Exhibit 99.1
PRESS RELEASE |
Total System Services, Inc. One TSYS Way Post Office Box 2567 Columbus GA 31902-2567 | +1.706.649.2307 +1.706.649.5740 www.tsys.com |
For immediate release:
Contacts:
Shawn Roberts
TSYS Investor Relations
+1.706.644.6081
shawnroberts@tsys.com
TSYS Investor Relations
+1.706.644.6081
shawnroberts@tsys.com
TSYS Announces First Quarter 2010 Financial Results
Columbus, Ga., April 20, 2010 —TSYS (NYSE: TSS) today reported results for the first quarter of 2010. Total revenues were $415.4 million for an increase of 1.6% over 2009.
Income from continuing operations increased 3.1% to $51.8 million and net income was up 10.3% compared to 2009. Basic earnings per share (EPS) from continuing operations were $0.26.
As previously reported, TSYS completed its acquisition of 51% of Omaha, Nebraska-based First National Merchant Solutions, LLC (FNMS) on April 1, 2010. TSYS will consolidate this new entity in its financial statements in its Merchant Services segment for the remaining nine months of 2010. TSYS’ guidance for 2010 has been updated to reflect this acquisition. For 2010, it is expected that FNMS will contribute $95 to $97 million to TSYS’ total revenues; $2 to $3 million to net income, net of acquisition costs of approximately $2.5 million; and approximately $0.01 to basic earnings per share. While TSYS will consolidate and report all of FNMS’ revenues and expenses, it will report only 51% of FNMS’ net income.
“Our new FNMS joint venture is transformational for TSYS as it advances our goal to diversify our business from being just a transaction processor to being a full service payments company. FNMS is a “top-tier” merchant acquirer with a deep and talented pool of experienced management and team members that mirrors our TSYS culture,” said Philip W. Tomlinson, chairman of the board and chief executive officer of TSYS.
“With the economy showing signs of improvement for the first time in two years, we remain optimistic about our ability to achieve our original guidance for 2010, and are pleased to be able to raise it as a result of the FNMS joint venture,” added Tomlinson.
TSYS also announced today a new stock repurchase plan to purchase up to 10 million shares of TSYS stock. This equates to approximately $162 million of TSYS stock based on current market prices. The shares may be purchased from time to time over the next two years at prices considered attractive to the company.
TSYS’ revised guidance for 2010 is set forth below and includes the impact of deconverted portfolios (whether as the result of bank failures, portfolio sales or otherwise), price compression, reduction in one-time termination fees and currency impact, and the current economic environment of the credit card market.
Page 1 of 12
PRESS RELEASE |
2010 Revised Guidance | ||||||||||||||||||||||||
Range | ||||||||||||||||||||||||
(in millions, except per | Percent | |||||||||||||||||||||||
share amounts) | Change | |||||||||||||||||||||||
Total revenues | $ | 1,711 | to | $ | 1,745 | 1 | % | to | 3 | % | ||||||||||||||
Reimbursable items | $ | 279 | to | $ | 284 | 3 | % | to | 5 | % | ||||||||||||||
Revenues before reimbursable items | $ | 1,432 | to | $ | 1,461 | 1 | % | to | 3 | % | ||||||||||||||
Income from continuing operations | $ | 189 | to | $ | 194 | (14 | %) | to | (12 | %) | ||||||||||||||
EPS from continuing operations available to TSYS common shareholders | $ | 0.96 | to | $ | 0.98 | (14 | %) | to | (12 | %) | ||||||||||||||
Average Shares Outstanding | 197.3 |
Conference Call
TSYS will host its quarterly conference call at 5:00 p.m. ET on Tuesday, April 20. The conference call can be accessed via simultaneous Internet broadcast attsys.comby clicking on the link under “Webcasts” on the main homepage. The replay will be archived for 12 months and will be available approximately 30 minutes after the completion of the call. A slide presentation to accompany the call will be available by clicking on the link under “Webcasts” on the main homepage oftsys.com.
Non-GAAP Measures
The financial highlights section of this release contains the non-GAAP financial measures of revenues and operating results on a constant currency basis to describe TSYS’ performance. Management uses these non-GAAP financial measures to better understand and assess TSYS’ operating results and financial performance. TSYS believes these non-GAAP financial measures provide meaningful additional information about TSYS to assist investors in understanding and evaluating its operating results.
