Global Payments Reports First Quarter Earnings



    ATLANTA, Oct. 2 /CNW/ -- Global Payments Inc. (NYSE:   GPN) today announced
results for its fiscal first quarter ended August 31, 2008. For the first
quarter, revenues grew 30 percent to $405.8 million compared to $311.0 million
in the prior year.  Excluding a prior period restructuring charge relating to
a facility closure, diluted earnings per share grew 31 percent to $0.71
compared to $0.54 in the prior year quarter.
    
    (Logo: http://www.newscom.com/cgi-bin/prnh/20010221/ATW031LOGO )
    
    In accordance with GAAP, the prior year quarter included a restructuring
charge (see attached reconciliation schedule).  For the three months ended
August 31, 2007, GAAP diluted earnings per share was $0.53.
    During the first quarter, the company began assessing its operating
performance using a new segment structure.  The segments are now defined as
North America Merchant Services, International Merchant Services, and Money
Transfer (see attached segment schedule for historical financial results). The
company made this change as a result of its June 30, 2008 completion of a
joint venture with HSBC in the United Kingdom, in addition to anticipated
future international expansion.
    
    Comments and Outlook
    
    Chairman, President and CEO, Paul R. Garcia, stated, "We are delighted
with our strong first quarter financial performance.  Our North America
segment reported strong revenue and earnings growth primarily driven by
successful pricing initiatives in Canada and a favorable foreign currency
exchange benefit.  International merchant services results were primarily
driven by the favorable impact of our June 30, 2008 U.K. acquisition, in
addition to a continued benefit from our sales initiatives in our Asia-Pacific
region and a favorable foreign currency benefit in the Czech Republic."
    "Based on these results, we are raising our annual revenue guidance to a
range of $1,640 million to $1,680 million.  This revenue guidance reflects an
expected 29 percent to 32 percent growth versus $1,274.2 million in fiscal
2008.  In addition, we are raising our annual diluted earnings per share
guidance to a range of $2.37 to $2.45, or 20 percent to 24 percent growth
versus $1.98 in fiscal 2008(1).  Our fiscal 2009 guidance excludes the impact
of restructuring and other charges, as well as the impact of future
acquisitions, such as our recently announced agreement to acquire ZAO United
Card Service in the Russian Federation," said Garcia.
    
    Conference Call
    
    Global Payments will hold a conference call today, October 2, 2008 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 1-877-681-3378 and callers outside U.S. and Canada may dial 1-719-325-
4771.  The pass code is "GPN."  A replay of the call may be accessed through
the Global Payments' Web site through October 15, 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.  For more
        information, please see the company's quarterly earnings press
        releases for fiscal 2008.
    
    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 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
             investor.relations@globalpay.com
    



    
    UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
    GLOBAL PAYMENTS INC. AND SUBSIDIARIES
    

    
    (In thousands, except per share data)
    

    
                                                 Three Months Ended August 31,
                                                     2008              2007
    

    
    Revenues                                       $405,757          $310,980
    

    
    Operating expenses:
         Cost of service                            144,177           116,309
         Sales, general and administrative          168,483           127,436
         Restructuring                                    -             1,003
                                                    312,660           244,748
    

    
    Operating income                                 93,097            66,232
    

    
    Other income (expense):
         Interest and other income                    3,371             5,137
         Interest and other expense                  (2,404)           (1,873)
                                                        967             3,264
    

    
    Income before income taxes and
     minority interest                               94,064            69,496
    Provision for income taxes, net                 (28,216)          (23,783)
    Minority interest, net of tax                    (8,321)           (2,138)
              Net income                            $57,527           $43,575
    

    
    Earnings per share:
              Basic                                   $0.72             $0.54
              Diluted                                 $0.71             $0.53
    

    
    Weighted average shares outstanding:
              Basic                                  79,462            80,501
              Diluted                                81,106            81,907
    



    
    CONSOLIDATED BALANCE SHEETS
    GLOBAL PAYMENTS INC. AND SUBSIDIARIES
    

    
    (In thousands)
                                                 August 31,         May 31,
                                                   2008              2008
                                                (Unaudited)
    Assets
    Cash and cash equivalents                     $287,721          $456,060
    Accounts receivable, net                       138,884           100,179
    Claims receivable, net                           1,852             1,354
    Settlement processing assets                    19,532            24,280
    Inventory, net                                   6,576             3,821
    Deferred income taxes                            4,187             4,119
    Prepaid expenses and other current
     assets                                         25,968            27,597
            Current assets                         484,720           617,410
    

