EXHIBIT 99.2
GLOBAL PAYMENTS INC.
Pro Forma Combined Financial Statements
(Unaudited)
On December 19, 2000, NDC's Board of Directors declared a pro rata
distribution of 0.8 of a share of common stock of Global Payments Inc. ("Global
Payments" or "the Company") for every share of NDC common stock outstanding on
the record date. On December 28, 2000, a committee established by the Board
determined that the distribution would be payable to the holders of record of
NDC common stock at the close of business on January 19, 2001. The board of
directors of NDC believes that the distribution is in the best interests of
NDC's stockholders.
On November 9, 2000, the Company entered into certain definitive agreements
to purchase the Canadian Imperial Bank of Commerce ("CIBC") Merchant Acquiring
or Merchant Card Services ("MCS") business and to form a ten-year marketing
alliance to jointly provide payment related products and services in Canada.
Under the terms of the purchase agreements, the Company issued 9,764,623 shares
of its common stock, or 26.25% of the outstanding common stock, calculated on a
diluted basis, in consideration for certain net assets of CIBC-MCS. The fair
value of the shares to be issued to CIBC was determined to be $133.6 million
measured on the consummation date. The net assets acquired consisted of
accounts receivable, inventory, tangible personal property, customer contracts
and the goodwill of the business, net of certain accrued expenses. The
acquisition will be recorded for using the purchase method of accounting. The
acquisition was consummated on March 20, 2001. The Company intends to operate
the business in a manner consistent with CIBC's historical operations. The
Company will retain the major functions of sales, customer support and service,
and equipment warehousing, repair and deployment in Canada and contract with
CIBC for other key functions, such as funds transfer and daily settlement
services.
Under the terms of the marketing alliance, CIBC is required to refer all new
merchant processing relationships exclusively to Global Payments. In addition,
the Company will jointly develop emerging payment solutions for distribution
and marketing in the Company's North American customer base. The alliance will
significantly broaden the Company's scope and presence in North America. This
transaction will provide MCS' existing distribution channel with a larger array
of existing and new payment solutions. After the acquisition is completed, the
alliance will be branded under the name "CIBC Merchant Card Services, an
alliance with Global Payments Canada, Inc."
Any adjustments to the purchase price allocations are not expected to be
material to the pro forma combined financial statements taken as a whole.
During the nine month period ended February 28, 2001, the Company had
divested two businesses. Accordingly, the operating results of these businesses
are adjusted from the historical results in the following pro forma combined
financial statements.
The following pro forma combined financial statements have been prepared as
if the acquisition, the distribution and divestitures had taken place on
February 28, 2001 for the pro forma combined balance sheet and June 1, 1999 for
the pro forma combined income statements. The Company has a fiscal year end of
May 31st. CIBC-MCS has a fiscal year end of October 31st. For purposes of the
pro forma combined financial statements, CIBC-MCS information is presented
using the same fiscal year end of the Company for the May 31, 2001 income
statement and using the financial statements as of January 31, 2001 for the
Company's pro forma combined financial statements as of February 28, 2001.
The unaudited pro forma financial statements are not necessarily indicative
of the results that would have occurred if the acquisition and the distribution
had occurred on the dates indicated or the expected financial position or
results of operations in the future. The unaudited pro forma combined financial
statements should be read in conjunction with the separate historical financial
statements and notes there to of the Company, as well as the historical
financial statements and notes thereto of CIBC-MCS contained elsewhere herein,
and in conjunction with the related notes to these unaudited pro forma combined
financial statements.
F(b)-1
GLOBAL PAYMENTS INC.
