Exhibit 99.1
Total System Services, Inc. One TSYS Way Post Office Box 2567 Columbus GA 31902-2567 |
+1.706.649.2307 +1.706.649.5740 www.tsys.com |
For immediate release:
Contacts:
Shawn Roberts
TSYS Investor Relations
+1.706.644.6081
shawnroberts@tsys.com
TSYS Reports 2012 Earnings Per Share Up 13.1%
Provides 2013 EPS Guidance of 10%-12% Growth
COLUMBUS, Ga., Jan. 22, 2013 — TSYS (NYSE: TSS) today reported results for the fourth quarter and full year with basic earnings per share (EPS) at $0.33 for the quarter, an increase of 3.7%, and $1.30 for the full year, an increase of 13.1% over 2011. Revenues before reimbursable items for the quarter were $418.6 million, an increase of 2.7%, and $1,618.5 million for the year, an increase of 5.0% over 2011. Total revenues were $479.1 million for the quarter and $1,871.0 million for the full year, increases of 1.5% and 3.4%, respectively, as compared to 2011. Total revenues were impacted by decreases of $4.0 million for the quarter and $15.8 million for the year in reimbursable items.
Operating margin excluding reimbursable items for the year was 22.1%, an increase of 117 basis points over last year. The increase is attributable to a 5.0% increase in revenues before reimbursable items, while expenses before reimbursable items were up only 3.5%.
“We are pleased to report that we exceeded the high end of our net income and EPS guidance for 2012. These results reflect continued strong same client transaction growth of 12.0% in our card issuer processing business. Point-Of-Sale transactions, excluding deconverted clients in the indirect merchant business, were up 9.9% and sales volume in the direct merchant business was up 12.9%. Excluding the impact of acquisitions, sales volume was up 3.2%. Also contributing to our strong results was our consolidated internal revenue growth of 5.1% for the year, combined with acquisitions in the acquiring space, which added 1.8% to our growth in revenues before reimbursable items,” said Philip W. Tomlinson, chairman and chief executive officer of TSYS.
“Our guidance for 2013 is included in the table below and we expect 6% to 8 % growth in revenues before reimbursable items and 10% to 12% EPS growth. This is the second year in a row that we have projected double digit EPS growth. We remain focused on executing our strategy of growing our existing businesses, adding strategic acquisitions and deploying capital to enhance shareholder return. In support of this strategy during 2012, we purchased 3.2 million shares of our stock for $75 million, used $190 million to invest in acquisitions, and returned $94 million in dividends to our shareholders, for a total spend of $359 million,” said Tomlinson.
Page 1 of 12
2013 Guidance | ||||||||||||||||||||||||
Range (in millions, except per share amounts) | Percent Change | |||||||||||||||||||||||
Total revenues | $ | 1,955 | to | $ | 1,995 | 5 | % | to | 7 | % | ||||||||||||||
Revenues before reimbursable items | $ | 1,711 | to | $ | 1,746 | 6 | % | to | 8 | % | ||||||||||||||
Net Income attributable to TSYS common shareholders | $ | 266 | to | $ | 272 | 9 | % | to | 11 | % | ||||||||||||||
EPS attributable to TSYS common shareholders | $ | 1.43 | to | $ | 1.45 | 10 | % | to | 12 | % |
Conference Call
TSYS will host its quarterly conference call at 5:00 p.m. ET on Tuesday, January 22. 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 and this release contain the non-GAAP financial measures of revenues and operating results on a constant currency basis, and revenues and operating margin excluding reimbursable items, 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
At TSYS, (NYSE: TSS), we believe payments should revolve around people — not the other way around. We call this belief “People-Centered PaymentsSM.” 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.
Page 2 of 12
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’ earnings guidance for 2013 total revenues, revenues before reimbursable items, net income attributable to TSYS common shareholders and EPS attributable to TSYS common shareholders, 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 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, the effect of current domestic and worldwide economic conditions; 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; 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 growth rates of TSYS’ existing clients are lower than anticipated or attrition rates of existing clients are higher than anticipated. 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.
