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 Third Quarter Earnings

ATLANTA, March 31, 2011 — Global Payments Inc. (NYSE: GPN) today announced results for its fiscal third quarter ended February 28, 2011. For the third quarter, revenues grew 15% to $456.4 million compared to $398.5 million in the prior fiscal year. Normalized diluted earnings per share from continuing operations for the quarter were $0.63 compared to $0.58 in the prior year (See Schedule 2 Normalized Income Statements). On a GAAP basis, the company reported fiscal 2011 third quarter diluted earnings per share from continuing operations for the quarter of $0.60 compared to $0.58 in the prior year (See Schedule 1 for GAAP Income Statements).

Normalized third quarter results exclude pretax expenses consisting of certain start-up and duplicative costs related to the company’s Global Service Center in Manila, Philippines. These results also exclude certain employee termination and relocation benefits. (See Schedule 7 for Reconciliation of Normalized and Cash Earnings to GAAP).

Chairman and CEO Paul R. Garcia stated, “We are pleased with our solid third quarter results, which include our December 2010 acquisition in Spain. Our businesses performed as we expected during the quarter, and I am delighted that we have successfully completed the back-end settlement platform migration of our U.K. merchant portfolio to our own platform at the end of February as we anticipated.”

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GPN Reports Third Quarter Earnings

March 31, 2011

Page 2

David E. Mangum, EVP and CFO, stated, “On a cash basis, the company reported fiscal 2011 third quarter diluted earnings per share from continuing operations of $0.71 which represents 9% growth over the prior year quarter of $0.65.”

Cash Earnings exclude normalized adjustments and acquisition intangible amortization expense from continuing operations. (See Schedule 3 Cash Earnings Income Statements and Schedule 10 for Cash Earnings by Segment for details).

For the full year of fiscal 2011, including the addition of the “la Caixa” joint venture, the company now expects revenue of $1,800 million to $1,820 million, or 10% to 11% growth over fiscal 2010 which compares to the previous quarter’s range of $1,780 million to $1.820 million, or 8% to 10% growth over fiscal 2010. The company now expects diluted earnings per share from continuing operations on a cash basis of $2.99 to $3.06, reflecting 7% to 9% growth over fiscal 2010, this compares to our previous quarter’s expectations of $2.95 to $3.06, or 5% to 9% growth over fiscal 2010. Normalized earnings per share from continuing operations expectations are now $2.70 to $2.77, reflecting growth of 6% to 9% compared to previous quarter’s range of $2.66 to $2.77, or 5% to 9% growth and GAAP diluted earnings per share from continuing operations of $2.58 to $2.65, which previously was $2.54 to $2.65.

Conference Call

Global Payments will hold a conference call today, March 31, 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 April 21, 2011.

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GPN Reports Third Quarter Earnings

March 31, 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

(In thousands, except per share data)


	Three Months Ended February 28,						% Change			Nine Months Ended February 28,						% Change
	2011			2010			% Change			2011			2010			% Change

Revenues	$	456,382		$	398,535			15	%	$	1,340,047		$	1,217,418			10	%

Operating expenses:
Cost of service		168,332			146,202			15	%		473,578			432,287			10	%
Sales, general and administrative		209,851			178,484			18	%		623,019			533,337			17	%

		378,183			324,686			16	%		1,096,597			965,624			14	%


Operating income		78,199			73,849			6	%		243,450			251,794			(3	%)

Other income (expense):
Interest and other income		1,631			1,319			24	%		7,239			2,699			168	%
Interest and other expense		(4,315	)		(4,141	)		4	%		(13,455	)		(12,704	)		6	%

		(2,684	)		(2,822	)		(5	%)		(6,216	)		(10,005	)		(38	%)


Income from continuing operations before income taxes		75,515			71,027			6	%		237,234			241,789			(2	%)
Provision for income taxes		(20,962	)		(20,298	)		3	%		(70,489	)		(69,489	)		1	%

Income from continuing operations		54,553			50,729			8	%		166,745			172,300			(3	%)
(Loss) income from discontinued operations, net of tax		(430	)		722			NM			(946	)		7,778			NM

Net income including noncontrolling interests		54,123			51,451			5	%		165,799			180,078			(8	%)
Less: Net income attributable to noncontrolling interests, net of tax		(6,334	)		(2,990	)		112	%		(15,138	)		(10,951	)		38	%

