Exhibit 99.1

| | |
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:
Contacts:
Shawn Roberts
TSYS Investor Relations
+1.706.644.6081
shawnroberts@tsys.com
TSYS Reports EPS Growth of 26.5% for the Second Quarter
COLUMBUS, Ga., July 24, 2012 — TSYS (NYSE: TSS) today reported results for the second quarter of 2012. For the quarter, basic earnings per share was $0.35, an increase of 26.5% over 2011. Total revenues for the quarter were $462.7 million, an increase of 3.4% over 2011. Revenues before reimbursable items were $398.7 million and operating income was $92.1 million, increases of 4.9% and 17.3%, respectively, as compared to 2011.
“Our second quarter results continued to benefit from increases in the number of transactions processed in our issuer processing and indirect merchant acquiring businesses, increases in the dollar volume of transactions in our direct merchant acquiring business, our ongoing management focus on cost controls, and an expected nonrecurring tax benefit. Same client transaction growth in our card issuer processing business increased 12.7%. POS transactions, excluding deconverted clients in our indirect merchant acquiring business, were up 12.4% and sales volume in our direct merchant business was up 9.7%,” said Philip W. Tomlinson, chairman and chief executive officer of TSYS.
“Our recently announced renewal and expansion of our relationship with Bank of America was a defining accomplishment for TSYS as we have yet again demonstrated that we can deliver for one of the top credit card issuers in the world. The Bank of America signing, when coupled with the signing of a 12-year contract extension with Royal Bank of Scotland confirms my confidence in our outstanding management team and team members to get the job done,” said Tomlinson.
Taking into consideration TSYS’ reported results for the first half of 2012, and reductions in revenues associated with both the client requested delays in conversions previously scheduled for the second half of 2012 and the retention and expansion of the Bank of America issuer processing relationship, TSYS believes it will achieve the high end of its 2012 guidance for net income and EPS.
TSYS also announced that its Board of Directors has approved increasing the number of shares that may be repurchased under its current share repurchase plan from up to 15 million shares to up to 20 million shares. With the increase, TSYS has 10.3 million shares available to be repurchased. In addition, the Board of Directors extended the expiration date of the plan to April 30, 2014. The shares may be repurchased from time to time at prices considered attractive to management. Repurchased shares will be used for general corporate purposes.
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Conference Call
TSYS will host its quarterly conference call at 5:00 p.m. ET on Tuesday, July 24. The conference call can be accessed via simultaneous Internet broadcast attsys.com by 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 pages 11 and 12 of this release.
About TSYS
At TSYS, (NYSE: TSS), we believe payments should revolve around people — not the other way around. We call this belief “People-Centered Payments.” By putting people at the center of every decision we make, with unmatched customer service and industry insight, TSYS is able to support financial institutions, businesses and governments in more than 80 countries. Offering merchant payment-acceptance solutions as well as services in credit, debit, prepaid, mobile, chip, healthcare and more, we make it possible for those in the global marketplace to conduct safe and secure electronic transactions with trust and convenience.
TSYS’ headquarters are located in Columbus, Georgia, with local offices spread across the Americas, EMEA and Asia-Pacific. TSYS provides services to more than half of the top 20 international banks, is a Fortune 1000 company and was named one of the 2012 World’s Most Ethical Companies by Ethisphere magazine. For more information, please visit us atwww.tsys.com.
Forward-Looking Statements
This press release contains “forward-looking statements” – that is, statements related to future, not past, events. Forward-looking statements often address our expected future business and financial performance and often contain words such as “expect,” “anticipate,” “intend,” “believe,” “should,” “plan,” “will,” “could,” and similar expressions. These forward-looking statements include, among others, statements regarding TSYS’ belief that it will achieve the high-end of its guidance range for net income and EPS for 2012, and the assumptions underlying such statements. These statements are based on the current beliefs and expectations of TSYS’ management, are based on management’s assumptions and are subject to significant risks and
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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: continued consolidation and turmoil in the financial services and other industries during 2012, 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; TSYS is unable to control expenses and increase market share both domestically and internationally; TSYS is unable to manage the impact of slowing economic conditions and consumer spending; the material breach of security of any of TSYS’ systems; the impact of potential and completed acquisitions, including the costs associated therewith and their being more difficult to integrate than anticipated; adverse developments with respect to foreign currency exchange rates; expenses are incurred associated with the signing of a significant client; the deconversion of a significant client; the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act on TSYS and on our clients; 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; the costs and effects of litigation, investigations or similar matters or adverse facts and developments relating thereto; 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 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 risks and other 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 most recent Annual Report on Form 10-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.