— more —
Page 3 of 12
TSYS Announces Fourth Quarter 2012 Earnings
Page 4 of 12
TSYS
Financial Highlights
(unaudited)
(in thousands, except per share data)
Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||||||
Percent | Percent | |||||||||||||||||||||||
2012 | 2011 | Change | 2012 | 2011 | Change | |||||||||||||||||||
Total revenues | $ | 479,100 | 472,234 | 1.5 | % | $ | 1,870,972 | 1,808,966 | 3.4 | % | ||||||||||||||
Cost of services | 315,698 | 322,946 | (2.2 | ) | 1,262,310 | 1,257,970 | 0.3 | |||||||||||||||||
Selling, general and administrative expenses | 73,571 | 59,570 | 23.5 | 251,010 | 228,540 | 9.8 | ||||||||||||||||||
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Operating income | 89,831 | 89,718 | 0.1 | 357,652 | 322,456 | 10.9 | ||||||||||||||||||
Nonoperating income (expenses) | 5 | (541 | ) | nm | (2,798 | ) | (5,905 | ) | 52.6 | |||||||||||||||
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Income before income taxes, noncontrolling interests and equity in income of equity investments | 89,836 | 89,177 | 0.7 | 354,854 | 316,551 | 12.1 | ||||||||||||||||||
Income taxes | 30,767 | 29,497 | 4.3 | 115,102 | 102,597 | 12.2 | ||||||||||||||||||
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Income before noncontrolling interests and equity in income of equity investments | 59,069 | 59,680 | (1.0 | ) | 239,752 | 213,954 | 12.1 | |||||||||||||||||
Equity in income of equity investments | 3,188 | 1,234 | nm | 10,171 | 8,708 | 16.8 | ||||||||||||||||||
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Net income | 62,257 | 60,914 | 2.2 | 249,923 | 222,662 | 12.2 | ||||||||||||||||||
Net income attributable to noncontrolling interests | (1,395 | ) | (1,040 | ) | (34.1 | ) | (5,643 | ) | (2,103 | ) | nm | |||||||||||||
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Net income attributable to TSYS common shareholders | $ | 60,862 | 59,874 | 1.7 | % | $ | 244,280 | 220,559 | 10.8 | % | ||||||||||||||
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Basic earnings per share | $ | 0.33 | 0.31 | 3.7 | % | $ | 1.30 | 1.15 | 13.1 | % | ||||||||||||||
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Diluted earnings per share | $ | 0.32 | 0.31 | 3.4 | % | $ | 1.29 | 1.15 | 12.5 | % | ||||||||||||||
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Dividends declared per share | $ | 0.10 | 0.10 | $ | 0.40 | 0.31 | ||||||||||||||||||
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TSYS Announces Fourth Quarter 2012 Earnings
Page 5 of 12
TSYS
Consolidated Statements of Comprehensive Income
(unaudited)
(in thousands)
Three Months Ended | Twelve Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||
Net income | $ | 62,257 | 60,914 | 249,923 | 222,662 | |||||||||||
Other comprehensive income (loss), net of tax: | ||||||||||||||||
Foreign currency translation adjustments | (2,257 | ) | (2,944 | ) | 678 | 1,133 | ||||||||||
Postretirement healthcare plan adjustments | (415 | ) | 263 | (1,665 | ) | 1,056 | ||||||||||
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Other comprehensive income (loss) | (2,672 | ) | (2,681 | ) | (987 | ) | 2,189 | |||||||||
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Comprehensive income | 59,585 | 58,233 | 248,936 | 224,851 | ||||||||||||
Comprehensive income attributable to noncontrolling interests | (1,041 | ) | (1,146 | ) | 2,803 | 2,152 | ||||||||||
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Comprehensive income attributable to TSYS common shareholders | $ | 60,626 | 59,379 | 246,133 | 222,699 | |||||||||||
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TSYS Announces Fourth Quarter 2012 Earnings
