Exhibit 99.2
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Page 6 of 11 |
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TSYS | ||||||||
Financial Highlights | ||||||||
(Unaudited) | ||||||||
(In thousands, except per share data) | ||||||||
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| Three Months Ended |
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| Percentage |
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| 2007 |
| 2006 |
| Change |
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Revenues |
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Electronic payment processing services | $ | 230,165 |
| 221,061 |
| 4.1 | % |
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Merchant acquiring services |
| 60,680 |
| 63,949 |
| (5.1) |
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Other services |
| 52,766 |
| 44,542 |
| 18.5 |
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Revenues before reimbursables |
| 343,611 |
| 329,552 |
| 4.3 |
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Reimbursable items |
| 85,992 |
| 82,738 |
| 3.9 |
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Total revenues |
| 429,603 |
| 412,290 |
| 4.2 |
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Expenses |
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Salaries & other personnel expense |
| 140,443 |
| 121,330 |
| 15.8 |
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Net occupancy & equipment expense |
| 66,136 |
| 75,350 |
| (12.2) |
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Other operating expenses |
| 51,353 |
| 61,015 |
| (15.8) |
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Expenses before reimbursable items |
| 257,932 |
| 257,695 |
| 0.1 |
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Reimbursable items |
| 85,992 |
| 82,738 |
| 3.9 |
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Total operating expenses |
| 343,924 |
| 340,433 |
| 1.0 |
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Operating income |
| 85,679 |
| 71,857 |
| 19.2 |
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Other income: |
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Interest income |
| 5,488 |
| 2,508 |
| 118.8 |
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Interest expense |
| (210) |
| (44) |
| nm |
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Gain on foreign currency translation, net |
| 683 |
| 276 |
| 147.5 |
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Dividend income |
| 15 |
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| nm |
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Other income |
| 5,976 |
| 2,740 |
| 118.1 |
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Income before income taxes, minority interest |
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and equity in income of equity investments |
| 91,655 |
| 74,597 |
| 22.9 |
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Income taxes* |
| 34,892 |
| 24,965 |
| 39.8 |
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Income before minority interest and equity |
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in income of equity investments |
| 56,763 |
| 49,632 |
| 14.4 |
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Minority interest |
| (350) |
| (91) |
| nm |
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Equity in income of equity investments |
| 860 |
| 852 |
| 0.9 |
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Net income | $ | 57,273 |
| 50,393 |
| 13.7 | % |
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Basic earnings per share | $ | 0.29 |
| 0.26 |
| 14.0 | % |
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Diluted earnings per share | $ | 0.29 |
| 0.26 |
| 13.9 | % |
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Dividend declared per share | $ | 0.07 |
| 0.06 |
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Average common shares outstanding |
| 196,487 |
| 197,086 |
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Average common and common |
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equivalent shares outstanding |
| 196,938 |
| 197,326 |
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* Includes $2.3 million of additional expense in 1st Quarter 2007 related to the recoverability of certain income tax credits. | ||||||||
nm = not meaningful |
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- more - |
TSYS Announces Earnings for 2007 |
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Page 7 of 11 |
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TSYS | ||||||||||||||||||
Segment Breakdown | ||||||||||||||||||
(Unaudited) | ||||||||||||||||||
(In thousands) | ||||||||||||||||||
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| Three Months Ended March 31, 2007 |
| Three Months Ended March 31, 2006 |
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| Domestic- | International- | Merchant | Consolidated |
| Domestic- | International- | Merchant | Consolidated |
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Revenues before reimbursables | $ | 240,969 | 52,963 | 54,818 | 348,750 |
| 244,443 | 30,713 | 58,862 | 334,018 |
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Intersegment revenues |
| (4,781) | (223) | (135) | (5,139) |
| (4,434) | - | (32) | (4,466) |
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Revenues before reimbursables |
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from external customers | $ | 236,188 | 52,740 | 54,683 | 343,611 |
| 240,009 | 30,713 | 58,830 | 329,552 |
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Total revenues | $ | 314,458 | 55,400 | 66,884 | 436,742 |
| 312,830 | 36,246 | 70,332 | 419,408 |
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Intersegment revenues |
| (6,781) | (223) | (135) | (7,139) |
| (7,086) | - | (32) | (7,118) |
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Revenues from external customers | $ | 307,677 | 55,177 | 66,749 | 429,603 |
| 305,744 | 36,246 | 70,300 | 412,290 |
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Depreciation and amortization | $ | 25,967 | 5,800 | 6,830 | 38,597 |
| 31,910 | 3,978 | 7,273 | 43,161 |
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Intersegment expenses | $ | 3,407 | (3,239) | (7,302) | (7,134) |
| 8,690 | (7,575) | (8,219) | (7,104) |
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Segment operating income | $ | 61,587 | 12,129 | 11,963 | 85,679 |
| 60,966 | 879 | 10,012 | 71,857 |
