Exhibit 99.2
TSYS Announces First Quarter 2009 Earnings
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Financial Highlights
(unaudited)
(in thousands, except per share data)
Three Months Ended | ||||||||||||
March 31, | ||||||||||||
Percent | ||||||||||||
2009 | 2008 | Change | ||||||||||
Revenues | ||||||||||||
Electronic payment processing services | $ | 232,119 | 245,669 | (5.5 | )% | |||||||
Merchant acquiring services | 65,477 | 61,714 | 6.1 | |||||||||
Other services | 47,850 | 45,747 | 4.6 | |||||||||
Revenues before reimbursables | 345,446 | 353,130 | (2.2 | ) | ||||||||
Reimbursable items | 63,487 | 66,696 | (4.8 | ) | ||||||||
Total revenues | 408,933 | 419,826 | (2.6 | ) | ||||||||
Expenses | ||||||||||||
Salaries & other personnel expense | 144,342 | 145,225 | (0.6 | ) | ||||||||
Net technology & facilities expense | 73,986 | 72,255 | 2.4 | |||||||||
Spin related expenses | — | 6,895 | (100.0 | ) | ||||||||
Other operating expenses | 49,004 | 42,659 | 14.9 | |||||||||
Expenses before reimbursable items | 267,332 | 267,034 | 0.1 | |||||||||
Reimbursable items | 63,487 | 66,696 | (4.8 | ) | ||||||||
Total operating expenses | 330,819 | 333,730 | (0.9 | ) | ||||||||
Operating income | 78,114 | 86,096 | (9.3 | ) | ||||||||
Nonoperating (expense) income | (1,458 | ) | 1,280 | nm | ||||||||
Income from continuing operations before income taxes, noncontrolling interests and equity in income of of equity investments | 76,656 | 87,376 | (12.3 | ) | ||||||||
Income taxes | 27,415 | 32,907 | (16.7 | ) | ||||||||
Income from continuing operations before noncontrolling interests and equity in income of equity investments | 49,241 | 54,469 | (9.6 | ) | ||||||||
Equity in income of equity investments | 1,043 | 2,162 | (51.8 | ) | ||||||||
Income from continuing operations, net of tax | 50,284 | 56,631 | (11.2 | ) | ||||||||
(Loss) income from discontinued operations, net of tax | (3,343 | ) | 233 | nm | ||||||||
Net income | 46,941 | 56,864 | (17.5 | ) | ||||||||
Net income attributable to the noncontrolling interests | (415 | ) | (250 | ) | (66.0 | ) | ||||||
Net income attributable to TSYS | $ | 46,526 | 56,614 | (17.8 | )% | |||||||
Basic earnings per share: | ||||||||||||
Income from continuing operations to TSYS common shareholders | $ | 0.26 | 0.29 | (10.3 | )% | |||||||
(Loss) income from discontinued operations to TSYS common shareholders | (0.02 | ) | 0.00 | nm% | ||||||||
Net income attributable to TSYS common shareholders | $ | 0.24 | 0.29 | (17.3 | )% | |||||||
Diluted earnings per share: | ||||||||||||
Income from continuing operations to TSYS common shareholders | $ | 0.26 | 0.29 | (10.2 | )% | |||||||
(Loss) income from discontinued operations to TSYS common shareholders | (0.02 | ) | 0.00 | nm% | ||||||||
Net income attributable to TSYS common shareholders | $ | 0.24 | 0.29 | (20.0 | )% | |||||||
Dividends declared per share | $ | 0.07 | 0.07 | |||||||||
Average common shares outstanding | 195,461 | 196,745 | ||||||||||
Average common and common equivalent shares outstanding | 195,816 | 197,306 | ||||||||||
Amounts attributable to TSYS common shareholders: | ||||||||||||
Income from continuing operations, net of tax | $ | 49,869 | 56,381 | |||||||||
(Loss) income from discontinued operations, net of tax | (3,343 | ) | 233 | |||||||||
Net income | $ | 46,526 | 56,614 | |||||||||
nm = | not meaningful | |
Note: | Certain amounts have been previously reclassified to conform with the presentation adopted in 2009. | |
Basic and diluted EPS is computed based on the two-class method in accordance with FSP EITF 03-6-1. The impact on first quarter 2009 and 2008 EPS (as recast to show retroactive adoption of FSP EITF 03-6-1) does not change basic or diluted EPS. |
