PR Newswire
ATLANTA, Jan. 6, 2011
ATLANTA, Jan. 6, 2011 /PRNewswire/ -- Global Payments Inc. (NYSE: GPN) today announced results for its fiscal second quarter ended November 30, 2010. For the second quarter, revenues grew 8% to $443.5 million compared to $409.0 million in the prior fiscal year. Normalized diluted earnings per share from continuing operations for the quarter were $0.70 compared to $0.71 in the prior year (See Schedule 2 Normalized Income Statements). On a GAAP basis, the company reported fiscal 2011 second quarter diluted earnings per share from continuing operations for the quarter of $0.67 compared to $0.71 in the prior year (See Schedule 1 for GAAP Income Statements).
(Logo: http://photos.prnewswire.com/prnh/20010221/ATW031LOGO )
Normalized second quarter results exclude pretax expenses consisting of certain start-up and duplicative costs related to the company's Global Service Center in Manila, Philippines and employee termination benefits related to Canada. (See Schedule 7 for Reconciliation of Normalized and Cash Earnings to GAAP).
Chairman and CEO Paul R. Garcia stated, "Our performance demonstrates continued execution of our growth strategies in all of our regions. In aggregate, the businesses performed as we expected during the quarter, with especially strong performance in Asia. Given our solid performance to date and some benefit from favorable currency exchange rates, we are pleased to increase our organic revenue and earnings expectations for the year.
I am also delighted that we have closed our 'la Caixa' acquisition which will of course generate additional revenues and cash earnings. Just as importantly, 'la Caixa' provides us a leading market position in Spain from which to drive long term growth."
David E. Mangum, EVP and CFO, stated, "In an effort to assist investors in reviewing the company's underlying performance, and with the acquisition of 'la Caixa', we are supplementing our financial reporting with earnings per share on a cash basis, which excludes the impact of acquisition-related amortization, special or non-recurring charges, and their related tax effects. On a cash basis, the company reported fiscal 2011 second quarter diluted earnings per share from continuing operations comparable to the prior year quarter of $0.76." (See Schedule 3 Cash Earnings income statements).
The company expects the "la Caixa" joint venture to add revenue of $25 million to $30 million and to be dilutive to our GAAP and normalized earnings per share by $0.02 to $0.04 for fiscal 2011 and accretive by $0.02 to $0.04 to cash earnings per share.
For the full year of fiscal 2011, including the addition of the "la Caixa" joint venture, the company now expects revenue of $1,780 million to $1,820 million, or 8% to 11% growth over fiscal 2010, and diluted earnings per share from continuing operations on a cash basis of $2.95 to $3.06, reflecting 5% to 9% growth over fiscal 2010, normalized earnings per share from continuing operations of $2.66 to $2.77, reflecting growth of 5% to 9% and GAAP diluted earnings per share from continuing operations of $2.54 to $2.65 (See Schedule 9 for full details on guidance with and without the impact of "la Caixa").
Conference Call
Global Payments will hold a conference call today, January 6, 2011 at 5:00 p.m. ET to discuss financial results and business highlights. Callers may access the conference call via the company's Web site 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' Web site through January 18, 2011.
Global Payments Inc. (NYSE: GPN) is a leading provider of electronic transaction processing services for merchants, Independent Sales Organizations (ISOs), financial institutions, government agencies and multi-national corporations located throughout the United States, Canada, Europe, and the Asia-Pacific region. Global Payments, a Fortune 1000 company, offers a comprehensive line of processing solutions for credit and debit cards, business-to-business purchasing cards, gift cards, electronic check conversion and check guarantee, verification and recovery including electronic check services, as well as terminal management. Visit www.globalpaymentsinc.com for more information about the company and its services.
This announcement and comments made by Global Payments' management during the conference call may contain certain forward-looking statements within the meaning of the "safe-harbor" provisions of the Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including revenue and earnings estimates and management's expectations regarding future events and developments, are forward-looking statements and are subject to significant risks and uncertainties. Important factors that may cause actual events or results to differ materially from those anticipated by such forward-looking statements include the following: the effect of current economic conditions in Spain and their anticipated austerity measures on our ability to drive sales and achieve long-term growth in the market; foreign currency risks which become increasingly relevant as we expand internationally, the effect of current worldwide economic conditions, including a decline in the value of the U.S. dollar, and future performance and integration of recent acquisitions, and other risks detailed in the company's SEC filings, including the most recently filed Form 10-Q or Form 10-K, as applicable. The company undertakes no obligation to revise any of these statements to reflect future circumstances or the occurrence of unanticipated events.
SCHEDULE 1 | |||||||||||||||
UNAUDITED GAAP CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||
GLOBAL PAYMENTS INC. AND SUBSIDIARIES | |||||||||||||||
(In thousands, except per share data) | |||||||||||||||
Three Months Ended November 30, | Six Months Ended November 30, | ||||||||||||||
2010 | 2009 | % Change | 2010 | 2009 | % Change | ||||||||||
Revenues | $ 443,526 | $ 408,951 | 8% | $ 883,665 | $ 818,882 | 8% | |||||||||
Operating expenses: | |||||||||||||||
Cost of service | 154,205 | 144,881 | 6% | 305,246 | 286,084 | 7% | |||||||||
Sales, general and administrative | 206,178 | 175,368 | 18% | 413,168 | 354,853 | 16% | |||||||||
360,383 | 320,249 | 13% | 718,414 | 640,937 | 12% | ||||||||||
Operating income | 83,143 | 88,702 | (6%) | 165,251 | 177,945 | (7%) | |||||||||
Other income (expense): | |||||||||||||||
Interest and other income | 4,072 | 690 | 490% | 5,608 | 1,380 | 306% | |||||||||