Page 6 of 12
TSYS
Earnings Per Share
(unaudited)
(in thousands, except per share data)
Three Months Ended | Three Months Ended | Twelve Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||||
December 31, 2012 | December 31, 2011 | December 31, 2012 | December 31, 2011 | |||||||||||||||||||||||||||||
Common | Participating | Common | Participating | Common | Participating | Common | Participating | |||||||||||||||||||||||||
Stock | Securities | Stock | Securities | Stock | Securities | Stock | Securities | |||||||||||||||||||||||||
Basic Earnings per share: | ||||||||||||||||||||||||||||||||
Net income | $ | 60,862 | 59,874 | $ | 244,280 | 220,559 | ||||||||||||||||||||||||||
Less income allocated to nonvested awards | (186 | ) | 186 | (213 | ) | 213 | (800 | ) | 800 | (805 | ) | 805 | ||||||||||||||||||||
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Net income allocated to common stock for EPS calculation ( a ) | $ | 60,676 | 186 | 59,661 | 213 | $ | 243,480 | 800 | 219,754 | 805 | ||||||||||||||||||||||
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Average common shares outstanding ( b ) | 185,888 | 583 | 189,506 | 684 | 187,403 | 627 | 191,239 | 707 | ||||||||||||||||||||||||
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Average common shares and participating securities | 186,471 | 190,190 | 188,030 | 191,946 | ||||||||||||||||||||||||||||
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Basic Earnings per share ( a )/( b ) | $ | 0.33 | 0.32 | 0.31 | 0.31 | $ | 1.30 | 1.29 | 1.15 | 1.14 | ||||||||||||||||||||||
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Diluted Earnings per share: | ||||||||||||||||||||||||||||||||
Net income | $ | 60,862 | 59,874 | $ | 244,280 | 220,559 | ||||||||||||||||||||||||||
Less income allocated to nonvested awards | (186 | ) | 186 | (212 | ) | 212 | (796 | ) | 796 | (804 | ) | 804 | ||||||||||||||||||||
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Net income allocated to common stock for EPS calculation ( c ) | $ | 60,676 | 186 | 59,662 | 212 | $ | 243,484 | 796 | 219,755 | 804 | ||||||||||||||||||||||
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Average common shares outstanding | 185,888 | 583 | 189,506 | 684 | 187,403 | 627 | 191,239 | 707 | ||||||||||||||||||||||||
Increase due to assumed issuance of shares related to common equivalent shares outstanding | 983 | 517 | 1,262 | 345 | ||||||||||||||||||||||||||||
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Average common and common equivalent shares outstanding ( d ) | 186,871 | 583 | 190,023 | 684 | 188,665 | 627 | 191,584 | 707 | ||||||||||||||||||||||||
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Average common and common equivalent shares and participating securities | 187,454 | 190,707 | 189,292 | 192,291 | ||||||||||||||||||||||||||||
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Diluted Earnings per share ( c )/( d ) | $ | 0.32 | 0.32 | 0.31 | 0.31 | $ | 1.29 | 1.27 | 1.15 | 1.14 | ||||||||||||||||||||||
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TSYS Announces Fourth Quarter 2012 Earnings
Page 7 of 12
TSYS
Segment Breakdown
(unaudited)
(in thousands)
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||||||||||||||||||
Change | Change | |||||||||||||||||||||||||||||||
2012 | 2011 | $ | % | 2012 | 2011 | $ | % | |||||||||||||||||||||||||
Revenues before reimbursable items | ||||||||||||||||||||||||||||||||
North America Services | $ | 213,639 | 209,618 | 4,021 | 1.9 | % | $ | 826,750 | 809,069 | 17,681 | 2.2 | % | ||||||||||||||||||||
