Welcome to Global Payments’ fourth quarter fiscal 2009 earnings conference call. (Operator Instructions) At this time I would like to turn the conference over to your host, Vice President of Investor Relations, Ms. Jane Elliott. Please go ahead.

Good afternoon and welcome to Global Payments fiscal 2009 fourth quarter and year-end conference call. (Operator Instructions) Our call today is scheduled for one hour. Joining me on the call are Paul Garcia, Chairman and CEO; Jim Kelly, President and COO; and David Mangum, EVP and CFO. Before we begin, I’d like to remind you that some of the comments made by management during the conference call contain forward-looking statements that are subject to risks and uncertainties that could cause actual results to vary which are discussed in our public releases including our most recent 10-K. We caution you not to put undue reliance on forward-looking statements. Forward-looking statements made during this call speak only as of the date of this call. In addition, some of the comments made on this call may refer to normalized results which are not in accordance with GAAP. Management believes that normalized results more clearly reflect comparative operating performance. For a full reconciliation of normalized to GAAP results in accordance with Regulation G, please see our press release filed as an exhibit to our Form 8K dated today, July 23, 2009 which may be located under the Investor Relations area on our website at www.globalpaymentsinc.com. Now, I’d like to introduce Paul Garcia.

For our fiscal 2009 full year, we posted strong financial performance with revenue growth of 26% to $1.602 billion and normalized diluted earnings per share growth of 13% to $2.23. On a constant currency basis, our full year revenue and EPS growth are 32% and 24% respectively. For our Q4, we received revenue of $402 million which represents 17% growth, and EPS results of $0.46 representing a modest decline over last year. We’re pleased with our recent acquisitions of United Card Service or UCS in the Russian Federation and the remaining 49% ownership interest in the United Kingdom joint venture with HSBC. Our overall growth strategy remains the same. To grow market share in each of our existing geographies, to expand our global footprint via acquisitions, and to drive improved economies of scale with investments in systems and back-office integration. The adoption of card-based payments around the world continues to fuel both our industry’s overall growth and our organic growth. We believe that our mix of business in mature markets that yield higher margins and early stage long-term growth markets such as China and Russia provide a solid platform for long-term growth. We plan to continue to augment our businesses with targeted investments and acquisitions focusing on Europe, Asia-Pacific and North America. We will, however, continue to be disciplined in our approach, and we will focus on core merchant services businesses or portfolios with solid market share and potential to deliver long-term return to our shareholders. We also continue to make progress consolidating our technology platforms around the world. We continue to see tangible benefits from these consolidations beginning in our fiscal 2011. Our merchant transaction growth rates for the quarter across all of our geographies were generally about as we expected, with transaction growth of 16%, primarily generated by our ISO channel, solid single digit transaction growth in the UK, and low single digit growth in Canada. Our market presence, our distribution channels, and our ability to deliver high-quality service and products to our customers and partners all play an important role in delivering strong financial results. Finally and as we discussed in last quarter’s conference call, the money transfer business continues to face challenging macroeconomic immigrant labor trends. Despite these difficulties, I’m pleased to report that we maintained double digit operating margins in that business. Our goal is to continue to drive solid margin performance in this business in fiscal 2010, but this may be difficult given the ongoing market conditions. Now, here’s David Mangum to discuss the financial details.

I plan to cover the financial impact of the recent acquisitions, segment results, margins, and some balance sheet and cash flow highlights. In the fourth quarter, UCS performed about as we expected overall and posted revenue a little above our $2.5 million expectation. For fiscal 2010, we continue to expect UCS to be neutral to 2010 normalized earnings per share. Our acquisition of the remaining 49% of our UK business on June 12, 2009, will have no impact on revenue, operating income, or operating margin as the business was already fully consolidated based on our majority ownership and control. However, since we now own 100%, we will no longer record any minority interest expense related to this business. In addition, due to the transition provisions of FAS-141R business combinations and FAS-160 noncontrolling interest in consolidated financial statements which adopted as of June 1st 2009, we treated the acquisition of the remaining 40% as an equity transaction. That means we did not apply purchase accounting to this transaction. As a result, we will not increase the intangible assets for the UK and will not record any incremental amortization expense for the business. We did, however, take on additional debt resulting in interest expense for this acquisition. We expect the 49% acquisition to add approximately $0.09 to $0.12 of earnings per share in fiscal 2010. At the risk of stating the obvious, this is not a one-time gain, but rather reflects ongoing accretion from the business. The US dollar weakened a bit against our key currencies in late May and early June and then strengthened in July. Our full year fiscal 2010 revenue and earnings per share assumes that the US dollar will likely weaken just a bit from current levels over the course of fiscal 2010. This weakening could result in…

Based on our current outlook, we are providing 2010 annual revenue guidance of $1.690 billion to $1.740 billion or 6-9% growth over fiscal 2009. We are also providing fiscal ’10 normalized diluted EPS guidance to $2.43 to $2.54, reflecting 9-14% growth over fiscal 2009. We are pleased to provide this guidance and at the prospect of expanding margins. We expect margin leverage to be driven primarily by our international segment with margin expansion in the US and improved operating leverage in Asia Pacific. Operator, we will now go to questions.

