Exhibit 99.1
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Total System Services, Inc. | ||
One TSYS Way | +1.706.649.2307 | |
Post Office Box 2567 | +1.706.649.5740 | |
Columbus GA 31902-2567 | www.tsys.com |
For immediate release:
Contact:
Shawn Roberts
TSYS Investor Relations
+1.706.644.6081
shawnroberts@tsys.com
TSYS Investor Relations
+1.706.644.6081
shawnroberts@tsys.com
TSYS Provides 2011 Guidance of 9% — 11% EPS Growth and
Reports 2010 Fourth Quarter and Full Year Financial Results
Columbus, Ga., January 25, 2011 —TSYS (NYSE: TSS) today reported results for the fourth quarter and full-year of 2010 that were in-line with consensus estimates for earnings per share (EPS).
For the fourth quarter, total revenues were $440.0 million, an increase of 1.7% over 2009. Basic EPS from continuing operations were $0.24, down $0.07 or 20.9%. Excluding termination fees in the fourth quarter of 2009, total revenues were up 6.0% and basic EPS from continuing operations were down 3.2%.
For the year 2010, total revenues were $1.7 billion, up 2.4% over 2009. Basic EPS from continuing operations were $1.00, down $0.12 or 10.7%. Excluding termination fees in 2009 and 2010, total revenues were up 3.0% and basic EPS from continuing operations were down 9.1%.
TSYS’ 2011 guidance includes revenues before reimbursable growth of 3% — 5% and basic EPS from continuing operations growth of 9% — 11%.
“While 2010 was a very challenging year, we are pleased to have met the high end range of our guidance for net income and EPS for the year. We continued to see growth in transactions in our card issuing services and merchant business for the fourth quarter that resulted in organic revenue growth of 4.0% and same client issuer transactions increased 5.3% for the year. Including the acquisition of TSYS Merchant Solutions (formerly First National Merchant Solutions), revenues from our Merchant Segment rose from 19% to 27% of consolidated total revenues. We believe this diversification will contribute to our growth and benefit our margins in the future,” said Philip W. Tomlinson, chairman and chief executive officer of TSYS.
“Our guidance for 2011 reflects our renewed enthusiasm for growth in all of our business segments. Excluding the termination fees in 2010, our 2011 guidance for revenues before reimbursable items are projected to be up 6% — 8%, and net income from continuing operations is projected to be up 20% — 22%,” said Tomlinson.
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TSYS’ guidance for 2011 is as follows:
2011 Guidance | ||||||||||||||||||||||||
Range | ||||||||||||||||||||||||
(in millions, except per | Percent | |||||||||||||||||||||||
share amounts) | Change | |||||||||||||||||||||||
Total revenues | $ | 1,748 | to | $ | 1,788 | 2 | % | to | 4 | % | ||||||||||||||
Reimbursable items | $ | 260 | to | $ | 267 | (5 | %) | to | (3 | %) | ||||||||||||||
Revenues before reimbursable items | $ | 1,488 | to | $ | 1,521 | 3 | % | to | 5 | % | ||||||||||||||
Income from continuing operations | $ | 211 | to | $ | 216 | 7 | % | to | 9 | % | ||||||||||||||
EPS from continuing operations | $ | 1.09 | to | $ | 1.11 | 9 | %* | to | 11 | %* | ||||||||||||||
Average Shares Outstanding | 194.5 |
NOTE: * Denotes rounding |
Conference Call
TSYS will host its quarterly conference call at 5:00 p.m. ET on Tuesday, January 25. 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
This press release and the financial highlights section of this release contain the non-GAAP financial measures of revenues and basic EPS excluding revenues from termination fees and the impact of revenues and operating results on a constant currency basis, respectively, 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 pages 11 and 12 of this release.
About TSYS
TSYS (NYSE: TSS) is reshaping a new era in digital commerce, connecting consumers, merchants, financial institutions, businesses and governments. Through unmatched customer service and industry insight, TSYS creates a better experience for buyers and sellers globally, supporting cross-border payments in more than 85 countries. Offering services in credit, debit, prepaid, mobile, chip, healthcare, installments, money transfer and more, TSYS makes it possible for those in the global marketplace to conduct safe and secure payment transactions with trust and convenience.