International Services | 102,427 | 102,792 | (365 | ) | (0.4 | )% | 396,149 | 380,129 | 16,020 | 4.2 | % | |||||||||||||||||||||
Merchant Services | 105,855 | 100,379 | 5,476 | 5.5 | % | 409,698 | 373,159 | 36,539 | 9.8 | % | ||||||||||||||||||||||
Intersegment revenues | (3,352 | ) | (5,106 | ) | 1,754 | 34.4 | % | (14,106 | ) | (21,659 | ) | 7,553 | 34.9 | % | ||||||||||||||||||
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Revenues before reimbursable items from external customers | $ | 418,569 | 407,683 | 10,886 | 2.7 | % | $ | 1,618,491 | 1,540,698 | 77,793 | 5.0 | % | ||||||||||||||||||||
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Total revenues | ||||||||||||||||||||||||||||||||
North America Services | $ | 247,612 | 246,190 | 1,422 | 0.60 | % | $ | 965,393 | 954,550 | 10,843 | 1.1 | % | ||||||||||||||||||||
International Services | 107,000 | 106,560 | 440 | 0.4 | % | 413,467 | 394,831 | 18,636 | 4.7 | % | ||||||||||||||||||||||
Merchant Services | 129,413 | 126,224 | 3,189 | 2.5 | % | 512,580 | 487,997 | 24,583 | 5.0 | % | ||||||||||||||||||||||
Intersegment revenues | (4,925 | ) | (6,740 | ) | 1,815 | 26.9 | % | (20,468 | ) | (28,412 | ) | 7,944 | 28.0 | % | ||||||||||||||||||
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Revenues from external customers | $ | 479,100 | 472,234 | 6,866 | 1.5 | % | $ | 1,870,972 | 1,808,966 | 62,006 | 3.4 | % | ||||||||||||||||||||
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Depreciation and amortization | ||||||||||||||||||||||||||||||||
North America Services | $ | 18,817 | 18,767 | 50 | 0.3 | % | $ | 74,674 | 78,155 | (3,481 | ) | (4.5 | )% | |||||||||||||||||||
International Services | 14,510 | 15,373 | (863 | ) | (5.6 | )% | 57,127 | 51,888 | 5,239 | 10.1 | % | |||||||||||||||||||||
Merchant Services | 9,509 | 8,893 | 616 | 6.9 | % | 36,252 | 36,124 | 128 | 0.4 | % | ||||||||||||||||||||||
Corporate Admin | 446 | 729 | (283 | ) | (38.8 | )% | 2,557 | 2,998 | (441 | ) | (14.7 | )% | ||||||||||||||||||||
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Total depreciation and amortization | $ | 43,282 | 43,762 | (480 | ) | (1.1 | )% | $ | 170,610 | 169,165 | 1,445 | 0.9 | % | |||||||||||||||||||
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Segment operating income | ||||||||||||||||||||||||||||||||
North America Services | $ | 77,801 | 66,560 | 11,241 | 16.9 | % | $ | 287,595 | 253,844 | 33,751 | 13.3 | % | ||||||||||||||||||||
International Services | 6,058 | 11,983 | (5,925 | ) | (49.4 | )% | 27,335 | 41,408 | (14,073 | ) | (34.0 | )% | ||||||||||||||||||||
Merchant Services | 30,438 | 32,958 | (2,520 | ) | (7.6 | )% | 132,115 | 112,986 | 19,129 | 16.9 | % | |||||||||||||||||||||
Corporate Admin | (24,466 | ) | (21,783 | ) | (2,683 | ) | (12.3 | )% | (89,393 | ) | (85,782 | ) | (3,611 | ) | (4.2 | )% | ||||||||||||||||
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Operating income | $ | 89,831 | 89,718 | 113 | 0.1 | % | $ | 357,652 | 322,456 | 35,196 | 10.9 | % | ||||||||||||||||||||
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Reimbursable items: | ||||||||||||||||||||||||||||||||
North America Services | $ | 33,973 | 36,572 | (2,599 | ) | (7.1 | )% | $ | 138,643 | 145,481 | (6,838 | ) | (4.7 | )% | ||||||||||||||||||
International Services | 4,573 | 3,768 | 805 | 21.4 | % | 17,318 | 14,702 | 2,616 | 17.8 | % | ||||||||||||||||||||||
Merchant Services | 23,558 | 25,845 | (2,287 | ) | (8.8 | )% | 102,882 | 114,838 | (11,956 | ) | (10.4 | )% | ||||||||||||||||||||
Intersegment revenues | (1,573 | ) | (1,634 | ) | 61 | 3.7 | % | (6,362 | ) | (6,753 | ) | 391 | 5.8 | % | ||||||||||||||||||
