GLOBAL PAYMENTS INC. 
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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,
"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
"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,
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
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
SOURCE Global Payments Inc.