Interest and other expense | (4,299) | (4,423) | (3%) | (9,140) | (8,564) | 7% | |||||||||
(227) | (3,733) | NM | (3,532) | (7,184) | NM | ||||||||||
Income from continuing operations before income taxes | 82,916 | 84,969 | (2%) | 161,719 | 170,761 | (5%) | |||||||||
Provision for income taxes | (24,546) | (23,655) | 4% | (49,527) | (49,191) | 1% | |||||||||
Income from continuing operations | 58,370 | 61,314 | (5%) | 112,192 | 121,570 | (8%) | |||||||||
(Loss) income from discontinued operations, net of tax | (487) | 4,868 | NM | (515) | 7,056 | NM | |||||||||
Net income including noncontrolling interests | 57,883 | 66,182 | (13%) | 111,677 | 128,626 | (13%) | |||||||||
Less: Net income attributable to noncontrolling interests, net of tax | (4,378) | (3,347) | 31% | (8,804) | (7,960) | 11% | |||||||||
Net income attributable to Global Payments | $ 53,505 | $ 62,835 | (15%) | $ 102,873 | $ 120,666 | (15%) | |||||||||
Amounts attributable to Global Payments: | |||||||||||||||
Income from continuing operations | $ 53,992 | $ 57,967 | (7%) | $ 103,388 | $ 113,610 | (9%) | |||||||||
(Loss) income from discontinued operations, net of tax | (487) | 4,868 | NM | (515) | 7,056 | NM | |||||||||
Net income attributable to Global Payments | $ 53,505 | $ 62,835 | (15%) | $ 102,873 | $ 120,666 | (15%) | |||||||||
Basic earnings per share attributable to Global Payments: | |||||||||||||||
Income from continuing operations | $ 0.68 | $ 0.71 | (4%) | $ 1.30 | $ 1.40 | (7%) | |||||||||
(Loss) income from discontinued operations, net of tax | (0.01) | 0.06 | NM | (0.01) | 0.09 | NM | |||||||||
Net income attributable to Global Payments | $ 0.67 | $ 0.77 | (13%) | $ 1.29 | $ 1.49 | (13%) | |||||||||
Diluted earnings per share attributable to Global Payments: | |||||||||||||||
Income from continuing operations | $ 0.67 | $ 0.71 | (6%) | $ 1.29 | $ 1.39 | (7%) | |||||||||
(Loss) income from discontinued operations, net of tax | - | 0.05 | NM | (0.01) | 0.09 | NM | |||||||||
Net income attributable to Global Payments | $ 0.67 | $ 0.76 | (12%) | $ 1.28 | $ 1.48 | (14%) | |||||||||
Weighted average shares outstanding: | |||||||||||||||
Basic | 79,701 | 81,236 | 79,642 | 80,890 | |||||||||||
Diluted | 80,344 | 82,188 | 80,310 | 81,786 | |||||||||||
NM - Not Meaningful | |||||||||||||||
SCHEDULE 2 | |||||||||||||||
NORMALIZED EARNINGS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO GLOBAL PAYMENTS | |||||||||||||||
GLOBAL PAYMENTS INC. AND SUBSIDIARIES | |||||||||||||||
(In thousands, except per share data) | |||||||||||||||
Three Months Ended November 30, | Six Months Ended November 30, | ||||||||||||||
2010 | 2009 | % Change | 2010 | 2009 | % Change | ||||||||||
Normalized(1) | GAAP(2) | Normalized(1) | GAAP(2) | ||||||||||||
Revenues | $ 443,526 | $ 408,951 | 8% | $ 883,665 | $ 818,882 | 8% | |||||||||
Operating expenses: | |||||||||||||||
Cost of service | 152,975 | 144,881 | 6% | 303,420 | 286,084 | 6% | |||||||||
Sales, general and administrative | 203,425 | 175,368 | 16% | 407,821 | 354,853 | 15% | |||||||||
356,400 | 320,249 | 11% | 711,241 | 640,937 | 11% | ||||||||||
Operating income | 87,126 | 88,702 | (2%) | 172,424 | 177,945 | (3%) | |||||||||
Other income (expense): | |||||||||||||||
Interest and other income | 4,072 | 690 | 490% | 5,608 | 1,380 | 306% | |||||||||
Interest and other expense | (4,299) | (4,423) | (3%) | (9,140) | (8,564) | 7% | |||||||||
(227) | (3,733) | NM | (3,532) | (7,184) | NM | ||||||||||
Income from continuing operations before income taxes | 86,899 | 84,969 | 2% | 168,892 | 170,761 | (1%) | |||||||||
Provision for income taxes | (25,982) | (23,655) | 10% | (49,646) | (49,191) | 1% | |||||||||
Income from continuing operations including noncontrolling interests | 60,917 | 61,314 | (1%) | 119,246 | 121,570 | (2%) | |||||||||
Less: Net income attributable to noncontrolling interests, net of tax | (4,378) | (3,347) | 31% | (8,804) | (7,960) | 11% | |||||||||
Net income from continuing operations attributable to Global Payments | $ 56,539 | $ 57,967 | (2%) | $ 110,442 | $ 113,610 | (3%) | |||||||||
Basic earnings per share | $ 0.71 | $ 0.71 | 0% | $ 1.39 | $ 1.40 | (1%) | |||||||||
Diluted earnings per share | $ 0.70 | $ 0.71 | (1%) | $ 1.38 | $ 1.39 | (1%) | |||||||||
Weighted average shares outstanding: | |||||||||||||||
Basic | 79,701 | 81,236 | 79,642 | 80,890 | |||||||||||
Diluted | 80,344 | 82,188 | 80,310 | 81,786 | |||||||||||
NM - Not Meaningful | |||||||||||||||
1 Normalized results exclude expenses consisting of $1.6 million and $2.3 million during the three and six months ended November 30, 2010, respectively, of start-up costs related to our new Global Service Center in Manila, Philippines and $2.4 million and $4.8 million during the three and six months ended November 30, 2010, respectively, related to employee termination and relocation benefits. Results for the six months ended November 30, 2010 also exclude a $2.5 million one-time, non-cash write-down of a deferred tax asset we established in July 2009 when we purchased the remaining 49% of our UK business. The write-down resulted from a legislated reduction to the tax rate of 1%. See schedule 7 for reconciliation of normalized earnings from continuing operations to GAAP. | |||||||||||||||
2 There were no normalized adjustments during the three and six months ended November 30, 2009. | |||||||||||||||
SCHEDULE 3 | |||||||||||||||
CASH EARNINGS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO GLOBAL PAYMENTS | |||||||||||||||
GLOBAL PAYMENTS INC. AND SUBSIDIARIES | |||||||||||||||
(In thousands, except per share data) | |||||||||||||||
Three Months Ended November 30, | Six Months Ended November 30, | ||||||||||||||
2010 | 2009 | % Change | 2010 | 2009 | % Change | ||||||||||
Revenues | $ 443,526 | $ 408,951 | 8% | $ 883,665 | $ 818,882 | 8% | |||||||||
Operating expenses: | |||||||||||||||
Cost of service | 145,003 | 136,539 | 6% | 287,774 | 269,859 | 7% | |||||||||
Sales, general and administrative | 203,425 | 175,368 | 16% | 407,821 | 354,853 | 15% | |||||||||
348,428 | 311,907 | 12% | 695,595 | 624,712 | 11% | ||||||||||
Operating income | 95,098 | 97,044 | (2%) | 188,070 | 194,170 | (3%) | |||||||||
Other income (expense): | |||||||||||||||
Interest and other income | 4,072 | 690 | 490% | 5,608 | 1,380 | 306% | |||||||||
Interest and other expense | (4,299) | (4,423) | (3%) | (9,140) | (8,564) | 7% | |||||||||
