EX-99.1 3 gp8438ex991.htm EXHIBIT 99.1

Exhibit 99.1

Global Payments Reports Second Quarter Earnings

Message

          ATLANTA, Jan. 5 /PRNewswire-FirstCall/ -- Global Payments Inc. (NYSE: GPN) today announced results for its second quarter ended November 30, 2006.  For the second quarter, revenue grew 19 percent to $260.7 million compared to $219.7 million in the prior year.  Excluding the impact of current period stock option expense and prior year restructuring charges, diluted earnings per share grew 16 percent to $0.44 compared to $0.38 in the prior year quarter.

          For the six months ended November 30, 2006, revenue grew 17 percent to $521.0 million compared to $444.1 million in the prior year period.  Excluding the impact of current period stock option expense and prior year restructuring charges, diluted earnings per share grew 29 percent to $0.99 from $0.77 in the prior year period.

          In accordance with GAAP, both quarter and year-to-date prior period diluted earnings per share include certain restructuring charges (see attached reconciliation schedule) relating to an operating center consolidation, which was announced in July 2005.  Additionally, both the current quarter and year-to-date periods include the recognition of stock option expenses as a result of the company’s June 1, 2006 adoption of Statement of Financial Accounting Standards No. 123( R ) using the modified prospective method.  For the three and six months ended November 30, 2006, GAAP diluted earnings per share were $0.42 and $0.92, respectively, compared to $0.37 and $0.75, respectively, in the prior year periods. 

          Comments and Outlook

          Chairman, President and CEO, Paul R. Garcia, stated, “We are pleased to report solid financial results for our fiscal 2007 second quarter, which were primarily due to expansion in our merchant services segment.  Our domestic ISO channel continues to drive our merchant services revenue growth, in addition to a full quarter’s results from our new Asia-Pacific joint venture with HSBC.  Our merchant services results also benefited from a favorable Canadian currency exchange rate compared to the prior year.  Based on recent Canadian exchange rate movements, however, we do not expect to receive a similar benefit for the second half of our fiscal year. Lastly, our consumer money transfer segment reported strong revenue growth in the quarter, although we are anticipating slower growth in this area for the second half of our fiscal year due to a competitive pricing environment.” 

          “Based on our first half results and our second half expectations, we are reaffirming the low end of our annual fiscal 2007 revenue guidance of $1,057 million, and reducing the high end of this guidance to $1,069 million.  This revenue guidance reflects an expected 16 percent to 18 percent growth versus $908 million in fiscal 2006.  In addition, we are reaffirming our annual fiscal 2007 diluted earnings per share guidance of $1.79 to $1.85, excluding the impact of stock option expenses as a result of our adoption of FAS 123R, for an expected growth of 16 percent to 20 percent versus $1.54 in fiscal 2006.(1) Including the impact of these stock option expenses, our annual fiscal 2007 diluted earnings per share guidance is $1.69 to $1.75,” said Garcia.

          Conference Call

          Global Payments will hold a conference call today, January 5, 2007 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 January 19, 2007.


          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.  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)

Fiscal 2006 diluted earnings per share was $1.53 on a GAAP basis,  which includes restructuring charges equivalent to $0.01 in 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.

 

Contact:

Jane M. Elliott

 

 

770-829-8234 Voice

 

 

770-829-8267 Fax

 

 

investor.relations@globalpay.com


UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands, except per share data)

 

 

Three Months Ended
November 30,

 

 

 

 

 

 

2006

 

2005

 

 

 

 

 

Revenues

 

$

260,697

 

$

219,673

 

Operating expenses:

 

 

 

 

 

 

 

Cost of service

 

 

105,766

 

 

86,912

 

Sales, general and administrative

 

 

102,628

 

 

81,728

 

Restructuring

 

 

—  

 

 

1,005

 

 

 

 

208,394

 

 

169,645

 

Operating income

 

 

52,303

 

 

50,028

 

Other income (expense):

 

 

 

 

 

 

 

Interest and other income

 

 

3,728

 

