Global Payments Reports Fourth Quarter and Year-End 2014 Earnings
Establishes Fiscal 2015 Cash Earnings Per Share Growth Expectations of 10% to 12%
Board Expands Total Share Repurchase Authorization to $320 Million

ATLANTA, July 29, 2014 -- Global Payments Inc. (NYSE: GPN), one of the largest worldwide providers of payment solutions, today announced results for its fiscal fourth quarter and year ended May 31, 2014.

“I am pleased with Global Payments’ strong financial performance for the fourth quarter and full fiscal year. During fiscal 2014, we grew cash earnings per share 13 percent, returned over $450 million dollars to shareholders and completed a $420 million acquisition to further diversify distribution in our largest market and complement our focus on differentiated technologies. We achieved key execution milestones, including meaningfully expanding our integrated solutions business in the U.S., delivering solid performance in Canada and adding to our direct distribution channels in Asia,” said Jeff Sloan, Chief Executive Officer of Global Payments Inc. “In fiscal 2015, we will continue to focus on our direct distribution strategy by leveraging our global technology platforms to deliver new, innovative products and services, driving operating margin expansion and delivering double-digit cash earnings per share growth.”

Full-Year 2014 Summary
•
Revenues grew 8% to $2.55 billion, compared to $2.38 billion in fiscal 2013.
•
Cash diluted earnings per share1 grew 13% to $4.12, compared to $3.65 in the prior fiscal year.
•
GAAP full-year diluted earnings per share of $3.37, compared to $2.76 diluted earnings per share in the prior year.

Fourth Quarter 2014 Summary
•
Revenues grew 9% to $674.0 million, compared to $618.4 million in the fourth quarter of fiscal 2013.
•
Cash diluted earnings per share grew 11% to $1.09, compared to $0.98 in the fourth quarter of fiscal 2013.
•
GAAP diluted earnings per share were $0.72, compared to $0.53 in the fourth quarter of 2013.

2015 Outlook
For the full year of fiscal 2015, the company expects annual revenue of $2.69 billion to $2.76 billion, or 6% to 8% growth over fiscal 2014. The company also expects annual diluted earnings per share on a cash basis of $4.52 to $4.62, reflecting growth of 10% to 12% over fiscal 2014. Annual fiscal 2015 GAAP diluted earnings per share is expected to be $3.76 to $3.86.


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

Additional Share Repurchase Authorization
Global Payments’ board of directors also expanded its share repurchase authorization by an incremental $200 million, bringing its total current authorization to $320 million. Under the company’s new authorization, 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.

Conference Call
Global Payments will hold a conference call today, July 29, 2014, 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 on the Global Payments website through August 12, 2014.

About Global Payments
Global Payments Inc. is one of the largest worldwide providers of payment solutions for merchants, value added resellers, enterprise software providers, financial institutions, government agencies, multi-national corporations and independent sales organizations located throughout North America, South America, Europe and the Asia-Pacific region.  Global Payments, a Fortune 1000 company, offers a comprehensive line of solutions and services 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 our potential failure to safeguard our data; our ability to maintain Visa and MasterCard registration and financial institution sponsorship; our reliance on financial institutions to provide clearing services in connection with our settlement activities; our potential failure to comply with card network requirements; increased merchant, referral partner or ISO attrition; our ability to increase our share of existing markets and expand into new markets; political, economic and regulatory changes in the foreign countries in which we operate; system interruptions in service; increases in credit card network fees; future performance, integration and conversion of acquired operations; and other risk factors presented in our Annual Report on Form 10-K for the fiscal year ended May 31, 2014, which we advise you to review. 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,
 
 
 
2014
 
2013
 
% Change
 
2014
 
2013
 
% Change
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
$
673,977

 
$
618,352

 
9.0
 %
 
$
2,554,236

 
$
2,375,923

 
7.5
%
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
Cost of service
253,373

 
229,951

 
10.2
 %
 
952,225

 
862,075

 
10.5
%
Sales, general and administrative
331,687

 
290,568

 
14.2
 %
 
1,203,512

 
1,119,860

 
7.5
%
Processing system intrusion
—

 
28,464

 
NM

 
(7,000
)
 