(227) | (3,733) | NM | (3,532) | (7,184) | NM | ||||||||||
Income from continuing operations before income taxes | 94,871 | 93,311 | 2% | 184,538 | 186,986 | (1%) | |||||||||
Provision for income taxes | (28,843) | (26,914) | 7% | (54,793) | (54,916) | (0%) | |||||||||
Income from continuing operations including noncontrolling interests | 66,028 | 66,397 | (1%) | 129,745 | 132,070 | (2%) | |||||||||
Less: Net income attributable to noncontrolling interests, net of tax | (4,701) | (3,698) | 27% | (9,440) | (8,622) | 9% | |||||||||
Net income from continuing operations attributable to Global Payments | $ 61,327 | $ 62,699 | (2%) | $ 120,305 | $ 123,448 | (3%) | |||||||||
Basic earnings per share | $ 0.77 | $ 0.77 | 0% | $ 1.51 | $ 1.53 | (1%) | |||||||||
Diluted earnings per share | $ 0.76 | $ 0.76 | 0% | $ 1.50 | $ 1.51 | (1%) | |||||||||
Weighted average shares outstanding: | |||||||||||||||
Basic | 79,701 | 81,236 | 79,642 | 80,890 | |||||||||||
Diluted | 80,344 | 82,188 | 80,310 | 81,786 | |||||||||||
NM - Not Meaningful | |||||||||||||||
Cash earnings exclude acquisition intangible amortization expense from continuing operations and the related income tax benefit. See schedule 7 for reconciliation of cash earnings from continuing operations to GAAP. | |||||||||||||||
SCHEDULE 4 | ||||||||||||||||||||||||
SEGMENT INFORMATION CONTINUING OPERATIONS | ||||||||||||||||||||||||
GLOBAL PAYMENTS INC. AND SUBSIDIARIES | ||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Three Months Ended November 30, | ||||||||||||||||||||||||
2010 | 2009 | % Change | ||||||||||||||||||||||
GAAP | Normalized | Cash Earnings | GAAP | Cash Earnings | GAAP | Normalized to GAAP(1) | Cash Earnings | |||||||||||||||||
Revenues: | ||||||||||||||||||||||||
United States | $ 245,671 | $ 245,671 | $ 245,671 | $ 220,934 | $ 220,934 | 11% | 11% | 11% | ||||||||||||||||
Canada | 81,453 | 81,453 | 81,453 | 78,236 | 78,236 | 4% | 4% | 4% | ||||||||||||||||
North America merchant services | 327,124 | 327,124 | 327,124 | 299,170 | 299,170 | 9% | 9% | 9% | ||||||||||||||||
Europe | 79,881 | 79,881 | 79,881 | 84,143 | 84,143 | (5%) | (5%) | (5%) | ||||||||||||||||
Asia-Pacific | 36,521 | 36,521 | 36,521 | 25,638 | 25,638 | 42% | 42% | 42% | ||||||||||||||||
International merchant services | 116,402 | 116,402 | 116,402 | 109,781 | 109,781 | 6% | 6% | 6% | ||||||||||||||||
Total revenues | $ 443,526 | $ 443,526 | $ 443,526 | $ 408,951 | $ 408,951 | 8% | 8% | 8% | ||||||||||||||||
Operating income: | ||||||||||||||||||||||||
North America merchant services | $ 67,131 | $ 67,131 | $ 70,287 | $ 73,643 | $ 76,305 | (9%) | (9%) | (8%) | ||||||||||||||||
International merchant services | 35,349 | 35,349 | 40,165 | 30,750 | 36,430 | 15% | 15% | 10% | ||||||||||||||||
Corporate | (19,337) | (15,354) | (15,354) | (15,691) | (15,691) | (23%) | 2% | 2% | ||||||||||||||||
Operating income | $ 83,143 | $ 87,126 | $ 95,098 | $ 88,702 | $ 97,044 | (6%) | (2%) | (2%) | ||||||||||||||||
Six Months Ended November 30 | |||||||||||||||||||||||
2010 | 2009 | % Change | |||||||||||||||||||||
GAAP | Normalized | Cash Earnings | GAAP | Cash Earnings | GAAP | Normalized to GAAP(1) | Cash Earnings | ||||||||||||||||
Revenues: | |||||||||||||||||||||||
United States | $ 501,302 | $ 501,302 | $ 501,302 | $ 443,699 | $ 443,699 | 13% | 13% | 13% | |||||||||||||||
Canada | 162,666 | 162,666 | 162,666 | 159,461 | 159,461 | 2% | 2% | 2% | |||||||||||||||
North America merchant services | 663,968 | 663,968 | 663,968 | 603,160 | 603,160 | 10% | 10% | 10% | |||||||||||||||
Europe | 153,677 | 153,677 | 153,677 | 164,610 | 164,610 | (7%) | (7%) | (7%) | |||||||||||||||
Asia-Pacific | 66,020 | 66,020 | 66,020 | 51,112 | 51,112 | 29% | 29% | 29% | |||||||||||||||
International merchant services | 219,697 | 219,697 | 219,697 | 215,722 | 215,722 | 2% | 2% | 2% | |||||||||||||||
Total revenues | $ 883,665 | $ 883,665 | $ 883,665 | $ 818,882 | $ 818,882 | 8% | 8% | 8% | |||||||||||||||
Operating income: | |||||||||||||||||||||||
North America merchant services | $ 135,499 | $ 135,499 | $ 141,672 | $ 149,564 | $ 154,473 | (9%) | (9%) | (8%) | |||||||||||||||
International merchant services | 66,742 | 66,742 | 76,215 | 59,499 | 70,815 | 12% | 12% | 8% | |||||||||||||||
Corporate | (36,990) | (29,817) | (29,817) | (31,118) | (31,118) | (19%) | 4% | 4% | |||||||||||||||
Operating income | $ 165,251 | $ 172,424 | $ 188,070 | $ 177,945 | $ 194,170 | (7%) | (3%) | (3%) | |||||||||||||||
See Schedule 8 for reconciliation of normalized and cash earnings segment information to GAAP. | |||||||||||||||||||||||
1 There were no normalized adjustments during the three and six months ended November 30, 2009. | |||||||||||||||||||||||
SCHEDULE 5 | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
GLOBAL PAYMENTS INC. AND SUBSIDIARIES | |||||||
(In thousands) | |||||||
November 30 | May 31, | ||||||
2010 | 2010 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ 663,660 | $ 769,946 | |||||
Accounts receivable, net of allowances for doubtful accounts of $353 and $269, respectively | 149,366 | 131,817 | |||||
Claims receivable, net of allowance for losses of $4,308 and $4,208, respectively | 909 | 664 | |||||
Settlement processing assets | 81,192 | 13,741 | |||||
Inventory | 7,737 | 9,740 | |||||
Deferred income taxes | 4,027 | 2,752 | |||||
Prepaid expenses and other current assets | 21,767 | 39,604 | |||||
Total current assets | 928,658 | 968,264 | |||||
Goodwill | 590,911 | 569,090 | |||||
Other intangible assets, net of accumulated amortization of $164,171 and $145,076, respectively | 198,687 | 205,110 | |||||
Property and equipment, net of accumulated depreciation of $142,121 and $119,402, respectively | 219,944 | 183,938 | |||||
Deferred income taxes | 96,080 | 90,470 | |||||
Other | 22,310 | 22,454 | |||||
Total assets | $ 2,056,590 | $ 2,039,326 | |||||
LIABILITIES AND EQUITY | |||||||
Current liabilities: | |||||||
Lines of credit | $ 180,881 | $ 79,187 | |||||
Notes payable - current portion | 143,094 | 148,169 | |||||
Accounts payable and accrued liabilities | 177,879 | 173,575 | |||||
Settlement processing obligations | 94,887 | 265,110 | |||||
Income taxes payable | 9,244 | 6,430 | |||||
Total current liabilities | 605,985 | 672,471 | |||||
Notes payable | 202,610 | 272,965 | |||||
Deferred income taxes | 95,426 | 88,265 | |||||
Other long-term liabilities | 38,825 | 31,436 | |||||