 

1,520

 

Interest and other expense

 

 

(1,737

)

 

(1,802

)

 

 

 

1,991

 

 

(282

)

Income before income taxes and minority interest

 

 

54,294

 

 

49,746

 

Provision for income taxes

 

 

(17,692

)

 

(16,963

)

Minority interest, net of tax

 

 

(2,600

)

 

(2,170

)

Net income

 

$

34,002

 

$

30,613

 

Earnings per share:

 

 

 

 

 

 

 

Basic

 

$

0.42

 

$

0.39

 

Diluted

 

$

0.42

 

$

0.37

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

Basic

 

 

80,147

 

 

78,748

 

Diluted

 

 

81,729

 

 

81,906

 


UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands, except per share data)

 

 

Six Months Ended
November 30,

 

 

 

 

 

 

2006

 

2005

 

 

 

 

 

Revenues

 

$

521,005

 

$

444,129

 

Operating expenses:

 

 

 

 

 

 

 

Cost of service

 

 

203,956

 

 

180,094

 

Sales, general and administrative

 

 

201,219

 

 

161,605

 

Restructuring

 

 

—  

 

 

1,878

 

 

 

 

405,175

 

 

343,577

 

Operating income

 

 

115,830

 

 

100,552

 

Other income (expense):

 

 

 

 

 

 

 

Interest and other income

 

 

7,324

 

 

2,434

 

Interest and other expense

 

 

(3,899

)

 

(3,322

)

 

 

 

3,425

 

 

(888

)

Income before income taxes and minority interest

 

 

119,255

 

 

99,664

 

Provision for income taxes

 

 

(38,601

)

 

(33,985

)

Minority interest, net of tax

 

 

(5,143

)

 

(4,328

)

Net income

 

$

75,511

 

$

61,351

 

Earnings per share:

 

 

 

 

 

 

 

Basic

 

$

0.94

 

$

0.78

 

Diluted

 

$

0.92

 

$

0.75

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

Basic

 

 

79,939

 

 

78,385

 

Diluted

 

 

81,651

 

 

81,458

 


CONSOLIDATED CONDENSED BALANCE SHEETS
GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands)

 

 

November 30,
2006

 

May 31,
2006

 

 

 

 

 

 

 

(Unaudited)

 

 

 

 

Assets

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

249,247

 

$

218,475

 

Accounts receivable, net

 

 

74,524

 

 

67,476

 

Claims receivable, net

 

 

800

 

 

903

 

Settlement processing assets

 

 

29,068

 

 

39,671

 

Other current assets

 

 

23,274

 

 

21,881

 

Current assets

 

 

376,913

 

 

348,406

 

Property and equipment, net

 

 

112,712

 

 

107,977

 

Goodwill

 

 

443,917

 

 

387,280

 

Other intangible assets, net

 

 

179,372

 

 

167,182

 

Other assets

 

 

7,934

 

 

7,833

 

Total assets

 

$

1,120,848

 

$

1,018,678

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

Settlement processing obligations

 

$

39,382

 

$

37,942

 

Payable to money transfer beneficiaries

 

 

6,337

 

 

6,361

 

Accounts payable and other accrued liabilities

 

 

114,111

 

 

104,606

 

Obligations under capital leases

 

 

202

 

 

746

 

Current liabilities

 

 

160,032

 

 

149,655

 

Other long-term liabilities

 

 

78,736

 

 

85,804

 

Total liabilities

 

 

238,768

 

 

235,459

 

Minority interest in equity of subsidiaries

 

 

15,771

 

 

12,996

 

Shareholders’ equity

 

 

866,309

 

 

770,223

 

Total liabilities and shareholders’ equity

 

$

1,120,848

 

$

1,018,678

 


UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW
GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands)

 

 

Six Months Ended
November 30,

 

 

 

 

 

 

2006

 

2005

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income

 

$

75,511

 

$

61,351

 

Non-cash items

 

 

 

 

 

 

 

Depreciation and amortization

 

 

20,058

 

 

20,378

 

