Global Payments Reports First Quarter Earnings,
Increases Annual Fiscal 2016 Outlook and Declares Two-for-One Stock Split

ATLANTA, October 7, 2015 -- Global Payments Inc. (NYSE: GPN) today announced results for its fiscal first quarter ended August 31, 2015.
“We are delighted with our outstanding first quarter results, which represent an excellent start to the 2016 fiscal year and a continuation of exceeding our expectations across our markets,” said Jeff Sloan, Chief Executive Officer. “This performance builds on the momentum we have generated as we continue to invest in our strategy to expand distribution and create competitive differentiation through technology by delivering innovative solutions globally.”

First Quarter Fiscal 2016 Summary
•
Adjusted net revenue grew 8% to $537.0 million, compared to $495.2 million in the first quarter of fiscal 2015.
•
Cash diluted earnings per share grew 25% to $1.57, compared to $1.26 in the first quarter of fiscal 2015.
•
Cash operating margin expanded to 30.5%, a 150 basis point increase over the first quarter of fiscal 2015.
•
GAAP revenues grew 6% to $748.8 million, compared to $704.9 million in the first quarter of fiscal 2015, and diluted earnings per share were $1.32, compared to $1.10 in the prior year.

Fiscal 2016 Outlook
“As a result of our strong first quarter performance, we are increasing our outlook for annual fiscal 2016 diluted earnings per share on a cash basis to a range of $5.77 to $5.92, reflecting growth of 14% to 17% over fiscal 2015,” stated Cameron Bready, Executive Vice President and Chief Financial Officer. “We also now expect annual fiscal 2016 core cash operating margins to expand by as much as 50 basis points on a constant currency basis. We continue to expect adjusted net revenues to range from $2.06 billion to $2.10 billion, or growth of 6% to 8% over fiscal 2015.”





Stock Split and Dividend
Global Payments’ Board of Directors has declared a two-for-one stock split of the company’s common stock to be effected in the form of a stock dividend of one additional share of common stock for each outstanding share of common stock. The stock dividend will be payable on November 2, 2015 to all shareholders of record as of October 21, 2015.
A first quarter dividend of $0.01 per share, after giving effect to the two-for-one stock split, will be payable on November 27, 2015 to shareholders of record as of November 13, 2015.

Conference Call
Global Payments’ management will host a conference call today, October 7, 2015 at 8:00 a.m. ET 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; or callers in North America may dial 877-674-6428 and callers outside North America may dial 970-315-0457. A replay of the call will be archived on the company's website within two hours of the live call.

Non-GAAP Financial Measures
Global Payments supplemented revenues, income and earnings per share information determined in accordance with GAAP by providing income and related earnings per share on a "cash earnings" basis and adjusted net revenue in this earnings release to assist with evaluating performance. In addition to GAAP measures, management uses these non-GAAP measures to focus on the factors the company believes are pertinent to the daily management of our operations.
Reconciliations of the non-GAAP measures to the most directly comparable GAAP measure are included in the schedules to this release.

About Global Payments
Global Payments Inc. (NYSE: GPN) is a leading worldwide provider of payment technology services that delivers innovative solutions driven by customer needs globally. Our technologies, partnerships and employee expertise enable us to provide a broad range of products and services that allow our customers to accept all payment types across a variety of distribution channels in many markets around the world.
Headquartered in Atlanta, Georgia with approximately 4,500 employees worldwide, Global Payments is a Fortune 1000 Company with merchants and partners in 29 countries throughout North America, Europe, the Asia-Pacific region and Brazil. For more information about Global Payments, our Service. Driven. Commerce brand and our technologies, please visit www.globalpaymentsinc.com.
_________________________

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 most recent Annual Report on Form 10-K and any subsequent SEC filings, 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
UNAUDITED GAAP CONSOLIDATED STATEMENTS OF INCOME
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands, except per share data)

 
Three Months Ended August 31,
 
2015
 
2014
 
% Change
 
 
 
 
 
 
 
(unaudited)
 
 
Revenues
$
748,796

 
$
704,895

 
6.2
 %
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
Cost of service
272,666

 
259,839

 
4.9
 %
Selling, general and administrative
338,358

 
320,658

 
5.5
 %
 
611,024

 
580,497

 
5.3
 %
 
 
 
 
 

Operating income
137,772

 
124,398

 
10.8
 %
 
 
 
 
 
