Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | Apr. 30, 2018 | |
Document And Entity Information | ||
Entity Registrant Name | TOTAL SYSTEM SERVICES INC | |
Entity Central Index Key | 721,683 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 182,306,223 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents (Note 4) | $ 493,207 | $ 450,357 |
Accounts receivable, net of allowances for doubtful accounts and billing adjustments of $4.7 million and $5.9 million as of 2018 and 2017, respectively | 420,124 | 412,322 |
Contract assets (Note 2) | 40,264 | |
Prepaid expenses and other current assets (Note 4) | 224,684 | 216,565 |
Total current assets | 1,178,279 | 1,079,244 |
Contract assets (Note 2) | 40,419 | |
Goodwill (Note 3) | 4,073,511 | 3,264,071 |
Other intangible assets, net of accumulated amortization of $655.6 million and $600.9 million as of 2018 and 2017, respectively | 953,397 | 727,146 |
Intangible assets - computer software, net of accumulated amortization of $822.6 million and $849.3 million as of 2018 and 2017, respectively | 467,747 | 383,715 |
Property and equipment, net of accumulated depreciation and amortization of $520.6 million and $521.1 million as of 2018 and 2017, respectively | 360,111 | 325,218 |
Contract cost assets, net of accumulated amortization (Notes 2 and 4) | 151,758 | 258,665 |
Equity investments, net | 180,841 | 163,518 |
Deferred income tax assets | 8,104 | 6,091 |
Other assets | 117,550 | 124,021 |
Total assets | 7,531,717 | 6,331,689 |
Current liabilities: | ||
Current portion of long-term borrowings (Note 5) | 807,052 | 559,050 |
Accounts payable | 66,077 | 62,310 |
Contract liabilities (Note 2) | 56,880 | 52,913 |
Accrued salaries and employee benefits | 36,104 | 82,135 |
Current portion of obligations under capital leases and license agreements (Note 5) | 8,512 | 6,762 |
Other current liabilities (Note 4) | 243,245 | 225,922 |
Total current liabilities | 1,217,870 | 989,092 |
Long-term borrowings, excluding current portion (Note 5) | 3,286,016 | 2,591,949 |
Deferred income tax liabilities | 370,869 | 238,317 |
Contract liabilities (Note 2) | 21,925 | 48,526 |
Obligations under capital leases and license agreements, excluding current portion (Note 5) | 40,520 | 36,053 |
Other long-term liabilities | 73,943 | 71,070 |
Total liabilities | 5,011,143 | 3,975,007 |
Redeemable noncontrolling interest in consolidated subsidiary | 126,000 | 115,689 |
Commitments and contingencies (Note 10) | ||
Shareholders’ Equity | ||
Common stock- $0.10 par value. Authorized 600,000 shares; 202,765 issued as of 2018 and 2017; 182,305 and 184,041 outstanding as of 2018 and 2017, respectively | 20,277 | 20,277 |
Additional paid-in capital | 154,897 | 162,806 |
Accumulated other comprehensive loss, net (Note 4) | (21,219) | (36,148) |
Treasury stock, at cost (21,862 and 19,314 shares as of 2018 and 2017, respectively) | (876,900) | (909,960) |
Retained earnings | 3,117,519 | 3,004,018 |
Total shareholders' equity | 2,394,574 | 2,240,993 |
Total liabilities and shareholders' equity | $ 7,531,717 | $ 6,331,689 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) shares in Thousands, $ in Millions | Mar. 31, 2018 | Dec. 31, 2017 |
Consolidated Balance Sheets | ||
Accounts receivable, allowances for doubtful accounts and billing adjustments | $ 4.7 | $ 5.9 |
Other intangible assets, accumulated amortization | 655.6 | 600.9 |
Intangible assets - computer software, accumulated amortization | 822.6 | 849.3 |
Property and equipment, accumulated depreciation and amortization | $ 520.6 | $ 521.1 |
Common stock, par value (in dollars per share) | $ 0.10 | $ 0.10 |
Common stock, authorized (in shares) | 600,000 | 600,000 |
Common stock, issued (in shares) | 202,765 | 202,765 |
Common stock, outstanding (in shares) | 182,305 | 180,903 |
Treasury stock (in shares) | 20,460 | 21,862 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Consolidated Statements of Income | ||
Total revenues (Notes 2 and 8) | $ 987,170 | $ 1,184,725 |
Cost of services (Note 2) | 613,365 | 861,856 |
Selling, general and administrative expenses | 185,534 | 155,686 |
Total operating expenses | 798,899 | 1,017,542 |
Operating income | 188,271 | 167,183 |
Nonoperating expenses, net | (37,642) | (29,903) |
Income before income taxes and equity in income of equity investments | 150,629 | 137,280 |
Income taxes (Note 7) | 18,135 | 43,082 |
Income before equity in income of equity investments | 132,494 | 94,198 |
Equity in income of equity investments, net of tax | 10,608 | 12,909 |
Net income | 143,102 | 107,107 |
Net income attributable to noncontrolling interests | (1,261) | (1,239) |
Net income attributable to Total System Services, Inc. (TSYS) common shareholders | $ 141,841 | $ 105,868 |
Basic earnings per share (EPS) attributable to TSYS common shareholders (Note 11) (in dollars per share) | $ 0.78 | $ 0.58 |
Diluted EPS attributable to TSYS common shareholders (Note 11) (in dollars per share) | $ 0.77 | $ 0.57 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Consolidated Statements of Comprehensive Income | ||
Net income | $ 143,102 | $ 107,107 |
Other comprehensive income (loss), net of tax: | ||
Foreign currency translation adjustments | 12,495 | 5,512 |
Postretirement healthcare plan adjustments | (147) | 124 |
Unrealized gain (loss) on available-for-sale securities | 2,581 | (1,859) |
Other comprehensive income | 14,929 | 3,777 |
Comprehensive income | 158,031 | 110,884 |
Comprehensive income attributable to noncontrolling interests | (1,261) | (1,239) |
Comprehensive income attributable to TSYS common shareholders | $ 156,770 | $ 109,645 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Cash flows from operating activities: | ||
Net income | $ 143,102 | $ 107,107 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 104,389 | 104,178 |
Provisions for cardholder losses | 15,545 | 12,548 |
Share-based compensation | 6,295 | 9,047 |
Provisions for bad debt expenses and billing adjustments | 2,839 | 1,921 |
Charges for transaction processing provisions | 729 | 1,917 |
Amortization of debt issuance costs | 1,035 | 1,079 |
Loss on foreign currency | 427 | 311 |
Amortization of bond discount | 233 | 223 |
Loss (gain) on disposal of equipment, net | 2 | (4) |
Deferred income tax expense | 15,180 | 891 |
Equity in income of equity investments, net of tax | (10,608) | (12,909) |
Changes in operating assets and liabilities, net of effects of acquisitions: | ||
Accrued salaries and employee benefits | (50,835) | (32,548) |
Accounts receivable | 9,006 | 25,844 |
Contract assets and contract liabilities | 498 | 4,228 |
Contract cost assets | 2,168 | |
Prepaid expenses, other current assets and other long-term assets | (7,701) | (27,102) |
Accounts payable | 2,289 | 6,808 |
Other current liabilities and other long-term liabilities | (22,700) | 85,342 |
Net cash provided by operating activities | 211,893 | 288,881 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (22,069) | (12,240) |
Additions to contract acquisition costs | (7,668) | |
Additions to internally developed computer software | (10,340) | (7,355) |
Additions to licensed computer software from vendors | (13,827) | (5,162) |
Cash used in acquisitions, net of cash acquired | (1,036,853) | |
Other investing activities | (1,550) | (379) |
Net cash used in investing activities | (1,084,639) | (32,804) |
Cash flows from financing activities: | ||
Principal payments on long-term borrowings, capital lease obligations and license agreements | (129,010) | (104,654) |
Purchase of noncontrolling interest | (70,000) | |
Dividends paid on common stock | (23,496) | (18,333) |
Subsidiary dividends paid to noncontrolling shareholders | (1) | (752) |
Repurchase of common stock under plans and tax withholding | (24) | (17) |
Proceeds from borrowings of long-term debt | 1,040,000 | |
Proceeds from exercise of stock options | 26,461 | 4,207 |
Net cash provided by (used in) financing activities | 913,930 | (189,549) |
Cash, cash equivalents and restricted cash: | ||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 1,684 | 1,578 |
Net increase in cash, cash equivalents and restricted cash | 42,868 | 68,106 |
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Beginning Balance | 451,370 | 425,810 |
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Ending Balance | 494,238 | 493,916 |
Supplemental cash flow information: | ||
Interest paid | 42,040 | 36,554 |
Income taxes paid, net | $ 2,936 | $ 3,019 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Equity - USD ($) $ in Thousands | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Treasury Stock. | Retained Earnings | Redeemable Noncontrolling Interest | Total |
Changes in Total Equity | |||||||
Impact of change in accounting policy (Note 2) | Adjustments for New Accounting Pronouncement | ASU 2014-09 | $ (4,445) | $ (4,445) | |||||
Adjusted balance as of January 1, 2018 | $ 20,277 | $ 162,806 | $ (36,148) | $ (909,960) | 2,999,573 | 2,236,548 | |
Balance (Previously reported) at Dec. 31, 2017 | $ 115,689 | ||||||
Balance at Dec. 31, 2017 | 115,689 | ||||||
Changes in Redeemable Noncontrolling Interests | |||||||
Net income | 1,261 | ||||||
Adjustments to redemption value of redeemable noncontrolling interest | 9,051 | ||||||
Subsidiary repurchase of noncontrolling interests | (1) | ||||||
Balance at Mar. 31, 2018 | $ 126,000 | ||||||
Balance (Previously reported) at Dec. 31, 2017 | $ 20,277 | 162,806 | (36,148) | (909,960) | 3,004,018 | $ 2,240,993 | |
Balance (in shares) (Previously reported) at Dec. 31, 2017 | 202,765 | ||||||
Balance (in shares) at Dec. 31, 2017 | 202,765 | 202,765,000 | |||||
Changes in Total Equity | |||||||
Net income | 141,841 | $ 141,841 | |||||
Other comprehensive income | 14,929 | 14,929 | |||||
Common stock issued from treasury shares for exercise of stock options | 5,199 | 21,258 | 26,457 | ||||
Common stock unissued due to forfeiture of nonvested awards | 551 | (551) | |||||
Common stock issued from treasury shares for nonvested awards | (12,368) | 12,368 | |||||
Common stock issued from treasury for dividend equivalents | 925 | 9 | 934 | ||||
Share-based compensation | 6,835 | 6,835 | |||||
Cash dividends declared ($0.13 per share) | (23,895) | (23,895) | |||||
Purchase of treasury shares | (24) | (24) | |||||
Adjustments to redemption value of redeemable noncontrolling interest | (9,051) | (9,051) | |||||
Balance at Mar. 31, 2018 | $ 20,277 | $ 154,897 | $ (21,219) | $ (876,900) | $ 3,117,519 | $ 2,394,574 | |
Balance (in shares) at Mar. 31, 2018 | 202,765 | 202,765,000 |
Consolidated Statements of Cha8
Consolidated Statements of Changes in Equity (Parenthetical) | 3 Months Ended |
Mar. 31, 2018$ / shares | |
Consolidated Statements of Changes in Equity | |
Cash dividends declared, per share | $ 0.13 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2018 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | Note Business Total System Services, Inc.’s (“TSYS’” or the “Company’s”) revenues are derived from providing payment processing, merchant services and related payment services to financial and nonfinancial institutions, generally under long-term processing contracts. The Company also derives revenues by providing general-purpose reloadable (GPR) prepaid debit and payroll cards, demand deposit accounts and other financial service solutions to the underbanked and other consumers and businesses. The Company’s services are provided through three operating segments: Issuer Solutions, Merchant Solutions and Netspend. Through the Company's Issuer Solutions segment, TSYS processes information through its cardholder systems for financial and nonfinancial institutions throughout the United States and internationally. The Company's Merchant Solutions segment provides merchant services to merchant acquirers and merchants mainly in the United States. The Company’s Netspend segment provides financial service solutions to consumers in the United States. Basis of Presentation The accompanying unaudited consolidated financial statements of TSYS include the accounts of TSYS and its wholly- and majority-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. These financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X and, therefore, do not include all information and footnotes required by U.S. GAAP for complete financial statements. The preparation of the consolidated financial statements requires management of the Company to make estimates and assumptions relating to the reported amounts of assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. These estimates and assumptions are developed based upon all information available. Actual results could differ from estimated amounts. All adjustments, consisting of normal recurring accruals, which, in the opinion of management, are necessary for a fair presentation of financial position and results of operations for the periods covered by this report, have been included. The accompanying unaudited consolidated financial statements should be read in conjunction with the Company’s summary of significant accounting policies, consolidated financial statements and related notes appearing in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, as filed with the Securities and Exchange Commission (“SEC”). Results of interim periods are not necessarily indicative of results to be expected for the year. Recently Adopted Accounting Pronouncements The Company adopted the following Accounting Standards Updates (“ASUs”) on January 1, 2018: In May 2017, the Financial Accounting Standards Board (FASB) issued ASU 2017-09 Compensation - Stock Compensation (Topic 718), Scope of Modification Accounting, to provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. An entity should account for the effects of a modification unless all the following are met: 1. The fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the modified award is the same as the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the original award immediately before the original award is modified. If the modification does not affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification. 2. The vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified. 3. The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The ASU is effective for the Company on January 1, 2018. Early adoption is permitted, including adoption in any interim period, for (a) public business entities for reporting periods for which financial statements have not yet been issued and (b) all other entities for reporting periods for which financial statements have not yet been made available for issuance. The adoption of this ASU did not have a material impact on the Company’s financial position, results of operations or cash flows. In January 2017, the FASB issued ASU 2017-01 Business Combinations (Topic 805), Clarifying the Definition of a Business, which provides a more robust framework to use in determining when a set of assets and activities is a business. The framework assists entities in evaluating whether both an input and a substantive process are present. The framework includes two sets of criteria to consider that depend on whether a set has outputs. Although outputs are not required for a set to be a business, outputs generally are a key element of a business; therefore, the FASB has developed more stringent criteria for sets without outputs. The ASU is effective for the Company on January 1, 2018. Early application of the amendments in this Update is allowed under certain circumstances. The adoption of this ASU did not have a material impact on the Company’s financial position, results of operations or cash flows. In November 2016, the FASB issued ASU 2016-18 Statement of Cash Flows (Topic 230): Restricted Cash , which requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The Company adopted this guidance on January 1, 2018 and has applied the guidance using a retrospective transition method for all periods presented. In October 2016, the FASB issued ASU 2016-16 Income Taxes (Topic 740): Intra-Equity Transfers of Assets Other Than Inventory, which requires that an entity should recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs and eliminates the exception for an intra-entity transfer of an asset other than inventory. The ASU is effective for the Company on January 1, 2018. The adoption of this ASU did not have a material impact on the Company’s financial position, results of operations or cash flows. In August 2016, the FASB issued ASU 2016-15 Statement of Cash Flow (Topic 230): Classification of Certain Receipts and Cash Payments , which clarifies how entities should classify certain cash receipts and cash payments on the statement of cash flows. The guidance also clarifies how the predominance principle should be applied when cash receipts and cash payments have aspects of more than one class of cash flow. The ASU is effective for the Company on January 1, 2018. Early adoption is permitted by all entities. The adoption of this ASU did not have a material impact on the Company’s financial position, results of operations or cash flows. In January 2016, the FASB issued ASU 2016-01 Recognition and Measurement of Financial Assets and Financial Liabilities, which amends the guidance in U.S. GAAP on the classification and measurement of financial instruments. The ASU significantly revises an entity’s accounting related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. The ASU also amends certain disclosure requirements associated with the fair value of financial instruments. The new standard is effective for fiscal years and interim periods within those years beginning after December 15, 2017. The adoption of this ASU did not have a material impact on the Company’s financial position, results of operations or cash flows. In May 2014, the FASB issued ASU 2014-09 Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU replaces most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The FASB has issued several additional ASUs since this time that add additional clarification to certain issues existing after the original ASU was released. All of the new standards were effective for the Company on January 1, 2018. The standards permit the use of either the full retrospective or modified retrospective transition method. TSYS adopted the new revenue standard as of January 1, 2018 using the modified retrospective transition method. See Note 2 for further discussion of the Company’s adoption of this new standard. New Accounting Pronouncements In March 2018, the FASB issued ASU 2018-05 Income Taxes (Topic 740) - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 . This ASU adds SEC paragraphs pursuant to the SEC Staff Accounting Bulletin No. 118, which expresses the view of the staff regarding application of Topic 740, Income Taxes , in the reporting period that includes December 22, 2017 - the date on which the Tax Cuts and Jobs Act was signed into law. The Company adopted the provisions of SEC Staff Accounting Bulletin No. 118 as of December 22, 2017. See Note 7 for further discussion regarding income taxes. In February 2018, the FASB issued ASU 2018-02 Income Statement - Reporting Comprehensive Income (Topic 220 ) Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. ASU 2018-02 allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. Consequently, the amendments in this ASU eliminate the stranded tax effects resulting from the Tax Cuts and Jobs Act and will improve the usefulness of information reported to financial statement users. The amendments in this ASU are effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption of the amendments in this ASU is permitted. The amendments in this ASU should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. The Company is evaluating the effect of ASU 2018-02 on its consolidated financial statements. In September 2017, the FASB issued ASU 2017-13 Revenue Recognition (Topic 605), Revenues from Customers (Topic 606), Leases (Topic 840) and Leases (Topic 842), which made amendments to SEC paragraphs pursuant to the Staff Announcement at the July 20, 2017 Emerging Issues Task Force (EITF) Meeting and rescission of prior SEC Staff Announcements and Observer comments. This guidance, which is effective immediately, generally relates to the adoption of ASC 606 and 842. The adoption of the amendments in this ASU relating to ASC 606 did not have a material impact on the Company’s financial position, results of operations or cash flows. The Company does not expect the adoption of the amendments in this ASU relating to ASC 842 to have a material impact on the Company’s financial position, results of operations or cash flows. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial instruments . The amendments in this update change how companies measure and recognize credit impairment for many financial assets. The new expected credit loss model will require companies to immediately recognize an estimate of credit losses expected to occur over the remaining life of the financial assets (including trade receivables) that are in the scope of the update. The update also made amendments to the current impairment model for held-to-maturity and available-for-sale debt securities and certain guarantees. The ASU is effective for the Company on January 1, 2020. Early adoption is permitted for periods beginning on or after January 1, 2019. The Company is evaluating the effect of ASU 2016-13 on its consolidated financial statements. In February 2016, the FASB issued ASU 2016-02 Leases (Topic 842), which introduces a lessee model that brings most leases on the balance sheet and aligns many of the underlying principles of the new lessor model with those in the FASB’s new revenue recognition standard. The ASU also addresses other concerns related to the current leases model. The new guidance will be effective for fiscal years and interim periods within those years beginning after December 15, 2018. Early adoption will be permitted for all entities. The Company plans to adopt ASU 2016-02 on January 1, 2019. While the Company is continuing to evaluate the effects of this ASU, the Company expects to record material right of use assets and lease liabilities on its consolidated balance sheet upon adoption. |