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Reimbursable items | $ | 60,531 | 64,551 | (4,020 | ) | (6.2 | )% | $ | 252,481 | 268,268 | (15,787 | ) | (5.9 | )% | ||||||||||||||||||
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Volumes: | ||||||||||||||||||||||||||||||||
FTEs (full-time equivalents) | ||||||||||||||||||||||||||||||||
North America Services | 4,096 | 4,318 | (222 | ) | (5.1 | )% | ||||||||||||||||||||||||||
International Services | 2,404 | 2,376 | 28 | 1.2 | % | |||||||||||||||||||||||||||
Merchant Services | 1,481 | 1,158 | 323 | 27.9 | % | |||||||||||||||||||||||||||
Corporate Admin | 425 | 397 | 28 | 7.1 | % | |||||||||||||||||||||||||||
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FTEs | 8,406 | 8,249 | 157 | 1.9 | % | |||||||||||||||||||||||||||
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At | Change | |||||||||||||||||||||||||||||||
12/31/2012 | 12/31/2011 | $ | % | |||||||||||||||||||||||||||||
Total assets (in thousands) | ||||||||||||||||||||||||||||||||
North America Services | $ | 1,747,096 | 1,621,664 | 125,432 | 7.7 | % | ||||||||||||||||||||||||||
International Services | 445,642 | 433,203 | 12,439 | 2.9 | % | |||||||||||||||||||||||||||
Merchant Services | 696,426 | 487,858 | 208,568 | 42.8 | % | |||||||||||||||||||||||||||
Intersegment assets | (870,406 | ) | (684,333 | ) | (186,073 | ) | (27.2 | )% | ||||||||||||||||||||||||
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Total assets | $ | 2,018,758 | 1,858,392 | 160,366 | 8.6 | % | ||||||||||||||||||||||||||
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2012 | 2011 | Inc(Dec) | % | 2012 | 2011 | Inc(Dec) | % | |||||||||||||||||||||||||
North America Segment: | ||||||||||||||||||||||||||||||||
Accounts on File (AOF) (in millions) | 424.8 | 351.4 | 73.4 | 20.9 | % | |||||||||||||||||||||||||||
Transactions (in millions) | 2,194.7 | 1,947.8 | 246.9 | 12.7 | % | 8,102.3 | 7,218.4 | 884.0 | 12.2 | % | ||||||||||||||||||||||
International Segment: | ||||||||||||||||||||||||||||||||
AOF (in millions) | 54.6 | 52.8 | 1.8 | 3.5 | % | |||||||||||||||||||||||||||
Transactions (in millions) | 474.0 | 399.5 | 74.5 | 18.6 | % | 1,674.5 | 1,426.7 | 247.8 | 17.4 | % | ||||||||||||||||||||||
Merchant Segment: | ||||||||||||||||||||||||||||||||
Point-of-sale Transactions (in millions) | 1,153.2 | 1,216.4 | (63.2 | ) | (5.2 | )% | 4,877.6 | 4,955.5 | (77.9 | ) | (1.6 | )% |
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TSYS Announces Fourth Quarter 2012 Earnings
Page 8 of 12
TSYS
Balance Sheet
(unaudited)
(in thousands)
Dec 31, 2012 | Dec 31, 2011 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 247,612 | 316,337 | |||||
Accounts receivable, net | 247,075 | 248,541 | ||||||
Deferred income tax assets | 9,825 | 12,872 | ||||||
Prepaid expenses and other current assets | 70,206 | 72,431 | ||||||
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Total current assets | 574,718 | 650,181 | ||||||
Goodwill | 513,273 | 355,498 | ||||||
Property and equipment, net | 260,389 | 266,608 | ||||||
Computer software, net | 226,017 | 215,244 | ||||||
Contract acquisition costs, net | 161,267 | 162,987 | ||||||
Equity investments, net | 87,764 | 82,924 | ||||||
Other intangible assets, net | 130,054 | 81,250 | ||||||
Deferred income tax assets, net | 5,334 | 4,069 | ||||||
Other assets | 59,942 | 39,631 | ||||||
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Total assets | $ | 2,018,758 | 1,858,392 | |||||
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Liabilities | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 63,370 | 26,095 | |||||
Current portion of notes payable | 27,687 | 181,251 | ||||||