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Income before income taxes, minority interest |
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and equity income of equity investments |
| 67,693 | 11,477 | 12,485 | 91,655 |
| 63,479 | 728 | 10,390 | 74,597 |
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Income tax expense | $ | 26,249 | 4,172 | 4,471 | 34,892 |
| 20,471 | 567 | 3,927 | 24,965 |
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Equity in income of equity investments | $ | - | 860 | - | 860 |
| - | 852 | - | 852 |
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Net Income | $ | 41,563 | 7,696 | 8,014 | 57,273 |
| 42,819 | 1,111 | 6,463 | 50,393 |
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Identifiable assets |
| 1,543,651 | 318,241 | 218,378 | 2,080,270 |
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Intersegment eliminations |
| (415,896) | (1,136) | (129) | (417,161) |
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Total assets |
| 1,127,755 | 317,105 | 218,249 | 1,663,109 |
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Note: | Revenues from domestic-based services include electronic payment processing services and other services provided from the United |
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| States to clients domiciled in the United States or other countries. Revenues from international-based services include electronic payment | |||||||||||||||||
| processing services and other services provided from outside the United States to clients based mainly outside the United States. | |||||||||||||||||
| Revenues from merchant processing services include TSYS Acquiring's merchant acquiring and related services. | |||||||||||||||||
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- more - | ||||||||||||||||||
TSYS Announces Earnings for 2007 |
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Page 8 of 11 |
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TSYS | ||||
Balance Sheet | ||||
(Unaudited) | ||||
(In thousands) | ||||
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| Mar 2007 | Dec 2006 |
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Assets |
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Current assets: |
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Cash and cash equivalents | $ | 421,711 | 389,123 |
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Restricted cash |
| 42,643 | 31,568 |
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Accounts receivable, net |
| 238,892 | 246,637 |
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Deferred income tax assets |
| 23,306 | 21,556 |
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Prepaid expenses and other current assets |
| 51,107 | 55,832 |
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Total current assets |
| 777,659 | 744,716 |
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Property and equipment, net |
| 275,567 | 271,321 |
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Computer software, net |
| 204,683 | 216,450 |
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Contract acquisition costs, net |
| 166,785 | 167,449 |
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Goodwill, net |
| 141,840 | 133,337 |
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Equity investments, net |
| 63,721 | 62,064 |
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Other intangible assets, net |
| 15,525 | 21,314 |
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Other assets |
| 17,329 | 17,590 |
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Total assets | $ | 1,663,109 | 1,634,241 |
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Liabilities and Shareholders' Equity |
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Current liabilities: |
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Accounts payable | $ | 30,920 | 31,589 |
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Accrued salaries and employee benefits |
| 41,486 | 80,697 |
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Current portion of obligations under capital leases |
| 2,875 | 3,156 |
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Other current liabilities |
| 192,714 | 180,345 |
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Total current liabilities |
| 267,995 | 295,787 |
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Deferred income tax liabilities |
| 74,812 | 75,019 |
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Notes payable |
| 6,805 | - |
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Obligations under capital leases excluding current portion |
| 3,204 | 3,625 |
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Other long-term liabilities |
| 35,497 | 36,221 |
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Total liabilities |
| 388,313 | 410,652 |
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Minority interest in consolidated subsidiary |
| 6,623 | 6,229 |
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Shareholders' Equity: |
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Common stock |
| 19,911 | 19,868 |
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Additional paid-in capital |
| 75,070 | 66,677 |
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Treasury stock |
| (34,547) | (35,233) |
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Accumulated other comprehensive income |
| 20,533 | 20,641 |
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Retained earnings |
| 1,187,206 | 1,145,407 |
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Total shareholders' equity |
| 1,268,173 | 1,217,360 |
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Total liabilities and shareholders' equity | $ | 1,663,109 | 1,634,241 |
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- more - | ||||
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TSYS Announces Earnings for 2007 |
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Page 9 of 11 |
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TSYS |
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Cash Flow |
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(Unaudited) |
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(In thousands) |
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| Three Months Ended March 31, |
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| 2007 | 2006 |
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Cash flows from operating activities: |