 
Interest and other income
1,142

 
1,192

 
(4.2
)%
Interest and other expense
(13,243
)
 
(11,010
)
 
20.3
 %
 
(12,101
)
 
(9,818
)
 
23.3
 %
 
 
 
 
 

Income before income taxes
125,671

 
114,580

 
9.7
 %
Provision for income taxes
(32,623
)
 
(30,146
)
 
8.2
 %
Net income
93,048

 
84,434

 
10.2
 %
Less: Net income attributable to noncontrolling interests, net of income tax
(6,402
)
 
(9,068
)
 
(29.4
)%
Net income attributable to Global Payments
$
86,646

 
$
75,366

 
15.0
 %
 
 
 
 
 
 
Earnings per share attributable to Global Payments:
 
 
 
 
 
    Basic
$
1.33

 
$
1.11

 
19.8
 %
    Diluted
$
1.32

 
$
1.10

 
20.0
 %
 
 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
 
    Basic
65,164

 
68,146

 
 
    Diluted
65,573

 
68,617

 
 







4


SCHEDULE 2
CASH EARNINGS ATTRIBUTABLE TO GLOBAL PAYMENTS
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands, except per share data)

 
Three Months Ended August 31,
 
2015
 
2014
 
% Change
 
 
 
 
 
 
Adjusted net revenue
$
536,953

 
$
495,212

 
8.4
 %
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
Cost of service
231,921

 
221,033

 
4.9
 %
Selling, general and administrative
141,466

 
130,802

 
8.2
 %
 
373,387

 
351,835

 
6.1
 %
 
 
 
 
 
 
Operating income
163,566

 
143,377

 
14.1
 %
 
 
 
 
 
 
Interest and other income
1,142

 
1,192

 
(4.2
)%
Interest and other expense
(13,243
)
 
(11,010
)
 
20.3
 %
 
(12,101
)
 
(9,818
)
 
23.3
 %
 
 
 
 
 
 
Income before income taxes
151,465

 
133,559

 
13.4
 %
Provision for income taxes
(41,160
)
 
(36,894
)
 
11.6
 %
Net income
110,305

 
96,665

 
14.1
 %
Less: Net income attributable to noncontrolling interests, net of income tax
(7,280
)
 
(10,303
)
 
(29.3
)%
Net income attributable to Global Payments
$
103,025

 
$
86,362

 
19.3
 %
 
 
 
 
 
 
Earnings per share attributable to Global Payments:
 
 
 
 
 
Basic
$
1.58

 
$
1.27

 
24.4
 %
Diluted
$
1.57

 
$
1.26

 
24.6
 %
 
 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
 
Basic
65,164

 
68,146

 
 
Diluted
65,573

 
68,617

 
 

See Schedule 6 for a reconciliation of adjusted net revenue and cash earnings to GAAP.

See "Non-GAAP Financial Measures" discussion on Schedule 8.



5


SCHEDULE 3
SEGMENT INFORMATION
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(Dollars in thousands)
 
 
Three Months Ended August 31,
 
 
 
 
 
 
2015
 
2014
 
 % Change
 
 
GAAP
 
 Adjusted Net Revenue and Cash Earnings
 
 GAAP
 
 Adjusted Net Revenue and Cash Earnings
 
 GAAP
 
 Adjusted Net Revenue and Cash Earnings
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
North America
 
$
530,857

 
$
340,431

 
$
504,007

 
$
315,276

 
5.3
%
 
8.0
%
Europe
 
168,357

 
146,940

 
162,787

 
141,835

 
3.4
%
 
3.6
%
Asia-Pacific
 
49,582

 
49,582

 
38,101

 
38,101

 
30.1
%
 
30.1
%
Total revenues
 
$
748,796

 
$
536,953

 
$
704,895

 
$
495,212

 
6.2
%
 
8.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating income for segments:
 
 
 
 
 
 
 
 
 
 
 
 
North America
 
$
83,513

 
$
96,966

 
$
77,937

 
$
89,315

 
7.2
%
 
8.6
%
Europe
 
72,733

 
77,031

 
67,045

 
70,310

 
8.5
%
 
9.6
%
Asia-Pacific
 
12,233

 
13,810

 
6,557

 
6,827

 
86.6
%
 
102.3
%
Corporate
 
(30,707
)
 
(24,241
)
 
(27,141
)
 
(23,075
)
 
13.1
%
 
5.1
%
Operating income
 
$
137,772

 
$
163,566

 
$
124,398

 
$
143,377

 
10.8
%
 
14.1
%


See Schedule 7 for reconciliation of adjusted net revenue and cash earnings segment information to GAAP.