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TSYS’ global headquarters are located in Columbus, Georgia, with other local offices spread across the Americas, EMEA and Asia-Pacific. TSYS serves approximately 400 clients in 85 countries, including relationships with more than half of the Top 20 international banks. For more information, please visit us atwww.tsys.com.
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 Litigation Reform Act of 1995. These forward-looking statements include, among others, statements regarding TSYS’ belief about the positive impact of diversification and TSYS’ earnings guidance for 2011 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 2011: (1) the economy will not worsen during 2011; (2) there will be no deconversions of large clients during the year; (3) there will be no significant movement in foreign currency exchange rates related to TSYS’ business during 2011; (4) 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 (5) 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’ 2011 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 2011, 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) the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act on TSYS and on our clients; (9) changes occur in laws, rules, regulations, credit card association rules or other industry standards affecting TSYS and our clients that may result in costly new compliance burdens on TSYS and our clients and lead to a decrease in the volume and/or number of transactions processed; (10) the costs and effects of litigation, investigations or similar matters or adverse facts and developments relating thereto; (11) 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 (12) 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
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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 —
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TSYS Announces 2010 Earnings
Page 5 of 12
Page 5 of 12
TSYS
Financial Highlights
(unaudited)
(in thousands, except per share data)
Financial Highlights
(unaudited)
(in thousands, except per share data)
Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||||||
Percent | Percent | |||||||||||||||||||||||
2010 | 2009 | Change | 2010 | 2009 | Change | |||||||||||||||||||
Total revenues | $ | 439,991 | 432,529 | 1.7 | % | $ | 1,717,577 | 1,677,483 | 2.4 | % | ||||||||||||||
Cost of services | 311,901 | 294,403 | 5.9 | 1,201,012 | 1,149,883 | 4.4 | ||||||||||||||||||
Selling, general and administrative expenses | 57,116 | 44,218 | 29.2 | 207,136 | 183,574 | 12.8 | ||||||||||||||||||
Operating income | 70,974 | 93,908 | (24.4 | ) | 309,429 | 344,026 | (10.1 | ) | ||||||||||||||||
Nonoperating income (expenses) | (215 | ) | (279 | ) | nm | (1,617 | ) | (3,441 | ) | nm | ||||||||||||||
Income from continuing operations before income taxes, noncontrolling interests and equity in income of equity investments | 70,759 | 93,629 | (24.4 | ) | 307,812 | 340,585 | (9.6 | ) | ||||||||||||||||
Income taxes | 21,840 | 33,002 | (33.8 | ) | 106,088 | 121,850 | (12.9 | ) | ||||||||||||||||
Income from continuing operations before noncontrolling interests and equity in income of equity investments | 48,919 | 60,627 | (19.3 | ) | 201,724 | 218,735 | (7.8 | ) | ||||||||||||||||
Equity in income of equity investments | 2,780 | 2,694 | 3.2 | 7,142 | 6,985 | 2.2 | ||||||||||||||||||
Income from continuing operations, net of tax | 51,699 | 63,321 | (18.4 | ) | 208,866 | 225,720 | (7.5 | ) | ||||||||||||||||
