Global Payments Reports Year-End Earnings

Establishes Fiscal 2014 Growth Expectations
    
Board Authorizes New $250 Million Share Repurchase Program

Announces Expanded Partnership with CaixaBank in Brazil

ATLANTA, July 25, 2013 -- Global Payments Inc. (NYSE: GPN) today announced results for its fiscal fourth quarter and year ended May 31, 2013. The company delivered revenues of $2.4 billion or 8% growth and cash earnings per share of $3.65 or 3% growth over prior year.

Chairman and CEO Paul R. Garcia said, “We are focused on delivering a strong fiscal 2014 with cash earnings per share growth of 8% to 10%. Importantly, this includes a significant step up in annual security costs. Excluding these costs, annual cash earnings per share growth for fiscal 2014 would be 12% to 14%.
“I am also delighted to announce that our Spanish partner, CaixaBank, will be taking a 50% share in Global Payments Brazil. This expands our strategic partnership with CaixaBank and will provide us the opportunity to grow more rapidly in this important region with potential further expansion into other Latin American markets over time,” continued Garcia.

Full-Year 2013 Summary
•
Revenues grew 8% to $2,375.9 million, compared to $2,203.8 million in fiscal 2012.
•
Cash diluted earnings per share1 grew 3% to $3.65, compared to $3.53 in the prior fiscal year.
•
GAAP full-year diluted earnings per share of $2.76, compared to $2.37 diluted earnings per share in the prior year.







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



Fourth Quarter 2013 Summary
•
Revenues grew 4% to $618.4 million, compared to $597.0 million in the fourth quarter of fiscal 2012.
•
Cash diluted earnings per share grew 1% to $0.98, compared to $0.97 in the fourth quarter of fiscal 2012.
•
GAAP diluted earnings per share were $0.53, compared to $0.06 in the fourth quarter of 2012.

2014 Outlook
For the full-year of fiscal 2014, the company expects annual revenue of $2.51 billion to $2.56 billion, or 6% to 8% growth over fiscal 2013 and diluted earnings per share on a cash basis of $3.93 to $4.00, reflecting growth of 8% to 10% over fiscal 2013. Annual fiscal 2014 GAAP diluted earnings per share is expected to be $3.35 to $3.42.

New $250 Million Share Repurchase Authorization
David E. Mangum, Senior Executive Vice President and CFO, stated, “I am pleased that the Board of Directors approved a new $250 million share repurchase authorization of Global Payments' stock. We intend to complete our previous $300 million share authorization in the first quarter of fiscal 2014, and the benefit from the original authorization is factored into our outlook for fiscal 2014.”

Under the company's 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. The company's expectations exclude the impact of any potential share repurchases under the new $250 million authorization.

Conference Call
Global Payments will hold a conference call today, July 25, 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 August 8, 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, Brazil, 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    
Amy Corn
770-829-8234
770-829-8755






 




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,
 
 
 
2013
 
2012
 
% Change
 
2013
 
2012
 
% Change
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
$
618,352

 
$
597,032

 
4
 %
 
$
2,375,923

 
$
2,203,847

 
8
 %
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
Cost of service
229,951

 
213,071

 
8
 %
 
862,075

 
784,756

 
10
 %
Sales, general and administrative
290,568

 
289,712

 
—
 %
 
1,119,860

 
1,027,304

 
9
 %
Processing system intrusion
28,464

 
84,438

 
(66
)%
 
36,775

 
84,438

 
(56
)%
 
548,983

 
587,221

 
(7
)%
 
2,018,710

 
1,896,498

 
6
 %
 
 
 
 
 

 
 
 
 
 

Operating income
69,369

 
9,811

 
607
 %
 
357,213

 
307,349

 
16
 %
 
 
 
 
 
 
 
 
 
 
 

Other income (expense):
 
 
 
 
 
 
 
 
 
 

Interest and other income
3,647

 
2,818

 
29
 %
 
10,353

 
9,946

 
4
 %
Interest and other expense
(8,065
)
 
