Global Payments (GPN) 8-K Global Payments Reports Fourth Quarter and Fiscal 2007 Earnings

Global Payments Reports Fourth Quarter and Fiscal 2007 Earnings

ATLANTA, July 26 /PRNewswire-FirstCall/ -- Global Payments Inc. (NYSE: GPN) today announced results for its fourth quarter and fiscal year ended May 31, 2007. For the fourth quarter, revenue grew 17 percent to $280.1 million compared to $238.8 million in the prior year. Excluding the impact of current period restructuring and other charges and stock option expense, diluted earnings per share grew 10 percent to $0.45 compared to $0.41 in the prior year quarter.

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For the 2007 fiscal year, revenue grew 17 percent to $1,061.5 million compared to $908.1 million in the prior year period. Excluding the impact of stock option expense in the current period and restructuring and other charges in both periods, diluted earnings per share grew 21 percent to $1.87 from $1.54 in the prior year period.

In accordance with GAAP, the current quarter and year-to-date periods, as well as the prior year-to-date period, include certain restructuring and other charges (see attached reconciliation schedule) primarily relating to operating center consolidations announced in March 2007 and July 2005, respectively. These charges are reflected in our GAAP diluted earnings per share amounts. Additionally, both the current quarter and year-to-date periods include the recognition of stock option expenses as a result of the company's June 1, 2006 adoption of Statement of Financial Accounting Standards No. 123( R ) using the modified prospective method. For the three and twelve months ended May 31, 2007, GAAP diluted earnings per share were $0.40 and $1.75, respectively, compared to $0.41 and $1.53, respectively, in the prior year comparable periods.

Comments and Outlook

Chairman, President and CEO, Paul R. Garcia, stated, "Our solid fiscal 2007 results and accomplishments demonstrate continued success in our merchant services segment. This revenue growth was primarily driven by expansion in our domestic ISO channel, as well as the favorable impact from our July 2006 addition of our Asia-Pacific joint venture with HSBC. In addition, our Canadian merchant services channel benefited from a favorable Canadian currency exchange rate, as well as from certain card association incentives. Our merchant services segment growth also benefited from cost reductions and operating efficiencies achieved during the prior year. Lastly, our money transfer segment met our near-term expectations for the year, which reflect the continued unfavorable impact of a competitive domestic pricing environment and the year-over-year impact of strong results in our prior year."

"For our fiscal 2007 fourth quarter, our merchant services segment delivered solid results, with revenue growth improvements in both the United States and Europe. Our money transfer segment performed as expected for the fourth quarter due to a continuation of the trends discussed above. We expect our money transfer segment growth to rebound during the second half of fiscal 2008, as we annualize the impact of these trends."

"Based on these results and trends, we are providing annual fiscal 2008 revenue guidance of $1,168 million to $1,220 million. This revenue guidance reflects an expected 10 percent to 15 percent growth versus $1,061.5 million in fiscal 2007. In addition, we are providing annual fiscal 2008 diluted earnings per share guidance of $1.85 to $1.94, or 5 percent to 10 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 potential restructuring and other charges," said Garcia.

Conference Call

Global Payments will hold a conference call today, July 26, 2007 at 10:30 a.m. ET to discuss financial results and business highlights. The conference call may be accessed by calling 1-877-352-5208 (U.S.) or 1-210-234-0000 (internationally) 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 August 9, 2007.

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.

(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.

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. Among the 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, 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 state, federal or foreign laws and regulations affecting the consumer 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.

Contact: Jane M. Elliott

770-829-8234 Voice

770-829-8267 Fax

investor.relations@globalpay.com

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands, except per share data)

	Three Months Ended May 31,
	2007			2006
Revenues	$	280,100		$	238,768
Operating expenses:
Cost of service		107,326			89,062
Sales, general and administrative		118,620			97,305
Restructuring and other		3,088			-
		229,034			186,367
Operating income		51,066			52,401
Other income (expense):
Interest and other income		4,654			2,970
Interest and other expense		(2,166	)		(2,127	)
		2,488			843
Income before income taxes and minority interest		53,554			53,244
Provision for income taxes		(17,687	)		(16,960	)
Minority interest, net of tax		(2,689	)		(2,222	)
Net income	$	33,178		$	34,062
Earnings per share:
Basic	$	0.41		$	0.43
Diluted	$	0.40		$	0.41
Weighted average shares outstanding:
Basic		80,617			79,511
Diluted		82,015			82,912

