Exhibit 99.2
TSYS Announces First Quarter 2004 Earnings
Page 4 of 9
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TSYS
Financial Highlights
(In thousands, except per share data)
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Three months ended
March 31,
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Percentage
2004 2003 Change
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Revenues
Electronic payment processing services $ 183,756 167,826 9.5 %
Other services 40,848 25,053 63.0
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Revenues before reimbursables 224,604 192,879 16.4
Reimbursable items 60,632 58,474 3.7
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Total revenues 285,236 251,353 13.5
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Expenses
Employment expenses 87,862 76,096 15.5
Net occupancy & equipment expenses 58,011 51,620 12.4
Other expenses 34,551 22,017 56.9
(Gain)/Loss on disposal of equipment 38 (22) nm
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Expenses before reimbursables 180,462 149,711 20.5
Reimbursable items 60,632 58,474 3.7
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Total operating expenses 241,094 208,185 15.8
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Operating Income 44,142 43,168 2.3
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Other Income:
Interest income 505 651 (22.4)
Interest expense (743) (13) nm
Loss on foreign currency translation, net (71) (626) 88.7
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Other Income (Expense) (309) 12 nm
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Income before Income Taxes, Minority Interest and Equity in Income of Joint Ventures 43,833 43,180 1.5
Income Taxes 16,755 15,514 8.0
Minority Interest (93) (118) 21.1
Equity in Income of Joint Ventures 5,576 4,188 33.1
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Net Income $ 32,561 31,736 2.6 %
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Basic Earnings Per Share $ 0.17 0.16 2.7 %
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Diluted Earnings Per Share $ 0.17 0.16 2.6 %
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Dividend Declared Per Share $ 0.0200 0.0175
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Average Common Shares Outstanding 196,844,410 197,049,470
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Average Common and Common
Equivalent Shares Outstanding 197,214,046 197,231,833
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Effective Tax Rate 34.2% 33.0%
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EFFECTIVE INCOME TAX RATE CALCULATION
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Income taxes (A) $ 16,755 15,514
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Income before Income Taxes, Minority Interest and Equity in Income of Joint Ventures $ 43,833 43,180
Adjustments: Equity in Income of Vital 5,201 3,941
Minority Interest (93) (118)
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Adjusted Income before income taxes (B) $ 48,941 47,003
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Effective Tax Rate (A/B) 34.2% 33.0%
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Note: nm = not meaningful
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TSYS Announces First Quarter 2004 Earnings
Page 5 of 9
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TSYS
Segment Breakdown
(In thousands)
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Three Months Ended March 31, 2004 Three Months Ended March 31, 2003
----------------------------------------------------- -------------------------------------------------
Domestic-based International-based Domestic-based International-based
Services Services Consolidated Services Services Consolidated
----------------- ------------------ -------------- ---------------- ------------------- --------------
Total revenue $ 260,620 24,618 285,238 233,119 18,235 251,354
Intersegment revenue (2) - (2) (1) - (1)
----------------- ------------------ -------------- ---------------- ------------------- --------------
Revenues from external
customers $ 260,618 24,618 285,236 233,118 18,235 251,353
================= ================== ============== ================ =================== ==============
Depreciation and amortization $ 23,284 2,831 26,115 19,619 2,483 22,102
================= ================== ============== ================ =================== ==============
Segment operating income $ 39,573 4,569 44,142 41,036 2,132 43,168
================= ================== ============== ================ =================== ==============
Income tax expense $ 15,161 1,594 16,755 14,917 597 15,514
================= ================== ============== ================ =================== ==============
Equity in income of joint
ventures $ 5,201 375 5,576 3,941 247 4,188
================= ================== ============== ================ =================== ==============
Net Income $ 29,444 3,117 32,561 30,365 1,371 31,736
================= ================== ============== ================ =================== ==============
Average accounts on file 264,185 14,035 278,220 239,565 12,643 252,208
================= ================== ============== ================ =================== ==============
Note: Revenues for domestic-based services include electronic
payment processing services and other services provided from the
United States to clients domiciled in the United States or other
countries. Revenues from international-based services
include electronic payment processing services and other services
provided from outside the United States to clients based mainly
outside the United States.
