ATLANTA, March 31, 2010 /PRNewswire-FirstCall/ -- Global Payments Inc. (NYSE: GPN) today announced results for its fiscal third quarter ended February 28, 2010. For the third quarter, revenues grew 11% to $398.5 million compared to $359.5 million in the prior year. Diluted earnings per share from continuing operations grew 35% to $0.58 compared to $0.43 in the prior year (See Schedule 2 for financial results from continuing operations).
Chairman and CEO, Paul R. Garcia, stated, "I am pleased with our results for the quarter which include a lift from foreign currency translation. On a constant currency basis, we delivered solid revenue and diluted earnings per share growth of 6% and 18%, respectively(1). This demonstrates strong financial performance despite a challenging, albeit improving, macroeconomic environment. These results were driven by steady growth in our U.S. ISO channel, continued successful execution in our international businesses and a better than expected effective tax rate.
"Based on our current outlook for continuing operations, we are increasing our fiscal 2010 annual revenue expectations to $1,615 million to $1,625 million, or 10% to 11% growth over fiscal 2009, and we are increasing our fiscal 2010 diluted EPS expectations to $2.49 to $2.54, reflecting 19% to 21% growth over fiscal 2009 EPS," said Garcia.
Conference Call
Global Payments will hold a conference call today, March 31, 2010 at 4:30 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 in North America may dial 1-888-609-5666 and callers outside North America may dial 1-913-312-6664. The pass code is "GPN." A replay of the call may be accessed through the Global Payments' Web site through April 21, 2010.
Global Payments Inc. (NYSE: GPN) is a leading provider of electronic transaction processing services for merchants, Independent Sales Organizations (ISOs), financial institutions, government agencies and multi-national corporations located throughout the United States, Canada, 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. Visit www.globalpaymentsinc.com for more information about the company and its services.
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 worldwide economic conditions, including a decline in the value of the U.S. dollar, the impact of the divestiture of the Money Transfer business and future performance and integration of recent 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.
(1) Please see Schedule 6.
Contact: Jane M. Elliott |
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770-829-8234 Voice |
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770-829-8267 Fax |
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SCHEDULE 1 UNAUDITED CONSOLIDATED STATEMENTS OF INCOME GLOBAL PAYMENTS INC. AND SUBSIDIARIES (In thousands, except per share data) |
||||||||||||
Three Months Ended February 28, |
Nine Months Ended February 28, |
|||||||||||
2010 |
2009 |
% Change |
2010 |
2009 |
% Change |
|||||||
Revenues |
$ 398,535 |
$ 359,528 |
11% |
$ 1,217,418 |
$ 1,094,372 |
11% |
||||||
Operating expenses: |
||||||||||||
Cost of service |
146,202 |
124,001 |
18% |
432,287 |
374,631 |
15% |
||||||
Sales, general and administrative |
178,484 |
173,144 |
3% |
533,337 |
490,857 |
9% |
||||||
324,686 |
297,145 |
9% |
965,624 |
865,488 |
12% |
|||||||
Operating income |
73,849 |
62,383 |
18% |
251,794 |
228,884 |
10% |
||||||
Other income (expense): |
||||||||||||
Interest and other income |
1,319 |
1,135 |
16% |
2,699 |
6,354 |
-58% |
||||||
Interest and other expense |
(4,141) |
(2,287) |
81% |
(12,704) |
(6,357) |
100% |
||||||
(2,822) |
(1,152) |
145% |
(10,005) |
(3) |
NM |
|||||||
Income from continuing operations before income taxes |
