Exhibit 99.1
For Immediate Release
Contact: Jane M. Forbes |
770-829-8234 Voice |
770-829-8267 Fax |
investor.relations@globalpay.com |
Global Payments Reports Fourth Quarter and Fiscal 2004 Earnings
ATLANTA, July 21, 2004 Global Payments Inc. (NYSE: GPN) today announced results for the fourth quarter and fiscal year ended May 31, 2004. For the fourth quarter, revenue grew 35 percent to $181.8 million compared to $134.3 million in the prior year. This includes $30.6 million in revenue recorded in the current quarter as a result of the companys DolEx and MUZO acquisitions, which were announced earlier during the 2004 fiscal year. Excluding restructuring charges and a gain on the sale of an investment, net income grew 30 percent to $18.0 million compared to $13.8 million in the prior year quarter and diluted earnings per share grew 28 percent to $0.46 compared to $0.36 in the prior year quarter.
For the fiscal year, revenue grew 22 percent to $629.3 million compared to $516.1 million in the prior year period. Excluding restructuring charges and a gain on the sale of an investment, net income grew 26 percent to $68.1 million from $54.1 million in the prior year period and diluted earnings per share grew 22 percent to $1.75 from $1.43 in the prior year period.
The above results exclude restructuring and other items to more clearly reflect comparative operating performance. In accordance with GAAP, current and prior period net income and diluted earnings per share include these items (see attached reconciliation schedules). Fourth quarter GAAP net income and diluted earnings per share were $15.2 million and $0.39, respectively, compared to $13.0 million and $0.34, respectively in the prior year. For the 2004 fiscal year, GAAP net income and diluted earnings per share were $62.4 million and $1.60, respectively, compared to $53.3 million and $1.41, respectively in the prior year.
During the 2004 fiscal fourth quarter, the company recognized a $4.9 million ($3.1 million, net of tax) restructuring charge. This includes a $3.1 million non-cash charge relating to employee termination benefits. The remainder of this charge relates to Globals consolidation efforts of three operating facilities and other functions into other existing locations, which was announced in the 2003 fiscal fourth quarter. As of May 31, 2004, these consolidation efforts were substantially complete. In total, the company spent $8.8 million on this plan, consistent with previous estimates. In addition during the quarter, the company recorded a gain on sale of investment in the Interest and other income line for $0.6 million, or $0.01 per share.
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Global Payments Reports Fourth Quarter and Fiscal 2004 Earnings
July 21, 2004
Page 2
Comments and Outlook
Chairman, President and CEO, Paul R. Garcia, stated, We are delighted with yet another year of solid financial results. We are very pleased with our DolEx and MUZO acquisitions and look forward to the ongoing growth opportunities provided in both of these markets. We also remain focused on expanding our core domestic direct channels and are encouraged by the strong growth rates we have achieved in this area. Finally, we continue to gain operating leverage through greater economies of scale and the ongoing consolidation of operating functions. For our fiscal 2005, we are providing annual revenue guidance of $722 million to $743 million, or 15% to 18% growth versus $629 million in fiscal 2004 and annual diluted earnings per share guidance of $1.96 to $2.05 for growth of 12% to 17% versus diluted earnings per share of $1.75 in fiscal 2004, excluding restructuring and other items.1
Conference Call
Global Payments will hold a conference call on July 22, 2004 at 10:30 a.m. EDT to discuss financial results and business highlights. The conference call can be accessed by calling 1-888-428-4474 (U.S.) or 1-651-291-0900 (internationally), or via Web cast at www.globalpaymentsinc.com. A replay of the call will be available on the Global Payments Web site through August 5, 2004.
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 and Europe. Global Payments offers a comprehensive line of processing solutions for credit and debit cards, business-to-business purchasing cards, gift cards, check guarantee, check verification and recovery, terminal management and money transfer services. For more information about the company and its services, visit www.globalpaymentsinc.com.
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Global Payments Reports Fourth Quarter and Fiscal 2004 Earnings
July 21, 2004
Page 3
1 The fiscal 2004 diluted earnings per share of $1.60 on a GAAP basis reflects restructuring and other items of $5.7 million, net of tax, or $0.15 diluted earnings per share.