Loss from discontinued operations, net of tax | (82 | ) | (429 | ) | 80.9 | (3,245 | ) | (6,544 | ) | nm | ||||||||||||||
Net income | 51,617 | 62,892 | (17.9 | ) | 205,621 | 219,176 | (6.2 | ) | ||||||||||||||||
Net income attributable to noncontrolling interests | (4,444 | ) | (2,678 | ) | nm | (11,674 | ) | (3,963 | ) | nm | ||||||||||||||
Net income attributable to TSYS common shareholders | $ | 47,173 | 60,214 | (21.7 | )% | $ | 193,947 | 215,213 | (9.9 | )% | ||||||||||||||
Basic earnings per share: | ||||||||||||||||||||||||
Income from continuing operations to TSYS common shareholders* | $ | 0.24 | 0.31 | (20.9 | )% | $ | 1.00 | 1.12 | (10.7 | )% | ||||||||||||||
Loss from discontinued operations to TSYS common shareholders* | (0.00 | ) | (0.00 | ) | nm | (0.02 | ) | (0.03 | ) | nm | ||||||||||||||
Net income attributable to TSYS common shareholders* | $ | 0.24 | 0.31 | (20.5 | )% | $ | 0.99 | 1.09 | (9.5 | )% | ||||||||||||||
Diluted earnings per share: | ||||||||||||||||||||||||
Income from continuing operations to TSYS common shareholders* | $ | 0.24 | 0.31 | (20.9 | )% | $ | 1.00 | 1.12 | (10.8 | )% | ||||||||||||||
Loss from discontinued operations to TSYS common shareholders* | (0.00 | ) | (0.00 | ) | nm | (0.02 | ) | (0.03 | ) | nm | ||||||||||||||
Net income attributable to TSYS common shareholders* | $ | 0.24 | 0.31 | (20.5 | )% | $ | 0.99 | 1.09 | (9.6 | )% | ||||||||||||||
Dividends declared per share | $ | 0.07 | 0.07 | $ | 0.28 | 0.28 | ||||||||||||||||||
Amounts attributable to TSYS common shareholders: | ||||||||||||||||||||||||
Income from continuing operations, net of tax | $ | 47,255 | 60,643 | (22.1 | )% | $ | 197,192 | 221,757 | (11.1 | )% | ||||||||||||||
(Loss) income from discontinued operations, net of tax | (82 | ) | (429 | ) | nm | (3,245 | ) | (6,544 | ) | nm | ||||||||||||||
Net income | $ | 47,173 | 60,214 | (21.7 | )% | $ | 193,947 | 215,213 | (9.9 | )% | ||||||||||||||
nm = not meaningful | ||
* | Basic and diluted EPS amounts for continuing operations and net income do not total due to rounding. |
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TSYS Announces 2010 Earnings
Page 6 of 12
Page 6 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 | Twelve Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||||
December 31, 2010 | December 31, 2009 | December 31, 2010 | December 31, 2009 | |||||||||||||||||||||||||||||
Common | Participating | Common | Participating | Common | Participating | Common | Participating | |||||||||||||||||||||||||
Stock | Securities | Stock | Securities | Stock | Securities | Stock | Securities | |||||||||||||||||||||||||
Basic Earnings per share: | ||||||||||||||||||||||||||||||||
Net income | $ | 47,173 | 60,214 | $ | 193,947 | $ | 215,213 | |||||||||||||||||||||||||
Less income allocated to nonvested awards | (221 | ) | 221 | (413 | ) | 413 | (959 | ) | 959 | (1,644 | ) | 1,644 | ||||||||||||||||||||
Net income allocated to common stock for EPS calculation (a) | $ | 46,952 | 221 | 59,801 | 413 | $ | 192,988 | 959 | $ | 213,569 | 1,644 | |||||||||||||||||||||
Average common shares outstanding (b) | 193,352 | 914 | 195,835 | 1,356 | 195,378 | 975 | 195,623 | 1,511 | ||||||||||||||||||||||||
Average common shares and participating securities | 194,266 | 197,191 | 196,353 | 197,134 | ||||||||||||||||||||||||||||
Basic Earnings per share (a)/(b) | $ | 0.24 | 0.24 | 0.31 | 0.30 | $ | 0.99 | 0.98 | $ | 1.09 | 1.09 | |||||||||||||||||||||
Diluted Earnings per share: | ||||||||||||||||||||||||||||||||
