2008-07-24 15:01:00
Global Payments Reports Fourth Quarter and Fiscal 2008 Earnings
ATLANTA, July 24 /EMWNews/ -- Global Payments Inc. (NYSE: GPN) today announced results for its fourth quarter and fiscal year ended May 31, 2008. For the fourth quarter, revenues grew 23 percent to $343.8 million compared to $280.1 million in the prior year. Excluding the unfavorable impact of a non-recurring, non-cash foreign currency item and prior period restructuring and other charges, diluted earnings per share grew 21 percent to $0.52 compared to $0.43 in the prior year quarter. For the fiscal year ended May 31, 2008, revenues grew 20 percent to $1,274.2 million compared to $1,061.5 million in the prior year. Excluding the favorable impact of a non-recurring, non-cash operating tax item, the unfavorable impact of a non-recurring, non-cash foreign currency item, and prior period restructuring and other charges, diluted earnings per share grew 12 percent to $1.98 from $1.77 in the prior year. In accordance with GAAP, the current and prior fiscal year periods include restructuring and other charges, and the current fiscal year period includes the operating tax item and foreign currency item described above. These items are reflected in our GAAP diluted earnings per share amounts (see attached reconciliation schedule). For the three months and year ended May 31, 2008, GAAP diluted earnings per share were $0.50 and $2.01, respectively, compared to $0.40 and $1.75, respectively, in the prior year comparable periods. Comments and Outlook Chairman, President and CEO, Paul R. Garcia, stated, "Our merchant services segment delivered solid financial results for the fourth quarter and fiscal year 2008. We continue to successfully pursue our ongoing strategy of expanding our existing sales channels, increasing our international presence, and investing in our technology and people. We are also delighted to be joining forces once more with HSBC Bank plc in a merchant services joint venture in the U.K. Lastly, our money transfer segment rebounded to strong growth in the fourth quarter, as expected." "For our fiscal 2009, we are providing annual revenue guidance of $1,620 million to $1,675 million. This revenue guidance reflects an expected 27 percent to 31 percent growth versus $1,274.2 million in fiscal 2008. In addition, we are providing annual diluted earnings per share guidance of $2.20 to $2.30, or 11 percent to 16 percent growth versus $1.98 in fiscal 2008(1). Our fiscal 2009 guidance excludes the impact of future significant acquisitions and restructuring and other charges," said Garcia. Conference Call Global Payments will hold a conference call today, July 24, 2008 at 5:00 p.m. ET to discuss financial results and business highlights. The conference call may be accessed by calling 1-888-221-9554 (U.S. and Canada) or 1-913-312-0963 (outside U.S. and Canada) and using a pass code of "GPN" for both numbers, or via Web cast at http://www.globalpaymentsinc.com . A replay of the call will be available on the Global Payments Web site through August 7, 2008. (1) 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 (see attached reconciliation schedule). 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, the United Kingdom 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 U.S. and Europe to destinations in Latin America, Morocco and the Philippines. For more information about the company and its services, visit http://www.globalpaymentsinc.com . This announcement and comments made by Global Payments' management during the conference call 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 economic conditions and 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.
Contact: Jane M. Elliott 770-829-8234 Voice 770-829-8267 Fax [email protected] UNAUDITED CONSOLIDATED STATEMENTS OF INCOME GLOBAL PAYMENTS INC. AND SUBSIDIARIES (In thousands, except per share data) Three Months Ended May 31, 2008 2007 Revenues $343,832 $280,100 Operating expenses: Cost of service 125,129 107,326 Sales, general and administrative 151,918 118,620 Restructuring and other - 3,088 277,047 229,034 Operating income 66,785 51,066 Other income (expense): Interest and other income 3,567 4,654 Interest and other expense (2,827) (2,166) 740 2,488 Income before income taxes and minority interest 67,525 53,554 Provision for income taxes (26,517) (17,687) Minority interest, net of tax benefit (provision) of $770 and $(1,139), respectively (197) (2,689) Net income $40,811 $33,178 Earnings per share: Basic $0.51 $0.41 Diluted $0.50 $0.40 Weighted average shares outstanding: Basic 79,316 80,617 Diluted 80,846 82,015 UNAUDITED CONSOLIDATED STATEMENTS OF INCOME GLOBAL PAYMENTS INC. AND SUBSIDIARIES (In thousands, except per share data) Year Ended May 31, 2008 2007 Revenues $1,274,229 $1,061,523 Operating expenses: Cost of service 475,612 414,837 Sales, general and administrative 545,941 425,509 Restructuring and other 1,317 3,088 1,022,870 843,434 Operating income 251,359 218,089 Other income (expense): Interest and other income 18,210 16,706 Interest