Additional information about non-GAAP financial measures and a reconciliation of those measures to the most directly comparable GAAP measures are included on page 11 of this release.
About TSYS
TSYS (NYSE: TSS) is one of the world’s largest companies for outsourced payment services, offering a broad range of issuer- and acquirer-processing technologies that support consumer-finance, credit, debit, healthcare, loyalty and prepaid services for financial institutions and retail companies in the Americas, EMEA and Asia-Pacific regions. For more information contact news@tsys.com or log on towww.tsys.com. TSYS routinely posts all important information on its Web site.
Forward-Looking Statements
This press release contains statements that constitute “forward-looking statements” within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934 as amended by the Private Securities
Page 2 of 12
PRESS RELEASE |
Litigation Reform Act of 1995. These forward-looking statements include, among others, statements regarding the expected impact of the FNMS joint venture on TSYS’ 2010 total revenues, net income and basic earnings per share, TSYS’ earnings guidance for 2010 total revenues, revenues before reimbursable items, income from continuing operations and EPS from continuing operations, and the assumptions underlying such statements including, with respect to TSYS’ earnings guidance for 2010: (1) the economy will not worsen during 2010; (2) there will be no deconversions of large clients during the year other than as previously announced; (3) there will be no significant movement in foreign currency exchange rates related to TSYS’ business during 2010; (4) the anticipated levels in employment, technology and other expenses, which are included in 2010 estimates, will be accomplished; (5) TSYS will not incur significant expenses associated with the conversion of new large clients or acquisitions, or any significant impairment of goodwill or other intangibles; and (6) there will be no significant movements in LIBOR, and no significant draws on the remaining balance of TSYS’ revolving credit facility. These statements are based on the current beliefs and expectations of TSYS’ management and are subject to significant risks and uncertainties. Actual results may differ materially from those contemplated by the forward-looking statements. A number of important factors could cause actual results to differ materially from those contemplated by our forward-looking statements in this press release. Many of these factors are beyond TSYS’ ability to control or predict. These factors include, but are not limited to: (1) one or more of the assumptions set forth above upon which TSYS’ 2010 earnings guidance is based is inaccurate; (2) adverse developments with respect to entering into contracts with new clients and retaining current clients; (3) continued consolidation and turmoil in the financial services and other industries during 2010, including the merger of TSYS clients with entities that are not TSYS processing clients, the sale of portfolios by TSYS clients to entities that are not TSYS processing clients and the nationalization or seizure by banking regulators of TSYS clients; (4) TSYS is unable to control expenses and increase market share both domestically and internationally; (5) TSYS is unable to manage the impact of slowing economic conditions and consumer spending; (6) the material breach of security of any of TSYS’ systems; (7) the impact of potential and completed acquisitions, including the costs associated therewith and their being more difficult to integrate than anticipated; (8) changes occur in laws, rules, regulations, credit card association rules or other industry standards affecting TSYS’ business which require significant product development efforts or reduce the market demand for or value of its products; (9) adverse developments with respect to the credit card industry in general, including a decline in the use of credit cards as a payment mechanism; and (10) internal growth rates of TSYS’ existing clients are lower than anticipated whether as a result of unemployment rates, card delinquencies and charge-off rates or otherwise. Additional factors that could cause actual results to differ materially from those contemplated in this release can be found in TSYS’ filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. We believe these forward-looking statements are reasonable; however, undue reliance should not be placed on any forward-looking statements, which are based on current expectations. We do not assume any obligation to update any forward-looking statements as a result of new information , future developments or otherwise.