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TSYS Announces Second Quarter 2012 Earnings
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TSYS
Financial Highlights
(unaudited)
(in thousands, except per share data)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, | | | Six Months Ended June 30, | |
| | 2012 | | | 2011 | | | Percent Change | | | 2012 | | | 2011 | | | Percent Change | |
Total revenues | | $ | 462,651 | | | | 447,554 | | | | 3.4 | % | | $ | 923,813 | | | | 876,985 | | | | 5.3 | % |
| | | | | | |
Cost of services | | | 312,669 | | | | 312,052 | | | | 0.2 | | | | 630,927 | | | | 613,543 | | | | 2.8 | |
Selling, general and administrative expenses | | | 57,886 | | | | 56,973 | | | | 1.6 | | | | 115,959 | | | | 111,885 | | | | 3.6 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Operating income | | | 92,096 | | | | 78,529 | | | | 17.3 | | | | 176,927 | | | | 151,557 | | | | 16.7 | |
| | | | | | |
Nonoperating expenses | | | (1,818 | ) | | | (841 | ) | | | nm | | | | (2,223 | ) | | | (1,568 | ) | | | (41.8 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Income before income taxes, noncontrolling interests and equity in income of equity investments | | | 90,278 | | | | 77,688 | | | | 16.2 | | | | 174,704 | | | | 149,989 | | | | 16.5 | |
Income taxes | | | 24,553 | | | | 23,658 | | | | 3.8 | | | | 54,108 | | | | 48,815 | | | | 10.8 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income before noncontrolling interests and equity in income of equity investments | | | 65,725 | | | | 54,030 | | | | 21.6 | | | | 120,596 | | | | 101,174 | | | | 19.2 | |
Equity in income of equity investments | | | 2,252 | | | | 617 | | | | nm | | | | 5,026 | | | | 2,885 | | | | 74.2 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net income | | | 67,977 | | | | 54,647 | | | | 24.4 | | | | 125,622 | | | | 104,059 | | | | 20.7 | |
Net income attributable to noncontrolling interests | | | (1,267 | ) | | | (900 | ) | | | (40.8 | ) | | | (2,516 | ) | | | (1,522 | ) | | | (65.3 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net income attributable to TSYS common shareholders | | $ | 66,710 | | | | 53,747 | | | | 24.1 | % | | $ | 123,106 | | | | 102,537 | | | | 20.1 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Basic earnings per share | | $ | 0.35 | | | | 0.28 | | | | 26.5 | % | | $ | 0.65 | | | | 0.53 | | | | 22.7 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Diluted earnings per share | | $ | 0.35 | | | | 0.28 | | | | 25.5 | % | | $ | 0.65 | | | | 0.53 | | | | 21.8 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Dividends declared per share | | $ | 0.10 | | | | 0.07 | | | | | | | $ | 0.20 | | | | 0.14 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
nm = not meaningful
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TSYS Announces Second Quarter 2012 Earnings
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TSYS
Consolidated Statements of Comprehensive Income
(unaudited)
(in thousands)
| | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, | | | Six Months Ended June 30, | |
| | 2012 | | | 2011 | | | 2012 | | | 2011 | |
| | | | |
Net income | | $ | 67,977 | | | | 54,647 | | | | 125,622 | | | | 104,059 | |
Other comprehensive income (loss), net of tax: | | | | | | | | | | | | | | | | |
Foreign currency translation adjustments | | | (10,027 | ) | | | 1,685 | | | | (7,064 | ) | | | 11,956 | |
Postretirement healthcare plan adjustments | | | 23 | | | | (182 | ) | | | 286 | | | | (363 | ) |
| | | | | | | | | | | | | | | | |
Other comprehensive income (loss) | | | (10,004 | ) | | | 1,503 | | | | (6,778 | ) | | | 11,593 | |