Revenue
Revenue | 3 Months Ended |
Mar. 31, 2018 | |
Revenue | |
Revenue | Note 2 — Revenue from Contracts with Customers The Company adopted ASU 2014-09 and related ASUs (“ASC 606”) as of January 1, 2018 using the modified retrospective method for all contracts not completed as of the date of adoption. For contracts that were modified before the effective date, the Company considered the effect of all modifications when identifying performance obligations and allocating transaction price, which did not have a material effect on the adjustment to retained earnings. The reported results for 2018 reflect the application of ASC 606 guidance while the reported results for 2017 were prepared under the guidance of ASC 605, Revenue Recognition (“ASC 605”), which is also referred to herein as "legacy GAAP" or the "previous guidance". In accordance with ASC 606, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these services. To achieve this core principle, the Company applies the following five steps: 1. Identify the contract with a customer. A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s rights regarding the services to be transferred and identifies the payment terms related to these services, (ii) the contract has commercial substance and, (iii) the Company determines that collection of substantially all consideration for services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. The Company applies judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer. 2. Identify the performance obligations in the contract. Performance obligations promised in a contract are identified based on the goods or services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised services, the Company must apply judgment to determine whether promised services are capable of being distinct and are distinct in the context of the contract. If these criteria are not met, the promised services are accounted for as a combined performance obligation. 3. Determine the transaction price. The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring goods and services to the customer. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method depending on the nature of the variable consideration. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. 4. Allocate the transaction price to performance obligations in the contract. If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. However, if a series of distinct services that are substantially the same qualifies as a single performance obligation in a contract with variable consideration, the Company must determine if the variable consideration is attributable to the entire contract or to a specific part of the contract. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct service that forms part of a single performance obligation. The Company determines standalone selling prices based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations. 5. Recognize revenue when or as the Company satisfies a performance obligation. The Company satisfies performance obligations either over time or at a point in time as discussed in further detail below. Revenue is recognized at the time the related performance obligation is satisfied by transferring a promised good or service to a customer. Description of service offerings and revenue recognition policies Issuer Solutions Description of service offerings The Company's Issuer Solutions revenues are derived from long-term processing contracts with financial and nonfinancial institutions. Payment processing services revenues are generated primarily from charges based on: · The number of accounts on file; · Transactions and authorizations processed; · Statements generated and/or mailed; · Managed services; and · Cards embossed and mailed and other processing services for cardholder accounts on file. Most of these contracts have prescribed annual revenue minimums, penalties for early termination, and service level agreements which may impact contractual fees if certain service levels are not achieved. Issuer Solutions revenues also include loyalty redemption services and conversion and development services. Description of revenue recognition policies Issuer Solutions revenues typically include a performance obligation to provide processing services to financial and non-financial institutions. The Company has determined that these processing services represent a stand-ready series of distinct daily services that are substantially the same, with the same pattern of transfer to the customer. In many cases, Issuer Solutions arrangements may include additional performance obligations relating to loyalty redemption services and other professional services. Similar to processing services, the Company has determined that loyalty redemption services represent a stand-ready series of distinct daily services that are substantially the same, with the same pattern of transfer to the customer. Professional services represent performance obligations that are satisfied over time. The Company has determined that the vast majority of performance obligations to provide processing services and loyalty redemption services meet the allocation of variable consideration exception criteria (“direct allocation”) in that (a) the terms of a variable payment relate specifically to the entity’s efforts to satisfy the performance obligation or transfer the distinct service and (b) allocating the variable amount of consideration entirely to the performance obligation or the distinct good or service is consistent with the allocation objective when considering all of the performance obligations and payment terms in the contract. As a result, for those performance obligations qualifying for direct allocation, the Company allocates and recognizes variable consideration in the period in which it has the contractual right to invoice the customer. In certain instances when a performance obligation does not meet the criteria for direct allocation, the Company recognizes revenue on either a straight-line basis or a blended rate method (i.e., an output method using the estimated per transaction fee based on estimated total contract consideration and volumes, multiplied by the actual monthly transaction volumes) over the term of the contract. A blended rate method is utilized for contracts that have estimates of significant growth over the contract term. The Company determined that straight-line or blended rate are the most appropriate methods of measuring progress toward completion for performance obligations that do not meet the criteria for direct allocation. For professional services, the Company recognizes revenue based on the labor hours incurred for time and materials projects or on a straight-line basis for fixed fee projects. For Issuer Solutions contracts that contain multiple performance obligations, the transaction price is allocated to each performance obligation based on a relative standalone selling price basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct service that forms part of a single performance obligation. The Company determines standalone selling price based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations. The Issuer Solutions segment also enters into licensing arrangements with customers. Under these arrangements, the Company provides the customer with a term license (functional IP), implementation services and annual support, which includes unspecified upgrades and enhancements. The Company has determined that these promised goods and services represent one combined performance obligation since the individual promised goods or services are not distinct in the context of the contract. The Company recognizes revenue over the remaining contract period beginning at go-live, on a straight-line basis, for this performance obligation. For separate performance obligations relating to professional services, revenue is recognized using an input method based on labor hours expended. Merchant Solutions Description of service offerings The Company’s Merchant Solutions revenues are partially derived from relationships with thousands of individual merchants whose contracts range from thirty days to five years. Additionally, part of the revenues are derived from long-term processing contracts with large financial institutions, other merchant acquirers and merchant organizations which generally range from three to eight years. Merchant services revenue is generated primarily from processing all payment forms including credit, debit and electronic benefits transfer for merchants of all sizes across a wide array of retail market segments. The products and services offered include: · Authorizations and capture of electronic transactions; · Clearing and settlement of electronic transactions; · Information reporting services related to electronic transactions; · Merchant billing services; and · Point-of-sale equipment and services. Most of these contracts have prescribed revenue minimums, penalties for early termination, and service level agreements which may impact contractual fees if certain service levels are not achieved. Description of revenue recognition policies Merchant Solutions revenues typically include one performance obligation to provide processing services to individual merchants, large financial institutions, other merchant acquirers or merchant organizations. The Company has determined that merchant processing services represent a stand-ready series of distinct daily services that are substantially the same, with the same pattern of transfer to the customer. Merchant Solutions arrangements also include other promised goods or services (such as point of sale terminals and merchant statement services) that are immaterial in the context of the contract. As a result, the Company has determined that Merchant Solutions arrangements represent one performance obligation. The Company has determined that the performance obligations to provide merchant processing services meet the allocation of variable consideration exception criteria (“direct allocation”) in that (a) the terms of a variable payment relate specifically to the entity’s efforts to satisfy the performance obligation or transfer the distinct service and (b) allocating the variable amount of consideration entirely to the performance obligation or the distinct good or service is consistent with the allocation objective when considering all of the performance obligations and payment terms in the contract. As a result, the Company allocates and recognizes variable consideration in the period it has the contractual right to invoice the customer. Interchange and payment network fees Interchange and payment network fees are charged by the card associations or payment networks and relate primarily to the Company’s Merchant Solutions segment. With respect to interchange and payment network fees, the Company evaluated whether it is the principal or the agent in the arrangement. With the adoption of ASC 606, the Company determined that interchange and payment network fees are not provided in return or exchange for services that the Company controls or acts as the principal, and, therefore, are not part of the consideration paid for its services. These fees collected on behalf of the payment networks and card issuers are presented net of the amounts paid to them. Accordingly, the Company is acting as an agent and presents the fees collected from merchants on behalf of the payment networks and card issuers net of the amounts paid to them. In reaching this determination, the Company considered a number of factors including indicators of control such as the party primarily responsible and the party who has discretion in establishing prices. Netspend Description of service offerings The Company’s Netspend revenues principally consist of a portion of the service fees collected from cardholders and interchange revenues received by the issuing banks in connection with the programs Netspend manages. Customers are charged fees in connection with Netspend’s products and services as follows: · Transactions - Customers are typically charged a fee for each Personal Identification Number (“PIN”) and signature-based purchase transaction made using their cards, unless the customer is on a monthly or annual service plan, in which case the customer is instead charged a monthly or annual subscription fee, as applicable. Customers are also charged fees for Automated Teller Machine (“ATM”) withdrawals and other transactions conducted at ATMs. · Customer Service and Maintenance - Customers are typically charged fees for balance inquiries made through Netspend’s call centers. Customers are also charged a monthly maintenance fee after a specified period of inactivity. · Additional Products and Services - Customers are charged fees associated with additional products and services offered in connection with certain cards, including the use of overdraft features, a variety of bill payment options, custom card designs and card-to-card transfers of funds initiated through the call centers. · Other - Customers are charged fees in connection with the acquisition and reloading of the GPR cards at retailers and the Company receives a portion of these amounts in some cases. Description of revenue recognition policies Netspend revenues include one performance obligation to provide account access and facilitate purchase transactions and interchange fees. The Company has determined that Netspend services represent a stand-ready series of distinct daily services that are substantially the same, with the same pattern of transfer to the customer. Further, the Company has determined that the performance obligation to provide account access and facilitate purchase transactions meets the criteria for the “as invoiced” practical expedient in that the Company has a right to consideration from a customer in an amount that corresponds directly with the value to the customer of the Company’s performance completed to date. As a result, the Company recognizes revenue in the amount to which the Company has a right to invoice. Disaggregation of revenue The following table summarizes volume-based and non-volume related revenue from contracts with customers for the three month period ended March 31, 2018: Three months ended March 31, 2018 (in thousands) Issuer Solutions Merchant Solutions Netspend Total Volume-based revenues $ 219,271 298,948 209,721 $ 727,940 Non-volume related revenues 238,088 20,475 667 259,230 Total revenues $ 457,359 319,423 210,388 $ 987,170 Issuer Solutions Volume-based revenues are generated from charges based on the number of Accounts on File (AOF), transactions and authorizations processed, statements generated, and other processing services for cardholder AOF. Cardholder AOF includes active and inactive consumer credit, retail, prepaid, stored value, government services and commercial card accounts. TSYS’ clients also have the option to use fraud and portfolio management services which are based on authorizations processed and AOF, respectively. Collectively, these services are considered volume-based revenues. Non-volume related revenues include processing fees which are not directly associated with AOF and transactional activity, such as value-added products and services, customer programming and certain other services, which are only offered to TSYS’ processing clients. Additionally, non-volume based revenues include managed services and output services such as card and document production. Merchant Solutions The Merchant Solutions segment’s revenues primarily consist of volume-based revenues generated from charges based on sales volume processed, and authorization transactions and settled transactions processed. Non-volume related revenues include chargeback and retrieval services, data transmissions, value added products and managed services which are not directly associated with transactional activity. Netspend The Netspend segment’s revenues primarily consist of a portion of the service fees collected from cardholders and interchange revenues. Customers are charged fees for transactions including fees for purchase transactions, ATM withdrawals, balance inquiries, monthly maintenance services and other transaction fees. Customers are also charged fees associated with additional features and services offered in connection with certain products including the use of courtesy overdraft protection, bill payment options, custom card designs and card-to-card transfers of funds initiated through call centers. The Netspend segment also earns revenues from a portion of the interchange fees remitted by merchants when customers make purchase transactions using their products. Substantially all of the Netspend segment revenues are volume driven by the active card and gross dollar volume (spend) indicators. The following table summarizes revenue from contracts with customers, by currency, for the three month period ended March 31, 2018: Three months ended March 31, 2018 (in thousands) Issuer Solutions Merchant Solutions Netspend Total U.S. dollar $ 359,870 319,219 210,388 $ 889,477 British Pound Sterling 63,121 - - 63,121 Euro 26,597 - - 26,597 Other 7,771 204 - 7,975 Total revenues $ 457,359 319,423 210,388 $ 987,170 See Note 8 for disclosure of revenues by geography. Performance obligations