Total liabilities | 942,846 | 1,065,137 | |||||
Commitments and contingencies | |||||||
Redeemable noncontrolling interest | 115,279 | 102,672 | |||||
Equity: | |||||||
Preferred stock, no par value; 5,000,000 shares authorized and none issued | - | - | |||||
Common stock, no par value; 200,000,000 shares authorized; 82,472,803 issued | |||||||
and 79,745,066 outstanding at November 30, 2010 and 82,028,945 issued and | |||||||
79,646,055 outstanding at May 31, 2010 | - | - | |||||
Paid-in capital | 469,372 | 460,747 | |||||
Retained earnings | 636,594 | 544,772 | |||||
Treasury stock; 2,727,737 and 2,382,890 shares at November 30, 2010 and May 31, 2010, | |||||||
respectively | (112,980) | (100,000) | |||||
Accumulated other comprehensive loss | (4,457) | (44,255) | |||||
Total Global Payments shareholders' equity | 988,529 | 861,264 | |||||
Noncontrolling interest | 9,936 | 10,253 | |||||
Total equity | 998,465 | 871,517 | |||||
Total liabilities and equity | $ 2,056,590 | $ 2,039,326 | |||||
SCHEDULE 6 | |||||||||
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||
GLOBAL PAYMENTS INC. AND SUBSIDIARIES | |||||||||
(In thousands) | |||||||||
Six Months Ended November 30, | |||||||||
2010 | 2009 | ||||||||
Cash flows from operating activities: | |||||||||
Net income including noncontrolling interests | $ 111,677 | $ 128,626 | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||
Depreciation and amortization of property and equipment | 19,082 | 17,441 | |||||||
Amortization of acquired intangibles | 15,646 | 16,264 | |||||||
Share-based compensation expense | 7,690 | 7,433 | |||||||
Provision for operating losses and bad debts | 10,146 | 13,152 | |||||||
Deferred income taxes | 3,287 | (18,091) | |||||||
Estimated loss on disposal of discontinued operations | - | 15,850 | |||||||
Other, net | (3,556) | (151) | |||||||
Changes in operating assets and liabilities, net of the effects of acquisitions: | |||||||||
Accounts receivable | (17,549) | (7,869) | |||||||
Claims receivable | (8,095) | (8,052) | |||||||
Settlement processing assets and obligations, net | (239,970) | 617,802 | |||||||
Inventory | 1,954 | (7,274) | |||||||
Prepaid expenses and other assets | (4,600) | 2,299 | |||||||
Payables to money transfer beneficiaries | - | (5,082) | |||||||
Accounts payable and other accrued liabilities | 18,990 | 13,642 | |||||||
Income taxes payable | 24,382 | (768) | |||||||
Net cash (used in) provided by operating activities | (60,916) | 785,222 | |||||||
Cash flows from investing activities: | |||||||||
Business and intangible asset acquisitions, net of cash acquired | (3,488) | (17,059) | |||||||
Capital expenditures | (51,709) | (20,677) | |||||||
Preliminary settlement of working capital adjustments from disposition of business | (1,921) | - | |||||||
Net decrease (increase) in financing receivables | 991 | (501) | |||||||
Proceeds from sale of investment and contractual rights, net | - | 253 | |||||||
Net cash used in investing activities | (56,127) | (37,984) | |||||||
Cash flows from financing activities: | |||||||||
Net borrowings (payments) on lines of credit | 101,694 | (351) | |||||||
Proceeds from notes payable | 4,410 | 302,487 | |||||||
Principal payments under notes payable | (83,331) | (49,509) | |||||||
Acquisition of redeemable noncontrolling interests | - | (307,675) | |||||||
Proceeds from stock issued under share-based compensation plans | 1,962 | 18,017 | |||||||
Repurchase of common stock | (14,900) | - | |||||||
Tax benefit from share-based compensation | 118 | 4,037 | |||||||
Distribution to noncontrolling interests | (4,385) | (16,258) | |||||||
Dividends paid | (3,180) | (3,245) | |||||||
Net cash provided by (used in) financing activities | 2,388 | (52,497) | |||||||
Effect of exchange rate changes on cash | 8,369 | 6,522 | |||||||
(Decrease) increase in cash and cash equivalents | (106,286) | 701,263 | |||||||
Cash and cash equivalents, beginning of period | 769,946 | 426,935 | |||||||
Cash and cash equivalents, end of period | $ 663,660 | $ 1,128,198 | |||||||
SCHEDULE 7 | ||||||||||||
RECONCILIATION OF NORMALIZED AND CASH EARNINGS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO GLOBAL PAYMENTS TO GAAP | ||||||||||||
GLOBAL PAYMENTS INC. AND SUBSIDIARIES | ||||||||||||
(In thousands, except per share data) | ||||||||||||
Three Months Ended November 30, | ||||||||||||
2010 | 2009(4) | |||||||||||
GAAP | Employee Termination and Other(1) | Normalized | Cash Earnings Adjustments(3) | Cash Earnings | GAAP | Cash Earnings Adjustments(3) | Cash Earnings | |||||
Revenues | $ 443,526 | $ - | $ 443,526 | $ - | $ 443,526 | $ 408,951 | $ - | $ 408,951 | ||||
Operating expenses: | ||||||||||||
Cost of service | 154,205 | (1,230) | 152,975 | (7,972) | 145,003 | 144,881 | (8,342) | 136,539 | ||||
Sales, general and administrative | 206,178 | (2,753) | 203,425 | - | 203,425 | 175,368 | - | 175,368 | ||||
360,383 | (3,983) | 356,400 | (7,972) | 348,428 | 320,249 | (8,342) | 311,907 | |||||
Operating income | 83,143 | 3,983 | 87,126 | 7,972 | 95,098 | 88,702 | 8,342 | 97,044 | ||||
Other income (expense): | ||||||||||||
Interest and other income | 4,072 | - | 4,072 | - | 4,072 | 690 | - | 690 | ||||
Interest and other expense | (4,299) | - | (4,299) | - | (4,299) | (4,423) | - | (4,423) | ||||
(227) | - | (227) | - | (227) | (3,733) | - | (3,733) | |||||
Income from continuing operations before income taxes | 82,916 | 3,983 | 86,899 | 7,972 | 94,871 | 84,969 | 8,342 | 93,311 | ||||
Provision for income taxes | (24,546) | (1,436) | (25,982) | (2,861) | (28,843) | (23,655) | (3,259) | (26,914) | ||||
Income from continuing operations | 58,370 | 2,547 | 60,917 | 5,111 | 66,028 | 61,314 | 5,083 | 66,397 | ||||
Less: Net income attributable to noncontrolling interests, net of tax | (4,378) | - | (4,378) | (323) | (4,701) | (3,347) | (351) | (3,698) | ||||
Net income from continuing operations attributable to Global Payments | $ 53,992 | $ 2,547 | $ 56,539 | $ 4,788 | $ 61,327 | $ 57,967 | $ 4,732 | $ 62,699 | ||||
Diluted shares | 80,344 | 80,344 | 80,344 | 82,188 | 82,188 | |||||||
Diluted earnings per share | $ 0.67 | $ 0.03 | $ 0.70 | $ 0.06 | $ 0.76 | $ 0.71 | $ 0.05 | $ 0.76 | ||||
Six Months Ended November 30, | ||||||||||||
2010 | 2009(4) | |||||||||||
GAAP | Employee Termination and Other(1) | Foreign Tax Rate(2) | Normalized | Cash Earnings Adjustments(3) | Cash Earnings | GAAP | Cash Earnings Adjustments | Cash Earnings | ||||