(4,185
)
 
93
 %
 
(33,282
)
 
(16,848
)
 
98
 %
 
(4,418
)
 
(1,367
)
 
223
 %
 
(22,929
)
 
(6,902
)
 
232
 %
 
 
 
 
 

 
 
 
 
 

Income before income taxes
64,951

 
8,444

 
669
 %
 
334,284

 
300,447

 
11
 %
(Provision) benefit for income taxes
(18,585
)
 
3,202

 
(680
)%
 
(95,571
)
 
(82,881
)
 
15
 %
Net income
46,366

 
11,646

 
298
 %
 
238,713

 
217,566

 
10
 %
Less: Net income attributable to noncontrolling interests, net of tax
(5,561
)
 
(6,560
)
 
(15
)%
 
(22,588
)
 
(29,405
)
 
(23
)%
Net income attributable to Global Payments
$
40,805

 
$
5,086

 
702
 %
 
$
216,125

 
$
188,161

 
15
 %
 
 
 
 
 
 
 
 
 
 
 

Earnings per share attributable to Global Payments:
 
 
 
 
 
 
 
 
 
 

Basic
$
0.54

 
$
0.06

 
800
 %
 
$
2.78

 
$
2.39

 
16
 %
Diluted
$
0.53

 
$
0.06

 
783
 %
 
$
2.76

 
$
2.37

 
16
 %
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
 
 
 
 
 
 
 
Basic
76,034

 
78,539

 
 
 
77,767

 
78,829

 
 
Diluted
76,651

 
79,192

 
 
 
78,227

 
79,431

 
 









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,
 
 
 
2013
 
2012
 
% Change
 
2013
 
2012
 
% Change
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
$
618,352

 
$
597,032

 
4
 %
 
$
2,375,923

 
$
2,203,847

 
8
 %
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
Cost of service
214,080

 
200,051

 
7
 %
 
803,952

 
734,060

 
10
 %
Sales, general and administrative
285,017

 
274,390

 
4
 %
 
1,113,509

 
1,011,982

 
10
 %
 
499,097

 
474,441

 
5
 %
 
1,917,461

 
1,746,042

 
10
 %
 
 
 
 
 
 
 
 
 
 
 
 
Operating income
119,255

 
122,591

 
(3
)%
 
458,462

 
457,805

 
—
 %
 
 
 
 
 
 
 
 
 
 
 
 
Other income (expense):
 
 
 
 
 
 
 
 
 
 
 
Interest and other income
3,647

 
2,818

 
29
 %
 
10,353

 
9,946

 
4
 %
Interest and other expense
(8,065
)
 
(4,185
)
 
93
 %
 
(24,899
)
 
(16,848
)
 
48
 %
 
(4,418
)
 
(1,367
)
 
223
 %
 
(14,546
)
 
(6,902
)
 
111
 %
 
 
 
 
 
 
 
 
 
 
 
 
Income before income taxes
114,837

 
121,224

 
(5
)%
 
443,916

 
450,903

 
(2
)%
Provision for income taxes
(32,693
)
 
(36,318
)
 
(10
)%
 
(126,294
)
 
(133,455
)
 
(5
)%
Net income
82,144

 
84,906

 
(3
)%
 
317,622

 
317,448

 
—
 %
Less: Net income attributable to noncontrolling interests, net of tax
(7,042
)
 
(8,437
)
 
(17
)%
 
(32,206
)
 
(37,193
)
 
(13
)%
Net income attributable to Global Payments
$
75,102

 
$
76,469

 
(2
)%
 
$
285,416

 
$
280,255

 
2
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic earnings per share
$
0.99

 
$
0.97

 
2
 %
 
$
3.67

 
$
3.56

 
3
 %
 
 
 
 
 
 
 
 
 
 
 
 
Diluted earnings per share
$
0.98

 
$
0.97

 
1
 %
 
$
3.65

 
$
3.53

 
3
 %
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
 
 
 
 
 
 
 
Basic
76,034

 
78,539

 
 
