Global Payments Reports Fourth Quarter and Year-End Earnings Data Intrusion Investigation Completed

Signs Agreement to Acquire Remaining 44% Interest in Asia-Pacific Joint Venture

Board Authorizes $150 Million Share Repurchase Program

ATLANTA, July 26, 2012 /PRNewswire/ -- Global Payments Inc. (NYSE: GPN) today announced results for its fiscal fourth quarter and year ended May 31, 2012. 

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

Chairman and CEO Paul R. Garcia said, "I am pleased that in a challenging year we delivered strong results with revenues of $2.2 billion or 18% growth, and cash earnings per share of $3.53 or 15% growth over prior year.  In addition, I am delighted to announce that we recently completed our data intrusion investigation, and we are focused on executing the remediation plan.

"We continue to drive strategies that will produce sustainable long-term growth, so I am pleased to announce that we have signed an agreement to acquire the remaining 44% interest in our merchant services joint venture in Asia-Pacific from HSBC.  Lastly, our Board of Directors has authorized a $150 million share repurchase program, which I believe demonstrates our confidence in the company," Garcia concluded.

Full-Year 2012 Summary

  • Revenues grew 18% to $2,203.8 million compared to $1,859.8 million in 2011.   
  • Cash diluted earnings per share1 from continuing operations grew 15% to $3.53 compared to $3.08 in the prior year.
  • GAAP fiscal 2012 full-year diluted earnings per share from continuing operations of $2.37, compared to $2.61 diluted earnings per share from continuing operations in the prior year.

Fourth Quarter 2012 Summary

  • Revenues grew 15% to $597.0 million compared to $519.8 million in the fourth quarter of 2011.
  • Cash diluted earnings per share1 from continuing operations grew 13% to $0.97 compared to $0.86 in the fourth quarter of 2011.  
  • GAAP diluted earnings per share from continuing operations were $0.06, compared to $0.72 in the fourth quarter of 2011.

Data Intrusion Investigation

With the completion of our data intrusion investigation, GAAP results for the fourth quarter and full-year 2012 include a pre-tax charge of $84.4 million or $0.68 diluted earnings per share.  This charge includes an estimate of charges from the card brands and investigation and remediation expenses.  A qualified security assessor is conducting the independent review required to return the company to the lists of PCI compliant service providers.  

Agreement to Acquire Remaining Interest in Asia-Pacific Joint Venture

In 2006, Global Payments and HSBC formed a joint venture, Global Payments Asia Pacific Limited, to provide payment processing services to merchants in Asia-Pacific, in which Global Payments' ownership was 56%.  Under the terms of the most recent agreement, Global Payments plans to acquire the remaining 44% ownership interest in this joint venture and will pay HSBC a total of USD$242 million. The company plans to use existing cash and lines of credit to complete the transaction and anticipates the deal will close during the second quarter of fiscal 2013.  Assuming an October 1, 2012 close date, the deal is anticipated to be as much as $0.07 accretive to GAAP and cash diluted earnings per share and is included in our fiscal 2013 outlook.

2013 Outlook

For the full-year of fiscal 2013, the company expects annual revenue of $2,360 million to $2,400 million, or 7% to 9% growth over fiscal 2012.  The company expects annual fiscal 2013 diluted earnings per share on a cash basis of $3.59 to $3.66, and includes a benefit of as much as $0.07 related to the Asia-Pacific acquisition. This reflects growth of 2% to 4% over fiscal 2012.  On a constant currency basis, the company expects revenue to grow 8% to 10% and diluted earnings per share on a cash basis to grow 4% to 6%.  Annual fiscal 2013 GAAP diluted earnings per share is expected to be $3.22 to $3.29.  These expectations exclude the impact of any potential share repurchases.

David Mangum, Senior Executive Vice President and CFO, stated, "We completed fiscal 2012 with flexibility in our capital structure.  As we go forward, our primary priority for capital deployment will continue to be organic growth and acquisitions as demonstrated by our purchase of the remaining 44% of our Asia-Pacific joint venture, complemented by share repurchases."

Share Repurchase Authorization

The Board of Directors approved a new $150 million share repurchase authorization of Global Payments' stock.  Under this new program, Global Payments may repurchase shares in the open market or as otherwise may be determined by the company, subject to market conditions, business opportunities and other factors.  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.

Investor Day

Global Payments plans to host an Investor Day in New York City on October 11, 2012, at the New York Stock Exchange.  The company will webcast the Investor Day presentation live from the investor relations page of the company's website at www.globalpaymentsinc.com.  Additional details about the meeting will be available in the coming weeks. 

Conference Call

Global Payments will hold a conference call today, July 26, 2012 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 through the Global Payments website through August 9, 2012.   

About Global Payments

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

This announcement and comments made by Global Payments' management during the conference call may contain certain forward-looking statements within the meaning of the "safe-harbor" provisions of the Private Securities Litigation Reform Act of 1995.  Statements that are not historical facts, including revenue and earnings estimates and management's expectations regarding future events and developments, are forward-looking statements and are subject to significant risks and uncertainties.  Important factors that may cause actual events or results to differ materially from those anticipated by such forward-looking statements include the following: the effect on our results of operations of the remediation efforts resulting from the unauthorized access to our processing system announced in March 2012, and the impact on our results of operations; 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, developments in the implementation of debit interchange legislation, 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.