-more-
Page 3 of 12
TSYS Announces 2010 Earnings
Page 4 of 12
Page 4 of 12
TSYS
Financial Highlights
(unaudited)
(in thousands, except per share data)
Financial Highlights
(unaudited)
(in thousands, except per share data)
Three Months Ended | ||||||||||||
March 31, | ||||||||||||
Percent | ||||||||||||
2010 | 2009 | Change | ||||||||||
Total revenues | $ | 415,354 | 408,933 | 1.6 | % | |||||||
Cost of services | 292,191 | 284,675 | 2.6 | |||||||||
Selling, general and administrative expenses | 44,092 | 46,143 | (4.4 | ) | ||||||||
Operating income | 79,071 | 78,115 | 1.2 | |||||||||
Nonoperating expenses | (262 | ) | (1,459 | ) | nm | |||||||
Income from continuing operations before income taxes, noncontrolling interests and equity in income of equity investments | 78,809 | 76,656 | 2.8 | |||||||||
Income taxes | 27,883 | 27,415 | 1.7 | |||||||||
Income from continuing operations before noncontrolling interests and equity in income of equity investments | 50,926 | 49,241 | 3.4 | |||||||||
Equity in income of equity investments | 893 | 1,043 | (14.4 | ) | ||||||||
Income from continuing operations, net of tax | 51,819 | 50,284 | 3.1 | |||||||||
Loss from discontinued operations, net of tax | — | (3,343 | ) | nm | ||||||||
Net income | 51,819 | 46,941 | 10.4 | |||||||||
Net income attributable to noncontrolling interests | (492 | ) | (415 | ) | nm | |||||||
Net income attributable to TSYS common shareholders | $ | 51,327 | 46,526 | 10.3 | % | |||||||
Basic earnings per share: | ||||||||||||
Income from continuing operations to TSYS common shareholders | $ | 0.26 | 0.26 | 1.1 | % | |||||||
Loss from discontinued operations to TSYS common shareholders | 0.00 | (0.02 | ) | nm | ||||||||
Net income attributable to TSYS common shareholders | $ | 0.26 | 0.24 | 10.2 | % | |||||||
Diluted earnings per share: | ||||||||||||
Income from continuing operations to TSYS common shareholders | $ | 0.26 | 0.26 | 1.2 | % | |||||||
Loss from discontinued operations to TSYS common shareholders | 0.00 | (0.02 | ) | nm | ||||||||
Net income attributable to TSYS common shareholders | $ | 0.26 | 0.24 | 10.3 | % | |||||||
Dividends declared per share | $ | 0.07 | 0.07 | |||||||||
Amounts attributable to TSYS common shareholders: | ||||||||||||
Income from continuing operations, net of tax | $ | 51,327 | 49,869 | |||||||||
Loss from discontinued operations, net of tax | — | (3,343 | ) | |||||||||
Net income | $ | 51,327 | 46,526 | |||||||||
nm = not meaningful |
-more-
TSYS Announces 2010 Earnings
Page 5 of 12
Page 5 of 12
TSYS
Earnings Per Share
(unaudited)
(in thousands, except per share data)
Earnings Per Share
(unaudited)
(in thousands, except per share data)
Three Months Ended | Three Months Ended | |||||||||||||||
March 31, 2010 | March 31, 2009 | |||||||||||||||
Common | Participating | Common | Participating | |||||||||||||
Stock | Securities | Stock | Securities | |||||||||||||
Basic Earnings per share: | ||||||||||||||||
Net income | $ | 51,327 | 46,526 | |||||||||||||
Less income allocated to nonvested awards | (264 | ) | 264 | (361 | ) | 361 | ||||||||||
Net income allocated to common stock for EPS calculation ( a ) | $ | 51,063 | 264 | 46,165 | 361 | |||||||||||
Average common shares outstanding ( b ) | 196,160 | 1,016 | 195,461 | 1,534 | ||||||||||||
Average common shares and participating securities | 197,176 | 196,995 | ||||||||||||||
Basic Earnings per share ( a )/( b ) | $ | 0.26 | 0.26 | 0.24 | 0.24 | |||||||||||
Diluted Earnings per share: | ||||||||||||||||
Net income | $ | 51,327 | 46,526 | |||||||||||||
Less income allocated to nonvested awards | (263 | ) | 263 | (360 | ) | 360 | ||||||||||
Net income allocated to common stock for EPS calculation ( c ) | $ | 51,064 | 263 | 46,166 | 360 | |||||||||||
Average common shares outstanding | 196,160 | 1,016 | 195,461 | 1,534 | ||||||||||||
Increase due to assumed issuance of shares related to common equivalent shares outstanding | 86 | 67 | ||||||||||||||
Average common and common equivalent shares outstanding ( d ) | 196,246 | 1,016 | 195,528 | 1,534 | ||||||||||||
Average common and common equivalent shares and participating securities | 197,262 | 197,062 | ||||||||||||||
Diluted Earnings per share ( c )/( d ) | $ | 0.26 | 0.26 | 0.24 | 0.24 | |||||||||||
In June 2008, the Financial Accounting Standards Board (FASB) issued an update to the Accounting Standards Codification 260 (ASC 260),“Earnings Per Share”and it became effective for TSYS beginning January 1, 2009. Under this standard, unvested awards of share-based payments with rights to receive dividends or dividend equivalents, such as our nonvested awards, are considered participating securities for purposes of calculating earnings per share (“EPS”). Under the two-class method required by ASC 260, a portion of net income is allocated to these participating securities and therefore is excluded from the calculation of EPS allocated to common stock, as shown in the table above. This update to ASC 260 requires retrospective applications for periods prior to the effective date and as a result, all prior period earnings per share data presented herein have been adjusted to conform to these provisions.