(Operator Instructions) Your first question comes from the line of James Friedman – Susquehanna. James Friedman – Susquehanna: In terms of the Canada contribution, I think you mentioned on the call that the pricing benefit that you received in the past annualized in April. Are you seeing any potential for new price increases, and there is a lot of discussion there related to Interac; I was wondering if you could give us an update as to the pricing environment in Canada.

In terms of relating to the financials, there are price increases at the margin assumed over the course of 2010; nothing remotely resembling the scale of what you saw in 2009. Just more of the typical management of the market and management of the operation which we do a pretty nice job of in Canada. In terms of the ongoing change with Interac or anything else we see on the horizon, maybe I’ll turn it over to Paul and Jim to comment on that.

I’ll be happy to comment on the Interac. Interac as you know is the one debit brand in Canada, and Visa and Mastercard recognized that Canadian consumers would benefit from a brand that has more global acceptance, and consequently they are in the throes of entering that market and that would in fact have some opportunity for processors, and you’re exactly right. We’re not in a position to quantify it at present, but we do think there is some upside opportunity if that in fact is successful.

In terms of the timing, the fourth quarter was the Visa annualization, and Mastercard will be during this first or second quarter of 2010. As Paul alluded to, as the debit networks gain traction and the cards are issued, we will see an interchange where Interac today does not have an interchange. We will see an interchange in the market, and the likelihood is that will provide us some opportunity as well. James Friedman – Susquehanna: David, I know you had alluded to the revenue impact related to Canadian dollar. How should we think about the margin impact vis-à-vis Canada?

Relative to the quarter or the year 2010? James Friedman – Susquehanna: Fiscal Q4.

Fiscal Q4 really sees one more of the full quarter effect on a year over year basis of the movement in the dollar that we saw starting in Q2. At the end of the day, you’ve got a business that would have grown in the 20s in local currency reduced down to some of the numbers you see in our release by basically FX and nothing else. Does that help enough? James Friedman – Susquehanna: That is revealing with regard to the revenue you are describing, but how about the margin? My understanding was that you had fewer costs there than you might have revenue.

Sure. We don’t quote the margin by country as you know, but Canada operates essentially for translation purposes on a contribution margin, having a great deal of its expenses for operations and back office support in the US and our Baltimore operation center as well as some of the US headquarter. So while I can’t quote you a number, it operates at what I would call a contribution margin, looking a little bit more like a gross margin than anything else, and I think if you shape it that way in your model, you’ll get a sense for how that rolls through earnings line for the full year and what that really means Schedule 9 in the back of the earnings release. James Friedman – Susquehanna: Occasionally, you’ll share some qualitative observations about debit versus credit, Paul. I was wondering if you could share your observations about those two payment card methodologies.

Sure. As reported by those that report these numbers, debit is growing a little bit faster than credit, in fact significantly faster than credit, and I think what we perhaps haven’t clear in the past is not only do we process a significant amount of debit in the UK and in Canada and in emerging markets, we have over 50% of our transactions that are either signature or PIN-based debit in the US, so as that debit usage does expand, we do benefit from that, and we’re seeing a pickup in debit more quickly than credit.

Your next question comes from the line of Thomas McCrohan – Janney Montgomery Scott. Thomas McCrohan – Janney Montgomery Scott : Can you give us a revenue contribution expectation from the HSBC joint venture that is now completely owned and UCS? Have we just begun with the $55 million run rate and the $2.5 million quarterly run rate for both companies, or is there anything else that is coming online that’s not in those numbers?

In reverse order, for the Russian acquisition for UCS, you should use the $2.5 as your jumping-off point and annualize that. For the UK, rather than talk about $55 as the jumping-off point, what I’d point you to is a business that now we’ve got fully in 2009 and obviously it will be in 2010 heading back toward above market growth for the UK market, but that means probably mid single digit revenue growth above what’s a low single digit transaction volume growing market on organic basis. Thomas McCrohan – Janney Montgomery Scott : In regard to the new term loan facility, I couldn’t figure out from the credit agreement what the actual interest rate is on the loan. Is it LIBOR plus a spread, and if so, what’s the spread at current pricing to you for that term loan?