71,027 |
61,231 |
16% |
241,789 |
228,881 |
6% |
||||||
Provision for income taxes |
(20,298) |
(18,531) |
10% |
(69,489) |
(66,029) |
5% |
||||||
Income from continuing operations |
50,729 |
42,700 |
19% |
172,300 |
162,852 |
6% |
||||||
Income (loss) from discontinued operations, net of tax |
722 |
(141,418) |
NM |
7,778 |
(135,476) |
NM |
||||||
Net income (loss) including noncontrolling interests |
51,451 |
(98,718) |
NM |
180,078 |
27,376 |
558% |
||||||
Less: Net income attributable to noncontrolling interests, net of tax |
(2,990) |
(8,058) |
(63%) |
(10,951) |
(27,718) |
(60%) |
||||||
Net income (loss) attributable to Global Payments |
$ 48,461 |
$ (106,776) |
NM |
$ 169,127 |
$ (342) |
NM |
||||||
Amounts attributable to Global Payments: |
||||||||||||
Income from continuing operations |
$ 47,739 |
$ 34,642 |
38% |
$ 161,349 |
$ 135,134 |
19% |
||||||
Income (loss) from discontinued operations, net of tax |
722 |
(141,418) |
NM |
7,778 |
(135,476) |
NM |
||||||
Net income (loss) attributable to Global Payments |
$ 48,461 |
$ (106,776) |
NM |
$ 169,127 |
$ (342) |
NM |
||||||
Basic earnings per share attributable to Global Payments: |
||||||||||||
Income from continuing operations |
$ 0.59 |
$ 0.43 |
37% |
$ 1.99 |
$ 1.69 |
18% |
||||||
Income (loss) from discontinued operations, net of tax |
0.01 |
(1.76) |
NM |
0.10 |
(1.69) |
NM |
||||||
Net income (loss) |
$ 0.60 |
$ (1.33) |
NM |
$ 2.09 |
$ - |
NM |
||||||
Diluted earnings per share attributable to Global Payments: |
||||||||||||
Income from continuing operations |
$ 0.58 |
$ 0.43 |
35% |
$ 1.96 |
$ 1.67 |
17% |
||||||
Income (loss) from discontinued operations, net of tax |
0.01 |
(1.75) |
NM |
0.10 |
(1.67) |
NM |
||||||
Net income (loss) |
$ 0.59 |
$ (1.32) |
NM |
$ 2.06 |
$ - |
NM |
||||||
Weighted average shares outstanding(1): |
||||||||||||
Basic |
81,539 |
80,333 |
81,102 |
80,129 |
||||||||
Diluted |
82,636 |
80,948 |
82,181 |
81,077 |
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(1) Pursuant to the retrospective adoption of FASB guidance on participating securities (ASC 260-10-45-40), basic and diluted weighted average shares outstanding have been increased by 498 and 17, respectively for the three months ended February 28, 2009, and 453 and 22, respectively for the nine months ended February 28, 2009. |
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NM - Not Meaningful |
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SCHEDULE 2 INCOME FROM CONTINUING OPERATIONS ATTRIBUTABLE TO GLOBAL PAYMENTS GLOBAL PAYMENTS INC. AND SUBSIDIARIES |
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(In thousands, except per share data) |
||||||||||||
Three Months Ended February 28, |
Nine Months Ended February 28, |
|||||||||||
2010 |
2009 |
% Change |
2010 |
2009 |
% Change |
|||||||
Revenues |
$ 398,535 |
$ 359,528 |
11% |
$ 1,217,418 |
$ 1,094,372 |
11% |
||||||
Operating expenses: |
||||||||||||
Cost of service |
146,202 |
124,001 |
18% |
432,287 |
374,631 |
15% |
||||||
Sales, general and administrative |
178,484 |
173,144 |
3% |
533,337 |
490,857 |
9% |
||||||
324,686 |
297,145 |
9% |
965,624 |
865,488 |
12% |
|||||||
Operating income |
73,849 |
62,383 |
18% |
251,794 |
228,884 |
10% |
||||||
Other income (expense): |
||||||||||||
Interest and other income |
1,319 |
1,135 |
16% |
2,699 |
6,354 |
(58%) |
||||||
Interest and other expense |
(4,141) |
(2,287) |
81% |
(12,704) |
(6,357) |
100% |
||||||
(2,822) |
(1,152) |
145% |
(10,005) |
(3) |
NM |
|||||||
Income from continuing operations before income taxes |
71,027 |
61,231 |
16% |
241,789 |
228,881 |
6% |
||||||
Provision for income taxes |
(20,298) |
(18,531) |
10% |
