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Global Payments Inc. Reports Operating Results (10-Q)

January 10, 2011 | About:
10qk

10qk

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Global Payments Inc. (GPN) filed Quarterly Report for the period ended 2010-11-30.

Global Payments Inc. has a market cap of $3.78 billion; its shares were traded at around $47.47 with a P/E ratio of 18.76 and P/S ratio of 2.3. The dividend yield of Global Payments Inc. stocks is 0.17%. Global Payments Inc. had an annual average earning growth of 16.2% over the past 10 years. GuruFocus rated Global Payments Inc. the business predictability rank of 4-star.GPN is in the portfolios of Columbia Wanger of Columbia Wanger Asset Management, Steven Cohen of SAC Capital Advisors, Jim Simons of Renaissance Technologies LLC, Bruce Kovner of Caxton Associates, Jeremy Grantham of GMO LLC, Chuck Royce of Royce& Associates, George Soros of Soros Fund Management LLC.

Highlight of Business Operations:

On May 26, 2010, we completed the disposition of our DolEx and Europhil-branded money transfer businesses to an affiliate of Palladium Equity Partners, LLC for $85.0 million. We recognized an estimated pre-tax loss on disposal of $24.6 million. We also recognized $15.7 million of tax benefits associated with the disposition. As a result of our May 2010 disposition of the money transfer businesses, this segment has been accounted for as a discontinued operation. Amounts related to our discontinued operations in our prior fiscal years statements of income have been reclassified to conform with the presentation in the current fiscal year. Please see Note 3Discontinued Operations in the notes to the unaudited consolidated financial statements for further information.

Operating income decreased $12.7 million during the six months ended November 30, 2010 compared to the prior years comparable period. Operating margins for the six months ended November 30, 2010 declined to 18.7% compared to 21.7% during the six months ended November 30, 2009. The consolidated operating income decline was primarily driven by our North America business, specifically Canada which has recently become a more competitive market recently. The overall decline in operating margins is due to the dilutive impact of ISO transactions, Canada pricing compression and increased corporate costs, offset by further margin expansion in International. Sales, general and administrative costs increased $58 million, or 16% due to employee termination benefits, relocation benefits and expenses related to a new Global Service Center in Manila, Philippines, and proportional increases in commission payments to ISOs as a percentage of ISO revenues.

For the six months ended November 30, 2010 currency exchange rate fluctuations increased our revenues by $2.2 million and our earnings by $0.02 per diluted share. To calculate this impact, we converted our fiscal 2011 actual revenues and expenses from continuing operations at fiscal 2010 currency exchange rates. Further fluctuations in currency exchange rates could cause our results to differ from our current expectations.

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