Global Payments Reports Third Quarter Earnings
</pre> <p><span class="xn-location">ATLANTA</span>, <span class="xn-chron">March 31, 2010</span> /CNW/ -- Global Payments Inc. (NYSE: GPN) today announced results for its fiscal third quarter ended <span class="xn-chron">February 28, 2010</span>. For the third quarter, revenues grew 11% to <span class="xn-money">$398.5 million</span> compared to <span class="xn-money">$359.5 million</span> in the prior year. Diluted earnings per share from continuing operations grew 35% to <span class="xn-money">$0.58</span> compared to <span class="xn-money">$0.43</span> in the prior year (See Schedule 2 for financial results from continuing operations).</p> <p/> <p>Chairman and CEO, Paul R. Garcia, stated, "I am pleased with our results for the quarter which include a lift from foreign currency translation. On a constant currency basis, we delivered solid revenue and diluted earnings per share growth of 6% and 18%, respectively(1). This demonstrates strong financial performance despite a challenging, albeit improving, macroeconomic environment. These results were driven by steady growth in our U.S. ISO channel, continued successful execution in our international businesses and a better than expected effective tax rate.</p> <p/> <p>"Based on our current outlook for continuing operations, we are increasing our fiscal 2010 annual revenue expectations to <span class="xn-money">$1,615 million to $1,625 million</span>, or 10% to 11% growth over fiscal 2009, and we are increasing our fiscal 2010 diluted EPS expectations to <span class="xn-money">$2.49 to $2.54</span>, reflecting 19% to 21% growth over fiscal 2009 EPS," said Garcia.</p> <pre> Conference Call </pre> <p>Global Payments will hold a conference call today, <span class="xn-chron">March 31, 2010</span> at <span class="xn-chron">4:30 p.m. ET</span> to discuss financial results and business highlights. Callers may access the conference call via the company's Web site at <a href="http://www.globalpaymentsinc.com">www.globalpaymentsinc.com</a> by clicking the "Webcast" button; or callers in <span class="xn-location">North America</span> may dial 1-888-609-5666 and callers outside <span class="xn-location">North America</span> may dial 1-913-312-6664. The pass code is "GPN." A replay of the call may be accessed through the Global Payments' Web site through <span class="xn-chron">April 21, 2010</span>.</p> <p/> <p>Global Payments Inc. (NYSE: GPN) is a leading provider of electronic transaction processing services for merchants, Independent Sales Organizations (ISOs), financial institutions, government agencies and multi-national corporations located throughout the <span class="xn-location">United States</span>, <span class="xn-location">Canada</span>, <span class="xn-location">Europe</span>, 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. Visit <a href="http://www.globalpaymentsinc.com">www.globalpaymentsinc.com</a> for more information about the company and its services.</p> <p/> <p>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, the effect of current worldwide economic conditions, including a decline in the value of the U.S. dollar, the impact of the divestiture of the Money Transfer business and future performance and integration of recent 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.