International merchant services


745,244


-


-


-


745,244


670,248


-


-


-


670,248






















     Total revenues


$ 2,554,236


$               -


$               -


$               -


$   2,554,236


$  2,375,923


$               -


$               -


$               -


$   2,375,923






















Operating income (loss) for segments:





















North America merchant services


$     272,251


$               -


$        3,945


$      32,374


$      308,570


$     258,910


$               -


$        5,593


$      23,659


$      288,162

International merchant services


240,179


-


801


29,571


270,551


211,242


53


878


33,106


245,279

Corporate


(106,931)


(7,000)


15,404


-


(98,527)


(112,939)


36,722


1,238


-


(74,979)

     Operating income (loss)


$     405,499


$       (7,000)


$      20,150


$      61,945


$      480,594


$     357,213


$      36,775


$        7,709


$      56,765


$      458,462











































1Represents insurance proceeds associated with processing system intrusion charges incurred in FY 2012.


































Represents acceleration of equity awards and other costs associated with the retirement of our former CEO and Chairman, non-cash losses from the retirement of fixed assets, and charges related to employee termination benefits and certain contract settlement and related costs.































3Represents acquisition intangible amortization expense.








































 

SCHEDULE 9

OUTLOOK SUMMARY


GLOBAL PAYMENTS INC. AND SUBSIDIARIES

 

(In billions, except per share data)










Fiscal 2014 Actual


Fiscal 2015

Outlook


% Change

FY14









Revenue Outlook







Total Revenues


$         2.55


$2.69 to $2.76


6% to 8%









EPS Outlook







Cash EPS 


$         4.12


$4.52 to $4.62


10% to 12%

Acquisition-related intangibles assets, non-recurring items and 






    processing system intrusion 1


(0.75)


(0.76)


1%

GAAP Diluted EPS 


$         3.37


 $3.76 to $3.86 


12% to 15%

























We supplemented our reporting of income and the related earnings per share information determined in accordance with GAAP by reporting income and the related earnings per share for the years ended May 31, 2014 and 2013 on a "cash earnings" basis in this earnings release as a measure to help evaluate performance. We calculated income and earnings per share on a cash basis by excluding amounts related to the processing system intrusion, acquisition intangible amortization, acceleration of equity awards and other costs associated with the retirement of our former Chairman and CEO, a nonrecurring charge associated with our retained interest in Brazil, non-cash losses from the retirement of fixed assets, employee termination benefits and resolution of a contract related contingency and an adjustment to the costs associated with the debt refinancing.  In the twelve months ended May 2013, we also adjusted the net income attributable to noncontrolling interests to include HSBC's share of GPAP net income.We exclude these charges in order to more clearly focus on the factors we believe are pertinent to the daily management of our operations. Our income and earnings per share reported on a cash earnings basis should be considered in addition to, and not as a substitute for, income and earnings per share determined in accordance with GAAP. Our measures of income and earnings per share on a cash earnings basis reflect management's judgment of particular items, and may not be comparable to similarly titled measures reported by other companies.

















1  Fiscal 2015 reflects $0.72 of acquisition-related intangibles amortization and $0.04 of one-time charges.  Fiscal 2014  reflects acquisition-related intangibles amortization of $0.51, processing-intrusion of ($0.07), and non-recurring items accounted for $0.31 relating to acceleration of equity awards and other costs associated with the retirement of our former Chairman and CEO, a credit related to the sale of an interest in our Brazil business and a subsequent charge associated with our retained interest, cost associated with the debt refinancing we completed in February 2014, non-cash losses from the retirement of fixed assets, charges related to employee termination benefits and HSBC's share of dividends declared.









 

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SOURCE Global Payments Inc.



RELATED LINKS
http://www.globalpaymentsinc.com

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