Exhibit 99.1
GLOBAL PAYMENTS REPORTS FIRST QUARTER EARNINGS
ATLANTA, Sept. 29 /PRNewswire-FirstCall/ -- Global Payments Inc. (NYSE: GPN)
today announced results for its first quarter ended August 31, 2006. For the
first quarter, revenue grew 16 percent to $260.3 million compared to $224.5
million in the prior year. Excluding the impact of current period stock option
expense and prior year restructuring charges, net income grew 41 percent to
$44.2 million compared to $31.3 million in the prior year quarter, and diluted
earnings per share grew 38 percent to $0.54 compared to $0.39 in the prior year
quarter.
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In accordance with GAAP, prior period net income and diluted earnings per
share include certain restructuring charges (see attached reconciliation
schedule) relating to an operating center consolidation, which was announced in
July 2005. These charges consisted of employee termination benefits.
Additionally, the current fiscal quarter includes 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. First quarter fiscal 2007 GAAP net income and diluted earnings per share
were $41.5 million and $0.51, respectively, compared to $30.7 million and $0.38,
respectively, in the prior year quarter.
Comments and Outlook
Chairman, President and CEO, Paul R. Garcia, stated, "We are very pleased
with our first quarter fiscal 2007 financial results, which were driven
primarily by strong revenue and operating margin growth in our merchant services
segment. Our domestic ISO channel remains one of the fastest growing areas of
the company, with outstanding expansion in the quarter. We are also delighted
with the progress made in our new HSBC joint venture and continue to move
forward with our sales strategy to take advantage of the strong growth
opportunities present in the Asia-Pacific region. We also remain very pleased
with our money transfer segment, which achieved solid revenue growth of 18%
during the quarter. Based on our overall strong results, we are raising the low
end of our annual fiscal 2007 revenue guidance to $1,057 million, and
reaffirming the high end of this guidance of $1,084 million. This revenue
guidance reflects an expected 16 percent to 19 percent growth versus $908
million in fiscal 2006. In addition, we are raising our annual fiscal 2007
diluted earnings per share guidance to a range of $1.79 to $1.85, excluding the
impact of stock option expenses as a result of our adoption of FAS 123R, for an
expected growth of 16 percent to 20 percent versus $1.54 in fiscal 2006." (1)
Including the impact of these stock option expenses, our annual fiscal 2007
diluted earnings per share guidance is $1.69 to $1.75.
Conference Call
Global Payments will hold a conference call today, September 29, 2006 at
10:30 a.m. ET to discuss financial results and business highlights. The
conference call may be accessed by calling 1-888-791-2132 (U.S.) or
1-517-623-4000 (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 October 13, 2006.
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. 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 2006 diluted earnings per share was $1.53 on a GAAP basis, which
includes restructuring charges equivalent to $0.01 in diluted earnings per
share.
This announcement and comments made by Global Payments' management during
the conference call may contain forward-looking statements pursuant to the
"safe-harbor" provisions of the Private Securities Litigation Reform Act of
1995. These forward looking statements involve risks and uncertainties such as
product demand, market and customer acceptance, the effect of economic
conditions, competition, pricing, development difficulties, foreign currency
risks, costs of capital, continued certification by credit card associations,
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 August 31,
-----------------------------
2006 2005
------------- -------------
Revenues $ 260,308 $ 224,456
Operating expenses:
Cost of service 98,190 93,183
Sales, general and administrative 98,591 79,876
Restructuring - 873
196,781 173,932
Operating income 63,527 50,524
Other income (expense):
Interest and other income 3,596 914
Interest and other expense (2,162) (1,520)
1,434 (606)
Income before income taxes and minority
interest 64,961 49,918
Provision for income taxes (20,909) (17,022)
Minority interest, net of tax (2,543) (2,158)
Net income $ 41,509 $ 30,738
Earnings per share:
Basic $ 0.52 $ 0.39(1)
Diluted $ 0.51 $ 0.38(1)
Weighted average shares outstanding:
Basic 79,734 78,024(1)
Diluted 81,576 81,014(1)
(1) All share and per share amounts reflect the retroactive effect of the
company's two-for-one stock split, which was completed through a stock
dividend that was distributed on October 28, 2005.