-more-
TSYS Announces 2010 Earnings
Page 6 of 12
Page 6 of 12
TSYS
Segment Breakdown
(unaudited)
(in thousands)
Segment Breakdown
(unaudited)
(in thousands)
Three Months Ended March 31, | ||||||||||||||||
Change | ||||||||||||||||
2010 | 2009 | $ | % | |||||||||||||
Revenues before reimbursable items | ||||||||||||||||
North America Services | $ | 215,309 | 223,782 | (8,473 | ) | (3.8 | )% | |||||||||
International Services | 76,281 | 70,584 | 5,697 | 8.1 | % | |||||||||||
Merchant Services | 58,663 | 58,206 | 457 | 0.8 | % | |||||||||||
Intersegment revenues | (5,702 | ) | (7,126 | ) | 1,424 | (20.0 | )% | |||||||||
Revenues before reimbursable items from external customers | $ | 344,551 | 345,446 | (895 | ) | (0.3 | )% | |||||||||
Total revenues | ||||||||||||||||
North America Services | $ | 254,228 | 268,789 | (14,561 | ) | (5.4 | )% | |||||||||
International Services | 79,392 | 73,802 | 5,590 | 7.6 | % | |||||||||||
Merchant Services | 89,209 | 75,499 | 13,710 | 18.2 | % | |||||||||||
Intersegment revenues | (7,475 | ) | (9,157 | ) | 1,682 | (18.4 | )% | |||||||||
Revenues from external customers | $ | 415,354 | 408,933 | 6,421 | 1.6 | % | ||||||||||
Depreciation and amortization | ||||||||||||||||
North America Services | $ | 20,403 | 23,230 | (2,827 | ) | (12.2 | )% | |||||||||
International Services | 8,783 | 7,584 | 1,199 | 15.8 | % | |||||||||||
Merchant Services | 8,585 | 8,087 | 498 | 6.2 | % | |||||||||||
Corporate Admin | 793 | 577 | 216 | 37.4 | % | |||||||||||
Total depreciation and amortization | $ | 38,564 | 39,478 | (914 | ) | (2.3 | )% | |||||||||
Segment operating income | ||||||||||||||||
North America Services | $ | 69,788 | 71,494 | (1,706 | ) | (2.4 | )% | |||||||||
International Services | 11,283 | 9,532 | 1,751 | 18.4 | % | |||||||||||
Merchant Services | 17,325 | 15,519 | 1,806 | 11.6 | % | |||||||||||
Corporate Admin | (19,325 | ) | (18,430 | ) | (895 | ) | 4.9 | % | ||||||||
Operating income | $ | 79,071 | 78,115 | 956 | 1.2 | % | ||||||||||
Other: | ||||||||||||||||
Reimbursable items: | ||||||||||||||||
North America Services | $ | 38,919 | 45,007 | (6,088 | ) | (13.5 | )% | |||||||||
International Services | 3,111 | 3,218 | (107 | ) | (3.3 | )% | ||||||||||
Merchant Services | 30,546 | 17,293 | 13,253 | 76.6 | % | |||||||||||
Intersegment revenues | (1,773 | ) | (2,031 | ) | 258 | (12.7 | )% | |||||||||
Reimbursable items | $ | 70,803 | 63,487 | 7,316 | 11.5 | % | ||||||||||
Volumes: | ||||||||||||||||
FTEs | ||||||||||||||||
North America Services | 4,519 | 5,056 | (537 | ) | (10.6 | )% | ||||||||||
International Services | 1,895 | 1,818 | 77 | 4.2 | % | |||||||||||
Merchant Services | 705 | 836 | (131 | ) | (15.7 | )% | ||||||||||
Corporate Admin | 314 | 358 | (44 | ) | (12.3 | )% | ||||||||||
FTEs | 7,433 | 8,068 | (635 | ) | (7.9 | )% | ||||||||||
North America Segment: | ||||||||||||||||
Accounts on File (AOF) (in millions) | 283.1 | 303.2 | (20.1 | ) | (6.6 | )% | ||||||||||
Transactions (in millions) | 1,458.2 | 1,481.0 | (22.8 | ) | (1.5 | )% | ||||||||||
International Segment: | ||||||||||||||||
AOF (in millions) | 40.2 | 37.2 | 3.0 | 8.1 | % | |||||||||||
Transactions (in millions) | 281.3 | 247.9 | 33.4 | 13.5 | % | |||||||||||
Merchant Segment: | ||||||||||||||||
POS Transactions (in millions) | 1,320.3 | 1,226.1 | 94.2 | 7.7 | % |
At | Change | |||||||||||||||