Sure, and then you’re missing fees and things like that as well, Tom. If you look at the first tier, leverage will say something like LIBOR plus 300 or just north of that. We’re kind of in that range right now, along with the fees on top which would add a little to it, but that’s the general way to get at the interest. I’m probably not going to part the interest rates on a quarterly basis, but I’m pretty sure you can get it from that color. Thomas McCrohan – Janney Montgomery Scott : The negative covenant that’s most binding or most restrictive is total debt to EBITDA of 3.25 times? Is that the most restrictive covenant?

Yes. It’s probably the one to watch for in terms of capacity, and it’s certainly not a capacity level we intend to head toward. Less than that would be comfortable for us, but that’s probably the one to watch. Thomas McCrohan – Janney Montgomery Scott : Is there an accordion feature in that term loan? Could you expand that at your option?

No. We cannot.

Your next question comes from the line of Tien-Tsin Huang - JP Morgan.

On the transaction growth in the US, it actually picked up a little bit in the quarter. How much of this was due to market share gains or new ISOs coming on versus just a pickup in the underlying macro trends?

I think it’s probably a combination of the last two. We’re not seeing the declines we saw before in the market, as David or Paul on previously calls talked about. The third quarter was probably the bottoming piece, so maybe a small improvement there. The rest of it is just associated with the ISOs growing and our direct business for new signing this year, and our Comerica had a strong year.

On the international side, the operating profit dollars there were flat sequentially. It looked like the revenues were up quite a bit sequentially, so what’s driving the delta there? Was there anything unusual?

Nothing particularly unusual. The thing that’s dragging margins a little bit in international is the central Europe business, the indirect business with the major customer renewals we talked about. As a general rule, trends in the UK and Asia kind of held. Asia is a little more challenging given our exposure to T&E there, but there is sort of an underlying a bit and Central Europe given the indirect model there.

David, can you directionally tell us where Asia Pacific margins exited the year at?

I’d probably rather stick with just the international margin. It continues to expand on a full year basis. Q4 over Q3 did not move materially, which may be what you’re struggling with when you stare at your model with the preliminary results, but I’m not sure I’m ready to quote to that level of detail the margins. The trajectory long-term as we go through 2010 is of course upward and upward pretty rapidly.

Tien-Tsin, I’ve said in the past that Asia in the not too distant past had no margins. So Asia has grown to have a margin that is dilutive of course to the company, but I’ve gone on record as saying I believe Asia given enough time will actually have accretive margins.

The implications of the Bank of America-First Data deal, was that something Global Payments looked at, and how could that change the landscape competitively?

Let me take the last part. In terms of changing the landscape, you have a big competitor in BoA, and you have a big competitor in First Data, and they are going to put these two businesses together. It doesn’t change the game necessarily. In fact, I think it’s fair to say that that is a fairly large effort, and I think there are perhaps opportunities for competition while they attempt to put these two together. In terms our taking a look at this transaction or being interested in it, you know that the unique structure of this transaction basically limited the parties to these two parties, so I think that’s the best answer.

Has your appetite to do deal changes at all on the M&A front?

No. In fact, I think that one of the nice things from a challenging economy sometimes is that interesting opportunities arise, and I think there are some great opportunities for us literally in every market, including North America. So I would encourage you to stay tuned.

Your next question comes from the line of Darrin Peller – Barclays Capital. Darrin Peller – Barclays Capital: Could you just talk quickly a bit about HSBC’s rationale behind selling to you the remaining JV, and whether there might be any similar opportunities perhaps in the big JV in Asia?

I can’t speak exactly; I can tell you what they told us. First of all, they are very happy with the deal. You of course know that they actually extended the marketing agreement, so we have a long-term relationship with these guys where they’ll refer business through all their UK operations. Although they were happy with that and willing to extend that deal, I think that they probably came to the realization this is well run, they don’t need to have a management role, have a JV board, and they always contemplated monetizing their other piece. It was actually in the agreement. They just said let’s get on with that more quickly. We were of course delighted to buy 51, even more delighted to buy 100, so I think that’s basically it. This is a huge bank, probably arguable the most secure financial institution in the world—I think the only really large bank that didn’t take any government assistance. That said and done, every little bit helps towards their Tier 1 issues too, so that could be a small part of it. Darrin Peller – Barclays Capital: Any potential for following on another maybe in Asia?

It’s a very different operation. It’s two different people making those decisions, but sure. The Asian operation contemplated the same opportunity, and we would be interested in doing that as well, but that’s all bank driven. As of now, they don’t have any interest in exercising that. Darrin Peller – Barclays Capital: You mentioned the high-level data, the transaction growth trends in UK, Canada, and Asia. Is there any way to get a little more specific color on the numbers behind it, where they were trending through the quarter?