See "Non-GAAP Financial Measures" discussion on Schedule 8.


6



SCHEDULE 4
CONSOLIDATED BALANCE SHEETS
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands, except share data)
 
August 31, 2015
 
May 31, 2015
 
(unaudited)
 
 
ASSETS
 
  
 
Current assets:
 
  
 
Cash and cash equivalents
$
803,309

 
$
650,739

Accounts receivable, net of allowances for doubtful accounts of $398 and $468, respectively
207,949

 
202,390

Claims receivable, net of allowances for doubtful accounts of $5,933 and $548, respectively
7,177

 
548

Settlement processing assets
1,658,193

 
2,394,822

Deferred income taxes
12,179

 
11,664

Prepaid expenses and other current assets
58,231

 
41,416

Total current assets
2,747,038

 
3,301,579

Goodwill
1,603,593

 
1,491,833

Other intangible assets, net
686,852

 
560,136

Property and equipment, net
368,795

 
374,143

Deferred income taxes
30,375

 
30,578

Other
36,265

 
32,846

Total assets
$
5,472,918

 
$
5,791,115

 
 
 
 
LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
Lines of credit
$
356,675

 
$
592,629

Current portion of long-term debt
—

 
61,784

Accounts payable and accrued liabilities
303,497

 
312,647

Settlement processing obligations
1,699,353

 
2,033,900

Income taxes payable
30,711

 
14,228

Total current liabilities
2,390,236

 
3,015,188

Long-term debt
1,932,028

 
1,678,283

Deferred income taxes
216,844

 
214,669

Other long-term liabilities
16,667

 
19,422

Total liabilities
4,555,775

 
4,927,562

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; 64,941,393 issued and outstanding at August 31, 2015 and 65,278,838 issued and outstanding at May 31, 2015
—

 
—

Paid-in capital
138,212

 
148,742

Retained earnings
861,212

 
795,226

Accumulated other comprehensive loss
(212,727
)
 
(185,992
)
Total Global Payments shareholders’ equity
786,697

 
757,976

Noncontrolling interests
130,446

 
105,577

Total equity
917,143

 
863,553

Total liabilities and equity
$
5,472,918

 
$
5,791,115


7


SCHEDULE 5
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands)
 
Three Months Ended August 31,
 
2015
 
2014
Cash flows from operating activities:
 
 
 
Net income
$
93,048

 
$
84,434

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

 
 
Depreciation and amortization of property and equipment
17,909

 
16,712

Amortization of acquired intangibles
20,848

 
17,854

Share-based compensation expense
6,467

 
4,066

Provision for operating losses and bad debts
4,263

 
4,308

Deferred income taxes
3,584

 
3,705

Other, net
1,333

 
(755
)
Changes in operating assets and liabilities, net of the effects of acquisitions:

 

Accounts receivable
(7,512
)
 
7,933

Claims receivable
(12,261
)
 
(2,742
)
Settlement processing assets and obligations, net
402,676

 
(179,462
)
Prepaid expenses and other assets
(18,114
)
 
1,625

Accounts payable and other liabilities
(14,801
)
 
(22,151
)
Income taxes payable
15,952

 
1,000

Net cash provided by (used in) operating activities
513,392

 
(63,473
)
Cash flows from investing activities:
 
 
 
Business, intangible and other asset acquisitions, net of cash acquired
(241,530
)
 
(4,773
)
Capital expenditures
(16,858
)
 
(18,157
)
Principal collections on financing receivables
—

 
219

    Net proceeds from sales of investments and business
—

 
10,528

Net cash used in investing activities
(258,388
)
 
(12,183
)
Cash flows from financing activities:
 
 
 
Net (payments) borrowings on short-term lines of credit
(236,041
)
 
212,029

Proceeds from issuance of long-term debt
2,821,425

 
390,000

Principal payments of long-term debt
(2,626,925
)
 
(363,679
)
Payment of debt issuance costs
(4,934
)
 
—

Repurchase of common stock
(34,296
)
 
(132,283
)
Proceeds from stock issued under share-based compensation plans
2,513

 
12,588

Common stock repurchased - share-based compensation plans
(8,154
)
 
(15,105
)
Tax benefit from share-based compensation plans
5,760

 
3,154

Distributions to noncontrolling interests
(8,158
)
 