Net income | $ | 47,173 | 60,214 | $ | 193,947 | $ | 215,213 | |||||||||||||||||||||||||
Less income allocated to nonvested awards | (221 | ) | 221 | (413 | ) | 413 | (959 | ) | 959 | (1,644 | ) | 1,644 | ||||||||||||||||||||
Net income allocated to common stock for EPS calculation (c) | $ | 46,952 | 221 | 59,801 | 413 | $ | 192,988 | 959 | $ | 213,569 | 1,644 | |||||||||||||||||||||
Average common shares outstanding | 193,352 | 914 | 195,835 | 1,356 | 195,378 | 975 | 195,623 | 1,511 | ||||||||||||||||||||||||
Increase due to assumed issuance of shares related to common equivalent shares outstanding | 214 | 63 | 193 | 63 | ||||||||||||||||||||||||||||
Average common and common equivalent shares outstanding (d) | 193,566 | 914 | 195,898 | 1,356 | 195,571 | 975 | 195,686 | 1,511 | ||||||||||||||||||||||||
Average common and common equivalent shares and participating securities | 194,480 | 197,254 | 196,546 | 197,197 | ||||||||||||||||||||||||||||
Diluted Earnings per share (c)/(d) | $ | 0.24 | 0.24 | 0.31 | 0.30 | $ | 0.99 | 0.98 | $ | 1.09 | 1.09 | |||||||||||||||||||||
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TSYS Announces 2010 Earnings
Page 7 of 12
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TSYS
Segment Breakdown
(unaudited)
(in thousands)
Segment Breakdown
(unaudited)
(in thousands)
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||||||||||||||||||
Change | Change | |||||||||||||||||||||||||||||||
2010 | 2009 | $ | % | 2010 | 2009 | $ | % | |||||||||||||||||||||||||
Revenues before reimbursable items | ||||||||||||||||||||||||||||||||
North America Services | $ | 198,742 | 214,027 | (15,285 | ) | (7.1) | % | 809,012 | 880,668 | (71,656 | ) | (8.1) | % | |||||||||||||||||||
International Services | 88,547 | 96,264 | (7,717 | ) | (8.0) | % | 321,846 | 322,697 | (851 | ) | (0.3) | % | ||||||||||||||||||||
Merchant Services | 93,482 | 56,365 | 37,117 | 65.9 | % | 337,178 | 232,262 | 104,916 | 45.2 | % | ||||||||||||||||||||||
Intersegment revenues | (6,927 | ) | (6,216 | ) | (711 | ) | 11.4 | % | (25,600 | ) | (28,322 | ) | 2,722 | (9.6) | % | |||||||||||||||||
Revenues before reimbursable items from external customers | $ | 373,844 | 360,440 | 13,404 | 3.7 | % | 1,442,436 | 1,407,305 | 35,131 | 2.5 | % | |||||||||||||||||||||
Total revenues | ||||||||||||||||||||||||||||||||
North America Services | $ | 233,960 | 253,579 | (19,619 | ) | (7.7) | % | 956,546 | 1,048,933 | (92,387 | ) | (8.8) | % | |||||||||||||||||||
International Services | 92,248 | 101,350 | (9,102 | ) | (9.0) | % | 334,954 | 337,757 | (2,803 | ) | (0.8) | % | ||||||||||||||||||||
Merchant Services | 122,519 | 85,654 | 36,865 | 43.0 | % | 458,921 | 327,055 | 131,866 | 40.3 | % | ||||||||||||||||||||||
Intersegment revenues | (8,736 | ) | (8,054 | ) | (682 | ) | 8.5 | % | (32,844 | ) | (36,262 | ) | 3,418 | (9.4) | % | |||||||||||||||||
Revenues from external customers | $ | 439,991 | 432,529 | 7,462 | 1.7 | % | 1,717,577 | 1,677,483 | 40,094 | 2.4 | % | |||||||||||||||||||||
Depreciation and amortization | ||||||||||||||||||||||||||||||||
North America Services | $ | 20,017 | 20,359 | (342 | ) | (1.7) | % | 78,834 | 84,577 | (5,743 | ) | (6.8) | % | |||||||||||||||||||
International Services | 13,457 | 9,082 | 4,375 | 48.2 | % | 40,792 | 34,791 | 6,001 | 17.2 | % | ||||||||||||||||||||||
Merchant Services | 9,782 | 8,423 | 1,359 | 16.1 | % | 40,298 | 32,590 | 7,708 | 23.7 | % | ||||||||||||||||||||||