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands, except per share data)
	Year Ended May 31,
	2007			2006
Revenues	$	1,061,523		$	908,056
Operating expenses:
Cost of service		414,837			358,020
Sales, general and administrative		425,509			347,070
Restructuring and other		3,088			1,878
		843,434			706,968
Operating income		218,089			201,088
Other income (expense):
Interest and other income		16,706			7,576
Interest and other expense		(8,464	)		(7,144	)
		8,242			432
Income before income taxes and minority interest		226,331			201,520
Provision for income taxes		(73,436	)		(67,522	)
Minority interest, net of tax		(9,910	)		(8,474	)
Net income	$	142,985		$	125,524
Earnings per share:
Basic	$	1.78		$	1.59
Diluted	$	1.75		$	1.53
Weighted average shares outstanding:
Basic		80,229			78,874
Diluted		81,822			82,149

CONSOLIDATED CONDENSED BALANCE SHEETS

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands)

	May 31,		May 31,
	2007		2006
	(Unaudited)
Assets
Cash and cash equivalents	$	308,872	$	218,475
Accounts receivable, net		76,168		67,476
Claims receivable, net		2,187		903
Settlement processing assets		32,853		39,671
Other current assets		24,349		21,881
Current assets		444,429		348,406
Property and equipment, net		118,495		107,977
Goodwill		451,244		387,280
Other intangible assets, net		175,620		167,182
Other assets		10,841		7,833
Total assets	$	1,200,629	$	1,018,678
Liabilities and Shareholders' Equity
Settlement processing obligations	$	20,617	$	37,942
Payable to money transfer beneficiaries		6,589		6,361
Accounts payable and other accrued  liabilities		115,671		104,606
Obligations under capital leases		-		746
Current liabilities		142,877		149,655
Other long-term liabilities		85,043		85,804
Total liabilities		227,920		235,459
Minority interest in equity of subsidiaries		14,933		12,996
Shareholders' equity		957,776		770,223
Total liabilities and shareholders' equity	$	1,200,629	$	1,018,678

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands)

	Year Ended May 31,
	2007			2006
	(Unaudited)
Cash flows from operating activities:
Net income	$	142,985		$	125,524
Non-cash items
Restructuring and other charges		1,145			-
Depreciation and amortization		40,365			40,489
Minority interest in earnings		9,214			8,474
Other, net		36,227			29,425
Changes in working capital, which  (used) provided cash
Settlement processing		(13,937	)		31,198
Other, net		(24,867	)		(337	)
Net cash provided by operating activities		191,132			234,773
Cash flows from investing activities:
Capital expenditures		(35,374	)		(25,038	)
Business acquisitions, net of cash acquired		(81,261	)		(4,917	)
Net cash used in investing  activities		(116,635	)		(29,955	)
Cash flows from financing activities:
Net payments on lines of credit		-			(58,606	)
Principal payments under capital leases and other notes		(746	)		(3,042	)
Net stock issued to employees under stock plans and dividends		20,385			17,586
Distributions to minority interests		(8,753	)		(10,212	)
Net cash provided by (used  in) financing activities		10,886			(54,274	)
Effect of exchange rate changes on cash		5,014			18,952
Increase in cash and cash equivalents		90,397			169,496
Cash and cash equivalents, beginning of period		218,475			48,979
Cash and cash equivalents, end of period	$	308,872		$	218,475

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

Reconciliation to Exclude Stock Option Expenses and Restructuring and

Other Charges from Normalized Results

(In thousands, except per share data)

	Three Months Ended May 31,
	2007												2006
							Restructuring
				Stock			and
	Normalized			Options(1)			Other(2)			GAAP			GAAP
Revenues	$	280,100		$	-		$	-		$	280,100		$	238,768
Operating expenses:					-			-
Cost of service		107,326			-			-			107,326			89,062
Sales, general and administrative		116,608			2,012			-			118,620			97,305
Restructuring and other		-			-			3,088			3,088			-
		223,934			2,012			3,088			229,034			186,367
Operating income		56,166			(2,012	)		(3,088	)		51,066			52,401
Other income/(expense):
Interest and other income		4,654			-			-			4,654			2,970
Interest and other expense		(2,166	)		-			-			(2,166	)		(2,127	)
		2,488			-			-			2,488			843
Income before income taxes		58,654			(2,012	)		(3,088	)		53,554			53,244
Provision for income taxes		(19,361	)		672			1,002			(17,687	)		(16,960	)
Minority interest, net of tax		(2,689	)		-			-			(2,689	)		(2,222	)
Net income	$	36,604		$	(1,340	)	$	(2,086	)	$	33,178		$	34,062
Diluted shares		82,015			-			-			82,015			82,912
Diluted earnings per share	$	0.45		$	(0.02	)	$	(0.03	)	$	0.40		$	0.41

(1) Relates to the company's adoption of SFAS 123( R ) on June 1, 2006, which requires the recognition of compensation expense resulting from employee stock options. 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) Restructuring and other charges consist of employee terminationbenefits, facility closure costs, and fixed asset abandonment relating to various restructuring initiatives. Also reflects the related income tax benefit using the company's effective tax rate, as described above.