Probably not, other than just to tell you maybe in a different way that we saw a declining transaction growth as we headed out of the calendar year 2008 and into early ’09. That kind of stabilized around February and March, and quite honestly the trends haven’t changed materially since then when you look across the board. You know enough about the Canadian Markets. You know it’s a low single digit transaction market, and we’re a fair amount of the market relatively speaking, but as a general rule, not a lot of changes really in the last few months. Darrin Peller – Barclays Capital: The 16% in the US, how did that trend in the past three months of the quarter?

Over the course of the quarter, it was consistent. Darrin Peller – Barclays Capital: Following the First Data deal, if it was going to have an impact on pricing from that, we have heard some anecdotes about some of the larger acquirers having been extremely competitive, have you seen that increase at all, or is that status quo?

I think in each of the markets, the mature markets, there is always competitiveness especially at the high end, but I would not say that anything abnormal has occurred recently.

Your next question comes from the line of Andrew Jeffrey – Suntrust. Andrew Jeffrey – Suntrust: As I look at the guidance for flat year over year consolidated operating margin, particularly in light of what’s happening in Eastern Europe right now with no necessary indication for a turning point, can you be a little more granular in terms of how you’re going to drive margin in the UK and in Asia? Is it just scaling some of the investments you’ve made to date? The implication obviously is that you’re going to get a pretty big lift internationally from you were in the fourth quarter, so how do you get there and is it ratable through the year or is going to be backend loaded?

I’m going to let David answer that in one second, Andrew, but the one thing you didn’t throw in was Dollex too. Although we did a pretty good job with margins, there are some headwinds. Housing sales are up, but construction starts need to follow suit, and we need some more encouragement from immigrant labor in sending money home, so that could be a headwind too, but with that said and done, go ahead David.

In reverse order, Andrew, it is kind of ratable over the course of the year, so maybe said another way, it ticks up steadily over the course of the year. To put it in a little bit better perspective, if you look at the two broad international markets that you mentioned, Asia is probably the more ratable of the markets in terms of the expansion that we expect to see, largely because that’s a scale conversation. It’s more volume moving through the system. It’s leveraging the backend migrations we’ve done to date beginning to leverage a little bit at the margin. There are a couple of markets we’ve moved to the front end G2 authorization system, and then for the UK, it’s a couple of things—it’s rationalizing the expenses in general as we move through the expense base and investment base we migrated over from the bank. It’s beginning now to have that salesforce be a little more effective. It’s now a salesforce we’ve doubled, and it’s been on board a good six months or so, so it ought to be more effective as we head through the year without adding incremental salespeople to the model, and then finally it’s the introduction of a couple of price increases, actually this is true in both markets by the way, but a couple of price increases in the UK that obviously should they be successful would be 100% margin. As a result, you kind of end up with the UK expansion maybe being a little lumpier than the more ratable Asia margin expansion you’ll be modeling. Andrew Jeffrey – Suntrust: Are you assuming a status quo in Russia? I assume those margins are pretty low right now?

Yes. It’s effectively earnings neutral, which means the margins are certainly quite low, and we don’t assume a radical change. It may exit and it will exit if we execute in a better position, but on a full year basis, it’s easier to assume it as a breakeven business, the way you probably have it already. Andrew Jeffrey – Suntrust: Paul, without being specific, at a very high level conceptually, would Global ever consider buying an ISO?

I think the short answer is year. There are scenarios. There are ISOs that fit a model that would be attractive, and I’ll tell you what is not attractive for us. What is not attractive is for us to buy an ISO and then operate thousands of independent salespeople and then in fact be competing with our ISO base, but ISOs have had different models. There are levels of attractiveness, so yes, the answer is yes.

Your next question comes from the line of Bryan Keane – Credit Suisse. Bryan Keane – Credit Suisse : What exchange rate are you using for fiscal year ’10 guidance with some of the key currencies like the Canadian dollar and the pound?

What we’ve done Brian is we’ve kind of looked at the June rates on average in the major geographies and had them weaken just a little bit—a point or two—over the course of the year. It’s kind of interesting when you look at ’10 versus ’09. With all the jumping around in FX in places like Canada and UK in ’09 quarter by quarter, by the time you get out to kind of average rate for ’09 and an average rate for ’10, they look a lot alike, and they look a lot like the June ’09 rate, so we’re starting with June ’09 and kind of trending that to have it weaken a little bit, which mask 5 or 6 sources we look at. It’s anybody guess as to where FX really goes. We have absolutely no expertise, but we look at a couple of sources, off of Bloomberg and some of the other guys, and that’s the assumption right now that’s implicit in the guidance. Bryan Keane – Credit Suisse : The US dollar to the Canadian dollar closed at $1.09. I guess that’s a significantly stronger Canadian dollar than you had modeled?

