Global Payments Reports Third Quarter Earnings for Fiscal 2013
Reaffirms Fiscal 2013 Annual Revenue and Cash Earnings Expectations

ATLANTA, April 2, 2013 -- Global Payments Inc. (NYSE: GPN), a leading, worldwide provider of electronic transaction processing solutions, today announced results for its fiscal third quarter ended February 28, 2013.

Third Quarter 2013 Summary
•
Revenue grew 8% to $578.7 million compared to $533.5 million in the third quarter of 2012.
•
Cash diluted earnings per share1 grew 5% to $0.87 compared to $0.83 in the third quarter of 2012.
•
GAAP diluted earnings per share were $0.75, compared to $0.73 in the third quarter of 2012.

Chairman and CEO Paul R. Garcia said, “We are pleased with the progress we have made on our strategic initiatives, and we are on track to achieve our full-year earnings expectations in 2013. These initiatives include focusing on expanding distribution channels through our partner of choice strategy, leveraging our technology infrastructure and driving innovation. We recently launched a number of innovative mobility and loyalty products to our worldwide merchants, and we are fully focused on expanding our unparalleled global footprint.”

Data Remediation Expense Update
During the third quarter, the company was returned to the list of PCI DSS compliant service providers and received reports on compliance covering all of the systems that process, store, transmit or otherwise utilize card data. The company expects that net full-year 2013 expenses for the data intrusion will total approximately $20 million. Based on the assumption that the company will receive an additional $10 million of insurance proceeds in fiscal 2014, the company estimates that the total cost for the processing system intrusion since inception will be approximately $95 million.
David Mangum, Senior Executive Vice President and CFO, stated, “Now that the remediation work is behind us, we can turn our undivided attention to driving the business forward. We are grateful to our customers, partners and the card networks for their support as well as the significant efforts of our team.”

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




2013 Outlook
For the full-year of fiscal 2013, the company continues to expect annual revenue of $2,360 million to $2,400 million, or 7% to 9% growth over fiscal 2012 and expected diluted earnings per share on a cash basis continue to be in a range of $3.64 to $3.71, or growth of 3% to 5% over fiscal 2012.
Annual fiscal 2013 GAAP diluted earnings per share have been revised to include the estimated impact of net intrusion remediation costs of $0.17 per share and are now expected to be in a range of $2.87 to $2.94.
For reconciliation of expected full-year fiscal 2013 Cash Earnings to GAAP and constant currency, see schedule 9.

Conference Call
Global Payments will hold a conference call today, April 2, 2013 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 April 16, 2013.

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 continued security enhancements to our processing system; foreign currency risks which become increasingly relevant as we expand internationally; the effect of current domestic and worldwide economic conditions, including sovereign insolvency situations and a decline in the value of the U.S. dollar, and future performance and integration of acquisitions, and other risks detailed in our SEC filings, including the most recently filed Form 10-K. We undertake no obligation to revise any of these statements to reflect future circumstances or the occurrence of unanticipated events.

Investor contact: investor.relations@globalpay.com Media contact: media.relations@globalpay.com
Jane Elliott     Kay Sharpton                 Amy Corn
770-829-8234      770-829-8870             770-829-8755




SCHEDULE 1
UNAUDITED GAAP CONSOLIDATED STATEMENTS OF INCOME
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands, except per share data)

 
Three Months Ended
 
 
 
Nine Months Ended
 
 
 
February 28, 2013
 
February 29, 2012
 
% Change
 
February 28, 2013
 
February 29, 2012
 
% Change
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
578,746

 
533,539

 
8
 %
 
1,757,571

 
1,606,815

 
9
 %
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
Cost of service
217,465

 
194,218

 
12
 %
 
632,124

 
571,685

 
11
 %
Sales, general and administrative
271,696

 
246,973

 
10
 %
 
829,292

 
737,593

 
12
 %
Processing system intrusion
(1,189
)
 