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TSYS Announces First Quarter 2009 Earnings
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TSYS | ||||||||||||||||||||||||||||||||||||||||
Segment Breakdown | ||||||||||||||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||||||||||||||
Three Months Ended March 31, 2009 | Three Months Ended March 31, 2008 | |||||||||||||||||||||||||||||||||||||||
North America | International | Merchant | Spin-Related | North America | International | Merchant | Spin-Related | |||||||||||||||||||||||||||||||||
Services | Services | Services | Costs | Consolidated | Services | Services | Services | Costs | Consolidated | |||||||||||||||||||||||||||||||
Revenues before reimbursables | $ | 223,782 | 70,584 | 58,206 | — | 352,572 | 235,860 | 67,957 | 55,129 | — | 358,946 | |||||||||||||||||||||||||||||
Intersegment revenues | (5,888 | ) | (845 | ) | (393 | ) | — | (7,126 | ) | (5,231 | ) | (403 | ) | (182 | ) | — | (5,816 | ) | ||||||||||||||||||||||
Revenues before reimbursables from external customers | $ | 217,894 | 69,739 | 57,813 | — | 345,446 | 230,629 | 67,554 | 54,947 | — | 353,130 | |||||||||||||||||||||||||||||
Total revenues | $ | 268,789 | 73,802 | 75,498 | — | 418,089 | 287,012 | 69,824 | 70,937 | — | 427,773 | |||||||||||||||||||||||||||||
Intersegment revenues | (7,918 | ) | (845 | ) | (393 | ) | — | (9,156 | ) | (7,362 | ) | (403 | ) | (182 | ) | — | (7,947 | ) | ||||||||||||||||||||||
Revenues from external customers | $ | 260,871 | 72,957 | 75,105 | — | 408,933 | 279,650 | 69,421 | 70,755 | — | 419,826 | |||||||||||||||||||||||||||||
Depreciation and amortization | $ | 23,509 | 7,706 | 8,087 | — | 39,302 | 24,732 | 7,695 | 6,554 | — | 38,981 | |||||||||||||||||||||||||||||
Intersegment expenses | $ | 1,311 | (3,062 | ) | (7,405 | ) | — | (9,156 | ) | 2,774 | (3,541 | ) | (7,180 | ) | — | (7,947 | ) | |||||||||||||||||||||||
Segment operating income | $ | 58,033 | 6,004 | 14,077 | — | 78,114 | 70,471 | 7,446 | 15,074 | (6,895 | ) | 86,096 | ||||||||||||||||||||||||||||
Income from continuing operations before income taxes, noncontrolling interest and equity income of equity investments | 58,055 | 4,787 | 13,814 | — | 76,656 | 70,137 | 8,750 | 15,384 | (6,895 | ) | 87,376 | |||||||||||||||||||||||||||||
Income tax expense | $ | 19,594 | 2,877 | 4,944 | — | 27,415 | 26,509 | 2,914 | 5,408 | (1,924 | ) | 32,907 | ||||||||||||||||||||||||||||
Equity in income of equity investments | $ | 666 | 377 | — | — | 1,043 | 888 | 1,274 | — | — | 2,162 | |||||||||||||||||||||||||||||
Income from continuing operations | $ | 39,127 | 2,287 | 8,870 | — | 50,284 | 44,516 | 7,111 | 9,976 | (4,972 | ) | 56,631 | ||||||||||||||||||||||||||||
Identifiable assets | 1,451,129 | 310,787 | 215,584 | — | 1,977,500 | 1,296,769 | 353,570 | 188,360 | — | 1,838,699 | ||||||||||||||||||||||||||||||
Intersegment eliminations | (387,340 | ) | (1,007 | ) | (1 | ) | — | (388,348 | ) | (312,665 | ) | (1,513 | ) | (1,209 | ) | — | (315,387 | ) | ||||||||||||||||||||||
Total assets | 1,063,789 | 309,780 | 215,583 | — | 1,589,152 | 984,104 | 352,057 | 187,151 | — | 1,523,312 | ||||||||||||||||||||||||||||||
Note: | Revenues from North America 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 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 Services include TSYS Acquiring’s merchant acquiring and related services. Certain amounts have been previously reclassified to conform with the presentation adopted in 2009. |
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TSYS Announces First Quarter 2009 Earnings
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TSYS | ||||||||
Balance Sheet | ||||||||
(in thousands) | ||||||||
