Global Payments Reports Second Quarter Earnings



    ATLANTA, Jan. 6 /CNW/ -- Global Payments Inc. (NYSE:   GPN) today announced
results for its fiscal second quarter ended November 30, 2008. For the second
quarter, revenues grew 30 percent to $401.1 million compared to $308.8 million
in the prior year.  Diluted earnings per share grew 25 percent to $0.60
compared to $0.48 in the prior year quarter.
    
    (Logo:  http://www.newscom.com/cgi-bin/prnh/20010221/ATW031LOGO )
    
    These results include the unfavorable impact of foreign currency exchange
rates during the period, and as such, the company added a schedule (Schedule
9) this quarter to provide revenue and diluted earnings per share growth on a
constant currency basis for both the quarter as well as the outlook for fiscal
2009.  On a constant currency basis, revenues grew 37 percent and diluted
earnings per share grew 39 percent over the prior year quarter.
    
    Comments and Outlook
    
    Chairman and CEO, Paul R. Garcia, stated, "We are pleased with our strong
second quarter financial performance, in spite of the difficult macro
environment.  Our results for the quarter were driven by the favorable impact
of our June 30, 2008 U.K. acquisition and strong results in our North America
segment.  North America continues to benefit from successful pricing
initiatives in Canada as well as a solid 16 percent transaction growth in the
U.S."
    "Based on the significant strengthening of the U.S. dollar this quarter,
and the related translation impact, we are updating our annual revenue
guidance to a range of $1,550 million to $1,580 million, or 22 percent to 24
percent growth over fiscal 2008.  We are also modifying our annual diluted
earnings per share guidance to a range of $2.14 to $2.21, or 8 percent to 12
percent growth versus $1.98 in fiscal 2008 (see Schedule 6 for details).  Our
fiscal 2009 guidance excludes the impact of any future restructuring and other
charges, as well as the impact of future acquisitions, such as our announced
agreement to acquire ZAO United Card Service in the Russian Federation."
    "We remain committed to our long-term growth strategy, and the
fundamentals of our business model remain strong.  This is underscored by our
constant currency outlook for diluted earnings per share growth of 21 percent
to 25 percent for fiscal 2009, which is consistent with the constant currency
outlook we provided last quarter," said Garcia.
    
    Conference Call
    
    Global Payments will hold a conference call today, January 6, 2009 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 1-877-857-6177 and callers outside U.S. and Canada may dial
1-719-325-4793.  The pass code is "GPN."  A replay of the call may be accessed
through the Global Payments' Web site through January 20, 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, development difficulties,
the effect of current economic conditions, including a decrease in 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.



    
    SCHEDULE 1
    UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
    GLOBAL PAYMENTS INC. AND SUBSIDIARIES
    

    
    (In thousands, except per share data)
    

    
                                               Three Months Ended November 30,
                                                    2008              2007
    

    
    Revenues                                       $401,063          $308,776
    

    
    Operating expenses:
         Cost of service                            154,311           116,513
         Sales, general and administrative          163,987           133,518
         Restructuring                                    -               314
                                                    318,298           250,345
    

    
    Operating income                                 82,765            58,431
    

    
    Other income (expense):
         Interest and other income                    2,002             4,739
         Interest and other expense                  (2,016)           (1,268)
                                                        (14)            3,471
    

    
    Income before income taxes and
     minority interest                               82,751            61,902
    Provision for income taxes                      (22,505)          (21,023)
    Minority interest, net of tax
     (provision) benefit of ($710) and
     $524, respectively                             (11,339)           (2,566)
              Net income                            $48,907           $38,313
    

    
    Earnings per share:
              Basic                                   $0.61             $0.48
              Diluted                                 $0.60             $0.48
    

    
    Weighted average shares outstanding:
              Basic                                  79,735            79,027
              Diluted                                81,132            80,506
    




    
    SCHEDULE 2
    SEGMENT INFORMATION
    GLOBAL PAYMENTS INC. AND SUBSIDIARIES
    

    
    (In thousands)
    

    
                                               Three Months Ended November 30,
                                                    2008              2007
    

    
      Revenues:
      United States                                $192,149          $176,115
      Canada                                         78,633            65,772
        North America Merchant Services             270,782           241,887
    