Corporate Admin | 748 | 1,046 | (298 | ) | (28.5) | % | 3,003 | 3,690 | (687 | ) | (18.6) | % | ||||||||||||||||||||
Total depreciation and amortization | $ | 44,004 | 38,910 | 5,094 | 13.1 | % | 162,927 | 155,648 | 7,279 | 4.7 | % | |||||||||||||||||||||
Segment operating income | ||||||||||||||||||||||||||||||||
North America Services | $ | 56,339 | 71,184 | (14,845 | ) | (20.9) | % | 244,989 | 285,409 | (40,420 | ) | (14.2) | % | |||||||||||||||||||
International Services | 7,429 | 21,240 | (13,811 | ) | (65.0) | % | 42,689 | 57,654 | (14,965 | ) | (26.0) | % | ||||||||||||||||||||
Merchant Services | 29,782 | 19,457 | 10,325 | 53.1 | % | 102,444 | 71,438 | 31,006 | 43.4 | % | ||||||||||||||||||||||
Corporate Admin | (22,576 | ) | (17,973 | ) | (4,603 | ) | 25.6 | % | (80,693 | ) | (70,475 | ) | (10,218 | ) | 14.5 | % | ||||||||||||||||
Operating income | $ | 70,974 | 93,908 | (22,934 | ) | (24.4) | % | 309,429 | 344,026 | (34,597 | ) | (10.1) | % | |||||||||||||||||||
Other: | ||||||||||||||||||||||||||||||||
Reimbursable items: | ||||||||||||||||||||||||||||||||
North America Services | $ | 35,219 | 39,552 | (4,333 | ) | (11.0) | % | 147,534 | 168,264 | (20,730 | ) | (12.3) | % | |||||||||||||||||||
International Services | 3,701 | 5,087 | (1,386 | ) | (27.2) | % | 13,108 | 15,060 | (1,952 | ) | (13.0) | % | ||||||||||||||||||||
Merchant Services | 29,036 | 29,288 | (252 | ) | (0.9) | % | 121,743 | 94,794 | 26,949 | 28.4 | % | |||||||||||||||||||||
Intersegment revenues | (1,809 | ) | (1,838 | ) | 29 | (1.6) | % | (7,244 | ) | (7,940 | ) | 696 | (8.8) | % | ||||||||||||||||||
Reimbursable items | $ | 66,147 | 72,089 | (5,942 | ) | (8.2) | % | 275,141 | 270,178 | 4,963 | 1.8 | % | ||||||||||||||||||||
Volumes: | ||||||||||||||||||||||||||||||||
FTEs (continuing operations) | ||||||||||||||||||||||||||||||||
North America Services | 4,296 | 4,726 | (430 | ) | (9.1) | % | ||||||||||||||||||||||||||
International Services | 2,043 | 1,805 | 238 | 13.2 | % | |||||||||||||||||||||||||||
Merchant Services | 1,115 | 726 | 389 | 53.6 | % | |||||||||||||||||||||||||||
Corporate Admin | 334 | 322 | 12 | 3.7 | % | |||||||||||||||||||||||||||
FTEs | 7,788 | 7,579 | 209 | 2.8 | % | |||||||||||||||||||||||||||
At | Change | |||||||||||||||
12/31/2010 | 12/31/2009 | $ | % | |||||||||||||
Total assets (in thousands) | ||||||||||||||||
North America Services | $ | 1,647,980 | 1,535,129 | 112,851 | 7.4 | % | ||||||||||
International Services | 408,880 | 379,606 | 29,274 | 7.7 | % | |||||||||||
Merchant Services | 461,050 | 215,855 | 245,195 | 113.6 | % | |||||||||||
Intersegment assets | (550,251 | ) | (419,636 | ) | (130,615 | ) | 31.1 | % | ||||||||
Total assets | $ | 1,967,659 | 1,710,954 | 256,705 | 15.0 | % | ||||||||||
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||||||||||||||||||
Change | Change | |||||||||||||||||||||||||||||||
2010 | 2009 | Inc(Dec) | % | 2010 | 2009 | Inc(Dec) | % | |||||||||||||||||||||||||
North America Segment: | ||||||||||||||||||||||||||||||||
Accounts on File (AOF) (in millions) | 296.7 | 305.2 | (8.6 | ) | (2.8 | )% | ||||||||||||||||||||||||||
Transactions (in millions) | 1,730.6 | 1,577.8 | 152.8 | 9.7 | % | 6,410.6 | 6,136.9 | 273.6 | 4.5 | % | ||||||||||||||||||||||
International Segment: | ||||||||||||||||||||||||||||||||
AOF (in millions) | 46.3 | 39.5 | 6.8 | 17.1 | % | |||||||||||||||||||||||||||
Transactions (in millions) | 357.9 | 317.3 | 40.6 | 12.8 | % | 1,259.9 | 1,136.0 | 123.9 | 10.9 | % |
Certain amounts have been reclassified to conform with the presentation adopted in 2010.