(11,249
)
Dividends paid
(1,305
)
 
(1,370
)
Net cash (used in) provided by financing activities
(90,115
)
 
94,085

Effect of exchange rate changes on cash
(12,319
)
 
(4,417
)
Increase in cash and cash equivalents
152,570

 
14,012

Cash and cash equivalents, beginning of the period
650,739

 
581,872

Cash and cash equivalents, end of the period
$
803,309

 
$
595,884


8


SCHEDULE 6
RECONCILIATION OF ADJUSTED NET REVENUE AND CASH EARNINGS ATTRIBUTABLE TO GLOBAL PAYMENTS TO GAAP
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands, except per share data)
 
 
Three Months Ended August 31, 2015
 
 
GAAP
Net Revenue Adjustment1
Cash Earnings Adjustments2
Other3
Adjusted Net Revenue and Cash Earnings
Revenues
 
$
748,796

$
(211,843
)
$
—

$
—

$
536,953

 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
   Cost of service
 
272,666

(21,417
)
(21,398
)
2,070

231,921

   Selling, general and administrative
 
338,358

(190,426
)
(6,466
)
—

141,466

 
 
611,024

(211,843
)
(27,864
)
2,070

373,387

 
 
 
 
 
 
 
Operating income
 
137,772

—

27,864

(2,070
)
163,566

 
 
 
 
 
 
 
Interest and other income
 
1,142

—

—

—

1,142

Interest and other expense
 
(13,243
)
—

—

—

(13,243
)
 
 
(12,101
)
—

—

—

(12,101
)
Income before income taxes
 
125,671

—

27,864

(2,070
)
151,465

(Provision for) benefit from income taxes
 
(32,623
)


(8,968
)
431

(41,160
)
Net income
 
93,048

—

18,896

(1,639
)
110,305

Less: Net income attributable to noncontrolling interests, net of income tax
 
(6,402
)
—

(878
)
—

(7,280
)
Net income attributable to Global Payments
 
$
86,646

$
—

$
18,018

$
(1,639
)
$
103,025

Diluted shares
 
65,573

 
 
 
65,573

Diluted earnings per share
 
$
1.32

$
—

$
0.27

$
(0.02
)
$
1.57

 
 
 
 
 
 
 
 
 
Three Months Ended August 31, 2014
 
 
GAAP
Net Revenue Adjustment1
Cash Earnings Adjustments2
Other3
Adjusted Net Revenue and Cash Earnings
Revenues
 
$
704,895

$
(209,683
)
$
—

$
—

$
495,212

 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
   Cost of service
 
259,839

(20,952
)
(17,854
)
—

221,033

   Selling, general and administrative
 
320,658

(188,731
)
(4,066
)
2,941

130,802

 
 
580,497

(209,683
)
(21,920
)
2,941

351,835

 
 
 
 
 
 
 
Operating income
 
124,398

—

21,920

(2,941
)
143,377

 
 
 
 
 
 
 
Interest and other income
 
1,192

—

—

—

1,192

Interest and other expense
 
(11,010
)
—

—

—

(11,010
)
 
 
(9,818
)
—

—

—

(9,818
)
Income before income taxes
 
114,580

 
21,920

(2,941
)
133,559

(Provision for) benefit from income taxes
 
(30,146
)
—

(7,336
)
588

(36,894
)
Net income
 
84,434

—

14,584

(2,353
)
96,665

Less: Net income attributable to noncontrolling interests, net of income tax
 
(9,068
)
—

(1,235
)
—

(10,303
)
Net income attributable to Global Payments
 
$
75,366

$
—

$
13,349

$
(2,353
)
$
86,362

Diluted shares
 
68,617

 
 
 
68,617

Diluted earnings per share
 
$
1.10

$
—

$
0.19

$
(0.03
)
$
1.26


1 Represents adjustments to revenues for gross-up related payments (included in operating expenses) associated with certain wholesale lines of business to reflect economic benefits to the Company.

2 Represents adjustments to exclude acquisition-related amortization expense, share-based compensation expense and the related income tax benefits of each.

3 For the three months ended August 31, 2015, represents recoveries associated with a U.K. vendor outage and the related provision for income taxes. For the three months ended August 31, 2014, represents a gain on sale of a component of our Russia business that leased ATMs to our sponsor bank in Russia and the related provision for income taxes.