 
77,767

 
78,829

 
 
Diluted
76,651

 
79,192

 
 
 
78,227

 
79,431

 
 

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 May 31,
 
 
 
 
 
 
2013
 
2012
 
 % Change
 
 
GAAP
 
 Cash Earnings
 
 GAAP
 
 Cash Earnings
 
 GAAP
 
 Cash Earnings
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
United States
 
$
372,425

 
$
372,425

 
$
351,872

 
$
351,872

 
6
 %
 
6
 %
Canada
 
77,115

 
77,115

 
79,015

 
79,015

 
(2
)%
 
(2
)%
North America merchant services
 
449,540

 
449,540

 
430,887

 
430,887

 
4
 %
 
4
 %
 
 
 
 
 
 
 
 
 
 

 
 
Europe
 
132,217

 
132,217

 
128,521

 
128,521

 
3
 %
 
3
 %
Asia-Pacific
 
36,595

 
36,595

 
37,624

 
37,624

 
(3
)%
 
(3
)%
International merchant services
 
168,812

 
168,812

 
166,145

 
166,145

 
2
 %
 
2
 %
 
 
 
 
 
 
 
 
 
 

 
 
Total revenues
 
$
618,352

 
$
618,352

 
$
597,032

 
$
597,032

 
4
 %
 
4
 %
 
 
 
 
 
 
 
 
 
 

 
 
Operating income (loss) for segments:
 
 
 
 
 
 
 
 
 

 
 
North America merchant services
 
$
69,101

 
$
80,229

 
$
76,412

 
$
81,194

 
(10
)%
 
(1
)%
International merchant services
 
48,295

 
57,460

 
48,074

 
61,664

 
—
 %
 
(7
)%
Corporate1
 
(48,027
)
 
(18,434
)
 
(114,675
)
 
(20,267
)
 
58
 %
 
9
 %
Operating income
 
$
69,369

 
$
119,255

 
$
9,811

 
$
122,591

 
607
 %
 
(3
)%

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Year Ended May 31,
 
 
 
 
 
 
2013
 
2012
 
 % Change
 
 
GAAP
 
Cash Earnings
 
GAAP
 
Cash Earnings
 
GAAP
 
Cash Earnings
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
United States
 
$
1,394,675

 
$
1,394,675

 
$
1,234,818

 
$
1,234,818

 
13
 %
 
13
 %
Canada
 
311,000

 
311,000

 
332,434

 
332,434

 
(6
)%
 
(6
)%
North America merchant services
 
1,705,675

 
1,705,675

 
1,567,252

 
1,567,252

 
9
 %
 
9
 %
 
 
 
 
 
 
 
 
 
 

 
 
Europe
 
522,593

 
522,593

 
489,300

 
489,300

 
7
 %
 
7
 %
Asia-Pacific
 
147,655

 
147,655

 
147,295

 
147,295

 
—
 %
 
—
 %
International merchant services
 
670,248

 
670,248

 
636,595

 
636,595

 
5
 %
 
5
 %
 
 
 
 
 
 
 
 
 
 

 
 
Total revenues
 
$
2,375,923

 
$
2,375,923

 
$
2,203,847

 
$
2,203,847

 
8
 %
 
8
 %
 
 
 
 
 
 
 
 
 
 

 
 
Operating income (loss) for segments:
 
 
 
 
 
 
 
 
 

 
 
North America merchant services
 
$
258,910

 
$
288,162

 
$
281,305

 
$
295,003

 
(8
)%
 
(2
)%
International merchant services
 
211,242

 
245,279

 
196,137

 
238,487

 
8
 %
 
3
 %
Corporate1
 
(112,939
)
 
(74,979
)
 
(170,093
)
 
(75,685
)
 
34
 %
 
1
 %
Operating income
 
$
357,213

 
$
458,462

 
307,349

 
$
457,805

 
16
 %
 
—
 %

1 GAAP results include data intrusion charges of $28.5 million and $36.8 million for the three and twelve months ended  May 31, 2013 respectively and $84.4 million for the three and twelve months ended May 31, 2012.
 