The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting period. The purpose of this disclosure is to provide additional information about the amounts and expected timing of revenue to be recognized from the remaining performance obligations in the Company’s existing contracts. For revenue which is recognized using (i) the “as-invoiced” practical expedient and (ii) the “direct allocation” method, the Company is required to disclose the value of unsatisfied performance obligations for contractual minimums only. Accordingly, the total unsatisfied or partially unsatisfied performance obligations related to processing services are materially higher than the amounts disclosed in the below table. (in thousands) Remainder of 2018 2019 2020 2021 2022 - 2029 Total Unsatisfied or partially unsatisfied performance obligations $ 613,877 625,501 534,100 440,213 548,902 $ 2,762,593 Contract balances The following table provides information about accounts receivables, contract assets and contract liabilities from contracts with customers: As of (in thousands) March 31, 2018 January 1, 2018 Accounts receivable $ 420,124 $ 412,322 Contract assets 80,683 87,812 Contract liabilities 78,805 76,541 ASC 606 requires an entity to present in its consolidated balance sheets the net position in a customer contract on a contract-by-contract basis. The net position in a customer contract is presented as either contract assets or contract liabilities. Contract assets are defined as an entity’s right to consideration in exchange for goods or services that the entity has transferred to a Contract liabilities are defined as an entity’s obligation to transfer goods or services to a Net contract assets and liabilities may include amounts related to signing incentives for signing or renewing long-term contracts. Capitalized signing incentives are amortized over the contract term and the amortization is included as a reduction of revenues in the Company’s consolidated statements of income. Significant changes in the contract assets and liabilities balances during the three months ended March 31, 2018 are as follows: Three months ended March 31, 2018 (in thousands) Contract Assets Increase/(Decrease) Contract Liabilities (Increase)/Decrease Increase in net contract assets related to signing incentives $ 1,273 $ - Decrease in net contract assets and increase in net contract liabilities related to signing incentive amortization (8,211) (3,990) Increase in net contract assets related to revenue recognized in advance of billings 2,654 - Change in net contract assets due to billed amounts transferred to receivables (1,723) - Increase in net contract liabilities primarily relating to cash received from customers - (41,533) Decrease in net contract assets primarily relating to cash received from customers (608) - Deferred revenue that was released from net contract liabilities - 40,697 Deferred revenue that was released from net contract assets 2,112 - Costs to obtain or fulfill a contract The Company capitalizes the incremental costs of obtaining a contract with a customer if the Company expects to recover those costs. The incremental costs of obtaining a contract are those that the Company incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained (for example, a sales commission). The Company capitalizes the costs incurred to fulfill a contract only if those costs meet all of the following criteria: a. The costs relate directly to a contract or to an anticipated contract that the Company can specifically identify. b. The costs generate or enhance resources of the Company that will be used in satisfying (or in continuing to satisfy) performance obligations in the future. c. The costs are expected to be recovered. See related discussion of contract cost assets in Note 4. Contract acquisition and fulfillment costs are amortized using the straight-line method over the expected period of benefit (ranging from 20 months to seven years or the longer of the contract term) beginning when the client’s cardholder accounts are converted or activated and producing revenues. The amortization of contract fulfillment costs associated with conversion activity is recorded as cost of services in the Company’s consolidated statements of income. The amortization of contract acquisition costs associated with sales commissions that qualify for capitalization is recorded as selling, general and administrative expense in the Company’s consolidated statements of income. Costs to obtain or fulfill a contract are classified as contract cost assets in the Company’s consolidated balance sheets. In evaluating contract acquisition and fulfillment costs for recoverability, expected cash flows are estimated by management should events indicate a loss may have been triggered. The Company evaluates the carrying value of contract cost assets associated with each customer for impairment on the basis of whether these costs are fully recoverable from either contractual minimum fees or from expected undiscounted net operating cash flows of the related contract. The determination of expected undiscounted net operating cash flows requires management to make estimates. If the actual cash flows are not consistent with the Company’s estimates, a material impairment charge may result and net income may be materially different than was initially recorded. These costs may become impaired with the loss of a contract, the financial decline of a client, termination of conversion efforts after a contract is signed, diminished prospects for current clients or if the Company’s actual results differ from its estimates of future cash flows. The amount of the impairment is written off in the period that such a determination is made. Optional exemptions, practical expedients and policy elections The Company has elected to treat shipping and handling activities as a cost of fulfillment rather than a separate performance obligation. The Company has elected to exclude all sales and other similar taxes from the transaction price. Accordingly, the Company presents all collections from customers for these taxes on a net basis, rather than having to assess whether the Company is acting as an agent or a principal in each taxing jurisdiction. In certain arrangements with customers, the Company has determined that certain promised goods or services are immaterial in the context of the contract, from both a quantitative and qualitative perspective. The Company utilizes a portfolio approach in order to estimate amounts for service level agreement penalties and similar items for portfolios of contracts with similar characteristics, using estimates and assumptions that reflect the size and composition of the portfolio. As a practical expedient, the Company is not required to adjust the promised amount of consideration for the effects of a significant financing component if the Company expects, at contract inception, that the period between when the Company transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less. None of the Company’s contracts as of March 31, 2018 contained a significant financing component. The Company has elected to use the ‘as-invoiced’ practical expedient for its performance obligations to provide account access and facilitate purchase transactions related to the Netspend segment. The Company does not disclose the value of unsatisfied performance obligations (except for contractual minimums) for which revenue is recognized using (i) the “as-invoiced” practical expedient and (ii) the “direct allocation” method. The Company adopted ASC 606 as of January 1, 2018 using the modified retrospective method for all contracts not completed as of the date of adoption. For contracts that were modified before the effective date, the Company utilized the practical expedient to consider the aggregate effect of all modifications when identifying performance obligations and allocating transaction price. Impact of New Revenue Guidance on Financial Statement Line Items The disclosure of the impact of adoption of ASC 606 on the Company’s consolidated balance sheets, statements of income, and statements of cash flows was as follows: March 31, 2018 (in thousands) As Reported Balances without adoption of ASC 606 Effect of Change Higher/(Lower) Assets: Prepaid expenses and other current assets $ 224,684 $ 226,745 $ (2,061) Contract assets 80,683 - 80,683 Contract cost assets 151,758 257,432 (105,674) Deferred income tax assets 8,104 7,227 877 Other assets 117,550 122,968 (5,418) Liabilities: Contract liabilities 78,805 75,138 3,667 Other liabilities (short-term and long-term) 317,188 347,538 (30,350) Shareholders’ equity: Accumulated other comprehensive loss, net (21,219) (21,132) (87) Retained earnings 3,117,519 3,122,342 (4,823) Three months ended March 31, 2018 (in thousands, except per share data) As Reported Balances without adoption of ASC 606 Effect of Change Higher/(Lower) Total revenues $ 987,170 $ 1,362,501 $ (375,331) Total operating expenses 798,899 1,173,741 (374,842) Operating income 188,271 188,760 (489) Income taxes 18,135 18,247 (112) Net income 143,102 143,480 (378) Net income attributable to TSYS common shareholders 141,841 142,218 (377) Basic earnings per share (EPS) attributable to TSYS common shareholders 0.78 0.78 Diluted EPS attributable to TSYS common shareholders 0.77 0.78 Three months ended March 31, 2018 (in thousands) As Reported Balances without adoption of ASC 606 Effect of Change Higher/(Lower) Cash flows from operating activities: Net income $ 143,102 $ 143,480 $ (378) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 104,389 121,591 (17,202) Changes in contract assets and contract liabilities 498 (6,375) 6,873 Changes in contract cost assets 2,168 - 2,168 Changes in other current and other long-term liabilities (22,700) (22,680) (20) Cash flows from investing activities: Additions to contract cost assets - (8,559) 8,559 |
Fair Value Measurement
Fair Value Measurement | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value Measurement | |
Fair Value Measurement | Note 3 — Fair Value Measurement Refer to Note 2 of the Company’s audited financial statements for the year ended December 31, 2017, which is included as Exhibit 13.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, as filed with the SEC, for a discussion regarding fair value measurement. The Company had no transfers between Level 1, Level 2 or Level 3 assets during the three months ended March 31, 2018 and 2017. As of March 31, 2018, the Company had recorded goodwill in the amount of $4.1 billion. |
Supplementary Balance Sheet Inf
Supplementary Balance Sheet Information | 3 Months Ended |
Mar. 31, 2018 | |
Supplementary Balance Sheet Information | |
Supplementary Balance Sheet Information | Note 4 — Supplementary Balance Sheet Information Cash and Cash Equivalents, and Restricted Cash The Company maintains accounts outside the United States denominated in currencies other than the U.S. dollar. All amounts in domestic accounts are denominated in U.S. dollars. The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows. Cash, cash equivalents and restricted cash balances are summarized as follows: (in thousands) March 31, 2018 December 31, 2017 Cash and cash equivalents in domestic accounts $ 430,819 396,577 Cash and cash equivalents in foreign accounts 62,388 53,780 Total cash and cash equivalents 493,207 450,357 Restricted cash included in other assets 1,031 1,013 Total cash, cash equivalents and restricted cash shown in the statement of cash flows $ 494,238 451,370 Restricted cash included in other assets in the consolidated balance sheets represents immaterial amounts required across the Company’s segments for operational purposes. Prepaid Expenses and Other Current Assets Significant components of prepaid expenses and other current assets are summarized as follows: (in thousands) March 31, 2018 December 31, 2017 Prepaid expenses $ 63,847 65,159 Income taxes receivable 42,934 41,400 R&D state tax credit 22,642 22,642 Supplies inventory 17,465 17,072 Other 77,796 70,292 Total $ 224,684 216,565 Contract Cost Assets, Net Significant components of contract cost assets, net of accumulated amortization, are summarized as follows: (in thousands) March 31, 2018 December 31, 2017 Contract cost assets 1 , net of accumulated amortization of $179.6 million and $176.4 million as of 2018 and 2017, respectively $ 151,758 139,249 Payments for processing rights 2 , net of accumulated amortization of $166.3 million as of 2017 - 119,416 Total $ 151,758 258,665 Amortization expense related to contract cost assets is as follows: Three months ended March 31, (in thousands) 2018 2017 Amortization expense related to: Contract cost assets 1 $ 10,726 8,173 Payments for processing rights 2 - 5,219 1 Upon the Company’s adoption of ASC 606, costs to obtain or fulfill a contract are classified as contract cost assets. As of March 31, 2018, contract cost assets primarily relate to conversion costs. Costs to obtain a contract that qualify for capitalization are immaterial. See further discussion in Note 2. Prior to the Company’s adoption of ASC 606, contract cost assets were referred to as contract acquisition costs and included both conversion costs and payments for processing rights (signing incentives). 2 Upon the Company’s adoption of ASC 606, payments for processing rights (signing incentives) are classified as contract assets in the Company’s consolidated balance sheets. See further discussion in Note 2. Prior to the Company’s adoption of ASC 606, contract cost assets were referred to as contract acquisition costs and included both conversion costs and payments for processing rights. Other Current Liabilities Significant components of other current liabilities are summarized as follows: (in thousands) March 31, 2018 December 31, 2017 Accrued third-party commissions $ 43,468 34,276 Accrued expenses 38,993 38,018 Dividends payable 24,351 24,886 Accrued interest 13,422 19,330 Litigation settlements 2,691 1,380 Income taxes payable 1,331 185 Other 118,989 107,847 Total $ 243,245 225,922 Accumulated Other Comprehensive Loss (AOCL) The income tax effects allocated to and the cumulative balance of accumulated other comprehensive income (AOCI) (loss) attributable to TSYS shareholders are as follows: (in thousands) Foreign currency translation adjustments and transfers from noncontrolling interests Gain on available-for-sale securities Change in postretirement healthcare plans Total accumulated other comprehensive income/(loss), net of tax Balance as of December 31, 2017 $ (43,464) 8,446 (1,130) $ (36,148) Pretax amount 13,390 3,310 (231) 16,469 Tax effect 895 729 (84) 1,540 Net-of-tax amount 12,495 2,581 (147) 14,929 Balance as of March 31, 2018 $ (30,969) 11,027 (1,277) $ (21,219) There were no reclassifications of AOCI to net income or to other accounts for the three months ended March 31, 2018. |
Long-term Borrowings, Capital L
Long-term Borrowings, Capital Lease Obligations and License Agreements | 3 Months Ended |
Mar. 31, 2018 | |
Long-term Borrowings, Capital Lease Obligations and License Agreements | |
Long-Term Borrowings, Capital Lease Obligations and License Agreements | Note 5 — Long-Term Borrowings, Capital Lease Obligations and License Agreements Term Loan Facility On January 10, 2018, TSYS entered into a credit agreement with Bank of America, N.A. as Administrative Agent and other lenders party thereto from time to time. The credit agreement provides the Company with a $450 million two-year term loan facility (“Term Loan Facility”). The Term Loan Facility was used to finance, in part, the Company’s acquisition of Cayan Holdings LLC (“Cayan”). Borrowings under the credit agreement will accrue interest at the base rate (as defined in the Credit Agreement) or, for certain euro-denominated borrowings, the London Interbank Offered Rate (“LIBOR”), in each case plus a margin based on the Company’s corporate credit ratings. The applicable margin for loans bearing interest based on LIBOR ranges from 1.000% to 1.750%. The applicable margin for loans bearing interest based on the base rate ranges from 0.000% to 0.750%. The credit agreement contains customary covenants regarding, among other matters, the maintenance of insurance, the preservation and maintenance of the Company’s corporate existence, material compliance with laws and the payment of taxes and other material obligations. The credit agreement also contains financial covenants requiring the maintenance as of the end of each fiscal quarter of (i) a minimum fixed charge coverage ratio of 2.5 to 1.0 and (ii) a maximum consolidated leverage ratio of 3.5 to 1.0, which may be increased upon the occurrence of certain events (including the consummation of the acquisition of Cayan). The Company was in compliance with all applicable covenants as of March 31, 2018. Refer to Note 11 of the Company’s audited financial statements for the year ended December 31, 2017, which is included as Exhibit 13.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, as filed with the SEC, for further discussion regarding long-term borrowings and capital lease obligations and license agreements. Below is a summary of the Company’s borrowings and repayments on outstanding debt, capital lease obligations and license agreements: Three months ended March 31, 2018 (in thousands) Borrowings Capital lease obligations License agreements Total Additional borrowings $ 1,065,955 6,818 3,416 $ 1,076,189 Principal payments 125,000 3,553 129,010 |
Share-Based Compensation
Share-Based Compensation | 3 Months Ended |
Mar. 31, 2018 | |
Share-Based Compensation | |