36,775

 
NM

 
585,060

 
548,983

 
6.6
 %
 
2,148,737

 
2,018,710

 
6.4
%
 
 
 
 
 

 
 
 
 
 

Operating income
88,917

 
69,369

 
28.2
 %
 
405,499

 
357,213

 
13.5
%
 
 
 
 
 
 
 
 
 
 
 

Other income (expense):
 
 
 
 
 
 
 
 
 
 

Interest and other income
2,093

 
3,647

 
(42.6
)%
 
13,663

 
10,353

 
32.0
%
Interest and other expense
(9,451
)
 
(8,065
)
 
17.2
 %
 
(41,812
)
 
(33,282
)
 
25.6
%
 
(7,358
)
 
(4,418
)
 
66.5
 %
 
(28,149
)
 
(22,929
)
 
22.8
%
 
 
 
 
 

 
 
 
 
 

Income before income taxes
81,559

 
64,951

 
25.6
 %
 
377,350

 
334,284

 
12.9
%
Provision for income taxes
(23,293
)
 
(18,585
)
 
25.3
 %
 
(107,398
)
 
(95,571
)
 
12.4
%
Net income
58,266

 
46,366

 
25.7
 %
 
269,952

 
238,713

 
13.1
%
Less: Net income attributable to noncontrolling interests, net of income tax
(6,641
)
 
(5,561
)
 
19.4
 %
 
(24,666
)
 
(22,588
)
 
9.2
%
Net income attributable to Global Payments
$
51,625

 
$
40,805

 
26.5
 %
 
$
245,286

 
$
216,125

 
13.5
%
 
 
 
 
 
 
 
 
 
 
 

Earnings per share attributable to Global Payments:
 
 
 
 
 
 
 
 
 
 

Basic
$
0.73

 
$
0.54

 
35.2
 %
 
$
3.40

 
$
2.78

 
22.3
%
Diluted
$
0.72

 
$
0.53

 
35.8
 %
 
$
3.37

 
$
2.76

 
22.1
%
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
 
 
 
 
 
 
 
Basic
70,707

 
76,034

 
 
 
72,119

 
77,767

 
 
Diluted
71,322

 
76,651

 
 
 
72,688

 
78,227

 
 


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,
 
 
 
2014
 
2013
 
% Change
 
2014
 
2013
 
% Change
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
$
673,977

 
$
618,352

 
9.0
 %
 
$
2,554,236

 
$
2,375,923

 
7.5
 %
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
Cost of service
234,856

 
214,080

 
9.7
 %
 
889,576

 
803,952

 
10.7
 %
Sales, general and administrative
317,085

 
285,017

 
11.3
 %
 
1,184,066

 
1,113,509

 
6.3
 %
 
551,941

 
499,097

 
10.6
 %
 
2,073,642

 
1,917,461

 
8.1
 %
 
 
 
 
 
 
 
 
 
 
 
 
Operating income
122,036

 
119,255

 
2.3
 %
 
480,594

 
458,462

 
4.8
 %
 
 
 
 
 
 
 
 
 
 
 
 
Other income (expense):
 
 
 
 
 
 
 
 
 
 
 
Interest and other income
2,093

 
3,647

 
(42.6
)%
 
11,540

 
10,353

 
11.5
 %
Interest and other expense
(8,110
)
 
(8,065
)
 
0.6
 %
 
(32,327
)
 
(24,899
)
 
29.8
 %
 
(6,017
)
 
(4,418
)
 
36.2
 %
 
(20,787
)
 
(14,546
)
 
42.9
 %
 
 
 
 
 
 
 
 
 
 
 
 
Income before income taxes
116,019

 
114,837

 
1.0
 %
 
459,807

 
443,916

 
3.6
 %
Provision for income taxes
(30,249
)
 
(32,693
)
 
(7.5
)%
 
(130,181
)
 
(126,294
)
 
3.1
 %
Net income
85,770

 
82,144

 
4.4
 %
 
329,626

 
317,622

 
3.8
 %
Less: Net income attributable to noncontrolling interests, net of income tax
(8,075
)
 
(7,042
)
 
14.7
 %
 
(30,295
)
 
(32,206
)
 
(5.9
)%
Net income attributable to Global Payments
$
77,695

 
$
75,102

 
3.5
 %
 
$
299,331

 
$
285,416

 
4.9
 %
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per share attributable to Global Payments:
 