—

 
NM

 
8,311

 
—

 
NM

 
487,972

 
441,191

 
11
 %
 
1,469,727

 
1,309,278

 
12
 %
 
 
 
 
 

 
 
 
 
 

Operating income
90,774

 
92,348

 
(2
)%
 
287,844

 
297,537

 
(3
)%
 
 
 
 
 
 
 
 
 
 
 

Other income (expense):
 
 
 
 
 
 
 
 
 
 

Interest and other income
2,536

 
2,368

 
7
 %
 
6,706

 
7,128

 
(6
)%
Interest and other expense
(7,063
)
 
(3,698
)
 
91
 %
 
(25,217
)
 
(12,663
)
 
99
 %
 
(4,527
)
 
(1,330
)
 
240
 %
 
(18,511
)
 
(5,535
)
 
234
 %
 
 
 
 
 

 
 
 
 
 

Income before income taxes
86,247

 
91,018

 
(5
)%
 
269,333

 
292,002

 
(8
)%
Provision for income taxes
(23,433
)
 
(25,328
)
 
(7
)%
 
(76,986
)
 
(86,082
)
 
(11
)%
Net income
62,814

 
65,690

 
(4
)%
 
192,347

 
205,920

 
(7
)%
Less: Net income attributable to noncontrolling interests, net of tax
(4,352
)
 
(7,770
)
 
(44
)%
 
(17,027
)
 
(22,845
)
 
(25
)%
Net income attributable to Global Payments
58,462

 
57,920

 
1
 %
 
175,320

 
183,075

 
(4
)%
 
 
 
 
 
 
 
 
 
 
 

Earnings per share attributable to Global Payments:
 
 
 
 
 
 
 
 
 
 

Basic
$
0.75

 
$
0.74

 
1
 %
 
$
2.24

 
$
2.32

 
(3
)%
Diluted
$
0.75

 
$
0.73

 
3
 %
 
$
2.23

 
$
2.30

 
(3
)%
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
 
 
 
 
 
 
 
Basic
77,756

 
78,421

 
 
 
78,364

 
78,937

 
 
Diluted
78,324

 
79,065

 
 
 
78,747

 
79,511

 
 

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
 
 
 
Nine Months Ended
 
 
 
February 28, 2013
 
February 29, 2012
 
% Change
 
February 28, 2013
 
February 29, 2012
 
% Change
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
$
578,746

 
$
533,539

 
8
 %
 
$
1,757,571

 
$
1,606,815

 
9
 %
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
Cost of service
200,935

 
181,338

 
11
 %
 
589,872

 
534,009

 
10
 %
Sales, general and administrative
271,696

 
246,973

 
10
 %
 
828,492

 
737,593

 
12
 %
 
472,631

 
428,311

 
10
 %
 
1,418,364

 
1,271,602

 
12
 %
 
 
 
 
 
 
 
 
 
 
 
 
Operating income
106,115

 
105,228

 
1
 %
 
339,207

 
335,213

 
1
 %
 
 
 
 
 
 
 
 
 
 
 
 
Other income (expense):
 
 
 
 
 
 
 
 
 
 
 
Interest and other income
2,536

 
2,368

 
7
 %
 
6,706

 
7,128

 
(6
)%
Interest and other expense
(7,063
)
 
(3,698
)
 
91
 %
 
(16,834
)
 
(12,663
)
 
33
 %
 
(4,527
)
 
(1,330
)
 
240
 %
 
(10,128
)
 
(5,535
)
 
83
 %
 
 
 
 
 
 
 
 
 
 
 
 
Income before income taxes
101,588

 
103,898

 
(2
)%
 
329,079

 
329,678

 
—
 %
Provision for income taxes
(27,662
)
 
(28,912
)
 
(4
)%
 
(93,601
)
 
(97,163
)
 
(4
)%
Net income
73,926

 
74,986

 
(1
)%
 
235,478

 
232,515

 
1
 %
Less: Net income attributable to noncontrolling interests, net of tax
(5,993
)
 