Mar 31, 2009 | Dec 31, 2008 | |||||||
(unaudited) | (unaudited) | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 271,043 | 211,365 | |||||
Restricted cash | 32,892 | 31,128 | ||||||
Accounts receivable, net | 240,421 | 246,767 | ||||||
Deferred income tax assets | 14,777 | 29,615 | ||||||
Prepaid expenses and other current assets | 90,826 | 88,612 | ||||||
Current assets of discontinued operations | 28,985 | 24,570 | ||||||
Total current assets | 678,944 | 632,057 | ||||||
Property and equipment, net | 273,028 | 279,653 | ||||||
Computer software, net | 198,504 | 202,038 | ||||||
Contract acquisition costs, net | 129,912 | 131,568 | ||||||
Goodwill, net | 165,413 | 165,995 | ||||||
Equity investments, net | 75,027 | 74,012 | ||||||
Other intangible assets, net | 16,491 | 17,452 | ||||||
Other assets | 45,136 | 40,768 | ||||||
Long-term assets of discontinued operations | 6,697 | 7,245 | ||||||
Total assets | $ | 1,589,152 | 1,550,788 | |||||
Liabilities and Equity | ||||||||
Current liabilities: | ||||||||
Current portion of notes payable | $ | 8,619 | 8,575 | |||||
Accrued salaries and employee benefits | 20,861 | 46,696 | ||||||
Accounts payable | 29,177 | 32,440 | ||||||
Current portion of obligations under capital leases | 6,954 | 6,344 | ||||||
Other current liabilities | 170,711 | 131,515 | ||||||
Current liabilities of discontinued operations | 18,911 | 10,998 | ||||||
Total current liabilities | 255,233 | 236,568 | ||||||
Notes payable, excluding current portion | 195,920 | 196,295 | ||||||
Deferred income tax liabilities | 49,674 | 60,578 | ||||||
Obligations under capital leases, excluding current portion | 15,186 | 13,576 | ||||||
Other long-term liabilities | 40,004 | 40,709 | ||||||
Long-term liabilities of discontinued operations | 1,600 | 2,212 | ||||||
Total liabilities | 557,617 | 549,938 | ||||||
Shareholders’ Equity: | ||||||||
Common stock | 20,040 | 20,036 | ||||||
Additional paid-in capital | 129,114 | 126,889 | ||||||
Accumulated other comprehensive income, net | (10,383 | ) | (6,627 | ) | ||||
Treasury stock | (69,970 | ) | (69,641 | ) | ||||
Retained earnings | 953,005 | 920,292 | ||||||
Total shareholders’ equity | 1,021,806 | 990,949 | ||||||
Noncontrolling interests in consolidated subsidiaries | 9,729 | 9,901 | ||||||
Total equity | 1,031,535 | 1,000,850 | ||||||
Total liabilities and equity | $ | 1,589,152 | 1,550,788 | |||||
Note: | Certain amounts have been previously reclassified to conform with the presentation adopted in 2009. |
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TSYS Announces First Quarter 2009 Earnings
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TSYS | ||||||||
Cash Flow | ||||||||
(unaudited) | ||||||||
(in thousands) | ||||||||
Three Months Ended March 31, | ||||||||
2009 | 2008 | |||||||
Cash flows from operating activities: | ||||||||
Net income attributable to TSYS | $ | 46,526 | 56,614 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Net income attributable to the noncontrolling interests | 415 | 250 | ||||||
Equity in income of equity investments | (1,043 | ) | (2,162 | ) | ||||
Loss (gain) on currency translation adjustments, net | 883 | (1,943 | ) | |||||
Depreciation and amortization | 39,850 | 39,229 | ||||||
Amortization of debt issuance costs | 38 | 38 | ||||||
Share-based compensation | 5,297 | 7,895 | ||||||
Excess tax benefit from share-based payment arrangements | — | (67 | ) | |||||
(Recoveries of) provisions for bad debt expense and billing adjustments | (394 | ) | 2,101 | |||||
Charges for transaction processing provisions | 1,537 | 265 | ||||||
Deferred income tax benefit | (2,329 | ) | (6,875 | ) | ||||
Loss on disposal of equipment, net | 7 | 161 | ||||||
(Increase) decrease in: | ||||||||