and other expense (8,166) (8,464) 10,044 8,242 Income before income taxes and minority interest 261,403 226,331 Provision for income taxes (90,588) (73,436) Minority interest, net of tax benefit (provision) of $700 and $(696), respectively (8,061) (9,910) Net income $162,754 $142,985 Earnings per share: Basic $2.05 $1.78 Diluted $2.01 $1.75 Weighted average shares outstanding: Basic 79,518 80,229 Diluted 80,979 81,822 CONSOLIDATED CONDENSED BALANCE SHEETS GLOBAL PAYMENTS INC. AND SUBSIDIARIES (In thousands) May 31, May 31, 2008 2007 (Unaudited) Assets Cash and cash equivalents $456,060 $308,872 Accounts receivable, net 100,179 76,168 Claims receivable, net 1,354 2,187 Settlement processing assets 24,280 32,853 Other current assets 35,537 24,349 Current assets 617,410 444,429 Property and equipment, net 141,415 118,495 Goodwill 497,136 451,244 Other intangible assets, net 175,636 175,620 Other assets 14,310 10,841 Total assets $1,445,907 $1,200,629 Liabilities and Shareholders' Equity Lines of credit $1,527 $- Settlement processing obligations 56,731 20,617 Payable to money transfer beneficiaries 9,276 6,589 Accounts payable and other accrued liabilities 150,218 115,671 Current liabilities 217,752 142,877 Other long-term liabilities 86,613 85,043 Total liabilities 304,365 227,920 Minority interest in equity of subsidiaries 14,724 14,933 Shareholders' equity 1,126,818 957,776 Total liabilities and shareholders' equity $1,445,907 $1,200,629 UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW GLOBAL PAYMENTS INC. AND SUBSIDIARIES (In thousands) Year Ended May 31, 2008 2007 Cash flows from operating activities: Net income $162,754 $142,985 Non-cash items Restructuring and other charges - 1,145 Depreciation and amortization 44,034 40,365 Minority interest in earnings 8,762 9,214 Other, net 38,558 36,227 Changes in working capital, which provided (used) cash Settlement processing assets and obligations, net 38,311 (13,937) Other, net (20,005) (24,867) Net cash provided by operating activities 272,414 191,132 Cash flows from investing activities: Capital expenditures (44,974) (35,374) Business and intangible asset acquisitions (18,247) (81,261) Net cash used in investing activities (63,221) (116,635) Cash flows from financing activities: Net borrowings on lines of credit 1,527 - Principal payments under capital leases - (746) Repurchase of common stock (87,020) - Net proceeds under share-based compensation plans and dividends 18,579 20,385 Distributions to minority interests, net (9,459) (8,753) Net cash (used in) provided by financing activities (76,373) 10,886 Effect of exchange rate changes on cash 14,368 5,014 Increase in cash and cash equivalents 147,188 90,397 Cash and cash equivalents, beginning of period 308,872 218,475 Cash and cash equivalents, end of period $456,060 $308,872 UNAUDITED CONSOLIDATED STATEMENTS OF INCOME GLOBAL PAYMENTS INC. AND SUBSIDIARIES Reconciliation to Exclude Restructuring and Other Items from Normalized Results (In thousands, except per share data) Three Months Ended May 31, 2008 Normalized Other(1) GAAP Revenues $343,832 $- $343,832 Operating expenses: Cost of service 125,129 - 125,129 Sales, general and administrative 151,918 - 151,918 Restructuring and other - - - 277,047 - 277,047 Operating income 66,785 - 66,785 Other income/(expense): Interest and other income 3,567 - 3,567 Interest and other expense (1,157) (1,670) (2,827) 2,410 (1,670) 740 Income before income taxes 69,195 (1,670) 67,525 Provision for income taxes (26,868) 351 (26,517) Minority interest, net of tax benefit (provision) of $770 and $(1,139), respectively (197) - (197) Net income $42,130 $(1,319) $40,811 Diluted shares 80,846 - 80,846 Diluted earnings per share $0.52 $(0.02) $0.50 UNAUDITED CONSOLIDATED STATEMENTS OF INCOME GLOBAL PAYMENTS INC. AND SUBSIDIARIES Reconciliation to Exclude Restructuring and Other Items from Normalized Results (In thousands, except per share data) Three Months Ended May 31, 2007 Restructur- ing and Normalized Other(2) GAAP Revenues $280,100 $- $280,100 Operating expenses: Cost of service 107,326 - 107,326 Sales, general and administrative 118,620 - 118,620 Restructuring and other - 3,088 3,088 225,946 3,088 229,034 Operating income 54,154 (3,088) 51,066 Other income/(expense): Interest and other income 4,654 - 4,654 Interest and other expense (2,166) - (2,166) 2,488 - 2,488 Income before income taxes 56,642 (3,088) 53,554 Provision for income taxes (18,689) 1,002 (17,687) Minority interest, net of tax benefit (provision) of $770 and $(1,139), respectively (2,689) - (2,689) Net income $35,264 $(2,086) $33,178 Diluted shares 82,015 - 82,015 Diluted earnings per share $0.43 $(0.03) $0.40 (1) Reflects the impact of a non-recurring, non-cash, foreign currency accounting loss relating to one of our United States dollar cash accounts held by a foreign subsidiary whose functional currency is their local currency. No economic loss occurred relating to this item. Also reflects the related income tax benefit. (2) Restructuring and other charges consist of employee termination benefits, facility closure costs, and fixed asset abandonment relating to various restructuring initiatives. 