See "Non-GAAP Financial Measures" discussion on Schedule 8.

9


SCHEDULE 7
RECONCILIATION OF ADJUSTED NET REVENUE AND CASH EARNINGS SEGMENT INFORMATION TO GAAP
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands)
 
Three Months Ended August 31,
 
2015
 
2014
 
GAAP
Net Revenue Adjustment1
Cash Earnings Adjustments2
Other3
Adjusted Net Revenues and Cash Earnings
 
GAAP
Net Revenue Adjustment1
Cash Earnings Adjustments2
Other3
Adjusted Net Revenues and Cash Earnings
 
 
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
North America
$
530,857

$
(190,426
)
$
—

$
—

$
340,431

 
$
504,007

$
(188,731
)
$
—

$
—

$
315,276

Europe
168,357

(21,417
)
—

—

146,940

 
162,787

(20,952
)
—

—

141,835

Asia-Pacific
49,582

—

—

—

49,582

 
38,101

—

—

—

38,101

Total revenues
$
748,796

$
(211,843
)
$
—

$
—

$
536,953

 
$
704,895

$
(209,683
)
$
—

$
—

$
495,212

 
 
 
 
 
 
 
 
 
 
 
 
Operating income for segments:
 
 
 
 
 
 
 
 
 
 
 
North America
$
83,513

$
—

$
13,453

$
—

$
96,966

 
$
77,937

$
—

$
11,378

$
—

$
89,315

Europe
72,733

—

6,368

(2,070
)
77,031

 
67,045

—

6,206

(2,941
)
70,310

Asia-Pacific
12,233

—

1,577

—

13,810

 
6,557

—

270

—

6,827

Corporate
(30,707
)
—

6,466

—

(24,241
)
 
(27,141
)
—

4,066

—

(23,075
)
Operating income
$
137,772

$
—

$
27,864

$
(2,070
)
$
163,566

 
$
124,398

$
—

$
21,920

$
(2,941
)
$
143,377



1 Represents adjustments to revenues for gross-up related payments (included in operating expenses) associated with certain wholesale lines of business to reflect economic benefits to the Company.

2 Represents adjustments to exclude acquisition-related amortization expense and share-based compensation expense.

3 For the three months ended August 31, 2015, represents recoveries associated with a U.K. vendor outage. For the three months ended August 31, 2014, represents a gain on sale of a component of our Russia business that leased ATMs to our sponsor bank in Russia.


See "Non-GAAP Financial Measures" discussion on Schedule 8.

10


SCHEDULE 8
OUTLOOK SUMMARY
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In billions, except per share data)
 
 
Fiscal 2015 Actual
 
Fiscal 2016 Outlook
 
% Change
Revenues:
 
 
 
 
 
 
GAAP Revenues
 
$
2.77

 
$2.87 to $2.95

 
4% to 6%

Adjustments1
 
(0.82
)
 
(0.83
)
 
 
Adjusted Net Revenue
 
$
1.95

 
$2.06 to $2.10

 
6% to 8%

 
 
 
 
 
 
 
Earnings Per Share:
 
 
 
 
 
 
GAAP Diluted EPS
 
$
4.12

 
$4.70 to $4.85

 
14% to 18%

Acquisition-related amortization expense, share-based compensation expense and non-recurring items2
 
0.92

 
1.07

 
16
%
Cash EPS
 
$
5.04

 
$5.77 to $5.92

 
14% to 17%



1 Represents adjustments to revenues for gross-up related payments (included in operating expenses) associated with certain wholesale lines of business to reflect economic benefits to the Company and, in fiscal 2015, a revenue adjustment for select U.K. customer payments related to a vendor outage.

2 Fiscal 2015 reflects acquisition-related amortization expense of $0.67, share-based compensation expense of $0.19 and non-recurring items of $0.06, including a revenue adjustment for select U.K. customer payments related to a vendor outage and expense adjustments for charges related to employee termination benefits, non-cash losses from the retirement of property and equipment, a transaction-related tax associated with the acquisition of Realex, certain business tax assessments in the U.S. for prior periods, a gain on the sale of our Russia ATM business, reversal of previously recorded interest expense associated with a previously uncertain tax position and the related income tax effects of each.

