Exhibit 99.2
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Page 7 of 13 |
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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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| March 31, |
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| Percentage |
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| 2008 |
| 2007 |
| Change |
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Revenues |
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Electronic payment processing services* | $ | 241,279 |
| 230,060 |
| 4.9 | % |
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Merchant acquiring services |
| 61,667 |
| 60,680 |
| 1.6 |
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Other services* |
| 57,095 |
| 52,871 |
| 8.0 |
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Revenues before reimbursables |
| 360,041 |
| 343,611 |
| 4.8 |
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Reimbursable items |
| 101,682 |
| 85,992 |
| 18.2 |
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Total revenues |
| 461,723 |
| 429,603 |
| 7.5 |
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Expenses |
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Salaries & other personnel expense* |
| 148,317 |
| 140,445 |
| 5.6 |
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Net occupancy & equipment expense* |
| 72,886 |
| 67,348 |
| 8.2 |
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Spin related expenses* |
| 6,895 |
| - |
| nm |
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Other operating expenses* |
| 45,168 |
| 50,139 |
| (9.9) |
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Expenses before reimbursable items |
| 273,266 |
| 257,932 |
| 5.9 |
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Reimbursable items |
| 101,682 |
| 85,992 |
| 18.2 |
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Total operating expenses |
| 374,948 |
| 343,924 |
| 9.0 |
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Operating income |
| 86,775 |
| 85,679 |
| 1.3 |
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Other income: |
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Interest income |
| 2,563 |
| 5,488 |
| (53.3) |
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Interest expense |
| (3,340) |
| (210) |
| nm |
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Gain on foreign currency translation, net |
| 1,943 |
| 683 |
| 184.5 |
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Dividend income |
| 134 |
| 15 |
| nm |
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Other income |
| 1,300 |
| 5,976 |
| (78.2) |
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Income before income taxes, minority interest |
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and equity in income of equity investments |
| 88,075 |
| 91,655 |
| (3.9) |
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Income taxes |
| 33,035 |
| 34,892 |
| (5.3) |
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Income before minority interest and equity |
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in income of equity investments |
| 55,040 |
| 56,763 |
| (3.0) |
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Minority interest |
| (250) |
| (350) |
| 28.6 |
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Equity in income of equity investments |
| 1,824 |
| 860 |
| 112.1 |
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Net income | $ | 56,614 |
| 57,273 |
| (1.2) | % |
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Basic earnings per share | $ | 0.29 |
| 0.29 |
| (1.3) | % |
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Diluted earnings per share | $ | 0.29 |
| 0.29 |
| (1.3) | % |
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Dividend declared per share | $ | 0.07 |
| 0.07 |
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Average common shares outstanding |
| 196,745 |
| 196,487 |
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Average common and common |
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equivalent shares outstanding |
| 197,306 |
| 196,938 |
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* Certain amounts have been previously reclassed to conform with the presentation adopted in 2008. |
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nm = not meaningful |
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- more - | ||||||||
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TSYS Announces First Quarter 2008 Earnings |
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Page 8 of 13 |
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TSYS | ||||||||||||
Segment Breakdown | ||||||||||||
(unaudited) | ||||||||||||
(in thousands) | ||||||||||||
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| Three Months Ended March 31, 2008 |
| Three Months Ended March 31, 2007 | ||||||||
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| Domestic- Based Support Services | International- Based Support Services | Merchant Acquiring Services | Spin- Related Costs | Consolidated |
| Domestic- Based Support Services | International- Based Support Services | Merchant Acquiring Services | Spin- Related Costs | Consolidated |
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Revenues before reimbursables | $ | 242,771 | 67,957 | 55,129 | - | 365,857 |
| 240,106 | 52,963 | 55,681 | - | 348,750 |
Intersegment revenues |
| (5,231) | (403) | (182) | - | (5,816) |
| (4,776) | (223) | (140) | - | (5,139) |
Revenues before reimbursables |
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from external customers | $ | 237,540 | 67,554 | 54,947 | - | 360,041 |
| 235,330 | 52,740 | 55,541 | - | 343,611 |
Total revenues | $ | 328,909 | 69,824 | 70,937 | - | 469,670 |
| 313,595 | 55,400 | 67,747 | - | 436,742 |
Intersegment revenues |
| (7,362) | (403) | (182) | - | (7,947) |
| (6,776) | (223) | (140) | - | (7,139) |
Revenues from external customers | $ | 321,547 | 69,421 | 70,755 | - | 461,723 |
| 306,819 | 55,177 | 67,607 | - | 429,603 |
Depreciation and amortization | $ | 24,980 | 7,695 | 6,554 | - | 39,229 |
| 25,951 | 5,800 | 6,846 | - | 38,597 |
Intersegment expenses | $ | 2,774 | (3,541) | (7,180) | - | (7,947) |
| 3,476 | (3,239) | (7,371) | - | (7,134) |
Segment operating income | $ | 71,150 | 7,446 | 15,074 | (6,895) | 86,775 |
| 62,481 | 11,112 | 12,086 | - | 85,679 |
Income before income taxes, minority interest and |
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equity income of equity investments |
| 70,836 | 8,750 | 15,384 | (6,895) | 88,075 |
| 67,613 | 11,379 | 12,663 | - | 91,655 |
Income tax expense | $ | 26,637 | 2,914 | 5,408 | (1,924) | 33,035 |
| 26,186 | 4,172 | 4,534 | - | 34,892 |
Equity in income of equity investments | $ | (338) | 2,162 | - | - | 1,824 |
| - | 860 | - | - | 860 |
Net Income | $ | 45,917 | 5,693 | 9,976 | (4,972) | 56,614 |