PRO FORMA COMBINED BALANCE SHEET
FEBRUARY 28, 2001
UNAUDITED
Pro Forma
Global Payments CIBC-MCS Pro Forma As Adjusted
Historical Historical Adjustments (C) Combined
--------------- ---------- --------------- -----------
(in thousands)
ASSETS
Current assets:
Cash and cash
equivalents........... $ 550 $ -- $ -- $ 550
Accounts receivable,
net................... 38,494 -- -- 38,494
Merchant processing
receivable............ 19,017 64,424 -- 83,441
Inventory.............. 3,096 -- -- 3,096
Prepaid expenses and
other current assets.. 4,825 483 (483)(h) 4,825
-------- ------- ------- --------
Total current
assets.............. 65,982 64,907 (483) 130,406
-------- ------- ------- --------
Property and equipment,
net................... 24,119 18,281 -- 42,400
Intangible assets,
net................... 166,494 -- 56,267 (f) 222,761
Investments............ 5,000 -- -- 5,000
Other.................. 442 -- -- 442
-------- ------- ------- --------
Total Assets......... $262,037 $83,188 55,784 $401,009
======== ======= ======= ========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities:
Line of credit......... $ 59,000 $ -- -- $ 59,000
Merchant processing
payable............... 4,660 -- -- 4,660
Obligations under
capital leases........ 2,718 964 -- 3,682
Accounts payable and
accrued liabilities... 32,403 7,992 4,000 (g) 36,831
(7,564)(h)
-------- ------- ------- --------
Total current
liabilities......... 98,781 8,956 (3,564) 104,173
-------- ------- ------- --------
Obligations under
capital leases......... 2,255 -- -- 2,255
Other long-term
liabilities............ 11,324 -- -- 11,324
-------- ------- ------- --------
Total liabilities.... 112,360 8,956 (3,564) 117,752
-------- ------- ------- --------
Commitments and
contingencies
Minority interest in
equity of
subsidiaries........... 19,066 -- -- 19,066
Shareholders' equity:
CIBC equity
investment............ -- 79,766 (79,766)(i) --
Preferred stock........ -- -- -- --
Common stock, no par... -- -- -- --
Paid in capital........ 133,577 -- 133,580 (g) 267,157
Retained earnings...... 1,451 -- -- 1,451
Deferred compensation.. (3,384) -- -- (3,384)
Cumulative translation
adjustment............ (1,033) (5,534) 5,534 (i) (1,033)
-------- ------- ------- --------
Total shareholders'
equity.............. 130,611 74,232 59,348 264,191
-------- ------- ------- --------
Total Liabilities and
Shareholders' Equity... $262,037 $83,188 $55,784 $401,009
======== ======= ======= ========
The accompanying notes are an integral part of this unaudited Pro Forma
Combined Balance Sheet.
F(b)-2
GLOBAL PAYMENTS INC.
PRO FORMA COMBINED INCOME STATEMENT
FOR THE YEAR ENDED MAY 31, 2000
UNAUDITED
Global Pro Forma
Payments Pro Forma Pro Forma Pro Forma CIBC-MCS Pro Forma As Adjusted
Historical Adjustments(A) Adjustments(B) Combined Historical Adjustments(C) Combined
---------- -------------- -------------- --------- ---------- -------------- -----------
(In thousands, except per share data)
Revenues................ $340,033 $ -- $(12,850)(d) $327,183 $90,763 $ -- $417,946
-------- ------- -------- -------- ------- ------- --------
Operating expenses:
Cost of service........ 181,479 -- (7,441)(d) 174,038 52,726 3,205 (j) 229,969
Sales, general and
administrative......... 95,342 3,697 (a) (5,054)(d) 93,985 10,979 -- 104,964
-------- ------- -------- -------- ------- ------- --------
276,821 3,697 (12,495) 268,023 63,705 3,205 334,933
-------- ------- -------- -------- ------- ------- --------
Operating income........ 63,212 (3,697) (355) 59,160 27,058 (3,205) 83,013