NON-GAAP FINANCIAL MEASURES

Global Payments supplemented revenues, income and earnings per share information determined in accordance with GAAP by providing income and related earnings per share on a "cash earnings" basis and Adjusted Net Revenue in this earnings release to assist with evaluating performance. In addition to GAAP measures, management uses these non-GAAP measures to focus on the factors we believe are pertinent to the daily management of our operations. Management believes Adjusted Net Revenue more closely reflects the economic benefits to the Company's core business and allows for better comparisons with industry peers. Management uses these non-GAAP metrics, together with other metrics, to set goals for and measure the performance of its business and to determine incentive compensation. Our Adjusted Net Revenue and income and earnings per share reported on a cash earnings basis should be considered in addition to, and not as a substitute for, revenues, income and earnings per share determined in accordance with GAAP. Our measures of Adjusted Net Revenue, 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.

Adjusted Net Revenue excludes gross-up related payments associated with certain wholesale lines of business to reflect economic benefits to the Company. On a GAAP basis, these payments are presented gross in both revenues and operating expenses.

Income and the related earnings per share on a cash earnings basis exclude acquisition-related amortization expense, share-based compensation and certain other items specific to each reporting period as more fully described in the accompanying reconciliations in Schedule 6, Schedule 7 and Schedule 9. The tax rate used in determining the net income impact of cash earnings adjustments is either the jurisdictional statutory rate in effect at the time of the adjustment or the jurisdictional expected annual effective tax rate for the period, depending on the nature and timing of the adjustment.












11


SCHEDULE 9
RECONCILIATION OF ADJUSTED NET REVENUE AND CASH EARNINGS SEGMENT INFORMATION TO GAAP
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands, except per share data)

 
Three Months Ended
 
August 31, 2014
 
November 30, 2014
 
GAAP
Net Revenue Adjustment1
Cash Earnings Adjustments2
Other3
Adjusted Net Revenue and Cash Earnings
 
GAAP
Net Revenue Adjustment1
Cash Earnings Adjustments2
Other3
Adjusted Net Revenue and Cash Earnings
Revenues:
 
 
 
 
 
 
 
 
 
 
 
North America
$
504,007

$
(188,731
)
$
—

$
—

$
315,276

 
$
488,776

$
(183,217
)
$
—

$
—

$
305,559

Europe
162,787

(20,952
)
—

—

141,835

 
159,974

(20,409
)
—

—

139,565

Asia-Pacific
38,101

—

—

—

38,101

 
48,541

—

—

—

48,541

Total revenues
$
704,895

$
(209,683
)
$
—

$
—

$
495,212

 
$
697,291

$
(203,626
)
$
—

$
—

$
493,665

 
 
 
 
 
 
 
 
 
 
 
 
Operating income (loss) for segments:
 
 
 
 
 
 
 
 
 
 
 
North America
77,937

—

11,378

—

89,315

 
74,246

—

11,173

—

85,419

Europe
67,045

—

6,206

(2,941
)
70,310

 
64,563

—

5,832

—

70,395

Asia-Pacific
6,557

—

270

—

6,827

 
11,880

—

1,258

—

13,138

Corporate
(27,141
)
—

4,066

—

(23,075
)
 
(26,705
)
—

5,079

—

(21,626
)
Operating income (loss)
124,398

—

21,920

(2,941
)
143,377

 
123,984

—

23,342

—

147,326

 
 
 
 
 
 
 
 
 
 
 
 
Interest and other income
1,192

—

—

—

1,192

 
1,282

—

—

—

1,282

Interest and other expense
(11,010
)
—

—

—

(11,010
)
 
(10,350
)
—

—

—

(10,350
)
 
(9,818
)
—

—

—

(9,818
)
 
(9,068
)
—

—

—

(9,068
)
 
 
 
 
 
 
 
 
 
 
 
 
Income (loss) before income taxes
114,580

—

21,920

(2,941
)
133,559

 
114,916

—

23,342

—

138,258

(Provision for) benefit from income taxes
(30,146
)
—

(7,336
)
588

(36,894
)
 
(29,660
)
—

(7,688
)
—

(37,348
)
Net income (loss)
84,434

—

14,584

(2,353
)
96,665

 
85,256

—

15,654

—

100,910

Less: Net income attributable to noncontrolling interests, net of income tax
(9,068
)
—

(1,235
)
—

(10,303
)
 
(10,475
)
—

(1,173
)
—

(11,648
)
Net income (loss) attributable to Global Payments
$
75,366

$
—

$
13,349

$
(2,353
)
$
86,362

 
$
74,781

$
—

$
14,481

$
—

$
89,262

 
 