Share-Based Compensation | Note 6 — Share-Based Compensation Refer to Notes 1 and 17 of the Company’s audited financial statements for the year ended December 31, 2017, which are included as Exhibit 13.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, as filed with the SEC, for a discussion regarding the Company’s share-based compensation plans and policy. Share-Based Compensation Share-based compensation costs are classified as selling, general and administrative expenses on the Company’s statements of income and corporate administration and other expenses for segment reporting purposes. TSYS’ share-based compensation costs are expensed, rather than capitalized, as these awards are typically granted to individuals not involved in capitalizable activities. Below is a summary of share-based compensation expense for the three months ended March 31, 2018 and 2017: Three months ended March 31, (in thousands) 2018 2017 Share-based compensation $ 6,295 9,047 Nonvested Share Awards - Time-Based The Company granted shares of TSYS common stock to certain key employees. The nonvested stock bonus awards are typically for services to be provided in the future and vest over a period of up to four years. The market value of the TSYS common stock as of the date of issuance is charged as compensation expense over the vesting periods of the awards. As of March 31, 2018, there was approximately $35.7 million of unrecognized compensation cost related to time-based nonvested share awards. Three months ended March 31, 2018 2017 Number of shares granted 292,359 282,860 Market value ( in millions ) $ 26.1 15.4 Performance- and Market-Based Awards The Company granted performance- and market-based shares to certain key employees. The performance- and market-based goals are established by the Compensation Committee of the Board of Directors and will vest up to a maximum of 200%. During the first three months of 2018 and 2017, the Compensation Committee establishes performance goals based primarily on various financial and market-based measures. The Company’s market-based awards are based upon the Company’s Total Shareholder Return (TSR) as compared to the TSR of the companies in the S&P 500 at the end of the performance period. Compensation expense for performance shares is measured on the grant date based on the quoted market price of TSYS common stock. The Company estimates the probability of achieving the goals through the performance period and expenses the awards on a straight-line basis. The fair value of market-based awards is estimated on the grant date using a Monte Carlo simulation model. The Company expenses market-based awards on a straight-line basis. Compensation costs related to performance- and market-based shares are recognized through the longer of the performance period or the vesting period. As of March 31, 2018, there was approximately $28.2 million of unrecognized compensation cost related to TSYS performance-based awards that is expected to be recognized through December 2020. As of March 31, 2018, there was approximately $4.8 million of unrecognized compensation cost related to TSYS market-based awards that is expected to be recognized through December 2020. The following table summarizes the performance-based awards granted during the first three months of 2018 and 2017: Year Performance Performance Number of Period Expensed 2018 December 2020 Adjusted Diluted EPS 1 December 2020 2018 December 2018 Net Revenue and Adjusted Diluted EPS 1 December 2020 2018 December 2019 Non-financial Operational Metric December 2020 2017 December 2019 Adjusted Diluted EPS 1 December 2019 2017 December 2017 Net Revenue and Adjusted Diluted EPS 1 December 2019 1 Adjusted Diluted EPS is adjusted earnings divided by weighted average diluted shares outstanding used for diluted EPS calculations. Adjusted earnings is net income excluding the after-tax impact of share-based compensation expenses, amortization of acquisition intangibles, merger and acquisition expenses for completed acquisitions and litigation claims, judgments or settlement expenses and related legal expenses. The following table summarizes the market-based awards granted during the first three months of 2018 and 2017: Year Performance Performance Number of Period Expensed 2018 December 2020 TSR December 2020 2017 December 2019 TSR December 2019 Stock Option Awards The Company granted stock options to certain key executives. The grants will vest over a period of up to three years. The weighted average fair value of the option grants was estimated on the date of grant using the Black-Scholes-Merton option-pricing model with the following weighted average assumptions: Three months ended March 31, 2018 2017 Number of options granted 341,659 481,712 Weighted average exercise price $ 87.08 54.47 Risk-free interest rate 2.55 % 1.77 % Expected volatility 21.80 % 21.72 % Expected term (years) 4.8 4.6 Dividend yield 0.60 % 0.73 % Weighted average fair value $ 19.34 10.73 As of March 31, 2018, there was approximately $8.1 million of unrecognized compensation cost related to TSYS stock options that is expected to be recognized over a remaining weighted average period of 2.6 years. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2018 | |
Income Taxes | |
Income Taxes | Note 7 — Income Taxes Refer to Notes 1 and 13 of the Company’s audited financial statements for the year ended December 31, 2017, which are included as Exhibit 13.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, as filed with the SEC, for a discussion regarding income taxes. TSYS is the parent of an affiliated group that files a consolidated U.S. federal income tax return and most state and foreign income tax returns on a separate entity basis. In the normal course of business, the Company is subject to examinations by these taxing authorities unless statutory examination periods lapse. TSYS is no longer subject to U.S. federal income tax examinations for years before 2011 and with few exceptions, the Company is no longer subject to income tax examinations from state and local or foreign tax authorities for years before 2010. There are currently federal income tax examinations in progress for the years 2011 through 2013. Additionally, a number of tax examinations are in progress by the relevant state tax authorities. Although TSYS is unable to determine the ultimate outcome of these examinations, TSYS believes that its liability for uncertain tax positions relating to these jurisdictions for such years is adequate. TSYS’ effective tax rate was 12.0% and 31.4% for the three months ended March 31, 2018 and 2017, respectively. The primary reasons for the lower 2018 effective income tax rate as compared to the 2017 effective income tax rate are the lower 2018 statutory Federal income tax rate as enacted by the Tax Cuts and Jobs Act of 2017 (“Tax Act”) and favorable variances in discrete items related to excess tax benefits from share-based compensation. On December 22, 2017, the President signed into law the Tax Act. Some key provisions of this law impacted the Company during this reporting period. One such provision was the reduction of the Federal corporate income tax rate from 35.0% to 21.0%. The Company’s consolidated financial statements reflect the impact of this rate reduction. Additionally, the Tax Act provides for two U.S. tax base erosion provisions which began in 2018. They are the global intangible low-taxed income (“GILTI”) and the base-erosion and anti-abuse tax (“BEAT”). TSYS’ calculations indicate no impact related to either of these provisions in 2018. However, TSYS will perform all necessary calculations, make any needed elections and report any future impacts of GILTI and BEAT as appropriate. The Tax Act also provides for a new deduction starting in 2018 which impacted TSYS. This deduction is described as a deduction for foreign-derived intangible income. TSYS has appropriately incorporated the results of this calculated deduction in the Company’s consolidated financial statements, which is not significant for the three months ended March 31, 2018 or the year ending December 31, 2018. GAAP prescribes a recognition threshold and measurement attribute for the financial statement recognition, measurement and disclosure of a tax position taken or expected to be taken in a tax return. The amount of unrecognized tax benefits were $23.4 million and $23.8 million as of March 31, 2018 and December 31, 2017, respectively, which resulted in a decrease of $0.4 million during the period. TSYS recognizes potential interest and penalties related to the underpayment of income taxes as income tax expense in the consolidated statements of income. Gross accrued interest and penalties on unrecognized tax benefits totaled $2.2 million and $2.0 million as of March 31, 2018 and December 31, 2017, respectively. The total amounts of unrecognized income tax benefits as of March 31, 2018 and December 31, 2017, that, if recognized, would affect the effective tax rates are $24.5 million and $24.5 million (net of the federal benefit on state tax issues), respectively, which include interest and penalties of $1.4 million and $1.3 million, respectively. TSYS does not expect any significant changes to its calculation of uncertain tax positions during the next twelve months. |
Segment Reporting and Major Cus
Segment Reporting and Major Customers | 3 Months Ended |
Mar. 31, 2018 | |
Segment Reporting and Major Customers | |
Segment Reporting and Major Customers | Note 8 — Segment Reporting and Major Customers Refer to Note 20 of the Company’s audited financial statements for the year ended December 31, 2017, which is included as Exhibit 13.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, as filed with the SEC, for a discussion regarding segment reporting and major customers. The following table presents the Company’s total assets by segment: As of (in thousands) March 31, 2018 December 31, 2017 Issuer Solutions $ 6,911,399 5,735,195 Merchant Solutions 4,204,303 3,136,395 Netspend 1,428,399 1,418,644 Intersegment assets (5,012,384) (3,958,545) Total assets $ 7,531,717 6,331,689 The Company maintains property and equipment, net of accumulated depreciation and amortization, in the following geographic areas: As of (in thousands) March 31, 2018 December 31, 2017 United States $ 295,862 273,690 Europe 50,857 43,586 Other 13,392 7,942 Total $ 360,111 325,218 The following table presents the Company’s depreciation and amortization by segment: Three months ended March 31, (in thousands) 2018 2017 Depreciation and amortization by segment: Issuer Solutions $ 36,853 Merchant Solutions 7,825 7,022 Netspend 4,259 4,092 Segment depreciation and amortization 40,415 47,967 Acquisition intangible amortization 63,023 55,167 Corporate administration and other 951 1,044 Total depreciation and amortization 1 $ 104,178 1 Client incentive/contract asset amortization are no longer included in depreciation and amortization due to the adoption of ASC 606 on January 1, 2018. The following tables reconcile geographic revenues to external revenues by operating segment based on the domicile of the Company’s customers: Three months ended March 31, 2018 (in thousands) Issuer Solutions Merchant Solutions Netspend Total United States $ 264,032 318,749 210,388 $ 793,169 Europe 1 95,143 125 - 95,268 Canada 1 77,582 279 - 77,861 Other 1 20,602 270 - 20,872 Total $ 319,423 210,388 $ Three months ended March 31, 2017 (in thousands) Issuer Solutions Merchant Solutions Netspend Total United States $ 563,108 197,058 $ Europe 1 70,115 80 - 70,195 Canada 1 76,195 276 - 76,471 Other 1 16,842 322 - 17,164 Total $ 563,786 197,058 $ 1 Certain of these revenues are impacted by movements in foreign currency exchange rates. As discussed in Note 2 in the Notes to Unaudited Consolidated Financial Statements, the most significant impact of the Company’s adoption of ASC 606 as of January 1, 2018 is primarily the result of gross versus net presentation of interchange and payment network fees. In 2018, these fees collected on behalf of the payment networks and card issuers are presented “net” of the amounts paid to them, as opposed to the “gross” presentation for certain of these fees in 2017. The following table presents the Company’s operating results by segment: Operating Segments Three Months Ended March 31, (in thousands) 2018 2017 Adjusted operating income by segment: Issuer Solutions (a) $ 150,991 133,873 Merchant Solutions (b) 110,014 91,279 Netspend (c) 49,353 48,648 Corporate Administration and Other (38,401) (35,574) Adjusted segment operating income 1 (d) 271,957 238,226 Less: Share-based compensation 6,295 9,047 TransFirst and Cayan merger & acquisition (M&A) and integration expenses 2 14,368 4,868 Litigation, claims, judgments or settlements - 1,961 Acquisition intangible amortization 63,023 55,167 Operating income 188,271 167,183 Nonoperating expenses, net (37,642) (29,903) Income before income taxes and equity in income of equity investments $ 150,629 137,280 Net revenue by segment: Issuer Solutions (e) $ 423,574 387,255 Merchant Solutions (f) 317,403 260,561 Netspend (g) 210,489 197,465 Segment net revenue 951,466 845,281 Less: intersegment revenues 15,969 12,389 Net revenue 3 (h) 935,497 832,892 Add: reimbursable items, interchange and payment network fees 4 51,673 351,833 Total revenues $ 987,170 1,184,725 Adjusted segment operating margin on net revenue: Issuer Solutions (a)/(e) Merchant Solutions (b)/(f) Netspend (c)/(g) Adjusted segment operating margin on net revenue (d)/(h) 1 Adjusted segment operating income excludes acquisition intangible amortization, TransFirst and Cayan M&A and integration expenses, share-based compensation and expenses associated with Corporate Administration and Other. 2 Excludes share-based compensation. 3 Net revenue is defined as total revenues less reimbursable items (such as postage), as well as, merchant acquiring interchange and payment network fees charged by the card associations or payment networks that are recorded by TSYS as expense . 4 As discussed in Note 2 in the Notes to Unaudited Consolidated Financial Statements, the most significant impact of the Company’s adoption of ASC 606 as of January 1, 2018 is primarily the result of gross versus net presentation of interchange and payment network fees. In 2018, these fees collected on behalf of the payment networks and card issuers are presented “net” of the amounts paid to them, as opposed to the “gross” presentation for certain of these fees in 2017. Major Customers For the three months ended March 31, 2018 and 2017, the Company did not have any major customers. |
Supplementary Cash Flow Informa
Supplementary Cash Flow Information | 3 Months Ended |
Mar. 31, 2018 | |
Supplementary Cash Flow Information | |
Supplementary Cash Flow Information | Note 9 — Supplementary Cash Flow Information Nonvested Awards The Company issued shares of common stock to certain key employees during the first three months of 2018 and 2017, respectively. The grants were issued under nonvested stock bonus awards for services to be provided in the future. Refer to Note 6 for more information. Equipment Acquired Under Capital Lease Obligations and Software Acquired Under License Agreements There was approximately $6.8 million of equipment acquired under capital lease obligations and $3.4 million of software acquired under license agreements in the first three months of 2018. Additionally, the Company acquired $36.5 million of software through vendor financing and other arrangements in March 2018. During the first three months of 2017, the Company acquired approximately $1.9 million of equipment under capital lease obligations and software under license agreements. Cayan Acquisition Refer to Note 12 for a summary of the assets acquired and liabilities assumed in the Cayan acquisition in January 2018. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contingencies | |
Commitments and Contingencies | Note 10 — Commitments and Contingencies Refer to Note 14 of the Company’s audited financial statements for the year ended December 31, 2017, which is included as Exhibit 13.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, as filed with the SEC, for a discussion regarding commitments and contingencies. Legal Proceedings The Company is subject to various legal proceedings and claims and is also subject to information requests, inquiries and investigations arising out of the ordinary conduct of its business. The Company establishes accruals for litigation and similar matters when those matters present loss contingencies that TSYS determines to be both probable and reasonably estimable in accordance with GAAP. Legal costs are expensed as incurred. In the opinion of management, based on current knowledge and in part upon the advice of legal counsel, all matters not specifically discussed below are believed to be adequately covered by insurance, or, if not covered, the possibility of losses from such matters are believed to be remote or such matters are of such kind or involve such amounts that would not have a material adverse effect on the financial position, results of operations or cash flows of the Company if disposed of unfavorably. TelexFree Matter ProPay, Inc. (“ProPay”), a subsidiary of the Company, has been named as one of a number of defendants (including other merchant processors) in several purported class action lawsuits relating to the activities of TelexFree, Inc. and its affiliates and principals. TelexFree is a former merchant customer of ProPay. With regard to TelexFree, each purported class action lawsuit generally alleges that TelexFree engaged in an improper multi-tier marketing scheme involving voice-over Internet protocol telephone services. The plaintiffs in each of the purported class action complaints generally allege that the various merchant processor defendants, including ProPay, aided and abetted the improper activities of TelexFree. TelexFree filed for bankruptcy protection in Nevada. The bankruptcy proceeding was subsequently transferred to the Massachusetts Bankruptcy Court. Specifically, ProPay has been named as one of a number of defendants (including other merchant processors) in each of the following purported class action complaints relating to TelexFree: (i) Waldermara Martin, et al. v. TelexFree, Inc., et al. (Case No. BK-S-14-12524-ABL) filed on May 3, 2014 in the United States Bankruptcy Court District of Nevada, (ii) Anthony Cellucci, et al. v. TelexFree, Inc., et. al. (Case No. 4:14-BK-40987) filed on May 15, 2014 in the United States Bankruptcy Court District of Massachusetts, (iii) Maduako C. Ferguson Sr., et al. v. Telexelectric, LLP, et. al (Case No. 5:14-CV-00316-D) filed on June 5, 2014 in the United States District Court of North Carolina, (iv) Todd Cook v. TelexElectric LLP et al. (Case No. 2:14-CV-00134), filed on June 24, 2014 in the United States District Court for the Northern District of Georgia, (v) Felicia Guevara v. James M. Merrill et al., (CA No. 1:14-cv-22405-DPG), filed on June 27, 2014 in the United State District Court for the Southern District of Florida, and (vi) Reverend Jeremiah Githere, et al. v. TelexElectric LLP et al. (Case No. 1:14-CV-12825-GAO), filed on June 30, 2014 in the United States District Court for the District of Massachusetts (together, the “Actions”). On October 21, 2014, the Judicial Panel on Multidistrict Litigation transferred and consolidated the Actions before the United States District Court for the District of Massachusetts (the “Consolidated Action”). Following the Judicial Panel on Multidistrict Litigation’s October 21, 2014 order, four additional cases arising from the alleged TelexFree scheme were transferred to the United States District Court for the District of Massachusetts for coordinated or consolidated proceedings, including (i) Paulo Eduardo Ferrari et al. v. Telexfree, Inc. et al. (Case No. 14-04080); (ii) Magalhaes v. TelexFree, Inc., et al., No. 14-cv-12437 (D. Mass.); (iii) Griffith v. Merrill et al., No. 14-CV-12058 (D. Mass.); Abelgadir v. Telexelectric, LLP, No. 14-09857 (S.D.N.Y.) In addition, on September 23, 2015, a putative class action relating to TelexFree was filed in the United States District Court for the District of Arizona, styled Rita Dos Santos, Putative Class Representatives and those Similarly Situated v. TelexElectric, LLP et al ., 2:15-cv-01906-NVW (the “Arizona Action”). The Arizona Action makes claims similar to those alleged in the consolidated action pending before the United States District Court for the District of Massachusetts. On September 29, 2015, a group of certain defendants to the Consolidated Action, including ProPay, filed a “tag along” notice with the Judicial Panel on Multidistrict Litigation, asking that the Arizona Action be transferred to the District of Massachusetts where it can be consolidated or coordinated with the Consolidated Action. On October 20, 2015, the Judicial Panel on Multidistrict Litigation transferred the Arizona Action to the District of Massachusetts. The United States District Court for the District of Massachusetts appointed lead plaintiffs’ counsel on behalf of the putative class of plaintiffs in the Consolidated Action. On March 31, 2015, the plaintiffs filed a First Consolidated Amended Complaint (the “Consolidated Complaint”). The Consolidated Complaint purports to bring claims on behalf of all persons who purchased certain TelexFree “memberships” and suffered a “net loss” between January 1, 2012 and April 16, 2014. The Consolidated Complaint supersedes the complaints filed prior to consolidation of the Actions, and alleges that ProPay aided and abetted tortious acts committed by TelexFree, and that ProPay was unjustly enriched in the course of providing payment processing services to TelexFree. On April 30, 2015, the plaintiffs filed a Second Consolidated Amended Complaint (the “Second Amended Complaint”), which amends and supersedes the Consolidated Complaint. Like the Consolidated Complaint, the Second Amended Complaint generally alleges that ProPay aided and abetted tortious acts committed by TelexFree, and that ProPay was unjustly enriched in the course of providing payment processing services to TelexFree. Several defendants, including ProPay, moved to dismiss the Second Amended Complaint on June 2, 2015. Briefing on those motions closed on October 16, 2015. The court held a hearing on the motions to dismiss on November 2, 2015. At present, pursuant to a court order, all discovery in the action is stayed pending the resolution of parallel criminal proceedings against certain former principals of TelexFree, Inc. Despite that stay of discovery, the lead plaintiffs have subpoenaed documents previously produced by ProPay pursuant to the Federal Rules of Bankruptcy Procedure to the court-appointed trustee in the TelexFree bankruptcy proceeding. ProPay has filed a motion to quash that subpoena. ProPay’s motion remains pending before the Court. ProPay’s motion to dismiss also remains pending. On April 4, 2017, lead plaintiffs moved the court for leave to further amend the Second Amended Complaint, and submitted a proposed amendment with their motion. The proposed amendment seeks to add new defendants to the case but does not make any new or additional allegations against ProPay. ProPay, along with certain other defendants in the litigation, have not opposed the lead plaintiffs’ motion to further amend the Second Amended Complaint so long as the amendment, if allowed by the court, would not delay the court’s decision on the pending motions to dismiss. Lead plaintiffs’ motion for leave to amend is pending before the court. ProPay has also received various subpoenas, a seizure warrant and other inquiries requesting information regarding TelexFree from (i) the Commonwealth of Massachusetts, Securities Division, (ii) United States Securities and Exchange Commission, (iii) US Immigration and Customs Enforcement, and (iv) the bankruptcy Trustee of the Chapter 11 entities of TelexFree, Inc., TelexFree, LLC and TelexFree Financial, Inc. Pursuant to the seizure warrant served by the United States Attorney’s Office for the District of Massachusetts, ProPay delivered all funds associated with TelexFree held for chargeback and other purposes by ProPay to US Immigration and Customs Enforcement. In addition, ProPay received a notice of potential claim from the bankruptcy Trustee as a result of the relationship of ProPay with TelexFree and its affiliates. The above proceedings and actions are preliminary in nature. While the Company and ProPay intend to vigorously defend matters arising out of the relationship of ProPay with TelexFree and believe ProPay has substantial defenses related to these purported claims, the Company currently cannot reasonably estimate losses attributable to these matters. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share | |