    
    Property and equipment, net                    153,533           141,415
    Goodwill                                       762,493           497,136
    Other intangible assets, net                   285,590           175,636
    Other assets                                    13,422            14,310
                    Total assets                $1,699,758        $1,445,907
    

    
    Liabilities and Shareholders' Equity
    Lines of credit                                $10,633            $1,527
    Current portion of term loan                    25,000               -
    Payable to money transfer
     beneficiaries                                  13,904             9,276
    Accounts payable and other accrued
     liabilities                                   142,167           138,243
    Settlement processing obligations               48,344            56,731
    Income taxes payable                            30,314            11,975
            Current liabilities                    270,362           217,752
    

    
    Term loan                                      175,000               -
    Deferred income taxes                           70,780            75,001
    Other long-term liabilities                     14,752            11,612
            Total liabilities                      530,894           304,365
    

    
    Commitments and contingencies
    Minority interest in equity of
     subsidiaries                                   42,203            14,724
    

    
    Preferred stock                                      -                 -
    Common stock                                         -                 -
    Paid-in capital                                387,918           380,741
    Retained earnings                              677,806           621,875
    Accumulated other comprehensive
     income                                         60,937           124,202
            Total shareholders' equity           1,126,661         1,126,818
                    Total liabilities and
                     shareholders' equity       $1,699,758        $1,445,907
    



    
    UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
    GLOBAL PAYMENTS INC. AND SUBSIDIARIES
    

    
    (In thousands)
                                                 Three Months Ended August 31,
                                                      2008              2007
    

    
    Cash flows from operating activities:
       Net income                                   $57,527           $43,575
       Adjustments to reconcile net income
        to net cash provided by operating
        activities:
          Depreciation and amortization of
           property and equipment                     9,553             6,663
          Amortization of acquired
           intangibles                                7,243             3,566
          Share-based compensation expense            3,291             3,147
          Provision for operating losses
           and bad debts                              5,614             5,926
          Minority interest in earnings               8,357             2,050
          Deferred income taxes                         934            (1,089)
          Other, net                                   (266)              (20)
       Changes in operating assets and
        liabilities, net of the effects of
        acquisitions:
          Accounts receivable                       (41,189)          (12,116)
          Claims receivable                          (5,445)           (6,265)
          Settlement processing assets and
           obligations, net                          (4,206)             (569)
          Inventory                                  (2,500)             (589)
          Prepaid expenses and other
           assets                                     2,502           (11,573)
          Payables to money transfer
           beneficiaries                              4,628             1,355
          Accounts payable and accrued
           liabilities                                3,392            (1,044)
          Income taxes payable                       18,339             5,122
             Net cash provided by
              operating activities                   67,774            38,139
    

    
    Cash flows from investing activities:
       Business and intangible asset
        acquisitions                               (442,123)           (2,625)
       Capital expenditures                          (7,663)           (9,605)
       Proceeds from sale of investment
        and contractual rights                        5,737               -
             Net cash used in investing
              activities                           (444,049)          (12,230)
    

    
    Cash flows from financing activities:
       Net borrowings on lines of credit              9,106               133
       Proceeds from term loan                      200,000               -
       Proceeds from stock issued under
        share-based compensation plans                2,910             2,321
       Tax benefit from share-based
        compensation plans                              976             2,831
       Repurchase of common stock                       -             (67,873)
       Dividends paid                                (1,596)           (1,622)
       Contribution from minority interest
        holder                                        8,857               -
       Distributions to minority
        interests, net                               (2,469)           (2,372)
             Net cash provided by (used
              in) financing activities              217,784           (66,582)
    

    
    Effect of exchange rate changes on
     cash                                            (9,848)            2,345
    

    
    Decrease in cash and cash equivalents          (168,339)          (38,328)
    Cash and cash equivalents, beginning
     of period                                      456,060           308,872
    Cash and cash equivalents, end of
     period                                        $287,721          $270,544
    



    
    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 August 31,                             2007
                                          2008              Restruct-
                                          GAAP   Normalized  uring(1)  GAAP
    

    
    Revenues                             $405,757  $310,980    $-    $310,980
    

    
    Operating expenses:
       Cost of service                    144,177   116,309     -     116,309
       Sales, general and administrative  168,483   127,436     -     127,436
       Restructuring                          -         -     1,003     1,003
                                          312,660   243,745   1,003   244,748
    

    
    Operating income                       93,097    67,235  (1,003)   66,232
    

    
    Other income(expense):
       Interest and other income            3,371     5,137     -       5,137
       Interest and other expense          (2,404)   (1,873)    -      (1,873)
                                              967     3,264     -       3,264
    

