2014

Global Payments Reports Fourth Quarter and Year End Earnings

ATLANTA, July 21, 2011 /PRNewswire/ -- Global Payments Inc. (NYSE: GPN) today announced results for its fiscal fourth quarter and year ended May 31, 2011.  For the full year, revenues grew 13% to $1,859.8 million compared to $1,642.5 million in the prior fiscal year.  Normalized diluted earnings per share from continuing operations grew 9% to $2.77 compared to $2.54 in the prior year (See Schedule 2 for Normalized Earnings).  On a GAAP basis, the company reported fiscal 2011 full year diluted earnings per share from continuing operations of $2.61 compared to $2.52 in the prior year (See Schedule 1 for GAAP Consolidated Statements of Income).

(Logo: http://photos.prnewswire.com/prnh/20010221/ATW031LOGO )

For the fourth quarter, revenues grew 22% to $519.8 million compared to $425.1 million in the prior year.  Normalized diluted earnings per share from continuing operations grew 31% to $0.76 compared to $0.58 in the prior year quarter.  On a GAAP basis, the company reported fourth quarter diluted earnings per share from continuing operations of $0.72 compared to $0.56 in the prior year quarter.

Normalized fourth quarter and full year results exclude expenses related to certain start-up and duplicative costs for the company's Global Service Center in Manila, Philippines.  These results also exclude certain employee termination and relocation benefits.  (See Schedules 7 and 8 for Reconciliations of Normalized and Cash Earnings to GAAP).  

Chairman and CEO Paul R. Garcia stated, "We are pleased with our strong fiscal year 2011 financial performance which was driven by solid execution of our business strategy across our regions and the December 2010 addition of Spain.  We delivered exceptional results in the fourth quarter, driven by strong performance in North America and outstanding results in our International segment.  Our execution during fiscal 2011 established a basis from which we expect to drive margin expansion of as much as 30 basis points in fiscal 2012."  

David E. Mangum, Senior Executive Vice President and CFO, stated, "On a cash basis, the company reported fiscal 2011 fourth quarter and full year diluted earnings per share from continuing operations of $0.86 and $3.08, respectively, which represents 32% and 10% growth over the respective prior year periods.  

For the full year of fiscal 2012, the company expects annual revenue of $2,100 million to $2,150 million, or 13% to 16% growth over fiscal 2011.  The company expects annual fiscal 2012 diluted earnings per share on a cash basis of $3.35 to $3.43, reflecting 9% to 11% growth over fiscal 2011.  Annual fiscal 2012 GAAP diluted earnings per share is expected to be $3.02 to $3.09," said Mangum.

Cash earnings exclude normalized adjustments and acquisition intangible amortization expense from continuing operations.  (See Schedule 3 for Cash Earnings and Schedule 4 for Segment Information).

Conference Call

Global Payments will hold a conference call today, July 21, 2011 at 5:00 p.m. ET to discuss financial results and business highlights.  Callers may access the conference call via the company's Web site at www.globalpaymentsinc.com by clicking the "Webcast" button; or callers in North America may dial 1-888-895-3550 and callers outside North America may dial 1-706-758-8809.  The pass code is "GPN."  A replay of the call may be accessed through the Global Payments Web site through August 5, 2011.  

Global Payments Inc. (NYSE: GPN) is a leading provider of electronic transaction processing services for merchants, Independent Sales Organizations (ISOs), financial institutions, government agencies and multi-national corporations located throughout the United States, Canada, Europe, and the Asia-Pacific region.  Global Payments, a Fortune 1000 company, offers a comprehensive line of processing solutions for credit and debit cards, business-to-business purchasing cards, gift cards, electronic check conversion and check guarantee, verification and recovery including electronic check services, as well as terminal management.  Visit www.globalpaymentsinc.com for more information about the company and its services.

This announcement and comments made by Global Payments' management during the conference call may contain certain forward-looking statements within the meaning of the "safe-harbor" provisions of the Private Securities Litigation Reform Act of 1995.  Statements that are not historical facts, including revenue and earnings estimates and management's expectations regarding future events and developments, are forward-looking statements and are subject to significant risks and uncertainties.  Important factors that may cause actual events or results to differ materially from those anticipated by such forward-looking statements include the following: foreign currency risks which become increasingly relevant as we expand internationally, the effect of current worldwide economic conditions, including sovereign insolvency situations and a decline in the value of the U.S. dollar, and future performance and integration of recent acquisitions, and other risks detailed in the company's SEC filings, including the most recently filed Form 10-Q or Form 10-K, as applicable.  The company undertakes no obligation to revise any of these statements to reflect future circumstances or the occurrence of unanticipated events.