</p> <pre> (1) Please see Schedule 6. </pre> <p> </p> <p> </p> <pre> Contact: Jane M. Elliott 770-829-8234 Voice 770-829-8267 Fax [email protected] </pre> <p> </p> <pre> SCHEDULE 1 UNAUDITED CONSOLIDATED STATEMENTS OF INCOME GLOBAL PAYMENTS INC. AND SUBSIDIARIES </pre> <p> </p> <p>(In thousands, except per share data)</p> <p> </p> <p> </p> <pre> Three Months Ended February 28, ------------------ 2010 2009 % Change ---- ---- -------- </pre> <p> </p> <pre> Revenues $398,535 $359,528 11% -------- -------- -------- --- </pre> <p> </p> <pre> Operating expenses: Cost of service 146,202 124,001 18% Sales, general and administrative 178,484 173,144 3% 324,686 297,145 9% ------- ------- </pre> <p> </p> <pre> Operating income 73,849 62,383 18% ---------------- ------ ------ --- </pre> <p> </p> <pre> Other income (expense): Interest and other income 1,319 1,135 16% Interest and other expense (4,141) (2,287) 81% ------ ------ (2,822) (1,152) 145% ------ ------ </pre> <p> </p> <pre> Income from continuing operations before income taxes 71,027 61,231 16% Provision for income taxes (20,298) (18,531) 10% ------- ------- Income from continuing operations 50,729 42,700 19% Income (loss) from discontinued operations, net of tax 722 (141,418) NM --- Net income (loss) including noncontrolling interests 51,451 (98,718) NM Less: Net income attributable to noncontrolling interests, net of tax (2,990) (8,058) (63%) ------ ------ Net income (loss) attributable to Global Payments $48,461 $(106,776) NM ------- --------- </pre> <p> </p> <pre> Amounts attributable to Global Payments: Income from continuing operations $47,739 $34,642 38% Income (loss) from discontinued operations, net of tax 722 (141,418) NM --- -------- Net income (loss) attributable to Global Payments $48,461 $(106,776) NM ------- --------- </pre> <p> </p> <p> </p> <pre> Basic earnings per share attributable to Global Payments: Income from continuing operations $0.59 $0.43 37% Income (loss) from discontinued operations, net of tax 0.01 (1.76) NM ---- ----- Net income (loss) $0.60 $(1.33) NM ----- ------ </pre> <p> </p> <pre> Diluted earnings per share attributable to Global Payments: Income from continuing operations $0.58 $0.43 35% Income (loss) from discontinued operations, net of tax 0.01 (1.75) NM ---- ----- Net income (loss) $0.59 $(1.32) NM ----- ------ </pre> <p> </p> <pre> Weighted average shares outstanding(1): Basic 81,539 80,333 Diluted 82,636 80,948 </pre> <p> </p> <p> </p> <p> </p> <pre> Nine Months Ended February 28, ----------------- 2010 2009 % Change ---- ---- -------- </pre> <p> </p> <pre> Revenues $1,217,418 $1,094,372 11% -------- ---------- ---------- --- </pre> <p> </p> <pre> Operating expenses: Cost of service 432,287 374,631 15% Sales, general and administrative 533,337 490,857 9% 965,624 865,488 12% ------- ------- </pre> <p> </p> <pre> Operating income 251,794 228,884 10% ---------------- ------- ------- --- </pre> <p> </p> <pre> Other income (expense): Interest and other income 2,699 6,354 -58% Interest and other expense (12,704) (6,357) 100% ------- ------ (10,005) (3) NM ------- --- </pre> <p> </p> <pre> Income from continuing operations before income taxes 241,789 228,881 6% Provision for income taxes (69,489) (66,029) 5% ------- ------- Income from continuing operations 172,300 162,852 6% Income (loss) from discontinued operations, net of tax 7,778 (135,476) NM ----- -------- Net income (loss) including noncontrolling interests 180,078 27,376 558% Less: Net income attributable to noncontrolling interests, net of tax (10,951) (27,718) (60%) ------- ------- Net income (loss) attributable to Global Payments $169,127 $(342) NM -------- ----- </pre> <p> </p> <pre> Amounts attributable to Global Payments: Income from continuing operations $161,349 $135,134 19% Income (loss) from discontinued operations, net of tax 7,778 (135,476) NM ----- -------- Net income (loss) attributable to Global Payments $169,127 $(342) NM -------- ----- </pre> <p> </p> <p> </p> <pre> Basic earnings per share attributable to Global Payments: Income from continuing operations $1.99 $1.69 18% Income (loss) from discontinued operations, net of tax 0.10 (1.69) NM ---- ----- Net income (loss) $2.09 $- NM ----- --- </pre> <p> </p> <pre> Diluted earnings per