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Net income | $ | 57,273 | 50,393 |
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Adjustments to reconcile net income to net cash provided by |
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operating activities: |
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Minority interests in consolidated subsidiaries' net income |
| 350 | 91 |
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Equity in income of equity investments |
| (860) | (852) |
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(Gain) loss on currency translation adjustments, net |
| (683) | (276) |
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Depreciation and amortization |
| 38,597 | 43,161 |
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Share-based compensation |
| 3,036 | 2,267 |
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Impairment of developed software/contract acquisition costs |
| 620 | - |
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Provisions for (recoveries of) bad debt expense and billing |
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adjustments |
| (1,239) | 567 |
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Charges for transaction processing provisions |
| (792) | 4,161 |
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Deferred income tax (benefit) expense |
| (1,006) | (5,069) |
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Loss on disposal of equipment, net |
| 20 | 92 |
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(Increase) decrease in: |
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Accounts receivable |
| 9,089 | (22,684) |
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Prepaid expenses, other current assets and other long-term assets |
| (3,518) | 4,405 |
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Increase (decrease) in: |
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Accounts payable |
| 735 | 8,718 |
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Accrued salaries and employee benefits |
| (39,211) | (44,884) |
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Excess tax benefit from share-based payment arrangements |
| (2,503) | - |
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Other current liabilities and other long-term liabilities |
| 6,542 | (1,705) |
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Net cash provided by operating activities |
| 66,450 | 38,385 |
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Cash flows from investing activities: |
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Purchases of property and equipment, net |
| (17,232) | (5,786) |
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Additions to licensed computer software from vendors |
| (3,884) | (1,776) |
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Additions to internally developed computer software |
| (3,039) | (3,773) |
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Cash used in acquisitions |
| (472) | - |
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Additions to contract acquisition costs |
| (7,145) | (9,554) |
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Net cash used in investing activities |
| (31,772) | (20,889) |
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Cash flows from financing activities: |
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Proceeds from borrowings of long-term debt |
| 6,805 | - |
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Principal payments on long-term debt borrowings and |
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capital lease obligations |
| (562) | (402) |
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Proceeds from exercise of stock options |
| 3,518 | - |
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Excess tax benefit from share-based payment arrangements |
| 2,503 | - |
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Dividends paid on common stock |
| (13,783) | (11,837) |
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Net cash used in financing activities |
| (1,519) | (12,239) |
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Effect of exchange rate changes on cash and cash equivalents |
| (571) | 31 |
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Net increase in cash and cash equivalents |
| 32,588 | 5,288 |
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Cash and cash equivalents at beginning of year |
| 389,123 | 237,569 |
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Cash and cash equivalents at end of period | $ | 421,711 | 242,857 |
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- more - |
TSYS Announces Earnings for 2007 |
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Page 10 of 11 |
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Geographic Area Data: |
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The following geographic area data represents revenues for the three months ended March 31 based on where the client is domiciled: |
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| Three Months Ended March 31, |
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(dollars in millions): |
| 2007 | % |
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| 2006 | % |
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United States | $ | 337.7 |
| 78.6 | % |
| $ | 349.8 |
| 84.8 | % |
| (3.5) | % |
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Europe |
| 45.9 |
| 10.7 |
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| 32.7 |
| 7.9 |
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| 40.4 |
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Canada |
| 30.0 |
| 7.0 |
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| 22.1 |
| 5.4 |
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| 35.8 |
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Japan |
| 5.3 |
| 1.2 |
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| 3.9 |
| 0.9 |
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| 37.0 |
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Mexico |
| 3.3 |
| 0.8 |
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| 2.5 |
| 0.6 |
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| 30.7 |
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Other |
| 7.4 |
| 1.7 |
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| 1.3 |
| 0.4 |
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| $ | 429.6 |
| 100.0 | % |
| $ | 412.3 |
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| 4.2 | % |