| | | | | | | | | | | | | | | | |
Comprehensive income | | | 57,973 | | | | 56,150 | | | | 118,844 | | | | 115,652 | |
Comprehensive income attributable to noncontrolling interests | | | 1,594 | | | | 1,475 | | | | 2,135 | | | | 2,196 | |
| | | | | | | | | | | | | | | | |
Comprehensive income attributable to TSYS common shareholders | | $ | 56,379 | | | | 54,675 | | | | 116,709 | | | | 113,456 | |
| | | | | | | | | | | | | | | | |
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TSYS Announces Second Quarter 2012 Earnings
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TSYS
Earnings Per Share
(unaudited)
(in thousands, except per share data)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, 2012 | | | Three Months Ended June 30, 2011 | | | Six Months Ended June 30, 2012 | | | Six Months Ended June 30, 2011 | |
| | Common Stock | | | Participating Securities | | | Common Stock | | | Participating Securities | | | Common Stock | | | Participating Securities | | | Common Stock | | | Participating Securities | |
| | | | | | | | |
Basic Earnings per share: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income | | $ | 66,710 | | | | | | | | 53,747 | | | | | | | $ | 123,106 | | | | | | | | 102,537 | | | | | |
Less income allocated to nonvested awards | | | (224 | ) | | | 224 | | | | (191 | ) | | | 191 | | | | (421 | ) | | | 421 | | | | (383 | ) | | | 383 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income allocated to common stock for EPS calculation (a) | | $ | 66,486 | | | | 224 | | | | 53,556 | | | | 191 | | | $ | 122,685 | | | | 421 | | | | 102,154 | | | | 383 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
Average common shares outstanding (b) | | | 189,070 | | | | 650 | | | | 191,935 | | | | 690 | | | | 188,894 | | | | 658 | | | | 192,390 | | | | 727 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
Average common shares and participating securities | | | 189,720 | | | | | | | | 192,625 | | | | | | | | 189,552 | | | | | | | | 193,117 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
Basic Earnings per share (a)/(b) | | $ | 0.35 | | | | 0.35 | | | | 0.28 | | | | 0.28 | | | $ | 0.65 | | | | 0.64 | | | | 0.53 | | | | 0.53 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
Diluted Earnings per share: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income | | $ | 66,710 | | | | | | | | 53,747 | | | | | | | $ | 123,106 | | | | | | | | 102,537 | | | | | |
Less income allocated to nonvested awards | | | (223 | ) | | | 223 | | | | (190 | ) | | | 190 | | | | (419 | ) | | | 419 | | | | (382 | ) | | | 382 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income allocated to common stock for EPS calculation (c) | | $ | 66,487 | | | | 223 | | | | 53,557 | | | | 190 | | | $ | 122,687 | | | | 419 | | | | 102,155 | | | | 382 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
Average common shares outstanding | | | 189,070 | | | | 650 | | | | 191,935 | | | | 690 | | | | 188,894 | | | | 658 | | | | 192,390 | | | | 727 | |
Increase due to assumed issuance of shares related to common equivalent shares outstanding | | | 1,270 | | | | | | | | 459 | | | | | | | | 1,159 | | | | | | | | 366 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
Average common and common equivalent shares outstanding (d) | | | 190,340 | | | | 650 | | | | 192,394 | | | | 690 | | | | 190,053 | | | | 658 | | | | 192,756 | | | | 727 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
Average common and common equivalent shares and participating securities | | | 190,990 | | | | | | | | 193,084 | | | | | | | | 190,711 | | | | | | | | 193,483 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