Net income attributable to Global Payments	$	47,789		$	48,461			(1	%)	$	150,661		$	169,127			(11	%)


Amounts attributable to Global Payments:
Income from continuing operations	$	48,219		$	47,739			1	%	$	151,607		$	161,349			(6	%)
(Loss) income from discontinued operations, net of tax		(430	)		722			NM			(946	)		7,778			NM

Net income attributable to Global Payments	$	47,789		$	48,461			(1	%)	$	150,661		$	169,127			(11	%)


Basic earnings per share attributable to Global Payments:
Income from continuing operations	$	0.60		$	0.59			2	%	$	1.90		$	1.99			(5	%)
(Loss) income from discontinued operations, net of tax		—			0.01			NM			(0.01	)		0.10			NM

Net income attributable to Global Payments	$	0.60		$	0.60			0	%	$	1.89		$	2.09			(10	%)


Diluted earnings per share attributable to Global Payments:
Income from continuing operations	$	0.60		$	0.58			3	%	$	1.89		$	1.96			(4	%)
(Loss) income from discontinued operations, net of tax		(0.01	)		0.01			NM			(0.02	)		0.10			NM

Net income attributable to Global Payments	$	0.59		$	0.59			0	%	$	1.87		$	2.06			(9	%)


Weighted average shares outstanding:
Basic		79,897			81,539						79,711			81,102
Diluted		80,733			82,636						80,413			82,181

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 February 28,						% Change			Nine Months Ended February 28,						% Change
	2011			2010			% Change			2011			2010			% Change
	Normalized¹			GAAP²						Normalized¹			GAAP²

Revenues	$	456,382		$	398,535			15	%	$	1,340,047		$	1,217,418			10	%

Operating expenses:
Cost of service		167,922			146,202			15	%		471,517			432,287			9	%
Sales, general and administrative		206,694			178,484			16	%		614,340			533,337			15	%

		374,616			324,686			15	%		1,085,857			965,624			12	%


Operating income		81,766			73,849			11	%		254,190			251,794			1	%

Other income (expense):
Interest and other income		1,631			1,319			24	%		7,239			2,699			168	%
Interest and other expense		(4,315	)		(4,141	)		4	%		(13,455	)		(12,704	)		6	%

		(2,684	)		(2,822	)		(5	%)		(6,216	)		(10,005	)		(38	%)


Income from continuing operations before income taxes		79,082			71,027			11	%		247,974			241,789			3	%
Provision for income taxes		(21,727	)		(20,298	)		7	%		(71,394	)		(69,489	)		3	%

Income from continuing operations including noncontrolling interests		57,355			50,729			13	%		176,580			172,300			2	%
Less: Net income attributable to noncontrolling interests, net of tax		(6,334	)		(2,990	)		112	%		(15,138	)		(10,951	)		38	%

Net income from continuing operations attributable to Global Payments	$	51,021		$	47,739			7	%	$	161,442		$	161,349			0	%


Basic earnings per share	$	0.64		$	0.59			8	%	$	2.03		$	1.99			2	%


Diluted earnings per share	$	0.63		$	0.58			9	%	$	2.01		$	1.96			3	%


Weighted average shares outstanding:
Basic		79,897			81,539						79,711			81,102
Diluted		80,733			82,636						80,413			82,181

NM - Not Meaningful

Normalized results exclude expenses consisting of $2.4 million and $4.7 million during the three and nine months ended February 28, 2011, respectively, of start-up costs related to our new Global Service Center in Manila, Philippines and expenses of $1.2 million and $6.0 million during the three and nine months ended February 28, 2011, respectively, related to employee termination and relocation benefits. Results for the nine months ended February 28, 2011 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 nine months ended February 28, 2010.