(9,671
)
 
(38
)%
 
(25,164
)
 
(28,756
)
 
(12
)%
Net income attributable to Global Payments
$
67,933

 
$
65,315

 
4
 %
 
$
210,314

 
$
203,759

 
3
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic earnings per share
$
0.87

 
$
0.83

 
5
 %
 
$
2.68

 
$
2.58

 
4
 %
 
 
 
 
 
 
 
 
 
 
 
 
Diluted earnings per share
$
0.87

 
$
0.83

 
5
 %
 
$
2.67

 
$
2.56

 
4
 %
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
 
 
 
 
 
 
 
Basic
77,756

 
78,421

 
 
 
78,364

 
78,937

 
 
Diluted
78,324

 
79,065

 
 
 
78,747

 
79,511

 
 

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





SCHEDULE 3
SEGMENT INFORMATION
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands)
 
 
Three Months Ended
 
 
 
 
 
 
February 28, 2013
 
February 29, 2012
 
 % Change
 
 
GAAP
 
 Cash Earnings
 
 GAAP
 
 Cash Earnings
 
 GAAP
 
 Cash Earnings
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
United States
 
$
336,354

 
$
336,354

 
$
302,105

 
$
302,105

 
11
 %
 
11
 %
Canada
 
72,218

 
72,218

 
76,677

 
76,677

 
(6
)%
 
(6
)%
North America merchant services
 
408,572

 
408,572

 
378,782

 
378,782

 
8
 %
 
8
 %
 
 
 
 
 
 
 
 
 
 

 
 
Europe
 
130,750

 
130,750

 
116,196

 
116,196

 
13
 %
 
13
 %
Asia-Pacific
 
39,424

 
39,424

 
38,561

 
38,561

 
2
 %
 
2
 %
International merchant services
 
170,174

 
170,174

 
154,757

 
154,757

 
10
 %
 
10
 %
 
 
 
 
 
 
 
 
 
 

 
 
Total revenues
 
$
578,746

 
$
578,746

 
$
533,539

 
$
533,539

 
8
 %
 
8
 %
 
 
 
 
 
 
 
 
 
 

 
 
Operating income:
 
 
 
 
 
 
 
 
 

 
 
North America merchant services
 
$
55,478

 
$
63,210

 
$
62,462

 
$
65,697

 
(11
)%
 
(4
)%
International merchant services
 
51,820

 
60,618

 
47,911

 
57,556

 
8
 %
 
5
 %
Corporate1
 
(16,524
)
 
(17,713
)
 
(18,025
)
 
(18,025
)
 
8
 %
 
2
 %
Operating income
 
$
90,774

 
$
106,115

 
$
92,348

 
$
105,228

 
(2
)%
 
1
 %

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended
 
 
 
 
 
 
February 28, 2013
 
February 29, 2012
 
 % Change
 
 
GAAP
 
Cash Earnings
 
GAAP
 
Cash Earnings
 
GAAP
 
Cash Earnings
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
United States
 
$
1,022,250

 
$
1,022,250

 
$
882,946

 
$
882,946

 
16
 %
 
16
 %
Canada
 
233,885

 
233,885

 
253,419

 
253,419

 
(8
)%
 
(8
)%
North America merchant services
 
1,256,135

 
1,256,135

 
1,136,365

 
1,136,365

 
11
 %
 
11
 %
 
 
 
 
 
 
 
 
 
 

 
 
Europe
 
390,376

 
390,376

 
360,779

 
360,779

 
8
 %
 
8
 %
Asia-Pacific
 
111,060

 
111,060

 
109,671

 
109,671

 
1
 %
 
1
 %
International merchant services
 
501,436

 
501,436

 
470,450

 
470,450

 
7
 %
 
7
 %
 
 
 
 
 
 
 
 
 
 

 
 
Total revenues
 
$
1,757,571

 
$
1,757,571

 
$
1,606,815

 
$
1,606,815

 
9
 %
 
9
 %
 
 
 