| 41,547 | 7,597 | 8,129 | - | 57,273 |
Identifiable assets |
| 1,296,349 | 353,655 | 188,360 | - | 1,838,364 |
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Intersegment eliminations |
| (312,664) | (1,514) | (1,209) | - | (315,387) |
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Total assets |
| 983,685 | 352,141 | 187,151 | - | 1,522,977 |
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Note: | Revenues from domestic-based services include electronic payment processing services and other services provided from the United 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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| Effective February 1, 2008, TSYS merged the operations of Golden Retriever LLC with TSYS Acquiring Solutions, LLC. As a result of the merger, the results of Golden Retriever for prior periods have been reclassified to reflect the move from domestic-based support services to the merchant acquiring services segment. |
- more- |
TSYS Announces First Quarter 2008 Earnings |
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Page 9 of 13 |
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TSYS |
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Balance Sheet |
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(in thousands) |
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| Mar 31, 2008 | Dec 31, 2007 |
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| (unaudited) | (unaudited) |
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Assets |
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Current assets: |
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Cash and cash equivalents | $ | 242,649 | 210,518 |
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Restricted cash |
| 25,706 | 29,688 |
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Accounts receivable, net |
| 261,935 | 256,970 |
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Deferred income tax assets |
| 19,787 | 17,152 |
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Prepaid expenses and other current assets |
| 75,492 | 72,250 |
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Total current assets |
| 625,569 | 586,578 |
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Property and equipment, net |
| 287,594 | 283,138 |
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Computer software, net |
| 195,853 | 205,830 |
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Contract acquisition costs, net |
| 159,778 | 151,599 |
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Goodwill, net |
| 143,555 | 142,545 |
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Equity investments, net |
| 85,189 | 80,905 |
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Other intangible assets, net |
| 13,209 | 13,462 |
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Other assets |
| 12,230 | 14,963 |
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Total assets | $ | 1,522,977 | 1,479,020 |
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Liabilities and Shareholders' Equity |
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Current liabilities: |
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Accrued salaries and employee benefits | $ | 50,787 | 85,142 |
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Accounts payable |
| 43,638 | 41,817 |
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Current portion of notes payable |
| 71,776 | 8,648 |
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Current portion of obligations under capital leases |
| 3,552 | 3,080 |
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Other current liabilities |
| 163,905 | 135,108 |
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Total current liabilities |
| 333,658 | 273,795 |
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Notes payable, excluding current portion |
| 186,292 | 252,659 |
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Deferred income tax liabilities |
| 67,232 | 67,428 |
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Obligations under capital leases, excluding current portion |
| 7,562 | 3,934 |
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Other long-term liabilities |
| 30,524 | 28,151 |
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Total liabilities |
| 625,268 | 625,967 |
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Minority interests in consolidated subsidiaries |
| 9,793 | 8,580 |
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Shareholders' Equity: |
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Common stock |
| 20,038 | 19,966 |
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Additional paid-in capital |
| 112,402 | 104,762 |
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Accumulated other comprehensive income, net |
| 32,687 | 28,322 |
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Treasury stock |
| (45,475) | (34,138) |
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Retained earnings |
| 768,264 | 725,561 |
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Total shareholders' equity |
| 887,916 | 844,473 |
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Total liabilities and shareholders' equity | $ | 1,522,977 | 1,479,020 |
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- more - |
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TSYS Announces First Quarter 2008 Earnings |
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Page 10 of 13 |
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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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| 2008 | 2007 |
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Cash flows from operating activities: |
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Net income | $ | 56,614 | 57,273 |
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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 |
| 250 | 350 |
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Equity in income of equity investments |
| (1,824) | (860) |
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Gain on currency translation adjustments, net |
| (1,943) | (683) |
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Depreciation and amortization |
| 39,229 | 38,597 |
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Share-based compensation |
| 7,895 | 3,036 |
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Asset impairments |
| - | 620 |
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Provisions for (recoveries of) bad debt expense and billing |
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adjustments |
| 2,101 | (1,239) |
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Charges for transaction processing provisions |
| 265 | (792) |
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Deferred income tax benefit |
| (6,875) | (1,006) |