I’m sorry, closed when? Bryan Keane – Credit Suisse : Today.

I’d have to go back and look at June versus that. To tell you the truth, I didn’t look it up today, so wherever June was was our assumptions, and then we assumed weakening from there, so I don’t know that it’s significantly different at all. In fact, I’d suspect that it’s pretty much right on what we’re looking at.

You mean the Canadian dollar at 91 cents against the US dollar? Bryan Keane – Credit Suisse : Yes.

We missed a big movement. That was a big day on the FX. Bryan Keane – Credit Suisse : No. I flipped it for you. David, then is there a way to look at FX and probably it will be a positive for earnings this year? It was a drag of $0.23 last year, so what would it be if it’s positive for earnings in fiscal year ’10?

If you look at the two years side by side and say what kind of growth in earnings do you have, first off you have to play with the range a little bit, but if you’re looking at where you want to be in our range, say it’s in the upper quartile of our range or something along those lines, it’s worth about 1% or thereabouts of earnings growth, which means it’s worth a couple of cents, and that’s our assumption for the moment. Bryan Keane – Credit Suisse : So, if I took out currency especially on the Canadian dollar, would margins still be able to go up this year or would they be more flat or down?

They still have the opportunity to go up because remember those couple of pennies of earnings is a couple of million dollars, so they still have the opportunity we’re describing to go up, and then the complexity of it all is that you can’t just focus on Canada. What happens in the UK and Central Europe and other places are going to matter as well, and they all don’t necessarily move in concert, which makes this occasionally a mind-bending exercise. Bryan Keane – Credit Suisse : The transaction growth looks like it picked up a little bit, 15-16, but the revenue growth in the US kind of dropped down to 7% from 13%. Is there anything to read in there?

The thing to remember when you look at the US by itself is remember we had a number of ISO fees in the third quarter. That did not recur again in the fourth quarter, so what you actually saw if you look at it sequentially without the ISO fees, enough to pull some $10 odd million or so out of revenue of the US because of the fees from the December-January timeframe, if you looked at that, you’d see nice solid sequential growth from an ISO perspective compared to Q3, and that explains also your two deltas in year over year performance.

Your next question comes from the line of Julio Quinteros - Goldman Sachs.

David, the accounting for the HSBC piece, just to be clear, no intangibles amortization impact, and when we’re thinking about it, and the only impact through to P&L is going to be the reversal of the minority interest expense, and I think that’s what you suggested?

That’s right, Julio. You likely in your ’09 model have built in some assumption as to what new minority interest expense came in with the UK acquisition. You can essentially take that out of your formula for Q1 and roll from there, if that makes sense.

So for fiscal ’10, the only piece then that we would have to adjust would be the UK piece. Any sort of ballpark range on what you guys are estimating as left from minority interest perspective?

No, not really. I guess you have the tools to do this because you had to add in a lump of the UK on top of whatever you assumed Asia growth is, and now Asia is going grow again, and that’s the only thing left for you to model in ’10.

You did give us the Capex number for fiscal year 2010?

$45 milllion.

That’s all in, right?

Yes.

Just go back to the question regarding margins, excluding currency, if we adjust currency, your view is that the underlying operating margin of this business, you’re thinking about the US and the other parts of the world, could expand if you take all the currency situation out of the equation?

Yes. Let me say this again. My view is that currency doesn’t necessarily drive this expansion, and we’ll see where currency turns out. You’re talking about a combination of flat to maybe modest decline in North American margins, flat to declining margins in money transfer, and then expanding margins internationally. At the same time, you’re going to keep you corporate expenses flat year over year, and all in, that give us the opportunity for basis point expansion in margin when you’re starting to model the high end of our range.

That’s what I was trying to understand.

Your next question comes from the line of Kartik Mehta – Northcoast Research. Kartik Mehta – Northcoast Research: Paul, I had a question on your UK joint venture. If you look at this transaction and now that you own 100% of it, does this change strategically or structurally for you in Europe or UK or is this just a financial transaction that’s beneficial for Global Payments?

There are some things that have changed because we own 100% of this business. We had a noncompete with HSBC that was part of that; we no longer have that, but I wouldn’t want you to jump into an assumption that we’re going to go buy someone else in the UK. We have a pretty big market share of the UK today, and I’m very happy with our market position. Other than that, it’s pretty much the same. It was an attractive opportunity for us and it make sense for the bank, and we executed on it, Kartik. Kartik Mehta – Northcoast Research: You talked about the North American margins being flat or declining in 2010. Is that just a function of more ISO business and so that’s why it stays there, or are there other inputs other than that also in that?