 
 
 
 
 
 
 
 
 
 
Basic
$
1.10

 
$
0.99

 
11.1
 %
 
$
4.15

 
$
3.67

 
13.1
 %
Diluted
$
1.09

 
$
0.98

 
11.2
 %
 
$
4.12

 
$
3.65

 
12.9
 %
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
 
 
 
 
 
 
 
Basic
70,707

 
76,034

 
 
 
72,119

 
77,767

 
 
Diluted
71,322

 
76,651

 
 
 
72,688

 
78,227

 
 

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,
 
 
 
 
 
 
2014
 
2013
 
 % Change
 
 
GAAP
 
 Cash Earnings
 
 GAAP
 
 Cash Earnings
 
 GAAP
 
 Cash Earnings
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
United States
 
$
407,153

 
$
407,153

 
$
372,425

 
$
372,425

 
9.3
 %
 
9.3
 %
Canada
 
74,954

 
74,954

 
77,115

 
77,115

 
(2.8
)%
 
(2.8
)%
North America merchant services
 
482,107

 
482,107

 
449,540

 
449,540

 
7.2
 %
 
7.2
 %
 
 
 
 
 
 
 
 
 
 

 
 
Europe
 
153,577

 
153,577

 
132,217

 
132,217

 
16.2
 %
 
16.2
 %
Asia-Pacific
 
38,293

 
38,293

 
36,595

 
36,595

 
4.6
 %
 
4.6
 %
International merchant services
 
191,870

 
191,870

 
168,812

 
168,812

 
13.7
 %
 
13.7
 %
 
 
 
 
 
 
 
 
 
 

 
 
Total revenues
 
$
673,977

 
$
673,977

 
$
618,352

 
$
618,352

 
9.0
 %
 
9.0
 %
 
 
 
 
 
 
 
 
 
 

 
 
Operating income (loss) for segments:
 
 
 
 
 
 
 
 
 

 
 
North America merchant services
 
$
70,420

 
$
82,722

 
$
69,101

 
$
80,229

 
1.9
 %
 
3.1
 %
International merchant services
 
58,094

 
66,402

 
48,295

 
57,460

 
20.3
 %
 
15.6
 %
Corporate1
 
(39,597
)
 
(27,088
)
 
(48,027
)
 
(18,434
)
 
17.6
 %
 
(46.9
)%
Operating income
 
$
88,917

 
$
122,036

 
$
69,369

 
$
119,255

 
28.2
 %
 
2.3
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Year Ended May 31,
 
 
 
 
 
 
2014
 
2013
 
 % Change
 
 
GAAP
 
Cash Earnings
 
GAAP
 
Cash Earnings
 
GAAP
 
Cash Earnings
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
United States
 
$
1,488,659

 
$
1,488,659

 
$
1,394,675

 
$
1,394,675

 
6.7
 %
 
6.7
 %
Canada
 
320,333

 
320,333

 
311,000

 
311,000

 
3.0
 %
 
3.0
 %
North America merchant services
 
1,808,992

 
1,808,992

 
1,705,675

 
1,705,675

 
6.1
 %
 
6.1
 %
 
 
 
 
 
 
 
 
 
 

 
 
Europe
 
587,463

 
587,463

 
522,593

 
522,593

 
12.4
 %
 
12.4
 %
Asia-Pacific
 
157,781

 
157,781

 
147,655

 
147,655

 
6.9
 %
 
6.9
 %
International merchant services
 
745,244

 
745,244

 
670,248

 
670,248

 
11.2
 %
 
11.2
 %
 
 
 
 
 
 
 
 
 
 

 
 
Total revenues
 
$
2,554,236

 
$
2,554,236

 
$
2,375,923

 
$
2,375,923

 
7.5
 %
 
7.5
 %
 
 
 
 
 
 
 
 
 
 

 
 
Operating income (loss) for segments:
 
 
 
 
 
 
 
 
 

 
 
North America merchant services
 
$
272,251

 
$
308,570

 
$
258,910

 
$
288,162

 
5.2
 %
 
7.1
 %
International merchant services
 
240,179

 
270,551

 
211,242

 
245,279

 
13.7
 %
 
10.3
 %
Corporate1
 
(106,931
)
 