Minority interest in earnings

 

 

5,487

 

 

4,328

 

Other, net

 

 

15,446

 

 

14,918

 

Changes in working capital, which  (used) provided cash

 

 

 

 

 

 

 

Settlement processing

 

 

9,339

 

 

60,678

 

Other, net

 

 

(11,622

)

 

(18,714

)

Net cash provided by operating activities

 

 

114,219

 

 

142,939

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Capital expenditures

 

 

(15,259

)

 

(12,538

)

Business acquisitions, net of cash acquired

 

 

(79,530

)

 

(1,571

)

Net cash used in investing activities

 

 

(94,789

)

 

(14,109

)

Cash flows from financing activities:

 

 

 

 

 

 

 

Net payments on lines of credit

 

 

—  

 

 

(58,606

)

Principal payments under capital leases and other notes

 

 

(544

)

 

(2,057

)

Net stock issued to employees under stock plans and dividends

 

 

14,020

 

 

11,624

 

Distributions to minority interests

 

 

(4,707

)

 

(5,407

)

Net cash provided by (used in) financing activities

 

 

8,769

 

 

(54,446

)

Effect of exchange rate changes on cash

 

 

2,573

 

 

8,333

 

Increase in cash and cash equivalents

 

 

30,772

 

 

82,717

 

Cash and cash equivalents, beginning of period

 

 

218,475

 

 

48,979

 

Cash and cash equivalents, end of period

 

$

249,247

 

$

131,696

 


UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
GLOBAL PAYMENTS INC. AND SUBSIDIARIES

Reconciliation to Exclude Restructuring and Stock Option Expenses from Normalized Results

(In thousands, except per share data)

 

 

Three Months Ended November 30,

 

 

 

 

 

 

2006

 

2005

 
 

 

 

 

 

 

Normalized

 

Stock
Options(1)

 

GAAP

 

Normalized

 

Restructuring(2)

 

GAAP

 

 

 

 

 

 

 

 

 

Revenues

 

$

260,697

 

$

—  

 

$

260,697

 

$

219,673

 

$

—  

 

$

219,673

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of service

 

 

105,766

 

 

—  

 

 

105,766

 

 

86,912

 

 

—  

 

 

86,912

 

Sales, general and administrative

 

 

99,353

 

 

3,275

 

 

102,628

 

 

81,728

 

 

—  

 

 

81,728

 

Restructuring

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

1,005

 

 

1,005

 

 

 

 

205,119

 

 

3,275

 

 

208,394

 

 

168,640

 

 

1,005

 

 

169,645

 

Operating income

 

 

55,578

 

 

(3,275

)

 

52,303

 

 

51,033

 

 

(1,005

)

 

50,028

 

Other income/(expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and other income

 

 

3,728

 

 

—  

 

 

3,728

 

 

1,520

 

 

—  

 

 

1,520

 

Interest and other expense

 

 

(1,737

)

 

—  

 

 

(1,737

)

 

(1,802

)

 

—  

 

 

(1,802

)

 

 

 

1,991

 

 

—  

 

 

1,991

 

 

(282

)

 

—  

 

 

(282

)

Income before income taxes

 

 

57,569

 

 

(3,275

)

 

54,294

 

 

50,751

 

 

(1,005

)

 

49,746

 

Provision for income taxes

 

 

(18,759

)

 

1,067

 

 

(17,692

)

 

(17,306

)

 

343

 

 

(16,963

)

Minority interest, net of tax

 

 

(2,600

)

 

—  

 

 

(2,600

)

 

(2,170

)

 

—  

 

 

(2,170

)

Net income

 

$

36,210

 

$

(2,208

)

$

34,002

 

$

31,275

 

$

(662

)

$

30,613

 

Basic shares

 

 

80,147

 

 

—  

 

 

80,147

 

 

78,748

 

 

—  

 

 

78,748

 

Basic earnings per share

 

$

0.45

 

$

(0.03

)

$

0.42

 

$

0.40

 

$

(0.01

)

$

0.39

 

Diluted shares

 

 

81,729

 

 

—  

 

 

81,729

 

 

81,906

 

 

—  

 

 

81,906

 

Diluted earnings per share

 

$

0.44

 

$

(0.02

)

$

0.42

 

$

0.38

 

$

(0.01

)

$

0.37

 

(1) Relates to the company’s adoption of SFAS 123( R ) on June 1, 2006, which requires the recognition of compensation expense resulting from employee stock options.  Also reflects the related income tax benefit using the company’s effective tax rate, which is defined as the provision for income taxes divided by income before income taxes and minority interest.

