Exhibit 99.2
TSYS Announces Second 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 Six months ended
June 30, June 30,
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Percentage Percentage
2004 2003 Change 2004 2003 Change
------------- ------------ ---------- --------------- ------------- ------------
Revenues
Electronic payment processing services $ 191,863 177,306 8.2 % $ 375,619 345,132 8.8 %
Other services 41,827 25,755 62.4 82,675 50,808 62.7
------------ --------- ------------ ---------
Revenues before reimbursables 233,690 203,061 15.1 458,294 395,940 15.7
Reimbursable items 55,932 54,638 2.4 116,564 113,112 3.1
------------ --------- ------------ ---------
Total revenues 289,622 257,699 12.4 574,858 509,052 12.9
------------ --------- ------------ ---------
Expenses
Employment expenses 82,224 83,600 (1.6) 170,086 159,696 6.5
Net occupancy & equipment expenses 66,153 50,407 31.2 124,164 102,027 21.7
Other expenses 37,701 24,312 55.1 72,252 46,329 56.0
(Gain)/Loss on disposal of equipment 340 (13) nm 378 (35) nm
------------ --------- ------------ ---------
Expenses before reimbursables 186,418 158,306 17.8 366,880 308,017 19.1
Reimbursable items 55,932 54,638 2.4 116,564 113,112 3.1
------------ --------- ------------ ---------
Total operating expenses 242,350 212,944 13.8 483,444 421,129 14.8
------------ --------- ------------ ---------
Operating Income 47,272 44,755 5.6 91,414 87,923 4.0
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Other Income:
Interest income 537 1,230 (56.3) 1,042 1,881 (44.6)
Interest expense (39) (17) nm (782) (30) nm
(Loss) Gain on foreign currency translation, net (30) 1,788 nm (101) 1,162 nm
------------ --------- ------------ ---------
Other Income (Expense) 468 3,001 nm 159 3,013 nm
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Income before Income Taxes, Minority Interest
and Equity in Income of Joint Ventures 47,740 47,756 0.0 91,573 90,936 0.7
Income Taxes 18,471 18,108 2.0 35,226 33,622 4.8
Minority Interest (67) (142) 52.9 (160) (260) 38.5
Equity in Income of Joint Ventures 6,684 4,800 39.3 12,260 8,988 36.4
------------ --------- ------------ ---------
Net Income $ 35,886 34,306 4.6 % $ 68,447 66,042 3.6 %
============ ========= ============ =========
Basic Earnings Per Share $ 0.18 0.17 4.5 % $ 0.35 0.34 3.6 %
============ ========= ============ =========
Diluted Earnings Per Share $ 0.18 0.17 4.6 % $ 0.35 0.33 3.7 %
============ ========= ============ =========
Dividend Declared Per Share $ 0.0400 0.0200 $ 0.0600 0.0375
============ ========= ============ =========
Average Common Shares Outstanding 196,846,084 196,703,341 196,845,247 196,875,450
============ ========= ============ =========
Average Common and Common
Equivalent Shares Outstanding 197,175,406 197,207,696 197,195,425 197,242,500
============ ========= ============ =========
Effective Tax Rate 34.2% 34.7% 34.2% 33.9%
============ ========= ============ =========
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EFFECTIVE INCOME TAX RATE CALCULATION
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Income taxes (A) $ 18,471 18,108 $ 35,226 33,622
=========== ========= ============ =========
Income before Income Taxes, Minority Interest
and Equity in Income of Joint Ventures $ 47,740 47,756 $ 91,573 90,936
Adjustments: Equity in Income of Vital 6,366 4,551 11,567 8,492
Minority Interest (67) (142) (160) (260)
----------- --------- ------------ ---------
Adjusted Income before income taxes (B) $ 54,039 52,165 $ 102,980 99,168
============ ========= ============ =========
Effective Tax Rate (A/B) 34.2% 34.7% 34.2% 33.9%
============ ========= ============ =========
Note: nm = not meaningful
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TSYS Announces Second Quarter 2004 Earnings
Page 5 of 9
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TSYS
Segment Breakdown
(In thousands)
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Three Months Ended June 30, 2004 Three Months Ended June 30, 2003
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Domestic-based International-based Domestic-based International-based
Services Services Consolidated Services Services Consolidated
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Total revenue $ 262,113 27,511 289,624 237,849 19,852 257,701
Intersegment revenue (2) - (2) (2) - (2)
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Revenues from external
customers $ 262,111 27,511 289,622 237,847 19,852 257,699
================================================= ================================================
Depreciation and amortization $ 23,484 3,187 26,671 20,958 2,537 23,495
================================================= ================================================
Segment operating income $ 40,498 6,774 47,272 41,015 3,740 44,755
================================================= ================================================
Income tax expense $ 15,934 2,537 18,471 16,799 1,309 18,108
================================================= ================================================
Equity in income of joint
ventures $ 6,366 318 6,684 4,550 250 4,800
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Net Income $ 31,401 4,485 35,886 31,672 2,634 34,306
================================================= ================================================
Average accounts on file 270,123 14,912 285,035 247,659 12,992 260,651
================================================= ================================================
Six Months Ended June 30, 2004 Six Months Ended June 30, 2003
------------------------------------------------- ------------------------------------------------