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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 Companys SEC filings, including, but not limited to, our most recent report on Form 10-Q. 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 May 31, |
||||||||
2004 |
2003 |
|||||||
Revenues |
$ | 181,848 | $ | 134,322 | ||||
Operating expenses: |
||||||||
Cost of service |
88,144 | 66,327 | ||||||
Sales, general and administrative |
59,575 | 44,328 | ||||||
Restructuring and other |
4,945 | 1,257 | ||||||
152,664 | 111,912 | |||||||
Operating income |
29,184 | 22,410 | ||||||
Other income (expense): |
||||||||
Interest and other income |
1,139 | 451 | ||||||
Interest and other expense |
(2,553 | ) | (917 | ) | ||||
Minority interest |
(3,421 | ) | (1,165 | ) | ||||
(4,835 | ) | (1,631 | ) | |||||
Income before income taxes |
24,349 | 20,779 | ||||||
Provision for income taxes |
9,106 | 7,771 | ||||||
Net income |
$ | 15,243 | $ | 13,008 | ||||
Earnings per share: |
||||||||
Basic |
$ | 0.40 | $ | 0.35 | ||||
Diluted |
$ | 0.39 | $ | 0.34 | ||||
Weighted average shares outstanding: |
||||||||
Basic |
37,800 | 37,085 | ||||||
Diluted |
39,320 | 37,986 |
CONSOLIDATED STATEMENTS OF INCOME
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands, except per share data)
Twelve Months Ended May 31, |
||||||||
2004 |
2003 |
|||||||
Revenues |
$ | 629,320 | $ | 516,084 | ||||
Operating expenses: |
||||||||
Cost of service |
289,353 | 260,290 | ||||||
Sales, general and administrative |
217,418 | 161,272 | ||||||
Restructuring |
9,648 | 1,257 | ||||||
516,419 | 422,819 | |||||||
Operating income |
112,901 | 93,265 | ||||||
Other income (expense): |
||||||||
Interest and other income |
2,358 | 1,183 | ||||||
Interest and other expense |
(6,525 | ) | (4,296 | ) | ||||
Minority interest |
(8,985 | ) | (5,008 | ) | ||||
(13,152 | ) | (8,121 | ) | |||||
Income before income taxes |
99,749 | 85,144 | ||||||
Provision for income taxes |
37,306 | 31,844 | ||||||
Net income |
$ | 62,443 | $ | 53,300 | ||||
Earnings per share: |
||||||||
Basic |
$ | 1.66 | $ | 1.44 | ||||
Diluted |
$ | 1.60 | $ | 1.41 | ||||
Weighted average shares outstanding: |
||||||||
Basic |
37,533 | 36,957 | ||||||
Diluted |
38,955 | 37,824 |
CONSOLIDATED CONDENSED BALANCE SHEETS
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands)
May 31, 2004 |
May 31, 2003 | |||||
Assets |
||||||
Cash and cash equivalents |
$ | 34,472 | $ | 38,010 | ||
Accounts receivable, net |
47,414 | 44,929 | ||||
Claims receivable, net |
761 | 608 | ||||
Settlement processing receivable, net |
95,233 | 68,070 | ||||
Other current assets |
25,324 | 10,486 | ||||
Current assets |
203,204 | 162,103 | ||||
Property and equipment, net |
97,482 | 51,785 | ||||
Goodwill |
342,012 | 161,216 | ||||
Intangible assets, net |
182,658 | 137,898 | ||||
Other assets |
7,539 | 5,132 | ||||
Total assets |
$ | 832,895 | $ | 518,134 | ||
Liabilities & Shareholders Equity |
||||||
Line of credit |
$ | 122,000 | $ | | ||
Line of credit with related party |
83,109 | 33,900 | ||||
Accounts payable and other accrued liabilities |
79,773 | 61,405 | ||||
Obligations under capital leases |
1,190 | 1,456 | ||||
Current liabilities |
286,072 | 96,761 | ||||
Notes payable |
10,886 | | ||||
Obligations under capital leases, net of current portion |
2,061 | 3,251 | ||||
Other accrued liabilities |
61,324 | 28,455 | ||||
Total liabilities |
360,343 | 128,467 | ||||