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

Reconciliation to Exclude Stock Option Expenses and Restructuring and Other Charges from Normalized Results

(In thousands, except per share data)

	Year Ended May 31, 2007
							Restructuring
				Stock			and
	Normalized			Options(1)			Other(2)			GAAP
Revenues	$	1,061,523		$	-		$	-		$	1,061,523
Operating expenses:
Cost of service		414,837			-			-			414,837
Sales, general and administrative		413,169			12,340			-			425,509
Restructuring and other		-			-			3,088			3,088
		828,006			12,340			3,088			843,434
Operating income		233,517			(12,340	)		(3,088	)		218,089
Other income/(expense):
Interest and other income		16,706			-			-			16,706
Interest and other expense		(8,464	)		-			-			(8,464	)
		8,242			-			-			8,242
Income before income taxes		241,759			(12,340	)		(3,088	)		226,331
Provision for income taxes		(78,442	)		4,004			1,002			(73,436	)
Minority interest, net of tax		(9,910	)		-			-			(9,910	)
Net income	$	153,407		$	(8,336	)	$	(2,086	)	$	142,985
Diluted shares		81,822			-			-			81,822
Diluted earnings per share(3)	$	1.87		$	(0.10	)	$	(0.02	)	$	1.75

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

Reconciliation to Exclude Stock Option Expenses and Restructuring and Other Charges from Normalized Results

(In thousands, except per share data)

	Year Ended May 31, 2006
	Normalized			Restructuring(2)			GAAP
Revenues	$	908,056		$	-		$	908,056
Operating expenses:
Cost of service		358,020			-			358,020
Sales, general and administrative		347,070			-			347,070
Restructuring and other		-			1,878			1,878
		705,090			1,878			706,968
Operating income		202,966			(1,878	)		201,088
Other income/(expense):
Interest and other income		7,576			-			7,576
Interest and other expense		(7,144	)		-			(7,144	)
		432			-			432
Income before income taxes		203,398			(1,878	)		201,520
Provision for income taxes		(68,151	)		629			(67,522	)
Minority interest, net of tax		(8,474	)		-			(8,474	)
Net income	$	126,773		$	(1,249	)	$	125,524
Diluted shares		82,149			-			82,149
Diluted earnings per share(3)	$	1.54		$	(0.01	)	$	1.53

(1) Relates to the company's adoption of SFAS 123( R ) on June 1, 2006, which requires the recognition of compensation expense resulting from employee stock options. Also reflects the related income tax benefit using the company's effective tax rate, which is defined as theprovision for income taxes divided by income before income taxes and minority interest.

(2) Restructuring and other charges consist of employee termination benefits, facility closure costs, and fixed asset abandonment relating to various restructuring initiatives. Also reflects the related income tax benefit using the company's effective tax rate, as described above.

(3) The $0.02 impact of restructuring and other charges for fiscal year 2007 differs from the $0.03 impact shown for the fourth quarter of fiscal 2007 due to rounding on normalized and GAAP diluted earnings per share results.

SEGMENT INFORMATION

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands)

	Three Months Ended May 31,
	2007			2006
Revenues
Domestic direct	$	154,166		$	130,618
Canada		54,256			51,597
Asia-Pacific		13,377			-
Central and Eastern Europe		12,457			10,810
Domestic indirect and other		11,695			12,213
Merchant services		245,951			205,238
Domestic		29,323			30,361
Europe		4,826			3,169
Money transfer		34,149			33,530
Total revenues	$	280,100		$	238,768
Operating income
Merchant services	$	63,395		$	56,640
Money transfer		3,481			6,602
Corporate(1)		(12,722	)		(10,841	)
Restructuring and other		(3,088	)		-
Operating income	$	51,066		$	52,401

(1) Fiscal 2007 includes compensation expense resulting from employee stock options as a result of our adoption of SFAS 123R. Fiscal 2006 does not include these expenses.

SEGMENT INFORMATION

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands)

	Year Ended May 31,
	2007			2006
Revenues
Domestic direct	$	558,026		$	481,273
Canada		224,570			208,126
Asia-Pacific		48,449			-
Central and Eastern Europe		51,224			47,114
Domestic indirect and other		46,873			51,987
Merchant services		929,142			788,500
Domestic		115,416			109,067
Europe		16,965			10,489
Money transfer		132,381			119,556
Total revenues	$	1,061,523		$	908,056
Operating income
Merchant services	$	259,670		$	224,221
Money transfer		14,476			18,741
Corporate(1)		(52,969	)		(39,996	)
Restructuring and other		(3,088	)		(1,878	)
Operating income	$	218,089		$	201,088

(1) Fiscal 2007 includes compensation expense resulting from employee stock options as a result of our adoption of SFAS 123R. Fiscal 2006 does not include these expenses.