Accounts receivable | 1,166 | (6,140 | ) | |||||
Prepaid expenses, other current assets and other long-term assets | (1,743 | ) | 2,492 | |||||
Increase (decrease) in: | ||||||||
Accounts payable | (3,779 | ) | 3,426 | |||||
Accrued salaries and employee benefits | (25,567 | ) | (34,401 | ) | ||||
Other current liabilities and other long-term liabilities | 37,806 | 39,116 | ||||||
Net cash provided by operating activities | 98,670 | 99,999 | ||||||
Cash flows from investing activities: | ||||||||
Purchases of property and equipment, net | (2,181 | ) | (14,350 | ) | ||||
Additions to licensed computer software from vendors | (5,932 | ) | (2,351 | ) | ||||
Additions to internally developed computer software | (5,828 | ) | (2,413 | ) | ||||
Cash used in acquisitions | (205 | ) | — | |||||
Additions to contract acquisition costs | (10,992 | ) | (17,168 | ) | ||||
Net cash used in investing activities | (25,138 | ) | (36,282 | ) | ||||
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 | (3,622 | ) | (4,976 | ) | ||||
Proceeds from exercise of stock options | — | 59 | ||||||
Excess tax benefit from share-based payment arrangements | — | 67 | ||||||
Repurchase of common stock | (329 | ) | (11,369 | ) | ||||
Dividends paid on common stock | (13,779 | ) | (13,858 | ) | ||||
Net cash used in financing activities | (14,921 | ) | (30,077 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | (1,084 | ) | (1,509 | ) | ||||
Net increase in cash and cash equivalents | 57,527 | 32,131 | ||||||
Cash and cash equivalents at beginning of year | 220,018 | 210,518 | ||||||
Cash and cash equivalents at end of period | $ | 277,545 | 242,649 | |||||
Note: | Certain amounts have been previously reclassified to conform with the presentation adopted in 2009. |
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TSYS Announces First Quarter 2009 Earnings
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Geographic Area Data:
The following geographic area data represents revenues for the three months ended March 31 based on where the client is domiciled:
Three Months Ended March 31, | ||||||||||||||||||||
Percent | ||||||||||||||||||||
(dollars in millions): | 2009 | % | 2008 | % | Change | |||||||||||||||
United States | $ | 300.4 | 73.5 | % | $ | 312.2 | 74.4 | % | (3.8 | )% | ||||||||||
Europe | 57.8 | 14.1 | 58.9 | 14.0 | (1.8 | ) | ||||||||||||||
Canada | 30.6 | 7.5 | 31.7 | 7.5 | (3.2 | ) | ||||||||||||||
Japan | 11.1 | 2.7 | 7.4 | 1.8 | 49.2 | |||||||||||||||
Mexico | 2.2 | 0.5 | 3.7 | 0.9 | (41.2 | ) | ||||||||||||||
Other | 6.8 | 1.7 | 5.9 | 1.4 | 14.4 | |||||||||||||||
$ | 408.9 | 100.0 | % | $ | 419.8 | 100.0 | % | (2.6 | )% | |||||||||||
Geographic Area Revenue by Operating Segment:
The following table reconciles revenues by geography to revenues by reporting segment for the three months ended March 31:
Three Months Ended March 31, | ||||||||||||||||||||||||
North America | International | Merchant | ||||||||||||||||||||||
Services | Services | Services | ||||||||||||||||||||||
(dollars in millions): | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | ||||||||||||||||||
United States | $ | 225.6 | 241.7 | — | 0.1 | 74.8 | 70.4 | |||||||||||||||||
Europe | 0.2 | 0.3 | 57.6 | 58.6 | — | — | ||||||||||||||||||
Canada | 30.5 | 31.5 | — | — | 0.1 | 0.2 | ||||||||||||||||||
Japan | — | — | 11.1 | 7.4 | — | — | ||||||||||||||||||
Mexico | 2.2 | 3.7 | — | — | — | — | ||||||||||||||||||
Other | 2.4 | 2.4 | 4.2 | 3.3 | 0.2 | 0.2 | ||||||||||||||||||
$ | 260.9 | 279.6 | 72.9 | 69.4 | 75.1 | 70.8 | ||||||||||||||||||
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TSYS Announces First Quarter 2009 Earnings
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Supplemental Information:
Accounts on File at March 31, | ||||||||||||||||||||
Percent | ||||||||||||||||||||
(in millions) | 2009 | % | 2008 | % | Change | |||||||||||||||
Consumer | 186.5 | 54.8 | % | 211.4 | 57.9 | % | (11.8 | )% | ||||||||||||
Retail | 56.5 | 16.6 | 57.9 | 15.9 | (2.6 | ) | ||||||||||||||
Commercial | 44.4 | 13.0 | 40.1 | 11.0 | 10.8 | |||||||||||||||
Government services | 21.7 | 6.4 | 24.1 | 6.6 | (9.9 | ) | ||||||||||||||
Stored Value | 26.1 | 7.7 | 26.0 | 7.1 | 0.4 | |||||||||||||||
Debit | 5.2 | 1.5 | 5.4 | 1.5 | (3.1 | ) | ||||||||||||||
340.4 | 100.0 | % | 364.9 | 100.0 | % | (6.7 | )% | |||||||||||||
Percent | ||||||||||||
(in millions) | March 31, 2009 | March 31, 2008 | Change | |||||||||
YTD Average Accounts on File | 349.9 | 370.2 | (5.5 | )% |
Accounts on File at March 31, | ||||||||||||||||||||
Percent | ||||||||||||||||||||
(in millions) | 2009 | % | 2008 | % | Change | |||||||||||||||
Domestic | 252.0 | 74.0 | % | 283.4 | 77.7 | % | (11.1 | )% | ||||||||||||
International | 88.4 | 26.0 | 81.5 | 22.3 | 8.5 | |||||||||||||||
340.4 | 100.0 | % | 364.9 | 100.0 | % | (6.7 | )% | |||||||||||||
Note: | The accounts on file between domestic and international is based on the geographic domicile of processing clients. |
Growth in Accounts on File (in millions):
March 2008 to | March 2007 to | |||||||
March 2009 | March 2008 | |||||||
Beginning balance | 364.9 | 422.7 | ||||||
Change in accounts on file due to: | ||||||||
Internal growth of existing clients | 32.0 | 53.9 | ||||||
New clients | 20.0 | 18.2 | ||||||
Purges/Sales | (35.9 | ) | (25.3 | ) | ||||
Deconversions | (40.6 | ) | (104.6 | ) | ||||
Ending balance | 340.4 | 364.9 | ||||||
Number of Employees (FTEs): | 2009 | 2008 | ||||||
At March 31, | 8,068 | 7,547 | ||||||
YTD average for period ended March 31, | 8,061 | 7,245 |
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TSYS Announces First Quarter 2009 Earnings
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Constant Currency Comparison
(unaudited)
(unaudited)
(in thousands, except per share) | Three Months Ended March 31, | |||||||||||
Percent | ||||||||||||
2009 | 2008 | Change | ||||||||||
Consolidated | ||||||||||||
Constant currency (1) | $ | 431,516 | 419,826 | 2.8 | % | |||||||
Foreign currency (2) | (22,583 | ) | — | (5.4 | ) | |||||||
Total revenues | $ | 408,933 | 419,826 | (2.6 | )% | |||||||
Constant currency (1) | $ | 81,377 | 86,096 | (5.5 | )% | |||||||
Foreign currency (2) | (3,263 | ) | — | (3.8 | ) | |||||||
Operating income | $ | 78,114 | 86,096 | (9.3 | )% | |||||||
International Services | ||||||||||||
Constant currency (1) | $ | 96,385 | 69,824 | 38.0 | % | |||||||
Foreign currency (2) | (22,583 | ) | — | (32.3 | ) | |||||||
Total revenues | $ | 73,802 | 69,824 | 5.7 | % | |||||||
Constant currency (1) | $ | 9,267 | 7,446 | 24.5 | % | |||||||
Foreign currency (2) | (3,263 | ) | — | (43.8 | ) | |||||||
Operating income | $ | 6,004 | 7,446 | (19.4 | )% | |||||||
Total Revenues Including Discontinued Operations: | ||||||||||||
Consolidated | ||||||||||||
Total revenues including discontinued operations | $ | 498,284 | 461,722 | 7.9 | % | |||||||
Foreign currency (2) | (22,583 | ) | — | nm | ||||||||
Discontinued operations | (66,768 | ) | (41,896 | ) | (59.4 | ) | ||||||
Total revenues | $ | 408,933 | 419,826 | (2.6 | )% | |||||||
North America Services | ||||||||||||
Total revenues including discontinued operations | $ | 335,557 | 328,908 | 2.0 | % | |||||||
Discontinued operations | (66,768 | ) | (41,896 | ) | (59.4 | ) | ||||||
Total revenues | $ | 268,789 | 287,012 | (6.3 | )% | |||||||
nm = not meaningful | ||
(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. |
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