Accrued salaries and employee benefits | 26,243 | 33,004 | ||||||
Current portion of obligations under capital leases | 13,263 | 14,363 | ||||||
Other current liabilities | 94,505 | 125,863 | ||||||
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Total current liabilities | 225,068 | 380,576 | ||||||
Long-term debt, excluding current portion | 174,533 | 39,104 | ||||||
Deferred income tax liabilities | 48,771 | 32,889 | ||||||
Obligations under capital leases, excluding current portion | 17,155 | 24,489 | ||||||
Other long-term liabilities | 68,791 | 60,325 | ||||||
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Total liabilities | 534,318 | 537,383 | ||||||
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Redeemable noncontrolling interest | 39,505 | — | ||||||
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Equity | ||||||||
Shareholders’ equity: | ||||||||
Common stock | 20,247 | 20,186 | ||||||
Additional paid-in capital | 141,793 | 125,948 | ||||||
Accumulated other comprehensive income (loss), net | 1,408 | (445 | ) | |||||
Treasury stock | (287,301 | ) | (225,034 | ) | ||||
Retained earnings | 1,549,063 | 1,380,634 | ||||||
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Total shareholders’ equity | 1,425,210 | 1,301,289 | ||||||
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Noncontrolling interests in consolidated subsidiaries | 19,725 | 19,720 | ||||||
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Total equity | 1,444,935 | 1,321,009 | ||||||
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Total liabilities and equity | $ | 2,018,758 | 1,858,392 | |||||
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TSYS Announces Fourth Quarter 2012 Earnings
Page 9 of 12
TSYS
Cash Flow
(unaudited)
(in thousands)
Twelve Months Ended December 31, | ||||||||
2012 | 2011 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income | $ | 249,923 | 222,662 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Equity in income of equity investments | (10,171 | ) | (8,708 | ) | ||||
Dividends received from equity investments | 7,524 | 6,835 | ||||||
Net loss on foreign currency translation | 2,012 | 3,091 | ||||||
Depreciation and amortization | 170,610 | 169,165 | ||||||
Amortization of debt issuance costs | 298 | 160 | ||||||
Changes in fair value of private equity investments | (898 | ) | — | |||||
Share-based compensation | 18,621 | 16,477 | ||||||
Excess tax benefit from share-based payment arrangements | (1,259 | ) | 523 | |||||
Asset impairments | — | 799 | ||||||
Provisions for bad debt expense and billing adjustments | 1,054 | 1,552 | ||||||
Charges for transaction processing provisions | 2,803 | 4,750 | ||||||
Deferred income tax expense (benefit) | 285 | 1,491 | ||||||
(Gain) loss on disposal of equipment, net | 324 | (1,159 | ) | |||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | 2,855 | (7,044 | ) | |||||
Prepaid expenses, other current assets and other long-term assets | (2,945 | ) | 23,099 | |||||
Accounts payable | 37,206 | (15,512 | ) | |||||
Accrued salaries and employee benefits | (7,083 | ) | 4,492 | |||||
Other current liabilities and other long-term liabilities | (15,406 | ) | 13,646 | |||||
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Net cash provided by operating activities | 455,753 | 436,319 | ||||||
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CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Purchases of property and equipment, net | (31,434 | ) | (26,938 | ) | ||||
Additions to licensed computer software from vendors | (33,001 | ) | (19,502 | ) | ||||