 
 
 
 
 
 
 

 
 
Operating income:
 
 
 
 
 
 
 
 
 

 
 
North America merchant services
 
$
189,809

 
$
207,933

 
$
204,893

 
$
213,808

 
(7
)%
 
(3
)%
International merchant services
 
162,947

 
187,819

 
148,063

 
176,824

 
10
 %
 
6
 %
Corporate1
 
(64,912
)
 
(56,545
)
 
(55,419
)
 
(55,419
)
 
(17
)%
 
(2
)%
Operating income
 
$
287,844

 
$
339,207

 
297,537

 
$
335,213

 
(3
)%
 
1
 %

1 Fiscal 2013 GAAP amounts include a processing intrusion credit of $1.2 million for the three months ended February 28, 2013 and processing intrusion costs of $8.3 million for the nine months ended February 28, 2013.

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





SCHEDULE 4
CONSOLIDATED BALANCE SHEETS
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands)
 
February 28, 2013
 
May 31, 2012
 
(Unaudited)
 
 
ASSETS
 
  
 
Current assets:
 
  
 
Cash and cash equivalents
$
682,960

 
$
781,275

Accounts receivable, net of allowances for doubtful accounts of $478 and $532, respectively
166,271

 
182,962

Claims receivable, net of allowances for losses of $3,438 and $3,435, respectively
897

 
1,029

Settlement processing assets
208,471

 
217,994

Inventory
11,349

 
9,864

Deferred income taxes
6,350

 
21,969

Prepaid expenses and other current assets
70,564

 
33,646

Total current assets
1,146,862

 
1,248,739

Goodwill
1,051,614

 
724,687

Other intangible assets, net
412,995

 
290,188

Property and equipment, net of accumulated depreciation of $185,722 and $161,911, respectively
341,573

 
305,848

Deferred income taxes
93,626

 
97,235

Other
29,554

 
21,446

Total assets
$
3,076,224

 
$
2,688,143

 
 
 
 
LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
Lines of credit
$
167,152

 
$
215,391

Current portion of long-term debt
72,332

 
76,420

Accounts payable and accrued liabilities
227,367

 
316,313

Settlement processing obligations
201,190

 
216,878

Income taxes payable
5,787

 
12,283

Total current liabilities
673,828

 
837,285

Long-term debt
883,462

 
236,565

Deferred income taxes
162,389

 
106,644

Other long-term liabilities
71,307

 
62,306

Total liabilities
1,790,986

 
1,242,800

Commitments and contingencies
 
 
 
Redeemable noncontrolling interest
—

 
144,422

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

 
—

Common stock, no par value; 200,000,000 shares authorized; 76,749,164 and 78,551,297 issued and outstanding at February 28, 2013 and May 31, 2012, respectively
—

 
—

Paid-in capital
207,666

 
358,728

Retained earnings
946,195

 
843,456

Accumulated other comprehensive income (loss)
(6,774
)
 
(30,000
)
Total Global Payments shareholders’ equity
1,147,087

 
1,172,184

Noncontrolling interest
138,151

 
128,737

Total equity
1,285,238

 
1,300,921

Total liabilities and equity
$
3,076,224

 
$
2,688,143





SCHEDULE 5
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands)
 
Nine Months Ended
 
February 28, 2013
 
February 29, 2012
Cash flows from operating activities:
 
 
 
Net income
$
192,347

 
$
205,920

Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 
 
 
Depreciation and amortization of property and equipment
40,856

 
35,821

Amortization of acquired intangibles
42,091

 
37,676

Share-based compensation expense
14,063

 
12,796

Provision for operating losses and bad debts
16,681

 
18,833

Deferred income taxes
27,282

 
5,858

Other, net
(3,692
)
 
(949
)
Changes in operating assets and liabilities, net of the effects of acquisitions:
 
 
 
Accounts receivable
17,706

 
10,502

Claims receivable
(9,235
)
 
