UPDATE 2-Global Payments profit slides due to security breach costs

Thu Jul 26, 2012 6:05pm EDT

* Q4 EPS $0.06 vs $0.72 a year earlier

* Takes $84.4 mln pre-tax charge for breach costs

* To buy rest of JV with HSBC for $242 mln

* Authorizes new $150 mln buy back

* Sees additional charges in 2013

July 26 (Reuters) - Global Payments Inc's fourth-quarter profit fell 90 percent on costs related to a security breach affecting about 1.5 million cardholders and the payment processor said it expects to take more charges in 2013.

In March, Global Payments said an "unauthorized access" had been made into its systems, compromising credit card data. Following the breach, card network Visa Inc dropped the company from its list of approved service providers.

The payment processor took an $84.4 million pre-tax charge related to the breach in the fourth quarter, including an estimate of costs from the card brands and investigation of the intrusion.

Global Payments anticipates additional charges of $25 million to $35 million in 2013, after insurance proceeds of about $28 million are applied, a company executive said on a post-earnings conference call.

Global Payments said it has completed its investigation into the breach, and a qualified security assessor was conducting the independent review needed to return the company to the lists of compliant providers.

BUYS OUT HSBC JV

Global Payments has been making strategic investments to grow its business. As part of the build-out it said it would buy the remaining 44 percent of its payment processing joint venture with HSBC Holdings for $242 million.

The joint venture, which provides payment processing services to merchants in the Asia-Pacific region, began in 2006.

The deal allows to it to expand further into India, by targeting more payment processing partners.

Global Payments said the acquisition would add as much as 7 cents to both its cash and net earnings per share in 2013.

It plans to use existing cash and lines of credit to fund the transaction, which is slated to close in the second quarter.

Global Payments' board also authorized a new $150 million share repurchase program. The authorization has no expiration date.

PROFIT TUMBLES

Net income attributable to Global Payments fell in the fourth quarter to $5.1 million, or 6 cents a share, from $58.6 million, or 72 cents a share a year ago.

Cash earnings, excluding the data breach charge, were 97 cents a share in the quarter, Atlanta-based Global Payments said. Revenue grew 15 percent to $597 million.

For the 2013 year, the company expects cash earnings per share of between $3.59 and $3.66, on revenue of between $2.36 billion and $2.4 billion.

The company expects first-quarter cash earnings per share to be slightly down from a year ago, due to currency headwinds, executives said on the analyst call.

Shares of the company closed at $42.51 on Thursday on the New York Stock Exchange.

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