Revenues | $ 883,665 | $ - | $ - | $ 883,665 | $ - | $ 883,665 | $ 818,882 | $ - | $ 818,882 | |||
Operating expenses: | ||||||||||||
Cost of service | 305,246 | (1,826) | - | 303,420 | (15,646) | 287,774 | 286,084 | (16,225) | 269,859 | |||
Sales, general and administrative | 413,168 | (5,347) | - | 407,821 | - | 407,821 | 354,853 | - | 354,853 | |||
718,414 | (7,173) | - | 711,241 | (15,646) | 695,595 | 640,937 | (16,225) | 624,712 | ||||
Operating income | 165,251 | 7,173 | - | 172,424 | 15,646 | 188,070 | 177,945 | 16,225 | 194,170 | |||
Other income (expense): | ||||||||||||
Interest and other income | 5,608 | - | - | 5,608 | - | 5,608 | 1,380 | - | 1,380 | |||
Interest and other expense | (9,140) | - | - | (9,140) | - | (9,140) | (8,564) | - | (8,564) | |||
(3,532) | - | - | (3,532) | - | (3,532) | (7,184) | - | (7,184) | ||||
Income from continuing operations before income taxes | 161,719 | 7,173 | - | 168,892 | 15,646 | 184,538 | 170,761 | 16,225 | 186,986 | |||
Provision for income taxes | (49,527) | (2,598) | 2,479 | (49,646) | (5,147) | (54,793) | (49,191) | (5,725) | (54,916) | |||
Income from continuing operations | 112,192 | 4,575 | 2,479 | 119,246 | 10,499 | 129,745 | 121,570 | 10,500 | 132,070 | |||
Less: Net income attributable to noncontrolling interests, net of tax | (8,804) | - | - | (8,804) | (636) | (9,440) | (7,960) | (662) | (8,622) | |||
Net income from continuing operations attributable to Global Payments | $ 103,388 | $ 4,575 | $ 2,479 | $ 110,442 | $ 9,863 | $ 120,305 | $ 113,610 | $ 9,838 | $ 123,448 | |||
Diluted shares | 80,310 | 80,310 | 80,310 | 81,786 | 81,786 | |||||||
Diluted earnings per share | $ 1.29 | $ 0.06 | $ 0.03 | $ 1.38 | $ 0.12 | $ 1.50 | $ 1.39 | $ 0.12 | $ 1.51 | |||
1 Reflects expenses of $1.6 million and $2.3 million during the three and six months ended November 30, 2010, respectively, of start-up costs related to our new Global Service Center in Manila, Philippines and $2.4 million and $4.8 million during the three and six months ended November 30, 2010, respectively, related to employee termination and relocation benefits, and the related income tax benefits. | ||||||||||||
2 Represents a one-time, non-cash write-down of a deferred tax asset we established in July 2009 when we purchased the remaining 49% of our UK business. The write-down resulted from a legislated reduction to the tax rate of 1%. | ||||||||||||
3 Represents adjustments to cost of service to exclude acquisition intangible amortization expense from continuing operations and the related income tax benefit. | ||||||||||||
4 There were no normalized adjustments during the three and six months ended November 30, 2009. | ||||||||||||
We supplemented our reporting of income from continuing operations and the related earnings per share information determined in accordance with GAAP by reporting income from continuing operations and the related earnings per share for the three and six months ended November 30, 2010 and 2009 on a “normalized” and "cash earnings" basis in this earnings release as a measure to help evaluate performance. We calculated income from continuing operations and earnings per share on a normalized basis by excluding charges related to employee termination and relocation benefits, certain one-time costs related to our new Global Service Center and the legislated tax rate reduction. We calculated income from continuing operations on a cash earnings basis by excluding acquisition intangible amortization expense from our normalized results. We exclude these charges in order to more clearly focus on the factors we believe are pertinent to the daily management of our operations. Our income from continuing operations and earnings per share reported on a normalized and cash earnings basis should be considered in addition to, and not as a substitute for, income from continuing operations and earnings per share determined in accordance with GAAP. Our measures of income from continuing operations and earnings per share on a normalized and 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 NORMALIZED AND CASH EARNINGS SEGMENT INFORMATION TO GAAP | |||||||||||||||||
GLOBAL PAYMENTS INC. AND SUBSIDIARIES | |||||||||||||||||
(In thousands) | |||||||||||||||||
Three Months Ended November 30, | |||||||||||||||||
2010 | 2009 | ||||||||||||||||
GAAP | Employee Termination and Other(1) | Normalized | Cash Earnings Adjustments(2) | Cash Earnings | GAAP | Cash Earnings Adjustments(2) | Cash Earnings | ||||||||||
Revenues: | |||||||||||||||||
United States | $ 245,671 | $ - | $ 245,671 | $ - | $ 245,671 | $ 220,934 | $ - | $ 220,934 | |||||||||
Canada | 81,453 | - | 81,453 | - | 81,453 | 78,236 | - | 78,236 | |||||||||
North America merchant services | 327,124 | - | 327,124 | - | 327,124 | 299,170 | - | 299,170 | |||||||||
Europe | 79,881 | - | 79,881 | - | 79,881 | 84,143 | - | 84,143 | |||||||||
Asia-Pacific | 36,521 | - | 36,521 | - | 36,521 | 25,638 | - | 25,638 | |||||||||
International merchant services | 116,402 | - | 116,402 | - | 116,402 | 109,781 | - | 109,781 | |||||||||
Total revenues | $ 443,526 | $ - | $ 443,526 | $ - | $ 443,526 | $ 408,951 | $ - | $ 408,951 | |||||||||
Operating income: | |||||||||||||||||
North America merchant services | $ 67,131 | $ - | $ 67,131 | $ 3,156 | $ 70,287 | $ 73,643 | $ 2,662 | $ 76,305 | |||||||||
International merchant services | 35,349 | - | 35,349 | 4,816 | 40,165 | 30,750 | 5,680 | 36,430 | |||||||||
Corporate | (19,337) | 3,983 | (15,354) | - | (15,354) | (15,691) | - | (15,691) | |||||||||
Operating income | $ 83,143 | $ 3,983 | $ 87,126 | $ 7,972 | $ 95,098 | $ 88,702 | $ 8,342 | $ 97,044 | |||||||||
Six Months Ended November 30, | |||||||||||||||||
2010 | 2009 | ||||||||||||||||
GAAP | Employee Termination and Other(1) | Normalized | Cash Earnings Adjustments(2) | Cash Earnings | GAAP | Cash Earnings Adjustments(2) | Cash Earnings | ||||||||||
Revenues: | |||||||||||||||||
United States | $ 501,302 | $ - | $ 501,302 | $ - | $ 501,302 | $ 443,699 | $ - | $ 443,699 | |||||||||
Canada | 162,666 | - | 162,666 | - | 162,666 | 159,461 | - | 159,461 | |||||||||
North America merchant services | 663,968 | - | 663,968 | - | 663,968 | 603,160 | - | 603,160 | |||||||||
Europe | 153,677 | - | 153,677 | - | 153,677 | 164,610 | - | 164,610 | |||||||||
Asia-Pacific | 66,020 | - | 66,020 | - | 66,020 | 51,112 | - | 51,112 | |||||||||