The single biggest driver, Kartik, continues to be the growth the ISO channel and the impact of that on the margin. Kartik Mehta – Northcoast Research: The recent credit card legislation and the impact on your business, will there be any impact on the merchant acquiring business because of that, and if so, do you have to change your strategy in anyway to benefit from that?

The short answer is no. We don’t see any immediate impact. We are of course staying very close to everything that’s happening. Most of is focused on issuing. By definition, it’s a three-legged stool. The card issuing is a very important process, so anything that really discouraged card issuers would be negative for us, but we don’t see anything clearly in the next couple of quarters or even for fiscal ’10 that would have any impact. Let’s all stay tuned to that one.

Your next question comes from the line of David Koning - Robert W. Baird.

Coming back to Kartik’s question a little bit about margins flat to down a little in North America, that’s a lot less decline, I guess, than last year when it was I think over 200 basis points of margin decline. Is that reduction in margin decline, is that a function of ISOs not growing as quite as fast in 2010 or maybe the direct business starting to grow a little better?

We are certainly benefiting from direct business. They had a pretty reasonable sales year in 2009, so the volume will come on 2010. We still are anticipating nice growth from the ISOs and not a change in the trends you’ve seen. I’d suggest to you that we’ve done a fairly nice job probably of rightsizing and cost base to support those businesses as we head into the year as well, and that’s probably the one thing that it’s not visible to you, but is sort of the missing factor in that equation for you. David Koning – Robert W. Baird: Secondly, the G2 savings, it sounds like there are comments that fiscal 2011 is going to be where more of a tangible benefit comes from G2. Is that the right way to think about 2010? We can’t really see it in the numbers, but maybe in 2011 it will be a little more visible.

That’s exactly right. David Koning – Robert W. Baird: Finally, if we look at the full year free cash flow and adjust out the settlement stuff and the minority interest distribution stuff, it looks like free cash flow is about $3 per share this year compared to I guess $2.20 or whatever it was of EPS, so a pretty big gap. Should we at least think of free cash flow being quite a bit higher, I guess, going forward than earnings? That was really a big year.

Free cash flow was a tough one for us right now, and I’d confess to you that the reason we talked about a bit about cash earnings on this call was we’re getting our arms around that, and we will see where that goes, but I know a lot of guys and you particularly model that in and talk about it. Free cash flow is a little bit further away for us in terms of being able to very crystally define it for you and explain moments, so your numbers by the way because I know your definition are not far off from what you are seeing. I still believe we are a solid free cash flow generator, but the moving parts make that a little difficult for me to explain to you in a really quick sound-bite the way it needs to be, so I probably stay away answering your specific question for just that reason, but you’re not on the wrong track if that helps enough Dave. I’m sorry.

The next question comes from the line of Moshe Katri with Cowen and Company. Moshe Katri – Cowen and Company: Paul, going over some of the recent trends on the regulatory side, maybe you can give us your view on the recent events taking place related to interchange regulation. Where do you think we are on that part? Has there been any impact on volume growth because of the credit card act that came through about a month to two months ago?

Moshe, firstly I think your credit act and a lot of the things that were discussed in that were at least in my thinking, and I’m not a card issuer, but I think a lot of that stuff was appropriate, and I think at the end of the day, if it’s consumer friendly, you might actually stimulate some credit usage. In terms of the interchange, I’ve always maintained that interchange rates will decline over time. I’m still holding to that, and there is nothing legislative that I can point to that would cause that. I think that will be one of the factors, but over time, interchange rates will clearly decline, and I think that’s one of the investment thesis that everyone should have for our company and others in our space. Moshe Katri – Cowen and Company: Maybe talk in that context in terms of what happens or the potential impact or benefits to Global Payments from that scenario.

In the past it has happened, and Master card in particular had a big movement. You saw what happened in Canada with just introductions of a much more complicated multi-tiered interchange level, so when these opportunities happen because of the broad base of medium-sized customers, we are able to mark up a little bit, round a little bit, and at the end of the day, although it’s a highly competitive market, and you clearly have to be appropriate with your customers, or you’ll lose them, you can take advantage of that, and a basis point here and basis point there on tens of billions of dollars of volume is significant amount of earnings, so that’s exactly what we have seen in the past. I maintain we’ll see it in the future. With that said and done, we’re not forecasting any of that in for 2010. I’m not saying that interchange goes down and we get some benefit of that, nothing like that for 2010. You’re really discussing more of a long-term trend and a prognosis for the future.