SCHEDULE 1 

UNAUDITED 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,




2011


2010


% Change


2011


2010


% Change














Revenues


$     519,754


$ 425,050


22%


$ 1,859,802


$ 1,642,468


13%














Operating expenses:













    Cost of service


191,440


152,322


26%


665,017


584,609


14%

    Sales, general and administrative


240,171


201,243


19%


863,191


734,580


18%



431,611


353,565


22%


1,528,208


1,319,189


16%














Operating income


88,143


71,485


23%


331,594


323,279


3%














Other income (expense):













    Interest and other income


3,534


1,930


83%


10,774


4,629


133%

    Interest and other expense


(4,706)


(4,814)


(2%)


(18,161)


(17,519)


4%



(1,172)


(2,884)


(59%)


(7,387)


(12,890)


(43%)














Income from continuing operations before income taxes


86,971


68,601


27%


324,207


310,389


4%

Provision for income taxes


(24,587)


(17,890)


37%


(95,076)


(87,379)


9%

Income from continuing operations


62,384


50,711


23%


229,131


223,010


3%

Loss  from discontinued operations, net of tax


(29)


(11,679)


NM


(975)


(3,901)


(75%)

Net income including noncontrolling interests


62,355


39,032


60%


228,156


219,109


4%

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


(3,779)


(4,842)


(22%)


(18,918)


(15,792)


20%

         Net income attributable to Global Payments


$       58,576


$   34,190


71%


$    209,238


$    203,317


3%














Amounts attributable to Global Payments:













   Income from continuing operations


$       58,605


$   45,869


28%


$    210,213


$    207,218


1%

   Loss  from discontinued operations, net of tax


(29)


(11,679)


NM


(975)


(3,901)


(75%)

         Net income attributable to Global Payments


$       58,576


$   34,190


71%


$    209,238


$    203,317


3%



























Basic earnings per share attributable to Global Payments:













   Income from continuing operations


$           0.73


$       0.56


30%


$          2.63


$          2.56


3%

   Loss  from discontinued operations, net of tax


-


(0.14)


NM


(0.01)


(0.05)


(80%)

         Net income attributable to Global Payments


$           0.73


$       0.42


74%


$          2.62


$          2.51


4%














Diluted earnings per share attributable to Global Payments:













   Income from continuing operations


$           0.72


$       0.56


29%


$          2.61


$          2.52


4%

   Loss  from discontinued operations, net of tax


-


(0.14)


NM


(0.01)


(0.04)


(75%)

         Net income attributable to Global Payments


$           0.72


$       0.42


71%


$          2.60


$          2.48


5%














Weighted average shares outstanding:













         Basic


80,222


81,203




79,837


81,075



         Diluted


81,045


82,142




80,478


82,120





























NM - Not Meaningful



SCHEDULE 2 

NORMALIZED EARNINGS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO GLOBAL PAYMENTS

GLOBAL PAYMENTS INC. AND SUBSIDIARIES


(In thousands, except per share data)  
















Three Months Ended May 31,




Year Ended May 31,




2011


2010


% Change


2011


2010


% Change



























Revenues


$ 519,754


$ 425,050


22%


$ 1,859,802


$ 1,642,468


13%














Operating expenses:













    Cost of service


190,103


152,322


25%


661,619


584,609


13%

    Sales, general and administrative


237,087


198,660


19%


851,428


731,997


16%



427,190


350,982


22%


1,513,047


1,316,606


15%














Operating income


92,564


74,068


25%


346,755


325,862


6%














Other income (expense):













    Interest and other income


3,534


1,930


83%


10,774


4,629


133%

    Interest and other expense


(4,706)


(4,814)


(2%)


(18,161)


(17,519)


4%



(1,172)


(2,884)


(59%)


(7,387)


(12,890)


(43%)














Income from continuing operations before income taxes


91,392


71,184


28%


339,368


312,972


8%

Provision for income taxes


(26,062)


(18,836)


38%


(97,546)