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TSYS Announces 2010 Earnings
Page 8 of 12
Page 8 of 12
TSYS
Balance Sheet
(in thousands)
Balance Sheet
(in thousands)
Dec 31, 2010 | Dec 31, 2009 | |||||||
(unaudited) | (unaudited) | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 394,795 | 450,254 | |||||
Restricted cash | 434 | 46,190 | ||||||
Accounts receivable, net | 238,283 | 231,162 | ||||||
Deferred income tax assets | 11,403 | 11,302 | ||||||
Prepaid expenses and other current assets | 92,296 | 68,527 | ||||||
Assets of discontinued operations | — | 3,461 | ||||||
Total current assets | 737,211 | 810,896 | ||||||
Property and equipment, net | 300,102 | 289,069 | ||||||
Computer software, net | 246,424 | 196,764 | ||||||
Contract acquisition costs, net | 166,251 | 128,038 | ||||||
Goodwill | 320,399 | 165,896 | ||||||
Equity investments, net | 77,127 | 75,495 | ||||||
Other intangible assets, net | 83,118 | 14,132 | ||||||
Other assets | 37,027 | 27,940 | ||||||
Assets of discontinued operations | — | 2,724 | ||||||
Total assets | $ | 1,967,659 | 1,710,954 | |||||
Liabilities | ||||||||
Current liabilities: | ||||||||
Current portion of notes payable | $ | 14,845 | 6,988 | |||||
Accrued salaries and employee benefits | 27,414 | 32,231 | ||||||
Accounts payable | 36,068 | 21,487 | ||||||
Current portion of obligations under capital leases | 13,191 | 6,289 | ||||||
Other current liabilities | 108,119 | 152,742 | ||||||
Current liabilities of discontinued operations | — | 1,042 | ||||||
Total current liabilities | 199,637 | 220,779 | ||||||
Notes payable, excluding current portion | 219,416 | 192,367 | ||||||
Deferred income tax liabilities | 60,865 | 47,162 | ||||||
Obligations under capital leases, excluding current portion | 30,573 | 12,756 | ||||||
Other long-term liabilities | 53,363 | 48,443 | ||||||
Total liabilities | 563,854 | 521,507 | ||||||
Redeemable noncontrolling interest | 146,000 | — | ||||||
Equity | ||||||||
Shareholders’ equity: | ||||||||
Common stock | 20,133 | 20,086 | ||||||
Additional paid-in capital | 119,722 | 139,742 | ||||||
Accumulated other comprehensive income, net | (2,585 | ) | 5,673 | |||||
Treasury stock | (115,449 | ) | (69,950 | ) | ||||
Retained earnings | 1,219,303 | 1,080,250 | ||||||
Total shareholders’ equity | 1,241,124 | 1,175,801 | ||||||
Noncontrolling interests in consolidated subsidiaries | 16,681 | 13,646 | ||||||
Total equity | 1,257,805 | 1,189,447 | ||||||
Total liabilities and equity | $ | 1,967,659 | 1,710,954 | |||||
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TSYS Announces 2010 Earnings
Page 9 of 12
TSYS
Cash Flow
(unaudited)
(in thousands)
Cash Flow
(unaudited)
(in thousands)
Twelve Months Ended December 31, | ||||||||
2010 | 2009 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income | $ | 205,621 | 219,176 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Equity in income of equity investments | (7,142 | ) | (6,985 | ) | ||||
Dividends received from equity investments | 6,572 | 4,942 | ||||||
Net loss (gain) on currency translation adjustments | 162 | 2,607 | ||||||
Depreciation and amortization | 163,111 | 156,471 | ||||||
Amortization of debt issuance costs | 154 | 154 | ||||||
Share-based compensation | 15,832 | 16,128 | ||||||
Excess tax benefit from share-based payment arrangements | (111 | ) | (6 | ) | ||||
Provisions for bad debt expense and billing adjustments | (798 | ) | 6,381 | |||||
Charges for transaction processing provisions | 3,891 | 6,556 | ||||||
Deferred income tax benefit | 13,616 | (3,864 | ) | |||||
(Gain) loss on disposal of equipment, net | 145 | 375 | ||||||
Loss on disposal of subsidiary | 1,591 | 5,713 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (7,138 | ) | 10,807 | |||||
