Global Payments Reports First Quarter Earnings

ATLANTA, Oct. 1 /CNW/ -- Global Payments Inc. (NYSE: GPN) today announced results for its fiscal first quarter ended August 31, 2009. For the first quarter, revenues grew 9% to $441.3 million compared to $405.8 million in the prior year. Diluted earnings per share were $0.71, flat when compared to the prior year quarter. On a constant currency basis, revenue and diluted earnings per share growth would have been 14% and 10%, respectively (See Schedule 5).

    

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Chairman and CEO, Paul R. Garcia, stated, "Despite difficult macroeconomic conditions and unfavorable foreign currency trends affecting our year over year growth, we reported solid financial results driven by robust performance in our U.S. ISO channel, acquisition benefits from the U.K. and United Card Service and strong performance in our International businesses.

"Based on our current outlook, we continue to expect fiscal 2010 annual revenue of $1,690 million to $1,740 million, or 6% to 9% growth over fiscal 2009, and fiscal 2010 diluted EPS of $2.43 to $2.54, reflecting 9% to 14% growth over fiscal 2009 normalized EPS," said Garcia.

    

    Conference Call
    

Global Payments will hold a conference call today, October 1, 2009 at 5:00 p.m. EDT 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 in North America may dial 1-888-668-1647 and callers outside North America may dial 1-913-312-0732. The pass code is "GPN." A replay of the call may be accessed through the Global Payments' Web site through October 15, 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, the effect of current U.S. economic conditions, including a decline in the value of the U.S. dollar, the impact of future performance and integration of recent acquisitions, the continued erosion of the value of our money transfer business 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.

    



    

    
    SCHEDULE 1
    UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
    GLOBAL PAYMENTS INC. AND SUBSIDIARIES
     (In thousands, except per share data)
    

    
                                              Three Months Ended August 31,
                                                2009              2008
    

Revenues $441,310 $405,757

    
    Operating expenses:
       Cost of service                          162,828           144,177
       Sales, general and administrative        185,836           168,483
                                                348,664           312,660
    

Operating income 92,646 93,097

    
    Other income (expense):
       Interest and other income                    731             3,371
       Interest and other expense                (4,171)           (2,404)
                                                 (3,440)              967
    

    
    Income before income taxes                   89,206            94,064
    Provision for income taxes, net             (26,762)          (28,216)
    Net income including noncontrolling
     Interests                                   62,444            65,848
    Less: Net income attributable to
     noncontrolling interests, net of tax
     provision (benefit) of $332 and $(35),
     respectively                                (4,613)           (8,321)
              Net income attributable to
               Global Payments                 $ 57,831          $ 57,527
    

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

    
    Weighted average shares outstanding(1):
              Basic                              80,554            79,828
              Diluted                            81,298            81,266
    

    
    1 Pursuant to the retrospective adoption of FSP Emerging Issues Task Force
      03-6-1, "Determining Whether Instruments Granted in Share-Based Payment
      Transactions Are Participating Securities", basic and diluted weighted
      average shares outstanding have been increased by 366 and 160,
      respectively for the three months ended August 31, 2008.
    

    
    SCHEDULE 2
    SEGMENT INFORMATION (UNAUDITED)
    GLOBAL PAYMENTS INC. AND SUBSIDIARIES
    

(In thousands)

    
                                            Three Months Ended August 31,
                                              2009                2008
    

    
    Revenues:
    United States                           $222,767            $200,696
    Canada                                    81,225              85,944
       North America Merchant Services       303,992             286,640
    

    
    Europe                                    80,467              61,602
    Asia-Pacific                              25,473              20,718
       International Merchant Services       105,940              82,320
    

    
    Money Transfer                            31,378              36,797
         Total Revenues                     $441,310            $405,757
    

    
    Operating Income:
    North America Merchant Services          $75,921             $83,069
    International Merchant Services           28,749              20,402
    Money Transfer                             3,403               4,478
    Corporate                                (15,427)            (14,852)
       Operating Income                      $92,646             $93,097
    