Domestic-based International-based Domestic-based International-based
Services Services Consolidated Services Services Consolidated
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Total revenue $ 522,734 52,129 574,863 470,968 38,087 509,055
Intersegment revenue (5) - (5) (3) - (3)
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Revenues from external
customers $ 522,729 52,129 574,858 470,965 38,087 509,052
================================================= ================================================
Depreciation and amortization $ 46,763 6,018 52,781 40,577 5,020 45,597
================================================= ================================================
Segment operating income $ 80,071 11,343 91,414 82,051 5,872 87,923
================================================= ================================================
Income tax expense $ 31,096 4,130 35,226 31,716 1,906 33,622
================================================= ================================================
Equity in income of joint
ventures $ 11,567 693 12,260 8,492 496 8,988
================================================= ================================================
Net Income $ 60,845 7,602 68,447 62,037 4,005 66,042
================================================= ================================================
Average accounts on file 267,154 14,474 281,628 243,612 12,817 256,429
================================================= ================================================
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 Second Quarter 2004 Earnings
Page 6 of 9
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TSYS
Balance Sheet
(In thousands)
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Jun 2004 Dec 2003
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Assets
Current assets:
Cash and cash equivalents $ 141,930 122,874
Restricted cash 7,276 7,679
Accounts receivable, net 117,407 120,646
Deferred income tax assets - 401
Prepaid expenses and other current assets 26,316 22,764
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Total current assets 292,929 274,364
Property and equipment, net 259,866 232,076
Computer software, net 238,974 258,090
Contract acquisition costs, net 118,750 125,472
Equity investments, net 63,228 66,708
Goodwill, net 29,626 29,626
Other assets 27,466 14,900
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Total assets $ 1,030,839 1,001,236
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Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 27,426 17,549
Accrued salaries and employee benefits 18,757 32,562
Current portion of obligations under capital leases and
software arrangements 1,064 15,231
Billings in excess of costs on uncompleted contracts 1,407 17,573
Deferred income tax liabilities 6,658 -
Other current liabilities 85,614 64,056
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Total current liabilities 140,926 146,971
Obligations under capital leases and software arrangements,
excluding current portion 3,178 29,748
Deferred income tax liabilities 91,423 88,544
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Total liabilities 235,527 265,263
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Minority interest in consolidated subsidiary 3,574 3,439
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Shareholders' Equity:
Common stock 19,759 19,750
Additional paid-in capital 42,716 41,574
Accumulated other comprehensive income 10,876 8,314
Treasury stock (13,573) (12,426)
Retained earnings 731,960 675,322
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Total shareholders' equity 791,738 732,534
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Total liabilities and shareholders' equity $ 1,030,839 1,001,236
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TSYS Announces Second Quarter 2004 Earnings
Page 7 of 9
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TSYS
Cash Flow
(In thousands)
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Six Months Ending:
Jun 2004 Jun 2003
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Cash flows from operating activities:
Net income $ 68,447 66,042
Adjustments to reconcile net income to net cash provided by
operating activities:
Minority interest in consolidated subsidiary's net income 160 260
Equity in income of joint ventures (12,260) (8,988)
Loss (gain) on currency translation adjustments, net 101 (1,162)
Depreciation and amortization 52,781 45,597
Noncash charge related to impairment of developed software 10,059 -
Recoveries of bad debt expenses and billing adjustments (1,373) (97)
Charges for transaction processing 4,865 2,164
Deferred income tax expense 9,938 8,178
Loss (gain) on disposal of equipment,net 378 (35)
(Increase)decrease in:
Accounts receivable 4,950 (11,335)
Prepaid expenses and other assets (17,645) (2,050)
Increase(decrease) in:
Accounts payable 10,759 4,596
Accrued salaries and employee benefits (13,811) (19,179)
Billings in excess of costs on uncompleted contracts (16,166) 28,472
Other current liabilities 11,272 (1,799)
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Net cash provided by operating activities 112,455 110,664
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Cash flows from investing activities:
Purchase of property and equipment (39,334) (107,432)
Additions to purchased computer software (14,001) (20,000)
Additions to internally developed computer software (3,703) (9,033)
Proceeds from disposal of equipment 8 66
Cash acquired in acquisition - 4,442
Cash used in acquisition - (36,000)
Dividends received from joint ventures 15,876 5,278
Increase in contract acquisition costs (3,283) (13,379)