 
 
 
 
 
 
 
 
 
 
Diluted shares
68,617

 
 
 
68,617

 
67,737

 
 
 
67,737

Diluted earnings (loss) per share
$
1.10

$
—

$
0.19

$
(0.03
)
$
1.26

 
$
1.10

$
—

$
0.21

$
—

$
1.32

 
 
 
 
 
 
 
 
 
 
 
 

12


 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
February 28, 2015
 
May 31, 2015
 
GAAP
Net Revenue Adjustment1
Cash Earnings Adjustments2
Other3
Adjusted Net Revenue and Cash Earnings
 
GAAP
Net Revenue Adjustment1
Cash Earnings Adjustments2
Other3
Adjusted Net Revenue and Cash Earnings
Revenues:
 
 
 
 
 
 
 
 
 
 
 
North America
$
473,063

$
(179,678
)
$
—

$
—

$
293,385

 
$
503,044

$
(188,930
)
$
—

$
—

$
314,114

Europe
138,378

(19,424
)
—

1,876

120,830

 
154,827

(21,361
)
—

—

133,466

Asia-Pacific
53,542

—

—

—

53,542

 
48,678

—

—

—

48,678

Total revenues
$
664,983

$
(199,102
)
$
—

$
1,876

$
467,757

 
$
706,549

$
(210,291
)
$
—

$
—

$
496,258

 
 
 
 
 
 
 
 
 
 
 
 
Operating income (loss) for segments:
 
 
 
 
 
 
 
 
 
 
 
North America
66,723

—

11,023

—

77,746

 
74,233

—

10,967

300

85,500

Europe
52,710

—

5,400

1,876

59,986

 
55,696

—

5,833

4,548

66,077

Asia-Pacific
12,192

—

1,644

—

13,836

 
9,068

—

1,603

—

10,671

Corporate
(27,010
)
—

5,682

1,872

(19,456
)
 
(35,397
)
—

5,504

4,837

(25,056
)
Operating income
104,615

—

23,749

3,748

132,112

 
103,600

—

23,907

9,685

137,192

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest and other income
1,160

—

—

—

1,160

 
1,315

—

—

—

1,315

Interest and other expense
(13,429
)
—

—

 
(13,429
)
 
(9,647
)
—

—

(3,596
)
(13,243
)
 
(12,269
)
—

—

—

(12,269
)
 
(8,332
)
—

—

(3,596
)
(11,928
)
 
 
 
 
 
 
 
 
 
 
 
 
Income before income taxes
92,346

—

23,749

3,748

119,843

 
95,268

—

23,907

6,089

125,264

Provision for income taxes
(23,031
)
—

(7,782
)
(1,031
)
(31,844
)
 
(25,158
)
—

(7,923
)
(2,096
)
(35,177
)
Net income
69,315

—

15,967

2,717

87,999

 
70,110

—

15,984

3,993

90,087

Less: Net income attributable to noncontrolling interests, net of income tax
(6,747
)
—

(1,078
)
—

(7,825
)
 
(4,785
)
—

(1,043
)
—

(5,828
)
Net income attributable to Global Payments
$
62,568

$
—

$
14,889

$
2,717

$
80,174

 
$
65,325

$
—

$
14,941

$
3,993

$
84,259

 
 
 
 
 
 
 
 
 
 
 
 
Diluted shares
67,306

 
 
 
67,306

 
66,196

 
 
 
66,196

Diluted earnings per share
$
0.93

$
—

$
0.22

$
0.04

$
1.19

 
$
0.99

$
—

$
0.23

$
0.06

$
1.27


1Represents adjustments to revenues for gross-up related payments (included in operating expenses) associated with certain wholesale lines of business to reflect economic benefits to the Company.

2Represents adjustments to exclude acquisition-related amortization expense, stock compensation expense and the related income tax benefits of each.

3Represents a gain on the sale of a component of our Russia business that leased ATMs to our sponsor bank in Russia.

4The revenue adjustment represents select U.K. customer payments related to a vendor outage and the expense adjustment represents certain business tax assessments in the U.S. for prior periods.

5The adjustments represent charges related to employee termination benefits, non-cash losses from the retirement of property and equipment, a transaction-related tax associated with our acquisition of Realex, reversal of previously recorded interest expense associated with a previously uncertain tax position and the related income tax effects of each.

See "Non-GAAP Financial Measures" discussion on Schedule 8.


13