EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

LOGO

Global Payments Reports Second Quarter Earnings

ATLANTA, January 6, 2009 — Global Payments Inc. (NYSE: GPN) today announced results for its fiscal second quarter ended November 30, 2008. For the second quarter, revenues grew 30 percent to $401.1 million compared to $308.8 million in the prior year. Diluted earnings per share grew 25 percent to $0.60 compared to $0.48 in the prior year quarter.

These results include the unfavorable impact of foreign currency exchange rates during the period, and as such, the company added a schedule (Schedule 9) this quarter to provide revenue and diluted earnings per share growth on a constant currency basis for both the quarter as well as the outlook for fiscal 2009. On a constant currency basis, revenues grew 37 percent and diluted earnings per share grew 39 percent over the prior year quarter.

Comments and Outlook

Chairman and CEO, Paul R. Garcia, stated, “We are pleased with our strong second quarter financial performance, in spite of the difficult macro environment. Our results for the quarter were driven by the favorable impact of our June 30, 2008 U.K. acquisition and strong results in our North America segment. North America continues to benefit from successful pricing initiatives in Canada as well as a solid 16 percent transaction growth in the U.S.”

“Based on the significant strengthening of the U.S. dollar this quarter, and the related translation impact, we are updating our annual revenue guidance to a range of $1,550 million to $1,580 million, or 22 percent to 24 percent growth over fiscal 2008. We are also modifying our annual diluted earnings per share guidance to a range of $2.14 to $2.21, or 8 percent to 12 percent growth versus $1.98 in fiscal 2008 (see Schedule 6 for details). Our fiscal 2009 guidance excludes the impact of any future restructuring and other charges, as well as the impact of future acquisitions, such as our announced agreement to acquire ZAO United Card Service in the Russian Federation.”

GPN Reports Second Quarter Earnings

January 6, 2009

Page 2

 

“We remain committed to our long-term growth strategy, and the fundamentals of our business model remain strong. This is underscored by our constant currency outlook for diluted earnings per share growth of 21 percent to 25 percent for fiscal 2009, which is consistent with the constant currency outlook we provided last quarter,” said Garcia.

Conference Call

Global Payments will hold a conference call today, January 6, 2009 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 may dial 1-877-857-6177 and callers outside U.S. and Canada may dial 1-719-325-4793. The pass code is “GPN.” A replay of the call may be accessed through the Global Payments’ Web site through January 20, 2009.

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, Europe, and the Asia-Pacific region. 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 United States and Europe to destinations in Latin America, Morocco, and the Philippines. For more information about the company and its services, visit www.globalpaymentsinc.com.

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: foreign currency risks which become increasingly relevant as we expand internationally, development difficulties, the effect of current economic conditions, including a decrease in consumer spending, costs of capital, 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.

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—More—

SCHEDULE 1

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands, except per share data)

 

 

     Three Months Ended November 30,  
     2008     2007  

Revenues

    $ 401,063     $ 308,776  
                

Operating expenses:

     

Cost of service

      154,311       116,513  

Sales, general and administrative

      163,987       133,518  

Restructuring

      —         314  
                
     318,298       250,345  
                

Operating income

      82,765       58,431  
                

Other income (expense):

     

Interest and other income

      2,002       4,739  

Interest and other expense

      (2,016 )     (1,268 )
                
     (14 )     3,471  
                

Income before income taxes and minority interest

      82,751       61,902  

Provision for income taxes

      (22,505 )     (21,023 )

Minority interest, net of tax (provision) benefit of ($710) and $524, respectively

      (11,339 )     (2,566 )
                

Net income

    $ 48,907     $ 38,313  
                

Earnings per share:

     

Basic

    $ 0.61     $ 0.48  
                

Diluted

    $ 0.60     $ 0.48  
                

Weighted average shares outstanding:

     

Basic

      79,735       79,027  

Diluted

      81,132       80,506  

SCHEDULE 2

SEGMENT INFORMATION

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands)

 

 

     Three Months Ended November 30,  
     2008     2007  

Revenues:

     

