EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

 

For Immediate Release

 

Contact: Jane M. Forbes

770-829-8234 Voice

770-829-8267 Fax

investor.relations@globalpay.com

 

Global Payments Reports Fourth Quarter and Fiscal 2005 Earnings

 

ATLANTA, July 20, 2005 — Global Payments Inc. (NYSE: GPN) today announced results for the fourth quarter and fiscal year ended May 31, 2005. For the fourth quarter, revenue grew 14 percent to $207.7 million compared to $181.8 million in the prior year. Excluding restructuring and other charges and a prior year gain on sale of investment, net income grew 44 percent to $25.9 million compared to $18.0 million in the prior year quarter, and diluted earnings per share grew 39 percent to $0.64 compared to $0.46 in the prior year quarter.

 

For the fiscal year, revenue grew 25 percent to $784.3 million compared to $629.3 million in the prior year period. Excluding restructuring and other charges and a prior year gain on sale of investment, net income grew 40 percent to $95.3 million from $68.1 million in the prior year, and diluted earnings per share grew 37 percent to $2.39 from $1.75 in the prior year.

 

In accordance with GAAP, current and prior period net income and diluted earnings per share include certain restructuring and other items (see attached reconciliation schedules). Fourth quarter GAAP net income and diluted earnings per share were $23.5 million and $0.58, respectively, compared to $15.2 million and $0.39, respectively in the prior year quarter. For fiscal 2005, GAAP net income and diluted earnings per share were $92.9 million and $2.33, respectively, compared to $62.4 million and $1.60, respectively in the prior year.

 

A component of Global Payments’ strategy is to consolidate management functions and maximize operating efficiency. As such, the company recognized $3.7 million ($2.4 million, net of tax) in restructuring and other charges during the quarter primarily relating to employee termination benefits, of which $2.7 million is non-cash. Further, the company has committed to a plan to consolidate an operating center into other existing locations. The company expects to complete this plan during fiscal 2006 and to incur additional restructuring charges of approximately $3 million related to this effort.

 

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GPN Reports Fourth Quarter and Fiscal 2005 Earnings

July 20, 2005

Page 2

 

For fiscal 2005, the company’s tax planning initiatives and strong international growth resulted in a lower than expected effective income tax rate of approximately 36.5%. In comparison to its initially expected income tax rate of 37.0%, this change added $0.02 in diluted earnings per share for the quarter. The company expects an effective income tax rate of 35.8% during fiscal 2006. Also during the quarter, the company began reporting minority interest net of income taxes for all current and prior year periods, which management believes is a more common practice.

 

Comments and Outlook

 

Chairman, President and CEO, Paul R. Garcia, stated, “We are proud of our fiscal 2005 accomplishments and are delighted with our financial results. Our success this year was primarily driven by our consumer money transfer channel and our Central and Eastern European operations. Our domestic and Canadian direct channels also achieved strong revenue expansion, largely due to re-pricing initiatives, ISO growth, and a favorable Canadian currency exchange rate. Lastly, we gained significant operating leverage this year from increased economies of scale and successful consolidation efforts. For our fiscal 2006, we are providing annual revenue guidance of $839 million to $870 million, or 7% to 11% growth versus $784 million in fiscal 2005 and annual diluted earnings per share guidance of $2.67 to $2.79 for growth of 12% to 17% versus diluted earnings per share of $2.39 in fiscal 2005, excluding restructuring and other items ($2.33 in fiscal 2005 on a GAAP basis).” 1

 

Conference Call

 

Global Payments will hold a conference call on July 21, 2005 at 10:30 a.m. ET to discuss financial results and business highlights. The conference call may be accessed by calling 1-888-791-2132 (U.S.) or 1-517-623-4000 (internationally) and using a pass code of “GPN” for both numbers, or via Web cast at www.globalpaymentsinc.com. A replay of the call will be available on the Global Payments Web site through August 4, 2005.

 

—More—

GPN Reports Fourth Quarter and Fiscal 2005 Earnings

July 20, 2005

Page 3

 

Global Payments Inc. (NYSE:GPN) is a leading provider of electronic transaction processing services for consumers, merchants, Independent Sales Organizations (ISOs), financial institutions, government agencies and multi-national corporations located throughout the United States, Canada, Latin America and Europe. Global Payments 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. The company also provides consumer money transfer services from the U.S. and Europe to destinations in Latin America, Morocco and the Philippines. For more information about the company and its services, visit www.globalpaymentsinc.com.

 

1 The fiscal 2005 diluted earnings per share of $2.33 on a GAAP basis reflects restructuring and other items of $2.4 million, net of tax, or $0.06 diluted earnings per share.

 

###

 

This announcement and comments made by Global Payments’ management during the conference call may contain forward-looking statements pursuant to the “safe-harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward looking statements involve risks and uncertainties such as product demand, market and customer acceptance, the effect of economic conditions, competition, pricing, development difficulties, foreign currency risks, costs of capital, continued certification by credit card associations, the ability to consummate and integrate 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.