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TSYS Announces First Quarter 2004 Earnings
Page 6 of 9
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TSYS
Balance Sheet
(In thousands)
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Mar 2004 Dec 2003
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Assets
Current assets:
Cash and cash equivalents $ 106,259 122,874
Restricted cash 9,776 7,679
Accounts receivable, net 133,823 120,646
Deferred income tax assets 2,861 401
Prepaid expenses and other current assets 16,386 22,764
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Total current assets 269,105 274,364
Property and equipment, net 246,286 232,076
Computer software, net 253,659 258,090
Contract acquisition costs, net 122,343 125,472
Equity investments, net 57,263 66,708
Goodwill, net 29,628 29,626
Other assets 35,970 14,900
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Total assets $ 1,014,254 1,001,236
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Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 19,209 17,549
Accrued salaries and employee benefits 14,457 32,562
Current portion of obligations under capital leases and
software arrangements 773 15,231
Billings in excess of costs on uncompleted contracts 10,824 17,573
Other current liabilities 111,203 64,056
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Total current liabilities 156,466 146,971
Obligations under capital leases and software arrangements,
excluding current portion 2,617 29,748
Deferred income tax liabilities 88,544 88,544
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Total liabilities 247,627 265,263
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Minority interest in consolidated subsidiary 3,585 3,439
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Shareholders' Equity:
Common stock 19,759 19,750
Additional paid-in capital 42,708 41,574
Accumulated other comprehensive income 10,244 8,314
Treasury stock (13,615) (12,426)
Retained earnings 703,946 675,322
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Total shareholders' equity 763,042 732,534
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Total liabilities and shareholders' equity $ 1,014,254 1,001,236
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TSYS Announces First Quarter 2004 Earnings
Page 7 of 9
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TSYS
Cash Flow
(In thousands)
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Three Months Ending:
Mar 2004 Mar 2003
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Cash flows from operating activities:
Net income $ 32,561 31,736
Adjustments to reconcile net income to net cash provided by
operating activities:
Minority interest in consolidated subsidiary's net income 93 118
Equity in income of joint ventures (5,576) (4,188)
Loss on currency translation adjustments, net 71 626
Depreciation and amortization 26,115 22,102
Charges for bad debts and billing adjustments (704) (291)
Charges for transaction processing 925 52
Deferred income tax expense (2,460) 12,277
Gain on disposal of equipment,net 38 (22)
(Increase)decrease in:
Accounts receivable (12,112) (4,639)
Prepaid expenses and other assets (15,013) (5,723)
Increase(decrease) in:
Accounts payable 2,019 (321)
Accrued salaries and employee benefits (18,116) (26,607)
Billings in excess of costs on uncompleted contracts (6,749) 29,722
Other current liabilities 42,866 5,978
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Net cash provided by operating activities 43,958 60,820
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Cash flows from investing activities:
Purchase of property and equipment (19,535) (5,072)
Additions to purchased computer software (7,370) (11,502)
Additions to developed software (1,982) (3,954)
Proceeds from disposal of equipment - 37
Dividends received from joint ventures 15,000 -
Increase in contract acquisition costs (1,857) (8,765)
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Net cash used in investing activities (15,744) (29,256)
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Cash flows from financing activities:
Purchase of common stock (1,188) -
Principal payments on long-term debt (41,589) (24)
Other (2,794) (3,448)
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Net cash used in financing activities (45,571) (3,472)
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Effect of foreign currency translation on cash and cash equivalents 742 978
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Net increase (decrease) in cash and cash equivalents (16,615) 29,070
Cash and cash equivalents at beginning of year 122,874 109,171
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Cash and cash equivalents at end of period $ 106,259 138,241
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TSYS Announces First Quarter 2004 Earnings
Page 8 of 9
Geographic Area Data:
The following geographic area data represents revenues for the three months
ended March 31 based on where the client is domiciled:
Three Months Ended March 31,
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2004 % 2003 % % Chg
--------------- -------------- --------------- ------------ ----------
(dollars in millions):
United States $ 237.0 83% 208.6 83% 13.7 %
Canada* 19.7 7% 16.0 6% 23.1
Europe 21.3 7% 15.4 6% 37.8
Mexico 3.0 1% 8.0 3% (62.9)
Japan 3.5 1% 2.8 1% 23.5
Other 0.7 0% 0.6 0% 27.1
--------------- -------------- --------------- ------------
$ 285.2 100% 251.4 100% 13.5 %
=============== ============== =============== ============
Geographic Area Revenue by Operating Segment:
The following tables reconcile segment revenues to revenues by reporting
segment for the three months ended March 31:
Three Months Ended March 31,
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Domestic-based International-based
services services
------------------------------ ----------------------------
(dollars in millions): 2004 2003 2004 2003
--------------- -------------- --------------- ------------
United States $ 237.0 208.6 - -
Canada* 19.7 16.0 - -
Europe 0.1 - 21.2 15.4
Mexico 3.0 8.0 - -
Japan - - 3.5 2.8
Other 0.7 0.6 - -
--------------- -------------- --------------- ------------
$ 260.5 233.2 24.7 18.2
=============== ============== =============== ============
* These revenues include those generated from the Caribbean accounts owned by a
Canadian institution.
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TSYS Announces First Quarter 2004 Earnings
Page 9 of 9
Supplemental Information:
Accounts on File at:
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Mar 31, 2004 % Mar 31, 2003 % % Chg
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Accounts on File (in millions):
Consumer 147.0 52% 145.7 57% 0.9 %
Retail 86.8 31% 74.7 29% 16.1
Commercial 22.2 8% 20.7 8% 7.1
Government services/EBT 14.2 5% 6.2 2% 128.7
Debit/Stored Value 10.2 4% 6.9 3% 47.5
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280.4 100% 254.2 100% 10.3 %
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Mar 31, 2004 Mar 31, 2003
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YTD Average Accounts on File (in thousands) 278,220 252,208 10.3 %
Accounts on File at:
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Mar 31, 2004 % Mar 31, 2003 % % Chg
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Accounts on File (in millions):
Domestic 235.4 84% 216.8 85% 8.6 %
International 45.0 16% 37.4 15% 20.3
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280.4 100% 254.2 100% 10.3 %
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Note: The accounts on file between domestic and international is based on the geographic domicile of processing clients.
Growth in Accounts (in millions):
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Mar 2003 to Mar 2004 Mar 2002 to Mar 2003
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Beginning balance Change in accounts on file due to: 254.2 229.2
Internal growth of existing clients 28.9 20.4
New clients 13.2 13.9
Purges/Sales (12.1) (9.2)
Deconversions (3.8) (0.1)
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Ending balance 280.4 254.2
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