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. UNAUDITED CONSOLIDATED STATEMENTS OF INCOME GLOBAL PAYMENTS INC. AND SUBSIDIARIES Reconciliation to Exclude Restructuring and Other Items from Normalized Results (In thousands, except per share data) Year Ended May 31, 2008 Restruct- Normalized uring(1) Other(2) GAAP Revenues $1,274,229 $- $- $1,274,229 Operating expenses: Cost of service 475,612 - - 475,612 Sales, general and admin. 552,989 - (7,048) 545,941 Restructuring and other - 1,317 - 1,317 1,028,601 1,317 (7,048) 1,022,870 Operating income 245,628 (1,317) 7,048 251,359 Other income/(expense): Interest and other income 18,210 - - 18,210 Interest and other expense (6,496) - (1,670) (8,166) 11,714 - (1,670) 10,044 Income before income taxes 257,342 (1,317) 5,378 261,403 Provision for income taxes (89,059) 449 (1,978) (90,588) Minority interest, net of tax benefit (provision) of $700 and $(696), respectively (8,061) - - (8,061) Net income $160,222 $(868) $3,400 $162,754 Diluted shares 80,979 - - 80,979 Diluted earnings per share(3) $1.98 $(0.01) $0.04 $2.01 UNAUDITED CONSOLIDATED STATEMENTS OF INCOME GLOBAL PAYMENTS INC. AND SUBSIDIARIES Reconciliation to Exclude Restructuring and Other Items from Normalized Results (In thousands, except per share data) Year Ended May 31, 2007 Restructur- ing and Normalized Other(1) GAAP Revenues $1,061,523 $- $1,061,523 Operating expenses: Cost of service 414,837 - 414,837 Sales, general and admin. 425,509 - 425,509 Restructuring and other - 3,088 3,088 840,346 3,088 843,434 Operating income 221,177 (3,088) 218,089 Other income/(expense): Interest and other income 16,706 - 16,706 Interest and other expense (8,464) - (8,464) 8,242 - 8,242 Income before income taxes 229,419 (3,088) 226,331 Provision for income taxes (74,438) 1,002 (73,436) Minority interest, net of tax benefit (provision) of $700 and $(696), respectively (9,910) - (9,910) Net income $145,071 $(2,086) $142,985 Diluted shares 81,822 - 81,822 Diluted earnings per share (3) $1.77 $(0.03) $1.75 (1) Restructuring charges in the current period consist of employee termination benefits relating to a facility closure. 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. Restructuring and other charges in the prior period consist of employee termination benefits, facility closure costs, and fixed asset abandonment relating to various restructuring initiatives. Also reflects the related income tax benefit using the company's effective tax rate, as described above. (2) Reflects the favorable impact of a non-recurring, non-cash operating tax item included in sales, general and administrative expenses. We define operating taxes as those that are unrelated to income taxes, such as sales and property taxes. During the nine months ended February 29, 2008, we determined that a contingent liability relating to an operating tax item was no longer deemed probable. As such, we released the related liability. Also reflects the related income tax benefit of this operating tax item 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. Also includes the impact of a non- recurring, non-cash, foreign currency accounting loss relating to one of our United States dollar cash accounts held by a foreign subsidiary whose functional currency is their local currency. No economic loss occurred relating to this item, which is reflected above in interest and other expense. Also reflects the related income tax benefit of this foreign currency item. (3) Amounts do not add across the columns due to rounding for the year ended May 31, 2007. SEGMENT INFORMATION GLOBAL PAYMENTS INC. AND SUBSIDIARIES (In thousands) Three Months Ended May 31, 2008 2007 Revenues Domestic direct $182,356 $154,166 Canada 73,544 54,256 Asia-Pacific 18,900 13,377 Central and Eastern Europe 17,413 12,457 Domestic indirect and other 11,256 11,695 Merchant services 303,469 245,951 Domestic 33,016 29,323 Europe 7,347 4,826 Money transfer 40,363 34,149 Total revenues $343,832 $280,100 Operating income Merchant services $73,714 $63,395 Money transfer 7,518 3,481 Corporate (14,447) (12,722) Restructuring and other - (3,088) Operating income $66,785 $51,066 SEGMENT INFORMATION GLOBAL PAYMENTS INC. AND SUBSIDIARIES (In thousands) Year Ended May 31, 2008 2007 Revenues Domestic direct $687,065 $558,026 Canada 267,249 224,570 Asia-Pacific 72,367 48,449 Central and Eastern Europe 59,778 51,224 Domestic indirect and other 44,150 46,873 Merchant services 1,130,609 929,142 Domestic 119,019 115,416 Europe 24,601 16,965 Money transfer 143,620 132,381 Total revenues $1,274,229 $1,061,523 Operating income Merchant services(1) $293,030 $259,670 Money transfer 13,635 14,476 Corporate (53,989) (52,969) Restructuring and other (1,317) (3,088) Operating income $251,359 $218,089 (1) Includes the favorable impact of a non-recurring, non-cash operating tax item of $7.0 million in the year ended May 31, 2008.
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