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

Jul 29, 2014, 16:01 ET from Global Payments Inc.

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