Earnings Per Share | Note 11 – Earnings Per Share The following tables illustrate basic and diluted EPS for the three months ended March 31, 2018 and 2017: Three months ended March 31, 2018 2017 (in thousands, except per share data) Common Common Basic EPS: Net income attributable to TSYS common shareholders $ 141,841 105,868 Less income allocated to nonvested awards (168) (373) Net income allocated to common stock for EPS calculation (a) $ 141,673 105,495 Average common shares outstanding (b) 181,395 183,220 Basic EPS (a)/(b) $ 0.78 0.58 Diluted EPS: Net income attributable to TSYS common shareholders $ 141,841 105,868 Less income allocated to nonvested awards (168) (373) Add income allocated to nonvested awards 1 168 373 Net income allocated to common stock for EPS calculation (c) $ 141,841 105,868 Average common shares outstanding 181,395 183,220 Increase due to assumed issuance of shares related to common equivalent shares outstanding 1,236 1,067 Average nonvested awards 1 667 651 Average common and common equivalent shares outstanding (d) 183,298 184,938 Diluted EPS (c)/(d) $ 0.77 0.57 1 In accordance with the diluted EPS guidance under the two-class method, the Company uses the approach- either the treasury stock method or the two-class method assuming a participating security is not exercised- that is more dilutive. In 2018 and 2017, the Company used the two-class method. Three months ended March 31, 2018 2017 (in thousands, except per share data) Participating Securities Participating Securities Basic EPS: Net income allocated to nonvested awards (a) $ 168 373 Nonvested awards (b) 217 660 Basic EPS (a)/(b) $ 0.77 0.57 Diluted EPS: Net income allocated to nonvested awards (c) $ 168 371 Average common and common equivalent shares outstanding (d) 217 660 Diluted EPS (c)/(d) $ 0.77 0.56 The diluted EPS calculation excludes stock options and nonvested awards that are exercisable into 0.3 million common shares for the three months ended March 31, 2018, and excludes 0.6 million common shares for the three months ended March 31, 2017, respectively, because their inclusion would have been anti-dilutive. |
Acquisitions
Acquisitions | 3 Months Ended |
Mar. 31, 2018 | |
Acquisitions | |
Acquisitions | Note 12 — Acquisitions Refer to Note 22 of the Company’s audited financial statements for the year ended December 31, 2017, which is included as Exhibit 13.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, as filed with the SEC, for a discussion regarding acquisitions. Cayan On January 11, 2018, TSYS completed the acquisition of 100 percent ownership of Cayan, a payment technology company focused on integrated payment solutions and merchant acquiring, in an all cash transaction valued at approximately $1.05 billion. In connection with the acquisition, the Company entered into a Loan Facility with Bank of America, N.A. as administrative agent and the other lenders a party thereto from time to time to provide a $450 million two-year bilateral loan (see Note 5). The results of the newly acquired business are being reported by TSYS as part of the Merchant Solutions segment. The goodwill amount of $0.8 billion arising from the acquisition is primarily attributable to the expansion of customer base, differentiation in market opportunity and economies of scale expected from combining the operations of TSYS and Cayan. All of the goodwill was assigned to TSYS’ Merchant Solutions segment. The goodwill recognized is not expected to be deductible for income tax purposes. The following table summarizes the consideration paid for Cayan and the preliminary recognized amounts of the identifiable assets acquired and liabilities assumed on January 11, 2018 (the acquisition date). These amounts will remain preliminary until the valuation analysis has been finalized. The measurement period during which changes in assets, liabilities, equity interests, or items of consideration are subject to adjustment ends one year following the acquisition date. The Company continues to evaluate consideration paid, deferred taxes, intangible assets, goodwill and financial liabilities . (in thousands) Consideration Cash $ 1,053,709 Fair value of total consideration transferred $ 1,053,709 Recognized amounts of identifiable assets acquired and liabilities assumed: Cash $ 16,856 Accounts receivable 16,846 Property, plant and equipment 27,048 Other assets 10,489 Identifiable intangible assets 321,585 Deferred tax liabilities (113,828) Other liabilities (33,245) Total identifiable net assets 245,751 Goodwill 807,958 Total identifiable assets acquired and liabilities assumed $ 1,053,709 Identifiable intangible assets acquired in the Cayan acquisition include channel relationships, merchant relationships, current technology, the Cayan and Genius trade names, non-compete agreements and favorable leases. The identifiable intangible assets had no significant estimated residual value. These intangible assets are being amortized over their estimated useful lives of one to ten years based on the pattern of expected future economic benefit, which approximates a straight-line basis over the useful lives of the assets. The fair value of the acquired identifiable intangible assets of $321.6 million was estimated using the income approach (discounted cash flow and relief from royalty methods) and cost approach. The fair values and useful lives of the identified intangible assets were primarily determined using forecasted cash flows, which included estimates for certain assumptions such as revenues, expenses, attrition rates and royalty rates. The estimated fair value of identifiable intangible assets acquired in the acquisition and the related estimated weighted average useful lives are as follows: (in millions) Fair Value Weighted Average Useful Life (in years) Merchant relationships $ 172.5 Channel relationships 80.4 Technology 40.8 Trade names 22.9 Covenants not-to-compete 3.3 Favorable leases 1.7 Total acquired identifiable intangible assets $ 321.6 7.7 The fair value measurement of the identifiable intangible assets represents Level 2 and Level 3 measurements as defined in ASC 820, Fair Value Measurement . Key assumptions include (a) cash flow projections based on market participant and internal data, (b) a discount rate of 12.0%, (c) a pre-tax royalty rate range of 1.5-2.0%, (d) attrition rate of 12.0%, (e) an effective tax rate of 27%, and (f) a terminal value based on a long-term sustainable growth rate of 3%. In connection with the acquisition, TSYS incurred $13.6 million in acquisition-related costs primarily related to professional legal, finance, and accounting costs. These costs were expensed as incurred and are included in selling, general and administrative expenses in the consolidated statements of income for the three months ended March 31, 2018. Pro Forma Results of Operations The revenue and operating loss of Cayan included in the Company’s consolidated statements of income since the acquisition are $42.0 million and ($3.4) million, respectively. The following unaudited pro forma financial information shows the results of operations of the combined entities as if the acquisition of Cayan had occurred on January 1, 2017. The unaudited pro forma information reflects certain pro forma adjustments to the combined financial information of TSYS and Cayan. The pro forma adjustments include incremental depreciation and amortization expense, incremental interest expense associated with new long-term debt and the elimination of non-recurring transaction costs directly related to the acquisition. Pro forma total revenues and pro forma net income attributable to TSYS common shareholders for the three months ended March 31, 2018 did not differ materially from actual total revenues and net income attributable to TSYS common shareholders. Supplemental pro forma Three months ended (in thousands, except per share data) March 31, 2017 Total revenues $ 1,217,517 Net income attributable to TSYS common shareholders $ 96,297 The unaudited pro forma financial information presented above does not purport to represent what the actual results of operations would have been if the acquisition of Cayan’s operations had occurred prior to January 1, 2017, nor is it indicative of the future operating results of TSYS. The unaudited pro forma financial information does not reflect the impact of future events that may occur after the acquisition, including, but not limited to, anticipated cost savings from operating synergies. The unaudited pro forma financial information presented in the table above has been adjusted to give effect to adjustments that are (1) directly related to the business combination; (2) factually supportable; and (3) expected to have a continuing impact. These adjustments include, but are not limited to, the application of accounting policies; and depreciation and amortization related to fair value adjustments to property, plant and equipment and intangible assets. The pro forma adjustments do not reflect the following material items that result directly from the acquisition and which impacted statement of operations following the acquisition: " Acquisition and related financing transaction costs relating to fees to investment bankers, attorneys, accountants, and other professional advisors, and other transaction-related costs that were not capitalized as deferred financing costs; and " The effect of anticipated cost savings or operating efficiencies expected to be realized and related restructuring charges such as technology and infrastructure integration expenses, and other costs related to the integration of Cayan into TSYS. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2018 | |
Subsequent Events | |
Subsequent Events | Note 13 — Subsequent Events Redeemable Noncontrolling Interest In April 2018, the Company acquired the remaining 15% equity interest in Central Payment Co., LLC from a privately-owned company for $126.0 million. Senior Credit Facility On April 23, 2018, TSYS entered into a Credit Agreement (“Credit Agreement”) with Bank of America, N.A., as Administrative Agent and letter of credit issuer. The Credit Agreement provides the Company with a $1.75 billion five-year revolving senior credit facility, which includes a $50 million sub-facility for the issuance of standby letters of credit. The Credit Agreement was used to repay (i) in full, borrowings under that certain Credit Agreement dated February 23, 2016, among the Company, JPMorgan Chase Bank, N.A., as administrative agent and the lenders party thereto, as amended, and (ii) in part, borrowings under that certain Credit Agreement dated January 10, 2018, among the Company and Bank of America as administrative agent and the lenders party thereto, as amended. Borrowings under the Credit Agreement will accrue interest at either the base rate (as defined in the Credit Agreement) or, for certain euro-denominated borrowings, the LIBOR, in each case plus a margin based on the Company’s corporate credit ratings. The Credit Agreement contains customary covenants regarding, among other matters, the maintenance of insurance, the preservation and maintenance of the Company’s corporate existence, material compliance with laws and the payment of taxes and other material obligations. The Credit Agreement also contains financial covenants including (i) a minimum consolidated fixed charge coverage ratio (the “Minimum Fixed Charge Coverage Ratio”) of 2.5 to 1.0 and (ii) a maximum consolidated leverage ratio (“Maximum Leverage Ratio”) (x) of 4.00 to 1.0, for the fiscal quarter ending June 30, 2018, (y) of 3.75 to 1.0, for each of the fiscal quarters ending September 30, 2018, December 31, 2018 and March 31, 2019, and (z) of 3.50 to 1.0, for any fiscal quarter ending thereafter. Management performed an evaluation of the Company’s activity as of the date these consolidated financial statements were issued and has concluded that, other than as set forth above, there are no significant subsequent events requiring disclosure. |
Summary of Significant Accoun22
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The accompanying unaudited consolidated financial statements of TSYS include the accounts of TSYS and its wholly- and majority-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. These financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X and, therefore, do not include all information and footnotes required by U.S. GAAP for complete financial statements. The preparation of the consolidated financial statements requires management of the Company to make estimates and assumptions relating to the reported amounts of assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. These estimates and assumptions are developed based upon all information available. Actual results could differ from estimated amounts. All adjustments, consisting of normal recurring accruals, which, in the opinion of management, are necessary for a fair presentation of financial position and results of operations for the periods covered by this report, have been included. The accompanying unaudited consolidated financial statements should be read in conjunction with the Company’s summary of significant accounting policies, consolidated financial statements and related notes appearing in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, as filed with the Securities and Exchange Commission (“SEC”). Results of interim periods are not necessarily indicative of results to be expected for the year. |
Recently Adopted and New Accounting Pronouncements | Recently Adopted Accounting Pronouncements The Company adopted the following Accounting Standards Updates (“ASUs”) on January 1, 2018: In May 2017, the Financial Accounting Standards Board (FASB) issued ASU 2017-09 Compensation - Stock Compensation (Topic 718), Scope of Modification Accounting, to provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. An entity should account for the effects of a modification unless all the following are met: 1. The fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the modified award is the same as the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the original award immediately before the original award is modified. If the modification does not affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification. 2. The vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified. 