Additions to internally developed computer software | (19,285 | ) | (17,882 | ) | ||||
Proceeds from sale of trade name | — | 4,500 | ||||||
Proceeds from disposition, net of expenses paid and cash disposed | 39 | — | ||||||
Cash used in acquisitions, net of cash acquired | (188,698 | ) | (47,909 | ) | ||||
Purchase of private equity investments | (3,031 | ) | (1,573 | ) | ||||
Subsidiary repurchase of noncontrolling interest | — | (493 | ) | |||||
Additions to contract acquisition costs | (34,384 | ) | (31,623 | ) | ||||
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Net cash used in investing activities | (309,794 | ) | (141,420 | ) | ||||
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CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Principal payments on long-term debt borrowings and capital lease obligations | (200,052 | ) | (28,892 | ) | ||||
Proceeds from borrowings of long-term debt | 150,000 | — | ||||||
Proceeds from exercise of stock options | 9,672 | 8,065 | ||||||
Excess tax benefit from share-based payment arrangements | 1,259 | (523 | ) | |||||
Repurchase of common stock | (74,939 | ) | (121,271 | ) | ||||
Debt issuance costs | (2,073 | ) | — | |||||
Purchase of noncontrolling interests | — | (174,050 | ) | |||||
Subsidiary dividends paid to noncontrolling shareholders | (2,797 | ) | (433 | ) | ||||
Dividends paid on common stock | (94,035 | ) | (53,949 | ) | ||||
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Net cash used in financing activities | (212,965 | ) | (371,053 | ) | ||||
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CASH AND CASH EQUIVALENTS: | ||||||||
Effect of exchange rate changes on cash and cash equivalents | (1,719 | ) | (2,304 | ) | ||||
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Net increase (decrease) in cash and cash equivalents | (68,725 | ) | (78,458 | ) | ||||
Cash and cash equivalents at beginning of period | 316,337 | 394,795 | ||||||
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Cash and cash equivalents at end of period | $ | 247,612 | 316,337 | |||||
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TSYS Announces Fourth Quarter 2012 Earnings
Page 10 of 12
Supplemental Information:
Accounts on File | ||||||||||||
Total | ||||||||||||
(in millions) | December 2012 | December 2011 | % Change | |||||||||
Consumer Credit | 200.5 | 195.0 | 2.8 | |||||||||
Retail | 25.0 | 24.6 | 2.0 | |||||||||
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Total Consumer | 225.5 | 219.6 | 2.7 | |||||||||
Commercial | 37.1 | 35.2 | 5.3 | |||||||||
Other | 12.8 | 7.9 | 61.4 | |||||||||
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Subtotal | 275.4 | 262.7 | 4.8 | |||||||||
Prepaid/Stored Value | 115.9 | 85.2 | 36.1 | |||||||||
Government Services | 57.0 | 29.7 | 92.0 | |||||||||
Commercial Card Single Use | 31.1 | 26.6 | 17.1 | |||||||||
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Total AOF | 479.4 | 404.2 | 18.6 | |||||||||
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Growth in Accounts on File (in millions):
December 2011 to December 2012 | December 2010 to December 2011 | |||||||
Beginning balance | 404.2 | 342.9 | ||||||
Change in accounts on file due to: | ||||||||
Internal growth of existing clients | 31.5 | 33.9 | ||||||
New clients | 80.1 | 43.4 | ||||||
Purges/Sales | (33.6 | ) | (15.3 | ) | ||||
Deconversions | (2.8 | ) | (0.7 | ) | ||||
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Ending balance | 479.4 | 404.2 | ||||||
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TSYS Announces Fourth 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 3.8% as compared to a reported GAAP increase of 3.4%.