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


Investor contacts:
Jane M. Elliott
770-829-8234

Kay Sharpton
770-829-8870
investor.relations@globalpay.com


Media contact:
Amy Corn
770-829-8755
media.relations@globalpay.com

 

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,







2012


2011


% Change


2012


2011


% Change





(unaudited)
























Revenues




$        597,032


$         519,754


15%


$      2,203,847


$    1,859,802


18%
















Operating expenses:













     Cost of service



213,071


191,440


11%


784,756


665,017


18%

     Sales, general and administrative


289,712


240,171


21%


1,027,304


863,191


19%

     Processing system intrusion


84,438


-


NM


84,438


-


NM





587,221


431,611


36%


1,896,498


1,528,208


24%
















Operating income



9,811


88,143


(89%)


307,349


331,594


(7%)
















Other income (expense):













     Interest and other income


2,818


3,534


(20%)


9,946


10,774


(8%)

     Interest and other expense


(4,185)


(4,706)


(11%)


(16,848)


(18,161)


(7%)





(1,367)


(1,172)


17%


(6,902)


(7,387)


(7%)
















Income from continuing operations before income taxes 


8,444


86,971


(90%)


300,447


324,207


(7%)

Benefit (provision) for income taxes


3,202


(24,587)


NM


(82,881)


(95,076)


(13%)

Income from continuing operations


11,646


62,384


(81%)


217,566


229,131


(5%)

Loss from discontinued operations, net of tax


-


(29)


NM


-


(975)


NM

Net income



11,646


62,355


(81%)


217,566


228,156


(5%)

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


(6,560)


(3,779)


74%


(29,405)


(18,918)


55%

          Net income attributable to Global Payments


$            5,086


$           58,576


(91%)


$         188,161


$       209,238


(10%)
















Amounts attributable to Global Payments:













    Income from continuing operations


$            5,086


$           58,605


(91%)


$         188,161


$       210,213


(10%)

    Loss from discontinued operations, net of tax


-


(29)


NM


-


(975)


NM

          Net income attributable to Global Payments


$            5,086


$           58,576


(91%)


$         188,161


$       209,238


(10%)































Basic earnings per share attributable to Global Payments:













    Income from continuing operations


$              0.06


$               0.73


(92%)


$               2.39


$             2.63


(9%)

    Loss from discontinued operations, net of tax


-


-


NM


-


(0.01)


NM

          Net income attributable to Global Payments


$              0.06


$               0.73


(92%)


$               2.39


$             2.62


(9%)
















Diluted earnings per share attributable to Global Payments:













    Income from continuing operations


$              0.06


$               0.72


(92%)


$               2.37


$             2.61


(9%)

    Loss from discontinued operations, net of tax


-


-


NM


-


(0.01)


NM

          Net income attributable to Global Payments


$              0.06


$               0.72


(92%)


$               2.37


$             2.60


(9%)
















Weighted average shares outstanding:













          Basic



78,539


80,222




78,829


79,837



          Diluted



79,192


81,045




79,431


80,478

































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,







2012


2011


% Change


2012


2011


% Change
















Revenues




$         597,032


$       519,754


15%


$      2,203,847


$    1,859,802


18%
















Operating expenses:













     Cost of service



200,051


175,897


14%


734,060


619,927


18%

     Sales, general and administrative


274,390


237,087


16%


1,011,982


851,428


19%





474,441


412,984


15%


1,746,042


1,471,355


19%
















Operating income



122,591


106,770


15%


457,805


388,447


18%
















Other income (expense):













     Interest and other income


2,818


3,534


(20%)


9,946


10,774


(8%)

     Interest and other expense


(4,185)


(4,706)


(11%)


(16,848)


(18,161)


(7%)





(1,367)


(1,172)


17%


(6,902)


(7,387)


(7%)
















Income from continuing operations before income taxes 


121,224


105,598


15%


450,903


381,060


18%

Provision for income taxes


(36,318)


(29,432)


23%


(133,481)


(109,459)


22%

Income from continuing operations 


84,906


76,166


11%


317,422


271,601


17%

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


(8,437)


(6,315)


34%


(37,193)


(23,876)


56%

Net income from continuing operations attributable to Global Payments


$           76,469


$         69,851


9%


$         280,229


$       247,725


13%































Basic earnings per share


$               0.97


$             0.87


11%


$               3.55


$             3.10


15%
















Diluted earnings per share


$               0.97


$             0.86


13%


$               3.53


$             3.08


15%
















Weighted average shares outstanding:













          Basic



78,539


80,222




78,829


79,837



          Diluted



79,192


81,045




79,431


80,478

































NM - Not Meaningful




























See Schedules 6 and 7 for a reconciliation of cash earnings from continuing operations to GAAP.