3. The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The ASU is effective for the Company on January 1, 2018. Early adoption is permitted, including adoption in any interim period, for (a) public business entities for reporting periods for which financial statements have not yet been issued and (b) all other entities for reporting periods for which financial statements have not yet been made available for issuance. The adoption of this ASU did not have a material impact on the Company’s financial position, results of operations or cash flows. In January 2017, the FASB issued ASU 2017-01 Business Combinations (Topic 805), Clarifying the Definition of a Business, which provides a more robust framework to use in determining when a set of assets and activities is a business. The framework assists entities in evaluating whether both an input and a substantive process are present. The framework includes two sets of criteria to consider that depend on whether a set has outputs. Although outputs are not required for a set to be a business, outputs generally are a key element of a business; therefore, the FASB has developed more stringent criteria for sets without outputs. The ASU is effective for the Company on January 1, 2018. Early application of the amendments in this Update is allowed under certain circumstances. The adoption of this ASU did not have a material impact on the Company’s financial position, results of operations or cash flows. In November 2016, the FASB issued ASU 2016-18 Statement of Cash Flows (Topic 230): Restricted Cash , which requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The Company adopted this guidance on January 1, 2018 and has applied the guidance using a retrospective transition method for all periods presented. In October 2016, the FASB issued ASU 2016-16 Income Taxes (Topic 740): Intra-Equity Transfers of Assets Other Than Inventory, which requires that an entity should recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs and eliminates the exception for an intra-entity transfer of an asset other than inventory. The ASU is effective for the Company on January 1, 2018. The adoption of this ASU did not have a material impact on the Company’s financial position, results of operations or cash flows. In August 2016, the FASB issued ASU 2016-15 Statement of Cash Flow (Topic 230): Classification of Certain Receipts and Cash Payments , which clarifies how entities should classify certain cash receipts and cash payments on the statement of cash flows. The guidance also clarifies how the predominance principle should be applied when cash receipts and cash payments have aspects of more than one class of cash flow. The ASU is effective for the Company on January 1, 2018. Early adoption is permitted by all entities. The adoption of this ASU did not have a material impact on the Company’s financial position, results of operations or cash flows. In January 2016, the FASB issued ASU 2016-01 Recognition and Measurement of Financial Assets and Financial Liabilities, which amends the guidance in U.S. GAAP on the classification and measurement of financial instruments. The ASU significantly revises an entity’s accounting related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. The ASU also amends certain disclosure requirements associated with the fair value of financial instruments. The new standard is effective for fiscal years and interim periods within those years beginning after December 15, 2017. The adoption of this ASU did not have a material impact on the Company’s financial position, results of operations or cash flows. In May 2014, the FASB issued ASU 2014-09 Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU replaces most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The FASB has issued several additional ASUs since this time that add additional clarification to certain issues existing after the original ASU was released. All of the new standards were effective for the Company on January 1, 2018. The standards permit the use of either the full retrospective or modified retrospective transition method. TSYS adopted the new revenue standard as of January 1, 2018 using the modified retrospective transition method. See Note 2 for further discussion of the Company’s adoption of this new standard. New Accounting Pronouncements In March 2018, the FASB issued ASU 2018-05 Income Taxes (Topic 740) - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 . This ASU adds SEC paragraphs pursuant to the SEC Staff Accounting Bulletin No. 118, which expresses the view of the staff regarding application of Topic 740, Income Taxes , in the reporting period that includes December 22, 2017 - the date on which the Tax Cuts and Jobs Act was signed into law. The Company adopted the provisions of SEC Staff Accounting Bulletin No. 118 as of December 22, 2017. See Note 7 for further discussion regarding income taxes. In February 2018, the FASB issued ASU 2018-02 Income Statement - Reporting Comprehensive Income (Topic 220 ) Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. ASU 2018-02 allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. Consequently, the amendments in this ASU eliminate the stranded tax effects resulting from the Tax Cuts and Jobs Act and will improve the usefulness of information reported to financial statement users. The amendments in this ASU are effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption of the amendments in this ASU is permitted. The amendments in this ASU should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. The Company is evaluating the effect of ASU 2018-02 on its consolidated financial statements. In September 2017, the FASB issued ASU 2017-13 Revenue Recognition (Topic 605), Revenues from Customers (Topic 606), Leases (Topic 840) and Leases (Topic 842), which made amendments to SEC paragraphs pursuant to the Staff Announcement at the July 20, 2017 Emerging Issues Task Force (EITF) Meeting and rescission of prior SEC Staff Announcements and Observer comments. This guidance, which is effective immediately, generally relates to the adoption of ASC 606 and 842. The adoption of the amendments in this ASU relating to ASC 606 did not have a material impact on the Company’s financial position, results of operations or cash flows. The Company does not expect the adoption of the amendments in this ASU relating to ASC 842 to have a material impact on the Company’s financial position, results of operations or cash flows. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial instruments . The amendments in this update change how companies measure and recognize credit impairment for many financial assets. The new expected credit loss model will require companies to immediately recognize an estimate of credit losses expected to occur over the remaining life of the financial assets (including trade receivables) that are in the scope of the update. The update also made amendments to the current impairment model for held-to-maturity and available-for-sale debt securities and certain guarantees. The ASU is effective for the Company on January 1, 2020. Early adoption is permitted for periods beginning on or after January 1, 2019. The Company is evaluating the effect of ASU 2016-13 on its consolidated financial statements. In February 2016, the FASB issued ASU 2016-02 Leases (Topic 842), which introduces a lessee model that brings most leases on the balance sheet and aligns many of the underlying principles of the new lessor model with those in the FASB’s new revenue recognition standard. The ASU also addresses other concerns related to the current leases model. The new guidance will be effective for fiscal years and interim periods within those years beginning after December 15, 2018. Early adoption will be permitted for all entities. The Company plans to adopt ASU 2016-02 on January 1, 2019. While the Company is continuing to evaluate the effects of this ASU, the Company expects to record material right of use assets and lease liabilities on its consolidated balance sheet upon adoption. |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Schedule of disaggregation of revenue | Three months ended March 31, 2018 (in thousands) Issuer Solutions Merchant Solutions Netspend Total Volume-based revenues $ 219,271 298,948 209,721 $ 727,940 Non-volume related revenues 238,088 20,475 667 259,230 Total revenues $ 457,359 319,423 210,388 $ 987,170 |
Schedule of disaggregation of revenue by currency | The following table summarizes revenue from contracts with customers, by currency, for the three month period ended March 31, 2018: Three months ended March 31, 2018 (in thousands) Issuer Solutions Merchant Solutions Netspend Total U.S. dollar $ 359,870 319,219 210,388 $ 889,477 British Pound Sterling 63,121 - - 63,121 Euro 26,597 - - 26,597 Other 7,771 204 - 7,975 Total revenues $ 457,359 319,423 210,388 $ 987,170 |
Schedule of performance obligations | (in thousands) Remainder of 2018 2019 2020 2021 2022 - 2029 Total Unsatisfied or partially unsatisfied performance obligations $ 613,877 625,501 534,100 440,213 548,902 $ 2,762,593 |
Schedule of contract balances | As of (in thousands) March 31, 2018 January 1, 2018 Accounts receivable $ 420,124 $ 412,322 Contract assets 80,683 87,812 Contract liabilities 78,805 76,541 |
Schedule of changes in Contract balances | Three months ended March 31, 2018 (in thousands) Contract Assets Increase/(Decrease) Contract Liabilities (Increase)/Decrease Increase in net contract assets related to signing incentives $ 1,273 $ - Decrease in net contract assets and increase in net contract liabilities related to signing incentive amortization (8,211) (3,990) Increase in net contract assets related to revenue recognized in advance of billings 2,654 - Change in net contract assets due to billed amounts transferred to receivables (1,723) - Increase in net contract liabilities primarily relating to cash received from customers - (41,533) Decrease in net contract assets primarily relating to cash received from customers (608) - Deferred revenue that was released from net contract liabilities - 40,697 Deferred revenue that was released from net contract assets 2,112 - |
Schedule of significant changes in the contract assets and liabilities | As of (in thousands) March 31, 2018 January 1, 2018 Accounts receivable $ 420,124 $ 412,322 Contract assets 80,683 87,812 Contract liabilities 78,805 76,541 |
ASU 2014-09 | |
Schedule of New Accounting Pronouncements and Changes in Accounting Principles [Table Text Block] | March 31, 2018 (in thousands) As Reported Balances without adoption of ASC 606 Effect of Change Higher/(Lower) Assets: Prepaid expenses and other current assets $ 224,684 $ 226,745 $ (2,061) Contract assets 80,683 - 80,683 Contract cost assets 151,758 257,432 (105,674) Deferred income tax assets 8,104 7,227 877 Other assets 117,550 122,968 (5,418) Liabilities: Contract liabilities 78,805 75,138 3,667 Other liabilities (short-term and long-term) 317,188 347,538 (30,350) Shareholders’ equity: Accumulated other comprehensive loss, net (21,219) (21,132) (87) Retained earnings 3,117,519 3,122,342 (4,823) Three months ended March 31, 2018 (in thousands, except per share data) As Reported Balances without adoption of ASC 606 Effect of Change Higher/(Lower) Total revenues $ 987,170 $ 1,362,501 $ (375,331) Total operating expenses 798,899 1,173,741 (374,842) Operating income 188,271 188,760 (489) Income taxes 18,135 18,247 (112) Net income 143,102 143,480 (378) Net income attributable to TSYS common shareholders 141,841 142,218 (377) Basic earnings per share (EPS) attributable to TSYS common shareholders 0.78 0.78 Diluted EPS attributable to TSYS common shareholders 0.77 0.78 Three months ended March 31, 2018 (in thousands) As Reported Balances without adoption of ASC 606 Effect of Change Higher/(Lower) Cash flows from operating activities: Net income $ 143,102 $ 143,480 $ (378) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 104,389 121,591 (17,202) Changes in contract assets and contract liabilities 498 (6,375) 6,873 Changes in contract cost assets 2,168 - 2,168 Changes in other current and other long-term liabilities (22,700) (22,680) (20) Cash flows from investing activities: Additions to contract cost assets - (8,559) 8,559 |
Supplementary Balance Sheet I24
Supplementary Balance Sheet Information (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Supplementary Balance Sheet Information | |
Schedule of cash and cash equivalent balances | (in thousands) March 31, 2018 December 31, 2017 Cash and cash equivalents in domestic accounts $ 430,819 396,577 Cash and cash equivalents in foreign accounts 62,388 53,780 Total cash and cash equivalents 493,207 450,357 Restricted cash included in other assets 1,031 1,013 Total cash, cash equivalents and restricted cash shown in the statement of cash flows $ 494,238 451,370 |
Schedule of significant components of prepaid expenses and other current assets | (in thousands) March 31, 2018 December 31, 2017 Prepaid expenses $ 63,847 65,159 Income taxes receivable 42,934 41,400 R&D state tax credit 22,642 22,642 Supplies inventory 17,465 17,072 Other 77,796 70,292 Total $ 224,684 216,565 |
Schedule of significant components and amortization expense of contract acquisition costs | (in thousands) March 31, 2018 December 31, 2017 Contract cost assets 1 , net of accumulated amortization of $179.6 million and $176.4 million as of 2018 and 2017, respectively $ 151,758 139,249 Payments for processing rights 2 , net of accumulated amortization of $166.3 million as of 2017 - 119,416 Total $ 151,758 258,665 |
Schedule of significant components of other current liabilities | (in thousands) March 31, 2018 December 31, 2017 Accrued third-party commissions $ 43,468 34,276 Accrued expenses 38,993 38,018 Dividends payable 24,351 24,886 Accrued interest 13,422 19,330 Litigation settlements 2,691 1,380 Income taxes payable 1,331 185 Other 118,989 107,847 Total $ 243,245 225,922 |
Schedule of income tax effects allocated to and cumulative balance of each component of accumulated other comprehensive income (loss) | (in thousands) Foreign currency translation adjustments and transfers from noncontrolling interests Gain on available-for-sale securities Change in postretirement healthcare plans Total accumulated other comprehensive income/(loss), net of tax Balance as of December 31, 2017 $ (43,464) 8,446 (1,130) $ (36,148) Pretax amount 13,390 3,310 (231) 16,469 Tax effect 895 729 (84) 1,540 Net-of-tax amount 12,495 2,581 (147) 14,929 Balance as of March 31, 2018 $ (30,969) 11,027 (1,277) $ (21,219) |
Schedule of amortization expense | Three months ended March 31, (in thousands) 2018 2017 Amortization expense related to: Contract cost assets 1 $ 10,726 8,173 Payments for processing rights 2 - 5,219 1 Upon the Company’s adoption of ASC 606, costs to obtain or fulfill a contract are classified as contract cost assets. As of March 31, 2018, contract cost assets primarily relate to conversion costs. Costs to obtain a contract that qualify for capitalization are immaterial. See further discussion in Note 2. Prior to the Company’s adoption of ASC 606, contract cost assets were referred to as contract acquisition costs and included both conversion costs and payments for processing rights (signing incentives). 2 Upon the Company’s adoption of ASC 606, payments for processing rights (signing incentives) are classified as contract assets in the Company’s consolidated balance sheets. See further discussion in Note 2. Prior to the Company’s adoption of ASC 606, contract cost assets were referred to as contract acquisition costs and included both conversion costs and payments for processing rights. |
Long-Term Borrowings, Capital25
Long-Term Borrowings, Capital Lease Obligations and License Agreements (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Long-term Borrowings, Capital Lease Obligations and License Agreements | |
Summary of the Company’s borrowings and repayments on outstanding debt, capital lease obligations and license agreements: | Three months ended March 31, 2018 (in thousands) Borrowings Capital lease obligations License agreements Total Additional borrowings $ 1,065,955 6,818 3,416 $ 1,076,189 Principal payments 125,000 3,553 129,010 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Share-based Compensation | |
Summary of share-based compensation expense | Three months ended March 31, (in thousands) 2018 2017 Share-based compensation $ 6,295 9,047 |
Summary of weighted average assumptions, and weighted average fair value of options | Three months ended March 31, 2018 2017 Number of options granted 341,659 481,712 Weighted average exercise price $ 87.08 54.47 Risk-free interest rate 2.55 % 1.77 % Expected volatility 21.80 % 21.72 % Expected term (years) 4.8 4.6 Dividend yield 0.60 % 0.73 % Weighted average fair value $ 19.34 10.73 |
Nonvested Share Awards | |
Share-based Compensation | |
Summary of shares granted | Three months ended March 31, 2018 2017 Number of shares granted 292,359 282,860 Market value ( in millions ) $ 26.1 15.4 |
Performance Based Awards | |
Share-based Compensation | |
Summary of shares granted | Year Performance Performance Number of Period Expensed 2018 December 2020 Adjusted Diluted EPS 1 December 2020 2018 December 2018 Net Revenue and Adjusted Diluted EPS 1 December 2020 2018 December 2019 Non-financial Operational Metric December 2020 2017 December 2019 Adjusted Diluted EPS 1 December 2019 2017 December 2017 Net Revenue and Adjusted Diluted EPS 1 December 2019 1 Adjusted Diluted EPS is adjusted earnings divided by weighted average diluted shares outstanding used for diluted EPS calculations. Adjusted earnings is net income excluding the after-tax impact of share-based compensation expenses, amortization of acquisition intangibles, merger and acquisition expenses for completed acquisitions and litigation claims, judgments or settlement expenses and related legal expenses. |
Market Based Share Awards | |
Share-based Compensation | |
Summary of shares granted | Year Performance Performance Number of Period Expensed 2018 December 2020 TSR December 2020 2017 December 2019 TSR December 2019 |
Segment Reporting and Major C27
Segment Reporting and Major Customers (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Segment Reporting and Major Customers | |
Schedule of operating income and revenue by segment | Operating Segments Three Months Ended March 31, (in thousands) 2018 2017 Adjusted operating income by segment: Issuer Solutions (a) $ 150,991 133,873 Merchant Solutions (b) 110,014 91,279 Netspend (c) 49,353 48,648 Corporate Administration and Other (38,401) (35,574) Adjusted segment operating income 1 (d) 271,957 238,226 Less: Share-based compensation 6,295 9,047 TransFirst and Cayan merger & acquisition (M&A) and integration expenses 2 14,368 4,868 Litigation, claims, judgments or settlements - 1,961 Acquisition intangible amortization 63,023 55,167 Operating income 188,271 167,183 Nonoperating expenses, net (37,642) (29,903) Income before income taxes and equity in income of equity investments $ 150,629 137,280 Net revenue by segment: Issuer Solutions (e) $ 423,574 387,255 Merchant Solutions (f) 317,403 260,561 Netspend (g) 210,489 197,465 Segment net revenue 951,466 845,281 Less: intersegment revenues 15,969 12,389 Net revenue 3 (h) 935,497 832,892 Add: reimbursable items, interchange and payment network fees 4 51,673 351,833 Total revenues $ 987,170 1,184,725 Adjusted segment operating margin on net revenue: Issuer Solutions (a)/(e) Merchant Solutions (b)/(f) Netspend (c)/(g) Adjusted segment operating margin on net revenue (d)/(h) 1 Adjusted segment operating income excludes acquisition intangible amortization, TransFirst and Cayan M&A and integration expenses, share-based compensation and expenses associated with Corporate Administration and Other. 2 Excludes share-based compensation. 3 Net revenue is defined as total revenues less reimbursable items (such as postage), as well as, merchant acquiring interchange and payment network fees charged by the card associations or payment networks that are recorded by TSYS as expense . 4 As discussed in Note 2 in the Notes to Unaudited Consolidated Financial Statements, the most significant impact of the Company’s adoption of ASC 606 as of January 1, 2018 is primarily the result of gross versus net presentation of interchange and payment network fees. In 2018, these fees collected on behalf of the payment networks and card issuers are presented “net” of the amounts paid to them, as opposed to the “gross” presentation for certain of these fees in 2017. |
Schedule of depreciation expense by segment | Three months ended March 31, (in thousands) 2018 2017 Depreciation and amortization by segment: Issuer Solutions $ 36,853 Merchant Solutions 7,825 7,022 Netspend 4,259 4,092 Segment depreciation and amortization 40,415 47,967 Acquisition intangible amortization 63,023 55,167 Corporate administration and other 951 1,044 Total depreciation and amortization 1 $ 104,178 Client incentive/contract asset amortization are no longer included in depreciation and amortization due to the adoption of ASC 606 on January 1, 2018. |
Schedule of total assets by segment | As of (in thousands) March 31, 2018 December 31, 2017 Issuer Solutions $ 6,911,399 5,735,195 Merchant Solutions 4,204,303 3,136,395 Netspend 1,428,399 1,418,644 Intersegment assets (5,012,384) (3,958,545) Total assets $ 7,531,717 6,331,689 |
Schedule of property and equipment, net by geographic area | As of (in thousands) March 31, 2018 December 31, 2017 United States $ 295,862 273,690 Europe 50,857 43,586 Other 13,392 7,942 Total $ 360,111 325,218 |