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




SCHEDULE 4
CONSOLIDATED BALANCE SHEETS
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands except share data)
 
May 31, 2013
 
May 31, 2012
 
 
 
 
ASSETS
 
  
 
Current assets:
 
  
 
Cash and cash equivalents
$
680,470

 
$
781,275

Accounts receivable, net of allowances for doubtful accounts of $509 and $532, respectively
189,435

 
182,962

Claims receivable, net of allowances for losses of $3,144 and $3,435, respectively
1,156

 
1,029

Settlement processing assets
259,204

 
217,994

Inventory
11,057

 
9,864

Deferred income taxes
6,485

 
21,969

Prepaid expenses and other current assets
66,685

 
33,646

Total current assets
1,214,492

 
1,248,739

Goodwill
1,044,222

 
724,687

Other intangible assets, net of accumulated amortization of $290,660 and $235,296, respectively
400,848

 
290,188

Property and equipment, net of accumulated depreciation of $156,948 and $161,911, respectively
348,064

 
305,848

Deferred income taxes
95,178

 
97,235

Other
22,252

 
21,446

Total assets
$
3,125,056

 
$
2,688,143

 
 
 
 
LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
Lines of credit
$
187,461

 
$
215,391

Current portion of long-term debt
72,335

 
76,420

Accounts payable and accrued liabilities
262,890

 
316,313

Settlement processing obligations
162,558

 
216,878

Income taxes payable
18,870

 
12,283

Total current liabilities
704,114

 
837,285

Long-term debt
891,134

 
236,565

Deferred income taxes
170,723

 
106,644

Other long-term liabilities
72,478

 
62,306

Total liabilities
1,838,449

 
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; 75,426,099 and 78,551,297 issued and outstanding at May 31, 2013 and May 31, 2012, respectively
—

 
—

Paid-in capital
202,396

 
358,728

Retained earnings
958,751

 
843,456

Accumulated other comprehensive income (loss)
(15,062
)
 
(30,000
)
Total Global Payments shareholders’ equity
1,146,085

 
1,172,184

Noncontrolling interest
140,522

 
128,737

Total equity
1,286,607

 
1,300,921

Total liabilities and equity
$
3,125,056

 
$
2,688,143




SCHEDULE 5
CONSOLIDATED STATEMENTS OF CASH FLOWS
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands)
 
Year Ended May 31,
 
2013
 
2012
Cash flows from operating activities:
 
 
 
Net income
$
238,713

 
$
217,566

Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 
 
 
Depreciation and amortization of property and equipment
55,023

 
48,403

Amortization of acquired intangibles
56,765

 
50,696

Share-based compensation expense
18,427

 
16,391

Provision for operating losses and bad debts
21,659

 
22,417

Deferred income taxes
33,112

 
(19,498
)
Other, net
(4,878
)
 
(2,775
)
Changes in operating assets and liabilities, net of the effects of acquisitions:
 
 
 
Accounts receivable
(5,458
)
 
(16,422
)
Claims receivable
(11,858
)
 
(13,519
)
Settlement processing assets and obligations, net
(104,007
)
 
(568,335
)
Inventory
(1,187
)
 
(2,394
)
Prepaid expenses and other assets
(22,978
)
 
3,511

Accounts payable and other accrued liabilities
(39,374
)
 
85,875

Income taxes payable
6,587

 
4,609

Net cash provided by (used in) operating activities
240,546

 
(173,475
)
Cash flows from investing activities:
 
 
 
Business, intangible and other asset acquisitions, net of cash acquired
(434,016
)
 
(44,274
)
Capital expenditures
(98,590
)
 
(109,876
)
Net decrease in financing receivables
2,812

 
2,565

    Proceeds from sale of investment and contractual rights
1,227

 
1,152

Net cash used in investing activities
(528,567
)
 
(150,433
)
Cash flows from financing activities:
 
 
 