(98,527
)
 
(112,939
)
 
(74,979
)
 
5.3
 %
 
(31.4
)%
Operating income
 
$
405,499

 
$
480,594

 
$
357,213

 
$
458,462

 
13.5
 %
 
4.8
 %

1 GAAP and cash earnings include incremental security spend for the three and twelve months ended May 31. 2014. GAAP earnings for the twelve months ended May 31, 2014 include insurance proceeds of ($7M) related to the FY 2012 data intrusion. GAAP earnings for the three and twelve months ended May 31, 2013 include a data intrusion charge of $28.5 million and $36.8 million, respectively.

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, 2014
 
May 31, 2013
 
 
 
 
ASSETS
 
  
 
Current assets:
 
  
 
Cash and cash equivalents
$
581,872

 
$
680,470

Accounts receivable, net of allowances for doubtful accounts of $401 and $509, respectively
214,574

 
189,435

Claims receivable, net
809

 
1,156

Settlement processing assets
780,917

 
259,204

Inventory
6,636

 
11,057

Deferred income taxes
12,963

 
6,485

Prepaid expenses and other current assets
45,673

 
66,685

Total current assets
1,643,444

 
1,214,492

Goodwill
1,337,285

 
1,044,222

Other intangible assets, net
535,173

 
400,848

Property and equipment, net
369,753

 
348,064

Deferred income taxes
101,928

 
95,178

Other
31,067

 
22,252

Total assets
$
4,018,650

 
$
3,125,056

 
 
 
 
LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
Lines of credit
$
440,128

 
$
187,461

Current portion of long-term debt
17,677

 
72,335

Accounts payable and accrued liabilities
290,106

 
262,890

Settlement processing obligations
451,317

 
162,558

Income taxes payable
12,390

 
18,870

Total current liabilities
1,211,618

 
704,114

Long-term debt
1,376,002

 
891,134

Deferred income taxes
209,099

 
170,723

Other long-term liabilities
89,132

 
72,478

Total liabilities
2,885,851

 
1,838,449

 
 
 
 
Commitments and Contingencies
 
 
 
Equity:

 

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

 
—

Common stock, no par value; 200,000,000 shares authorized; 68,845,643 and 75,426,099 issued and outstanding at May 31, 2014 and 2013, respectively
—

 
—

Paid-in capital
183,023

 
202,396

Retained earnings
815,980

 
958,751

Accumulated other comprehensive loss
(1,776
)
 
(15,062
)
Total Global Payments shareholders’ equity
997,227

 
1,146,085

Noncontrolling interests
135,572

 
140,522

Total equity
1,132,799

 
1,286,607

Total liabilities and equity
$
4,018,650

 
$
3,125,056



SCHEDULE 5
CONSOLIDATED STATEMENTS OF CASH FLOWS
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands)
 
Year Ended May 31,
 
2014
 
2013
Cash flows from operating activities:
 
 
 
Net income
$
269,952

 
$
238,713

Adjustments to reconcile net income to net cash provided by operating activities:

 
 
Depreciation and amortization of property and equipment
60,124

 
55,023

Amortization of acquired intangibles
61,945

 
56,765

Share-based compensation expense
29,793

 
18,427

Provision for operating losses and bad debts
20,574

 
21,659

Deferred income taxes
(1,799
)
 
33,112

Other, net
(1,484
)
 
(4,878
)
Changes in operating assets and liabilities, net of the effects of acquisitions:

 

Accounts receivable
(18,539
)
 
(5,458
)
Claims receivable
(11,569
)
 
(11,858
)
Settlement processing assets and obligations, net
(241,431
)
 
(104,007
)
Inventory
4,793

 
(1,187
)
Prepaid expenses and other assets
18,995

 
(22,978
)
Accounts payable and other accrued liabilities
9,224

 
(39,374
)
Income taxes payable
(6,480
)
 
6,587

Net cash provided by operating activities
194,098

 
240,546

Cash flows from investing activities:
 
 
 
Business, intangible and other asset acquisitions, net of cash acquired
(426,524
)
 
(434,016
)
Capital expenditures
(81,411
)
 