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 February 28,						% Change			Nine Months Ended February 28,						% Change
	2011			2010			% Change			2011			2010			% Change

Revenues	$	456,382		$	398,535			15	%	$	1,340,047		$	1,217,418			10	%

Operating expenses:
Cost of service		156,082			137,840			13	%		444,031			407,699			9	%
Sales, general and administrative		206,694			178,484			16	%		614,340			533,337			15	%

		362,776			316,324			15	%		1,058,371			941,036			12	%


Operating income		93,606			82,211			14	%		281,676			276,382			2	%

Other income (expense):
Interest and other income		1,631			1,319			24	%		7,239			2,699			168	%
Interest and other expense		(4,315	)		(4,141	)		4	%		(13,455	)		(12,704	)		6	%

		(2,684	)		(2,822	)		(5	%)		(6,216	)		(10,005	)		(38	%)


Income from continuing operations before income taxes		90,922			79,389			15	%		275,460			266,377			3	%
Provision for income taxes		(25,214	)		(22,531	)		12	%		(80,027	)		(77,447	)		3	%

Income from continuing operations including noncontrolling interests		65,708			56,858			16	%		195,433			188,930			3	%
Less: Net income attributable to noncontrolling interests, net of tax		(8,121	)		(3,343	)		143	%		(17,561	)		(11,966	)		47	%

Net income from continuing operations attributable to Global Payments	$	57,587		$	53,515			8	%	$	177,872		$	176,964			1	%


Basic earnings per share	$	0.72		$	0.66			9	%	$	2.23		$	2.18			2	%


Diluted earnings per share	$	0.71		$	0.65			9	%	$	2.21		$	2.15			3	%


Weighted average shares outstanding:
Basic		79,897			81,539						79,711			81,102
Diluted		80,733			82,636						80,413			82,181

NM - Not Meaningful

Cash earnings exclude normalized adjustments and 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 February 28,
	2011									2010						% Change
	GAAP			Normalized			Cash Earnings			GAAP			Cash Earnings			GAAP			Normalized to GAAP¹			Cash Earnings

Revenues:
United States	$	249,194		$	249,194		$	249,194		$	216,168		$	216,168			15	%		15	%		15	%
Canada		81,066			81,066			81,066			77,092			77,092			5	%		5	%		5	%

North America merchant services		330,260			330,260			330,260			293,260			293,260			13	%		13	%		13	%

Europe		90,531			90,531			90,531			78,174			78,174			16	%		16	%		16	%
Asia-Pacific		35,591			35,591			35,591			27,101			27,101			31	%		31	%		31	%

International merchant services		126,122			126,122			126,122			105,275			105,275			20	%		20	%		20	%


Total revenues	$	456,382		$	456,382		$	456,382		$	398,535		$	398,535			15	%		15	%		15	%


Operating income:
North America merchant services	$	62,916		$	62,916		$	66,122		$	60,855		$	63,667			3	%		3	%		4	%
International merchant services		35,537			35,537			44,171			28,853			34,403			23	%		23	%		28	%
Corporate		(20,254	)		(16,687	)		(16,687	)		(15,859	)		(15,859	)		(28	%)		(5	%)		(5	%)

Operating income	$	78,199		$	81,766		$	93,606		$	73,849		$	82,211			6	%		11	%		14	%


	Nine Months Ended February 28,
	2011									2010						% Change
	GAAP			Normalized			Cash Earnings			GAAP			Cash Earnings			GAAP			Normalized to GAAP¹			Cash Earnings

Revenues:
United States	$	750,495		$	750,495		$	750,495		$	659,868		$	659,868			14	%		14	%		14	%
Canada		243,733			243,733			243,733			236,552			236,552			3	%		3	%		3	%

North America merchant services		994,228			994,228			994,228			896,420			896,420			11	%		11	%		11	%

Europe		244,208			244,208			244,208			242,785			242,785			1	%		1	%		1	%
Asia-Pacific		101,611			101,611			101,611			78,213			78,213			30	%		30	%		30	%

International merchant services		345,819			345,819			345,819			320,998			320,998			8	%		8	%		8	%

Total revenues	$	1,340,047		$	1,340,047		$	1,340,047		$	1,217,418		$	1,217,418			10	%		10	%		10	%


Operating income:
North America merchant services	$	198,415		$	198,415		$	207,793		$	210,419		$	218,140			(6	%)		(6	%)		(5	%)
International merchant services		102,279			102,279			120,387			88,353			105,220			16	%		16	%		14	%
Corporate		(57,244	)		(46,504	)		(46,504	)		(46,978	)		(46,978	)		(22	%)		1	%		1	%

Operating income	$	243,450		$	254,190		$	281,676		$	251,794		$	276,382			(3	%)		1	%		2	%

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

¹	There were no normalized adjustments during the three and nine months ended February 28, 2010.