Net (payments) borrowings on short-term lines of credit
(27,930
)
 
(55,354
)
Proceeds from issuance of long-term debt
1,135,327

 
146,374

Principal payments under long-term debt
(482,349
)
 
(184,235
)
Acquisition of redeemable noncontrolling interest
(242,000
)
 
—

Payment of debt issuance cost
(3,987
)
 
—

Proceeds from stock issued under employee stock plans
10,543

 
11,446

Common stock repurchased - share-based compensation plans
(10,244
)
 
(4,861
)
Repurchase of common stock
(175,297
)
 
(99,604
)
Tax benefit from employee share-based compensation
1,863

 
1,441

Distributions to noncontrolling interest
(16,206
)
 
(27,082
)
Dividends paid
(6,198
)
 
(6,311
)
Net cash provided by (used in) financing activities
183,522

 
(218,186
)
Effect of exchange rate changes on cash
3,694

 
(30,916
)
Decrease in cash and cash equivalents
(100,805
)
 
(573,010
)
Cash and cash equivalents, beginning of the period
781,275

 
1,354,285

Cash and cash equivalents, end of the period
$
680,470

 
$
781,275




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, 2013
 
 
GAAP
Processing System Intrusion
Other1
Cash Earnings Adjustments2
Cash Earnings
Revenues
 
$
618,352

$
—

$
—

$
—

$
618,352

Operating expenses:
 
 
 
 
 
 
Cost of service
 
229,951

—

(1,197
)
(14,674
)
214,080

Sales, general and administrative
 
290,568

—

(5,551
)
—

285,017

Processing system intrusion
 
28,464

(28,464
)
 
—

—

 
 
548,983

(28,464
)
(6,748
)
(14,674
)
499,097

Operating income
 
69,369

28,464

6,748

14,674

119,255

Other income (expense):
 
 
 
 
 
 
Interest and other income
 
3,647

—

—

—

3,647

Interest and other expense
 
(8,065
)
—

—

—

(8,065
)
 
 
(4,418
)
—

—

—

(4,418
)
Income before income taxes
 
64,951

28,464

6,748

14,674

114,837

Provision for income taxes
 
(18,585
)
(8,865
)
(1,053
)
(4,190
)
(32,693
)
Net income
 
46,366

19,599

5,695

10,484

82,144

Less: Net income attributable to noncontrolling interests, net of tax
 
(5,561
)
—

—

(1,481
)
(7,042
)
Net income attributable to Global Payments
 
$
40,805

$
19,599

$
5,695

$
9,003

$
75,102

Diluted shares
 
76,651

 
 
 
76,651

Diluted earnings per share
 
$
0.53

$
0.26

$
0.07

$
0.12

$
0.98

 
 
 
 
 
 
 
 
 
Three Months Ended May 31, 2012
 
 
GAAP
Processing System Intrusion
Other1
Cash Earnings Adjustments2
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 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
)
Net income
 
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 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


1 Represents one-time charges primarily related to employee termination benefits and certain contract settlement and related costs.

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

We supplemented our reporting of income and the related earnings per share information determined in accordance with GAAP by reporting income and the related earnings per share for the three months ended May 31, 2013 and 2012 on a "cash earnings" basis in this earnings release as a measure to help evaluate performance. We calculated income 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 and certain contract settlement and related costs. 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 and earnings per share reported on a cash earnings basis should be considered in addition to, and not as a substitute for, income and earnings per share determined in accordance with GAAP. Our measures of 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)
 
 
Year Ended May 31, 2013
 
 
GAAP
Processing System Intrusion
Other1
Cash Earnings Adjustments2
Cash Earnings
Revenues
 
$
2,375,923

—

—

—

$
2,375,923

Operating expenses:
 
 
 
 
 
 
Cost of service
 
862,075

—

(1,358
)
(56,765
)
803,952

Sales, general and administrative
 
1,119,860

—

(6,351
)
—

1,113,509

Processing system intrusion
 
36,775

(36,775
)
—

—

—

 
 