(88,325)


10%

Income from continuing operations including noncontrolling interests


65,330


52,348


25%


241,822


224,647


8%

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


(3,779)


(4,842)


(22%)


(18,918)


(15,792)


20%

Net income from continuing operations attributable to Global Payments


$   61,551


$   47,506


30%


$    222,904


$    208,855


7%



























Basic earnings per share


$       0.77


$       0.59


31%


$          2.79


$          2.58


8%














Diluted earnings per share


$       0.76


$       0.58


31%


$          2.77


$          2.54


9%














Weighted average shares outstanding:













         Basic


80,222


81,203




79,837


81,075



         Diluted


81,045


82,142




80,478


82,120





























Normalized results exclude expenses consisting of $2.6 million and $7.4 million during the three and twelve months ended May 31, 2011, respectively, of start-up costs related to our new Global Service Center in Manila, Philippines and expenses of $1.8 million and $7.8 million during the three and twelve months ended May 31, 2011, respectively, related to employee termination and relocation benefits. During the three and twelve months ended May 31, 2010, normalized results exclude amounts due to our former President and Chief Operating Officer pursuant to his termination agreement dated April 21, 2010. Results for the twelve months ended May 31, 2011 also exclude a $2.5 million one-time, non-cash write-down of a deferred tax asset we established in July 2009 when we purchased the remaining 49% of our UK business.  The write-down resulted from a legislated reduction to the tax rate of 1%.  See Schedules 7 and 8 for reconciliations of normalized earnings from continuing operations to GAAP.



SCHEDULE 3 

CASH EARNINGS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO GLOBAL PAYMENTS

GLOBAL PAYMENTS INC. AND SUBSIDIARIES


(In thousands, except per share data) 
















Three Months Ended May 31,




Year Ended May 31,





2011


2010


% Change


2011


2010


% Change














Revenues


$ 519,754


$ 425,050


22%


$ 1,859,802


$ 1,642,468


13%














Operating expenses:













    Cost of service


175,897


144,146


22%


619,927


551,845


12%

    Sales, general and administrative


237,087


198,660


19%


851,428


731,997


16%



412,984


342,806


20%


1,471,355


1,283,842


15%














Operating income


106,770


82,244


30%


388,447


358,626


8%














Other income (expense):













    Interest and other income


3,534


1,930


83%


10,774


4,629


133%

    Interest and other expense


(4,706)


(4,814)


(2%)


(18,161)


(17,519)


4%



(1,172)


(2,884)


(59%)


(7,387)


(12,890)


(43%)














Income from continuing operations before income taxes


105,598


79,360


33%


381,060


345,736


10%

Provision for income taxes


(29,432)


(21,143)


39%


(109,459)


(98,590)


11%

Income from continuing operations including noncontrolling interests


76,166


58,217


31%


271,601


247,146


10%

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


(6,315)


(5,177)


22%


(23,876)


(17,142)


39%

Net income from continuing operations attributable to Global Payments


$   69,851


$   53,040


32%


$    247,725


$    230,004


8%



























Basic earnings per share


$       0.87


$       0.65


34%


$          3.10


$          2.84


9%














Diluted earnings per share


$       0.86


$       0.65


32%


$          3.08


$          2.80


10%














Weighted average shares outstanding:













         Basic


80,222


81,203




79,837


81,075



         Diluted


81,045


82,142




80,478


82,120





























NM - Not Meaningful


Cash earnings exclude normalized adjustments and acquisition intangible amortization expense from continuing operations and the related income tax benefit. See Schedules 7 and 8 for reconciliations of cash earnings from continuing operations to GAAP.



SCHEDULE 4  

SEGMENT INFORMATION CONTINUING OPERATIONS

GLOBAL PAYMENTS INC. AND SUBSIDIARIES


(In thousands)  


























Three Months Ended May 31,











2011


2010


% Change





GAAP


Normalized


Cash Earnings


GAAP


Normalized


Cash Earnings


GAAP


Normalized


Cash Earnings























Revenues:



