    
      Europe                                         71,170            14,135
      Asia-Pacific                                   23,932            18,426
        International Merchant Services              95,102            32,561
    

    
      United States                                  28,611            28,415
      Europe                                          6,568             5,913
        Money Transfer                               35,179            34,328
    

    
          Total Revenues                           $401,063          $308,776
    

    
      Operating Income:
      North America Merchant Services               $72,431           $66,245
      International Merchant Services                20,963             4,847
      Money Transfer                                  4,883             1,239
      Corporate                                     (15,512)          (13,586)
      Restructuring                                     -                (314)
        Operating Income                            $82,765           $58,431
    



    
    SCHEDULE 3
    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 November 30,         2008              2007
    

    
                                                    Normal-  Restruc-
                                            GAAP     ized    turing(1)  GAAP
    

    
    Revenues                              $401,063  $308,776   $-    $308,776
    

    
    Operating expenses:
       Cost of service                     154,311   116,513    -     116,513
       Sales, general and administrative   163,987   133,518    -     133,518
       Restructuring                           -         -      314       314
                                           318,298   250,031    314   250,345
    

    
    Operating income                        82,765    58,745   (314)   58,431
    

    
    Other income (expense):
       Interest and other income             2,002     4,739    -       4,739
       Interest and other expense           (2,016)   (1,268)   -      (1,268)
                                               (14)    3,471    -       3,471
    

    
    Income before income taxes and
     minority interest                      82,751    62,216   (314)   61,902
    Provision for income taxes             (22,505)  (21,129)   106   (21,023)
    Minority interest, net of tax
     (provision) benefit of ($710) and
     $524, respectively                    (11,339)   (2,566)   -      (2,566)
       Net income                          $48,907   $38,521  $(208)  $38,313
    

    
     Diluted shares                         81,132    80,506    -      80,506
     Diluted earnings per share              $0.60     $0.48   $-       $0.48
    

    
    Effective tax rate                       32.2%     34.8%            34.9%
    

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



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

    
    (In thousands, except per share data)
    

    
                                                 Six Months Ended November 30,
                                                    2008              2007
    

    
    Revenues                                       $806,820          $619,756
    

    
    Operating expenses:
         Cost of service                            298,488           232,822
         Sales, general and administrative          332,470           260,954
         Restructuring                                    -             1,317
                                                    630,958           495,093
    

    
    Operating income                                175,862           124,663
    

    
    Other income (expense):
         Interest and other income                    5,373             9,876
         Interest and other expense                  (4,420)           (3,141)
                                                        953             6,735
    

    
    Income before income taxes and
     minority interest                              176,815           131,398
    Provision for income taxes                      (50,721)          (44,806)
    Minority interest, net of tax
     (provision) benefit of ($675) and
     $436, respectively                             (19,660)           (4,704)
              Net income                           $106,434           $81,888
    

    
    Earnings per share:
              Basic                                   $1.34             $1.03
              Diluted                                 $1.31             $1.01
    

    
    Weighted average shares outstanding:
              Basic                                  79,598            79,767
              Diluted                                81,118            81,209
    



    
    SCHEDULE 5
    SEGMENT INFORMATION
    GLOBAL PAYMENTS INC. AND SUBSIDIARIES
    

    
    (In thousands)
    

    
                                                 Six Months Ended November 30,
                                                     2008              2007
    

    
      Revenues:
      United States                                $392,845          $355,565
      Canada                                        164,577           132,449
        North America Merchant Services             557,422           488,014
    

    
      Europe                                        132,772            27,910
      Asia-Pacific                                   44,650            34,490
        International Merchant Services             177,422            62,400
    

    
      United States                                  57,991            57,996
      Europe                                         13,985            11,346
        Money Transfer                               71,976            69,342
    

    
          Total Revenues                           $806,820          $619,756
    

    
      Operating Income:
      North America Merchant Services              $155,500          $137,215
      International Merchant Services                41,365             9,983
      Money Transfer                                  9,361             4,961
      Corporate                                     (30,364)          (26,179)
      Restructuring                                     -              (1,317)
        Operating Income                           $175,862          $124,663
    