2,018,710

(36,775
)
(7,709
)
(56,765
)
1,917,461

Operating income
 
357,213

36,775

7,709

56,765

458,462

Other income (expense):
 
 
 
 
 
 
Interest and other income
 
10,353

—

—

—

10,353

Interest and other expense
 
(33,282
)
—

8,383

—

(24,899
)
 
 
(22,929
)
—

8,383

—

(14,546
)
Income before income taxes
 
334,284

36,775

16,092

56,765

443,916

Provision for income taxes
 
(95,571
)
(11,913
)
(2,586
)
(16,224
)
(126,294
)
Net income
 
238,713

24,862

13,506

40,541

317,622

Less: Net income attributable to noncontrolling interests, net of tax
 
(22,588
)
—

(3,594
)
(6,024
)
(32,206
)
Net income attributable to Global Payments
 
$
216,125

$
24,862

$
9,912

$
34,517

$
285,416

Diluted shares
 
78,227

 
 
 
78,227

Diluted earnings per share
 
$
2.76

$
0.32

$
0.13

$
0.44

$
3.65

 
 
 
 
 
 
 
 
 
Year Ended May 31, 2012
 
 
GAAP
Processing System Intrusion
Other1
Cash Earnings Adjustments2
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 before income taxes
 
300,447

84,438

15,322

50,696

450,903

Provision for income taxes
 
(82,881
)
(30,640
)
(5,034
)
(14,900
)
(133,455
)
Net income
 
217,566

53,798

10,288

35,796

317,448

Less: Net income attributable to noncontrolling interests, net of tax
 
(29,405
)
—

—

(7,788
)
(37,193
)
Net income attributable to Global Payments
 
$
188,161

53,798

10,288

$
28,008

$
280,255

Diluted shares
 
79,431

 
 
 
79,431

Diluted earnings per share
 
$
2.37

$
0.68

$
0.13

$
0.35

$
3.53


1 Represents one-time charges primarily related to employee termination benefits and certain contract settlement and related costs.
 
2 Represents adjustments to cost of service to exclude acquisition intangible amortization expense from net income and the related income tax benefit.

We supplemented our reporting of income and the related earnings per share information determined in accordance with GAAP by reporting income and the related earnings per share for the three months ended May 31, 2013 and 2012 on a "cash earnings" basis in this earnings release as a measure to help evaluate performance. We calculated income 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 and certain contract settlement and related costs. 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 and earnings per share reported on a cash earnings basis should be considered in addition to, and not as a substitute for, income and earnings per share determined in accordance with GAAP. Our measures of 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 May 31,
 
2013
2012
 
GAAP
Processing System Intrusion
Other1
Cash Earnings Adjustments2
Cash Earnings
 
GAAP
Processing System Intrusion
Other1
Cash Earnings Adjustments2
Cash Earnings
 
 
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
United States
$
372,425

$
—

$
—

$
—

$
372,425

 
$
351,872

$
—

$
—

$
—

$
351,872

Canada
77,115

—

—

—

77,115

 
79,015

—

—

—

79,015

North America merchant services
449,540

—

—

—

449,540

 
430,887

—

—

—

430,887

 
 
 
 
 
 
 
 
 
 
 
 
Europe
132,217

—

—

—

132,217

 
128,521

—

—

—

128,521

Asia-Pacific
36,595

—

—

—

36,595

 
37,624

—

—

—

37,624

International merchant services
168,812

—

—

—

168,812

 
166,145

—

—

—

166,145

 
 
 


 
 
 
 
 
 
 
 
Total revenues
$
618,352

$
—

$
—

$
—

$
618,352

 
$
597,032

$
—

$
—

$
—

$
597,032

 
 
 
 
 
 
 
 
 
 
 
 
Operating income:
 
 
 
 
 
 
 
 
 
 
 
North America merchant services
$
69,101

$
—

$
4,688

$
6,440

$
80,229

 
$
76,412

$
—

$
1,538

$
3,244

$
81,194

International merchant services
48,295

53

878

8,234

57,460

 
48,074

—

3,814

9,776

61,664

Corporate
(48,027
)
28,411

1,182

—

(18,434
)
 