Total assets (in thousands) | 3/31/2010 | 12/31/2009 | $ | % | ||||||||||||
North America Services | $ | 1,582,743 | 1,535,129 | 47,614 | 3.1 | % | ||||||||||
International Services | 374,072 | 379,606 | (5,534 | ) | (1.5 | )% | ||||||||||
Merchant Services | 217,625 | 215,855 | 1,770 | 0.8 | % | |||||||||||
Intersegment assets | (410,397 | ) | (419,636 | ) | 9,239 | (2.2 | )% | |||||||||
Total assets | $ | 1,764,043 | 1,710,954 | 53,089 | 3.1 | % | ||||||||||
Certain amounts have been reclassified to conform with the presentation adopted in 2010.
-more-
TSYS Announces 2010 Earnings
Page 7 of 12
Page 7 of 12
TSYS
Balance Sheet
(in thousands)
Balance Sheet
(in thousands)
Mar 31, 2010 | Dec 31, 2009 | |||||||
(unaudited) | (unaudited) | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 534,487 | 449,955 | |||||
Restricted cash | 30,348 | 46,190 | ||||||
Accounts receivable, net | 218,815 | 231,325 | ||||||
Deferred income tax assets | 9,980 | 11,302 | ||||||
Prepaid expenses and other current assets | 66,775 | 72,124 | ||||||
Total current assets | 860,405 | 810,896 | ||||||
Property and equipment, net | 302,995 | 289,198 | ||||||
Computer software, net | 195,674 | 197,134 | ||||||
Contract acquisition costs, net | 123,482 | 128,038 | ||||||
Goodwill | 166,370 | 168,121 | ||||||
Equity investments, net | 76,021 | 75,495 | ||||||
Other intangible assets, net | 13,009 | 14,132 | ||||||
Other assets | 26,087 | 27,940 | ||||||
Total assets | $ | 1,764,043 | 1,710,954 | |||||
Liabilities | ||||||||
Current liabilities: | ||||||||
Current portion of notes payable | $ | 7,057 | 6,988 | |||||
Accrued salaries and employee benefits | 15,336 | 32,457 | ||||||
Accounts payable | 29,249 | 21,729 | ||||||
Current portion of obligations under capital leases | 9,817 | 6,289 | ||||||
Other current liabilities | 167,191 | 153,316 | ||||||
Total current liabilities | 228,650 | 220,779 | ||||||
Notes payable, excluding current portion | 190,308 | 192,367 | ||||||
Deferred income tax liabilities | 49,324 | 47,162 | ||||||
Obligations under capital leases, excluding current portion | 36,327 | 12,756 | ||||||
Other long-term liabilities | 44,507 | 48,443 | ||||||
Total liabilities | 549,116 | 521,507 | ||||||
Equity | ||||||||
Shareholders’ equity: | ||||||||
Common stock | 20,130 | 20,086 | ||||||
Additional paid-in capital | 141,617 | 139,742 | ||||||
Accumulated other comprehensive income, net | (7,145 | ) | 5,673 | |||||
Treasury stock | (70,881 | ) | (69,950 | ) | ||||
Retained earnings | 1,117,789 | 1,080,250 | ||||||
Total shareholders’ equity | 1,201,510 | 1,175,801 | ||||||
Noncontrolling interests in consolidated subsidiaries | 13,417 | 13,646 | ||||||
Total equity | 1,214,927 | 1,189,447 | ||||||
Total liabilities and equity | $ | 1,764,043 | 1,710,954 | |||||
- more -
TSYS Announces 2010 Earnings
Page 8 of 12
Page 8 of 12
TSYS
Cash Flow
(unaudited)
(in thousands)
Cash Flow
(unaudited)
(in thousands)
Three Months Ended March 31, | ||||||||
2010 | 2009 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income | $ | 51,819 | 46,941 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Equity in income of equity investments | (893 | ) | (1,043 | ) | ||||
Net loss (gain) on currency translation adjustments | (247 | ) | 883 | |||||
Depreciation and amortization | 38,564 | 39,850 | ||||||
Amortization of debt issuance costs | 38 | 38 | ||||||
Share-based compensation | 2,913 | 5,297 | ||||||