Schedule of reconciliation of geographic revenues to external revenues by operating segment | Three months ended March 31, 2018 (in thousands) Issuer Solutions Merchant Solutions Netspend Total United States $ 264,032 318,749 210,388 $ 793,169 Europe 1 95,143 125 - 95,268 Canada 1 77,582 279 - 77,861 Other 1 20,602 270 - 20,872 Total $ 319,423 210,388 $ Three months ended March 31, 2017 (in thousands) Issuer Solutions Merchant Solutions Netspend Total United States $ 563,108 197,058 $ Europe 1 70,115 80 - 70,195 Canada 1 76,195 276 - 76,471 Other 1 16,842 322 - 17,164 Total $ 563,786 197,058 $ 1 Certain of these revenues are impacted by movements in foreign currency exchange rates. As discussed in Note 2 in the Notes to Unaudited Consolidated Financial Statements, the most significant impact of the Company’s adoption of ASC 606 as of January 1, 2018 is primarily the result of gross versus net presentation of interchange and payment network fees. In 2018, these fees collected on behalf of the payment networks and card issuers are presented “net” of the amounts paid to them, as opposed to the “gross” presentation for certain of these fees in 2017. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share | |
Schedule of basic and diluted EPS | Three months ended March 31, 2018 2017 (in thousands, except per share data) Common Common Basic EPS: Net income attributable to TSYS common shareholders $ 141,841 105,868 Less income allocated to nonvested awards (168) (373) Net income allocated to common stock for EPS calculation (a) $ 141,673 105,495 Average common shares outstanding (b) 181,395 183,220 Basic EPS (a)/(b) $ 0.78 0.58 Diluted EPS: Net income attributable to TSYS common shareholders $ 141,841 105,868 Less income allocated to nonvested awards (168) (373) Add income allocated to nonvested awards 1 168 373 Net income allocated to common stock for EPS calculation (c) $ 141,841 105,868 Average common shares outstanding 181,395 183,220 Increase due to assumed issuance of shares related to common equivalent shares outstanding 1,236 1,067 Average nonvested awards 1 667 651 Average common and common equivalent shares outstanding (d) 183,298 184,938 Diluted EPS (c)/(d) $ 0.77 0.57 1 In accordance with the diluted EPS guidance under the two-class method, the Company uses the approach- either the treasury stock method or the two-class method assuming a participating security is not exercised- that is more dilutive. In 2018 and 2017, the Company used the two-class method. Three months ended March 31, 2018 2017 (in thousands, except per share data) Participating Securities Participating Securities Basic EPS: Net income allocated to nonvested awards (a) $ 168 373 Nonvested awards (b) 217 660 Basic EPS (a)/(b) $ 0.77 0.57 Diluted EPS: Net income allocated to nonvested awards (c) $ 168 371 Average common and common equivalent shares outstanding (d) 217 660 Diluted EPS (c)/(d) $ 0.77 0.56 |
Acquisitions (Tables)
Acquisitions (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Acquisitions | |
Summary of consideration paid and recognized identifiable assets acquired and liabilities assumed | (in thousands) Consideration Cash $ 1,053,709 Fair value of total consideration transferred $ 1,053,709 Recognized amounts of identifiable assets acquired and liabilities assumed: Cash $ 16,856 Accounts receivable 16,846 Property, plant and equipment 27,048 Other assets 10,489 Identifiable intangible assets 321,585 Deferred tax liabilities (113,828) Other liabilities (33,245) Total identifiable net assets 245,751 Goodwill 807,958 Total identifiable assets acquired and liabilities assumed $ 1,053,709 |
Schedule of estimated fair value of identifiable intangible assets acquired and weighted average useful lives | (in millions) Fair Value Weighted Average Useful Life (in years) Merchant relationships $ 172.5 Channel relationships 80.4 Technology 40.8 Trade names 22.9 Covenants not-to-compete 3.3 Favorable leases 1.7 Total acquired identifiable intangible assets $ 321.6 7.7 |
Schedule of pro forma results of operations | Supplemental pro forma Three months ended (in thousands, except per share data) March 31, 2017 Total revenues $ 1,217,517 Net income attributable to TSYS common shareholders $ 96,297 |
Summary of Significant Accoun30
Summary of Significant Accounting Policies - Operating Segments (Details) | 3 Months Ended |
Mar. 31, 2018segment | |
Summary of Significant Accounting Policies | |
Operating segments | 3 |
Revenue - (Details)
Revenue - (Details) | 3 Months Ended |
Mar. 31, 2018 | |
Disaggregation of Revenue [Line Items] | |
Revenue, Practical Expedient, Financing Component | true |
Minimum | |
Disaggregation of Revenue [Line Items] | |
Individual Merchants, Contract Term | 30 days |
Long Term Processing Contracts, Term | 3 years |
Capitalized Contract Cost, Amortization Period | 20 months |
Maximum | |
Disaggregation of Revenue [Line Items] | |
Individual Merchants, Contract Term | 5 years |
Long Term Processing Contracts, Term | 8 years |
Capitalized Contract Cost, Amortization Period | 7 years |
Revenue - Disaggregated Revenue
Revenue - Disaggregated Revenue (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Disaggregation of revenue | |
Revenue | $ 987,170 |
U.S. dollar | |
Disaggregation of revenue | |
Revenue | 889,477 |
British Pound Sterling | |
Disaggregation of revenue | |
Revenue | 63,121 |
Euro | |
Disaggregation of revenue | |
Revenue | 26,597 |
Other | |
Disaggregation of revenue | |
Revenue | 7,975 |
Volume-based revenues | |
Disaggregation of revenue | |
Revenue | 727,940 |
Non-volume related revenues | |
Disaggregation of revenue | |
Revenue | 259,230 |
Issuer Solutions | |
Disaggregation of revenue | |
Revenue | 457,359 |
Issuer Solutions | U.S. dollar | |
Disaggregation of revenue | |
Revenue | 359,870 |
Issuer Solutions | British Pound Sterling | |
Disaggregation of revenue | |
Revenue | 63,121 |
Issuer Solutions | Euro | |
Disaggregation of revenue | |
Revenue | 26,597 |
Issuer Solutions | Other | |
Disaggregation of revenue | |
Revenue | 7,771 |
Issuer Solutions | Volume-based revenues | |
Disaggregation of revenue | |
Revenue | 219,271 |
Issuer Solutions | Non-volume related revenues | |
Disaggregation of revenue | |
Revenue | 238,088 |
Merchant Solutions | |
Disaggregation of revenue | |
Revenue | 319,423 |
Merchant Solutions | U.S. dollar | |
Disaggregation of revenue | |
Revenue | 319,219 |
Merchant Solutions | Other | |
Disaggregation of revenue | |
Revenue | 204 |
Merchant Solutions | Volume-based revenues | |
Disaggregation of revenue | |
Revenue | 298,948 |
Merchant Solutions | Non-volume related revenues | |
Disaggregation of revenue | |
Revenue | 20,475 |
Netspend | |
Disaggregation of revenue | |
Revenue | 210,388 |
Netspend | U.S. dollar | |
Disaggregation of revenue | |
Revenue | 210,388 |
Netspend | Volume-based revenues | |
Disaggregation of revenue | |
Revenue | 209,721 |
Netspend | Non-volume related revenues | |
Disaggregation of revenue | |
Revenue | $ 667 |
Revenue - Performance Obligatio
Revenue - Performance Obligation (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Revenue, Performance Obligation [Abstract] | |
Unsatisfied or partially unsatisfied performance obligations | $ 2,762,593 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-04-01 | |
Revenue, Performance Obligation [Abstract] | |
Unsatisfied or partially unsatisfied performance obligations | $ 613,877 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 8 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-01-01 | |
Revenue, Performance Obligation [Abstract] | |
Unsatisfied or partially unsatisfied performance obligations | $ 625,501 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 12 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01 | |
Revenue, Performance Obligation [Abstract] | |
Unsatisfied or partially unsatisfied performance obligations | $ 534,100 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 12 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | |
Revenue, Performance Obligation [Abstract] | |
Unsatisfied or partially unsatisfied performance obligations | $ 440,213 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 12 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | |
Revenue, Performance Obligation [Abstract] | |
Unsatisfied or partially unsatisfied performance obligations | $ 548,902 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 84 months |
Revenue - Contract balances (De
Revenue - Contract balances (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Jan. 01, 2018 |
Contract with Customer, Asset and Liability [Abstract] | ||
Accounts receivable | $ 420,124 | $ 412,322 |
Contract assets | 80,683 | 87,812 |
Contract liabilities | $ 78,805 | $ 76,541 |
Revenue - Changes in contract a
Revenue - Changes in contract assets and liabilities (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Contract with Customer, Asset and Liability [Abstract] | |
Increase in net contract assets related to signing incentives | $ 1,273 |
Decrease in net contract assets and increase in net contract liabilities related to signing incentive amortization | (8,211) |
Decrease in net contract liabilities related to signing incentive amortization | (3,990) |
Increase in net contract assets related to revenue recognized in advance of billing | 2,654 |
Change in net contract assets due to amounts transferred to receivables | (1,723) |
Increase in net contract liabilities primarily relating to cash received from customers | (41,533) |
Decrease in net contract assets primarily relating to cash received from customers | (608) |
Revenue recognized that was included in the net contract liability balance | 40,697 |
Deferred revenue that was released from the net contract asset balance | $ 2,112 |
Revenue - Impact of New Guidanc
Revenue - Impact of New Guidance on Financial Statements (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |||
Mar. 31, 2018 | Mar. 31, 2017 | Jan. 01, 2018 | Dec. 31, 2017 | |
Statement of Financial Position [Abstract] | ||||
Prepaid expenses and other current assets. | $ 224,684 | |||
Contract assets | 80,683 | $ 87,812 | ||
Contract cost assets | 151,758 | $ 258,665 | ||
Deferred income tax assets | 8,104 | 6,091 | ||
Other assets | 117,550 | 124,021 | ||
Contract liabilities | 78,805 | $ 76,541 | ||
Other liabilities (short-term and long-term) | 317,188 | |||
Accumulated other comprehensive loss, net | (21,219) | (36,148) | ||
Retained earnings | 3,117,519 | $ 3,004,018 | ||
Income Statement | ||||
Total revenues | 987,170 | $ 1,184,725 | ||
Total operating expenses | 798,899 | 1,017,542 | ||
Operating income | 188,271 | 167,183 | ||
Income taxes | 18,135 | 43,082 | ||
Net income | 143,102 | 107,107 | ||
Net income attributable to TSYS common shareholders | $ 141,841 | $ 105,868 | ||
Basic earnings per share (EPS) attributable to TSYS common shareholders (in dollars per share) | $ 0.78 | $ 0.58 | ||
Diluted EPS attributable to TSYS common shareholders (in dollars per share) | $ 0.77 | $ 0.57 | ||
Cash flows from operating activities: | ||||
Net income | $ 143,102 | $ 107,107 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Depreciation and amortization | 104,389 | 104,178 | ||
Contract assets and contract liabilities | 498 | 4,228 | ||
Contract cost assets | 2,168 | |||
Other current and other long-term liabilities. | (22,700) | |||
Cash flows from investing activities: | ||||
Additions to contract acquisition costs | $ (7,668) | |||
Balances without adoption of adoption of ASC 606 | ASU 2014-09 | ||||
Statement of Financial Position [Abstract] | ||||
Prepaid expenses and other current assets. | 226,745 | |||
Contract cost assets | 257,432 | |||
Deferred income tax assets | 7,227 | |||
Other assets | 122,968 | |||
Contract liabilities | 75,138 | |||
Other liabilities (short-term and long-term) | 347,538 | |||
Accumulated other comprehensive loss, net | (21,132) | |||
Retained earnings | 3,122,342 | |||
Income Statement | ||||
Total revenues | 1,362,501 | |||
Total operating expenses | 1,173,741 | |||
Operating income | 188,760 | |||
Income taxes | 18,247 | |||
Net income | 143,480 | |||
Net income attributable to TSYS common shareholders | $ 142,218 | |||
Basic earnings per share (EPS) attributable to TSYS common shareholders (in dollars per share) | $ 0.78 | |||
Diluted EPS attributable to TSYS common shareholders (in dollars per share) | $ 0.78 | |||
Cash flows from operating activities: | ||||
Net income | $ 143,480 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Depreciation and amortization | 121,591 | |||
Contract assets and contract liabilities | (6,375) | |||
Other current and other long-term liabilities. | (22,680) | |||
Cash flows from investing activities: | ||||
Additions to contract acquisition costs | (8,559) | |||
Effect of Change Higher/(Lower) | ASU 2014-09 | ||||
Statement of Financial Position [Abstract] | ||||
Prepaid expenses and other current assets. | (2,061) | |||
Contract assets | 80,683 | |||
Contract cost assets | (105,674) | |||
Deferred income tax assets | 877 | |||
Other assets | (5,418) | |||
Contract liabilities | 3,667 | |||
Other liabilities (short-term and long-term) | (30,350) | |||
Accumulated other comprehensive loss, net | (87) | |||
Retained earnings | (4,823) | |||
Income Statement | ||||
Total revenues | (375,331) | |||
Total operating expenses | (374,842) | |||
Operating income | (489) | |||
Income taxes | (112) | |||
Net income | (378) | |||
Net income attributable to TSYS common shareholders | $ (377) | |||
Basic earnings per share (EPS) attributable to TSYS common shareholders (in dollars per share) | $ 0 | |||
Diluted EPS attributable to TSYS common shareholders (in dollars per share) | $ 0 | |||
Cash flows from operating activities: | ||||
Net income | $ (378) | |||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Depreciation and amortization | (17,202) | |||
Contract assets and contract liabilities | 6,873 | |||
Contract cost assets | 2,168 | |||
Other current and other long-term liabilities. | (20) | |||
Cash flows from investing activities: | ||||
Additions to contract acquisition costs | $ 8,559 |
Fair Value Measurement - Change
Fair Value Measurement - Changes in Fair Value Levels (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Fair Value Measurement | ||
Asset transfers out of Level 1 into Level 2 | $ 0 | $ 0 |
Asset transfers out of Level 2 into Level 1 | 0 | 0 |
Asset transfers into (out of) Level 3 | $ 0 | $ 0 |
Fair Value Measurement - Goodwi
Fair Value Measurement - Goodwill and Impairment Testing (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Jan. 11, 2018 | Dec. 31, 2017 |
Fair Value Measurement | |||
Goodwill | $ 4,073,511 | $ 807,958 | $ 3,264,071 |
Supplementary Balance Sheet I39
Supplementary Balance Sheet Information - Cash, and Cash Equivalents, and Restricted Cash (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 | Mar. 31, 2017 | Dec. 31, 2016 |
Cash and cash equivalents in domestic accounts | $ 430,819 | $ 396,577 | ||
Cash and cash equivalents in foreign accounts | 62,388 | 53,780 | ||
Total cash and cash equivalents | 493,207 | 450,357 | ||
Total cash, cash equivalents and restricted cash shown in the statement of cash flows | 494,238 | 451,370 | $ 493,916 | $ 425,810 |
Other long-term assets | ||||
Restricted cash included in other long-term assets | $ 1,031 | $ 1,013 |
Supplementary Balance Sheet I40
Supplementary Balance Sheet Information - Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Supplementary Balance Sheet Information | ||
Prepaid expenses | $ 63,847 | $ 65,159 |
Income taxes receivable | 42,934 | 41,400 |
R and D state tax credit | 22,642 | 22,642 |
Supplies inventory | 17,465 | 17,072 |
Other | 77,796 | 70,292 |
Total | $ 224,684 | $ 216,565 |
Supplementary Balance Sheet I41
Supplementary Balance Sheet Information - Contract Acquisition Costs, Net - Significant Components (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Identifiable intangible assets acquired | ||
Contract acquisition costs, net of accumulated amortization | $ 151,758 | $ 258,665 |
Contract cost assets | ||
Identifiable intangible assets acquired | ||
Accumulated amortization | 179,600 | 176,400 |
Amortization expense | 10,726 | 8,173 |
Contract acquisition costs, net of accumulated amortization | $ 151,758 | 139,249 |
Payments for processing rights | ||
Identifiable intangible assets acquired | ||
Amortization expense | 5,219 | |
Contract acquisition costs, net of accumulated amortization | 119,416 | |
Contract acquisition costs, accumulated amortization | $ 166,300 |
Supplementary Balance Sheet I42
Supplementary Balance Sheet Information - Other Current Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Supplementary Balance Sheet Information | ||
Accrued third-party commissions | $ 43,468 | $ 34,276 |
Accrued expenses | 38,993 | 38,018 |
Dividends payable | 24,351 | 24,886 |
Accrued interest | 13,422 | 19,330 |
Litigation settlements | 2,691 | 1,380 |
Income taxes payable | 1,331 | 185 |
Other | 118,989 | 107,847 |
Total | $ 243,245 | $ 225,922 |
Supplementary Balance Sheet I43
Supplementary Balance Sheet Information - Accumulated Other Comprehensive Loss (AOCL) (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Other comprehensive income (loss) | |
Beginning Balance | $ 2,240,993 |
Ending Balance | 2,394,574 |
Reclassifications of AOCI | 0 |
Accumulated Other Comprehensive Income (Loss) | |
Other comprehensive income (loss) | |
Beginning Balance | (36,148) |
Pretax Amount | 16,469 |
Tax Effect | 1,540 |
Net-of-tax Amount | 14,929 |
Ending Balance | (21,219) |
Foreign currency translation adjustments and transfers from noncontrolling interests | |
Other comprehensive income (loss) | |
Beginning Balance | (43,464) |
Pretax Amount | 13,390 |
Tax Effect | 895 |
Net-of-tax Amount | 12,495 |
Ending Balance | (30,969) |
Gain on available-for-sale securities | |
Other comprehensive income (loss) | |
Beginning Balance | 8,446 |
Pretax Amount | 3,310 |
Tax Effect | 729 |
Net-of-tax Amount | 2,581 |
Ending Balance | 11,027 |
Change in postretirement healthcare plans | |
Other comprehensive income (loss) | |
Beginning Balance | (1,130) |
Pretax Amount | (231) |
Tax Effect | (84) |
Net-of-tax Amount | (147) |
Ending Balance | $ (1,277) |
Long-term Borrowings, Capital44
Long-term Borrowings, Capital Lease Obligations and License Agreements - Term Loan Facility (Details) $ in Thousands | Jan. 10, 2018USD ($) | Mar. 31, 2018USD ($) |
Debt Instrument [Line Items] | ||
Additional borrowings | $ 1,076,189 | |
Principal payments | 129,010 | |
Borrowings | ||
Debt Instrument [Line Items] | ||
Additional borrowings | 1,065,955 | |
Principal payments | 125,000 | |
Capital lease obligations | ||
Debt Instrument [Line Items] | ||
Additional borrowings | 6,818 | |
Principal payments | 3,553 | |
License agreements | ||
Debt Instrument [Line Items] | ||
Additional borrowings | 3,416 | |
Principal payments | $ 457 | |
Term Loan Facility dated as of January 10, 2018 | ||
Debt Instrument [Line Items] | ||
Financing agreement amount | $ 450,000 | |
Term | 2 years | |
Minimum | Term Loan Facility dated as of January 10, 2018 | ||
Debt Instrument [Line Items] | ||
Fixed charge coverage ratio financial covenant | 2.5 | |
Minimum | LIBOR | Term Loan Facility dated as of January 10, 2018 | ||
Debt Instrument [Line Items] | ||
Margin added to variable rate (as a percent) | 1.00% | |
Minimum | Base rate | Term Loan Facility dated as of January 10, 2018 | ||
Debt Instrument [Line Items] | ||
Margin added to variable rate (as a percent) | 0.00% | |
Maximum | Term Loan Facility dated as of January 10, 2018 | ||
Debt Instrument [Line Items] | ||
Consolidated leverage ratio financial covenant | 3.5 | |
Maximum | LIBOR | Term Loan Facility dated as of January 10, 2018 | ||
Debt Instrument [Line Items] | ||
Margin added to variable rate (as a percent) | 1.75% | |
Maximum | Base rate | Term Loan Facility dated as of January 10, 2018 | ||
Debt Instrument [Line Items] | ||
Margin added to variable rate (as a percent) | 0.75% |
Share-Based Compensation - Expe
Share-Based Compensation - Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Share-Based Compensation | ||
Share-based compensation | $ 6,295 | $ 9,047 |
Selling, general and administrative expenses | ||
Share-Based Compensation | ||
Share-based compensation | $ 6,295 | $ 9,047 |
Share-Based Compensation - Nonv