-------- ------- -------- -------- ------- ------- --------
Other income (expense):
Interest and other
income................. 796 -- -- 796 -- -- 796
Interest and other
expense................ (6,119) (633)(b) -- (6,752) (4,748) -- (11,500)
Minority interest in
earnings............... (4,117) -- -- (4,117) -- -- (4,117)
-------- ------- -------- -------- ------- ------- --------
(9,440) (633) -- (10,073) (4,748) -- (14,821)
-------- ------- -------- -------- ------- ------- --------
Income (loss) before
income taxes............ 53,772 (4,330) (355) 49,087 22,310 (3,205) 68,192
Provision for income
taxes................... 20,725 (1,667)(c) (137)(e) 18,921 9,817 (1,234)(k) 27,504
-------- ------- -------- -------- ------- ------- --------
Net income (loss)...... $ 33,047 $(2,663) $ (218) $ 30,166 $12,493 $(1,971) $ 40,688
======== ======= ======== ======== ======= ======= ========
Basic shares
outstanding............. 26,586 26,586 9,765 (l) 36,351
Earnings per share...... $ 1.24 $ 1.13 $ 1.12
-------- -------- --------
Diluted shares
outstanding............. 26,793 26,793 9,765 (l) 36,558
Diluted earnings per
share................... $ 1.23 $ 1.13 $ 1.11
-------- -------- --------
The accompanying notes are an integral part of this unaudited Pro Forma
Combined Income Statement.
F(b)-3
GLOBAL PAYMENTS INC.
PRO FORMA COMBINED INCOME STATEMENT
FOR THE NINE MONTHS ENDED FEBRUARY 28, 2001
UNAUDITED
Global Pro Forma
Payments Pro Forma Pro Forma Pro Forma CIBC-MCS Pro Forma As Adjusted
Historical Adjustments(A) Adjustments(B) Combined Historical Adjustments(C) Combined
---------- -------------- -------------- --------- ---------- -------------- -----------
(In thousands, except per share data)
Revenues................ $250,496 $ -- $(2,880)(d) $247,616 $72,068 $ -- $319,684
-------- ------ ------- -------- ------- ------- --------
Operating expenses:
Cost of service........ 133,738 -- (2,272)(d) 131,466 37,252 2,404 (j) 171,122
Sales, general and
administrative......... 72,239 323 (a) (720)(d) 71,842 11,611 -- 83,453
-------- ------ ------- -------- ------- ------- --------
205,977 323 (2,992) 203,308 48,863 2,404 254,575
-------- ------ ------- -------- ------- ------- --------
Operating income........ 44,519 (323) 112 44,308 23,205 (2,404) 65,109
-------- ------ ------- -------- ------- ------- --------
Other income (expense):
Interest and other
income................. 1,490 -- -- 1,490 -- -- 1,490
Interest and other
expense................ (4,815) (828)(b) -- (5,643) (3,964) -- (9,607)
Minority interest in
earnings............... (3,955) -- -- (3,955) -- -- (3,955)
-------- ------ ------- -------- ------- ------- --------
(7,280) (828) -- (8,108) (3,964) -- (12,072)
-------- ------ ------- -------- ------- ------- --------
Income (loss) before
income taxes............ 37,239 (1,151) 112 36,200 19,241 (2,404) (53,037)
Provision for income
taxes................... 14,337 (443)(c) 43 (e) 13,937 8,466 (926)(k) 21,477
-------- ------ ------- -------- ------- ------- --------
Net income (loss)...... $ 22,902 $ (708) $ 69 $ 22,263 $10,775 $(1,478) $ 31,560
======== ====== ======= ======== ======= ======= ========
Basic shares
outstanding............. 26,336 26,336 9,765 (l) 36,101
Basic earnings per
share................... $ 0.87 $ 0.85 $ 0.87
-------- -------- --------
Diluted shares
outstanding............. 26,733 26,733 9,765 (l) 36,490
Diluted earnings per
share................... $ 0.86 $ 0.83 $ 0.86
-------- -------- --------
The accompanying notes are an integral part of this unaudited Pro Forma
Combined Income Statement.