(69,489) |
(66,029) |
5% |
||||||
Income from continuing operations including noncontrolling interests |
50,729 |
42,700 |
19% |
172,300 |
162,852 |
6% |
||||||
Less: Net income attributable to noncontrolling interests, net of tax |
(2,990) |
(8,058) |
(63%) |
(10,951) |
(27,718) |
(60%) |
||||||
Net income from continuing operations attributable to Global Payments |
$ 47,739 |
$ 34,642 |
38% |
$ 161,349 |
$ 135,134 |
19% |
||||||
Basic earnings per share |
$ 0.59 |
$ 0.43 |
37% |
$ 1.99 |
$ 1.69 |
18% |
||||||
Diluted earnings per share |
$ 0.58 |
$ 0.43 |
35% |
$ 1.96 |
$ 1.67 |
17% |
||||||
Weighted average shares outstanding: |
||||||||||||
Basic |
81,539 |
80,333 |
81,102 |
80,129 |
||||||||
Diluted |
82,636 |
80,948 |
82,181 |
81,077 |
||||||||
NM - Not Meaningful |
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SCHEDULE 3 SEGMENT INFORMATION CONTINUING OPERATIONS GLOBAL PAYMENTS INC. AND SUBSIDIARIES |
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(In thousands) |
||||||||||||||
Three Months Ended February 28, |
Nine Months Ended February 28, |
|||||||||||||
2010 |
2009 |
% Change |
2010 |
2009 |
% Change |
|||||||||
Revenues: |
||||||||||||||
United States |
$ 216,168 |
$ 206,237 |
5% |
$ 659,868 |
$ 599,082 |
10% |
||||||||
Canada |
77,092 |
68,201 |
13% |
236,552 |
232,779 |
2% |
||||||||
North America Merchant Services |
293,260 |
274,438 |
7% |
896,420 |
831,861 |
8% |
||||||||
Europe |
78,174 |
62,110 |
26% |
242,785 |
194,881 |
25% |
||||||||
Asia-Pacific |
27,101 |
22,980 |
18% |
78,213 |
67,630 |
16% |
||||||||
International Merchant Services |
105,275 |
85,090 |
24% |
320,998 |
262,511 |
22% |
||||||||
Total Revenues |
$ 398,535 |
$ 359,528 |
11% |
$ 1,217,418 |
$ 1,094,372 |
11% |
||||||||
Operating Income: |
||||||||||||||
North America Merchant Services |
$ 60,855 |
$ 57,909 |
5% |
$ 210,419 |
$ 213,409 |
(1%) |
||||||||
International Merchant Services |
28,853 |
20,771 |
39% |
88,353 |
62,136 |
42% |
||||||||
Corporate |
(15,859) |
(16,297) |
3% |
(46,978) |
(46,661) |
(1%) |
||||||||
Operating Income |
$ 73,849 |
$ 62,383 |
18% |
$ 251,794 |
$ 228,884 |
10% |
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SCHEDULE 4 CONSOLIDATED BALANCE SHEETS GLOBAL PAYMENTS INC. AND SUBSIDIARIES (In thousands) |
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February 28, |
May 31, |
|||
2010 |
2009 |
|||
ASSETS |
||||
Current assets: |
||||
Cash and cash equivalents |
$ 589,620 |
$ 426,935 |
||
Accounts receivable, net of allowances for doubtful accounts of $378 and $553, respectively |
121,839 |
122,831 |
||
Claims receivable, net of allowance for losses of $4,070 and $4,026, respectively |
809 |
607 |
||
Settlement processing assets |
11,202 |
6,675 |
||
Inventory, net of obsolescence reserves of $795 and $653, respectively |
12,146 |
5,914 |
||
Deferred income taxes |
2,607 |
3,789 |
||
Assets of discontinued operations |
141,298 |
- |
||
Prepaid expenses and other current assets |
21,732 |
28,437 |
||
Total current assets |
901,253 |
595,188 |
||
Property and equipment, net of accumulated depreciation of $111,385 and $121,189, respectively |
178,549 |
176,226 |
||
Goodwill |
577,218 |
625,120 |
||
Other intangible assets, net of accumulated amortization of $138,472 and $189,560, respectively |
210,309 |
258,094 |
||
Deferred income taxes |
89,850 |
- |
||
Other |
22,489 |
22,193 |
||
Total assets |
$ 1,979,668 |
$ 1,676,821 |
||
LIABILITIES AND SHAREHOLDERS' EQUITY |
||||
Current liabilities: |
||||
Lines of credit |
$ 10,513 |
$ 10,174 |
||
Notes payable - current portion |
139,976 |
29,393 |
||
Payables to money transfer beneficiaries |
- |
12,343 |
||
Accounts payable and accrued liabilities |