(98,590
)
Principal collections on financing receivables
2,658

 
2,812

    Net proceeds from sale of investments and business
3,607

 
1,227

Net cash used in investing activities
(501,670
)
 
(528,567
)
Cash flows from financing activities:
 
 
 
Net borrowings (payments) on short-term lines of credit
252,667

 
(27,930
)
Proceeds from issuance of long-term debt
2,690,000

 
1,135,327

Principal payments under long-term debt
(2,260,597
)
 
(482,349
)
Acquisition of redeemable noncontrolling interest
—

 
(242,000
)
Payment of debt issuance costs
(5,961
)
 
(3,987
)
Repurchase of common stock
(447,307
)
 
(175,297
)
Proceeds from stock issued under share-based compensation plans
31,727

 
10,543

Common stock repurchased - share-based compensation plans
(5,681
)
 
(10,244
)
Tax benefit from share-based compensation plans
6,475

 
1,863

Distributions to noncontrolling interests
(36,670
)
 
(16,206
)
Dividends paid
(5,757
)
 
(6,198
)
Net cash provided by financing activities
218,896

 
183,522

Effect of exchange rate changes on cash
(9,922
)
 
3,694

Decrease in cash and cash equivalents
(98,598
)
 
(100,805
)
Cash and cash equivalents, beginning of the period
680,470

 
781,275

Cash and cash equivalents, end of the period
$
581,872

 
$
680,470



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, 2014
 
 
GAAP
Processing System Intrusion
Other1
Cash Earnings Adjustments2
Cash Earnings
Revenues
 
$
673,977

$
—

$
—

$
—

$
673,977

Operating expenses:
 
 
 
 
 
 
Cost of service
 
253,373

—

(125
)
(18,392
)
234,856

Sales, general and administrative
 
331,687

—

(14,602
)
—

317,085

Processing system intrusion
 
—

—

—

—

—

 
 
585,060

—

(14,727
)
(18,392
)
551,941

Operating income
 
88,917

—

14,727

18,392

122,036

Other income (expense):
 
 
 
 
 
 
Interest and other income
 
2,093

—

—

—

2,093

Interest and other expense
 
(9,451
)
—

1,341

—

(8,110
)
 
 
(7,358
)
—

1,341

—

(6,017
)
Income before income taxes
 
81,559

—

16,068

18,392

116,019

Provision for income taxes
 
(23,293
)
—

(1,237
)
(5,719
)
(30,249
)
Net income
 
58,266

—

14,831

12,673

85,770

Less: Net income attributable to noncontrolling interests, net of income tax
 
(6,641
)
—

—

(1,434
)
(8,075
)
Net income attributable to Global Payments
 
$
51,625

$
—

$
14,831

$
11,239

$
77,695

Diluted shares
 
71,322

 
 
 
71,322

Diluted earnings per share
 
$
0.72

$
—

$
0.21

$
0.16

$
1.09

 
 
 
 
 
 
 
 
 
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 income 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


1 For the period ended May 31, 2014, represents acceleration of equity awards and other costs associated with the retirement of our former Chairman and CEO, a nonrecurring charge associated with our retained interest in Brazil, an adjustment to the costs associated with the debt refinancing we completed in February 2014, non-cash losses from the retirement of fixed assets and charges related to employee termination benefits. For the prior period, 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, 2014 and 2013 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 amounts related to the processing system intrusion, acquisition intangible amortization, acceleration of equity awards and other costs associated with the retirement of our former Chairman and CEO, a nonrecurring charge associated with our retained interest in Brazil, non-cash losses from the retirement of fixed assets, employee termination benefits and an adjustment to the costs associated with the debt refinancing. 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, 2014
 
 
GAAP
Processing System Intrusion1
Other2
Cash Earnings Adjustments3
Cash Earnings
Revenues
 
$
2,554,236

$
—

$
—

$
—

$
2,554,236

Operating expenses:
 
 
 
 
 
 
Cost of service
 
952,225

—

(704
)
(61,945
)
889,576

Sales, general and administrative
 
1,203,512

—

(19,446
)
—

1,184,066

Processing system intrusion
 
(7,000
)
7,000

—

—

—

 
 
2,148,737

7,000

(20,150
)
(61,945
)
2,073,642

Operating income
 
405,499

(7,000
)
20,150

61,945

480,594

Other income (expense):
 