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Net cash used in investing activities (44,437) (176,058)
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Cash flows from financing activities:
Purchase of common stock (1,188) (9,485)
Proceeds from the issuance of long-term debt - 20,234
Principal payments on long-term debt (42,039) (52)
Other (6,681) (6,260)
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Net cash (used in) provided by financing activities (49,908) 4,437
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Effect of foreign currency translation on cash and cash equivalents 946 (39)
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Net increase (decrease) in cash and cash equivalents 19,056 (60,996)
Cash and cash equivalents at beginning of year 122,874 109,171
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Cash and cash equivalents at end of period $ 141,930 48,175
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TSYS Announces Second Quarter 2004 Earnings
Page 8 of 9
Geographic Area Data:
The following geographic area data represents revenues for the three months
ended June 30 based on where the client is domiciled:
Three Months Ended June 30,
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2004 % 2003 % % Chg
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(dollars in millions):
United States $ 237.2 82% 209.0 81% 13.5 %
Canada* 21.3 7% 19.2 7% 11.2
Europe 24.2 8% 16.9 7% 43.2
Mexico 2.9 1% 9.1 4% (68.7)
Japan 3.4 1% 2.9 1% 15.9
Other 0.6 0% 0.6 0% 12.4
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$ 289.6 100% 257.7 100% 12.4 %
===================================================
The following geographic area data represents revenues for the six months
ended June 30 based on where the client is domiciled:
Six Months Ended June 30,
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2004 % 2003 % % Chg
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(dollars in millions):
United States $ 474.3 83% 417.6 82% 13.6 %
Canada* 41.0 7% 35.1 7% 16.6
Europe 45.5 8% 32.4 6% 40.6
Mexico 5.8 1% 17.1 3% (66.0)
Japan 6.9 1% 5.7 1% 19.6
Other 1.4 0% 1.2 0% 19.7
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$ 574.9 100% 509.1 100% 12.9 %
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Geographic Area Revenue by Operating Segment:
The following tables reconcile segment revenues to revenues by reporting
segment for the three months ended June 30:
Three Months Ended June 30,
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Domestic-based International-based
services services
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(dollars in millions): 2004 2003 2004 2003
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United States $ 237.2 209.0 - -
Canada* 21.3 19.2 - -
Europe 0.1 - 24.1 16.9
Mexico 2.9 9.1 - -
Japan - - 3.4 2.9
Other 0.6 0.6 - -
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$ 262.1 237.9 27.5 19.8
===================================================
The following tables reconcile segment revenues to revenues by reporting
segment for the six months ended June 30:
Six Months Ended June 30,
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Domestic-based International-based
services services
---------------------------------------------------
(dollars in millions): 2004 2003 2004 2003
---------------------------------------------------
United States $ 474.3 417.6 - -
Canada* 41.0 35.1 - -
Europe 0.2 - 45.3 32.4
Mexico 5.8 17.1 - -
Japan - - 6.9 5.7
Other 1.4 1.2 - -
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$ 522.7 471.0 52.2 38.1
===================================================
* These revenues include those generated from the Caribbean accounts owned
by a Canadian institution.
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TSYS Announces Second Quarter 2004 Earnings
Page 9 of 9
Supplemental Information:
Accounts on File at:
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Jun 30, 2004 % Jun 30, 2003 % % Chg
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Accounts on File (in millions):
Consumer 152.0 53% 145.0 55% 4.8 %
Retail 86.5 30% 82.6 31% 4.8
Commercial 22.9 8% 20.3 8% 13.0
Government services/EBT 14.6 5% 6.7 3% 117.8
Debit/Stored Value 11.0 4% 7.9 3% 39.4
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287.0 100% 262.5 100% 9.4 %
=======================================================
Jun 30, 2004 Jun 30, 2003
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QTD Average Accounts on File (in thousands) 285.0 260.7 9.4 %
YTD Average Accounts on File (in thousands) 281.6 256.4 9.8 %
Accounts on File at:
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Jun 30, 2004 % Jun 30, 2003 % % Chg
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Accounts on File (in millions):
Domestic 240.1 84% 217.3 83% 10.5 %
International 46.9 16% 45.2 17% 3.7
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287.0 100% 262.5 100% 9.4 %
=======================================================
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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Jun 2003 to Jun 2004 Jun 2002 to Jun 2003
-------------------- ---------------------
Beginning balance 262.5 226.7
Change in accounts on file due to:
Internal growth of existing clients 29.6 23.8
New clients 6.6 21.5
Purges/Sales (7.4) (9.4)
Deconversions (4.3) (0.1)
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Ending balance 287.0 262.5
=================== ==================
Number of Employees (FTEs): Jun 30, 2004 Jun 30, 2003
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At June 30, 5,519 5,543
Quarterly Average 5,504 5,421
YTD Average 5,564 5,370
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