    
    SCHEDULE 6
    UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
    GLOBAL PAYMENTS INC. AND SUBSIDIARIES
    

    
    Reconciliations to Exclude Restructuring and Other Charges from Normalized
    Results
    

    
    (In thousands, except per share data)
    


    
    Six Months Ended November 30,          2008               2007
    

    
                                                   Normal-   Restruc-
                                           GAAP      ized    turing(1)  GAAP
    

    
    Revenues                             $806,820  $619,756    $-    $619,756
    

    
    Operating expenses:
       Cost of service                    298,488   232,822     -     232,822
       Sales, general and administrative  332,470   260,954     -     260,954
       Restructuring                          -         -     1,317     1,317
                                          630,958   493,776   1,317   495,093
    

    
    Operating income                      175,862   125,980  (1,317)  124,663
    

    
    Other income (expense):
       Interest and other income            5,373     9,876     -       9,876
       Interest and other expense          (4,420)   (3,141)    -      (3,141)
                                              953     6,735     -       6,735
    

    
    Income before income taxes and
     minority interest                    176,815   132,715  (1,317)  131,398
    Provision for income taxes            (50,721)  (45,255)    449   (44,806)
    Minority interest, net of tax
     (provision) benefit of ($675) and
     $436, respectively                   (19,660)   (4,704)    -      (4,704)
       Net income                        $106,434   $82,756   $(868)  $81,888
    

    
     Diluted shares                        81,118    81,209     -      81,209
     Diluted earnings per share             $1.31     $1.02  $(0.01)    $1.01
    

    
    Effective tax rate                      32.6%     35.1%             35.1%
    

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




    
    Year Ended May 31,                                   2008
    

    
    Normalized diluted earnings per share               $1.98
    Restructuring and other(2)                           0.03
    GAAP diluted earnings per share                     $2.01
    


    
    (2) Full year 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 our fiscal 2008 earnings press releases,
        which were included as exhibits to our respective Form 8-Ks furnished
        to the SEC.
    



    
    SCHEDULE 7
    CONSOLIDATED BALANCE SHEETS
    GLOBAL PAYMENTS INC. AND SUBSIDIARIES
    (In thousands)
    

    
                                               November 30,         May 31,
                                                   2008              2008
                                               (Unaudited)
    Assets
    Cash and cash equivalents                     $356,234          $456,060
    Accounts receivable, net                       109,739           100,179
    Claims receivable, net                           1,537             1,354
    Settlement processing assets                     5,179            24,280
    Inventory, net                                   5,310             3,821
    Deferred income taxes                            4,261             4,119
    Prepaid expenses and other current
     assets                                         24,726            27,597
            Current assets                         506,986           617,410
    

    
    Property and equipment, net                    145,664           141,415
    Goodwill                                       696,246           497,136
    Other intangible assets, net                   251,999           175,636
    Other assets                                    12,535            14,310
                    Total assets                $1,613,430        $1,445,907
    

    
    Liabilities and Shareholders' Equity
    Lines of credit                                 $6,574            $1,527
    Current portion of term loan                    25,000               -
    Payables to money transfer
     beneficiaries                                  12,244             9,276
    Accounts payable and accrued
     liabilities                                   138,401           138,243
    Settlement processing obligations               76,702            56,731
    Income taxes payable                            13,671            11,975
            Current liabilities                    272,592           217,752
    

    
    Term loan                                      170,000               -
    Deferred income taxes                           57,086            75,001
    Other long-term liabilities                     12,001            11,612
            Total liabilities                      511,679           304,365
    

    
    Commitments and contingencies
    Minority interest in equity of
     subsidiaries                                   35,210            14,724
    

    
    Preferred stock                                      -                 -
    Common stock                                         -                 -
    Paid-in capital                                396,064           380,741
    Retained earnings                              725,099           621,875
    Accumulated other comprehensive
     (loss) income                                 (54,622)          124,202
            Total shareholders' equity           1,066,541         1,126,818
                    Total liabilities and
                     shareholders' equity       $1,613,430        $1,445,907
    



    
    SCHEDULE 8
    UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
    GLOBAL PAYMENTS INC. AND SUBSIDIARIES
    

    
    (In thousands)
    

    
                                                 Six Months Ended November 30,
                                                    2008              2007
    