United States

$    281,500


$    281,500


$        281,500


$    242,975


$    242,975


$        242,975


16%


16%


16%


Canada

87,140


87,140


87,140


80,720


80,720


80,720


8%


8%


8%



North America merchant services

368,640


368,640


368,640


323,695


323,695


323,695


14%


14%


14%























Europe

115,359


115,359


115,359


72,238


72,238


72,238


60%


60%


60%


Asia-Pacific

35,755


35,755


35,755


29,117


29,117


29,117


23%


23%


23%



International merchant services

151,114


151,114


151,114


101,355


101,355


101,355


49%


49%


49%

























Total revenues

$    519,754


$    519,754


$        519,754


$    425,050


$    425,050


$        425,050


22%


22%


22%























Operating income:



















North America merchant services

$      69,816


$      69,816


$          73,085


$      64,966


$      64,966


$          67,848


7%


7%


8%


International merchant services

41,632


41,632


52,569


25,346


25,346


30,640


64%


64%


72%


Corporate

(23,305)


(18,884)


(18,884)


(18,827)


(16,244)


(16,244)


(24%)


(16%)


(16%)




Operating income

$      88,143


$      92,564


$        106,770


$      71,485


$      74,068


$          82,244


23%


25%


30%







Year Ended May 31,











2011


2010


% Change





GAAP


Normalized


Cash Earnings


GAAP


Normalized


Cash Earnings


GAAP


Normalized


Cash Earnings























Revenues:



















United States

$ 1,031,997


$ 1,031,997


$     1,031,997


$    902,844


$    902,844


$        902,844


14%


14%


14%


Canada

330,872


330,872


330,872


317,272


317,272


317,272


4%


4%


4%



North America merchant services

1,362,869


1,362,869


1,362,869


1,220,116


1,220,116


1,220,116


12%


12%


12%























Europe

359,567


359,567


359,567


315,023


315,023


315,023


14%


14%


14%


Asia-Pacific

137,366


137,366


137,366


107,329


107,329


107,329


28%


28%


28%



International merchant services

496,933


496,933


496,933


422,352


422,352


422,352


18%


18%


18%

























Total revenues

$ 1,859,802


$ 1,859,802


$     1,859,802


$ 1,642,468


$ 1,642,468


$     1,642,468


13%


13%


13%























Operating income:



















North America merchant services

$    268,233


$    268,233


$        280,880


$    275,386


$    275,386


$        285,989


(3%)


(3%)


(2%)


International merchant services

143,911


143,911


172,956


113,699


113,699


135,860


27%


27%


27%


Corporate

(80,550)


(65,389)


(65,389)


(65,806)


(63,223)


(63,223)


(22%)


(3%)


(3%)




Operating income

$    331,594


$    346,755


$        388,447


$    323,279


$    325,862


$        358,626


3%


6%


8%











































See Schedule 9 for reconciliation of normalized and cash earnings segment information to GAAP.



SCHEDULE 5




CONSOLIDATED BALANCE SHEETS




GLOBAL PAYMENTS INC. AND SUBSIDIARIES




(In thousands)











May 31,


May 31,



2011


2010






ASSETS





Current assets:




Cash and cash equivalents

$ 1,354,285


$    769,946

Accounts receivable, net of allowances for doubtful accounts of $472 and $269, respectively

166,540


131,817

Claims receivable, net of allowance for losses of $3,870 and $4,208, respectively

914


664

Settlement processing assets

280,359


13,741

Inventory


7,640


9,740

Deferred income taxes

2,946


2,752

Prepaid expenses and other current assets

35,291


39,604

Total current assets

1,847,975


968,264






Goodwill


779,637


569,090

Other intangible assets, net of accumulated amortization of $197,066 and $145,076, respectively

341,500


205,110

Property and equipment, net of accumulated depreciation of $147,670 and $119,402, respectively

256,301


183,938

Deferred income taxes

104,140


90,470

Other


20,978


22,454






Total assets

$ 3,350,531


$ 2,039,326






LIABILITIES AND EQUITY




Current liabilities:




Lines of credit

$    270,745


$      79,187

Current portion of long-term debt

85,802


148,169

Accounts payable and accrued liabilities

241,578


173,575

Settlement processing obligations

838,565


265,110

Income taxes payable

7,674


6,430

 Total current liabilities

1,444,364


672,471






Long-term debt

268,217


272,965

Deferred income taxes

116,432


88,265

Other long-term liabilities

49,843


31,436

Total liabilities

1,878,856


1,065,137






Commitments and contingencies









Redeemable noncontrolling interest

133,858


102,672






Equity:





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

-


-

Common stock, no par value; 200,000,000 shares authorized; 83,062,518 issued




and 80,334,781 outstanding at May 31, 2011 and 82,028,945 issued and




79,646,055 outstanding at May 31, 2010

-


-

Paid-in capital

502,993


460,747

Retained earnings

715,202


544,772

Treasury stock; 2,727,737 and 2,382,890 shares at May 31, 2011 and May 31, 2010,




respectively

(112,980)


(100,000)

Accumulated other comprehensive income (loss)

79,320


(44,255)

     Total Global Payments shareholders' equity

1,184,535


861,264

Noncontrolling interest

153,282


10,253

Total equity

1,337,817


871,517






Total liabilities and equity

$ 3,350,531


$ 2,039,326



SCHEDULE 6





UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS




GLOBAL PAYMENTS INC. AND SUBSIDIARIES


















(In thousands)
















Year Ended May 31,





2011


2010








Cash flows from operating activities:





Net income including noncontrolling interests

$    228,156


$ 219,109


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






Depreciation and amortization of property and equipment

40,545


35,864



Amortization of acquired intangibles

41,692


32,803



Provision for operating losses and bad debts

20,577


25,025



Share-based compensation expense

15,885


18,072



Deferred income taxes

19,154


2,722



Loss on disposal of discontinued operations

602


24,310



Other, net

(3,576)


2,443


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






Accounts receivable

(34,723)


(11,689)



Claims receivable

(14,425)


(14,936)



Settlement processing assets and obligations, net

299,895


140,962



Inventory

1,979


(4,727)



Prepaid expenses and other assets

3,537


(13,710)



Accounts payable and other accrued liabilities

89,230


18,803



Payables to money transfer beneficiaries

-


(6,107)



Income taxes payable

1,244


(3,183)




Net cash provided by operating activities

709,772


465,761








Cash flows from investing activities:





Business and intangible asset acquisitions, net of cash acquired

(167,968)


(29,513)


Disposition of business, net of cash

(2,577)


60,231


Capital expenditures

(98,537)


(56,054)


Net decrease (increase) in financing receivables

2,062


(179)


Proceeds from sale of investment and contractual rights, net

-


311




Net cash used in investing activities

(267,020)


(25,204)








Cash flows from financing activities:





Net borrowings on lines of credit

191,558


69,013


Proceeds from issuance of long-term debt

205,298


305,744


Principal payments under long-term debt

(280,198)


(75,205)


Acquisition of redeemable noncontrolling interests

-


(307,675)


Proceeds from stock issued under share-based compensation plans, net

18,364


30,248


Repurchase of common stock

(14,900)


(98,080)


Tax benefit from share-based compensation

9,141


7,186


Distribution to noncontrolling interests

(8,752)


(20,484)


Dividends paid

(6,388)


(6,497)




Net cash provided by (used in) financing activities

114,123


(95,750)








Effect of exchange rate changes on cash

27,464


(1,796)








Increase in cash and cash equivalents

584,339


343,011

Cash and cash equivalents, beginning of period

769,946


426,935

Cash and cash equivalents, end of period

$ 1,354,285


$ 769,946



SCHEDULE 7







RECONCILIATION OF QUARTERLY NORMALIZED AND CASH EARNINGS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO GLOBAL PAYMENTS TO GAAP

GLOBAL PAYMENTS INC. AND SUBSIDIARIES





















(In thousands, except per share data)
















Three Months Ended May 31,



2011



GAAP

Employee Termination
and Other(1)

Normalized

Cash Earnings Adjustments(2)

Cash Earnings








Revenues


$ 519,754

$                                               -

$ 519,754

$                -

$       519,754








Operating expenses:







  Cost of service


191,440

(1,337)

190,103

(14,206)

175,897

  Sales, general and administrative


240,171

(3,084)

237,087

-

237,087



431,611

(4,421)

427,190

(14,206)

412,984








Operating income


88,143

4,421

92,564

14,206

106,770








Other income (expense):







  Interest and other income


3,534

-

3,534

-

3,534

  Interest and other expense


(4,706)

-

(4,706)

-

(4,706)



(1,172)

-

(1,172)

-

(1,172)








Income from continuing operations before income taxes


86,971

4,421

91,392

14,206

105,598

Provision for income taxes


(24,587)