SCHEDULE 5

CONSOLIDATED BALANCE SHEETS

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands)


	February 28 2011			May 31, 2010
	(Unaudited)

ASSETS
Current assets:
Cash and cash equivalents	$	1,329,065		$	769,946
Accounts receivable, net of allowances for doubtful accounts of $348 and $269, respectively		137,653			131,817
Claims receivable, net of allowance for losses of $4,196 and $4,208, respectively		861			664
Settlement processing assets		64,973			13,741
Inventory		9,834			9,740
Deferred income taxes		4,288			2,752
Prepaid expenses and other current assets		23,038			39,604

Total current assets		1,569,712			968,264


Goodwill		765,714			569,090
Other intangible assets, net of accumulated amortization of $181,472 and $145,076, respectively		347,639			205,110
Property and equipment, net of accumulated depreciation of $155,699 and $119,402, respectively		244,349			183,938
Deferred income taxes		101,252			90,470
Other		23,752			22,454


Total assets	$	3,052,418		$	2,039,326


LIABILITIES AND EQUITY
Current liabilities:
Lines of credit	$	188,961		$	79,187
Current portion of long-term debt		79,771			148,169
Accounts payable and accrued liabilities		200,179			173,575
Settlement processing obligations		765,020			265,110
Income taxes payable		3,987			6,430

Total current liabilities		1,237,918			672,471


Long-term debt		301,319			272,965
Deferred income taxes		101,702			88,265
Other long-term liabilities		45,571			31,436

Total liabilities		1,686,510			1,065,137


Commitments and contingencies

Redeemable noncontrolling interest		126,559			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; 82,793,925 issued and 80,066,188 outstanding at February 28, 2011 and 82,028,945 issued and 79,646,055 outstanding at May 31, 2010		—			—
Paid-in capital		484,757			460,747
Retained earnings		675,182			544,772
Treasury stock; 2,727,737 and 2,382,890 shares at February 28, 2011 and May 31, 2010, respectively		(112,980	)		(100,000	)
Accumulated other comprehensive income (loss)		49,283			(44,255	)

Total Global Payments shareholders’ equity		1,096,242			861,264

Noncontrolling interest		143,107			10,253

Total equity		1,239,349			871,517


Total liabilities and equity	$	3,052,418		$	2,039,326

SCHEDULE 6

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands)


	Nine Months Ended February 28,
	2011			2010

Cash flows from operating activities:
Net income including noncontrolling interests	$	165,799		$	180,078
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property and equipment		29,033			25,798
Amortization of acquired intangibles		27,486			24,627
Share-based compensation expense		11,748			11,843
Provision for operating losses and bad debts		15,301			18,713
Deferred income taxes		3,639			(21,023	)
Loss on disposal of discontinued operations		602			15,770
Other, net		(3,362	)		947
Changes in operating assets and liabilities, net of the effects of acquisitions:
Accounts receivable		(5,836	)		1,942
Claims receivable		(11,534	)		(11,552	)
Settlement processing assets and obligations, net		444,174			51,930
Inventory		(69	)		(6,785	)
Prepaid expenses and other assets		(7,997	)		(2,474	)
Payables to money transfer beneficiaries		—			(532	)
Accounts payable and other accrued liabilities		45,182			25,607
Income taxes payable		19,125			3,308

Net cash provided by operating activities		733,291			318,197


Cash flows from investing activities:
Business and intangible asset acquisitions, net of cash acquired		(167,775	)		(17,059	)
Capital expenditures		(77,095	)		(36,520	)
Preliminary settlement of working capital adjustments from disposition of business		(1,921	)		—
Net decrease (increase) in financing receivables		1,514			(649	)
Proceeds from sale of investment and contractual rights, net		—			297

Net cash used in investing activities		(245,277	)		(53,931	)


Cash flows from financing activities:
Net borrowings on lines of credit		109,774			339
Proceeds from issuance of long-term debt		202,155			304,964
Principal payments under long-term debt		(248,996	)		(50,958	)
Acquisition of redeemable noncontrolling interests		—			(307,675	)
Proceeds from stock issued under share-based compensation plans		12,072			20,699
Repurchase of common stock		(14,900	)		—
Tax benefit from share-based compensation		1,335			4,579
Distribution to noncontrolling interests		(6,650	)		(18,461	)
Dividends paid		(4,782	)		(4,877	)

Net cash provided by (used in) financing activities		50,008			(51,390	)