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Loss on disposal of equipment, net |
| 161 | 20 |
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(Increase) decrease in: |
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Accounts receivable |
| (6,140) | 9,089 |
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Prepaid expenses, other current assets and other long-term assets |
| 2,530 | (3,518) |
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Increase (decrease) in: |
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Accounts payable |
| 3,426 | 735 |
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Accrued salaries and employee benefits |
| (34,401) | (39,211) |
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Excess tax benefit from share-based payment arrangements |
| (67) | (2,503) |
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Other current liabilities and other long-term liabilities |
| 38,778 | 6,542 |
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Net cash provided by operating activities |
| 99,999 | 66,450 |
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Cash flows from investing activities: |
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Purchases of property and equipment, net |
| (14,350) | (17,232) |
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Additions to licensed computer software from vendors |
| (2,351) | (3,884) |
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Additions to internally developed computer software |
| (2,413) | (3,039) |
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Cash used in acquisitions and equity investments |
| - | (472) |
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Additions to contract acquisition costs |
| (17,168) | (7,145) |
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Net cash used in investing activities |
| (36,282) | (31,772) |
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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 |
| (4,976) | (562) |
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Proceeds from exercise of stock options |
| 59 | 3,518 |
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Excess tax benefit from share-based payment arrangements |
| 67 | 2,503 |
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Repurchase of common stock |
| (11,369) | - |
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Dividends paid on common stock |
| (13,858) | (13,783) |
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Net cash used in financing activities |
| (30,077) | (1,519) |
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Effect of exchange rate changes on cash and cash equivalents |
| (1,509) | (571) |
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Net increase in cash and cash equivalents |
| 32,131 | 32,588 |
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Cash and cash equivalents at beginning of year |
| 210,518 | 389,123 |
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Cash and cash equivalents at end of period | $ | 242,649 | 421,711 |
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TSYS Announces First Quarter 2008 Earnings |
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Page 11 of 13 |
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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): |
| 2008 | % |
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| 2007 | % |
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United States | $ | 354.1 |
| 76.7 | % |
| $ | 337.7 |
| 78.6 | % |
| 4.8 | % |
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Europe |
| 58.9 |
| 12.7 |
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| 45.9 |
| 10.7 |
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| 28.2 |
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Canada |
| 31.7 |
| 6.9 |
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| 30.0 |
| 7.0 |
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| 5.4 |
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Japan |
| 7.4 |
| 1.6 |
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| 5.3 |
| 1.2 |
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| 40.0 |
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Mexico |
| 3.7 |
| 0.8 |
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| 3.3 |
| 0.8 |
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| 14.4 |
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Other |
| 5.9 |
| 1.3 |
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| 7.4 |
| 1.7 |
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| (19.6) |
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| $ | 461.7 |
| 100.0 | % |
| $ | 429.6 |
| 100.0 | % |
| 7.5 | % |
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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 |
| International-based |
| Merchant acquiring | ||||||||
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| support services |
| support services |
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(dollars in millions): |
| 2008 | 2007 |
| 2008 | 2007 |
| 2008 | 2007 | |||||
United States | $ | 283.6 |
| 271.2 |
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| 0.1 |
| - |
| 70.4 |
| 66.5 | |
Europe |
| 0.3 |
| 0.4 |
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| 58.6 |
| 45.5 |
| - |
| - | |
Canada |
| 31.5 |
| 29.9 |
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| - |
| - |
| 0.2 |
| 0.1 | |
Japan |
| - |
| - |
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| 7.4 |
| 5.3 |
| - |
| - | |
Mexico |
| 3.7 |
| 3.3 |
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| - |
| - |
| - |
| - | |
Other |
| 2.1 |
| 2.9 |
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| 3.6 |
| 4.4 |
| 0.2 |
| 0.1 | |
| $ | 321.2 |
| 307.7 |
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| 69.7 |
| 55.2 |
| 70.8 |
| 66.7 | |
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-more- | ||||||||||||||
TSYS Announces First Quarter 2008 Earnings |
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Page 12 of 13 |
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Supplemental Information: |
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| Accounts on File at March 31, |
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(in millions) |
| 2008 | % |
| 2007 | % |
| % Change |
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Consumer |
| 211.4 |
| 57.9 | % |
| 268.9 |
| 63.6 | % |
| (21.4) | % |
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Retail |
| 57.9 |
| 15.9 |
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| 52.5 |
| 12.4 |
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| 10.4 |
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Commercial |
| 40.1 |
| 11.0 |
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| 32.8 |
| 7.8 |
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| 22.1 |
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Government services |
