For Immediate Release
Contact: Jane M. Forbes
404-728-2719 Voice
404-728-3216 Fax
investor.relations@globalpay.com
Global Payments Reports Third Quarter Earnings
ATLANTA, March 19, 2003 — Global Payments Inc. (NYSE: GPN) today announced results for the third quarter of fiscal 2003 ended February 28, 2003. Revenue grew 8% to $124.6 million compared to $115.3 million in the prior year. Net income grew 18% to $12.1 million and diluted earnings per share grew 19% to $0.32 compared to $10.3 million and $0.27 in the prior year, respectively.
For the nine months ended February 28, 2003, revenue grew 12% to $381.8 million compared to $341.9 million in the prior year. Our first quarter fiscal 2002 GAAP results included a $24.6 million trademark impairment charge (or $16.0 million after-tax) relating to a change in accounting principle, as explained in our 2002 Form 10-K. If we exclude this item from the 2002 results, our net income for the nine months ended February 28, 2003 grew 16% to $40.3 million compared to prior year net income of $34.8 million, and diluted earnings per share grew 16% to $1.07 compared to prior year diluted earnings per share of $0.92.
“We are pleased to announce another quarter of strong revenue and earnings growth. Our revenue results were driven by our ISO (Independent Sales Organization) and direct sales channels. Both of these channels continue to penetrate the U.S. market, while our direct channel continues to grow in the Canadian market. Additionally, we continue to achieve improvements in operating income margin due to our acquisition integration efforts and cost reduction programs. Given our results for this fiscal year through the third quarter, we are reaffirming our fiscal 2003 annual revenue guidance of $495 million to $514 million and we are raising our annual diluted earnings per share guidance from $1.35 to $1.41 to $1.39 to $1.42,” said Paul R. Garcia, Chairman, President and CEO.
Global Payments will hold a conference call on March 20, 2003 at 10:30 a.m. EST to discuss these financial results. The conference call can be accessed by calling 1-800-288-8961 (U.S.) or 1-612-332-0523 (internationally), or via Web cast at www.globalpaymentsinc.com. A replay of the call will be available on the Global Payments Web site through April 3, 2003.
— More —
Page 2—Global Payments Reports Third Quarter Earnings
Global Payments Inc. (NYSE: GPN) is a leading provider of electronic transaction processing services to merchants, Independent Sales Organizations (ISOs), financial institutions, government agencies and multi-national corporations located throughout the United States, Canada, the United Kingdom and Europe. Global Payments offers a comprehensive line of payment solutions, including credit and debit cards, business-to-business purchasing cards, gift cards, Electronic Benefits Transfer (EBT) cards, check guarantee, check verification and recovery, terminal management and funds transfer services. For additional information about the company and its products and services, visit www.globalpaymentsinc.com.
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 recent Form 10-K. 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 28, |
||||||||
| 2003 |
2002 |
|||||||
| Revenues |
$ |
124,573 |
|
$ |
115,283 |
| ||
| Operating expenses: |
||||||||
| Cost of service |
|
62,682 |
|
|
64,141 |
| ||
| Sales, general and administrative |
|
40,108 |
|
|
33,147 |
| ||
|
|
102,790 |
|
|
97,288 |
| |||
| Operating income |
|
21,783 |
|
|
17,995 |
| ||
| Other income (expense): |
||||||||
| Interest and other income |
|
219 |
|
|
553 |
| ||
| Interest and other expense |
|
(1,172 |
) |
|
(882 |
) | ||
| Minority interest |
|
(1,505 |
) |
|
(1,040 |
) | ||
|
|
(2,458 |
) |
|
(1,369 |
) | |||
| Income before income taxes |
|
19,325 |
|
|
16,626 |
| ||
| Provision for income taxes |
|
7,228 |
|
|
6,351 |
| ||
| Net Income |
$ |
12,097 |
|
$ |
10,275 |
| ||
| Earnings per share: |
||||||||
| Basic |
$ |
0.33 |
|
$ |
0.28 |
| ||
| Diluted |
$ |
0.32 |
|
$ |
0.27 |
| ||
| Weighted average shares outstanding: |
||||||||
| Basic |
|
36,993 |
|
|
36,498 |
| ||
| Diluted |
|
37,894 |
|
|
38,006 |
| ||
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
| (In thousands, except per share data) |
||||||||
| Nine Months Ended February 28, |
||||||||
| 2003 |
2002 |
|||||||
| Revenues |
$ |
381,762 |
|
$ |
341,855 |
| ||
| Operating expenses: |
||||||||
| Cost of service |
|
193,963 |
|
|
186,352 |
| ||
| Sales, general and administrative |
|
116,945 |
|
|
94,039 |
| ||
|
|
310,908 |
|
|
280,391 |
| |||
| Operating income |
|
70,854 |
|
|
61,464 |
| ||
| Other income (expense): |
||||||||
| Interest and other income |
|
733 |
|
|
1,329 |
| ||
| Interest and other expense |
|
(3,380 |
) |
|
(3,120 |
) | ||
| Minority interest |
|
(3,842 |
) |
|
(3,377 |
) | ||
|
|
(6,489 |
) |
|
(5,168 |
) | |||
| Income before income taxes and cumulative effect of change in accounting principle |
|
64,365 |
|
|
56,296 |
| ||
| Provision for income taxes |
|
24,072 |
|
|
21,505 |
| ||
| Income before cumulative effect of change in accounting principle |
$ |
40,293 |
|
$ |
34,791 |
| ||
| Cumulative effect of change in accounting principle, net of $8.6M income tax benefit1 |
|
— |
|
|
(15,999 |
) | ||
| Net Income |
$ |
40,293 |
|
$ |
18,792 |
| ||
| Earnings per share: |
||||||||
| Income before cumulative effect of change in accounting principle: |
||||||||
| Basic |
$ |
1.09 |
|
$ |
0.95 |
| ||
| Diluted |
$ |
1.07 |
|
$ |
0.92 |
| ||
| Net income: |
||||||||
| Basic |
$ |
1.09 |
|
$ |
0.52 |
| ||
| Diluted |
$ |
1.07 |
|
$ |
0.50 |
| ||
| Weighted average shares outstanding: |
||||||||
| Basic |
|
36,914 |
|
|
36,477 |
| ||
| Diluted |
|
37,769 |
|
|
37,883 |
| ||
1Reflects a change in accounting principle due to a trademark impairment, which the company recorded as of June 1, 2001, as a result of the adoption of FAS 142.
UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
| (In thousands) |
||||||
| February 28, |
May 31, | |||||
| 2003 |
2002 | |||||
| Assets |
||||||
| Cash and cash equivalents |
$ |
29,368 |
$ |
19,194 | ||
| Accounts receivable, net |
|
42,645 |
|
43,576 | ||
| Claims receivable, net |
|
535 |
|
739 | ||
| Merchant processing receivable |
|
15,326 |
|
— | ||
| Other current assets |
|
12,168 |
|
15,948 | ||
| Current assets |
|
100,042 |
|
79,457 | ||
| Property and equipment, net |
|
50,455 |
|
53,643 | ||
| Goodwill |
|
152,511 |
|
151,712 | ||
| Intangible assets, net |
|
133,006 |
|
141,308 | ||
| Other assets |
|
5,478 |
|
5,298 | ||
| Total assets |
$ |
441,492 |
$ |
431,418 | ||
| Liabilities & Shareholders’ Equity |
||||||
| Line of credit |
$ |
— |
$ |
22,000 | ||
| Merchant processing payable |
|
— |
|
9,244 | ||
| Accounts payable and other accrued liabilities |
|
65,649 |
|
63,162 | ||
| Obligations under capital leases |
|
1,783 |
|
2,599 | ||
| Current liabilities |
|
67,432 |
|
97,005 | ||
| Obligations under capital leases |
|
3,536 |
|
4,711 | ||
| Other accrued liabilities |
|
8,732 |
|
8,173 | ||
| Total liabilities |
|
79,700 |
|
109,889 | ||
| Minority interest in equity of subsidiaries |
|
23,743 |
|
25,241 | ||
| Shareholders’ equity |
|
338,049 |
|
296,288 | ||
| Total liabilities & shareholders’ equity |
$ |
441,492 |
$ |
431,418 | ||
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
| (In thousands) |
||||||||
| Nine Months Ended February 28, |
||||||||
| 2003 |
2002 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net income |
$ |
40,293 |
|
$ |
18,792 |
| ||
| Non-cash items |
||||||||
| Effect of cumulative change in accounting principle |
|
— |
|
|
24,613 |
| ||
| Depreciation and amortization |
|
24,226 |
|
|
21,842 |
| ||
| Deferred income taxes |
|
— |
|
|
(9,352 |
) | ||
| Minority interest in earnings |
|
3,842 |
|
|
3,377 |
| ||
| Other, net |
|
9,238 |
|
|
4,563 |
| ||
| Changes in working capital, which provided (used) cash |
||||||||
| Merchant processing |
|
(30,877 |
) |
|
67,733 |
| ||
| Other, net |
|
7,608 |
|
|
(4,607 |
) | ||
| Net cash provided by operating activities |
|
54,330 |
|
|
126,961 |
| ||
| Cash flows from investing activities: |
||||||||
| Capital expenditures |
|
(12,707 |
) |
|
(16,052 |
) | ||
| Other long term assets |
|
— |
|
|
(5,000 |
) | ||
| Net business development activities |
|
(1,153 |
) |
|
(61,215 |
) | ||
| Net cash used in investing activities |
|
(13,860 |
) |
|
(82,267 |
) | ||
| Cash flows from financing activities: |
||||||||
| Net repayments on line of credit |
|
(22,000 |
) |
|
(25,000 |
) | ||
| Principal payments under capital leases and other notes |
|
(1,991 |
) |
|
(2,530 |
) | ||
| Net stock issued to employees under stock plans and dividends |
|
(965 |
) |
|
(932 |
) | ||
| Distributions to minority interests |
|
(5,340 |
) |
|
(4,865 |
) | ||
| Net cash used in financing activities |
|
(30,296 |
) |
|
(33,327 |
) | ||
| Increase in cash and cash equivalents |
|
10,174 |
|
|
11,367 |
| ||
| Cash and cash equivalents, beginning of period |
|
19,194 |
|
|
6,103 |
| ||
| Cash and cash equivalents, end of period |
$ |
29,368 |
|
$ |
17,470 |
| ||