    
    Income before income taxes and
     minority interest                     94,064    70,499  (1,003)   69,496
    Provision for income taxes, net       (28,216)  (24,126)    343   (23,783)
    Minority interest, net of tax          (8,321)   (2,138)    -      (2,138)
    Net income                            $57,527   $44,235   $(660)  $43,575
    

    
     Diluted shares                        81,106    81,907     -      81,907
     Diluted earnings per share             $0.71     $0.54  $(0.01)    $0.53
    


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



    
    DILUTED EARNINGS PER SHARE GUIDANCE RECONCILIATION
    GLOBAL PAYMENTS INC. AND SUBSIDIARIES
    

    
                                      Low End of Fiscal   High End of Fiscal
                                        2009 Guidance        2009 Guidance
                                      Q1     Q2-Q4 Total   Q1   Q2-Q4  Total
                                                    Guid-       Fore-  Guid-
                                    Actual Forecast ance  Actual cast  ance
      Fiscal 2009 diluted earnings
       per share
      Constant currency(1)           $0.68  $1.73  $2.41  $0.68  $1.81  $2.49
      Foreign currency impact(2)      0.03  (0.07) (0.04)  0.03  (0.07) (0.04)
      GAAP/Normalized(3)             $0.71  $1.66  $2.37  $0.71  $1.74  $2.45
    

    
      Growth compared to fiscal 2008
      Constant currency(1)             26%    20%    22%    26%    26%    26%
      Foreign currency impact(2)        5%    (5%)   (2%)    5%    (5%)   (2%)
        Normalized                     31%    15%    20%    31%    21%    24%
    

    
      Restructuring and other items(4)  3%    (3%)   (2%)    3%    (3%)   (2%)
        GAAP                           34%    12%    18%    34%    18%    22%
    


    
                                                      Fiscal 2008
                                               Q1        Q2-Q4         Total
                                             Actual      Actual       Actual
      Fiscal 2008 diluted earnings per
       share
      Normalized                              $0.54       $1.44       $1.98
      Restructuring and other items (4)       (0.01)       0.04        0.03
        GAAP                                  $0.53       $1.48       $2.01
    


    
    (1) Reflects current period results on a pro forma basis as if foreign
        currency rates did not change from the comparable prior year period.
        The company added this disclosure in light of the recent volatility in
        the foreign exchange markets.
    

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

    
    (3) For fiscal 2009, GAAP results and Normalized results are assumed to
        equal each other.  This assumption is subject to change based on the
        incurrence of unexpected non-recurring items during fiscal 2009.
    

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



    
    SEGMENT INFORMATION
    GLOBAL PAYMENTS INC. AND SUBSIDIARIES
    

    
    (In thousands)
                                 Fiscal 2007                       Fiscal 2008
                                    Total          Q1       Q2          Q3
    

    
     Revenues:
     United States                  $604,899   $179,450   $176,115   $182,038
     Canada                          224,570     66,677     65,772     61,256
      North America Merchant
       Services                      829,469    246,127    241,887    243,294
    

    
     Europe                           51,224     13,775     14,135     14,455
     Asia-Pacific                     48,449     16,064     18,426     18,977
      International Merchant
       Services                       99,673     29,839     32,561     33,432
    

    
     United States                   115,416     29,581     28,415     28,007
     Europe                           16,965      5,433      5,913      5,908
      Money Transfer                 132,381     35,014     34,328     33,915
    

    
       Total Revenues             $1,061,523   $310,980   $308,776   $310,641
    

    
     Operating Income:
     North America Merchant
      Services - Normalized         $241,082    $70,970    $66,245    $60,744
     Non-Recurring Item(1)               -          -          -        7,048
     North America Merchant
      Services - GAAP                241,082     70,970     66,245     67,792
    

    
     International Merchant
      Services                        18,588      5,136      4,847      4,326
     Money Transfer                   14,476      3,722      1,239      1,156
     Corporate                       (52,969)   (12,593)   (13,586)   (13,363)
     Restructuring and Other(2)       (3,088)    (1,003)      (314)       -
      Operating Income              $218,089    $66,232    $58,431    $59,911
    



    
    SEGMENT INFORMATION
    GLOBAL PAYMENTS INC. AND SUBSIDIARIES
    

    
    (In thousands)
                                                                   Fiscal 2009
                                               Q4          Total       Q1
     Revenues:
      United States                          $193,612     $731,215   $200,696
      Canada                                   73,544      267,249     85,944
        North America Merchant Services       267,156      998,464    286,640
    

    
      Europe                                   17,413       59,778     61,602
      Asia-Pacific                             18,900       72,367     20,718
        International Merchant Services        36,313      132,145     82,320
    