International merchant services | 219,697 | - | 219,697 | - | 219,697 | 215,722 | - | 215,722 | |||||||||
Total revenues | $ 883,665 | $ - | $ 883,665 | $ - | $ 883,665 | $ 818,882 | $ - | $ 818,882 | |||||||||
Operating income: | |||||||||||||||||
North America merchant services | $ 135,499 | $ - | $ 135,499 | $ 6,173 | $ 141,672 | $ 149,564 | $ 4,909 | $ 154,473 | |||||||||
International merchant services | 66,742 | - | 66,742 | 9,473 | 76,215 | 59,499 | 11,316 | 70,815 | |||||||||
Corporate | (36,990) | 7,173 | (29,817) | - | (29,817) | (31,118) | - | (31,118) | |||||||||
Operating income | $ 165,251 | $ 7,173 | $ 172,424 | $ 15,646 | $ 188,070 | $ 177,945 | $ 16,225 | $ 194,170 | |||||||||
1 Reflects expenses of $1.6 million and $2.3 million during the three and six months ended November 30, 2010, respectively, of start-up costs related to our new Global Service Center in Manila, Philippines and $2.4 million and $4.8 million during the three and six months ended November 30, 2010, respectively, related to employee termination and relocation benefits. There were no normalized adjustments during the three and six months ended November 30, 2009. | |||||||||||||||||
2 Represents acquisition intangible amortization expense from continuing operations. | |||||||||||||||||
SCHEDULE 9 | |||||||||||||||||
OUTLOOK SUMMARY | |||||||||||||||||
GLOBAL PAYMENTS INC. AND SUBSIDIARIES | |||||||||||||||||
(In millions, except per share data) | |||||||||||||||||
Fiscal 2010 Actual | Fiscal 2011 Outlook Before "la Caixa" JV | Fiscal 2011 Outlook "la Caixa" JV | Fiscal 2011 Outlook Including "la Caixa" JV | % Change FY10 | |||||||||||||
Revenue Outlook | |||||||||||||||||
Revenues | $ 1,642 | $1,755 to $1,790 | $25 to $30 | $1,780 to 1,820 | 8% to 11% | ||||||||||||
EPS Outlook | |||||||||||||||||
GAAP diluted EPS from continuing operations | $ 2.52 | $2.58 to $2.67 | ($0.04) to ($0.02) | $2.54 to $2.65 | 1% to 5% | ||||||||||||
Employee Termination1 | 0.02 | $0.12 | -- | $0.12 | |||||||||||||
Normalized diluted EPS from continuing operations | $ 2.54 | $2.70 to $2.79 | ($0.04) to ($0.02) | $2.66 to $2.77 | 5% to 9% | ||||||||||||
Acquisition-related intangibles1 | 0.26 | $0.23 | $0.06 | $0.29 | --- | ||||||||||||
Cash EPS from continuing operations | $ 2.80 | $2.93 to $3.02 | $0.02 to $0.04 | $2.95 to $3.06 | 5% to 9% | ||||||||||||
1 See Schedule 12 for detail of Fiscal 2010 charges. | |||||||||||||||||
SCHEDULE 10 | ||||||||||||||||||||
CASH EARNINGS PER SHARE - HISTORICAL | ||||||||||||||||||||
GLOBAL PAYMENTS INC. AND SUBSIDIARIES | ||||||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||||||
Three Months Ended | Fiscal Year Ended | Three Months Ended | ||||||||||||||||||
8/31/09 | 11/30/09 | 2/28/10 | 5/31/10 | 5/31/10 | 8/31/10 | 11/30/10 | ||||||||||||||
Revenues | $ 409,932 | $ 408,951 | $ 398,535 | $ 425,050 | $ 1,642,468 | $ 440,138 | $ 443,526 | |||||||||||||
Operating expenses: | ||||||||||||||||||||
Cost of service | 133,320 | 136,539 | 137,840 | 144,146 | 551,845 | 142,771 | 145,003 | |||||||||||||
Sales, general and administrative | 179,485 | 175,368 | 178,484 | 198,660 | 731,997 | 204,396 | 203,425 | |||||||||||||
312,805 | 311,907 | 316,324 | 342,806 | 1,283,842 | 347,167 | 348,428 | ||||||||||||||
Operating income | 97,127 | 97,044 | 82,211 | 82,244 | 358,626 | 92,971 | 95,098 | |||||||||||||
Other income (expense): | ||||||||||||||||||||
Interest and other income | 690 | 690 | 1,319 | 1,930 | 4,629 | 1,537 | 4,072 | |||||||||||||
Interest and other expense | (4,141) | (4,423) | (4,141) | (4,814) | (17,519) | (4,841) | (4,299) | |||||||||||||
(3,451) | (3,733) | (2,822) | (2,884) | (12,890) | (3,304) | (227) | ||||||||||||||
Income from continuing operations before income taxes | 93,676 | 93,311 | 79,389 | 79,360 | 345,736 | 89,667 | 94,871 | |||||||||||||
Provision for income taxes | (28,002) | (26,914) | (22,531) | (21,143) | (98,590) | (25,950) | (28,843) | |||||||||||||
Income from continuing operations including noncontrolling interests | 65,674 | 66,397 | 56,858 | 58,217 | 247,146 | 63,717 | 66,028 | |||||||||||||
Less: Net income attributable to noncontrolling interests, net of tax | (4,924) | (3,698) | (3,343) | (5,177) | (17,142) | (4,739) | (4,701) | |||||||||||||
Net income from continuing operations attributable to Global Payments | $ 60,750 | $ 62,699 | $ 53,515 | $ 53,040 | $ 230,004 | $ 58,978 | $ 61,327 | |||||||||||||
Diluted shares | 81,298 | 82,188 | 82,636 | 82,142 | 82,120 | 80,339 | 80,344 | |||||||||||||
Diluted earnings per share | $ 0.75 | $ 0.76 | $ 0.65 | $ 0.65 | $ 2.80 | $ 0.73 | $ 0.76 | |||||||||||||
See Schedules 11, 12 and 13 for reconciliation of normalized and cash earnings from continuing operations to GAAP. | ||||||||||||||||||||
We supplemented our historical reporting of income from continuing operations and the related earnings per share information determined in accordance with GAAP by reporting income from continuing operations and the related earnings per share on a "cash earnings" basis in this earnings release as a measure to help evaluate performance. We calculated income from continuing operations on a cash earnings basis by excluding acquisition intangible amortization expense from our normalized results. We exclude these charges in order to more clearly focus on the factors we believe are pertinent to the daily management of our operations. Our income from continuing operations and earnings per share reported on a cash earnings basis should be considered in addition to, and not as a substitute for, income from continuing operations and earnings per share determined in accordance with GAAP. Our measures of income from continuing operations and earnings per share on a cash earnings basis reflect management’s judgment of particular items, and may not be comparable to similarly titled measures reported by other companies. | ||||||||||||||||||||
SCHEDULE 11 | |||||||||
RECONCILIATION OF HISTORICAL CASH EARNINGS PER SHARE TO GAAP - FISCAL 2010 QUARTERLY | |||||||||
GLOBAL PAYMENTS INC. AND SUBSIDIARIES | |||||||||
(In thousands, except per share data) | |||||||||
Three Months Ended | |||||||||
8/31/2009(3) | 11/30/2009(3) | ||||||||
GAAP | Cash Earnings Adjustments(1) | Cash Earnings | GAAP | Cash Earnings Adjustments(1) | Cash Earnings | ||||
Revenues | $ 409,932 | $ - | $ 409,932 | $ 408,951 | $ - | $ 408,951 | |||
Operating expenses: | |||||||||
