ATLANTA, March 28 /Xinhua-PRNewswire/ -- Global Payments Inc. (NYSE: GPN) today announced results for its third quarter ended February 29, 2008. For the third quarter, revenue grew 19 percent to $310.6 million compared to $260.4 million in the prior year. Excluding the favorable impact of a non-recurring, non-cash operating tax item (included in sales, general and administrative expenses), diluted earnings per share grew 5 percent to $0.44 compared to $0.42 in the prior year quarter.
(Logo: http://www.newscom.com/cgi-bin/prnh/20010221/ATW031LOGO)
For the nine months ended February 29, 2008, revenue grew 19 percent to $930.4 million compared to $781.4 million in the prior year period. Excluding the impact of current period restructuring charges and the operating tax item described above, diluted earnings per share grew 9 percent to $1.46 from $1.34 in the prior year period.
In accordance with GAAP, the current quarter and year-to-date periods include restructuring charges and the operating tax item described above (see attached reconciliation schedule). These items are reflected in our GAAP diluted earnings per share amounts. For the three and nine months ended February 29, 2008, GAAP diluted earnings per share were $0.50 and $1.51, respectively, compared to $0.42 and $1.34, respectively, in the prior year comparable periods.
Comments and Outlook
Chairman, President and CEO, Paul R. Garcia, stated, "We delivered solid financial results for our fiscal third quarter, largely driven by our merchant services segment. Our domestic ISO channel continues to favorably impact our financial results through organic expansion. Our growth also continues to benefit from favorable currency exchange rates in both Canada and the Czech Republic. I am also very pleased with the strong revenue growth from our Asia-Pacific joint venture with HSBC."
"Based on these results and trends, we are providing annual fiscal 2008 revenue guidance of $1,250 million to $1,260 million. This revenue guidance reflects an expected 18 percent to 19 percent growth versus $1,061.5 million in fiscal 2007. In addition, we are providing annual fiscal 2008 diluted earnings per share guidance of $1.95 to $1.97, or 10 percent to 11 percent growth versus $1.77 in fiscal 2007.(1) This includes the impact of stock option expenses as a result of our June 1, 2006 adoption of FAS 123R. Our guidance excludes the impact of future significant acquisitions, and these earnings per share ranges exclude the impact of the operating tax item described above, in addition to restructuring and other charges," said Garcia.
Conference Call
Global Payments will hold a conference call today, March 27, 2008 at 5:00 p.m. ET to discuss financial results and business highlights. The conference call may be accessed by calling 1-888-599-4884 (U.S. and Canada) or 1-913-312-0961 (outside U.S. and Canada) and using a pass code of "GPN" for both numbers, or via Web cast at www.globalpaymentsinc.com. A replay of the call will be available on the Global Payments Web site through April 10, 2008.
(1) Fiscal 2007 diluted earnings per share was $1.75 on a GAAP basis, which includes restructuring and other charges equivalent to $0.02 in diluted earnings per share.
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 U.S. 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: continued certification by credit card associations, foreign currency risks, competition and pricing, product demand, market and customer acceptance, development difficulties, the effect of economic conditions and consumer spending, security breaches or system failures, costs of capital, changes in immigration patterns, changes in state, federal or foreign laws and regulations affecting the electronic money transfer industry, increases in credit card association fees, utility or system interruptions, 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.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands, except per share data)
Three Months Ended February 29/28,
2008 2007
Revenues $310,641 $260,418
Operating expenses:
Cost of service 117,661 103,555
Sales, general and administrative 133,069 105,670
250,730 209,225
Operating income 59,911 51,193
Other income (expense):
Interest and other income 4,767 4,728
Interest and other expense (2,198) (2,399)
2,569 2,329
Income before income taxes and
minority interest 62,480 53,522
Provision for income taxes (19,265) (17,148)
Minority interest, net of tax (3,160) (2,078)
Net income $40,055 $34,296
Earnings per share:
Basic $0.51 $0.43
Diluted $0.50 $0.42
Weighted average shares outstanding:
Basic 79,219 80,421
Diluted 80,650 81,972
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands, except per share data)
Nine Months Ended February 29/28,
2008 2007
Revenues $930,397 $781,423
Operating expenses:
Cost of service 350,483 307,511
Sales, general and administrative 394,023 306,889
Restructuring 1,317 -
745,823 614,400
Operating income 184,574 167,023
Other income (expense):
Interest and other income 14,643 12,052
Interest and other expense (5,339) (6,298)
9,304 5,754
Income before income taxes and
minority interest 193,878 172,777
Provision for income taxes (64,071) (55,749)
Minority interest, net of tax (7,864) (7,221)
Net income $121,943 $109,807
Earnings per share:
Basic $1.53 $1.37
Diluted $1.51 $1.34
Weighted average shares outstanding:
Basic 79,584 80,098
Diluted 81,023 81,756
CONSOLIDATED CONDENSED BALANCE SHEETS
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands)
February 29, May 31,
2008 2007
(Unaudited)
Assets
Cash and cash equivalents $388,467 $308,872
Accounts receivable, net 83,209 76,168
Claims receivable, net 2,296 2,187
Settlement processing assets 15,647 32,853
Other current assets 39,153 24,349
Current assets 528,772 444,429