(11,744
)
Settlement processing assets and obligations, net
(12,028
)
 
(523,802
)
Inventory
(1,535
)
 
(4,773
)
Prepaid expenses and other assets
(34,898
)
 
(2,388
)
Accounts payable and other accrued liabilities
(78,375
)
 
(22,211
)
Income taxes payable
(6,496
)
 
11,615

Net cash provided by (used in) operating activities
204,767

 
(226,846
)
Cash flows from investing activities:
 
 
 
Business, intangible and other asset acquisitions, net of cash acquired
(433,427
)
 
(44,245
)
Capital expenditures
(75,016
)
 
(71,084
)
Net decrease in financing receivables
2,158

 
1,862

Net cash used in investing activities
(506,285
)
 
(113,467
)
Cash flows from financing activities:
 
 
 
Net payments on short-term lines of credit
(48,239
)
 
(55,029
)
Proceeds from issuance of long-term debt
1,085,327

 
71,374

Principal payments under long-term debt
(439,789
)
 
(162,482
)
Payment of debt issuance cost
(3,987
)
 
—

Acquisition of redeemable noncontrolling interests
(242,000
)
 
—

Proceeds from stock issued under share-based compensation plans
9,257

 
9,630

Common stock repurchased - share-based compensation plans
(10,215
)
 
(4,847
)
Repurchase of common stock
(137,653
)
 
(99,604
)
Tax benefit from employee share-based compensation
1,791

 
2,036

Distributions to noncontrolling interest
(13,656
)
 
(24,334
)
Dividends paid
(4,688
)
 
(4,740
)
Net cash provided by (used in) financing activities
196,148

 
(267,996
)
Effect of exchange rate changes on cash
7,055

 
(10,243
)
Decrease in cash and cash equivalents
(98,315
)
 
(618,552
)
Cash and cash equivalents, beginning of the period
781,275

 
1,354,285

Cash and cash equivalents, end of the period
$
682,960

 
$
735,733





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 February 28, 2013
 
 
GAAP
Processing System Intrusion
Cash Earnings Adjustments1
Cash Earnings
Revenues
 
$
578,746

—

—

$
578,746

Operating expenses:
 
 
 
 
 
Cost of service
 
217,465

—

(16,530
)
200,935

Sales, general and administrative
 
271,696

—

—

271,696

Processing system intrusion
 
(1,189
)
1,189

—

—

 
 
487,972

1,189

(16,530
)
472,631

Operating income
 
90,774

(1,189
)
16,530

106,115

Other income (expense):
 
 
 
 
 
Interest and other income
 
2,536

—

—

2,536

Interest and other expense
 
(7,063
)
—

—

(7,063
)
 
 
(4,527
)
—

—

(4,527
)
Income before income taxes
 
86,247

(1,189
)
16,530

101,588

Provision for income taxes
 
(23,433
)
232

(4,461
)
(27,662
)
Net income
 
62,814

(957
)
12,069

73,926

Less: Net income attributable to noncontrolling interests, net of tax
 
(4,352
)
—

(1,641
)
(5,993
)
Net income attributable to Global Payments
 
$
58,462

$
(957
)
$
10,428

$
67,933

Diluted shares
 
78,324

 
 
78,324

Diluted earnings per share
 
$
0.75

$
(0.01
)
$
0.13

$
0.87

 
 
 
 
 
 
 
 
Three Months Ended February 29, 2012
 
 
GAAP
 
Cash Earnings Adjustments1
Cash Earnings
 
 
 
 
 
 
Revenues
 
$
533,539

 
$
—

$
533,539

Operating expenses:
 
 
 
 
 
Cost of service
 
194,218

 
(12,880
)
181,338

Sales, general and administrative
 
246,973

 
—

246,973

 
 
441,191



(12,880
)
428,311

Operating income
 
92,348



12,880

105,228

Other income (expense):
 
 
 
 
 