Diluted Earnings per share (c)/(d) | | $ | 0.35 | | | | 0.34 | | | | 0.28 | | | | 0.28 | | | $ | 0.65 | | | | 0.64 | | | | 0.53 | | | | 0.53 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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TSYS Announces Second Quarter 2012 Earnings
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TSYS
Segment Breakdown
(unaudited)
(in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, | | | Six Months Ended June 30, | |
| | | | | | | | Change | | | | | | | | | Change | |
| | 2012 | | | 2011 | | | $ | | | % | | | 2012 | | | 2011 | | | $ | | | % | |
Revenues before reimbursable items | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
North America Services | | $ | 205,565 | | | | 198,775 | | | | 6,790 | | | | 3.4 | % | | | 409,614 | | | | 393,365 | | | | 16,249 | | | | 4.1 | % |
International Services | | | 99,047 | | | | 93,778 | | | | 5,269 | | | | 5.6 | % | | | 195,538 | | | | 181,198 | | | | 14,340 | | | | 7.9 | % |
Merchant Services | | | 97,701 | | | | 93,041 | | | | 4,660 | | | | 5.0 | % | | | 196,056 | | | | 179,560 | | | | 16,496 | | | | 9.2 | % |
Intersegment revenues | | | (3,621 | ) | | | (5,384 | ) | | | 1,763 | | | | 32.7 | % | | | (7,338 | ) | | | (11,269 | ) | | | 3,931 | | | | 34.9 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Revenues before reimbursable items from external customers | | $ | 398,692 | | | | 380,210 | | | | 18,482 | | | | 4.9 | % | | | 793,870 | | | | 742,854 | | | | 51,016 | | | | 6.9 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
Total revenues | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
North America Services | | $ | 239,557 | | | | 233,903 | | | | 5,654 | | | | 2.4 | % | | | 480,156 | | | | 464,461 | | | | 15,695 | | | | 3.4 | % |
International Services | | | 103,415 | | | | 97,670 | | | | 5,745 | | | | 5.9 | % | | | 203,775 | | | | 188,380 | | | | 15,395 | | | | 8.2 | % |
Merchant Services | | | 124,903 | | | | 123,084 | | | | 1,819 | | | | 1.5 | % | | | 250,420 | | | | 238,840 | | | | 11,580 | | | | 4.8 | % |
Intersegment revenues | | | (5,224 | ) | | | (7,103 | ) | | | 1,879 | | | | 26.5 | % | | | (10,538 | ) | | | (14,696 | ) | | | 4,158 | | | | 28.3 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Revenues from external customers | | $ | 462,651 | | | | 447,554 | | | | 15,097 | | | | 3.4 | % | | | 923,813 | | | | 876,985 | | | | 46,828 | | | | 5.3 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
Depreciation and amortization | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
North America Services | | $ | 18,821 | | | | 19,926 | | | | (1,105 | ) | | | (5.5 | )% | | | 37,275 | | | | 39,392 | | | | (2,117 | ) | | | (5.4 | )% |
International Services | | | 15,006 | | | | 11,960 | | | | 3,046 | | | | 25.5 | % | | | 27,917 | | | | 23,669 | | | | 4,248 | | | | 17.9 | % |
Merchant Services | | | 8,668 | | | | 9,313 | | | | (645 | ) | | | (6.9 | )% | | | 17,453 | | | | 18,460 | | | | (1,007 | ) | | | (5.5 | )% |
Corporate Admin | | | 718 | | | | 768 | | | | (50 | ) | | | (6.5 | )% | | | 1,441 | | | | 1,514 | | | | (73 | ) | | | (4.8 | )% |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total depreciation and amortization | | $ | 43,213 | | | | 41,967 | | | | 1,246 | | | | 3.0 | % | | | 84,086 | | | | 83,035 | | | | 1,051 | | | | 1.3 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
Segment operating income | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
North America Services | | $ | 72,060 | | | | 64,068 | | | | 7,992 | | | | 12.5 | % | | | 140,232 | | | | 119,268 | | | | 20,964 | | | | 17.6 | % |