United States

    $ 192,149     $ 176,115  

Canada

      78,633       65,772  
                

North America Merchant Services

      270,782       241,887  

Europe

      71,170       14,135  

Asia-Pacific

      23,932       18,426  
                

International Merchant Services

      95,102       32,561  

United States

      28,611       28,415  

Europe

      6,568       5,913  
                

Money Transfer

      35,179       34,328  
                

Total Revenues

    $ 401,063     $ 308,776  
                

Operating Income:

     

North America Merchant Services

    $ 72,431     $ 66,245  

International Merchant Services

      20,963       4,847  

Money Transfer

      4,883       1,239  

Corporate

      (15,512 )     (13,586 )

Restructuring

      —         (314 )
                

Operating Income

    $ 82,765     $ 58,431  
                

SCHEDULE 3

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

Reconciliation to Exclude Restructuring Charges from Normalized Results

(In thousands, except per share data)

 

 

     Three Months Ended November 30,  
     2008     2007  
     GAAP     Normalized     Restructuring1     GAAP  

Revenues

    $ 401,063     $ 308,776     $ —       $ 308,776  
                                

Operating expenses:

         

Cost of service

      154,311       116,513       —         116,513  

Sales, general and administrative

      163,987       133,518       —         133,518  

Restructuring

      —         —         314       314  
                                
     318,298       250,031       314       250,345  
                                

Operating income

      82,765       58,745       (314 )     58,431  
                                

Other income (expense):

         

Interest and other income

      2,002       4,739       —         4,739  

Interest and other expense

      (2,016 )     (1,268 )     —         (1,268 )
                                
     (14 )     3,471       —         3,471  
                                

Income before income taxes and minority interest

      82,751       62,216       (314 )     61,902  

Provision for income taxes

      (22,505 )     (21,129 )     106       (21,023 )

Minority interest, net of tax (provision) benefit of ($710) and $524, respectively

      (11,339 )     (2,566 )     —         (2,566 )
                                

Net income

    $ 48,907     $ 38,521     $ (208 )   $ 38,313  
                                

Diluted shares

      81,132       80,506       —         80,506  

Diluted earnings per share

    $ 0.60     $ 0.48     $ —       $ 0.48  
                                

Effective tax rate

      32.2 %     34.8 %       34.9 %

 

1

Restructuring charges consist of employee termination benefits relating to a facility closure. Also reflects the related income tax benefit.

SCHEDULE 4

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands, except per share data)

 

 

     Six Months Ended November 30,  
     2008     2007  

Revenues

    $ 806,820     $ 619,756  
                

Operating expenses:

     

Cost of service

      298,488       232,822  

Sales, general and administrative

      332,470       260,954  

Restructuring

      —         1,317  
                
     630,958       495,093  
                

Operating income

      175,862       124,663  
                

Other income (expense):

     

Interest and other income

      5,373       9,876  

Interest and other expense

      (4,420 )     (3,141 )
                
     953       6,735  
                

Income before income taxes and minority interest

      176,815       131,398  

Provision for income taxes

      (50,721 )     (44,806 )

Minority interest, net of tax (provision) benefit of ($675) and $436, respectively

      (19,660 )     (4,704 )
                

Net income

    $ 106,434     $ 81,888  
                

Earnings per share:

     

Basic

    $ 1.34     $ 1.03  
                

Diluted

    $ 1.31     $ 1.01  
                

Weighted average shares outstanding:

     

Basic

      79,598       79,767  

Diluted

      81,118       81,209  

SCHEDULE 5

SEGMENT INFORMATION

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands)

 

 

     Six Months Ended November 30,  
     2008     2007  

Revenues:

     

United States

    $ 392,845     $ 355,565  

Canada

      164,577       132,449  
                

North America Merchant Services

      557,422       488,014  

Europe

      132,772       27,910  

Asia-Pacific

      44,650       34,490  
                

International Merchant Services

      177,422       62,400  

United States

      57,991       57,996  

Europe

      13,985       11,346  
                

Money Transfer

      71,976       69,342  
                

Total Revenues

    $ 806,820     $ 619,756  
                

Operating Income:

     

North America Merchant Services

    $ 155,500     $ 137,215  

International Merchant Services

      41,365       9,983  

Money Transfer

      9,361       4,961  

Corporate

      (30,364 )     (26,179 )