F(b)-4
GLOBAL PAYMENTS INC.
Notes to Unaudited Pro Forma Combined Financial Statements
(In thousands, except share data)
A. DISTRIBUTION PRO FORMA ADJUSTMENTS
Pro Forma Combined Income Statement Adjustments
The following pro forma adjustments were made to the historical combined
income statements of the Company for the nine months ended February 28, 2001
and the year ended May 31, 2000 to reflect the distribution as if it had
occurred on June 1, 1999.
a. To reflect additional sales, general and administrative expenses
expected to be incurred as a separate independent public company. These
expenses relate to new compensation contracts entered into as a direct
result of the distribution.
b. To reflect an increase in interest expense as a result of the difference
in the interest rate under the terms of the new line of credit versus
the amounts that had been historically allocated, as follows:
Interest Rate
------------------------
Historically New Line of
Allocated Credit Rate
------------ -----------
Year Ended May 31, 2000........................... 5.62% 6.77%
Nine Months Ended February 28, 2001............... 5.73% 7.66%
c. To reflect the income tax benefit on the pro forma adjustments using the
Company's effective rates for those periods.
B. DIVESTITURES PRO FORMA ADJUSTMENTS
The following pro forma adjustments were made to the historical combined
income statements of the Company for the nine months ended February 28, 2001,
and the year ended May 31, 2000 to eliminate the effects of divested businesses
as if they occurred on June 1, 1999.
Pro forma Combined Income Statement Adjustments
d. To remove all income statement activity associated with divested
businesses and other one-time items, net.
e. To reflect the income tax benefit on the pro forma adjustments using the
Company's effective tax rates for those periods.
C. ACQUISITION PRO FORMA ADJUSTMENTS
1. Pro Forma Combined Balance Sheet Adjustments
The following pro forma adjustments were made to the historical combined
balance sheets of the Company and CIBC-MCS to reflect the acquisition as if it
had occurred on February 28, 2001.
f. To reflect the increase in goodwill and other intangibles associated
with the acquisition of CIBC-MCS. The amount is calculated as follows:
Purchase price including direct costs ......................... $137,580
Less: Net assets of CIBC-MCS .................................. (74,232)
Net assets of CIBC-MCS not assumed............................. (7,081)
--------
$ 56,267
========
F(b)-5
The book value of the net assets of CIBC-MCS to be acquired is assumed
to approximate fair value. The purchase price allocation of goodwill
and other intangibles and related useful life is as follows:
Useful Life
(in years)
-----------
Customer base.......................................... $44,400 17
Goodwill............................................... 11,867 20
-------
$56,267
=======
Customer base was valued using a discounted cash flow analysis, and the
useful life was estimated using information on start/stop dates and
yearly attrition rates. Goodwill represents the excess of the total
value of the identified tangible and intangible assets. The useful life
of goodwill was based on the relatively longer life assigned to
customer base and industry trends.
g. To reflect the purchase price in the form of issuing approximately 9.8
million unregistered shares of common stock with a fair value of
$133,580 and direct costs of the acquisition of approximately $4,000 in
conjunction with the acquisition.
h. To reflect assets and liabilities of CIBC-MCS not being acquired or
assumed in the acquisition.
i. To reflect the elimination of the book equity of CIBC-MCS in conjunction
with the acquisition.
2. Pro Forma Combined Income Statement Adjustments
The following pro forma adjustments were made to the historical combined
income statements of the Company and CIBC-MCS for the nine months ended
February 28, 2001 and the year ended May 31, 2000 to reflect the acquisition as
if it had occurred on June 1, 1999.
j. To reflect the increase of amortization expense related to the goodwill
and other intangibles associated with the acquisition.
k. To reflect the income tax benefit on the pro forma adjustments using the
Company's effective rates for those periods.
l. To reflect the shares of common stock issued in conjunction with the
acquisition.
F(b)-6