Cost of service | 141,204 | (7,884) | 133,320 | 144,881 | (8,342) | 136,539 | |||
Sales, general and administrative | 179,485 | - | 179,485 | 175,368 | - | 175,368 | |||
320,689 | (7,884) | 312,805 | 320,249 | (8,342) | 311,907 | ||||
Operating income | 89,243 | 7,884 | 97,127 | 88,702 | 8,342 | 97,044 | |||
Other income (expense): | |||||||||
Interest and other income | 690 | - | 690 | 690 | - | 690 | |||
Interest and other expense | (4,141) | - | (4,141) | (4,423) | - | (4,423) | |||
(3,451) | - | (3,451) | (3,733) | - | (3,733) | ||||
Income from continuing operations before income taxes | 85,792 | 7,884 | 93,676 | 84,969 | 8,342 | 93,311 | |||
Provision for income taxes | (25,536) | (2,466) | (28,002) | (23,655) | (3,259) | (26,914) | |||
Income from continuing operations | 60,256 | 5,418 | 65,674 | 61,314 | 5,083 | 66,397 | |||
Less: Net income attributable to noncontrolling interests, net of tax | (4,613) | (311) | (4,924) | (3,347) | (351) | (3,698) | |||
Net income from continuing operations attributable to Global Payments | $ 55,643 | $ 5,107 | $ 60,750 | $ 57,967 | $ 4,732 | $ 62,699 | |||
Diluted shares | 81,298 | 81,298 | 82,188 | 82,188 | |||||
Diluted earnings per share | $ 0.68 | $ 0.07 | $ 0.75 | $ 0.71 | $ 0.05 | $ 0.76 | |||
Three Months Ended 2/28/2010(3) | Three Months Ended May 31, 2010 | ||||||||||
GAAP | Cash Earnings Adjustments(1) | Cash Earnings | GAAP | Employee Termination(2) | Normalized | Cash Earnings Adjustments(1) | Cash Earnings | ||||
Revenues | $ 398,535 | $ - | $ 398,535 | $ 425,050 | $ - | $ 425,050 | $ - | $ 425,050 | |||
Operating expenses: | |||||||||||
Cost of service | 146,202 | (8,362) | 137,840 | 152,322 | - | 152,322 | (8,176) | 144,146 | |||
Sales, general and administrative | 178,484 | - | 178,484 | 201,243 | (2,583) | 198,660 | - | 198,660 | |||
324,686 | (8,362) | 316,324 | 353,565 | (2,583) | 350,982 | (8,176) | 342,806 | ||||
Operating income | 73,849 | 8,362 | 82,211 | 71,485 | 2,583 | 74,068 | 8,176 | 82,244 | |||
Other income (expense): | |||||||||||
Interest and other income | 1,319 | - | 1,319 | 1,930 | - | 1,930 | - | 1,930 | |||
Interest and other expense | (4,141) | - | (4,141) | (4,814) | - | (4,814) | - | (4,814) | |||
(2,822) | - | (2,822) | (2,884) | - | (2,884) | - | (2,884) | ||||
Income from continuing operations before income taxes | 71,027 | 8,362 | 79,389 | 68,601 | 2,583 | 71,184 | 8,176 | 79,360 | |||
Provision for income taxes | (20,298) | (2,233) | (22,531) | (17,890) | (946) | (18,836) | (2,307) | (21,143) | |||
Income from continuing operations | 50,729 | 6,129 | 56,858 | 50,711 | 1,637 | 52,348 | 5,869 | 58,217 | |||
Less: Net income attributable to noncontrolling interests, net of tax | (2,990) | (353) | (3,343) | (4,842) | - | (4,842) | (335) | (5,177) | |||
Net income from continuing operations attributable to Global Payments | $ 47,739 | $ 5,776 | $ 53,515 | $ 45,869 | $ 1,637 | $ 47,506 | $ 5,534 | $ 53,040 | |||
Diluted shares | 82,636 | 82,636 | 82,142 | 82,142 | 82,142 | ||||||
Diluted earnings per share | $ 0.58 | $ 0.07 | $ 0.65 | $ 0.56 | $ 0.02 | $ 0.58 | $ 0.07 | $ 0.65 | |||
1 Represents adjustments to cost of service to exclude acquisition intangible amortization expense from continuing operations and the related income tax benefit. | |||||||||||
2 Represents amounts due to our former President and Chief Operating Officer pursuant to his termination agreement dated April 21, 2010. Also reflects the related income tax benefit. | |||||||||||
3 There were no normalized adjustments during the three months ended August 30, 2009, November 30, 2009 and February 28, 2010. | |||||||||||
We supplemented our historical reporting of income from continuing operations and the related earnings per share information determined in accordance with GAAP by reporting income from continuing operations and the related earnings per share for the four quarters of fiscal 2010 on a "cash earnings" basis in this earnings release as a measure to help evaluate performance. We calculated income from continuing operations on a cash earnings basis by excluding acquisition intangible amortization expense from our normalized results. We exclude these charges in order to more clearly focus on the factors we believe are pertinent to the daily management of our operations. Our income from continuing operations and earnings per share reported on a cash earnings basis should be considered in addition to, and not as a substitute for, income from continuing operations and earnings per share determined in accordance with GAAP. Our measures of income from continuing operations and earnings per share on a cash earnings basis reflect management’s judgment of particular items, and may not be comparable to similarly titled measures reported by other companies. | |||||||||||
SCHEDULE 12 | |||||||
RECONCILIATION OF HISTORICAL CASH EARNINGS PER SHARE TO GAAP - FISCAL 2010 | |||||||
GLOBAL PAYMENTS INC. AND SUBSIDIARIES | |||||||
(In thousands, except per share data) | |||||||
Fiscal Year Ended May 31 2010, | |||||||
GAAP | Employee Termination(1) | Normalized | Cash Earnings Adjustments(2) | Cash Earnings | |||
Revenues | $ 1,642,468 | $ - | $ 1,642,468 | $ - | $ 1,642,468 | ||
Operating expenses: | |||||||
Cost of service | 584,609 | - | 584,609 | (32,764) | 551,845 | ||
Sales, general and administrative | 734,580 | (2,583) | 731,997 | - | 731,997 | ||
1,319,189 | (2,583) | 1,316,606 | (32,764) | 1,283,842 | |||
Operating income | 323,279 | 2,583 | 325,862 | 32,764 | 358,626 | ||
Other income (expense): | |||||||
Interest and other income | 4,629 | - | 4,629 | - | 4,629 | ||
Interest and other expense | (17,519) | - | (17,519) | - | (17,519) | ||
(12,890) | - | (12,890) | - | (12,890) | |||
Income from continuing operations before income taxes | 310,389 | 2,583 | 312,972 | 32,764 | 345,736 | ||
Provision for income taxes | (87,379) | (946) | (88,325) | (10,265) | (98,590) | ||
Income from continuing operations | 223,010 | 1,637 | 224,647 | 22,499 | 247,146 | ||
Less: Net income attributable to noncontrolling interests, net of tax | (15,792) | - | (15,792) | (1,350) | (17,142) | ||
Net income from continuing operations attributable to Global Payments | $ 207,218 | $ 1,637 | $ 208,855 | $ 21,149 | $ 230,004 | ||
Diluted shares | 82,120 | 82,120 | 82,120 | ||||
Diluted earnings per share | $ 2.52 | $ 0.02 | $ 2.54 | $ 0.26 | $ 2.80 | ||