Share-Based Compensation - Nonvested Awards - Vesting and Grants Cost (Details) - Nonvested Share Awards - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Unrecognized compensation cost | ||
Unrecognized compensation cost | $ 35.7 | |
Shares granted | ||
Number of shares granted | 292,359 | 282,860 |
Market value | $ 26.1 | $ 15.4 |
Maximum | ||
Share-based Compensation | ||
Award vesting period | 4 years |
Share-Based Compensation - Perf
Share-Based Compensation - Performance and Market-Based Award Vesting and Unrecognized Compensation Cost (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Performance Based Awards | ||
Share-based Compensation | ||
Unrecognized compensation cost (in dollars) | $ 28.2 | |
Performance Based Awards | Maximum | ||
Share-based Compensation | ||
Vesting percentage | 200.00% | |
Market Based Share Awards | ||
Share-based Compensation | ||
Unrecognized compensation cost (in dollars) | $ 4.8 | |
Market Based Share Awards | Maximum | ||
Share-based Compensation | ||
Vesting percentage | 200.00% |
Share-Based Compensation - Pe48
Share-Based Compensation - Performance-Based Awards Granted (Details) - Performance Based Awards - shares | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Performance Period Ending December 2020 | ||
Share-based Compensation | ||
Number of shares granted | 79,218 | |
Performance Period Ending December 2018 | ||
Share-based Compensation | ||
Number of shares granted | 84,444 | |
Performance period ending December 2019, Tranche one | ||
Share-based Compensation | ||
Number of shares granted | 99,492 | |
Performance Period Ending December 2019 | ||
Share-based Compensation | ||
Number of shares granted | 11,304 | |
Performance Period Ending December 2017 | ||
Share-based Compensation | ||
Number of shares granted | 146,094 |
Share-Based Compensation - Mark
Share-Based Compensation - Market- Based Awards Granted (Details) - Market Based Share Awards - shares | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Performance Period Ending December 2020 | ||
Share-based Compensation | ||
Number of shares granted | 33,940 | |
Performance Period Ending December 2019 | ||
Share-based Compensation | ||
Number of shares granted | 42,644 |
Share-Based Compensation - Stoc
Share-Based Compensation - Stock Option Award Vesting and Weighted Average Assumptions (Details) - Stock Options - $ / shares | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Weighted average assumptions and weighted average fair value of options | ||
Number of options granted (in shares) | 341,659 | 481,712 |
Weighted average exercise price (in dollars per share) | $ 87.08 | $ 54.47 |
Risk-free interest rate (as a percent) | 2.55% | 1.77% |
Expected volatility (as a percent) | 21.80% | 21.72% |
Expected term (years) | 4 years 9 months 18 days | 4 years 7 months 6 days |
Dividend yield (as a percent) | 0.60% | 0.73% |
Weighted average fair value (in dollars per share) | $ 19.34 | $ 10.73 |
Maximum | ||
Share-based Compensation | ||
Award vesting period | 3 years |
Share-Based Compensation - St51
Share-Based Compensation - Stock Option Award Unrecognized Compensation Cost (Details) - Stock Options $ in Millions | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Unrecognized compensation cost | |
Unrecognized compensation cost | $ 8.1 |
Weighted average period of recognition of unrecognized compensation cost | 2 years 7 months 6 days |
Income Taxes - Effective Tax Ra
Income Taxes - Effective Tax Rate and Unrecognized Tax Benefits (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Effective tax rate (as a percent) | ||||
Effective Income Tax Rate Reconciliation, Percent | 12.00% | 31.40% | ||
Effect of Tax Cuts and Jobs Act of 2017 [Abstract] | ||||
Federal corporate income tax rate (as a percent) | 35.00% | |||
Uncertain tax positions | ||||
Amount of unrecognized tax benefits | $ 23.4 | $ 23.8 | ||
Decrease in unrecognized tax benefits | 0.4 | |||
Gross accrued interest and penalties on unrecognized tax benefits | 2.2 | 2 | ||
Unrecognized income tax benefits that, if recognized, would affect the effective tax rates | 24.5 | 24.5 | ||
Unrecognized income tax benefits that, if recognized, would affect the effective tax rates , interest and penalties | 1.4 | $ 1.3 | ||
Significant Change in Unrecognized Tax Benefits is Reasonably Possible, Amount of Unrecorded Benefit | $ 0 | |||
Expected | ||||
Effect of Tax Cuts and Jobs Act of 2017 [Abstract] | ||||
Federal corporate income tax rate (as a percent) | 21.00% |
Segment Reporting and Major C53
Segment Reporting and Major Customers - Total Assets by Segment (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Segment Reporting | ||
Total assets | $ 7,531,717 | $ 6,331,689 |
Operating Segments | Issuer Solutions | ||
Segment Reporting | ||
Total assets | 6,911,399 | 5,735,195 |
Operating Segments | Merchant Solutions | ||
Segment Reporting | ||
Total assets | 4,204,303 | 3,136,395 |
Operating Segments | Netspend | ||
Segment Reporting | ||
Total assets | 1,428,399 | 1,418,644 |
Intersegment | ||
Segment Reporting | ||
Total assets | $ (5,012,384) | $ (3,958,545) |
Segment Reporting and Major C54
Segment Reporting and Major Customers - Property and Equipment, net (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Property and equipment, net, by geographic areas | ||
Property and equipment, net of accumulated depreciation and amortization | $ 360,111 | $ 325,218 |
United States | ||
Property and equipment, net, by geographic areas | ||
Property and equipment, net of accumulated depreciation and amortization | 295,862 | 273,690 |
Europe | ||
Property and equipment, net, by geographic areas | ||
Property and equipment, net of accumulated depreciation and amortization | 50,857 | 43,586 |
Other | ||
Property and equipment, net, by geographic areas | ||
Property and equipment, net of accumulated depreciation and amortization | $ 13,392 | $ 7,942 |
Segment Reporting and Major C55
Segment Reporting and Major Customers - Depreciation and Amortization (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Segment Reporting | ||
Total depreciation and amortization | $ 104,389 | $ 104,178 |
Operating Segments | ||
Segment Reporting | ||
Depreciation and amortization | 40,415 | 47,967 |
Operating Segments | Issuer Solutions | ||
Segment Reporting | ||
Depreciation and amortization | 28,331 | 36,853 |
Operating Segments | Merchant Solutions | ||
Segment Reporting | ||
Depreciation and amortization | 7,825 | 7,022 |
Operating Segments | Netspend | ||
Segment Reporting | ||
Depreciation and amortization | 4,259 | 4,092 |
Segment Reconciling Items | ||
Segment Reporting | ||
Acquisition intangible amortization | 63,023 | 55,167 |
Corporate Administration and Other | ||
Segment Reporting | ||
Depreciation and amortization | $ 951 | $ 1,044 |
Segment Reporting and Major C56
Segment Reporting and Major Customers - Geographic Revenues to External Revenues (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Geographic revenues to external revenues by operating segment | ||
Total revenues | $ 987,170 | $ 1,184,725 |
United States | ||
Geographic revenues to external revenues by operating segment | ||
Total revenues | 793,169 | 1,020,895 |
Europe | ||
Geographic revenues to external revenues by operating segment | ||
Total revenues | 95,268 | 70,195 |
Canada | ||
Geographic revenues to external revenues by operating segment | ||
Total revenues | 77,861 | 76,471 |
Other | ||
Geographic revenues to external revenues by operating segment | ||
Total revenues | 20,872 | 17,164 |
Issuer Solutions | ||
Geographic revenues to external revenues by operating segment | ||
Total revenues | 457,359 | 423,881 |
Issuer Solutions | United States | ||
Geographic revenues to external revenues by operating segment | ||
Total revenues | 264,032 | 260,729 |
Issuer Solutions | Europe | ||
Geographic revenues to external revenues by operating segment | ||
Total revenues | 95,143 | 70,115 |
Issuer Solutions | Canada | ||
Geographic revenues to external revenues by operating segment | ||
Total revenues | 77,582 | 76,195 |
Issuer Solutions | Other | ||
Geographic revenues to external revenues by operating segment | ||
Total revenues | 20,602 | 16,842 |
Merchant Solutions | ||
Geographic revenues to external revenues by operating segment | ||
Total revenues | 319,423 | 563,786 |
Merchant Solutions | United States | ||
Geographic revenues to external revenues by operating segment | ||
Total revenues | 318,749 | 563,108 |
Merchant Solutions | Europe | ||
Geographic revenues to external revenues by operating segment | ||
Total revenues | 125 | 80 |
Merchant Solutions | Canada | ||
Geographic revenues to external revenues by operating segment | ||
Total revenues | 279 | 276 |
Merchant Solutions | Other | ||
Geographic revenues to external revenues by operating segment | ||
Total revenues | 270 | 322 |
Netspend | ||
Geographic revenues to external revenues by operating segment | ||
Total revenues | 210,388 | 197,058 |
Netspend | United States | ||
Geographic revenues to external revenues by operating segment | ||
Total revenues | $ 210,388 | $ 197,058 |
Segment Reporting and Major C57
Segment Reporting and Major Customers - Operating Results (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Segment Reporting | ||
Adjusted operating income | $ 271,957 | $ 238,226 |
Share-based compensation | 6,295 | 9,047 |
Operating income | 188,271 | 167,183 |
Nonoperating expenses, net | (37,642) | (29,903) |
Income before income taxes and equity in income of equity investments | 150,629 | 137,280 |
Net revenue | 935,497 | 832,892 |
Add: reimbursable items, interchange and assessment expenses | 51,673 | 351,833 |
Total revenues | $ 987,170 | $ 1,184,725 |
Operating margin on net revenue | 29.10% | 28.60% |
Issuer Solutions | ||
Segment Reporting | ||
Total revenues | $ 457,359 | $ 423,881 |
Merchant Solutions | ||
Segment Reporting | ||
Total revenues | 319,423 | 563,786 |
Netspend | ||
Segment Reporting | ||
Total revenues | 210,388 | 197,058 |
Operating Segments | ||
Segment Reporting | ||
Net revenue | 951,466 | 845,281 |
Operating Segments | Issuer Solutions | ||
Segment Reporting | ||
Adjusted operating income | 150,991 | 133,873 |
Net revenue | $ 423,574 | $ 387,255 |
Operating margin on net revenue | 35.60% | 34.60% |
Operating Segments | Merchant Solutions | ||
Segment Reporting | ||
Adjusted operating income | $ 110,014 | $ 91,279 |
Net revenue | $ 317,403 | $ 260,561 |
Operating margin on net revenue | 34.70% | 35.00% |
Operating Segments | Netspend | ||
Segment Reporting | ||
Adjusted operating income | $ 49,353 | $ 48,648 |
Net revenue | $ 210,489 | $ 197,465 |
Operating margin on net revenue | 23.40% | 24.60% |
Corporate Administration and Other | ||
Segment Reporting | ||
Adjusted operating income | $ (38,401) | $ (35,574) |
Intersegment | ||
Segment Reporting | ||
Net revenue | 15,969 | 12,389 |
Segment Reconciling Items | ||
Segment Reporting | ||
TransFirst and Cayan merger & acquisition (M&A) and integration expenses | 14,368 | 4,868 |
Litigation, claims, judgements or settlements | 1,961 | |
Acquisition intangible amortization | $ 63,023 | $ 55,167 |
Supplementary Cash Flow Infor58
Supplementary Cash Flow Information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Supplementary Cash Flow Information | ||
Equipment acquired under capital lease obligations | $ 6.8 | $ 1.9 |
Software acquired under license agreements | 3.4 | |
Software acquired through vendor financing and other arrangements | $ 36.5 |
Commitments and Contingencies -
Commitments and Contingencies - Legal Proceedings (Details) - TelexFree Matter - Propay | Oct. 21, 2014claim | Mar. 31, 2018defendant |
Commitments and Contingencies | ||
Number of additional claims | claim | 4 | |
Minimum | ||
Commitments and Contingencies | ||
Number of defendants | defendant | 1 |
Earnings Per Share - Common Sto
Earnings Per Share - Common Stock (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Basic EPS: | ||
Net income | $ 141,841 | $ 105,868 |
Less income allocated to nonvested awards | (168) | (373) |
Net income allocated to common stock for EPS calculation | $ 141,673 | $ 105,495 |
Nonvested awards (in shares) | 181,395 | 183,220 |
Basic EPS | $ 0.78 | $ 0.58 |
Diluted EPS: | ||
Net income | $ 141,841 | $ 105,868 |
Less income allocated to nonvested awards | (168) | (373) |
Add income allocated to nonvested awards | 168 | 373 |
Net income allocated to common stock for EPS calculation | $ 141,841 | $ 105,868 |
Average common shares outstanding | 181,395 | 183,220 |
Increase due to assumed issuance of shares related to common equivalent shares outstanding | 1,236 | 1,067 |
Average nonvested awards | 667 | 651 |
Average common and common equivalent shares outstanding | 183,298 | 184,938 |
Diluted EPS attributable to TSYS common shareholders (Note 11) (in dollars per share) | $ 0.77 | $ 0.57 |
Earnings Per Share - Participat
Earnings Per Share - Participating Securities (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Basic EPS: | ||
Nonvested awards (in shares) | 181,395 | 183,220 |
Basic EPS | $ 0.78 | $ 0.58 |
Diluted EPS: | ||
Average common and common equivalent shares outstanding(d) | 183,298 | 184,938 |
Diluted EPS attributable to TSYS common shareholders (Note 11) (in dollars per share) | $ 0.77 | $ 0.57 |
Participating Securities | ||
Basic EPS: | ||
Net income allocated to nonvested awards | $ 168 | $ 373 |
Nonvested awards (in shares) | 217 | 660 |
Basic EPS | $ 0.77 | $ 0.57 |
Diluted EPS: | ||
Net income allocated to nonvested awards | $ 168 | $ 371 |
Average common and common equivalent shares outstanding(d) | 217 | 660 |
Diluted EPS attributable to TSYS common shareholders (Note 11) (in dollars per share) | $ 0.77 | $ 0.56 |
Earnings Per Share - Anti-dilut
Earnings Per Share - Anti-dilutive Securities (Details) - shares shares in Millions | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Earnings Per Share | ||
Anti-dilutive stock options and nonvested awards excluded from diluted EPS calculation | 0.3 | 0.6 |
Acquisitions - (Details)
Acquisitions - (Details) - USD ($) $ in Thousands | Jan. 11, 2018 | Jan. 10, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
Acquisitions | ||||
Cash transaction value | $ 1,053,709 | |||
Goodwill | $ 807,958 | $ 4,073,511 | $ 3,264,071 | |
Cayan | ||||
Acquisitions | ||||
Interest acquired (as a percent) | 100.00% | |||
Financing agreement amount | $ 450,000 | |||
Debt Instrument, Term | 2 years | |||
Term Loan Facility dated as of January 10, 2018 | ||||
Acquisitions | ||||
Financing agreement amount | $ 450,000 | |||
Debt Instrument, Term | 2 years |
Acquisitions - Cayan - Consider
Acquisitions - Cayan - Consideration and Recognized Assets and Liabilities (Details) - USD ($) $ in Thousands | Jan. 11, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
Recognized amounts of identifiable assets acquired and liabilities assumed: | |||
Cash paid | $ 1,053,709 | ||
Fair value of total consideration transferred | 1,053,709 | ||
Cash | 16,856 | ||
Accounts receivable | 16,846 | ||
Property, plant and equipment | 27,048 | ||
Other assets | 10,489 | ||
Identifiable intangible assets | 321,585 | ||
Total identifiable net assets | 245,751 | ||
Deferred tax liability | (113,828) | ||
Other liabilities | (33,245) | ||
Goodwill | 807,958 | $ 4,073,511 | $ 3,264,071 |
Total identifiable assets acquired and liabilities assumed | 1,053,709 | ||
TransFirst | |||
Recognized amounts of identifiable assets acquired and liabilities assumed: | |||
Total acquired identifiable intangible assets | $ 321,600 |
Acquisitions - Cayan - Identifi
Acquisitions - Cayan - Identifiable Intangible Assets (Details) - TransFirst - USD ($) $ in Millions | Jan. 11, 2018 | Mar. 31, 2018 |
Identifiable intangible assets acquired | ||
Total acquired identifiable intangible assets | $ 321.6 | |
Weighted Average Amortization Period | 7 years 8 months 12 days | |
Minimum | ||
Identifiable intangible assets acquired | ||
Weighted Average Amortization Period | 1 year | |
Maximum | ||
Identifiable intangible assets acquired | ||
Weighted Average Amortization Period | 10 years | |
Amortizable intangible assets | Level 2 and Level 3 measurements | ||
Key fair value assumptions | ||
Discount rate (as a percent) | 12.00% | |
Attrition rate (as a percent) | 12.00% | |
Effective tax rate (as a percent) | 27.00% | |
Long-term sustainable growth rate (as a percent) | 3.00% | |
Amortizable intangible assets | Level 2 and Level 3 measurements | Minimum | ||
Key fair value assumptions | ||
Pre-tax royalty rate (as a percent) | 1.50% | |
Amortizable intangible assets | Level 2 and Level 3 measurements | Maximum | ||
Key fair value assumptions | ||
Pre-tax royalty rate (as a percent) | 2.00% | |
Merchant relationships | ||
Identifiable intangible assets acquired | ||
Total acquired identifiable intangible assets | $ 172.5 | |
Weighted Average Amortization Period | 8 years | |
Channel relationships | ||
Identifiable intangible assets acquired | ||
Total acquired identifiable intangible assets | $ 80.4 | |
Weighted Average Amortization Period | 10 years | |
Technology | ||
Identifiable intangible assets acquired | ||
Total acquired identifiable intangible assets | $ 40.8 | |
Weighted Average Amortization Period | 5 years | |
Trade name | ||
Identifiable intangible assets acquired | ||
Total acquired identifiable intangible assets | $ 22.9 | |
Weighted Average Amortization Period | 3 years 6 months | |
Covenants not-to-compete | ||
Identifiable intangible assets acquired | ||
Total acquired identifiable intangible assets | $ 3.3 | |
Weighted Average Amortization Period | 2 years | |
Favorable lease | ||
Identifiable intangible assets acquired | ||
Total acquired identifiable intangible assets | $ 1.7 | |
Weighted Average Amortization Period | 6 years 6 months |
Acquisitions - TransFirst - Acq
Acquisitions - TransFirst - Acquisition Costs and Actual Operating Results since Acquisition (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2018USD ($) | |
TransFirst | Selling, general and administrative expenses | |
Acquisitions | |
Acquisition-related costs | $ 13.6 |
Acquisitions - Cayan - Pro Form
Acquisitions - Cayan - Pro Forma Information (Details) - USD ($) $ in Thousands | Jan. 11, 2018 | Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 |
Pro Forma Results of Operations | ||||
Total revenues (Notes 2 and 8) | $ 987,170 | $ 1,184,725 | ||
Net income attributable to TSYS common shareholders | 141,841 | 105,868 | ||
Operating Income (Loss) | $ 188,271 | $ 167,183 | ||
Cayan | ||||
Pro Forma Results of Operations | ||||
Total revenues (Notes 2 and 8) | $ 42,000 | $ 1,217,517 | ||
Net income attributable to TSYS common shareholders | $ 96,297 | |||
Operating Income (Loss) | $ 3,400 |
Subsequent Events (Details)
Subsequent Events (Details) $ in Thousands | Apr. 23, 2018USD ($) | Apr. 30, 2018USD ($) | Mar. 31, 2017USD ($) | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 |
Subsequent Events | ||||||||
Purchase of noncontrolling interest | $ 70,000 | |||||||
Subsequent Events. | ||||||||
Subsequent Events | ||||||||
Minimum fixed charge coverage ratio | 2.5 | |||||||
Maximum consolidated leverage ratio | 3.50 | 3.75 | 3.75 | 3.75 | 4 | |||
Subsequent Events. | Central Payments Co., LLC | ||||||||
Subsequent Events | ||||||||
Purchase of noncontrolling interest | $ 126,000 | |||||||
Subsequent Events. | Revolving senior credit facility | ||||||||
Subsequent Events | ||||||||
Maximum borrowing capacity | $ 1,750,000 | |||||||
Term | 5 years | |||||||
Subsequent Events. | Standby letters of credit | ||||||||
Subsequent Events | ||||||||
Maximum borrowing capacity | $ 50,000 | |||||||
Subsequent Events. | Central Payments Co., LLC | ||||||||
Subsequent Events | ||||||||
Noncontrolling equity interest acquired (as a percent) | 15.00% |