Interest and other income
 
2,368

 
—

2,368

Interest and other expense
 
(3,698
)
 
—

(3,698
)
 
 
(1,330
)


—

(1,330
)
Income before income taxes
 
91,018



12,880

103,898

Provision for income taxes
 
(25,328
)
 
(3,584
)
(28,912
)
Net income
 
65,690



9,296

74,986

Less: Net income attributable to noncontrolling interests, net of tax
 
(7,770
)
 
(1,901
)
(9,671
)
Net income attributable to Global Payments
 
$
57,920

 
$
7,395

$
65,315

Diluted shares
 
79,065

 
 
79,065

Diluted earnings per share
 
$
0.73

 
$
0.10

$
0.83


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

We supplemented our reporting of net income and the related earnings per share information determined in accordance with GAAP by reporting net income and the related earnings per share for the three months ended February 28, 2013 and February 29, 2012 on a "cash earnings" basis in this earnings release as a measure to help evaluate performance. We calculated February 28, 2013 net income and earnings per share on a cash basis by excluding credits related to the processing system intrusion and acquisition intangible amortization. We calculated February 29, 2012 net income and earnings per share on a cash basis by excluding acquisition intangible amortization from our results. We exclude these items in order to more clearly focus on the factors we believe are pertinent to the daily management of our operations. Our net income and earnings per share reported on a cash earnings basis should be considered in addition to, and not as a substitute for, net income and earnings per share determined in accordance with GAAP. Our measures of net income and earnings per share on a cash earnings basis reflect management's judgment of particular items, and may not be comparable to similarly titled measures reported by other companies.





SCHEDULE 7
RECONCILIATION OF YEAR TO DATE CASH EARNINGS ATTRIBUTABLE TO GLOBAL PAYMENTS TO GAAP
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands, except per share data)
 
 
Nine Months Ended February 28, 2013
 
 
GAAP
Processing System Intrusion
Other2
Cash Earnings Adjustments1
Cash Earnings
Revenues
 
$
1,757,571

—

—

—

$
1,757,571

Operating expenses:
 
 
 
 
 
 
Cost of service
 
632,124

—

(161
)
(42,091
)
589,872

Sales, general and administrative
 
829,292

—

(800
)
—

828,492

Processing system intrusion
 
8,311

(8,311
)
—

—

—

 
 
1,469,727

(8,311
)
(961
)
(42,091
)
1,418,364

Operating income
 
287,844

8,311

961

42,091

339,207

Other income (expense):
 
 
 
 
 
 
Interest and other income
 
6,706

—

—

—

6,706

Interest and other expense
 
(25,217
)
—

8,383

—

(16,834
)
 
 
(18,511
)
—

8,383

—

(10,128
)
Income before income taxes
 
269,333

8,311

9,344

42,091

329,079

Provision for income taxes
 
(76,986
)
(3,048
)
(1,533
)
(12,034
)
(93,601
)
Net income
 
192,347

5,263

7,811

30,057

235,478

Less: Net income attributable to noncontrolling interests, net of tax
 
(17,027
)
 
(3,594
)
(4,543
)
(25,164
)
Net income attributable to Global Payments
 
$
175,320

$
5,263

$
4,217

$
25,514

$
210,314

Diluted shares
 
78,747

 
 
 
78,747

Diluted earnings per share
 
$
2.23

$
0.07

$
0.05

$
0.32

$
2.67

 
 
 
 
 
 
 
 
 
Nine Months Ended February 29, 2012
 
 
GAAP
 
 
Cash Earnings Adjustments1
Cash Earnings
Revenues
 
$
1,606,815

 
 
$
—

$
1,606,815

Operating expenses:
 
 
 
 
 
 
Cost of service
 
571,685

 
 
(37,676
)
534,009

Sales, general and administrative
 
737,593

 
 
—

737,593

 
 
1,309,278

 
 
(37,676
)
1,271,602

Operating income
 
297,537

 
 