CONSOLIDATED CONDENSED BALANCE SHEETS
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands)
August 31, May 31,
2006 2006
----------- -----------
(Unaudited)
Assets
Cash and cash equivalents $ 168,578 $ 218,475
Accounts receivable, net 76,157 67,476
Claims receivable, net 1,592 903
Settlement processing assets 37,979 39,671
Other current assets 28,524 21,881
Current assets 312,830 348,406
Property and equipment, net 109,396 107,977
Goodwill 434,198 387,280
Other intangible assets, net 182,234 167,182
Other assets 12,362 7,833
Total assets $ 1,051,020 $ 1,018,678
Liabilities and Shareholders' Equity
Lines of credit $ 49 $ -
Settlement processing obligations 29,406 37,942
Payable to money transfer beneficiaries 5,828 6,361
Accounts payable and other accrued
liabilities 96,649 104,606
Obligations under capital leases-
current portion 397 746
Current liabilities 132,329 149,655
Other long-term liabilities 82,481 85,804
Total liabilities 214,810 235,459
Minority interest in equity of subsidiaries 15,320 12,996
Shareholders' equity 820,890 770,223
Total liabilities and
shareholders' equity $ 1,051,020 $ 1,018,678
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands)
Three Months Ended August 31,
-----------------------------
2006 2005
------------ ------------
Cash flows from operating activities:
Net income $ 41,509 $ 30,738
Non-cash items
Depreciation and amortization 9,805 10,396
Minority interest in earnings 2,651 2,158
Other, net 9,554 8,368
Changes in working capital, which
(used) provided cash
Settlement processing (7,572) 14,597
Other, net (33,587) (12,198)
Net cash provided by
operating activities 22,360 54,059
Cash flows from investing activities:
Capital expenditures (6,929) (5,206)
Business acquisitions, net of cash acquired (67,195) (480)
Net cash used in investing activities (74,124) (5,686)
Cash flows from financing activities:
Net borrowings (payments) on line of credit 49 (57,673)
Principal payments under capital
leases and other notes (349) (1,012)
Net stock issued to employees
under stock plans and dividends 5,585 (1,016)
Distributions to minority interests (2,530) (2,818)
Net cash provided by (used
in) financing activities 2,755 (62,519)
Effect of exchange rate changes on cash (888) 621
Decrease in cash and cash equivalents (49,897) (13,525)
Cash and cash equivalents, beginning of period 218,475 48,979
Cash and cash equivalents, end of period $ 168,578 $ 35,454
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
Reconciliation to Exclude Restructuring and Stock Option Expenses from
Normalized Results
(In thousands, except per share data)
Three Months Ended August 31,
--------------------------------------------------------------------------------------
2006 2005
----------------------------------------- -----------------------------------------
Stock Restruct-
Normalized Options(1) GAAP Normalized uring(2) GAAP
----------- ----------- ----------- ----------- ----------- -----------
Revenue $ 260,308 $ - $ 260,308 $ 224,456 $ - $ 224,456
Operating expenses:
Cost of service 98,190 - 98,190 93,183 - 93,183
Sales, general and
administrative 94,588 4,003 98,591 79,876 - 79,876
Restructuring - - - - 873 873
192,778 4,003 196,781 173,059 873 173,932
Operating income 67,530 (4,003) 63,527 51,397 (873) 50,524
Other income/(expense)
Interest and other
income 3,596 - 3,596 914 - 914
Interest and other
expense (2,162) - (2,162) (1,520) - (1,520)
1,434 - 1,434 (606) - (606)
Income before income taxes 68,964 (4,003) 64,961 50,791 (873) 49,918
Provision for income taxes (22,198) 1,289 (20,909) (17,320) 298 (17,022)
Minority interest,
net of tax (2,543) - (2,543) (2,158) - (2,158)
Net income $ 44,223 $ (2,714) $ 41,509 $ 31,313 $ (575) $ 30,738
Basic shares 79,734 - 79,734 78,024 - 78,024
Basic earnings per share $ 0.55 $ (0.03) $ 0.52 $ 0.40 $ (0.01) $ 0.39
Diluted shares 81,576 - 81,576 81,014 - 81,014
Diluted earnings per share $ 0.54 $ (0.03) $ 0.51 $ 0.39 $ (0.01) $ 0.38
(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 amount consists of employee termination benefits relating to
an operating center consolidation. Also reflects the related income tax
benefit using the company's effective tax rate, as described above.
SEGMENT INFORMATION
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands)
Three Months Ended August 31,
------------------------------
2006 2005
------------- -------------
Revenues
Domestic direct $ 135,442 $ 115,265
Canada 60,918 54,278
Central and Eastern Europe 13,275 12,727
Asia-Pacific 5,486 -
Domestic indirect and other(1) 12,195 14,168
Merchant services(1) 227,316 196,438
Domestic 29,302 25,701
Europe 3,690 2,317
Money transfer(1) 32,992 28,018
Total revenues $ 260,308 $ 224,456
Operating income
Merchant services $ 72,961 $ 56,248
Money transfer 4,679 4,579
Corporate(2) (14,113) (9,430)
Restructuring - (873)
Operating income $ 63,527 $ 50,524
(1) Prior to fiscal 2006, the company's legacy funds transfer revenue was
historically reported in "Money transfer". Beginning in the fourth quarter
of fiscal 2006, such revenues were reclassified to "Merchant services"
under the "Domestic indirect and other" category. All prior period amounts
were reclassified for this change. With this change, the company's "Money
transfer" segment only includes its consumer money transfer service
offerings.
(2) Fiscal 2007 includes compensation expense resulting from employee stock
options as a result of our adoption of FAS 123R. Fiscal 2006 does not
include these expenses.
SOURCE Global Payments Inc.
-0- 09/29/2006
/CONTACT: Jane M. Elliott of Global Payments Inc., +1-770-829-8234, Fax,
+1-770-829-8267, or investor.relations@globalpay.com/
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