Restructuring

      —         (1,317 )
                

Operating Income

    $ 175,862     $ 124,663  
                

SCHEDULE 6

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

Reconciliations to Exclude Restructuring and Other Charges from Normalized Results

(In thousands, except per share data)

 

 

     Six Months Ended November 30,  
      2008     2007  
     GAAP     Normalized     Restructuring1     GAAP  

Revenues

    $ 806,820     $ 619,756     $ —       $ 619,756  
                                

Operating expenses:

         

Cost of service

      298,488       232,822       —         232,822  

Sales, general and administrative

      332,470       260,954       —         260,954  

Restructuring

      —         —         1,317       1,317  
                                
     630,958       493,776       1,317       495,093  
                                

Operating income

      175,862       125,980       (1,317 )     124,663  
                                

Other income (expense):

         

Interest and other income

      5,373       9,876       —         9,876  

Interest and other expense

      (4,420 )     (3,141 )     —         (3,141 )
                                
     953       6,735       —         6,735  
                                

Income before income taxes and minority interest

      176,815       132,715       (1,317 )     131,398  

Provision for income taxes

      (50,721 )     (45,255 )     449       (44,806 )

Minority interest, net of tax (provision) benefit of ($675) and $436, respectively

      (19,660 )     (4,704 )     —         (4,704 )
                                

Net income

    $ 106,434     $ 82,756     $ (868 )   $ 81,888  
                                

Diluted shares

      81,118       81,209       —         81,209  

Diluted earnings per share

    $ 1.31     $ 1.02     $ (0.01 )   $ 1.01  
                                

Effective tax rate

      32.6 %     35.1 %       35.1 %

 

1

Restructuring charges consist of employee termination benefits relating to a facility closure. Also reflects the related income tax benefit.

 

     Year Ended May 31,
2008

Normalized diluted earnings per share

    $ 1.98

Restructuring and other2

      0.03
      

GAAP diluted earnings per share

    $ 2.01
      

 

2

Full year fiscal 2008 diluted earnings per share was $2.01 on a GAAP basis, which includes restructuring and other charges, a favorable operating tax item, and an unfavorable foreign currency item. For more information, please see our fiscal 2008 earnings press releases, which were included as exhibits to our respective Form 8-Ks furnished to the SEC.

SCHEDULE 7

CONSOLIDATED BALANCE SHEETS

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands)

 

 

     November 30,
2008		     May 31,
2008
     (Unaudited)      

Assets

     

Cash and cash equivalents

    $ 356,234     $ 456,060

Accounts receivable, net

      109,739       100,179

Claims receivable, net

      1,537       1,354

Settlement processing assets

      5,179       24,280

Inventory, net

      5,310       3,821

Deferred income taxes

      4,261       4,119

Prepaid expenses and other current assets

      24,726       27,597
              

Current assets

      506,986       617,410

Property and equipment, net

      145,664       141,415

Goodwill

      696,246       497,136

Other intangible assets, net

      251,999       175,636

Other assets

      12,535       14,310
              

Total assets

    $ 1,613,430     $ 1,445,907
              

Liabilities and Shareholders’ Equity

     

Lines of credit

    $ 6,574     $ 1,527

Current portion of term loan

      25,000       —  

Payables to money transfer beneficiaries

      12,244       9,276

Accounts payable and accrued liabilities

      138,401       138,243

Settlement processing obligations

      76,702       56,731

Income taxes payable

      13,671       11,975
              

Current liabilities

      272,592       217,752

Term loan

      170,000       —  

Deferred income taxes

      57,086       75,001

Other long-term liabilities

      12,001       11,612
              

Total liabilities

      511,679       304,365
              

Commitments and contingencies

     

Minority interest in equity of subsidiaries

      35,210       14,724

Preferred stock

      —         —  

Common stock

      —         —  

Paid-in capital

      396,064       380,741

Retained earnings

      725,099       621,875

Accumulated other comprehensive (loss) income

      (54,622 )     124,202
              

Total shareholders’ equity

      1,066,541       1,126,818
              

Total liabilities and shareholders’ equity

    $ 1,613,430     $ 1,445,907
              

SCHEDULE 8

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands)