Minority interest in equity of subsidiaries |
23,130 | 23,241 | ||||
Shareholders equity |
449,422 | 366,426 | ||||
Total liabilities & shareholders equity |
$ | 832,895 | $ | 518,134 | ||
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands)
Twelve Months Ended May 31, |
||||||||
2004 |
2003 |
|||||||
Cash flows from operating activities: |
||||||||
Net income |
$ | 62,443 | $ | 53,300 | ||||
Non-cash items |
||||||||
Restructuring and other charges |
4,437 | | ||||||
Depreciation and amortization |
35,540 | 32,061 | ||||||
Deferred income taxes |
(1,737 | ) | 10,968 | |||||
Minority interest in earnings |
8,985 | 5,008 | ||||||
Other, net |
9,778 | 13,848 | ||||||
Changes in working capital, which provided (used) cash |
||||||||
Settlement processing, net |
(36,342 | ) | (89,348 | ) | ||||
Other, net |
9,066 | 3,340 | ||||||
Net cash provided by operating activities |
92,170 | 29,177 | ||||||
Cash flows from investing activities: |
||||||||
Capital expenditures |
(24,564 | ) | (17,926 | ) | ||||
Net business development activities |
(122,276 | ) | (1,153 | ) | ||||
Net cash used in investing activities |
(146,840 | ) | (19,079 | ) | ||||
Cash flows from financing activities: |
||||||||
Net borrowings on (repayments of) line of credit |
122,000 | (22,000 | ) | |||||
Net borrowings on line of credit with related party and restricted for merchant funding |
49,209 | 33,900 | ||||||
Principal payments on notes payable issued in consideration of acquisition |
(114,229 | ) | | |||||
Principal payments under capital leases and other long-term debt |
(2,853 | ) | (2,603 | ) | ||||
Net stock issued to employees under stock plans and dividends paid |
5,433 | 47 | ||||||
Distributions to minority interests |
(9,447 | ) | (7,008 | ) | ||||
Net cash provided by financing activities |
50,113 | 2,336 | ||||||
Effect of exchange rate changes on cash |
1,019 | 6,382 | ||||||
(Decrease) Increase in cash and cash equivalents |
(3,538 | ) | 18,816 | |||||
Cash and cash equivalents, beginning of period |
38,010 | 19,194 | ||||||
Cash and cash equivalents, end of period |
$ | 34,472 | $ | 38,010 | ||||
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands, except per share data)
Three Months Ending May 31, | 2004 |
2003 |
||||||||||||||||||||||
Normalized |
Restructuring and Other(1) |
GAAP |
Normalized |
Restructuring(2) |
GAAP |
|||||||||||||||||||
Revenue |
$ | 181,848 | $ | | $ | 181,848 | $ | 134,322 | $ | | $ | 134,322 | ||||||||||||
Operating expenses: |
||||||||||||||||||||||||
Cost of service |
88,144 | | 88,144 | 66,327 | | 66,327 | ||||||||||||||||||
Sales, general and administrative |
59,575 | | 59,575 | 44,328 | | 44,328 | ||||||||||||||||||
Restructuring |
| 4,945 | 4,945 | | 1,257 | 1,257 | ||||||||||||||||||
147,719 | 4,945 | 152,664 | 110,655 | 1,257 | 111,912 | |||||||||||||||||||
Operating income |
34,129 | (4,945 | ) | 29,184 | 23,667 | (1,257 | ) | 22,410 | ||||||||||||||||
Other income/(expense) |
||||||||||||||||||||||||
Interest and other income |
556 | 583 | 1,139 | 451 | | 451 | ||||||||||||||||||
Interest and other expense |
(2,553 | ) | | (2,553 | ) | (917 | ) | | (917 | ) | ||||||||||||||
Minority interest in earnings |
(3,421 | ) | | (3,421 | ) | (1,165 | ) | | (1,165 | ) | ||||||||||||||
(5,418 | ) | 583 | (4,835 | ) | (1,631 | ) | | (1,631 | ) | |||||||||||||||
Income before income taxes |
28,711 | (4,362 | ) | 24,349 | 22,036 | (1,257 | ) | 20,779 | ||||||||||||||||