Prepaid expenses, other current assets and other long-term assets | (16,579 | ) | 27,893 | |||||
Accounts payable | 13,916 | (11,883 | ) | |||||
Accrued salaries and employee benefits | (21,965 | ) | (11,697 | ) | ||||
Other current liabilities and other long-term liabilities | 18,282 | 368 | ||||||
Net cash provided by operating activities | 389,160 | 423,136 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Purchases of property and equipment, net | (46,547 | ) | (34,017 | ) | ||||
Additions to licensed computer software from vendors | (69,826 | ) | (20,059 | ) | ||||
Additions to internally developed computer software | (25,466 | ) | (31,445 | ) | ||||
Proceeds from Disposition, net of expenses paid and cash disposed | 4,265 | 1,979 | ||||||
Cash used in acquisitions, net of cash acquired | (148,531 | ) | (294 | ) | ||||
Dividends received from equity investments | 68 | — | ||||||
Additions to contract acquisition costs | (75,669 | ) | (35,596 | ) | ||||
Net cash used in investing activities | (361,706 | ) | (119,432 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Proceeds from borrowings of long-term debt | 39,757 | 5,334 | ||||||
Principal payments on long-term debt borrowings and capital lease obligations | (11,741 | ) | (18,869 | ) | ||||
Proceeds from exercise of stock options | 543 | 2 | ||||||
Excess tax benefit from share-based payment arrangements | 111 | 6 | ||||||
Repurchase of common stock | (46,228 | ) | (328 | ) | ||||
Subsidiary dividends paid to noncontrolling shareholders | (9,030 | ) | (235 | ) | ||||
Dividends paid on common stock | (55,088 | ) | (55,208 | ) | ||||
Net cash used in financing activities | (81,676 | ) | (69,298 | ) | ||||
CASH AND CASH EQUIVALENTS: | ||||||||
Effect of exchange rate changes on cash and cash equivalents | (938 | ) | (4,470 | ) | ||||
Net increase (decrease) in cash and cash equivalents | (55,160 | ) | 229,936 | |||||
Cash and cash equivalents at beginning of period | 449,955 | 220,019 | ||||||
Cash and cash equivalents at end of period | $ | 394,795 | 449,955 | |||||
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TSYS Announces 2010 Earnings
Page 10 of 12
Page 10 of 12
Supplemental Information:
Accounts on File at December 31, | ||||||||||||||||||||
Percent | ||||||||||||||||||||
(in millions) | 2010 | % | 2009 | % | Change | |||||||||||||||
Consumer | 179.5 | 52.3 | % | 187.8 | 54.5 | % | (4.4 | )% | ||||||||||||
Stored Value | 55.3 | 16.1 | 42.0 | 12.2 | 31.6 | |||||||||||||||
Commercial | 49.7 | 14.5 | 41.1 | 11.9 | 20.9 | |||||||||||||||
Government services | 28.1 | 8.2 | 25.5 | 7.4 | 10.0 | |||||||||||||||
Retail | 24.2 | 7.1 | 42.9 | 12.4 | (43.5 | ) | ||||||||||||||
Debit | 5.3 | 1.6 | 5.2 | 1.5 | 2.9 | |||||||||||||||
Healthcare | 0.8 | 0.2 | 0.3 | 0.1 | nm | |||||||||||||||
342.9 | 100.0 | % | 344.8 | 100.0 | % | (0.5 | )% | |||||||||||||
December 2009 to | December 2008 to | |||||||
Growth in Accounts on File(in millions): | December 2010 | December 2009 | ||||||
Beginning balance | 344.8 | 352.5 | ||||||
Change in accounts on file due to: | ||||||||
Internal growth of existing clients | 22.4 | 25.2 | ||||||
New clients | 30.8 | 28.1 | ||||||
Purges/Sales | (39.3 | ) | (34.1 | ) | ||||
Deconversions | (15.8 | ) | (26.9 | ) | ||||
Ending balance | 342.9 | 344.8 | ||||||
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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 2.3% as compared to a reported GAAP increase of 2.4%, and operating income decreased 9.9% versus a GAAP-reported decrease of 10.1%. The schedule below also provides a reconciliation of revenues and basic EPS excluding revenues from termination fees.