| 24.1 |
| 6.6 |
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| 21.5 |
| 5.1 |
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| 11.8 |
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Stored Value |
| 26.0 |
| 7.1 |
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| 42.2 |
| 10.0 |
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| (38.4) |
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Debit |
| 5.4 |
| 1.5 |
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| 4.8 |
| 1.1 |
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| 12.1 |
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| 364.9 |
| 100.0 | % |
| 422.7 |
| 100.0 | % |
| (13.7) | % |
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(in millions) |
| March 31, 2008 |
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| March 31, 2007 |
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| % Change |
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YTD Average Accounts on File |
| 370.2 |
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| 418.3 |
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| (11.5) |
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| Accounts on File at March 31, |
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(in millions) |
| 2008 | % |
| 2007 | % |
| % Change |
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Domestic |
| 283.4 |
| 77.7 | % |
| 353.5 |
| 83.6 | % |
| (19.8) | % |
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International |
| 81.5 |
| 22.3 |
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| 69.2 |
| 16.4 |
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| 17.9 |
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|
| 364.9 |
| 100.0 | % |
| 422.7 |
| 100.0 | % |
| (13.7) | % |
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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 2007 to March 2008 |
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| March 2006 to March 2007 |
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Beginning balance |
| 422.7 |
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| 440.4 |
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Change in accounts on file due to: |
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Internal growth of existing clients |
| 53.9 |
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| 36.2 |
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New clients |
| 18.2 |
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| 96.1 |
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Purges/Sales |
| (25.3) |
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| (19.2) |
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Deconversions |
| (104.6) |
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| (130.8) |
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Ending balance |
| 364.9 |
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| 422.7 |
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Number of Employees (FTEs): |
| 2008 |
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| 2007 |
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At March 31, |
| 7,548 |
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| 6,804 |
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YTD average for period ended March 31, |
| 7,245 |
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| 6,740 |
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-more- | ||||||||||||
TSYS Announces First Quarter 2008 Earnings |
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Page 13 of 13 |
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RECONCILIATION OF GAAP TO NON-GAAP |
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| Three Months Ended March 31, |
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(in thousands, except per share) |
| 2008 |
|
| 2007 | % Change |
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REVENUES |
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Total revenues | $ | 461,723 |
|
| 429,603 | 7.5 | % |
Deduct: revenues associated with deconverted portfolios |
| (4,856) |
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| (28,899) |
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Total revenues, excluding revenues associated with |
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deconverted portfolios | $ | 456,867 |
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| 400,704 | 14.0 | % |
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OPERATING INCOME |
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Operating income | $ | 86,775 |
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| 85,679 | 1.3 | % |
Add: spin-related costs |
| 6,895 |
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| - |
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Operating income, excluding spin-related expenses | $ | 93,670 |
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| 85,679 | 9.3 | % |
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Revenues before reimbursables | $ | 360,041 |
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| 343,611 |
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Total revenues | $ | 461,723 |
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| 429,603 |
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Operating margin, as reported |
| 18.8% |
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| 19.9% |
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Operating margin, excluding reimbursables |
| 24.1% |
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| 24.9% |
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Operating margin, excluding reimbursables |
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and spin-related expenses |
| 26.0% |
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| 24.9% |
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NET INCOME |
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Net income | $ | 56,614 |
|
| 57,273 | (1.2) | % |
Add: spin-related costs, net of tax |
| 4,972 |
|
| - |
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Net income, excluding spin-related expenses | $ | 61,586 |
|
| 57,273 | 7.5 | % |
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Common shares outstanding |
| 196,745 |
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| 196,487 |
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EARNINGS PER SHARE (EPS) - Basic |
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Basic earnings per share | $ | 0.29 |
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| 0.29 | (1.3) | % |
Add: spin-related costs, net of tax per share |
| 0.02 |
|
| - |
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Basic EPS, excluding spin-related expenses | $ | 0.31 |
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| 0.29 | 7.4 | % |
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###