Global Payments Inc. (NYSE: GPN) today announced results for its fourth quarter and fiscal year ended May 31, 2006.
The company's prior period earnings per share results and share amounts reflect the retroactive effect of its two-for-one stock split, which was completed through a stock dividend that was distributed on October 28, 2005.
For the fourth quarter, revenue grew 15 percent to $238.8 million compared to $207.7 million in the prior year. Excluding restructuring charges, net income grew 32 percent to $34.1 million compared to $25.9 million in the prior year quarter, and diluted earnings per share grew 28 percent to $0.41 compared to $0.32 in the prior year quarter.
For the 2006 fiscal year, revenue grew 16 percent to $908.1 million compared to $784.3 million in the prior year period. Excluding restructuring charges, net income grew 33 percent to $126.8 million compared to $95.3 million in the prior year, and diluted earnings per share grew 29 percent to $1.54 compared to $1.19 in the prior year.
In accordance with GAAP, current and prior period net income and diluted earnings per share include certain restructuring charges (see attached reconciliation schedules) relating to an operating center consolidation, which was announced in July 2005. These charges consisted of employee termination benefits and facility-related closing costs. Fourth quarter GAAP net income and diluted earnings per share were $34.1 million and $0.41, respectively, compared to $23.5 million and $0.29, respectively, in the prior year quarter. For fiscal 2006, GAAP net income and diluted earnings per share were $125.5 million and $1.53, respectively, compared to $92.9 million and $1.16, respectively, in the prior year.
During the fourth quarter, the company began assessing its operating performance using a new segment structure. In addition, on June 1, 2006, the company adopted SFAS 123, which requires the recognition of compensation expense resulting from employee stock options. The company expects the adoption of SFAS 123 and the resulting stock option expense will lower fiscal 2007 diluted earnings per share by approximately $0.10.
For fiscal 2006, the company's tax planning initiatives and strong international growth resulted in a lower than expected effective income tax rate of approximately 33.5 percent. The company defines its effective tax rate as the provision for income taxes divided by income before income tax and minority interest. In comparison to its expected effective income tax rate of 34.1 percent, this change added $0.01 in diluted earnings per share for the fourth quarter.
Lastly, as of July 26, 2006, the company had not experienced any operating losses in connection with the merchant contingency situation (as described in the company's fiscal 2006 third quarter 10-Q) as a result of the cash reserves held for this merchant's activities. Further, the company does not believe it will incur a loss in connection with this former customer in the future.
Comments and Outlook
Chairman, President and CEO, Paul R. Garcia, stated, "We are delighted with our fiscal 2006 financial results and accomplishments. We are also very excited about our HSBC joint venture and look forward to a successful partnership that we expect will provide long-term growth opportunities in the Asia-Pacific marketplace. Our fiscal 2006 solid results were driven primarily by continued strength in our North American direct merchant channels and our DolEx-branded consumer money transfer channel. For our fiscal 2007, we are providing annual revenue guidance of $1,048 million to $1,084 million, or 15 percent to 19 percent growth versus $908 million in fiscal 2006. In addition, we are providing annual fiscal 2007 diluted earnings per share guidance of $1.69 to $1.77, excluding the impact of stock option expenses, for growth of 10 percent to 15 percent versus $1.54 in fiscal 2006."(1) Including the impact of stock option expenses, our annual fiscal 2007 diluted earnings per share guidance is $1.59 to $1.67. This guidance includes the impact of the HSBC joint venture.» Download the document now 44.7 kb (Adobe Acrobat Document)