share attributable to Global Payments: Income from continuing operations $1.96 $1.67 17% Income (loss) from discontinued operations, net of tax 0.10 (1.67) NM ---- ----- Net income (loss) $2.06 $- NM ----- --- </pre> <p> </p> <pre> Weighted average shares outstanding(1): Basic 81,102 80,129 Diluted 82,181 81,077 </pre> <p> </p> <pre> (1) Pursuant to the retrospective adoption of FASB guidance on participating securities (ASC 260-10-45-40), basic and diluted weighted average shares outstanding have been increased by 498 and 17, respectively for the three months ended February 28, 2009, and 453 and 22, respectively for the nine months ended February 28, 2009. </pre> <p> </p> <pre> NM - Not Meaningful </pre> <p> </p> <pre> SCHEDULE 2 INCOME FROM CONTINUING OPERATIONS ATTRIBUTABLE TO GLOBAL PAYMENTS GLOBAL PAYMENTS INC. AND SUBSIDIARIES </pre> <p> </p> <p>(In thousands, except per share data)</p> <p> </p> <p> </p> <pre> Three Months Ended February 28, ------------------ 2010 2009 % Change ---- ---- -------- </pre> <p> </p> <pre> Revenues $398,535 $359,528 11% -------- -------- -------- --- </pre> <p> </p> <pre> Operating expenses: Cost of service 146,202 124,001 18% Sales, general and administrative 178,484 173,144 3% 324,686 297,145 9% ------- ------- </pre> <p> </p> <pre> Operating income 73,849 62,383 18% ---------------- ------ ------ --- </pre> <p> </p> <pre> Other income (expense): Interest and other income 1,319 1,135 16% Interest and other expense (4,141) (2,287) 81% ------ ------ (2,822) (1,152) 145% ------ ------ </pre> <p> </p> <pre> Income from continuing operations before income taxes 71,027 61,231 16% Provision for income taxes (20,298) (18,531) 10% ------- ------- Income from continuing operations including noncontrolling interests 50,729 42,700 19% Less: Net income attributable to noncontrolling interests, net of tax (2,990) (8,058) (63%) ------ ------ Net income from continuing operations attributable to Global Payments $47,739 $34,642 38% ======= ======= </pre> <p> </p> <pre> Basic earnings per share $0.59 $0.43 37% ===== ===== </pre> <p> </p> <pre> Diluted earnings per share $0.58 $0.43 35% ===== ===== </pre> <p> </p> <pre> Weighted average shares outstanding: Basic 81,539 80,333 Diluted 82,636 80,948 </pre> <p> </p> <p> </p> <p> </p> <pre> Nine Months Ended February 28, ----------------- 2010 2009 % Change ---- ---- -------- </pre> <p> </p> <pre> Revenues $1,217,418 $1,094,372 11% -------- ---------- ---------- --- </pre> <p> </p> <pre> Operating expenses: Cost of service 432,287 374,631 15% Sales, general and administrative 533,337 490,857 9% 965,624 865,488 12% ------- ------- </pre> <p> </p> <pre> Operating income 251,794 228,884 10% ---------------- ------- ------- --- </pre> <p> </p> <pre> Other income (expense): Interest and other income 2,699 6,354 (58%) Interest and other expense (12,704) (6,357) 100% ------- ------ (10,005) (3) NM ------- --- </pre> <p> </p> <pre> Income from continuing operations before income taxes 241,789 228,881 6% Provision for income taxes (69,489) (66,029) 5% ------- ------- Income from continuing operations including noncontrolling interests 172,300 162,852 6% Less: Net income attributable to noncontrolling interests, net of tax (10,951) (27,718) (60%) ------- ------- Net income from continuing operations attributable to Global Payments $161,349 $135,134 19% ======== ======== </pre> <p> </p> <pre> Basic earnings per share $1.99 $1.69 18% ===== ===== </pre> <p> </p> <pre> Diluted earnings per share $1.96 $1.67 17% ===== ===== </pre> <p> </p> <pre> Weighted average shares outstanding: Basic 81,102 80,129 Diluted 82,181 81,077 </pre> <p> </p> <pre> NM - Not Meaningful </pre> <p> </p> <pre> SCHEDULE 3 SEGMENT INFORMATION CONTINUING OPERATIONS GLOBAL PAYMENTS INC. AND SUBSIDIARIES </pre> <p> </p> <p>(In