(114,675
)
84,438

9,970

—

(20,267
)
Operating income
$
69,369

$
28,464

$
6,748

$
14,674

$
119,255

 
$
9,811

$
84,438

$
15,322

$
13,020

$
122,591

 
 
 
 
 
 
 
 
 
 
 
 
 
Year Ended May 31,
 
2013
2012
 
 GAAP
Processing System Intrusion
Other1
Cash Earnings Adjustments2
 Cash Earnings
 
 GAAP
Processing System Intrusion
Other1
Cash Earnings Adjustments2
 Cash Earnings
 
 
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
United States
$
1,394,675

$
—

$
—

$
—

$
1,394,675

 
$
1,234,818

$
—

 
$
—

$
1,234,818

Canada
311,000

—

—

—

311,000

 
332,434

—

 
—

332,434

North America merchant services
1,705,675

—

—

—

1,705,675

 
1,567,252

—

—

—

1,567,252

 
 
 
 
 
 
 
 
 
 
 
 
Europe
522,593

—

—

—

522,593

 
489,300

—

—

—

489,300

Asia-Pacific
147,655

—

—

—

147,655

 
147,295

—

—

—

147,295

International merchant services
670,248

—

—

—

670,248

 
636,595

—

—

—

636,595

 
 
 
 
 
 
 
 
 
 
 
 
Total revenues
$
2,375,923

$
—

$
—

$
—

$
2,375,923

 
$
2,203,847

$
—

$
—

$
—

$
2,203,847

 
 
 
 
 
 
 
 
 
 
 
 
Operating income:
 
 
 
 
 
 
 
 
 
 
 
North America merchant services
$
258,910

$
—

$
5,593

$
23,659

$
288,162

 
$
281,305

$
—

$
1,538

$
12,160

$
295,003

International merchant services
211,242

53

878

33,106

245,279

 
196,137

—

3,814

38,536

238,487

Corporate
(112,939
)
36,722

1,238

—

(74,979
)
 
(170,093
)
84,438

9,970

—

(75,685
)
Operating income
$
357,213

$
36,775

$
7,709

$
56,765

$
458,462

 
$
307,349

$
84,438

$
15,322

$
50,696

$
457,805


1 Represents one-time charges primarily related to employee termination benefits and certain contract settlement and related costs.

2 Represents acquisition intangible amortization expense.



SCHEDULE 9
OUTLOOK SUMMARY
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In millions, except per share data)
 
 
Fiscal 2013 Actual
 
Fiscal 2014 Outlook
 
% Change FY13
 
 
 
 
 
 
 
Revenue Outlook
 
 
 
 
 
 
Total Revenues
 
$
2,376

 
$2,510 to $2,560

 
6% to 8%

 
 
 
 
 
 
 
EPS Outlook
 
 
 
 
 
 
Cash EPS
 
$
3.65

 
$3.93 to $4.00

 
8% to 10%

Acquisition-related intangible assets, non-recurring items and processing system intrusion1
 
(0.89
)
 
$
(0.58
)
 
35
%
GAAP Diluted EPS
 
$
2.76

 
 $3.35 to $3.42

 
21% to 24%


We supplemented our reporting of income and the related earnings per share information determined in accordance with GAAP by reporting income and the related earnings per share on a "cash earnings" basis in this earnings release as a measure to help evaluate performance. We calculated income 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 and certain contract settlement and related costs. 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 and earnings per share reported on a cash earnings basis should be considered in addition to, and not as a substitute for, income and earnings per share determined in accordance with GAAP. Our measures of 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.
1 Fiscal 2014 reflects $0.48 of acquisition-related intangibles and $0.10 of non-recurring items and processing system intrusion costs. Acquisition-related intangibles accounted and non-recurring items accounted for $0.57 in fiscal 2013 and processing intrusion cots were $0.32.