37,676

335,213

Other income (expense):
 
 
 
 
 
 
Interest and other income
 
7,128

 
 
—

7,128

Interest and other expense
 
(12,663
)
 
 
—

(12,663
)
 
 
(5,535
)
 
 
—

(5,535
)
Income before income taxes
 
292,002

 
 
37,676

329,678

Provision for income taxes
 
(86,082
)
 
 
(11,081
)
(97,163
)
Net income
 
205,920

 
 
26,595

232,515

Less: Net income attributable to noncontrolling interests, net of tax
 
(22,845
)
 
 
(5,911
)
(28,756
)
Net income attributable to Global Payments
 
$
183,075

 
 
$
20,684

$
203,759

Diluted shares
 
79,511

 
 
 
79,511

Diluted earnings per share
 
$
2.30

 
 
$
0.26

$
2.56


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

2 Represents HSBC's share of GPAP dividends declared and one-time charges primarily related to employee termination benefits.

We supplemented our reporting of net income and the related earnings per share information determined in accordance with GAAP by reporting net income and the related earnings per share for the nine months ended February 28, 2013 and February 29, 2012 on a "cash earnings" basis in this earnings release as a measure to help evaluate performance. We calculated February 28, 2013 net income and earnings per share on a cash basis by excluding costs related to the processing system intrusion, acquisition intangible amortization, the dividend paid to HSBC that was classified as interest expense, and one-time charges related to employee termination benefits. We also adjusted the net income attributable to noncontrolling interests to include HSBC's share of August 2012 through November 2012 GPAP net income. We calculated February 29, 2012 net income and earnings per share on a cash basis by excluding 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 net income and earnings per share reported on a cash earnings basis should be considered in addition to, and not as a substitute for, net income and earnings per share determined in accordance with GAAP. Our measures of net income and earnings per share on a cash earnings basis reflect management's judgment of particular items, and may not be comparable to similarly titled measures reported by other companies.





SCHEDULE 8
RECONCILIATION OF CASH EARNINGS SEGMENT INFORMATION TO GAAP
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands, except per share data)
 
Three Months Ended February 28, 2013
 
Three Months Ended February 29, 2012
 
GAAP
Processing System Intrusion
Other
Cash Earnings Adjustments1
Cash Earnings
 
GAAP
Cash Earnings Adjustments1
Cash Earnings
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
United States
$
336,354

$
—

$
—

$
—

$
336,354

 
$
302,105

$
—

$
302,105

Canada
72,218

—

—

—

72,218

 
76,677

—

76,677

North America merchant services
408,572

—

—

—

408,572

 
378,782

—

378,782

 
 
 
 
 
 
 
 
 
 
Europe
130,750

—

—

—

130,750

 
116,196

—

116,196

Asia-Pacific
39,424

—

—

—

39,424

 
38,561

—

38,561

International merchant services
170,174

—

—

—

170,174

 
154,757

—

154,757

 
 
 


 
 
 
 
 
 
Total revenues
$
578,746

$
—

$
—

$
—

$
578,746

 
$
533,539

$
—

$
533,539

 
 
 
 
 
 
 
 
 
 
Operating income:
 
 
 
 
 
 
 
 
 
North America merchant services
$
55,478

$
—

$
—

$
7,732

$
63,210

 
62,462

$
3,235

$
65,697

International merchant services
51,820

—

—

8,798

60,618

 
47,911

9,645

57,556

Corporate
(16,524
)
(1,189
)
—

—

(17,713
)
 
(18,025
)
—

(18,025
)
Operating income
$
90,774

$
(1,189
)
$
—

$
16,530

$
106,115

 
92,348

$
12,880

$
105,228

 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended February 28, 2013
 
Nine Months Ended February 29, 2012
 
 GAAP
Processing System Intrusion
Other2
Cash Earnings Adjustments1
 Cash Earnings
 
 GAAP
Cash Earnings Adjustments1
 Cash Earnings
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
United States
$
1,022,250