Effect of exchange rate changes on cash		21,097			1,965


Increase in cash and cash equivalents		559,119			214,841
Cash and cash equivalents, beginning of period		769,946			426,935
Cash and cash equivalents of discontinued operations		—			(52,156	)

Cash and cash equivalents, end of period	$	1,329,065		$	589,620

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 February 28,
	2011																	2010⁴
	GAAP			Employee Termination and Other¹					Normalized			Cash Earnings Adjustments³			Cash Earnings			GAAP			Cash Earnings Adjustments³			Cash Earnings

Revenues	$	456,382		$	—				$	456,382		$	—		$	456,382		$	398,535		$	—		$	398,535

Operating expenses:
Cost of service		168,332			(410	)				167,922			(11,840	)		156,082			146,202			(8,362	)		137,840
Sales, general and administrative		209,851			(3,157	)				206,694			—			206,694			178,484			—			178,484

		378,183			(3,567	)				374,616			(11,840	)		362,776			324,686			(8,362	)		316,324


Operating income		78,199			3,567					81,766			11,840			93,606			73,849			8,362			82,211

Other income (expense):
Interest and other income		1,631			—					1,631			—			1,631			1,319			—			1,319
Interest and other expense		(4,315	)		—					(4,315	)		—			(4,315	)		(4,141	)		—			(4,141	)

		(2,684	)		—					(2,684	)		—			(2,684	)		(2,822	)		—			(2,822	)


Income from continuing operations before income taxes		75,515			3,567					79,082			11,840			90,922			71,027			8,362			79,389
Provision for income taxes		(20,962	)		(765	)				(21,727	)		(3,487	)		(25,214	)		(20,298	)		(2,233	)		(22,531	)

Income from continuing operations		54,553			2,802					57,355			8,353			65,708			50,729			6,129			56,858
Less: Net income attributable to noncontrolling interests, net of tax		(6,334	)		—					(6,334	)		(1,787	)		(8,121	)		(2,990	)		(353	)		(3,343	)

Net income from continuing operations attributable to Global Payments	$	48,219		$	2,802				$	51,021		$	6,566		$	57,587		$	47,739		$	5,776		$	53,515


Diluted shares		80,733								80,733						80,733			82,636						82,636
Diluted earnings per share	$	0.60		$	0.03				$	0.63		$	0.08		$	0.71		$	0.58		$	0.07		$	0.65


	Nine Months Ended February 28,
	2011																	2010⁴
	GAAP			Employee Termination and Other¹			Foreign Tax Rate²		Normalized			Cash Earnings Adjustments³			Cash Earnings			GAAP			Cash Earnings Adjustments			Cash Earnings

Revenues	$	1,340,047		$	—		$	—	$	1,340,047		$	—		$	1,340,047		$	1,217,418		$	—		$	1,217,418

Operating expenses:
Cost of service		473,578			(2,061	)		—		471,517			(27,486	)		444,031			432,287			(24,588	)		407,699
Sales, general and administrative		623,019			(8,679	)		—		614,340			—			614,340			533,337			—			533,337

		1,096,597			(10,740	)		—		1,085,857			(27,486	)		1,058,371			965,624			(24,588	)		941,036


Operating income		243,450			10,740			—		254,190			27,486			281,676			251,794			24,588			276,382

Other income (expense):
Interest and other income		7,239			—			—		7,239			—			7,239			2,699			—			2,699
Interest and other expense		(13,455	)		—			—		(13,455	)		—			(13,455	)		(12,704	)		—			(12,704	)

		(6,216	)		—			—		(6,216	)		—			(6,216	)		(10,005	)		—			(10,005	)


Income from continuing operations before income taxes		237,234			10,740			—		247,974			27,486			275,460			241,789			24,588			266,377
Provision for income taxes		(70,489	)		(3,384	)		2,479		(71,394	)		(8,633	)		(80,027	)		(69,489	)		(7,958	)		(77,447	)

Income from continuing operations		166,745			7,356			2,479		176,580			18,853			195,433			172,300			16,630			188,930
Less: Net income attributable to noncontrolling interests, net of tax		(15,138	)		—			—		(15,138	)		(2,423	)		(17,561	)		(10,951	)		(1,015	)		(11,966	)

Net income from continuing operations attributable to Global Payments	$	151,607		$	7,356		$	2,479	$	161,442		$	16,430		$	177,872		$	161,349		$	15,615		$	176,964


Diluted shares		80,413								80,413						80,413			82,181						82,181
Diluted earnings per share	$	1.89		$	0.09		$	0.03	$	2.01		$	0.20		$	2.21		$	1.96		$	0.19		$	2.15

Reflects expenses of $2.4 million and $4.7 million during the three and nine months ended February 28, 2011, respectively, of start-up costs related to our new Global Service Center in Manila, Philippines and expenses of $1.2 million and $6.0 million during the three and nine months ended February 28, 2011, 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 nine months ended February 28, 2010.