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Geographic Area Revenue by Operating Segment: |
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The following table reconciles segment revenues to revenues by reporting segment for the three months ended March 31: |
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| Three Months Ended March 31, |
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| Domestic-based |
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| Merchant |
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(dollars in millions): |
| 2007 | 2006 |
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| 2007 | 2006 |
| 2007 | 2006 |
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United States | $ | 271.2 |
| 279.8 |
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| - |
| - |
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| 66.5 |
| 70.0 |
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Europe |
| 0.4 |
| 0.3 |
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| 45.5 |
| 32.4 |
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| - |
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Canada |
| 29.9 |
| 22.0 |
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| - |
| - |
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| 0.1 |
| 0.1 |
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Japan |
| - |
| - |
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| 5.3 |
| 3.9 |
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Mexico |
| 3.3 |
| 2.5 |
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| - |
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Other |
| 2.9 |
| 1.1 |
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| 4.4 |
| - |
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| 0.1 |
| 0.2 |
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| $ | 307.7 |
| 305.7 |
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| 55.2 |
| 36.3 |
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| 66.7 |
| 70.3 |
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TSYS Announces Earnings for 2007 |
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Page 11 of 11 |
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Supplemental Information: |
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| Accounts on File at March 31, |
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(in millions) |
| 2007 | % |
| 2006 | % |
| % Change |
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Consumer |
| 268.9 |
| 63.6 | % | 272.5 |
| 61.8 | % |
| (1.3) | % |
Retail | * | 52.5 |
| 12.4 |
| 82.9 |
| 18.8 |
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| (36.7) |
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Commercial |
| 32.8 |
| 7.8 |
| 31.2 |
| 7.1 |
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| 5.2 |
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Government services/EBT |
| 21.5 |
| 5.1 |
| 19.2 |
| 4.4 |
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| 12.4 |
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Stored Value | * | 42.2 |
| 10.0 |
| 26.7 |
| 6.1 |
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| 57.8 |
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Debit |
| 4.8 |
| 1.1 |
| 7.9 |
| 1.8 |
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| (39.0) |
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| 422.7 |
| 100.0 | % | 440.4 |
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| (4.0) | % |
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*Certain accounts previously classified as Retail have been reclassified as Stored Value to conform with the presentation adopted |
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in the second quarter of 2006. |
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(in millions) |
| March 31, 2007 |
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| March 31, 2006 |
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YTD Average Accounts on File |
| 418.3 |
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| 439.3 |
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| (4.8) |
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| Accounts on File at March 31, |
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(in millions) |
| 2007 | % |
| 2006 | % |
| % Change |
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Domestic |
| 353.5 |
| 83.6 | % |
| 383.5 |
| 87.1 | % | (7.8) | % |
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International |
| 69.2 |
| 16.4 |
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| 56.9 |
| 12.9 |
| 21.5 |
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| 422.7 |
| 100.0 | % |
| 440.4 |
| 100.0 | % | (4.0) | % |
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Note: The accounts on file between domestic and international is based on the geographic domicile of processing clients. |
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Growth in Accounts on File (in millions): |
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| March 2006 |
| March 2005 |
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Beginning balance |
| 440.4 |
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| 370.6 |
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Change in accounts on file due to: |
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Internal growth of existing clients |
| 36.2 |
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| 44.1 |
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New clients |
| 96.1 |
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| 39.3 |
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Purges/Sales |
| (19.2) |
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| (12.3) |
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Deconversions |
| (130.8) |
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| (1.3) |
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Ending balance |
| 422.7 |
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| 440.4 |
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Number of Employees (FTEs): |
| 2007 |
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| 2006 |
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At March 31, |
| 6,766 |
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| 6,579 |
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YTD average for period ended March 31, |
| 6,721 |
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| 6,641 |
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- ### - |