 
 
 
 
 
Interest and other income
 
13,663

—

(2,123
)
—

11,540

Interest and other expense
 
(41,812
)
—

9,485

—

(32,327
)
 
 
(28,149
)
—

7,362

—

(20,787
)
Income (loss) before income taxes
 
377,350

(7,000
)
27,512

61,945

459,807

(Provision) benefit for income taxes
 
(107,398
)
2,393

(5,351
)
(19,825
)
(130,181
)
Net income (loss)
 
269,952

(4,607
)
22,161

42,120

329,626

Less: Net income attributable to noncontrolling interests, net of income tax
 
(24,666
)
—

—

(5,629
)
(30,295
)
Net income (loss) attributable to Global Payments
 
$
245,286

$
(4,607
)
$
22,161

$
36,491

$
299,331

Diluted shares
 
72,688

 
 
 
72,688

Diluted earnings (loss) per share
 
$
3.37

$
(0.07
)
$
0.31

$
0.51

$
4.12

 
 
 
 
 
 
 
 
 
Year Ended May 31, 2013
 
 
GAAP
Processing System Intrusion
Other2
Cash Earnings Adjustments3
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 income 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


1 Represents insurance proceeds associated with processing system intrusion charges incurred in FY 2012.
 
2 For the year ended May 31, 2014, represents acceleration of equity awards and other costs associated with the retirement of our former Chairman and CEO, a credit related to the sale of an interest in our Brazil business and a subsequent charge associated with our retained interest, cost associated with the debt refinancing we completed in February 2014, non-cash losses from the retirement of fixed assets, charges related to employee termination benefits and HSBC's share of dividends declared. For the prior year, represents HSBC's share of GPAP dividends declared, one-time charges primarily related to employee termination benefits and certain contract settlement and related costs.

3 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 years ended May 31, 2014 and 2013 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 amounts related to the processing system intrusion, acquisition intangible amortization, acceleration of equity awards and other costs associated with the retirement of our former Chairman and CEO, a nonrecurring charge associated with our retained interest in Brazil, non-cash losses from the retirement of fixed assets, employee termination benefits and resolution of a contract related contingency and an adjustment to the costs associated with the debt refinancing. In the twelve months ended May 2013, we also adjusted the net income attributable to noncontrolling interests to include HSBC's share of GPAP net income. 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)
 
Three Months Ended May 31,
 
2014
2013
 
GAAP
Processing System Intrusion
Other2
Cash Earnings Adjustments3
Cash Earnings
 
GAAP
Processing System Intrusion
Other2
Cash Earnings Adjustments3
Cash Earnings
 
 
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
United States
$
407,153

$
—

$
—

$
—

$
407,153

 
$
372,425

$
—

$
—

$
—

$
372,425

Canada
74,954

—

—

—

74,954

 
77,115

—

—

—

77,115

North America merchant services
482,107

—

—

—

482,107

 
449,540

—

—

—

449,540

 
 
 
 
 
 
 
 
 
 
 
 
Europe
153,577

—

—

—

153,577

 
132,217

—

—

—

132,217

Asia-Pacific
38,293

—

—

—

38,293

 
36,595

—

—

—

36,595

International merchant services
191,870

—

—

—

191,870

 
168,812

—

—

—

168,812

 
 
 


 
 
 
 
 
 
 
 
Total revenues
$
673,977

$
—

$
—

$
—

$
673,977

 
$
618,352

$
—

$
—

$
—

$
618,352

 
 
 
 
 
 
 
 
 
 
 
 
Operating income (loss) for segments:
 
 
 
 
 
 
 
 
 
 
 
North America merchant services
$
70,420

$
—

$
1,428

$
10,874

$
82,722

 
$
69,101

$
—

$
4,688

$
6,440

$
80,229

International merchant services
58,094

—

790

7,518

66,402

 
48,295

53

878

8,234

57,460

Corporate
(39,597
)
—

12,509

—

(27,088
)
 
(48,027
)
28,411

1,182

—

(18,434
)
Operating income
$
88,917

$
—

$
14,727

$
18,392

$
122,036

 
$
69,369

$
28,464

$
6,748

$
14,674

$
119,255

 
 
 
 
 
 