 

(2) Restructuring amount consists of employee termination benefits and facility costs relating to an operating center consolidation.  Also reflects the related income tax benefit using the company’s effective tax rate, as described above.


UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
GLOBAL PAYMENTS INC. AND SUBSIDIARIES

Reconciliation to Exclude Restructuring and Stock Option Expenses from Normalized Results

(In thousands, except per share data)

 

 
Six Months Ended November 30,

 

 

 

 

 

 

2006

 

2005

 
 

 

 

 

 

 

Normalized

 

Stock
Options(1)

 

GAAP

 

Normalized

 

Restructuring (2)

 

GAAP

 

 

 

 

 

 

 

 

 

Revenues

 

$

521,005

 

$

—  

 

$

521,005

 

$

444,129

 

$

—  

 

$

444,129

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of service

 

 

203,956

 

 

—  

 

 

203,956

 

 

180,094

 

 

—  

 

 

180,094

 

Sales, general and administrative

 

 

193,941

 

 

7,278

 

 

201,219

 

 

161,605

 

 

—  

 

 

161,605

 

Restructuring

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

1,878

 

 

1,878

 

 

 

 

397,897

 

 

7,278

 

 

405,175

 

 

341,699

 

 

1,878

 

 

343,577

 

Operating income

 

 

123,108

 

 

(7,278

)

 

115,830

 

 

102,430

 

 

(1,878

)

 

100,552

 

Other income/(expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and other income

 

 

7,324

 

 

—  

 

 

7,324

 

 

2,434

 

 

—  

 

 

2,434

 

Interest and other expense

 

 

(3,899

)

 

—  

 

 

(3,899

)

 

(3,322

)

 

—  

 

 

(3,322

)

 

 

 

3,425

 

 

—  

 

 

3,425

 

 

(888

)

 

—  

 

 

(888

)

Income before income taxes

 

 

126,533

 

 

(7,278

)

 

119,255

 

 

101,542

 

 

(1,878

)

 

99,664

 

Provision for income taxes

 

 

(40,957

)

 

2,356

 

 

(38,601

)

 

(34,625

)

 

640

 

 

(33,985

)

Minority interest, net of tax

 

 

(5,143

)

 

—  

 

 

(5,143

)

 

(4,328

)

 

—  

 

 

(4,328

)

Net income

 

$

80,433

 

$

(4,922

)

$

75,511

 

$

62,589

 

$

(1,238

)

$

61,351

 

Basic shares

 

 

79,939

 

 

—  

 

 

79,939

 

 

78,385

 

 

—  

 

 

78,385

 

Basic earnings per share

 

$

1.01

 

$

(0.07

)

$

0.94

 

$

0.80

 

$

(0.02

)

$

0.78

 

Diluted shares

 

 

81,651

 

 

—  

 

 

81,651

 

 

81,458

 

 

—  

 

 

81,458

 

Diluted earnings per share

 

$

0.99

 

$

(0.07

)

$

0.92

 

$

0.77

 

$

(0.02

)

$

0.75

 

(1) Relates to the company’s adoption of SFAS 123( R ) on June 1, 2006, which requires the recognition of compensation expense resulting from employee stock options.  Also reflects the related income tax benefit using the company’s effective tax rate, which is defined as the provision for income taxes divided by income before income taxes and minority interest.

 

(2) Restructuring amount consists of employee termination benefits and facility costs relating to an operating center consolidation.  Also reflects the related income tax benefit using the company’s effective tax rate, as described above.