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

 

(In thousands, except per share data)

 

     Three Months Ended May 31,
  
     2005
     2004
  

Revenues

    $ 207,665     $ 181,849  
    
 

Operating expenses:

                 

Cost of service

      90,104       88,144  

Sales, general and administrative

      74,345       59,575  

Restructuring and other

      3,726       4,945  
    
 
       168,175       152,664  
    
 

Operating income

      39,490       29,185  
    
 

Other income (expense):

                 

Interest and other income

      685       1,139  

Interest and other expense

      (1,932 )     (2,553 )
    
 
       (1,247 )     (1,414 )
    
 

Income before income taxes

      38,243       27,771  

Provision for income taxes

      (13,296 )     (10,386 )

Minority interest, net of tax

      (1,450 )     (2,142 )
    
 

Net income

    $ 23,497     $ 15,243  
    
 

Earnings per share:

                 

Basic

    $ 0.60     $ 0.40  
    
 

Diluted

    $ 0.58     $ 0.39  
    
 

Weighted average shares outstanding:

                 

Basic

      38,886       37,800  

Diluted

      40,306       39,320  

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

 

(In thousands, except per share data)

 

     Twelve Months Ended May 31,
  
     2005
     2004
  

Revenues

    $ 784,331     $ 629,320  
    
 

Operating expenses:

                 

Cost of service

      337,272       289,353  

Sales, general and administrative

      283,232       217,418  

Restructuring and other

      3,726       9,648  
    
 
       624,230       516,419  
    
 

Operating income

      160,101       112,901  
    
 

Other income (expense):

                 

Interest and other income

      2,194       2,358  

Interest and other expense

      (8,378 )     (6,525 )
    
 
       (6,184 )     (4,167 )
    
 

Income before income taxes

      153,917       108,734  

Provision for income taxes

      (56,103 )     (40,666 )

Minority interest, net of tax

      (4,918 )     (5,625 )
    
 

Net income

    $ 92,896     $ 62,443  
    
 

Earnings per share:

                 

Basic

    $ 2.41     $ 1.66  
    
 

Diluted

    $ 2.33     $ 1.60  
    
 

Weighted average shares outstanding:

                 

Basic

      38,558       37,533  

Diluted

      39,880       38,955  

CONSOLIDATED CONDENSED BALANCE SHEETS

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

 

(In thousands)

 

    

May 31,

2005

    May 31,
2004
     (Unaudited)     

Assets

              

Cash and cash equivalents

    $ 48,979    $ 34,472

Accounts receivable, net

      54,932      47,414

Claims receivable, net

      937      761

Settlement processing assets

      63,435      125,112

Other current assets

      21,789      25,324
    
  

Current assets

      190,072      233,083

Property and equipment, net

      104,173      97,482

Goodwill

      372,744      342,012

Intangible assets, net

      175,006      182,658

Other assets

      11,592      7,539
    
  

Total assets

    $ 853,587    $ 862,774
    
  

Liabilities & Shareholders’ Equity

              

Line of credit

    $ 50,000    $ 122,000

Line of credit with related party

      8,606      83,109

Notes payable-current portion

      1,347      3,409

Settlement processing obligations

      24,537      24,962

Payable to money transfer beneficiaries

      5,694      3,706

Accounts payable and other accrued liabilities

      91,006      80,984

Obligations under capital leases-current portion

      1,695      1,190
    
  

Current liabilities

      182,885      319,360

Notes payable

      —        7,477

Obligations under capital leases

      746      2,061

Other accrued liabilities

      75,266      61,324
    
  

Total liabilities

      258,897      390,222
    
  

Minority interest in equity of subsidiaries

      16,340      23,130

Shareholders’ equity

      578,350      449,422
    
  

Total liabilities & shareholders’ equity

    $ 853,587    $ 862,774
    
  

UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

 

(In thousands)

 

     Twelve Months Ended May 31,
  
     2005
     2004
  

Cash flows from operating activities:

                 

Net income

    $ 92,896     $ 62,443  

Non-cash items

                 

Depreciation and amortization

      45,306       35,540  

Restructuring and other charges

      4,497       4,437  

Deferred income taxes

      9,002       (1,737 )

Minority interest in earnings

      7,739       8,985  

Other, net

      9,553       9,778  

Changes in working capital, which provided (used) cash Settlement processing

      55,517       (38,099 )

Other, net

      5,049       10,823  
    
 

Net cash provided by operating activities

      229,559       92,170  
    
 

Cash flows from investing activities:

                 

Capital expenditures

      (34,305 )     (24,564 )

Business acquisitions

      (30,773 )     (122,276 )
    
 

Net cash used in investing activities

      (65,078 )     (146,840 )
    
 

Cash flows from financing activities:

                 

Net (repayments of) borrowings on line of credit

      (72,000 )     122,000  

Net (repayments of) borrowings on line of credit with related party restricted for merchant funding

      (74,503 )     49,209  

Principal payments on notes payable issued in consideration of acquisition

      —         (114,229 )

Principal payments under capital leases and other notes

      (11,208 )     (2,853 )

Net stock issued to employees under stock plans and dividends

      15,020       5,433  

Distributions to minority interests

      (9,662 )     (9,447 )
    
 