Property and equipment, net 134,695 118,495
Goodwill 472,543 451,244
Other intangible assets, net 176,555 175,620
Other assets 13,204 10,841
Total assets $1,325,769 $1,200,629
Liabilities and Shareholders' Equity
Lines of credit $1,126 $-
Settlement processing obligations 33,643 20,617
Payable to money transfer beneficiaries 7,594 6,589
Accounts payable and other accrued
liabilities 126,695 115,671
Current liabilities 169,058 142,877
Other long-term liabilities 82,431 85,043
Total liabilities 251,489 227,920
Minority interest in equity of
subsidiaries 16,129 14,933
Shareholders' equity 1,058,151 957,776
Total liabilities and
shareholders' equity $1,325,769 $1,200,629
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands)
Nine Months Ended February 29/28,
2008 2007
Cash flows from operating activities:
Net income $121,943 $109,807
Non-cash items
Depreciation and amortization 32,220 30,344
Minority interest in earnings 7,794 7,664
Other, net 22,217 18,586
Changes in working capital, which
provided (used) cash
Settlement processing assets
and obligations, net 26,297 21,608
Other, net (26,561) (24,081)
Net cash provided by
operating activities 183,910 163,928
Cash flows from investing activities:
Capital expenditures (31,926) (23,234)
Business and intangible asset
acquisitions (12,051) (80,230)
Net cash used in investing
activities (43,977) (103,464)
Cash flows from financing activities:
Net borrowings on lines of credit 1,126 -
Principal payments under capital leases - (746)
Repurchase of common stock (87,020) -
Net proceeds under share-based
compensation plans and dividends 17,829 17,263
Distributions to minority
interests, net (7,085) (6,751)
Net cash (used in) provided
by financing activities (75,150) 9,766
Effect of exchange rate changes on cash 14,812 3,354
Increase in cash and cash equivalents 79,595 73,584
Cash and cash equivalents, beginning
of period 308,872 218,475
Cash and cash equivalents, end of period $388,467 $292,059
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
Reconciliation to Exclude an Operating Tax Item from Normalized Results
(In thousands, except per share data)
Three Months Ended February 29/28, 2008 2007
Opera-
ting
Tax
Normalized Item(1) GAAP GAAP
Revenues $310,641 $- $310,641 $260,418
Operating expenses:
Cost of service 117,661 - 117,661 103,555
Sales, general and administrative 140,117 (7,048) 133,069 105,670
257,778 (7,048) 250,730 209,225
Operating income 52,863 7,048 59,911 51,193
Other income/(expense):
Interest and other income 4,767 - 4,767 4,728
Interest and other expense (2,198) - (2,198) (2,399)
2,569 - 2,569 2,329
Income before income taxes 55,432 7,048 62,480 53,522
Provision for income taxes (16,936) (2,329) (19,265) (17,148)
Minority interest, net of tax (3,160) - (3,160) (2,078)
Net income $35,336 $4,719 $40,055 $34,296
Diluted shares 80,650 - 80,650 81,972
Diluted earnings per share $0.44 $0.06 $0.50 $0.42
(1) Relates to 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 three 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 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 Charges and an Operating Tax Item
from Normalized Results
(In thousands, except per share data)
Nine Months Ended February 29/28,
2008 2007
Opera-
ting
Restruc- Tax
Normalized turing(1) Item(2) GAAP GAAP
Revenues $930,397 $- $- $930,397 $781,423
Operating expenses:
Cost of service 350,483 - - 350,483 307,511
Sales, general and
administrative 401,071 - (7,048) 394,023 306,889
Restructuring - 1,317 - 1,317 -
751,554 1,317 (7,048) 745,823 614,400
Operating income 178,843 (1,317) 7,048 184,574 167,023
Other income/(expense):
Interest and other
income 14,643 - - 14,643 12,052
Interest and other
expense (5,339) - - (5,339) (6,298)
9,304 - - 9,304 5,754
Income before income taxes 188,147 (1,317) 7,048 193,878 172,777
Provision for income taxes (62,191) 449 (2,329) (64,071) (55,749)
Minority interest, net of
tax (7,864) - - (7,864) (7,221)
Net income $118,092 $(868) $4,719 $121,943 $109,807
Diluted shares 81,023 - - 81,023 81,756
Diluted earnings
per share $1.46 $(0.01) $0.06 $1.51 $1.34
(1) Restructuring charges 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.
(2) Relates to 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 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.
SEGMENT INFORMATION
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands)
Three Months Ended February 29/28,
2008 2007
Revenues
Domestic direct $171,372 $135,896
Canada 61,256 54,630
Asia-Pacific 18,977 14,737
Central and Eastern Europe 14,455 12,244
Domestic indirect and other 10,666 11,564
Merchant services 276,726 229,071
Domestic 28,007 26,903
Europe 5,908 4,444
Money transfer 33,915 31,347
Total revenues $310,641 $260,418
Operating income
Merchant services(1) $72,118 $62,033
Money transfer 1,156 2,249
Corporate (13,363) (13,089)
Operating income $59,911 $51,193
(1) Includes the favorable impact of a non-recurring, non-cash operating
tax item of $7.0 million in the three months ended February 29, 2008.
SEGMENT INFORMATION
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands)
Nine Months Ended February 29/28,
2008 2007
Revenues
Domestic direct $504,709 $403,860
Canada 193,705 170,314
Asia-Pacific 53,467 35,072
Central and Eastern Europe 42,365 38,767
Domestic indirect and other 32,894 35,178
Merchant services 827,140 683,191
Domestic 86,003 86,093
Europe 17,254 12,139
Money transfer 103,257 98,232
Total revenues $930,397 $781,423
Operating income
Merchant services(1) $219,316 $196,275
Money transfer 6,117 10,995
Corporate (39,542) (40,247)
Restructuring (1,317) -
Operating income $184,574 $167,023
(1) Includes the favorable impact of a non-recurring, non-cash operating
tax item of $7.0 million in the nine months ended February 29, 2008.