thousands)</p> <p> </p> <p> </p> <pre> Three Months Ended February 28, ------------------ 2010 2009 % Change --- --- -------- </pre> <p> </p> <pre> Revenues: --------- United States $216,168 $206,237 5% Canada 77,092 68,201 13% ------ ------ North America Merchant Services 293,260 274,438 7% </pre> <p> </p> <pre> Europe 78,174 62,110 26% Asia-Pacific 27,101 22,980 18% ------ ------ International Merchant Services 105,275 85,090 24% </pre> <p> </p> <pre> Total Revenues $398,535 $359,528 11% ======== ======== </pre> <p> </p> <pre> Operating Income: ----------------- North America Merchant Services $60,855 $57,909 5% International Merchant Services 28,853 20,771 39% Corporate (15,859) (16,297) 3% ------- ------- Operating Income $73,849 $62,383 18% ======= ======= </pre> <p> </p> <p> </p> <p> </p> <pre> Nine Months Ended February 28, ----------------- 2010 2009 % Change --- --- -------- </pre> <p> </p> <pre> Revenues: --------- United States $659,868 $599,082 10% Canada 236,552 232,779 2% ------- ------- North America Merchant Services 896,420 831,861 8% </pre> <p> </p> <pre> Europe 242,785 194,881 25% Asia-Pacific 78,213 67,630 16% ------ ------ International Merchant Services 320,998 262,511 22% </pre> <p> </p> <pre> Total Revenues $1,217,418 $1,094,372 11% ========== ========== </pre> <p> </p> <pre> Operating Income: ----------------- North America Merchant Services $210,419 $213,409 (1%) International Merchant Services 88,353 62,136 42% Corporate (46,978) (46,661) (1%) ------- ------- Operating Income $251,794 $228,884 10% ======== ======== </pre> <p> </p> <pre> SCHEDULE 4 CONSOLIDATED BALANCE SHEETS GLOBAL PAYMENTS INC. AND SUBSIDIARIES (In thousands) </pre> <p> </p> <p> </p> <pre> February 28, May 31, 2010 2009 ---- ---- </pre> <p> </p> <pre> ASSETS Current assets: Cash and cash equivalents $589,620 $426,935 Accounts receivable, net of allowances for doubtful accounts of $378 and $553, respectively 121,839 122,831 Claims receivable, net of allowance for losses of $4,070 and $4,026, respectively 809 607 Settlement processing assets 11,202 6,675 Inventory, net of obsolescence reserves of $795 and $653, respectively 12,146 5,914 Deferred income taxes 2,607 3,789 Assets of discontinued operations 141,298 - Prepaid expenses and other current assets 21,732 28,437 Total current assets 901,253 595,188 ------- ------- </pre> <p> </p> <pre> Property and equipment, net of accumulated depreciation of $111,385 and $121,189, respectively 178,549 176,226 Goodwill 577,218 625,120 Other intangible assets, net of accumulated amortization of $138,472 and $189,560, respectively 210,309 258,094 Deferred income taxes 89,850 - Other 22,489 22,193 ------ ------ </pre> <p> </p> <pre> Total assets $1,979,668 $1,676,821 ========== ========== </pre> <p> </p> <pre> LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Lines of credit $10,513 $10,174 Notes payable - current portion 139,976 29,393 Payables to money transfer beneficiaries - 12,343 Accounts payable and accrued liabilities 176,423 167,700 Settlement processing obligations 170,737 106,934 Liabilities of discontinued operations 32,738 - Income taxes payable 12,291 9,633 Total current liabilities 542,678 336,177 ------- ------- </pre> <p> </p> <pre> Notes payable 307,298 167,610 Deferred income taxes 59,133 76,405 Other long-term liabilities 26,326 19,009 Total liabilities 935,435 599,201 ------- ------- </pre> <p> </p> <p>Commitments and contingencies</p> <p> </p> <p>Redeemable noncontrolling interest 99,038 399,377</p> <p> </p> <pre> Shareholders' equity: Preferred stock, no par value; 5,000,000 shares authorized and none issued - - Common stock, no par value; 200,000,000 shares authorized; 81,597,227 and 80,445,009 shares issued and outstanding at February 28, 2010 and May 31, 2009, respectively - - Paid-in capital 442,362 405,241 Retained earnings 513,068 273,090 Accumulated other comprehensive loss (20,438) (10,901) Total Global Payments Inc. shareholders' equity 934,992 667,430 ------- ------- Noncontrolling interest 10,203 10,813 Total equity 945,195 678,243 ------- ------- </pre> <p> </p> <pre> Total liabilities and equity $1,979,668 $1,676,821 ========== ========== </pre> <p> </p> <pre> Presentation of prior year amounts have been adjusted to retrospectively conform with FASB guidance on noncontrolling interests. </pre> <p> </p> <pre> SCHEDULE 5 UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS GLOBAL PAYMENTS INC. AND SUBSIDIARIES </pre> <p> </p> <p>(In thousands)</p> <p> </p> <p> </p> <pre> Nine Months Ended February 28, ----------------- 2010 2009 ---- ---- </pre> <p> </p> <pre> Cash flows from operating activities: Net income including noncontrolling interests $180,078 $27,376 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization of property and equipment 25,798 27,175 Amortization of acquired intangibles 24,627 23,222 Share-based compensation expense 11,843 10,954 Provision for operating losses and bad debts 18,713 20,256 Deferred income taxes (21,023) (3,419) Estimated loss on disposal of discontinued operations 15,770 - Impairment of identified intangible assets - 147,664 Other, net 947 (87) Changes in operating assets and liabilities, net of the effects of acquisitions: Accounts receivable 1,942 (8,856) Claims receivable (11,552) (13,879) Settlement processing assets and obligations, net 51,930 28,818 Inventory (6,785) (2,314) Prepaid expenses and other assets (2,474) 6,832 Payables to money transfer beneficiaries (532) (446) Accounts payable and accrued liabilities 25,607 2,692 Income taxes payable 3,308 2,789 ----- ----- Net cash provided by operating activities 318,197 268,777 ------- ------- </pre> <p> </p> <pre> Cash flows from investing activities: Business and intangible asset acquisitions (17,059) (454,279) Capital expenditures (36,520) (25,458) Net increase in financing receivables (649) - Proceeds from sale of investment and contractual rights 297 6,796 --- ----- Net cash used in investing activities (53,931) (472,941) ------- -------- </pre> <p> </p> <pre> Cash flows from financing activities: Net borrowings on lines of credit 339 2,583 Proceeds from issuance of notes payable 304,964 200,000 Principal payments under notes payable (50,958) (10,000) Acquisition of redeemable noncontrolling interests (307,675) - Proceeds from stock issued under share-based compensation plans 20,699 7,961 Tax benefit from share-based compensation plans 4,579 2,421 Dividends paid (4,877) (4,808) Contribution from noncontrolling interest holder - 358 Distribution to noncontrolling interests (18,461) (23,258) ------- ------- Net cash (used in) provided by financing activities (51,390) 175,257 ------- ------- </pre> <p> </p> <pre> Effect of exchange rate changes on cash 1,965 (39,560) ----- ------- </pre> <p> </p> <pre> Increase (decrease) in cash and cash equivalents 214,841 (68,467) Cash and cash equivalents, beginning of period 426,935 456,060 Cash and cash equivalents of discontinued operations (52,156) - Cash and cash equivalents, end of period $589,620 $387,593 -------- -------- </pre> <p> </p> <pre> Presentation of prior year amounts have been adjusted to retrospectively conform with FASB guidance on noncontrolling interests. </pre> <p> </p> <pre> SCHEDULE 6 CONSTANT CURRENCY SUMMARY GLOBAL PAYMENTS INC. AND SUBSIDIARIES </pre> <p> </p> <p>(In millions, except per share data)</p> <p> </p> <p> </p> <pre> Q3 FY10 % change YTD FY10 % change Actual Q3 FY09 Actual YTD FY09 ------ ------- ------ -------- </pre> <p> </p> <pre> Fiscal 2010 Revenues -------------------- Constant currency(1) $381 6% $1,215 11% Foreign