Excess tax benefit from share-based payment arrangements | (111 | ) | — | |||||
Provisions for bad debt expense and billing adjustments | (658 | ) | (394 | ) | ||||
Charges for transaction processing provisions | 849 | 1,537 | ||||||
Deferred income tax benefit | 3,665 | (2,329 | ) | |||||
(Gain) loss on disposal of equipment, net | 30 | 7 | ||||||
(Increase) decrease in: | ||||||||
Accounts receivable | 9,874 | 1,166 | ||||||
Prepaid expenses, other current assets and other long-term assets | 2,892 | (1,743 | ) | |||||
Increase (decrease) in: | ||||||||
Accounts payable | 8,319 | (3,779 | ) | |||||
Accrued salaries and employee benefits | (32,707 | ) | (25,567 | ) | ||||
Other current liabilities and other long-term liabilities | 49,188 | 37,806 | ||||||
Net cash provided by operating activities | 133,535 | 98,670 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Purchases of property and equipment, net | (9,170 | ) | (2,181 | ) | ||||
Additions to licensed computer software from vendors | (3,769 | ) | (5,932 | ) | ||||
Additions to internally developed computer software | (5,760 | ) | (5,828 | ) | ||||
Cash used in acquisitions, net of cash acquired | — | (205 | ) | |||||
Additions to contract acquisition costs | (9,914 | ) | (10,992 | ) | ||||
Net cash used in investing activities | (28,613 | ) | (25,138 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Proceeds from borrowings of long-term debt | — | 2,809 | ||||||
Principal payments on long-term debt borrowings and capital lease obligations | (3,731 | ) | (3,622 | ) | ||||
Proceeds from exercise of stock options | 109 | — | ||||||
Excess tax benefit from share-based payment arrangements | 111 | — | ||||||
Repurchase of common stock | (1,075 | ) | (329 | ) | ||||
Dividends paid on common stock | (13,797 | ) | (13,779 | ) | ||||
Net cash used in financing activities | (18,383 | ) | (14,921 | ) | ||||
CASH AND CASH EQUIVALENTS: | ||||||||
Effect of exchange rate changes on cash and cash equivalents | (2,007 | ) | (1,084 | ) | ||||
Net increase in cash and cash equivalents | 84,532 | 57,527 | ||||||
Cash and cash equivalents at beginning of period | 449,955 | 220,018 | ||||||
Cash and cash equivalents at end of period | $ | 534,487 | 277,545 | |||||
- more -
TSYS Announces 2010 Earnings
Page 9 of 12
Page 9 of 12
Supplemental Information:
Accounts on File at March 31, | ||||||||||||||||||||
(in millions) | 2010 | % | 2009 | % | Percent Change | |||||||||||||||
Consumer | 182.2 | 56.3 | % | 186.5 | 54.8 | % | (2.3) | % | ||||||||||||
Commercial | 44.1 | 13.6 | 44.4 | 13.0 | (0.8 | ) | ||||||||||||||
Stored Value | 40.9 | 12.7 | 26.0 | 7.6 | 57.2 | |||||||||||||||
Government services | 26.3 | 8.1 | 21.7 | 6.4 | 21.2 | |||||||||||||||
Retail | 24.4 | 7.6 | 56.5 | 16.6 | (56.7 | ) | ||||||||||||||
Debit | 5.1 | 1.6 | 5.2 | 1.5 | (2.9 | ) | ||||||||||||||
Healthcare | 0.3 | 0.1 | 0.1 | 0.1 | nm | |||||||||||||||
323.3 | 100.0 | % | 340.4 | 100.0 | % | (5.0) | % | |||||||||||||
Growth in Accounts on File(in millions): |
March 2009 to | March 2008 to | |||||||
March 2010 | March 2009 | |||||||
Beginning balance | 340.4 | 364.9 | ||||||
Change in accounts on file due to: | ||||||||
Internal growth of existing clients | 24.4 | 32.0 | ||||||
New clients | 29.1 | 20.0 | ||||||
Purges/Sales | (43.4 | ) | (35.9 | ) | ||||
Deconversions | (27.2 | ) | (40.6 | ) | ||||