    
      United States                            33,016      119,019     29,380
      Europe                                    7,347       24,601      7,417
        Money Transfer                         40,363      143,620     36,797
    

    
          Total Revenues                     $343,832   $1,274,229   $405,757
    

    
      Operating Income:
      North America Merchant Services -
       Normalized                             $70,349     $268,308    $83,069
      Non-Recurring Item(1)                       -          7,048        -
      North America Merchant Services -
       GAAP                                    70,349      275,356     83,069
    

    
      International Merchant Services           3,365       17,674     20,402
      Money Transfer                            7,518       13,635      4,478
      Corporate                               (14,447)     (53,989)   (14,852)
      Restructuring and Other(2)                  -         (1,317)       -
        Operating Income                      $66,785     $251,359    $93,097
    

    
    (1) Relates to the favorable impact of a non-recurring, non-cash operating
        tax item of $7.0 million in the third quarter of fiscal 2008.
    (2) For more information, please see our earnings press releases for each
        of these periods, which were included as exhibits to our respective
        Form 8-Ks furnished to the SEC.
    



    
    EFFECTIVE TAX RATE INFORMATION
    GLOBAL PAYMENTS INC. AND SUBSIDIARIES
    

    
    (In thousands)
                                        Fiscal 2007                Fiscal 2008
                                           Total      Q1       Q2        Q3
      Effective Tax Rate
      Calculation - GAAP
      Income before income taxes and
       minority interest                  $226,331  $69,496  $61,902  $62,480
      Minority interest, net                (9,910)  (2,138)  (2,566)  (3,160)
      Tax provision (benefit) on minority
       interest                                696       88     (524)     506
      Income before income taxes          $217,117  $67,446  $58,812  $59,826
    

    
      Provision for income taxes, net      $73,436  $23,783  $21,023  $19,265
      Tax provision (benefit) on minority
       interest                                696       88     (524)     506
      Provision for income taxes           $74,132  $23,871  $20,499  $19,771
    

    
      Effective tax rate                     34.1%    35.4%    34.9%    33.0%
    


    
      Effective Tax Rate Calculation -
       Normalized(1)
      Income before income taxes and
       minority interest                  $229,419  $70,499  $62,216  $55,432
      Minority interest, net                (9,910)  (2,138)  (2,566)  (3,160)
      Tax provision (benefit) on minority
       interest                                696       88     (524)     506
      Income before income taxes          $220,205  $68,449  $59,126  $52,778
    

    
      Provision for income taxes, net      $74,438  $24,126  $21,129  $16,936
      Tax provision (benefit) on minority
       interest                                696       88     (524)     506
      Provision for income taxes           $75,134  $24,214  $20,605  $17,442
    

    
      Effective tax rate                     34.1%    35.4%    34.8%    33.0%
    



    
    EFFECTIVE TAX RATE INFORMATION
    GLOBAL PAYMENTS INC. AND SUBSIDIARIES
    

    
    (In thousands)                                                 Fiscal 2009
                                                 Q4       Total        Q1
      Effective Tax Rate
      Calculation - GAAP
      Income before income taxes and
       minority interest                      $67,525    $261,403    $94,064
      Minority interest, net                     (197)     (8,061)    (8,321)
      Tax provision (benefit) on minority
       interest                                  (770)       (700)       (35)
      Income before income taxes              $66,558    $252,642    $85,708
    

    
      Provision for income taxes, net         $26,517     $90,588    $28,216
      Tax provision (benefit) on minority
       interest                                  (770)       (700)       (35)
      Provision for income taxes              $25,747     $89,888    $28,181
    

    
      Effective tax rate                        38.7%       35.6%      32.9%
    

    
      Effective Tax Rate Calculation -
       Normalized(1)
      Income before income taxes and
       minority interest                      $69,195    $257,342    $94,064
      Minority interest, net                     (197)     (8,061)    (8,321)
      Tax provision (benefit) on minority
       interest                                  (770)       (700)       (35)
      Income before income taxes              $68,228    $248,581    $85,708
    

    
      Provision for income taxes, net         $26,868     $89,059    $28,216
      Tax provision (benefit) on minority
       interest                                  (770)       (700)       (35)
      Provision for income taxes              $26,098     $88,359    $28,181
    

    
      Effective tax rate                        38.3%       35.5%      32.9%
    


    
    (1) For a reconciliation of GAAP to Normalized results, please see our
        earnings press releases for each of these periods, which were included
        as exhibits to our respective Form 8-Ks furnished to the SEC.

    




For further information:

For further information: Jane M. Elliott, +1-770-829-8234, or Fax,
+1-770-829-8267, investor.relations@globalpay.com Web Site:
http://www.globalpaymentsinc.com

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