176,423 |
167,700 |
||
Settlement processing obligations |
170,737 |
106,934 |
||
Liabilities of discontinued operations |
32,738 |
- |
||
Income taxes payable |
12,291 |
9,633 |
||
Total current liabilities |
542,678 |
336,177 |
||
Notes payable |
307,298 |
167,610 |
||
Deferred income taxes |
59,133 |
76,405 |
||
Other long-term liabilities |
26,326 |
19,009 |
||
Total liabilities |
935,435 |
599,201 |
||
Commitments and contingencies |
||||
Redeemable noncontrolling interest |
99,038 |
399,377 |
||
Shareholders' equity: |
||||
Preferred stock, no par value; 5,000,000 shares authorized and none issued |
- |
- |
||
Common stock, no par value; 200,000,000 shares authorized; 81,597,227 |
||||
and 80,445,009 shares issued and outstanding at February 28, 2010 and May 31, 2009, respectively |
- |
- |
||
Paid-in capital |
442,362 |
405,241 |
||
Retained earnings |
513,068 |
273,090 |
||
Accumulated other comprehensive loss |
(20,438) |
(10,901) |
||
Total Global Payments Inc. shareholders' equity |
934,992 |
667,430 |
||
Noncontrolling interest |
10,203 |
10,813 |
||
Total equity |
945,195 |
678,243 |
||
Total liabilities and equity |
$ 1,979,668 |
$ 1,676,821 |
||
Presentation of prior year amounts have been adjusted to retrospectively conform with FASB guidance on noncontrolling interests. |
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SCHEDULE 5 UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS GLOBAL PAYMENTS INC. AND SUBSIDIARIES |
|||||||
(In thousands) |
|||||||
Nine Months Ended February 28, |
|||||||
2010 |
2009 |
||||||
Cash flows from operating activities: |
|||||||
Net income including noncontrolling interests |
$ 180,078 |
$ 27,376 |
|||||
Adjustments to reconcile net income to net cash provided by operating activities: |
|||||||
Depreciation and amortization of property and equipment |
25,798 |
27,175 |
|||||
Amortization of acquired intangibles |
24,627 |
23,222 |
|||||
Share-based compensation expense |
11,843 |
10,954 |
|||||
Provision for operating losses and bad debts |
18,713 |
20,256 |
|||||
Deferred income taxes |
(21,023) |
(3,419) |
|||||
Estimated loss on disposal of discontinued operations |
15,770 |
- |
|||||
Impairment of identified intangible assets |
- |
147,664 |
|||||
Other, net |
947 |
(87) |
|||||
Changes in operating assets and liabilities, net of the effects of acquisitions: |
|||||||
Accounts receivable |
1,942 |
(8,856) |
|||||
Claims receivable |
(11,552) |
(13,879) |
|||||
Settlement processing assets and obligations, net |
51,930 |
28,818 |
|||||
Inventory |
(6,785) |
(2,314) |
|||||
Prepaid expenses and other assets |
(2,474) |
6,832 |
|||||
Payables to money transfer beneficiaries |
(532) |
(446) |
|||||
Accounts payable and accrued liabilities |
25,607 |
2,692 |
|||||
Income taxes payable |
3,308 |
2,789 |
|||||
Net cash provided by operating activities |
318,197 |
268,777 |
|||||
Cash flows from investing activities: |
|||||||
Business and intangible asset acquisitions |
(17,059) |
(454,279) |
|||||
Capital expenditures |
(36,520) |
(25,458) |
|||||
Net increase in financing receivables |
(649) |
- |
|||||
Proceeds from sale of investment and contractual rights |
297 |
6,796 |
|||||
Net cash used in investing activities |
(53,931) |
(472,941) |
|||||
Cash flows from financing activities: |
|||||||
Net borrowings on lines of credit |
339 |
2,583 |
|||||
Proceeds from issuance of notes payable |
304,964 |
200,000 |
|||||
Principal payments under notes payable |
(50,958) |
(10,000) |
|||||
Acquisition of redeemable noncontrolling interests |
(307,675) |
- |
|||||
Proceeds from stock issued under share-based compensation plans |
20,699 |
7,961 |
|||||
Tax benefit from share-based compensation plans |