Ending balance | 323.3 | 340.4 | ||||||
- more -
TSYS Announces 2010 Earnings
Page 10 of 12
Page 10 of 12
TSYS
Cost of Services/Selling, General and Administrative Expenses by Quarter in 2009
(unaudited)
(in thousands)
(unaudited)
(in thousands)
Three Months Ended | ||||||||||||||||||||
Mar 31, | Jun 30, | Sep 30, | Dec 31, | YTD | ||||||||||||||||
2009 | 2009 | 2009 | 2009 | 2009 | ||||||||||||||||
Total revenues | $ | 408,933 | 411,993 | 432,296 | 434,840 | $ | 1,688,062 | |||||||||||||
Cost of services | 284,675 | 280,111 | 297,509 | 296,461 | 1,158,756 | |||||||||||||||
Selling, general and administrative expenses | 46,143 | 49,105 | 46,931 | 45,094 | 187,273 | |||||||||||||||
Operating income | $ | 78,115 | 82,777 | 87,856 | 93,285 | $ | 342,033 | |||||||||||||
TSYS
Segments by Quarter in 2009 Recast for Corporate Administration Segment
(unaudited)
(in thousands, except FTE data)
(unaudited)
(in thousands, except FTE data)
Three Months Ended | ||||||||||||||||||||
Mar 31, | Jun 30, | Sep 30, | Dec 31, | YTD | ||||||||||||||||
2009 | 2009 | 2009 | 2009 | 2009 | ||||||||||||||||
Depreciation and amortization | ||||||||||||||||||||
North America Services | $ | 23,230 | 20,799 | 20,189 | 20,359 | $ | 84,577 | |||||||||||||
International Services | 7,584 | 8,596 | 10,043 | 9,324 | 35,547 | |||||||||||||||
Merchant Services | 8,087 | 8,149 | 8,159 | 8,469 | 32,864 | |||||||||||||||
Corporate Admin | 577 | 749 | 803 | 805 | 2,934 | |||||||||||||||
Total depreciation and amortization | $ | 39,478 | 38,293 | 39,194 | 38,957 | $ | 155,922 | |||||||||||||
Segment operating income | ||||||||||||||||||||
North America Services | $ | 71,494 | 70,559 | 72,172 | 71,184 | $ | 285,409 | |||||||||||||
International Services | 9,532 | 12,836 | 14,047 | 21,240 | 57,655 | |||||||||||||||
Merchant Services | 15,519 | 16,690 | 18,909 | 18,964 | 70,082 | |||||||||||||||
Corporate Admin | (18,430 | ) | (17,308 | ) | (17,272 | ) | (18,103 | ) | (71,113 | ) | ||||||||||
Operating income | $ | 78,115 | 82,777 | 87,856 | 93,285 | $ | 342,033 | |||||||||||||
Reimbursable items: | ||||||||||||||||||||
North America Services | $ | 45,007 | 42,035 | 41,671 | 39,551 | $ | 168,264 | |||||||||||||
International Services | 3,218 | 3,150 | 3,606 | 5,087 | 15,061 | |||||||||||||||
Merchant Services | 17,293 | 18,185 | 30,028 | 29,288 | 94,794 | |||||||||||||||
Intersegment eliminations | (2,031 | ) | (2,098 | ) | (1,975 | ) | (1,837 | ) | (7,941 | ) | ||||||||||
Reimbursable items | $ | 63,487 | 61,272 | 73,330 | 72,089 | $ | 270,178 | |||||||||||||
FTEs | ||||||||||||||||||||
North America Services | 5,056 | 4,956 | 4,749 | 4,727 | ||||||||||||||||
International Services | 1,818 | 1,855 | 1,872 | 1,805 | ||||||||||||||||
Merchant Services | 836 | 832 | 763 | 762 | ||||||||||||||||
Corporate Admin | 358 | 358 | 336 | 326 | ||||||||||||||||
FTEs | ||||||||||||||||||||
8,068 | 8,001 | 7,720 | 7,620 | |||||||||||||||||
- more -
TSYS Announces 2010 Earnings
Page 11 of 12
Page 11 of 12
Reconciliation of GAAP to Non-GAAP
Non-GAAP Measures
The schedule below provides a reconciliation of revenues and operating results on a constant currency basis to reported revenues and operating income. This non-GAAP measure presents year-to-date 2010 financial results using the previous year’s foreign currency exchange rates. On a year-to-date constant currency basis, TSYS’ total revenues grew 0.1% as compared to a reported GAAP increase of 1.6%, and operating income increased 0.2% versus a GAAP-reported increase of 1.2%.