    
    SCHEDULE 3
    UNAUDITED CONSOLIDATED BALANCE SHEETS
    GLOBAL PAYMENTS INC. AND SUBSIDIARIES
    (In thousands)
    

    
                                             August 31,           May 31,
                                               2009                2009(1)
    

    
    Assets
    Cash and cash equivalents                $1,072,349          $426,935
    Accounts receivable, net                    125,676           122,831
    Claims receivable, net                          881               607
    Settlement processing assets                 11,990             6,675
    Inventory, net                               13,283             5,914
    Deferred income taxes                         2,984             3,789
    Prepaid expenses and other current assets    25,393            28,437
       Current assets                         1,252,556           595,188
    

    
    Property and equipment, net                 182,184           176,226
    Goodwill                                    626,212           625,120
    Other intangible assets, net                251,076           258,094
    Deferred income taxes                        93,605                 -
    Other assets                                 25,295            22,193
                 Total assets                $2,430,928        $1,676,821
    

    
    Liabilities and Shareholders' Equity
    Lines of credit                            $ 12,122          $ 10,174
    Notes payable - current portion              95,893            29,393
    Payables to money transfer beneficiaries      7,878            12,343
    Accounts payable and accrued liabilities    165,690           167,700
    Settlement processing obligations           723,812           106,934
    Income taxes payable                         24,378             9,633
       Current liabilities                    1,029,773           336,177
    

    
    Notes payable                               374,366           167,610
    Deferred income taxes                        76,652            76,405
    Other long-term liabilities                  22,837            19,009
       Total liabilities                      1,503,628           599,201
    

Commitments and contingencies

    
    Redeemable noncontrolling interests          96,613           399,377
    Shareholders' equity:
    Preferred stock                                   -                 -
    Common stock                                      -                 -
    Paid-in capital                             414,892           405,241
    Retained earnings                           404,934           273,090
    Accumulated other comprehensive
     income (loss)                                    9           (10,901)
       Total Global Payments
        shareholders' equity                    819,835           667,430
    

    
    Noncontrolling interest                      10,852            10,813
       Total equity                             830,687           678,243
                 Total liabilities and
                  equity                     $2,430,928        $1,676,821
    

    
    1 May 31, 2009 amounts have been adjusted to retrospectively conform with
      FAS 160 and EITF Topic D-98.
    

    
    SCHEDULE 4
    UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
    GLOBAL PAYMENTS INC. AND SUBSIDIARIES
    

(In thousands)

    
                                                        Three Months Ended
                                                              August 31,
                                                          2009         2008(1)
    

    
    Cash flows from operating activities:
        Net income including noncontrolling
         interests (2)                                  $ 62,444     $ 65,848
       Adjustments to reconcile net income
        including noncontrolling interests to net cash
        provided by operating activities:
          Depreciation and amortization of
           property and equipment                          9,002        9,553
          Amortization of acquired intangibles             7,920        7,243
          Share-based compensation expense                 3,004        3,291
          Provision for operating losses and bad debts     6,769        5,614
          Deferred income taxes                            1,596          934
          Other, net                                        (158)        (266)
    Changes in operating assets and liabilities,
     net of the effects of acquisitions:
          Accounts receivable                             (2,883)     (41,189)
          Claims receivable                               (4,137)      (5,445)
          Settlement processing assets and
           obligations, net                              608,711       (4,206)
          Inventory                                       (7,381)      (2,500)
          Prepaid expenses and other assets                  (58)       2,502
          Payables to money transfer beneficiaries        (4,465)       4,628
          Accounts payable and accrued liabilities         1,379        3,392
          Income taxes payable                            14,765       18,375
               Net cash provided by operating activities 696,508       67,774
    

    
    Cash flows from investing activities:
       Business and intangible asset acquisitions           (249)    (442,123)
       Capital expenditures                              (11,101)      (7,663)
       Proceeds from sale of investment and
        contractual rights                                   253        5,737
               Net cash used in investing activities     (11,097)    (444,049)
    