Net cash provided by (used in) financing activities

      (152,353 )     50,113  
    
 

Effect of exchange rate changes on cash

      2,379       1,019  
    
 

Increase (Decrease) in cash and cash equivalents

      14,507       (3,538 )

Cash and cash equivalents, beginning of period

      34,472       38,010  
    
 

Cash and cash equivalents, end of period

    $ 48,979     $ 34,472  
    
 

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

 

(In thousands, except per share data)

 

     2005
     2004
  

Three Months Ending May 31,

 

    Normalized
     Restructuring and
Other(1)
     GAAP
     Normalized
     Restructuring and
Other(1)
     GAAP
  

Revenue

    $ 207,665     $ —       $ 207,665     $ 181,849     $ —       $ 181,849  
    
 
 
 
 
 

Operating expenses:

                                                 

Cost of service

      90,104       —         90,104       88,144       —         88,144  

Sales, general and administrative

      74,345       —         74,345       59,575       —         59,575  

Restructuring and other

      —         3,726       3,726       —         4,945       4,945  
    
 
 
 
 
 
       164,449       3,726       168,175       147,719       4,945       152,664  
    
 
 
 
 
 

Operating income

      43,216       (3,726 )     39,490       34,130       (4,945 )     29,185  
    
 
 
 
 
 

Other income/(expense)

                                                 

Interest and other income

      685       —         685       556       583       1,139  

Interest and other expense

      (1,932 )     —         (1,932 )     (2,553 )     —         (2,553 )
    
 
 
 
 
 
       (1,247 )     —         (1,247 )     (1,997 )     583       (1,414 )
    
 
 
 
 
 

Income before income taxes

      41,969       (3,726 )     38,243       32,133       (4,362 )     27,771  

Provision for income taxes

      (14,654 )     1,358       (13,296 )     (12,018 )     1,632       (10,386 )

Minority interest, net of tax

      (1,450 )     —         (1,450 )     (2,142 )     —         (2,142 )
    
 
 
 
 
 

Net income

    $ 25,865     $ (2,368 )   $ 23,497     $ 17,973     $ (2,730 )   $ 15,243  
    
 
 
 
 
 

Basic shares

      38,886       —         38,886       37,800       —         37,800  

Basic earnings per share

    $ 0.67     $ (0.07 )   $ 0.60     $ 0.48     $ (0.08 )   $ 0.40  
    
 
 
 
 
 

Diluted shares

      40,306       —         40,306       39,320       —         39,320  

Diluted earnings per share

    $ 0.64     $ (0.06 )   $ 0.58     $ 0.46     $ (0.07 )   $ 0.39  
    
 
 
 
 
 
(1) Primarily relating to severance and facilities due to redundant activities and facility closures, as well as the related income tax benefit using the company’s effective tax rate.

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

 

(In thousands, except per share data)

 

     2005
     2004
  

Twelve Months Ending May 31,

 

    Normalized
     Restructuring and
Other(1)
     GAAP
     Normalized
     Restructuring and
Other(1)
     GAAP
  

Revenue

    $ 784,331     $ —       $ 784,331     $ 629,320     $ —       $ 629,320  
    
 
 
 
 
 

Operating expenses:

                                                 

Cost of service

      337,272       —         337,272       289,353       —         289,353  

Sales, general and administrative

      283,232       —         283,232       217,418       —         217,418  

Restructuring and other

      —         3,726       3,726       —         9,648       9,648  
    
 
 
 
 
 
       620,504       3,726       624,230       506,771       9,648       516,419  
    
 
 
 
 
 

Operating income

      163,827       (3,726 )     160,101       122,549       (9,648 )     112,901  
    
 
 
 
 
 

Other income/(expense)

                                                 

Interest and other income

      2,194       —         2,194       1,775       583       2,358  

Interest and other expense

      (8,378 )     —         (8,378 )     (6,525 )     —         (6,525 )
    
 
 
 
 
 
       (6,184 )     —         (6,184 )     (4,750 )     583       (4,167 )
    
 
 
 
 
 

Income before income taxes

      157,643       (3,726 )     153,917       117,799       (9,065 )     108,734  

Provision for income taxes

      (57,461 )     1,358       (56,103 )     (44,056 )     3,390       (40,666 )

Minority interest, net of tax

      (4,918 )     —         (4,918 )     (5,625 )     —         (5,625 )
    
 
 
 
 
 

Net income

    $ 95,264     $ (2,368 )   $ 92,896     $ 68,118     $ (5,675 )   $ 62,443  
    
 
 
 
 
 

Basic shares

      38,558       —         38,558       37,533       —         37,533  

Basic earnings per share

    $ 2.47     $ (0.06 )   $ 2.41     $ 1.81     $ (0.15 )   $ 1.66  
    
 
 
 
 
 

Diluted shares

      39,880       —         39,880       38,955       —         38,955  

Diluted earnings per share

    $ 2.39     $ (0.06 )   $ 2.33     $ 1.75     $ (0.15 )   $ 1.60  
    
 
 
 
 
 
(1) Primarily relating to severance and facilities due to redundant activities and facility closures, as well as the related income tax benefit using the company’s effective tax rate.