GLOBAL PAYMENTS INC - FORM 8-K - EX-99.1 - PRESS RELEASE

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8-K - FORM 8-K - GLOBAL PAYMENTS INC	d8k.htm

Exhibit 99.1

LOGO

Contact: Jane M. Elliott

770-829-8234 Voice

770-829-8267 Fax

investor.relations@globalpay.com

Global Payments Reports Second Quarter Earnings

ATLANTA, January 6, 2011 — 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).

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.”

—More—

GPN Reports Second Quarter Earnings

January 6, 2011

Page 2

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.

GPN Reports Second Quarter Earnings

January 6, 2011

Page 3

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


	Three Months Ended November 30,									Six Months Ended November 30,
(In thousands, except per share data)	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


	Three Months Ended November 30,									Six Months Ended November 30,
(In thousands, except per share data)	2010			2009			% Change			2010			2009			% Change
	Normalized¹			GAAP²						Normalized¹			GAAP²
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

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


	Three Months Ended November 30,									Six Months Ended November 30,
(In thousands, except per share data)	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


	Three Months Ended November 30,
	2010									2009						% Change
(In thousands)	GAAP			Normalized			Cash Earnings			GAAP			Cash Earnings			GAAP			Normalized to GAAP¹			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 GAAP¹			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


	November 30			May 31,
(In thousands)	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


	Six Months Ended November 30,
(In thousands)	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


	Three Months Ended November 30,
	2010																	2009⁴
(In thousands, except per share data)	GAAP			Employee Termination and Other¹					Normalized			Cash Earnings Adjustments³			Cash Earnings			GAAP			Cash Earnings Adjustments³			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																	2009⁴
	GAAP			Employee Termination and Other¹			Foreign Tax Rate²		Normalized			Cash Earnings Adjustments³			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

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


	Three Months Ended November 30,
	2010													2009
(In thousands)	GAAP			Employee Termination and Other¹		Normalized			Cash Earnings Adjustments²		Cash Earnings			GAAP			Cash Earnings Adjustments²		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 Other¹		Normalized			Cash Earnings Adjustments²		Cash Earnings			GAAP			Cash Earnings Adjustments²		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

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


	Three Months Ended												Fiscal Year Ended			Three Months Ended
(In thousands, except per share data)	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


	Three Months Ended
	8/31/2009³									11/30/2009³
(In thousands, except per share data)	GAAP			Cash Earnings Adjustments¹			Cash Earnings			GAAP			Cash Earnings Adjustments¹			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 2/28/2010³									Three Months Ended May 31, 2010
	GAAP			Cash Earnings Adjustments¹			Cash Earnings			GAAP			Employee Termination²			Normalized			Cash Earnings Adjustments¹			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


	Fiscal Year Ended May 31 2010,
(In thousands, except per share data)	GAAP			Employee Termination¹			Normalized			Cash Earnings Adjustments²			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


	Three Months Ended August 31, 2010
(In thousands, except per share data)	GAAP			Employee Termination and Other¹			Foreign Tax Rate²		Normalized			Cash Earnings Adjustments³			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 Other¹					Normalized			Cash Earnings Adjustments³			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.

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