    
    Cash flows from financing activities:
       Net borrowings on lines of credit                   1,948        9,106
       Proceeds from issuance of notes payable           300,487      200,000
       Principal payments under notes payable            (27,487)           -
       Acquisition of redeemable noncontrolling
        interests                                       (307,675)           -
       Proceeds from stock issued under
        share-based compensation plans                     4,048        2,910
       Tax benefit from share-based compensation plans     2,599          976
       Dividends paid                                     (1,616)      (1,596)
       Contribution from noncontrolling interest holder        -        8,857
       Distribution to noncontrolling interests          (13,998)      (2,469)
               Net cash (used in) provided by
                financing activities                     (41,694)     217,784
    

Effect of exchange rate changes on cash 1,697 (9,848)

    
    Increase (decrease)  in cash and cash
     equivalents                                         645,414     (168,339)
    Cash and cash equivalents, beginning of period       426,935      456,060
    Cash and cash equivalents, end of period          $1,072,349     $287,721
    

    
    1 Certain amounts for the three months ended August 31, 2008 have been
      adjusted to retrospectively conform with FAS 160 and EITF Topic D-98.
    

    
    2 Based on adoption of FAS 160, net income presented includes net income
      attributable to noncontrolling interest, net of taxes of $4,613 and
      $8,321, respectively.
    

    
    SCHEDULE 5
    CONSTANT CURRENCY SUMMARY and FY2009 RECONCILIATION SCHEDULE
    GLOBAL PAYMENTS INC. AND SUBSIDIARIES
    

Constant Currency Summary

    
    (in millions, except for per share data)  Q1 FY10     % change
                                              Actual       Q1 FY08
    

    
    Fiscal 2010 Revenues
    Constant currency (1)                      $462          14%
    Foreign currency impact (2)                 (21)         -5%
       GAAP Revenues                           $441           9%
    

    
    Fiscal 2010 Diluted Earnings Per Share
    Constant currency  (1)                   $ 0.78          10%
    Foreign currency impact (2)               (0.07)        (10%)
       GAAP Diluted EPS                      $ 0.71           0%
    

    
    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
    

    
    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 changes in foreign currency rates from the
      comparable prior year period.
    

FY2009 Reconciliation Schedule

    
        For Year Ended May 31,                              2009
    (in millions, except for per share data) Normalized  Impairment(3)  GAAP
                                            (Unaudited)
    

Revenues $1,601,524 $ - 1,601,524

Total Operating expenses 1,292,431 147,664 1,440,095

Operating income 309,093 (147,664) 161,429

Net income $180,793 $(143,576) $37,217

    
    Diluted shares (4)                         81,049           -       81,049
    Diluted earnings per share                 $ 2.23      $(1.77)       $0.46
    

    
    We supplemented our reporting of earnings per share information determined
    in accordance with GAAP by reporting earnings per share for fiscal 2009 on
    a "normalized" basis in this earnings release as a measure to help
    evaluate performance.  We exclude the impact of impairment charges in
    order to more clearly focus on the factors we believe are pertinent to the
    daily management of our operations, and our management uses normalized
    measures to evaluate the impact of operational business decisions.  Our
    earnings per share reported on a normalized basis should be considered in
    addition to, and not as a substitute for, earnings per share determined in
    accordance with GAAP. Our measures of earnings per share on a normalized
    basis reflect management's judgment of particular items, and may not be
    comparable to similarly titled measures reported by other companies.
    

    
    3 Impairment charges consist of goodwill and other intangible asset
      impairments in the Money Transfer segment.  Also reflects the related
      income tax benefit.
    

    
    4 Pursuant to the retrospective adoption of FSP Emerging Issues Task Force
      03-6-1, "Determining Whether Instruments Granted in Share-Based Payment
      Transactions Are Participating Securities", diluted weighted average
      shares outstanding have been increased by 57 for the twelve months ended
      May 31, 2009.



    

    
    Contact: Jane M. Elliott
    770-829-8234 Voice
    770-829-8267 Fax
    investor.relations@globalpay.com




    

SOURCE Global Payments Inc.

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

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