(1,475)

(26,062)

(3,370)

(29,432)

Income from continuing operations


62,384

2,946

65,330

10,836

76,166

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


(3,779)

-

(3,779)

(2,536)

(6,315)

Net income from continuing operations attributable to Global Payments


$   58,605

$                                         2,946

$   61,551

$           8,300

$         69,851








Diluted shares


81,045


81,045


81,045

Diluted earnings per share


$       0.72

$                                           0.04

$       0.76

$             0.10

$             0.86

















Three Months Ended May 31,



2010



GAAP

Employee Termination
and Other(1)

Normalized

Cash Earnings Adjustments(2)

Cash Earnings








Revenues


$ 425,050

$                                               -

$ 425,050

$                -

$       425,050








Operating expenses:







  Cost of service


152,322

-

152,322

(8,176)

144,146

  Sales, general and administrative


201,243

(2,583)

198,660

-

198,660



353,565

(2,583)

350,982

(8,176)

342,806








Operating income


71,485

2,583

74,068

8,176

82,244








Other income (expense):







  Interest and other income


1,930

-

1,930

-

1,930

  Interest and other expense


(4,814)

-

(4,814)

-

(4,814)



(2,884)

-

(2,884)

-

(2,884)








Income from continuing operations before income taxes


68,601

2,583

71,184

8,176

79,360

Provision for income taxes


(17,890)

(946)

(18,836)

(2,307)

(21,143)

Income from continuing operations


50,711

1,637

52,348

5,869

58,217

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


(4,842)

-

(4,842)

(335)

(5,177)

Net income from continuing operations attributable to Global Payments


$   45,869

$                                         1,637

$   47,506

$           5,534

$         53,040








Diluted shares


82,142


82,142


82,142

Diluted earnings per share


$       0.56

$                                           0.02

$       0.58

$             0.07

$             0.65










(1) Reflects expenses of $2.6 million during the three months ended May 31, 2011, of start-up costs related to our new Global Service Center in Manila, Philippines and expenses of $1.8 million and $2.6 million during the three months ended May 31, 2011 and 2010, respectively, related to employee termination and relocation benefits, and the related income tax benefits


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


We supplemented our reporting of income from continuing operations and the related earnings per share information determined in accordance with GAAP by reporting income from continuing operations and the related earnings per share for the three months ended May 31, 2011 and 2010 on a “normalized”  and "cash earnings" basis in this earnings release as a measure to help evaluate performance. We calculated income from continuing operations and earnings per share on a normalized basis by excluding charges related to employee termination and relocation benefits, and certain one-time costs related to our Global Service Center.  We calculated income from continuing operations on a cash earnings basis by excluding acquisition intangible amortization expense from our normalized results. We exclude these charges in order to more clearly focus on the factors we believe are pertinent to the daily management of our operations. Our income from continuing operations and earnings per share reported on a normalized and cash earnings basis should be considered in addition to, and not as a substitute for, income from continuing operations and earnings per share determined in accordance with GAAP. Our measures of income from continuing operations and earnings per share on a normalized and 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 ANNUAL NORMALIZED AND CASH EARNINGS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO GLOBAL PAYMENTS TO GAAP

GLOBAL PAYMENTS INC. AND SUBSIDIARIES
























(In thousands, except per share data)


















Year Ended May 31,



2011



GAAP

Employee Termination and
Other(1)

Foreign Tax Rate(2)

Normalized

Cash Earnings Adjustments(3)

Cash Earnings









Revenues


$ 1,859,802

$          -

$                      -

$ 1,859,802

$                -

$    1,859,802









Operating expenses:








  Cost of service


665,017

(3,398)

-

661,619

(41,692)

619,927

  Sales, general and administrative


863,191

(11,763)

-

851,428

-

851,428



1,528,208

(15,161)

-

1,513,047

(41,692)

1,471,355









Operating income


331,594

15,161

-

346,755

41,692

388,447









Other income (expense):








  Interest and other income


10,774

-

-

10,774

-

10,774

  Interest and other expense


(18,161)

-

-

(18,161)

-

(18,161)



(7,387)

-

-

(7,387)

-

(7,387)









Income from continuing operations before income taxes


324,207

15,161

-

339,368

41,692

381,060

Provision for income taxes


(95,076)

(4,949)