 

 

     Six Months Ended November 30,  
     2008     2007  

Cash flows from operating activities:

     

Net income

    $ 106,434     $ 81,888  

Adjustments to reconcile net income to net cash provided by operating activities:

     

Depreciation and amortization of property and equipment

      19,446       13,712  

Amortization of acquired intangibles

      15,654       7,266  

Share-based compensation expense

      7,154       6,592  

Provision for operating losses and bad debts

      11,814       14,444  

Minority interest in earnings

      18,985       5,139  

Deferred income taxes

      467       (1,287 )

Other, net

      349       156  

Changes in operating assets and liabilities, net of the effects of acquisitions:

     

Accounts receivable

      (13,210 )     (7,604 )

Claims receivable

      (9,872 )     (12,863 )

Settlement processing assets and obligations, net

      36,994       51,818  

Inventory

      (1,184 )     (2,836 )

Prepaid expenses and other assets

      4,263       (8,209 )

Payables to money transfer beneficiaries

      2,968       204  

Accounts payable and accrued liabilities

      (1,461 )     (3,001 )

Income taxes payable

      1,696       3,958  
                

Net cash provided by operating activities

      200,497       149,377  
                

Cash flows from investing activities:

     

Business and intangible asset acquisitions

      (454,265 )     (11,551 )

Capital expenditures

      (17,396 )     (22,914 )

Proceeds from sale of investment and contractual rights

      6,956       —    
                

Net cash used in investing activities

      (464,705 )     (34,465 )
                

Cash flows from financing activities:

     

Net borrowings on lines of credit

      5,047       679  

Proceeds from term loan

      200,000       —    

Principal payments under term loan

      (5,000 )     —    

Proceeds from stock issued under share-based compensation plans

      6,420       13,251  

Tax benefit from share-based compensation plans

      1,749       7,039  

Repurchase of common stock

      —         (87,020 )

Dividends paid

      (3,210 )     (3,193 )

Contribution from minority interest holder

      358       —    

Distributions to minority interests

      (11,718 )     (4,876 )
                

Net cash provided by (used in) financing activities

      193,646       (74,120 )
                

Effect of exchange rate changes on cash

      (29,264 )     13,733  
                

(Decrease) increase in cash and cash equivalents

      (99,826 )     54,525  

Cash and cash equivalents, beginning of period

      456,060       308,872  
                

Cash and cash equivalents, end of period

    $ 356,234     $ 363,397  
                

SCHEDULE 9

CONSTANT CURRENCY OUTLOOK

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

 

(in millions, except for per share data)    Q1 FY09
Actual		    % change
Q1 FY08		    Q2 FY09
Actual		     % change
Q2 FY08		     Fiscal 2009
Outlook		     % change
FY08		  

Fiscal 2009 Revenue

               

Constant currency1

    $ 397    28%    $ 424     37%     $ 1,641 to $1,671     29% to 31%  

Foreign currency impact2

      9    3%      (23 )   (7% )     (91 )   (7% )
                                        

Total Revenues

    $ 406    31%    $ 401     30%     $ 1,550 to $1,580     22% to 24%  
                                        

Fiscal 2009 Diluted Earnings Per Share

               

Constant currency1

    $ 0.68    27%    $ 0.67     39%     $ 2.40 to $2.47     21% to 25%  

Foreign currency impact2

      0.03    5%      (0.07 )   (14% )     (0.26 )   (13% )
                                        

Normalized

    $ 0.71    32%    $ 0.60     25%     $ 2.14 to $2.21     8% to 12%  

Restructuring and other items3

      —      2%      —       —         —       (2% )
                                        

GAAP

    $ 0.71    34%    $ 0.60     25%     $ 2.14 to $2.21     6% to 10%  
                                        

 

1

Reflects current period results on a pro forma basis as if foreign currency rates did not change from the comparable prior year period.

2

Reflects the impact of actual and forecasted changes in foreign currency rates from the comparable prior year period.

3

For more information, please see Schedule 6 and our earnings press releases for each of these periods, which were included as exhibits to our respective Form 8-Ks furnished to the SEC.