International Services | | | 9,438 | | | | 10,122 | | | | (684 | ) | | | (6.8 | )% | | | 13,552 | | | | 21,147 | | | | (7,595 | ) | | | (35.9 | )% |
Merchant Services | | | 32,950 | | | | 25,708 | | | | 7,242 | | | | 28.2 | % | | | 67,169 | | | | 52,631 | | | | 14,538 | | | | 27.6 | % |
Corporate Admin | | | (22,352 | ) | | | (21,369 | ) | | | (983 | ) | | | (4.6 | )% | | | (44,026 | ) | | | (41,489 | ) | | | (2,537 | ) | | | (6.1 | )% |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Operating income | | $ | 92,096 | | | | 78,529 | | | | 13,567 | | | | 17.3 | % | | | 176,927 | | | | 151,557 | | | | 25,370 | | | | 16.7 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
Other: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Reimbursable items: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
North America Services | | $ | 33,992 | | | | 35,128 | | | | (1,136 | ) | | | (3.2 | )% | | | 70,542 | | | | 71,096 | | | | (554 | ) | | | (0.8 | )% |
International Services | | | 4,368 | | | | 3,892 | | | | 476 | | | | 12.2 | % | | | 8,238 | | | | 7,183 | | | | 1,055 | | | | 14.7 | % |
Merchant Services | | | 27,202 | | | | 30,043 | | | | (2,841 | ) | | | (9.5 | )% | | | 54,364 | | | | 59,280 | | | | (4,916 | ) | | | (8.3 | )% |
Intersegment revenues | | | (1,603 | ) | | | (1,719 | ) | | | 116 | | | | 6.7 | % | | | (3,201 | ) | | | (3,428 | ) | | | 227 | | | | 6.6 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Reimbursable items | | $ | 63,959 | | | | 67,344 | | | | (3,385 | ) | | | (5.0 | )% | | | 129,943 | | | | 134,131 | | | | (4,188 | ) | | | (3.1 | )% |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
Volumes: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
FTEs (full-time equivalents) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
North America Services | | | | | | | | | | | | | | | | | | | 3,964 | | | | 4,327 | | | | (363 | ) | | | (8.4 | )% |
International Services | | | | | | | | | | | | | | | | | | | 2,624 | | | | 2,217 | | | | 407 | | | | 18.4 | % |
Merchant Services | | | | | | | | | | | | | | | | | | | 1,242 | | | | 1,185 | | | | 57 | | | | 4.8 | % |
Corporate Admin | | | | | | | | | | | | | | | | | | | 415 | | | | 380 | | | | 35 | | | | 9.2 | % |
| | | | | | | | | | | | | �� | | | | | | | | | | | | | | | | | | | |
FTEs | | | | | | | | | | | | | | | | | | | 8,245 | | | | 8,109 | | | | 136 | | | | 1.7 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | At | | | Change | |
| | | | | | | | | | | | | | 6/30/2012 | | | 12/31/2011 | | | $ | | | % | |
| | | | | | | | |
Total assets (in thousands) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
North America Services | | | | | | | | | | | | | | | | | | | 1,704,042 | | | | 1,621,664 | | | | 82,378 | | | | 5.1 | % |
International Services | | | | | | | | | | | | | | | | | | | 448,098 | | | | 433,203 | | | | 14,895 | | | | 3.4 | % |
Merchant Services | | | | | | | | | | | | | | | | | | | 486,444 | | | | 487,858 | | | | (1,414 | ) | | | (0.3 | )% |
Intersegment assets | | | | | | | | | | | | | | | | | | | (702,043 | ) | | | (684,333 | ) | | | (17,710 | ) | | | (2.6 | )% |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total assets | | | | | | | | | | | | | | | | | | | 1,936,541 | | | | 1,858,392 | | | | 78,149 | | | | 4.2 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | |
| | Three Months Ended June 30, | | | Six Months Ended June 30, | |
| | | | | | | | Change | | | | | | | | | Change | |
| | 2012 | | | 2011 | | | Inc(Dec) | | | % | | | 2012 | | | 2011 | | | Inc(Dec) | | | % | |
North America Segment: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Accounts on File (AOF) (in millions) | | | | | | | | | | | | | | | | | | | 387.3 | | | | 328.3 | | | | 59.0 | | | | 18.0 | % |