    
    Cash flows from operating activities:
       Net income                                  $106,434           $81,888
       Adjustments to reconcile net income
        to net cash provided by operating
        activities:
          Depreciation and amortization of
           property and equipment                    19,446            13,712
          Amortization of acquired
           intangibles                               15,654             7,266
          Share-based compensation expense            7,154             6,592
          Provision for operating losses
           and bad debts                             11,814            14,444
          Minority interest in earnings              18,985             5,139
          Deferred income taxes                         467            (1,287)
          Other, net                                    349               156
       Changes in operating assets and
        liabilities, net of the effects of
        acquisitions:
          Accounts receivable                       (13,210)           (7,604)
          Claims receivable                          (9,872)          (12,863)
          Settlement processing assets and
           obligations, net                          36,994            51,818
          Inventory                                  (1,184)           (2,836)
          Prepaid expenses and other
           assets                                     4,263            (8,209)
          Payables to money transfer
           beneficiaries                              2,968               204
          Accounts payable and accrued
           liabilities                               (1,461)           (3,001)
          Income taxes payable                        1,696             3,958
             Net cash provided by
              operating activities                  200,497           149,377
    

    
    Cash flows from investing activities:
       Business and intangible asset
        acquisitions                               (454,265)          (11,551)
       Capital expenditures                         (17,396)          (22,914)
       Proceeds from sale of investment
        and contractual rights                        6,956               -
             Net cash used in investing
              activities                           (464,705)          (34,465)
    

    
    Cash flows from financing activities:
       Net borrowings on lines of credit              5,047               679
       Proceeds from term loan                      200,000               -
       Principal payments under term loan            (5,000)              -
       Proceeds from stock issued under
        share-based compensation plans                6,420            13,251
       Tax benefit from share-based
        compensation plans                            1,749             7,039
       Repurchase of common stock                       -             (87,020)
       Dividends paid                                (3,210)           (3,193)
       Contribution from minority interest
        holder                                          358               -
       Distributions to minority interests          (11,718)           (4,876)
             Net cash provided by (used
              in) financing activities              193,646           (74,120)
    

    
    Effect of exchange rate changes on cash         (29,264)           13,733
    

    
    (Decrease) increase in cash and cash
     equivalents                                    (99,826)           54,525
    Cash and cash equivalents, beginning
     of period                                      456,060           308,872
    Cash and cash equivalents, end of
     period                                        $356,234          $363,397
    



    
    SCHEDULE 9
    CONSTANT CURRENCY OUTLOOK
    GLOBAL PAYMENTS INC. AND SUBSIDIARIES
    

    
    (in millions, except            %
     for per share data)   Q1    change    Q2        %                    %
                          FY09     Q1     FY09    change   Fiscal 2009  change
                         Actual   FY08   Actual   Q2 FY08    Outlook     FY08
    

    
    Fiscal 2009 Revenue
    

    
    Constant                                                $1,641 to  29% to
     currency(1)           $397   28%     $424      37%        $1,671     31%
    

    
    Foreign currency
     impact(2)                9    3%      (23)     (7%)          (91)   (7%)
    

    
    Total                                                   $1,550 to  22% to
     Revenues              $406   31%     $401      30%        $1,580     24%
    


    
    Fiscal 2009 Diluted
     Earnings Per Share
    

    
    Constant                                                 $2.40 to  21% to
     currency(1)          $0.68   27%    $0.67      39%         $2.47     25%
    

    
    Foreign currency
     impact(2)             0.03    5%    (0.07)    (14%)        (0.26)  (13%)
    

    
                                                             $2.14 to   8% to
    Normalized            $0.71   32%    $0.60      25%         $2.21     12%
    

    
    Restructuring and
     other items(3)           -    2%        -        -             -    (2%)
    

    
                                                             $2.14 to   6% to
     GAAP                 $0.71   34%    $0.60      25%         $2.21     10%
    




    
    (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 actual and forecasted changes in foreign
        currency rates from the comparable prior year period.
    

    
    (3) For more information, please see Schedule 6 and our earnings press
        releases for each of these periods, which were included as exhibits to
        our respective Form 8-Ks furnished to the SEC.
    


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

    




For further information:

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

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