2014

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.























 

SCHEDULE 3














SEGMENT INFORMATION 













GLOBAL PAYMENTS INC. AND SUBSIDIARIES






























(In thousands)









































 Three Months Ended May 31, 













2012


2011


 % Change 









 GAAP 


 Cash Earnings 


 GAAP 


 Cash Earnings 


 GAAP 


 Cash Earnings 





















Revenues:















United States



$    351,872


$    351,872


$    281,500


$    281,500


25%


25%


Canada



79,015


79,015


87,140


87,140


(9%)


(9%)



North America merchant services


430,887


430,887


368,640


368,640


17%


17%





















Europe



128,521


128,521


115,359


115,359


11%


11%


Asia-Pacific



37,624


37,624


35,755


35,755


5%


5%



International merchant services


166,145


166,145


151,114


151,114


10%


10%























Total revenues


$    597,032


$    597,032


$    519,754


$    519,754


15%


15%





















Operating income:















North America merchant services


$      76,412


$      81,194


$      69,816


$      73,085


9%


11%


International merchant services


48,074


61,664


41,632


52,569


15%


17%


Corporate1



(114,675)


(20,267)


(23,305)


(18,884)


(392%)


(7%)




Operating income


$        9,811


$    122,591


$      88,143


$    106,770


(89%)


15%















































 Year Ended May 31, 













2012


2011


 % Change 









 GAAP 


 Cash Earnings 


 GAAP 


 Cash Earnings 


 GAAP 


 Cash Earnings 





















Revenues:















United States



$ 1,234,818


$ 1,234,818


$ 1,031,997


$ 1,031,997


20%


20%


Canada



332,434


332,434


330,872


330,872


0%


0%



North America merchant services


1,567,252


1,567,252


1,362,869


1,362,869


15%


15%





















Europe



489,300


489,300


359,567


359,567


36%


36%


Asia-Pacific



147,295


147,295


137,366


137,366


7%


7%



International merchant services


636,595


636,595


496,933


496,933


28%


28%























Total revenues


$ 2,203,847


$ 2,203,847


$ 1,859,802


$ 1,859,802


18%


18%





















Operating income:















North America merchant services


$    281,305


$    295,003


$    268,233


$    280,880


5%


5%


International merchant services


196,137


238,487


143,911


172,956


36%


38%


Corporate1



(170,093)


(75,685)


(80,550)


(65,389)


(111%)


(16%)




Operating income


$    307,349


$    457,805


$    331,594


$    388,447


(7%)


18%




















1Fiscal 2012 GAAP amounts include processing system intrusion costs of $84.4 million


























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




















 

SCHEDULE 4





CONSOLIDATED BALANCE SHEETS




GLOBAL PAYMENTS INC. AND SUBSIDIARIES











(In thousands)

















May 31,


May 31,





2012


2011








ASSETS






Current assets:






Cash and cash equivalents


$         781,275


$    1,354,285

Accounts receivable, net of allowances for doubtful accounts of $532 and $472, respectively

182,962


166,540

Claims receivable, net of allowance for losses of $3,435 and $3,870, respectively

1,029


914

Settlement processing assets


217,994


280,359

Inventory



9,864


7,640

Deferred income taxes


21,969


2,946

Prepaid expenses and other current assets

33,646


35,291

Total current assets


1,248,739


1,847,975








Goodwill



724,687


779,637

Other intangible assets, net of accumulated amortization of $233,215 and $197,066, respectively

290,188


341,500

Property and equipment, net of accumulated depreciation of $161,911 and $147,670, respectively

305,848


256,301

Deferred income taxes


97,235


104,140

Other




21,446


20,978








Total assets


$      2,688,143


$    3,350,531








LIABILITIES AND EQUITY




Current liabilities:






Lines of credit



$         215,391


$       270,745

Current portion of long-term debt

76,420


85,802

Accounts payable and accrued liabilities

316,313


241,578

Settlement processing obligations

216,878


838,565

Income taxes payable


12,283


7,674

  Total current liabilities


837,285


1,444,364








Long-term debt



236,565


268,217

Deferred income taxes


106,644


116,432

Other long-term liabilities


62,306


49,843

Total liabilities


1,242,800


1,878,856








Commitments and contingencies











Redeemable noncontrolling interest

144,422


133,858








Equity:







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

-


-

Common stock, no par value; 200,000,000 shares authorized; 78,551,297 and




 80,334,781 issued and outstanding at May 31, 2012 and 2011, respectively.