4,579 |
2,421 |
|||||
Dividends paid |
(4,877) |
(4,808) |
|||||
Contribution from noncontrolling interest holder |
- |
358 |
|||||
Distribution to noncontrolling interests |
(18,461) |
(23,258) |
|||||
Net cash (used in) provided by financing activities |
(51,390) |
175,257 |
|||||
Effect of exchange rate changes on cash |
1,965 |
(39,560) |
|||||
Increase (decrease) in cash and cash equivalents |
214,841 |
(68,467) |
|||||
Cash and cash equivalents, beginning of period |
426,935 |
456,060 |
|||||
Cash and cash equivalents of discontinued operations |
(52,156) |
- |
|||||
Cash and cash equivalents, end of period |
$ 589,620 |
$ 387,593 |
|||||
Presentation of prior year amounts have been adjusted to retrospectively conform with FASB guidance on noncontrolling interests. |
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SCHEDULE 6 CONSTANT CURRENCY SUMMARY GLOBAL PAYMENTS INC. AND SUBSIDIARIES |
|||||||||||
(In millions, except per share data) |
|||||||||||
Q3 FY10 |
% change |
YTD FY10 |
% change |
||||||||
Actual |
Q3 FY09 |
Actual |
YTD FY09 |
||||||||
Fiscal 2010 Revenues |
|||||||||||
Constant currency(1) |
$ 381 |
6% |
$ 1,215 |
11% |
|||||||
Foreign currency impact(2) |
18 |
5% |
2 |
0% |
|||||||
Revenues from continuing operations |
$ 399 |
11% |
$ 1,217 |
11% |
|||||||
Fiscal 2010 Diluted Earnings Per Share |
|||||||||||
Constant currency(1) |
$ 0.51 |
18% |
$ 1.92 |
16% |
|||||||
Foreign currency impact(2) |
0.07 |
17% |
0.04 |
2% |
|||||||
Diluted EPS from continuing operations |
$ 0.58 |
35% |
$ 1.96 |
17% |
|||||||
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’s judgment of particular items, and may not be comparable to similarly titled measures reported by other companies. (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. |
|||||||||||
SCHEDULE 7 RECONCILIATION OF CONTINUING OPERATIONS TO FISCAL YEAR 2009 GLOBAL PAYMENTS INC. AND SUBSIDIARIES |
||||||||||||||
For Year Ended May 31, |
2009 |
2010 |
2010 |
|||||||||||
(in millions, except per share data) |
Actual |
Expectations |
Growth Rates |
|||||||||||
(Unaudited) |
||||||||||||||
Revenues |
$ 1,602 |
-- |
-- |
-- |
-- |
|||||||||
Money Transfer - discontinued operations |
139 |
-- |
-- |
-- |
-- |
|||||||||
Adjusted Revenues |
$ 1,463 |
$ 1,615 |
$ 1,625 |
10% |
11% |
|||||||||
Diluted earnings per share as previously reported |
$ 0.46 |
-- |
-- |
-- |
-- |
|||||||||
Diluted loss per share as a result of impairment - discontinued ops(1) |
$ 1.77 |
-- |
-- |
-- |
-- |
|||||||||
Normalized diluted earnings per share |
$ 2.23 |
-- |
-- |
-- |
-- |
|||||||||
Normalized earnings from Money Transfer - discontinued operations |
0.13 |
-- |
-- |
-- |
-- |
|||||||||
Diluted earnings from continuing operations per share |
$ 2.10 |
$ 2.49 |
$ 2.54 |
19% |
21% |
|||||||||
As a result of the agreement to sell the money transfer businesses, ASC 205-20, Discontinued Operations requires classification of the money transfer businesses as held for sale and the results of operations as discontinued. Previously reported results will be reclassified in future financial statements. The earnings per share calculation above reflects this reclassification. |
||||||||||||||
(1) Impairment charges consist of goodwill and other intangible asset impairments in the Money Transfer segment. Also reflects the related income tax benefit and share dilution. This impairment will be included in discontinued operations along with the earnings from Money Transfer for a GAAP diluted loss from discontinued operations per share of $1.64. |
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SOURCE Global Payments Inc.
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