The next question comes from the line of Larry Berlin with First Analysis. Larry Berlin – First Analysis: I have been reading too many newspapers and magazines recently, but one of them mentioned that the pricing for ISOs and the way you guys pay them, they didn’t mention you in specific but all merchant acquires in general, is changing so there’s a bigger upfront fee and less residual. Are you guys seeing that, and if so, how does that affect you?

You’ll have to tell me what magazine you have been reading. Larry Berlin – First Analysis: Transaction World.

It has not come to my attention. We’re not offering that type of structure here. I would be surprised to see that because the number of transactions that an ISO is going to sent to us as a processor is largely out of their control. It’s based upon the merchant’s performance, so it would be hard for us to get a number to prepay, but our pricing structure has been the same for the last 10 years that we have been in this business, and no we don’t see a change. Larry Berlin – First Analysis: I’m just curious about what you guys are doing to alter/approve or whatever with US direct sales.

Larry, we haven’t had a big change in the last quarter or even last year. We have the same relative number of salespeople in North America we had at the beginning the year. We’ve beefed up a lot in Asia. We intend to double the effort in Russia, but in the UK, we’ve also increased that fairly significantly, but pretty much domestically, it’s been straightforward. Now if you are alluding to opportunities, potentially with the BoA merger with First Data, we do think there are opportunities there, and we think that our salesforce is focused on that, and that may offer an ability to augment those forces somewhat, so we’ll let you know.

The next question comes from the line of Greg Smith with Duncan-Williams. Greg Smith – Duncan-Williams: David, the $20 million in amortization you gave to kind of calculate cash EPS, that was $20 for fiscal 2009, $29 million for fiscal 2010. That’s an after tax number, correct?

No. That’s the number you’d add back to pretax income or I think what we call income before taxes on the face of P&L. That’s the formal name for it. Greg Smith – Duncan-Williams: Okay, so we should add that essentially to pretax and then tax that whole number.

Right. That’s for simplicity sake Greg. Greg Smith – Duncan-Williams: That does not include stock comp expense, does it?

No. We have not pulled it up. This is a very simple definition of just the exclusion of acquisition-related intangibles. Greg Smith – Duncan-Williams: Most of your competitors also exclude the stock comp expense.

Well, at the end of day, I want to give you the simplest number possible since we’re not talking about guiding to cash earnings or something. I didn’t want to give you a complex definition, and when I read the bulk of the notes and talk to the bulk of the folks on the buy side who are interested in this kind of metric, it’s really all about acquisition-related intangibles. We’ll keep looking at this and we want to make sure that it is really useful and helping describe our underlying performance, and to the extent it is, we’ll talk about it a bit, but it is just amortization. Greg Smith – Duncan-Williams: Do you have any rough ballpark estimates for share-based compensation expense?

Off the top of my head, I do not. I can easily get that to you when we chat either later tonight or tomorrow. Greg Smith – Duncan-Williams: There is essentially no reason you’re expecting that to change dramatically from the trends that we have been seeing?

No. Quite the opposite. It’s a great question. Greg Smith – Duncan-Williams: Paul, just any update on China and the ability to acquire in local currencies?

It’s a great question Greg. We have passed a number of regulatory hurdles. There are other things we need to do. We’re in the process of meeting with a lot of Chinese institutions. CUP has been supportive to date, and we’re hoping to bring that to conclusion in the not too distant future, so just a very exciting opportunity for us in PRC. Greg Smith – Duncan-Williams: We don’t seem to see this in your numbers nor your guidance, but anything unusual going on with loss rates, fraud at merchants in this environment, or on the check business side?

No. We’re pleased to report no, no, and no to that.

The next question comes from the line of Jason Kupferberg with UBS. Jason Kupferberg – UBS: Regarding just the overall small business environment, obviously US transaction growth has really held in nicely here, but have you guys taken any kind of close look at measuring the impact of the increased bankruptcies across small businesses in the US, any way to describe that for us?

We measure same-store sales to a degree, and we also look at how many merchants leave us, and then we try to measure why they leave us, and going out of business is clearly a reason. Now that typically impacts our ISOs a little more because they a smaller merchant base than we. Our mid-sized merchants, we’ve seen some tick up in that area, but nothing extraordinary. I think the proof of the pudding here is that we are able to produce these results and have this growth in this environment and live with all those realities, so I don’t know if that’s helpful. No one asked yet, but we will volunteer. June looks the same as May. We’re not seeing any worsening, we not seeing a double dip. If anything, we have some optimism. Jason Kupferberg – UBS: That is helpful. Obviously, it’s early here, but since you guys talked about the fact that the platform consolidation should really start to drive some margin improvement in fiscal ’11, anyway you can point us towards thinking about order of magnitude there?

I would say large.