Transactions (in millions) | | | 2,037.9 | | | | 1,795.1 | | | | 242.8 | | | | 13.5 | % | | | 3,930.9 | | | | 3,421.9 | | | | 509.0 | | | | 14.9 | % |
| | | | | | | | |
International Segment: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
AOF (in millions) | | | | | | | | | | | | | | | | | | | 53.1 | | | | 47.8 | | | | 5.3 | | | | 11.1 | % |
Transactions (in millions) | | | 402.3 | | | | 340.6 | | | | 61.7 | | | | 18.1 | % | | | 785.4 | | | | 666.6 | | | | 118.7 | | | | 17.8 | % |
| | | | | | | | |
Merchant Segment: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Point-of-sale Transactions (in millions) | | | 1,279.7 | | | | 1,269.0 | | | | 10.7 | | | | 0.8 | % | | | 2,499.4 | | | | 2,475.8 | | | | 23.6 | | | | 1.0 | % |
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TSYS Announces Second Quarter 2012 Earnings
Page 8 of 12
TSYS
Balance Sheet
(unaudited)
(in thousands)
| | | | | | | | |
| | Jun 30, 2012 | | | Dec 31, 2011 | |
Assets | | | | | | | | |
Current assets: | | | | | | | | |
Cash and cash equivalents | | $ | 418,643 | | | | 316,337 | |
Accounts receivable, net | | | 246,335 | | | | 248,541 | |
Deferred income tax assets | | | 7,846 | | | | 12,872 | |
Prepaid expenses and other current assets | | | 81,016 | | | | 72,431 | |
| | | | | | | | |
Total current assets | | | 753,840 | | | | 650,181 | |
Goodwill | | | 354,879 | | | | 355,498 | |
Property and equipment, net | | | 259,160 | | | | 266,608 | |
Computer software, net | | | 205,862 | | | | 215,244 | |
Contract acquisition costs, net | | | 160,819 | | | | 162,987 | |
Equity investments, net | | | 85,843 | | | | 82,924 | |
Other intangible assets, net | | | 75,702 | | | | 81,250 | |
Deferred income tax assets, net | | | 5,102 | | | | 4,069 | |
Other assets | | | 35,334 | | | | 39,631 | |
| | | | | | | | |
Total assets | | $ | 1,936,541 | | | | 1,858,392 | |
| | | | | | | | |
| | |
Liabilities | | | | | | | | |
Current liabilities: | | | | | | | | |
Current portion of notes payable | | $ | 184,186 | | | | 181,251 | |
Accounts payable | | | 28,470 | | | | 26,095 | |
Accrued salaries and employee benefits | | | 14,216 | | | | 33,004 | |
Current portion of obligations under capital leases | | | 12,991 | | | | 14,363 | |
Other current liabilities | | | 132,235 | | | | 125,863 | |
| | | | | | | | |
Total current liabilities | | | 372,098 | | | | 380,576 | |
Long-term debt, excluding current portion | | | 37,627 | | | | 39,104 | |
Deferred income tax liabilities | | | 31,494 | | | | 32,889 | |
Obligations under capital leases, excluding current portion | | | 22,449 | | | | 24,489 | |
Other long-term liabilities | | | 59,155 | | | | 60,325 | |
| | | | | | | | |
Total liabilities | | | 522,823 | | | | 537,383 | |
| | | | | | | | |
Equity | | | | | | | | |
Shareholders’ equity: | | | | | | | | |
Common stock | | | 20,245 | | | | 20,186 | |
Additional paid-in capital | | | 132,374 | | | | 125,948 | |
Accumulated other comprehensive loss, net | | | (6,841 | ) | | | (445 | ) |
Treasury stock | | | (218,760 | ) | | | (225,034 | ) |
Retained earnings | | | 1,465,933 | | | | 1,380,634 | |
| | | | | | | | |
Total shareholders’ equity | | | 1,392,951 | | | | 1,301,289 | |
| | | | | | | | |
Noncontrolling interests in consolidated subsidiaries | | | 20,767 | | | | 19,720 | |
| | | | | | | | |
Total equity | | | 1,413,718 | | | | 1,321,009 | |
| | | | | | | | |
Total liabilities and equity | | $ | 1,936,541 | | | | 1,858,392 | |
| | | | | | | | |
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TSYS Announces Second Quarter 2012 Earnings
Page 9 of 12
TSYS
Cash Flow