Paid-in capital



358,728


419,591

Retained earnings


843,456


685,624

Accumulated other comprehensive (loss) income 

(30,000)


79,320

      Total Global Payments shareholders' equity

1,172,184


1,184,535

Noncontrolling interest


128,737


153,282

Total equity



1,300,921


1,337,817








Total liabilities and equity

$      2,688,143


$    3,350,531








 

SCHEDULE 5





CONSOLIDATED STATEMENTS OF CASH FLOWS





GLOBAL PAYMENTS INC. AND SUBSIDIARIES














(In thousands)





















Year Ended May 31,







2012


2011










Cash flows from operating activities:






Net income



$             217,566


$                228,156


Adjustments to reconcile net income to net cash used in operating activities:







Depreciation and amortization of property and equipment


48,403


40,545



Amortization of acquired intangibles


50,696


41,692



Provision for operating losses and bad debts


22,417


20,577



Share-based compensation expense


16,391


15,885



Deferred income taxes


(19,498)


19,154



Loss on disposal of discontinued operations, non-cash


-


602



Other, net


(2,775)


(3,576)


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







Accounts receivable


(16,422)


(34,723)



Claims receivable


(13,519)


(14,425)



Settlement processing assets and obligations, net


(568,335)


299,895



Inventory


(2,394)


1,979



Prepaid expenses and other assets


3,511


3,537



Accounts payable and other accrued liabilities


85,875


89,230



Income taxes payable


4,609


1,244




Net cash (used in) provided by operating activities


(173,475)


709,772










Cash flows from investing activities:






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


(44,274)


(167,968)


Capital expenditures


(109,876)


(98,537)


Disposition of business, net of cash


-


(2,577)


Net decrease in financing receivables


2,565


2,062


Proceeds from sale of investment and contractual rights


1,152


-




Net cash used in investing activities


(150,433)


(267,020)










Cash flows from financing activities:






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


(55,354)


191,558


Proceeds from issuance of long-term debt


146,374


205,298


Principal payments under long-term debt


(184,235)


(280,198)


Proceeds from stock issued under employee stock plans


11,446


18,364


Common stock repurchased - share-based compensation plans


(4,861)


-


Tax benefit from employee share-based compensation 


1,441


9,141


Repurchase of common stock


(99,604)


(14,900)


Distribution to noncontrolling interests


(27,082)


(8,752)


Dividends paid


(6,311)


(6,388)




Net cash (used in) provided by financing activities


(218,186)


114,123










Effect of exchange rate changes on cash


(30,916)


27,464










(Decrease) increase in cash and cash equivalents


(573,010)


584,339

Cash and cash equivalents, beginning of period


1,354,285


769,946

Cash and cash equivalents, end of period


$             781,275


$             1,354,285










 

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, 2012



GAAP

Processing System Intrusion

Other2

Cash Earnings Adjustments1

Cash Earnings








Revenues


$           597,032

$                -

$                  -

$                   -

$          597,032








Operating expenses:







   Cost of service


213,071

-

-

(13,020)

200,051

   Sales, general and administrative


289,712

-

(15,322)

-

274,390

   Processing system intrusion


84,438

(84,438)

-

-

-



587,221

(84,438)

(15,322)

(13,020)

474,441








Operating income


9,811

84,438

15,322

13,020

122,591








Other income (expense):







   Interest and other income


2,818

-

-

-

2,818

   Interest and other expense


(4,185)

-

-

-

(4,185)



(1,367)

-

-

-

(1,367)








Income from continuing operations before income taxes 


8,444

84,438

15,322

13,020

121,224

Benefit (provision) for income taxes


3,202

(30,666)