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 nine months ended February 28, 2011 and 2010 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 February 28,
	2011													2010
	GAAP			Employee Termination and Other¹		Normalized			Cash Earnings Adjustments²		Cash Earnings			GAAP			Cash Earnings Adjustments²		Cash Earnings

Revenues:
United States	$	249,194		$	—	$	249,194		$	—	$	249,194		$	216,168		$	—	$	216,168
Canada		81,066			—		81,066			—		81,066			77,092			—		77,092

North America merchant services		330,260			—		330,260			—		330,260			293,260			—		293,260

Europe		90,531			—		90,531			—		90,531			78,174			—		78,174
Asia-Pacific		35,591			—		35,591			—		35,591			27,101			—		27,101

International merchant services		126,122			—		126,122			—		126,122			105,275			—		105,275


Total revenues	$	456,382		$	—	$	456,382		$	—	$	456,382		$	398,535		$	—	$	398,535


Operating income:
North America merchant services	$	62,916		$	—	$	62,916		$	3,206	$	66,122		$	60,855		$	2,812	$	63,667
International merchant services		35,537			—		35,537			8,634		44,171			28,853			5,550		34,403
Corporate		(20,254	)		3,567		(16,687	)		—		(16,687	)		(15,859	)		—		(15,859	)

Operating income	$	78,199		$	3,567	$	81,766		$	11,840	$	93,606		$	73,849		$	8,362	$	82,211


	Nine Months Ended February 28,
	2011													2010
	GAAP			Employee Termination and Other¹		Normalized			Cash Earnings Adjustments²		Cash Earnings			GAAP			Cash Earnings Adjustments²		Cash Earnings

Revenues:
United States	$	750,495		$	—	$	750,495		$	—	$	750,495		$	659,868		$	—	$	659,868
Canada		243,733			—		243,733			—		243,733			236,552			—		236,552

North America merchant services		994,228			—		994,228			—		994,228			896,420			—		896,420

Europe		244,208			—		244,208			—		244,208			242,785			—		242,785
Asia-Pacific		101,611			—		101,611			—		101,611			78,213			—		78,213

International merchant services		345,819			—		345,819			—		345,819			320,998			—		320,998


Total revenues	$	1,340,047		$	—	$	1,340,047		$	—	$	1,340,047		$	1,217,418		$	—	$	1,217,418


Operating income:
North America merchant services	$	198,415		$	—	$	198,415		$	9,378	$	207,793		$	210,419		$	7,721	$	218,140
International merchant services		102,279			—		102,279			18,108		120,387			88,353			16,867		105,220
Corporate		(57,244	)		10,740		(46,504	)		—		(46,504	)		(46,978	)		—		(46,978	)

Operating income	$	243,450		$	10,740	$	254,190		$	27,486	$	281,676		$	251,794		$	24,588	$	276,382

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

$2.62 to $2.67

($0.04) to ($0.02)

$2.58 to $2.65

2% to 5%

Employee Termination

0.02

$0.12

—

$0.12

Normalized diluted EPS from continuing operations

2.54

$2.74 to $2.79

($0.04) to ($0.02)

$2.70 to $2.77

6% to 9%

Acquisition-related intangibles

0.26

$0.23

$0.06

$0.29

—

Cash EPS from continuing operations

2.80

$2.97 to $3.02

$0.02 to $0.04

$2.99 to $3.06

7% to 9%

SCHEDULE 10

CASH EARNINGS - HISTORICAL SEGMENT INFORMATION

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands)


	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			2/28/11

Revenues:
United States	$	222,767		$	220,934		$	216,168		$	242,975		$	902,844		$	255,630		$	245,671		$	249,194
Canada		81,225			78,236			77,092			80,720			317,272			81,213			81,453			81,066

North America merchant services		303,992			299,170			293,260			323,695			1,220,116			336,843			327,124			330,260