(unaudited)
(in thousands)
| | | | | | | | |
| | Six Months Ended June 30, | |
| | 2012 | | | 2011 | |
| | |
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | |
Net income | | $ | 125,622 | | | | 104,059 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | |
Equity in income of equity investments | | | (5,026 | ) | | | (2,885 | ) |
Dividends received from equity investments | | | 1,098 | | | | 13 | |
Net loss on foreign currency translation | | | 1,635 | | | | 574 | |
Depreciation and amortization | | | 84,086 | | | | 83,035 | |
Amortization of debt issuance costs | | | 94 | | | | 77 | |
Share-based compensation | | | 8,626 | | | | 8,644 | |
Excess tax benefit from share-based payment arrangements | | | (653 | ) | | | (54 | ) |
Asset impairments | | | — | | | | 1,298 | |
Provisions for bad debt expense and billing adjustments | | | 356 | | | | 873 | |
Charges for transaction processing provisions | | | 971 | | | | 2,632 | |
Deferred income tax expense (benefit) | | | 1,746 | | | | (9,738 | ) |
(Gain) loss on disposal of equipment, net | | | 29 | | | | (1,429 | ) |
Changes in operating assets and liabilities: | | | | | | | | |
Accounts receivable | | | (376 | ) | | | 19,410 | |
Prepaid expenses, other current assets and other long-term assets | | | (4,691 | ) | | | 4,508 | |
Accounts payable | | | 2,743 | | | | (13,239 | ) |
Accrued salaries and employee benefits | | | (18,602 | ) | | | (11,489 | ) |
Other current liabilities and other long-term liabilities | | | 5,746 | | | | 13,005 | |
| | | | | | | | |
Net cash provided by operating activities | | | 203,404 | | | | 199,294 | |
| | | | | | | | |
| | |
CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | | |
Purchases of property and equipment, net | | | (13,810 | ) | | | (12,543 | ) |
Additions to licensed computer software from vendors | | | (17,278 | ) | | | (5,882 | ) |
Additions to internally developed computer software | | | (10,121 | ) | | | (9,242 | ) |
Proceeds from sale of trade name | | | — | | | | 4,500 | |
Cash used in acquisitions, net of cash acquired | | | (1,750 | ) | | | (45,287 | ) |
Purchase of private equity investments | | | (623 | ) | | | — | |
Additions to contract acquisition costs | | | (16,740 | ) | | | (16,007 | ) |
| | | | | | | | |
Net cash used in investing activities | | | (60,322 | ) | | | (84,461 | ) |
| | | | | | | | |
| | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | |
Principal payments on long-term debt borrowings and capital lease obligations | | | (13,038 | ) | | | (14,494 | ) |
Proceeds from borrowings of long-term debt | | | 8,633 | | | | — | |
Proceeds from exercise of stock options | | | 4,698 | | | | 1,339 | |
Excess tax benefit from share-based payment arrangements | | | 653 | | | | 54 | |
Repurchase of common stock | | | (338 | ) | | | (35,700 | ) |
Purchase of noncontrolling interests | | | — | | | | (174,050 | ) |
Subsidiary dividends paid to noncontrolling shareholders | | | (1,087 | ) | | | (448 | ) |
Dividends paid on common stock | | | (37,809 | ) | | | (27,129 | ) |
| | | | | | | | |
Net cash used in financing activities | | | (38,288 | ) | | | (250,428 | ) |
| | | | | | | | |
| | |
CASH AND CASH EQUIVALENTS: | | | | | | | | |
Effect of exchange rate changes on cash and cash equivalents | | | (2,488 | ) | | | 4,134 | |
| | | | | | | | |
Net increase (decrease) in cash and cash equivalents | | | 102,306 | | | | (131,461 | ) |
Cash and cash equivalents at beginning of period | | | 316,337 | | | | 394,795 | |
| | | | | | | | |
Cash and cash equivalents at end of period | | $ | 418,643 | | | | 263,334 | |
| | | | | | | | |
