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

Jul 26, 2012, 16:01 ET from Global Payments Inc.

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.