Europe		80,467			84,143			78,174			72,238			315,023			73,796			79,881			90,531
Asia-Pacific		25,473			25,638			27,101			29,117			107,329			29,499			36,521			35,591

International merchant services		105,940			109,781			105,275			101,355			422,352			103,295			116,402			126,122


Total revenues	$	409,932		$	408,951		$	398,535		$	425,050		$	1,642,468		$	440,138		$	443,526		$	456,382


Operating income:
North America merchant services	$	78,168		$	76,305		$	63,667		$	67,848		$	285,989		$	71,384		$	70,287		$	66,122
International merchant services		34,386			36,430			34,403			30,640			135,860			36,051			40,165			44,171
Corporate		(15,427	)		(15,691	)		(15,859	)		(16,244	)		(63,223	)		(14,464	)		(15,354	)		(16,687	)

Operating income	$	97,127		$	97,044		$	82,211		$	82,244		$	358,626		$	92,971		$	95,098		$	93,606

See Schedules 11, 12 and 13 for reconciliation of normalized and cash earnings segment information to GAAP.

SCHEDULE 11

RECONCILIATION OF HISTORICAL CASH EARNINGS SEGMENT INFORMATION TO GAAP - FISCAL 2010 QUARTERLY

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands)


	Three Months Ended
	August 31, 2009								November 30, 2009
	GAAP			Cash Earnings Adjustments¹		Cash Earnings			GAAP			Cash Earnings Adjustments¹		Cash Earnings

Revenues:
United States	$	222,767		$	—	$	222,767		$	220,934		$	—	$	220,934
Canada		81,225			—		81,225			78,236			—		78,236

North America merchant services		303,992			—		303,992			299,170			—		299,170

Europe		80,467			—		80,467			84,143			—		84,143
Asia-Pacific		25,473			—		25,473			25,638			—		25,638

International merchant services		105,940			—		105,940			109,781			—		109,781


Total revenues	$	409,932		$	—	$	409,932		$	408,951		$	—	$	408,951


Operating income:
North America merchant services	$	75,921		$	2,247	$	78,168		$	73,643		$	2,662	$	76,305
International merchant services		28,749			5,637		34,386			30,750			5,680		36,430
Corporate		(15,427	)		—		(15,427	)		(15,691	)		—		(15,691	)

Operating income	$	89,243		$	7,884	$	97,127		$	88,702		$	8,342	$	97,044


	Three Months Ended
	February 28, 2010								May 31, 2010
	GAAP			Cash Earnings Adjustments¹		Cash Earnings			GAAP			Employee Termination²		Normalized			Cash Earnings Adjustments¹		Cash Earnings

Revenues:
United States	$	216,168		$	—	$	216,168		$	242,975		$	—	$	242,975		$	—	$	242,975
Canada		77,092			—		77,092			80,720			—		80,720			—		80,720

North America merchant services		293,260			—		293,260			323,695			—		323,695			—		323,695

Europe		78,174			—		78,174			72,238			—		72,238			—		72,238
Asia-Pacific		27,101			—		27,101			29,117			—		29,117			—		29,117

International merchant services		105,275			—		105,275			101,355			—		101,355			—		101,355


Total revenues	$	398,535		$	—	$	398,535		$	425,050		$	—	$	425,050		$	—	$	425,050


Operating income:
North America merchant services	$	60,855		$	2,812	$	63,667		$	64,966		$	—	$	64,966		$	2,882	$	67,848
International merchant services		28,853			5,550		34,403			25,346			—		25,346			5,294		30,640
Corporate		(15,859	)		—		(15,859	)		(18,827	)		2,583		(16,244	)		—		(16,244	)

Operating income	$	73,849		$	8,362	$	82,211		$	71,485		$	2,583	$	74,068		$	8,176	$	82,244

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.