SEGMENT INFORMATION
GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands)

 

 

Three Months Ended
November 30,

 

 

 

 

 

 

2006

 

2005

 
 

 

 

 

Revenues

 

 

 

 

 

 

 

Domestic direct

 

$

132,522

 

$

114,455

 

Canada

 

 

54,766

 

 

51,624

 

Asia-Pacific

 

 

14,849

 

 

—  

 

Central and Eastern Europe

 

 

13,248

 

 

11,415

 

Domestic indirect and other(1)

 

 

11,419

 

 

13,220

 

Merchant services(1)

 

 

226,804

 

 

190,714

 

Domestic

 

 

29,888

 

 

26,500

 

Europe

 

 

4,005

 

 

2,459

 

Money transfer(1)

 

 

33,893

 

 

28,959

 

Total revenues

 

$

260,697

 

$

219,673

 

Operating income

 

 

 

 

 

 

 

Merchant services

 

$

61,281

 

$

56,270

 

Money transfer

 

 

4,067

 

 

4,224

 

Corporate(2)

 

 

(13,045

)

 

(9,461

)

Restructuring

 

 

—  

 

 

(1,005

)

Operating income

 

$

52,303

 

$

50,028

 

(1)

Prior to fiscal 2006, the company’s legacy funds transfer revenue was historically reported in “Money transfer”.  Beginning in the fourth quarter of fiscal 2006, such revenues were reclassified to “Merchant services” under the “Domestic indirect and other” category.  All prior period amounts were reclassified for this change.  With this change, the company’s “Money transfer” segment only includes its consumer money transfer service offerings.

 

 

(2)

Fiscal 2007 includes compensation expense resulting from employee stock options as a result of our adoption of FAS 123R.  Fiscal 2006 does not include these expenses.


SEGMENT INFORMATION
GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands)

 

 

Six Months Ended
November 30,

 

 

 

 

 

 

2006

 

2005

 
 

 

 

 

Revenues

 

 

 

 

 

 

 

Domestic direct

 

$

267,964

 

$

229,720

 

Canada

 

 

115,684

 

 

105,902

 

Asia-Pacific

 

 

20,335

 

 

—  

 

Central and Eastern Europe

 

 

26,523

 

 

24,142

 

Domestic indirect and other(1)

 

 

23,614

 

 

27,388

 

Merchant services(1)

 

 

454,120

 

 

387,152

 

Domestic

 

 

59,190

 

 

52,201

 

Europe

 

 

7,695

 

 

4,776

 

Money transfer(1)

 

 

66,885

 

 

56,977

 

Total revenues

 

$

521,005

 

$

444,129

 

Operating income

 

 

 

 

 

 

 

Merchant services

 

$

134,242

 

$

112,518

 

Money transfer

 

 

8,746

 

 

8,803

 

Corporate(2)

 

 

(27,158

)

 

(18,891

)

Restructuring

 

 

—  

 

 

(1,878

)

Operating income

 

$

115,830

 

$

100,552

 

(1)

Prior to fiscal 2006, the company’s legacy funds transfer revenue was historically reported in “Money transfer”.  Beginning in the fourth quarter of fiscal 2006, such revenues were reclassified to “Merchant services” under the “Domestic indirect and other” category.  All prior period amounts were reclassified for this change.  With this change, the company’s “Money transfer” segment only includes its consumer money transfer service offerings.

 

 

(2)

Fiscal 2007 includes compensation expense resulting from employee stock options as a result of our adoption of FAS 123R.  Fiscal 2006 does not include these expenses.

SOURCE  Global Payments Inc.
          -0-                                                            01/05/2007
          /CONTACT:  Jane M. Elliott of Global Payments Inc., +1-770-829-8234, or fax, +1-770-829-8267, or investor.relations@globalpay.com /
          /First Call Analyst: /
          /FCMN Contact: phyllis.mcneill@globalpay.com /
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          /Web site:  http://www.globalpaymentsinc.com/