currency impact(2) 18 5% 2 0% --- --- --- --- Revenues from continuing operations $399 11% $1,217 11% ==== === ====== === </pre> <p> </p> <p> </p> <pre> Fiscal 2010 Diluted Earnings Per Share ---------------------------- Constant currency(1) $0.51 18% $1.92 16% Foreign currency impact(2) 0.07 17% 0.04 2% ---- --- ---- --- Diluted EPS from continuing operations $0.58 35% $1.96 17% ===== === ===== === </pre> <p> </p> <pre> We supplemented our reporting of total revenues and earnings per share information determined in accordance with GAAP by reporting revenues and earnings per share for fiscal 2010 on a "constant currency" basis in this earnings release as a measure to help evaluate performance. We calculated revenues and earnings per share on a constant currency basis by converting our fiscal 2010 actual revenues and expenses at fiscal 2009 exchange rates. We exclude the impact of exchange rate fluctuations in order to more clearly focus on the factors we believe are pertinent to the daily management of our operations, and our management uses constant currency measures to evaluate the impact of operational business decisions. Our revenues and earnings per share reported on a constant currency basis should be considered in addition to, and not as a substitute for, revenues and earnings per share determined in accordance with GAAP. Our measures of revenues and earnings per share on a constant currency basis reflect management's judgment of particular items, and may not be comparable to similarly titled measures reported by other companies. </pre> <p> </p> <pre> (1) Reflects current period results on a pro forma basis as if foreign currency rates did not change from the comparable prior year period. </pre> <p> </p> <pre> (2) Reflects the impact of changes in foreign currency rates from the comparable prior year period. </pre> <p> </p> <pre> SCHEDULE 7 RECONCILIATION OF CONTINUING OPERATIONS TO FISCAL YEAR 2009 GLOBAL PAYMENTS INC. AND SUBSIDIARIES </pre> <p> </p> <p> </p> <p> </p> <pre> For Year Ended May 31, 2009 2010 2010 (in millions, except per share data) Actual Expectations Growth Rates ------ ------------ ------------ (Unaudited) Revenues $1,602 -- -- -- -- Money Transfer - discontinued operations 139 -- -- -- -- </pre> <p> </p> <p> </p> <pre> Adjusted Revenues $1,463 $1,615 $1,625 10% 11% ====== ====== ====== === === </pre> <p> </p> <p> </p> <pre> Diluted earnings per share as previously reported $0.46 -- -- -- -- Diluted loss per share as a result of impairment - discontinued ops(1) $1.77 -- -- -- -- ----- Normalized diluted earnings per share $2.23 -- -- -- -- Normalized earnings from Money Transfer - discontinued operations 0.13 -- -- -- -- </pre> <p> </p> <p> </p> <pre> Diluted earnings from continuing operations per share $2.10 $2.49 $2.54 19% 21% ===== ===== ===== === === </pre> <p> </p> <pre> As a result of the agreement to sell the money transfer businesses, ASC 205-20, Discontinued Operations requires classification of the money transfer businesses as held for sale and the results of operations as discontinued. Previously reported results will be reclassified in future financial statements. The earnings per share calculation above reflects this reclassification. </pre> <p> </p> <pre> (1) Impairment charges consist of goodwill and other intangible asset impairments in the Money Transfer segment. Also reflects the related income tax benefit and share dilution. This impairment will be included in discontinued operations along with the earnings from Money Transfer for a GAAP diluted loss from discontinued operations per share of $1.64.
For further information: Jane M. Elliott, +1-770-829-8234 Voice, +1-770-829-8267 Fax, [email protected] Web Site: http://www.globalpaymentsinc.com
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