I would say more specifically, I guess stay tuned, but we’re probably unlikely to put ourselves in a position of reconciling that for you dollar for dollar on a quarterly basis, but stay tuned. We owe you more information.

But clearly, not to be flippant, we’ve talked about this for a long time, so everyone is saying where is the beef here. You’re going to get the beef in fiscal ’11. It is going to be meaningful. We kind of guided just generally what meaningful is and, as David said, we will give some more data when we can. Jason Kupferberg – UBS: Just any further thoughts on the strategic value of the money transfer business. I know you’re going to try and keep margins hanging in there, but macroenvironment is what it is, and maybe they’ll slip a little bit in fiscal ’10, so once the overall environment picks up, does it make sense for you guys to consider trying to monetize the asset?

It’s a great question. We have some wonderful people who run this business, and they’re doing a great job at a difficult time, but the business is not core, and I think everyone knows that, but I wouldn’t expect us to selling this asset anytime soon. In fact, we have a commitment to the management to give them the assets to run this thing, and we have expectations. We’ll continue to do the best job in a challenging environment.

The next question comes from the line of Robert Dodd with Morgan, Keegan. Robert Dodd – Morgan Keegan: I know you don’t normally give much color about trends during a quarter, and you just gave a little bit a moment ago, but I don’t know if you’ve seen the Amex results. They highlighted that June was the best month of their quarter. Is there any additional color you can give us on trends that you’ve seen, not just obviously in the US but the UK as well and may be even in Canada?

I think there probably isn’t much more additional color. If you think back to some of the questions we’ve answered though, really in almost all the markets we serve, whether it’s Canada, the UK, across the Asian markets, and the US, the trends in June are not wildly different from May, and the trends have been fairly consistent really since the end of the first calendar quarter of the year. They haven’t gotten better by the way, but haven’t gotten materially worse anywhere either. Robert Dodd – Morgan Keegan: Onto the UK business, obviously, now you own it. You got complete control so you can decide exactly how you want to go about growing that. What’s your view, and you have discussed this a little bit in the past about expanding into Europe and where would you stand from a salesforce/platform position to be able to do that?

There are two ways to expand into Europe. The first way is to follow your trans-European merchants, and we’re very focused on that, and the second is to do strategic deals on the continent, and we’re focused on that as well.

Part of the expansion to Europe was supposed to be now in place until they rationalized the debit scheme throughout the major countries. Bricks and mortar customers are more challenging, but one of the reasons beyond of the fact that we think this is a terrific business that we made the investment in UK and just doubled down on it is it gives us the management team similar to Canada, gives us a management team in the region to be able to expand across Europe, so it’s our expectation that we will be making investments in those markets. We will follow our customers into those markets. SEPA will help and opportunities to buy will be things that we’re gong to pay close attention to. Robert Dodd – Morgan Keegan: Looking at the margin compression last year in North America, the vast majority of that looked to be coming from just the Canadian dollar exchange rate. Is that the biggest reason this year if you’re factoring essentially flattish exchange rate over the course of the year, we should be looking for basically flat margins?

Well, it helps you at the margin, but it’s really not a material contributor to holding flat or the upturn a little bit for basis point expansion. It comes down to some of the items we talked about earlier, really sold progress in the US, also some nice direct sales, solid cost management, and continued nice operating performance from Canada, but you’re correct in thinking that the FX makes that a bit of odd conversation. It can help you a little bit depending on where rates go, maybe it keeps you to flat or holds you back a little bit depending on if you go the other direction.

Your next question comes from the line of Jason Deleeuw - Piper Jaffray.

You guys spoke about with Visa and Mastercard making a push into debit in Canada, you talked about the opportunities there. Do you see those as more of a potential pricing benefit or volume benefits?

I think it’s a pricing benefit primarily. It’s a huge debit market today. It’s probably the largest—maybe Iceland has just taken over the number one spot, but Canada is a huge debit market. It clearly was an early adopter, and it’s very penetrated. I think that this would be someone using a different brand for other reasons, and there’ll be some pricing opportunities.

At the point of sale, we generally control all credit and debit. Ten years ago, they had split market between Visa and Mastercard acquirers. That’s long since gone, so if there is a different card type that becomes available in the market or different structure under Visa or Mastercard, it would be likely that we would just take that additional volume and then it would be priced appropriately.

I believe it’s in the consumer’s interest, and that’s why this could be an interesting argument to watch. The consumer clearly is benefited by allowing those brands into Canada, because today they’re disadvantaged. Interac brand does not have universal acceptability the way Visa and Mastercard brands do, and a Canadian citizen if that’s their only choice, they are at a disadvantage so interesting stuff.

Thank you.

Thank you so much for joining us on the call today, and we appreciate your support of Global Payments.