 
 
 
 
 
 
 
Year Ended May 31,
 
2014
2013
 
 GAAP
Processing System Intrusion1
Other2
Cash Earnings Adjustments3
 Cash Earnings
 
 GAAP
Processing System Intrusion
Other2
Cash Earnings Adjustments3
 Cash Earnings
 
 
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
United States
$
1,488,659

$
—

$
—

$
—

$
1,488,659

 
$
1,394,675

$
—

 
$
—

$
1,394,675

Canada
320,333

—

—

—

320,333

 
311,000

—

 
—

311,000

North America merchant services
1,808,992

—

—

—

1,808,992

 
1,705,675

—

—

—

1,705,675

 
 
 
 
 
 
 
 
 
 
 
 
Europe
587,463

—

—

—

587,463

 
522,593

—

—

—

522,593

Asia-Pacific
157,781

—

—

—

157,781

 
147,655

—

—

—

147,655

International merchant services
745,244

—

—

—

745,244

 
670,248

—

—

—

670,248

 
 
 
 
 
 
 
 
 
 
 
 
Total revenues
$
2,554,236

$
—

$
—

$
—

$
2,554,236

 
$
2,375,923

$
—

$
—

$
—

$
2,375,923

 
 
 
 
 
 
 
 
 
 
 
 
Operating income (loss) for segments:
 
 
 
 
 
 
 
 
 
 
 
North America merchant services
$
272,251

$
—

$
3,945

$
32,374

$
308,570

 
$
258,910

$
—

$
5,593

$
23,659

$
288,162

International merchant services
240,179

—

801

29,571

270,551

 
211,242

53

878

33,106

245,279

Corporate
(106,931
)
(7,000
)
15,404

—

(98,527
)
 
(112,939
)
36,722

1,238

—

(74,979
)
Operating income (loss)
$
405,499

$
(7,000
)
$
20,150

$
61,945

$
480,594

 
$
357,213

$
36,775

$
7,709

$
56,765

$
458,462


1 Represents insurance proceeds associated with processing system intrusion charges incurred in FY 2012.

2 Represents acceleration of equity awards and other costs associated with the retirement of our former CEO and Chairman, non-cash losses from the retirement of fixed assets, and charges related to employee termination benefits and certain contract settlement and related costs.

3 Represents acquisition intangible amortization expense.


SCHEDULE 9
OUTLOOK SUMMARY
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In billions, except per share data)
 
 
Fiscal 2014 Actual
 
Fiscal 2015 Outlook
 
% Change FY14
 
 
 
 
 
 
 
Revenue Outlook
 
 
 
 
 
 
Total Revenues
 
$
2.55

 
$2.69 to $2.76

 
6% to 8%

 
 
 
 
 
 
 
EPS Outlook
 
 
 
 
 
 
Cash EPS
 
$
4.12

 
$4.52 to $4.62

 
10% to 12%

Acquisition-related intangible assets, non-recurring items and processing system intrusion1
 
(0.75
)
 
(0.76
)
 
1
%
GAAP Diluted EPS
 
$
3.37

 
 $3.76 to $3.86

 
12% to 15%


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 years ended May 31, 2014 and 2013 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 amounts related to the processing system intrusion, acquisition intangible amortization, acceleration of equity awards and other costs associated with the retirement of our former Chairman and CEO, a nonrecurring charge associated with our retained interest in Brazil, non-cash losses from the retirement of fixed assets, employee termination benefits and resolution of a contract related contingency and an adjustment to the costs associated with the debt refinancing. In the twelve months ended May 2013, we also adjusted the net income attributable to noncontrolling interests to include HSBC's share of GPAP net income. 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 2015 reflects $0.72 of acquisition-related intangibles amortization and $0.04 of one-time charges. Fiscal 2014 reflects acquisition-related intangibles amortization of $0.51, processing-intrusion of ($0.07), and non-recurring items accounted for $0.31 relating to acceleration of equity awards and other costs associated with the retirement of our former Chairman and CEO, a credit related to the sale of an interest in our Brazil business and a subsequent charge associated with our retained interest, cost associated with the debt refinancing we completed in February 2014, non-cash losses from the retirement of fixed assets, charges related to employee termination benefits and HSBC's share of dividends declared.