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 segment operating income determined in accordance with GAAP by reporting segment operating income 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 segment operating income 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 segment operating income reported on a cash earnings basis should be considered in addition to, and not as a substitute for, segment operating income determined in accordance with GAAP. Our measures of segment operating income 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 SEGMENT INFORMATION TO GAAP - FISCAL 2010

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands)


	Fiscal Year Ended May 31, 2010
	GAAP			Employee Termination¹		Normalized			Cash Earnings Adjustments²		Cash Earnings

Revenues:
United States	$	902,844		$	—	$	902,844		$	—	$	902,844
Canada		317,272			—		317,272			—		317,272

North America merchant services		1,220,116			—		1,220,116			—		1,220,116

Europe		315,023			—		315,023			—		315,023
Asia-Pacific		107,329			—		107,329			—		107,329

International merchant services		422,352			—		422,352			—		422,352


Total revenues	$	1,642,468		$	—	$	1,642,468		$	—	$	1,642,468


Operating income:
North America merchant services	$	275,386		$	—	$	275,386		$	10,603	$	285,989
International merchant services		113,699			—		113,699			22,161		135,860
Corporate		(65,806	)		2,583		(63,223	)		—		(63,223	)

Operating income	$	323,279		$	2,583	$	325,862		$	32,764	$	358,626

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 segment operating income determined in accordance with GAAP by reporting segment operating income for fiscal year 2010 on a “cash earnings” basis in this earnings release as a measure to help evaluate performance. We calculated segment operating income 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 segment operating income reported on a cash earnings basis should be considered in addition to, and not as a substitute for, segment operating income determined in accordance with GAAP. Our measures of segment operating income 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 SEGMENT INFORMATION TO GAAP - FISCAL 2011 QUARTERLY

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands)


	Three Months Ended August 31, 2010													Three Months Ended November 30, 2010
	GAAP			Employee Termination and Other¹		Normalized			Cash Earnings Adjustments²		Cash Earnings			GAAP			Employee Termination and Other¹		Normalized			Cash Earnings Adjustments²		Cash Earnings

Revenues:
United States	$	255,630		$	—	$	255,630		$	—	$	255,630		$	245,671		$	—	$	245,671		$	—	$	245,671
Canada		81,213			—		81,213			—		81,213			81,453			—		81,453			—		81,453

North America merchant services		336,843			—		336,843			—		336,843			327,124			—		327,124			—		327,124

Europe		73,796			—		73,796			—		73,796			79,881			—		79,881			—		79,881
Asia-Pacific		29,499			—		29,499			—		29,499			36,521			—		36,521			—		36,521

International merchant services		103,295			—		103,295			—		103,295			116,402			—		116,402			—		116,402


Total revenues	$	440,138		$	—	$	440,138		$	—	$	440,138		$	443,526		$	—	$	443,526		$	—	$	443,526


Operating income:
North America merchant services	$	68,368		$	—	$	68,368		$	3,016	$	71,384		$	67,131		$	—	$	67,131		$	3,156	$	70,287
International merchant services		31,393			—		31,393			4,658		36,051			35,349			—		35,349			4,816		40,165
Corporate		(17,654	)		3,190		(14,464	)		—		(14,464	)		(19,337	)		3,983		(15,354	)		—		(15,354	)

Operating income	$	82,107		$	3,190	$	85,297		$	7,674	$	92,971		$	83,143		$	3,983	$	87,126		$	7,972	$	95,098


	Three Months Ended February 28, 2011
	GAAP			Employee Termination and Other¹		Normalized			Cash Earnings Adjustments²		Cash Earnings

Revenues:
United States	$	249,194		$	—	$	249,194		$	—	$	249,194
Canada		81,066			—		81,066			—		81,066

North America merchant services		330,260			—		330,260			—		330,260

Europe		90,531			—		90,531			—		90,531
Asia-Pacific		35,591			—		35,591			—		35,591

International merchant services		126,122			—		126,122			—		126,122


Total revenues	$	456,382		$	—	$	456,382		$	—	$	456,382


Operating income:
North America merchant services	$	62,916		$	—	$	62,916		$	3,206	$	66,122
International merchant services		35,537			—		35,537			8,634		44,171
Corporate		(20,254	)		3,567		(16,687	)		—		(16,687	)

Operating income	$	78,199		$	3,567	$	81,766		$	11,840	$	93,606

¹	Reflects expenses of start-up costs related to our new Global Service Center in Manila, Philippines and employee termination and relocation benefits

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 segment operating income determined in accordance with GAAP by reporting segment operating income for the three months ended August 31, 2010, November 30, 2010 and February 28, 2011 on a “cash earnings” basis in this earnings release as a measure to help evaluate performance. We calculated segment operating income 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 segment operating income reported on a cash earnings basis should be considered in addition to, and not as a substitute for, segment operating income determined in accordance with GAAP. Our measures of segment operating income 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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