2,479

(97,546)

(11,913)

(109,459)

Income from continuing operations


229,131

10,212

2,479

241,822

29,779

271,601

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


(18,918)

-

-

(18,918)

(4,958)

(23,876)

Net income from continuing operations attributable to Global Payments


$    210,213

$  10,212

$                2,479

$    222,904

$         24,821

$       247,725









Diluted shares


80,478



80,478


80,478

Diluted earnings per share


$          2.61

$     0.13

$                  0.03

$          2.77

$             0.31

$             3.08



















Year Ended May 31,



2010



GAAP

Employee Termination and
Other(1)


Normalized

Cash Earnings Adjustments(3)

Cash Earnings









Revenues


$ 1,642,468

$        -


$ 1,642,468

$                -

$    1,642,468









Operating expenses:








  Cost of service


584,609

-


584,609

(32,764)

551,845

  Sales, general and administrative


734,580

(2,583)


731,997

-

731,997



1,319,189

(2,583)


1,316,606

(32,764)

1,283,842









Operating income


323,279

2,583


325,862

32,764

358,626









Other income (expense):








  Interest and other income


4,629

-


4,629

-

4,629

  Interest and other expense


(17,519)

-


(17,519)

-

(17,519)



(12,890)

-


(12,890)

-

(12,890)









Income from continuing operations before income taxes


310,389

2,583


312,972

32,764

345,736

Provision for income taxes


(87,379)

(946)


(88,325)

(10,265)

(98,590)

Income from continuing operations


223,010

1,637


224,647

22,499

247,146

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


(15,792)

-


(15,792)

(1,350)

(17,142)

Net income from continuing operations attributable to Global Payments


$    207,218

$   1,637


$    208,855

$         21,149

$       230,004









Diluted shares


82,120



82,120


82,120

Diluted earnings per share


$          2.52

$     0.02

$                      -

$          2.54

$             0.26

$             2.80

















(1) Reflects expenses of $7.4 million during the year ended May 31, 2011, of start-up costs related to our Global Service Center in Manila, Philippines and expenses of $7.8 million and $2.6 million during the years ended May 31, 2011 and 2010, respectively, related to employee termination and relocation benefits, and the related income tax benefits.


(2) Represents a one-time, non-cash write-down of a deferred tax asset we established in July 2009 when we purchased the remaining 49% of our UK business.  The write-down resulted from a legislated reduction to the tax rate of 1%.  









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









We supplemented our reporting of income from continuing operations and the related earnings per share information determined in accordance with GAAP by reporting income from continuing operations and the related earnings per share for the years ended May 31, 2011 and 2010 on a “normalized”  and "cash earnings" basis in this earnings release as a measure to help evaluate performance. We calculated income from continuing operations and earnings per share on a normalized basis by excluding charges related to employee termination and relocation benefits, certain one-time costs related to our new Global Service Center and the legislated tax rate reduction.  We calculated income from continuing operations on a cash earnings basis by excluding acquisition intangible amortization expense from our normalized results. We exclude these charges in order to more clearly focus on the factors we believe are pertinent to the daily management of our operations. Our income from continuing operations and earnings per share reported on a normalized and cash earnings basis should be considered in addition to, and not as a substitute for, income from continuing operations and earnings per share determined in accordance with GAAP. Our measures of income from continuing operations and earnings per share on a normalized and cash earnings basis reflect management’s judgment of particular items, and may not be comparable to similarly titled measures reported by other companies.



SCHEDULE 9  

RECONCILIATION OF  CASH EARNINGS SEGMENT INFORMATION TO GAAP

GLOBAL PAYMENTS INC. AND SUBSIDIARIES


(In thousands)  




















Three Months Ended May 31,  





2011


2010





GAAP

Employee Termination and Other(1)

Normalized

Cash Earnings Adjustments (2)

Cash Earnings


GAAP

Employee Termination and Other(1)

Normalized

Cash Earnings Adjustments (2)

Cash Earnings

















Revenues:













United States

$    281,500

$                  -

$    281,500

$                -

$        281,500


$    242,975

$                  -

$    242,975

$                -

$        242,975


Canada

87,140

-

87,140

-

87,140


80,720

-

80,720

-

80,720



North America merchant services

368,640

-

368,640

-

368,640


323,695

-

323,695

-

323,695

















Europe

115,359

-

115,359

-

115,359


72,238

-

72,238

-

72,238


Asia-Pacific

35,755

-

35,755

-

35,755


29,117

-

29,117

-

29,117



International merchant services

151,114

-

151,114

-

151,114


101,355

-

101,355

-

101,355



















Total revenues

$    519,754

$                  -

$    519,754

$                -

$        519,754


$    425,050

$                  -

$    425,050

$                -

$        425,050

















Operating income:













North America merchant services

$      69,816

$                  -

$      69,816

$           3,269

$          73,085


$      64,966

$                  -

$      64,966

$           2,882

$          67,848


International merchant services

41,632

-

41,632

10,937

52,569


25,346

-

25,346

5,294

30,640


Corporate

(23,305)

4,421

(18,884)

-

(18,884)


(18,827)

2,583

(16,244)

-

(16,244)



Operating income

$      88,143

$             4,421

$      92,564

$         14,206

$        106,770


$      71,485

$             2,583

$      74,068

$           8,176

$          82,244







Year Ended May 31,  





2011


2010





GAAP

Employee Termination and Other(1)

Normalized

Cash Earnings Adjustments (2)

Cash Earnings


GAAP

Employee Termination and Other(1)

Normalized

Cash Earnings Adjustments (2)

Cash Earnings

















Revenues:













United States

$ 1,031,997

$                  -

$ 1,031,997

$                -

$     1,031,997


$    902,844

$                  -

$    902,844

$                -

$        902,844


Canada

330,872

-

330,872

-

330,872


317,272

-

317,272

-

317,272



North America merchant services

1,362,869

-

1,362,869

-

1,362,869


1,220,116

-

1,220,116

-

1,220,116

















Europe

359,567

-

359,567

-

359,567


315,023

-

315,023

-

315,023


Asia-Pacific

137,366

-

137,366

-

137,366


107,329

-

107,329

-

107,329



International merchant services

496,933

-

496,933

-

496,933


422,352

-

422,352

-

422,352



















Total revenues

$ 1,859,802

$                  -

$ 1,859,802

$                -

$     1,859,802


$ 1,642,468

$                  -

$ 1,642,468

$                -

$     1,642,468

















Operating income:













North America merchant services

$    268,233

$                  -

$    268,233

$         12,647

$        280,880


$    275,386

$                  -

$    275,386

$         10,603

$        285,989


International merchant services

143,911

-

143,911

29,045

172,956


113,699

-

113,699

22,161

135,860


Corporate

(80,550)

15,161

(65,389)

-

(65,389)


(65,806)

2,583

(63,223)

-

(63,223)



Operating income

$    331,594

$           15,161

$    346,755

$         41,692

$        388,447


$    323,279

$             2,583

$    325,862

$         32,764

$        358,626















(1) Normalized results exclude expenses consisting of $2.6 million and $7.4 million during the three and twelve months ended May 31, 2011, respectively, of start-up costs related to our new Global Service Center in Manila, Philippines and expenses of $1.8 million and $7.8 million during the three and twelve months ended May 31, 2011, respectively, related to employee termination and relocation benefits. During the three and twelve months ended May 31, 2010, normalized results exclude amounts due to our former President and Chief Operating Officer pursuant to his termination agreement dated April 21, 2010.

(2) Represents acquisition intangible amortization expense from continuing operations.



SCHEDULE 10








OUTLOOK SUMMARY








GLOBAL PAYMENTS INC. AND SUBSIDIARIES

















(In millions, except per share data)




















Fiscal 2011 Actual



Fiscal 2012 Outlook


% Change FY11











Revenue Outlook









Revenues


$                 1,860



$2,100 to 2,150


13% to 16%




















EPS Outlook









GAAP diluted EPS from continuing operations


$                   2.61



$3.02 to $3.09


16% to 18%


Non-recurring items and acquisition-related intangibles


0.47

 (1)


$0.34


---


Cash EPS from continuing operations


$                   3.08



$3.35 to $3.43


9% to 11%



















(1)  Non-recurring items accounted for $0.16 and acquisition-related intangibles accounted for $0.31 in Fiscal 2011 results.



Contact:

Jane M. Elliott


770-829-8234 Voice


770-829-8267 Fax


investor.relations@globalpay.com



SOURCE Global Payments Inc.



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