$
—

$
—

$
—

$
1,022,250

 
$
882,946

$
—

$
882,946

Canada
233,885

—

—

—

233,885

 
253,419

—

253,419

North America merchant services
1,256,135

—

—

—

1,256,135

 
1,136,365

—

1,136,365

 
 
 
 
 
 
 
 
 
 
Europe
390,376

—

—

—

390,376

 
360,779

—

360,779

Asia-Pacific
111,060

—

—

—

111,060

 
109,671

—

109,671

International merchant services
501,436

—

—

—

501,436

 
470,450

—

470,450

 
 
 
 
 
 
 
 
 
 
Total revenues
$
1,757,571

$
—

$
—

$
—

$
1,757,571

 
$
1,606,815

$
—

$
1,606,815

 
 
 
 
 
 
 
 
 
 
Operating income:
 
 
 
 
 
 
 
 
 
North America merchant services
$
189,809

$
—

$
905

$
17,219

$
207,933

 
$
204,893

$
8,915

$
213,808

International merchant services
162,947

—

—

24,872

187,819

 
148,063

28,761

176,824

Corporate
(64,912
)
8,311

56

—

(56,545
)
 
(55,419
)
—

(55,419
)
Operating income
$
287,844

$
8,311

$
961

$
42,091

$
339,207

 
$
297,537

$
37,676

$
335,213


1 Represents acquisition intangible amortization expense.
2 Represents one-time charges primarily related to employee termination benefits.




SCHEDULE 9
OUTLOOK SUMMARY
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In millions, except per share data)
 
 
Fiscal 2012 Actual
 
Fiscal 2013 Outlook
 
% Change FY12
 
 
 
 
 
 
 
Revenue Outlook
 
 
 
 
 
 
Constant currency1
 
$
2,204

 
$2,385 to $2,425
 
8% to 10%
Foreign currency impact2
 
 NA

 
$(25)
 
 
Total Revenues
 
$
2,204

 
$2,360 to $2,400
 
7% to 9%
 
 
 
 
 
 
 
EPS Outlook
 
 
 
 
 
 
Constant currency1
 
$
3.53

 
$3.70 to $3.77
 
5% to 7%
Foreign currency impact2
 
 NA

 
$(0.06)
 
 
Cash EPS
 
$
3.53

 
$3.64 to $3.71
 
3% to 5%
Acquisition-related intangible assets, non-recurring items and processing system intrusion3
 
(1.16
)
 
$(0.77)
 
(34)%
GAAP Diluted EPS
 
$
2.37

 
$2.87 to $2.94
 
21% to 24%

We supplement our fiscal 2013 outlook of total revenues and earnings per share information determined in accordance with GAAP by reporting revenues and earnings per share on a “constant currency” basis in this earnings release as a measure to help evaluate performance.  We calculated revenues and earnings per share on a constant currency basis by converting our fiscal 2013 expected revenues and expenses at fiscal 2012 exchange rates.  We exclude the impact of exchange rate fluctuations in order to more clearly focus on the factors we believe are pertinent to the daily management of our operations, and our management uses constant currency measures to evaluate the impact of operational business decisions.  Our revenues and earnings per share reported on a constant currency basis should be considered in addition to, and not as a substitute for, revenues and earnings per share determined in accordance with GAAP. Our measures of revenues and earnings per share on a constant currency basis reflect management's judgment of particular items, and may not be comparable to similarly titled measures reported by other companies.
1 Reflects current period and forecasted results on a pro forma basis as if foreign currency rates did not change from the comparable prior year period.
2 Reflects the impact of actual and forecasted changes in foreign currency rates from the comparable prior year period.
3 Fiscal 2013 reflects $0.60 of acquisition-related intangibles and non-recurring items and $0.17 of processing system intrusion costs. Acquisition-related intangibles accounted and non-recurring items accounted for $0.48 in fiscal 2012 and processing intrusion costs $0.68.
NA=Not Applicable