1 Represents amounts due to our former President and Chief Operating Officer pursuant to his termination agreement dated April 21, 2010. Also reflects the related income tax benefit. | |||||||
2 Represents adjustments to cost of service to exclude acquisition intangible amortization expense from continuing operations and the related income tax benefit. | |||||||
We supplemented our historical reporting of income from continuing operations and the related earnings per share information determined in accordance with GAAP by reporting income from continuing operations and the related earnings per share for fiscal year 2010 on a "cash earnings" basis in this earnings release as a measure to help evaluate performance. We calculated income from continuing operations on a cash earnings basis by excluding acquisition intangible amortization expense from our normalized results. We exclude these charges in order to more clearly focus on the factors we believe are pertinent to the daily management of our operations. Our income from continuing operations and earnings per share reported on a cash earnings basis should be considered in addition to, and not as a substitute for, income from continuing operations and earnings per share determined in accordance with GAAP. Our measures of income from continuing operations and earnings per share on a cash earnings basis reflect management’s judgment of particular items, and may not be comparable to similarly titled measures reported by other companies. | |||||||
SCHEDULE 13 | ||||||||
RECONCILIATION OF HISTORICAL CASH EARNINGS PER SHARE TO GAAP - FISCAL 2011 QUARTERLY | ||||||||
GLOBAL PAYMENTS INC. AND SUBSIDIARIES | ||||||||
(In thousands, except per share data) | ||||||||
Three Months Ended August 31, 2010 | ||||||||
GAAP | Employee Termination and Other(1) | Foreign Tax Rate(2) | Normalized | Cash Earnings Adjustments(3) | Cash Earnings | |||
Revenues | $ 440,138 | $ - | $ - | $ 440,138 | $ - | $ 440,138 | ||
Operating expenses: | ||||||||
Cost of service | 151,041 | (596) | - | 150,445 | (7,674) | 142,771 | ||
Sales, general and administrative | 206,990 | (2,594) | - | 204,396 | - | 204,396 | ||
358,031 | (3,190) | - | 354,841 | (7,674) | 347,167 | |||
Operating income | 82,107 | 3,190 | - | 85,297 | 7,674 | 92,971 | ||
Other income (expense): | ||||||||
Interest and other income | 1,537 | - | - | 1,537 | - | 1,537 | ||
Interest and other expense | (4,841) | - | - | (4,841) | - | (4,841) | ||
(3,304) | - | - | (3,304) | - | (3,304) | |||
Income from continuing operations before income taxes | 78,803 | 3,190 | - | 81,993 | 7,674 | 89,667 | ||
Provision for income taxes | (24,981) | (1,162) | 2,479 | (23,664) | (2,286) | (25,950) | ||
Income from continuing operations | 53,822 | 2,028 | 2,479 | 58,329 | 5,388 | 63,717 | ||
Less: Net income attributable to noncontrolling interests, net of tax | (4,426) | - | - | (4,426) | (313) | (4,739) | ||
Net income from continuing operations attributable to Global Payments | $ 49,396 | $ 2,028 | $ 2,479 | $ 53,903 | $ 5,075 | $ 58,978 | ||
Diluted shares | 80,339 | 80,339 | 80,339 | |||||
Diluted earnings per share | $ 0.61 | $ 0.03 | $ 0.03 | $ 0.67 | $ 0.06 | $ 0.73 | ||
Three Months Ended November 30, 2010 | ||||||||
GAAP | Employee Termination and Other(1) | Normalized | Cash Earnings Adjustments(3) | Cash Earnings | ||||
Revenues | $ 443,526 | $ - | $ 443,526 | $ - | $ 443,526 | |||
Operating expenses: | ||||||||
Cost of service | 154,205 | (1,230) | 152,975 | (7,972) | 145,003 | |||
Sales, general and administrative | 206,178 | (2,753) | 203,425 | - | 203,425 | |||
360,383 | (3,983) | 356,400 | (7,972) | 348,428 | ||||
Operating income | 83,143 | 3,983 | 87,126 | 7,972 | 95,098 | |||
Other income (expense): | ||||||||
Interest and other income | 4,072 | - | 4,072 | - | 4,072 | |||
Interest and other expense | (4,299) | - | (4,299) | - | (4,299) | |||
(227) | - | (227) | - | (227) | ||||
Income from continuing operations before income taxes | 82,916 | 3,983 | 86,899 | 7,972 | 94,871 | |||
Provision for income taxes | (24,546) | (1,436) | (25,982) | (2,861) | (28,843) | |||
Income from continuing operations | 58,370 | 2,547 | 60,917 | 5,111 | 66,028 | |||
Less: Net income attributable to noncontrolling interests, net of tax | (4,378) | - | (4,378) | (323) | (4,701) | |||
Net income from continuing operations attributable to Global Payments | $ 53,992 | $ 2,547 | $ 56,539 | $ 4,788 | $ 61,327 | |||
Diluted shares | 80,344 | 80,344 | 80,344 | |||||
Diluted earnings per share | $ 0.67 | $ 0.03 | $ 0.70 | $ 0.06 | $ 0.76 | |||
1 Reflects expenses of start-up costs related to our new Global Service Center in Manila, Philippines and employee termination and relocation benefits and the related income tax benefits. | ||||||||
2 Represents a one-time, non-cash write-down of a deferred tax asset we established in July 2009 when we purchased the remaining 49% of our UK business. The write-down resulted from a legislated reduction to the tax rate of 1%. | ||||||||
3 Represents adjustments to cost of service to exclude acquisition intangible amortization expense from continuing operations and the related income tax benefit. | ||||||||
We supplemented our historical reporting of income from continuing operations and the related earnings per share information determined in accordance with GAAP by reporting income from continuing operations and the related earnings per share for the three months ended August 31, 2010 and November 30, 2010 on a "cash earnings" basis in this earnings release as a measure to help evaluate performance. We calculated income from continuing operations on a cash earnings basis by excluding acquisition intangible amortization expense from our normalized results. We exclude these charges in order to more clearly focus on the factors we believe are pertinent to the daily management of our operations. Our income from continuing operations and earnings per share reported on a cash earnings basis should be considered in addition to, and not as a substitute for, income from continuing operations and earnings per share determined in accordance with GAAP. Our measures of income from continuing operations and earnings per share on a cash earnings basis reflect management’s judgment of particular items, and may not be comparable to similarly titled measures reported by other companies. | ||||||||
Contact: | Jane M. Elliott | |
770-829-8234 Voice | ||
770-829-8267 Fax | ||
SOURCE Global Payments Inc.