The non-GAAP financial measures of constant currency and revenues and basic EPS excluding revenues from termination fees, with respect to year to date revenues and basic EPS 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.
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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 December 31, | ||||||||||||
Percent | ||||||||||||
2010 | 2009 | Change | ||||||||||
Consolidated | ||||||||||||
Constant currency (1) | $ | 440,742 | 432,529 | 1.9 | % | |||||||
Foreign currency (2) | (751 | ) | — | (0.2 | ) | |||||||
Total revenues | $ | 439,991 | 432,529 | 1.7 | % | |||||||
Constant currency (1) | $ | 70,661 | 93,908 | (24.8 | )% | |||||||
Foreign currency (2) | 313 | — | 0.4 | |||||||||
Operating income | $ | 70,974 | 93,908 | (24.4 | )% | |||||||
Twelve Months Ended December 31, | ||||||||||||
Percent | ||||||||||||
2010 | 2009 | Change | ||||||||||
Consolidated | ||||||||||||
Constant currency (1) | $ | 1,716,576 | 1,677,483 | 2.3 | % | |||||||
Foreign currency (2) | 1,001 | — | 0.1 | |||||||||
Total revenues | $ | 1,717,577 | 1,677,483 | 2.4 | % | |||||||
Constant currency (1) | $ | 310,009 | 344,026 | (9.9 | )% | |||||||
Foreign currency (2) | (580 | ) | — | (0.2 | ) | |||||||
Operating income | $ | 309,429 | 344,026 | (10.1 | )% | |||||||
(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. |
Normalized Results — Revenue and BASIC EPS Excluding Termination Fees
(unaudited)
(in thousands except per share data)
(unaudited)
(in thousands except per share data)
Three Months Ended December 31, | ||||||||||||
Percent | ||||||||||||
2010 | 2009 | Change | ||||||||||
Consolidated | ||||||||||||
Total Revenues | $ | 439,991 | 432,529 | 1.7 | % | |||||||
Less: | ||||||||||||
Termination Fees | — | 17,328 | ||||||||||
Total revenues excluding termination fees | $ | 439,991 | 415,201 | 6.0 | % | |||||||
Income from continuing operations, net of tax, available to TSYS common shareholders | $ | 47,255 | 60,643 | (22.1 | )% | |||||||
Less: | ||||||||||||
Termination Fees, net of tax | — | 11,090 | ||||||||||
Income from continuing operations, net of tax, available to TSYS common shareholders, excluding termination fees | $ | 47,255 | 49,553 | (4.6 | )% | |||||||
Average common shares and participating securities | 194,266 | 197,191 | ||||||||||
BASIC EPS — Income from continuing operations, net of tax, available to TSYS common shareholders | $ | 0.24 | 0.25 | (3.2 | )% | |||||||
Normalized Results — Revenue and Basic EPS Excluding Termination Fees
(unaudited)
(in thousands except per share data)
(unaudited)
(in thousands except per share data)
Twelve Months Ended December 31, | ||||||||||||
Percent | ||||||||||||
2010 | 2009 | Change | ||||||||||
Consolidated | ||||||||||||
Total Revenues | $ | 1,717,577 | 1,677,483 | 2.4 | ||||||||
Less: | ||||||||||||
Termination Fees | 32,677 | 41,622 | ||||||||||
Total revenues excluding termination fees | $ | 1,684,900 | 1,635,861 | 3.0 | ||||||||
Income from continuing operations, net of tax, available to TSYS common shareholders | $ | 197,192 | 221,757 | (11.1 | )% | |||||||
Less: | ||||||||||||
Termination Fees, net of tax | 20,989 | 27,054 | ||||||||||
Income from continuing operations, net of tax, available to TSYS common shareholders, excluding termination fees | $ | 176,203 | 194,703 | (9.5 | )% | |||||||
Average common shares and participating securities | 196,353 | 197,134 | ||||||||||
BASIC EPS — Income from continuing operations, net of tax, available to TSYS common shareholders | $ | 0.90 | 0.99 | (9.1 | )% | |||||||
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