Provision for income taxes |
10,738 | (1,632 | ) | 9,106 | 8,241 | (470 | ) | 7,771 | ||||||||||||||||
Net income |
$ | 17,973 | $ | (2,730 | ) | $ | 15,243 | $ | 13,795 | $ | (787 | ) | $ | 13,008 | ||||||||||
Basic shares |
37,800 | | 37,800 | 37,085 | | 37,085 | ||||||||||||||||||
Basic earnings per share |
$ | 0.48 | $ | (0.08 | ) | $ | 0.40 | $ | 0.37 | $ | (0.02 | ) | $ | 0.35 | ||||||||||
Diluted shares |
39,320 | | 39,320 | 37,986 | | 37,986 | ||||||||||||||||||
Diluted earnings per share |
$ | 0.46 | $ | (0.07 | ) | $ | 0.39 | $ | 0.36 | $ | (0.02 | ) | $ | 0.34 | ||||||||||
(1) | Primarily relating to one-time employee benefits due to redundant activities and a gain on sale of investment, as well as the related income tax impact using the companys effective tax rate. |
(2) | Primarily relating to severance and facilities due to redundant activities and facility closures, as well as the related income tax benefit using the companys effective tax rate. |
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands, except per share data)
Twelve Months Ending May 31, | 2004 |
2003 |
||||||||||||||||||||||
Normalized |
Restructuring and Other(1) |
GAAP |
Normalized |
Restructuring(2) |
GAAP |
|||||||||||||||||||
(Audited) | (Audited) | |||||||||||||||||||||||
Revenue |
$ | 629,320 | $ | | $ | 629,320 | $ | 516,084 | $ | | $ | 516,084 | ||||||||||||
Operating expenses: |
||||||||||||||||||||||||
Cost of service |
289,353 | | 289,353 | 260,290 | | 260,290 | ||||||||||||||||||
Sales, general and administrative |
217,418 | | 217,418 | 161,272 | | 161,272 | ||||||||||||||||||
Restructuring |
| 9,648 | 9,648 | | 1,257 | 1,257 | ||||||||||||||||||
506,771 | 9,648 | 516,419 | 421,562 | 1,257 | 422,819 | |||||||||||||||||||
Operating income |
122,549 | (9,648 | ) | 112,901 | 94,522 | (1,257 | ) | 93,265 | ||||||||||||||||
Other income/(expense) |
||||||||||||||||||||||||
Interest and other income |
1,775 | 583 | 2,358 | 1,183 | | 1,183 | ||||||||||||||||||
Interest and other expense |
(6,525 | ) | | (6,525 | ) | (4,296 | ) | | (4,296 | ) | ||||||||||||||
Minority interest in earnings |
(8,985 | ) | | (8,985 | ) | (5,008 | ) | | (5,008 | ) | ||||||||||||||
(13,735 | ) | 583 | (13,152 | ) | (8,121 | ) | | (8,121 | ) | |||||||||||||||
Income before income taxes |
108,814 | (9,065 | ) | 99,749 | 86,401 | (1,257 | ) | 85,144 | ||||||||||||||||
Provision for income taxes |
40,696 | (3,390 | ) | 37,306 | 32,315 | (471 | ) | 31,844 | ||||||||||||||||
Net income |
$ | 68,118 | $ | (5,675 | ) | $ | 62,443 | $ | 54,086 | $ | (786 | ) | $ | 53,300 | ||||||||||
Basic shares |
37,533 | | 37,533 | 36,957 | | 36,957 | ||||||||||||||||||
Basic earnings per share |
$ | 1.81 | $ | (0.15 | ) | $ | 1.66 | $ | 1.46 | $ | (0.02 | ) | $ | 1.44 | ||||||||||
Diluted shares |
38,955 | | 38,955 | 37,824 | | 37,824 | ||||||||||||||||||
Diluted earnings per share |
$ | 1.75 | $ | (0.15 | ) | $ | 1.60 | $ | 1.43 | $ | (0.02 | ) | $ | 1.41 | ||||||||||
(1) | Relating to one-time employee termination benefits, facility-related charges due to redundant activities and facility closures, and a gain on sale of investment, as well as the related income tax impact using the companys effective tax rate. |
(2) | Primarily relating to severance and facilities due to redundant activities and facility closures, as well as the related income tax benefit using the companys effective tax rate. |