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TSYS Announces Second Quarter 2012 Earnings
Page 10 of 12
Supplemental Information:
| | | | | | | | | | | | |
| | Accounts on File | |
| | Total | |
(in millions) | | June 2012 | | | June 2011 | | | % Change | |
Consumer Credit | | | 199.4 | | | | 187.6 | | | | 6.3 | |
Government Services | | | 30.8 | | | | 30.0 | | | | 2.8 | |
Retail | | | 25.2 | | | | 23.7 | | | | 6.0 | |
| | | | | | | | | | | | |
Total Consumer | | | 255.4 | | | | 241.3 | | | | 5.8 | |
Commercial | | | 36.1 | | | | 32.7 | | | | 10.4 | |
Other | | | 9.6 | | | | 6.7 | | | | 42.9 | |
| | | | | | | | | | | | |
Subtotal | | | 301.1 | | | | 280.7 | | | | 7.2 | |
Prepaid/Stored Value | | | 105.4 | | | | 72.8 | | | | 44.6 | |
Commercial Card Single Use | | | 34.0 | | | | 22.5 | | | | 51.2 | |
| | | | | | | | | | | | |
Total AOF | | | 440.5 | | | | 376.0 | | | | 17.1 | |
| | | | | | | | | | | | |
| | | | | | | | |
Growth in Accounts on File(in millions): | |
| | June 2011 to June 2012 | | | June 2010 to June 2011 | |
Beginning balance | | | 376.0 | | | | 332.8 | |
Change in accounts on file due to: | | | | | | | | |
Internal growth of existing clients | | | 33.9 | | | | 26.3 | |
New clients | | | 51.0 | | | | 33.0 | |
Purges/Sales | | | (17.6 | ) | | | (14.7 | ) |
Deconversions | | | (2.8 | ) | | | (1.4 | ) |
| | | | | | | | |
Ending balance | | | 440.5 | | | | 376.0 | |
| | | | | | | | |
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TSYS Announces Second Quarter 2012 Earnings
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 2012 financial results using the previous year’s foreign currency exchange rates. On a year-to-date constant currency basis, TSYS’ total revenues grew 5.8% as compared to a reported GAAP increase of 5.3%.
The non-GAAP financial measures of constant currency and revenues , 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 Second Quarter 2012 Earnings
Page 12 of 12
Reconciliation of GAAP to Non-GAAP
Constant Currency Comparison
(unaudited)
(in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, | | | Six Months Ended June 30, | |
| | 2012 | | | 2011 | | | Percent Change | | | 2012 | | | 2011 | | | Percent Change | |
Consolidated | | | | | | | | | | | | | | | | | | | | | | | | |
Constant currency (1) | | $ | 465,231 | | | | 447,554 | | | | 3.9 | % | | $ | 927,482 | | | | 876,985 | | | | 5.8 | % |
Foreign currency (2) | | | (2,580 | ) | | | — | | | | | | | | (3,669 | ) | | | — | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total revenues | | $ | 462,651 | | | | 447,554 | | | | 3.4 | % | | $ | 923,813 | | | | 876,985 | | | | 5.3 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Constant currency (1) | | $ | 90,675 | | | | 78,529 | | | | 15.5 | % | | $ | 175,086 | | | | 151,557 | | | | 15.5 | % |
Foreign currency (2) | | | 1,421 | | | | — | | | | | | | | 1,841 | | | | — | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Operating income | | $ | 92,096 | | | | 78,529 | | | | 17.3 | % | | $ | 176,927 | | | | 151,557 | | | | 16.7 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
International Services | | | | | | | | | | | | | | | | | | | | | | | | |
Constant currency (1) | | $ | 106,186 | | | | 97,670 | | | | 8.7 | % | | $ | 207,717 | | | | 188,380 | | | | 10.3 | % |
Foreign currency (2) | | | (2,771 | ) | | | — | | | | | | | | (3,942 | ) | | | — | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total revenues | | $ | 103,415 | | | | 97,670 | | | | 5.9 | % | | $ | 203,775 | | | | 188,380 | | | | 8.2 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
(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. |
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