(5,034)

(3,820)

(36,318)

Income from continuing operations


11,646

53,772

10,288

9,200

84,906

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


(6,560)

-

-

(1,877)

(8,437)

Net income from continuing operations attributable to Global Payments


$               5,086

$        53,772

$           10,288

$             7,323

$            76,469








Diluted shares


79,192




79,192

Diluted earnings per share


$                 0.06

$            0.68

$               0.13

$               0.10

$                0.97

















Three Months Ended May 31, 2011



GAAP

Employee Termination and Other3

Foreign Tax Rate

Cash Earnings Adjustments1

Cash Earnings








Revenues


$           519,754

$                -

$                  -

$                   -

$          519,754








Operating expenses:







   Cost of service


191,440

(1,337)

-

(14,206)

175,897

   Sales, general and administrative


240,171

(3,084)

-

-

237,087



431,611

(4,421)

-

(14,206)

412,984








Operating income


88,143

4,421

-

14,206

106,770








Other income (expense):







   Interest and other income


3,534

-

-

-

3,534

   Interest and other expense


(4,706)

-

-

-

(4,706)



(1,172)

-

-

-

(1,172)








Income from continuing operations before income taxes 


86,971

4,421

-

14,206

105,598

Provision for income taxes


(24,587)

(1,475)


(3,370)

(29,432)

Income from continuing operations


62,384

2,946

-

10,836

76,166

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


(3,779)

-

-

(2,536)

(6,315)

Net income from continuing operations attributable to Global Payments


$             58,605

$          2,946

$                  -

$             8,300

$            69,851








Diluted shares


81,045




81,045

Diluted earnings per share


$                 0.72

$            0.04

$                  -

$               0.10

$                0.86















1Represents adjustments to cost of service to exclude acquisition intangible amortization expense from continuing operations and the related income tax benefit.








2Represents one-time charges primarily related to employee termination benefits and two contractual disputes.








3 Reflects expenses of start-up costs related to our new Global Service Center in Manila, Philippines and employee termination and relocation benefits and the related income tax benefits.








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, 2012 and 2011 on a "cash earnings" basis in this earnings release as a measure to help evaluate performance. We calculated May 31, 2012 income from continuing operations and earnings per share on a cash basis by excluding costs related to the processing system intrusion, acquisition intangible amortization and one-time charges related to employee termination benefits, two contractual disputes and other immaterial items from our results. We calculated May 31, 2011 income from continuing operations and earnings per share on a cash basis by excluding charges related to employee termination and relocation benefits, certain one-time costs related to our Global Service Center, and acquisition intangible amortization from our 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 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 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, 2012



GAAP

Processing System Intrusion

Other2

Cash Earnings Adjustments1

Cash Earnings








Revenues


$        2,203,847

$                  -

$                  -

$                   -

$       2,203,847








Operating expenses:







   Cost of service


784,756

-

-

(50,696)

734,060

   Sales, general and administrative


1,027,304

-

(15,322)

-

1,011,982

   Processing system intrusion


84,438

(84,438)

-

-

-



1,896,498

(84,438)

(15,322)

(50,696)

1,746,042








Operating income


307,349

84,438

15,322

50,696

457,805








Other income (expense):







   Interest and other income


9,946

-

-

-

9,946

   Interest and other expense


(16,848)

-

-

-

(16,848)



(6,902)

-

-

-

(6,902)








Income from continuing operations before income taxes 


300,447

84,438

15,322

50,696

450,903

Provision for income taxes


(82,881)

(30,666)

(5,034)

(14,900)

(133,481)

Income from continuing operations


217,566

53,772

10,288

35,796

317,422

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


(29,405)

-


(7,788)

(37,193)

Net income from continuing operations attributable to Global Payments


$           188,161

$          53,772

$           10,288

$           28,008

$          280,229








Diluted shares


79,431




79,431

Diluted earnings per share


$                 2.37

$              0.68

$               0.13

$               0.35

$                3.53

















Year Ended May 31, 2011



GAAP

Employee Termination and Other3

Foreign Tax Rate4

Cash Earnings Adjustments1

Cash Earnings








Revenues


$        1,859,802

$                  -

$                  -

$                   -

$       1,859,802








Operating expenses:







   Cost of service


665,017

(3,398)

-

(41,692)

619,927

   Sales, general and administrative


863,191

(11,763)

-

-

851,428



1,528,208

(15,161)

-

(41,692)

1,471,355








Operating income


331,594

15,161

-

41,692

388,447








Other income (expense):







   Interest and other income


10,774

-

-

-

10,774

   Interest and other expense


(18,161)

-

-

-

(18,161)



(7,387)

-

-

-

(7,387)








Income from continuing operations before income taxes 


324,207

15,161

-

41,692

381,060

Provision for income taxes


(95,076)

(4,949)

2,479

(11,913)

(109,459)

Income from continuing operations


229,131

10,212

2,479

29,779

271,601

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


(18,918)

-

-

(4,958)

(23,876)

Net income from continuing operations attributable to Global Payments


$           210,213

$          10,212

$             2,479

$           24,821

$          247,725








Diluted shares


80,478




80,478

Diluted earnings per share


$                 2.61

$              0.13

$               0.03

$               0.31

$                3.08















1Represents adjustments to cost of service to exclude acquisition intangible amortization expense from continuing operations and the related income tax benefit.








2Represents one-time charges primarily related to employee termination benefits and two contractual disputes.








 3 Reflects expenses of start-up costs related to our new Global Service Center in Manila, Philippines and employee termination and relocation benefits and the related income tax benefits.








4Represents 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%.  








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, 2012 and 2011 on a "cash earnings" basis in this earnings release as a measure to help evaluate performance. We calculated May 31, 2012 income from continuing operations and earnings per share on a cash basis by excluding costs related to the processing system intrusion, acquisition intangible amortization and one-time charges related to employee termination benefits, two contractual disputes and other immaterial items from our results.  We calculated May 31, 2011 income from continuing operations and earnings per share on a cash basis by excluding charges related to employee termination and relocation benefits, certain one-time costs related to our Global Service Center, the legislated tax rate reduction and acquisition intangible amortization from our 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 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 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, 









2012


2011









 GAAP 

Processing System Intrusion

Other2

Cash Earnings Adjustments1

 Cash Earnings 


 GAAP 

Employee Termination and Other3

Cash Earnings Adjustments1

 Cash Earnings 




















Revenues:














United States



$      351,872

$                -

$                -

$                       -

$      351,872


$      281,500

$               -

$                       -

$      281,500


Canada



79,015

-

-

-

79,015


87,140

-

-

87,140



North America merchant services


430,887

-

-

-

430,887


368,640

-

-

368,640




















Europe



128,521

-

-

-

128,521


115,359

-

-

115,359


Asia-Pacific



37,624

-

-

-

37,624


35,755

-

-

35,755



International merchant services


166,145

-

-

-

166,145


151,114

-

-

151,114






















Total revenues


$      597,032

$                -

$                -

$                       -

$      597,032


$      519,754

$               -

$                       -

$      519,754




















Operating income:














North America merchant services


$        76,412

$                -

$          1,538

$                 3,244

$        81,194


$        69,816

$               -

$                 3,269

$        73,085


International merchant services


48,074

-

3,814

9,776

61,664


41,632

-

10,937

52,569


Corporate



(114,675)

84,438

9,970

-

(20,267)


(23,305)

4,421

-

(18,884)



Operating income


$          9,811

$        84,438

$        15,322

$               13,020

$      122,591


$        88,143

$         4,421

$               14,206

$      106,770













































 Year Ended May 31, 









2012


2011









 GAAP 

Processing System Intrusion

Other2

Cash Earnings Adjustments1

 Cash Earnings 


 GAAP 

Employee Termination and Other3

Cash Earnings Adjustments1

 Cash Earnings 




















Revenues:














United States



$   1,234,818

$                -

$                -

$                       -

$   1,234,818


$   1,031,997

$               -

$                       -

$   1,031,997