The non-GAAP financial measures of constant currency presented by TSYS are utilized by management to better understand and assess TSYS’ operating results and financial performance. TSYS also uses the non-GAAP financial measures to evaluate and assess TSYS’ financial performance against budget, as well as to evaluate financial performance for executive and management compensation purposes.
TSYS believes that non-GAAP financial measures are important to enable investors to understand and evaluate its ongoing operating results. Accordingly, TSYS includes non-GAAP financial measures when reporting its financial results to shareholders and investors in order to provide them with an additional tool to evaluate TSYS’ ongoing business operations. TSYS believes that the non-GAAP financial measures are representative of comparative financial performance that reflects the economic substance of TSYS’ current and ongoing business operations.
Although non-GAAP financial measures are often used to measure TSYS’ operating results and assess its financial performance, they are not necessarily comparable to similarly titled captions of other companies due to potential inconsistencies in the method of calculation.
TSYS believes that its use of non-GAAP financial measures provides investors with the same key financial performance indicators that are utilized by management to assess TSYS’ operating results, evaluate the business and make operational decisions on a prospective, going-forward basis. Hence, management provides disclosure of non-GAAP financial measures to give shareholders and potential investors an opportunity to see TSYS as viewed by management, to assess TSYS with some of the same tools that management utilizes internally and to be able to compare such information with prior periods. TSYS believes that the presentation of GAAP financial measures alone would not provide its shareholders and potential investors with the ability to appropriately analyze its ongoing operational results, and therefore expected future results. TSYS therefore believes that inclusion of non-GAAP financial measures provides investors with additional information to help them better understand its financial statements just as management utilizes these non-GAAP financial measures to better understand the business, manage budgets and allocate resources.
-more-
TSYS Announces 2010 Earnings
Page 12 of 12
Page 12 of 12
Reconciliation of GAAP to Non-GAAP
Constant Currency Comparison
(unaudited)
(in thousands)
(unaudited)
(in thousands)
Three Months Ended March 31, | ||||||||||||
Percent | ||||||||||||
2010 | 2009 | Change | ||||||||||
Consolidated | ||||||||||||
Constant currency (1) | $ | 409,520 | 408,933 | 0.1 | % | |||||||
Foreign currency (2) | 5,834 | — | 1.5 | |||||||||
Total revenues | $ | 415,354 | 408,933 | 1.6 | % | |||||||
Constant currency (1) | $ | 78,247 | 78,115 | 0.2 | % | |||||||
Foreign currency (2) | 824 | — | 1.0 | |||||||||
Operating income | $ | 79,071 | 78,115 | 1.2 | % | |||||||
(1) | Reflects current period results on a non-GAAP basis as if foreign currency rates did not change from the comparable prior year period. | |
(2) | Reflects the impact of calculated changes in foreign currency rates from the comparable period. |
-####-