The schedule below also provides a reconciliation of revenues and operating margin excluding reimbursable items to reported revenues and operating margin. On a year-to-date basis, TSYS’ total revenues excluding reimbursable items grew 5.0% as compared to a reported GAAP increase of 3.4%. On a year-to-date basis, TSYS’ operating margin excluding reimbursable items was 22.1% as compared to a reported GAAP margin of 19.1%.
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 Fourth Quarter 2012 Earnings
Page 12 of 12
Reconciliation of GAAP to Non-GAAP
Constant Currency Comparison
(unaudited)
(in thousands)
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||||||||||
Percent | Percent | |||||||||||||||||||||||
2012 | 2011 | Change | 2012 | 2011 | Change | |||||||||||||||||||
Consolidated | ||||||||||||||||||||||||
Constant currency (1) | $ | 479,027 | 472,234 | 1.4 | % | $ | 1,876,979 | 1,808,966 | 3.8 | % | ||||||||||||||
Foreign currency (2) | 73 | — | (6,007 | ) | — | |||||||||||||||||||
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Total revenues | $ | 479,100 | 472,234 | 1.5 | % | $ | 1,870,972 | 1,808,966 | 3.4 | % | ||||||||||||||
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Constant currency (1) | $ | 88,830 | 89,718 | (1.0 | )% | $ | 352,955 | 322,456 | 9.5 | % | ||||||||||||||
Foreign currency (2) | 1,001 | — | 4,697 | — | ||||||||||||||||||||
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Operating income | $ | 89,831 | 89,718 | 0.1 | % | $ | 357,652 | 322,456 | 10.9 | % | ||||||||||||||
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International Services | ||||||||||||||||||||||||
Constant currency (1) | $ | 106,985 | 106,560 | 0.4 | % | $ | 419,993 | 394,831 | 6.4 | % | ||||||||||||||
Foreign currency (2) | 15 | — | (6,526 | ) | — | |||||||||||||||||||
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Total revenues | $ | 107,000 | 106,560 | 0.4 | % | $ | 413,467 | 394,831 | 4.7 | % | ||||||||||||||
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(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. |
Operating Margin Excluding Reimbursable Items
(unaudited)
(in thousands)
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||||||||||
Percent | Percent | |||||||||||||||||||||||
2012 | 2011 | Change | 2012 | 2011 | Change | |||||||||||||||||||
Operating income (a) | $ | 89,831 | 89,718 | 0.1 | $ | 357,652 | 322,456 | 10.9 | ||||||||||||||||
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Total Revenues (b) | $ | 479,100 | 472,234 | 1.5 | $ | 1,870,972 | 1,808,966 | 3.4 | ||||||||||||||||
Less reimbursable items | 60,531 | 64,551 | (6.2 | ) | 252,481 | 268,268 | (5.9 | ) | ||||||||||||||||
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Revenues before reimbursable items ( c ) | $ | 418,569 | 407,683 | 2.7 | $ | 1,618,491 | 1,540,698 | 5.0 | ||||||||||||||||
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Operating margin (GAAP) (a) / (b) | 18.75 | % | 19.00 | % | -25 bps | 19.12 | % | 17.83 | % | 129 bps | ||||||||||||||
Operating margin excluding reimbursable items (a) / (c) | 21.46 | % | 22.01 | % | -55 bps | 22.10 | % | 20.93 | % | 117 bps |
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