COLUMBUS, Ga.--(BUSINESS WIRE)--TSYS (NYSE: TSS) today reported results for the second quarter of 2011 with total revenues of $447.6 million, an increase of 3.9% over 2010. Excluding a 2010 termination fee, total revenues were up 6.2%. Basic earnings per share from continuing operations were $0.28, an increase of 10.1% over 2010, and increased 25.4% excluding the 2010 termination fee.
“We continue to see the improvements that we expected in 2011 as evidenced by our year over year quarterly revenue growth with and without the termination fee. Our North America Services segment had an increase in revenues before reimbursable items of 3.2% and operating income growth of 13.0% excluding the 2010 termination fee. In our International Services segment, revenues before reimbursable items increased 14.1% on a constant currency basis as a result of new business and organic growth. Our Merchant Services segment had an increase in revenues before reimbursable items of 1.3% and operating income growth of 10.0%,” said Philip W. Tomlinson, chairman and chief executive officer of TSYS.
For the six months ended June 30, 2011, total revenues increased 3.9% over 2010 and were up 8.1% excluding 2010 termination fees. Basic earnings per share from continuing operations were $0.53, a 3.0% increase over 2010, and increased 29.8% excluding 2010 termination fees.
“Our year to date results confirm our confidence in the improving economic conditions and our expectation that we will be successful at achieving our full year guidance for 2011. Since the beginning of 2011, we have deployed approximately $252 million of capital for share repurchases and acquisitions as we continue to invest in our future growth,” said Tomlinson.
Conference Call
TSYS will host its quarterly conference call at 5:00 p.m. ET on Tuesday, July 26. The conference call can be accessed via simultaneous Internet broadcast at tsys.com by clicking on the link under "Webcasts" on the main homepage. The replay will be archived for 12 months and will be available approximately 30 minutes after the completion of the call. A slide presentation to accompany the call will be available by clicking on the link under "Webcasts" on the main homepage of tsys.com.
Non-GAAP Measures
This press release and the financial highlights section of this release contain the non-GAAP financial measures of revenues and basic EPS excluding revenues from termination fees and revenues and operating results on a constant currency basis, respectively, to describe TSYS’ performance. Management uses these non-GAAP financial measures to better understand and assess TSYS’ operating results and financial performance. TSYS believes these non-GAAP financial measures provide meaningful additional information about TSYS to assist investors in understanding and evaluating its operating results.
Additional information about non-GAAP financial measures and a reconciliation of those measures to the most directly comparable GAAP measures are included on pages 10 and 11 of this release.
About TSYS
TSYS (NYSE: TSS) is reshaping a new era in digital commerce, connecting consumers, merchants, financial institutions, businesses and governments. Through unmatched customer service and industry insight, TSYS creates a better experience for buyers and sellers, supporting cross-border payments in more than 85 countries. Offering merchant payment-acceptance solutions as well as services in credit, debit, prepaid, mobile, chip, healthcare, installments, money transfer and more, TSYS makes it possible for those in the global marketplace to conduct safe and secure electronic transactions with trust and convenience.
TSYS’ headquarters are located in Columbus, Georgia, with local offices spread across the Americas, EMEA and Asia-Pacific. TSYS provides services to more than half of the top 20 international banks. For more information, please visit us at www.tsys.com.
Forward-Looking Statements
This press release contains “forward-looking statements” – that is, statements related to future, not past, events. Forward-looking statements often address our expected future business and financial performance and often contain words such as “expect,” “anticipate,” “intend,” “believe,” “should,” “plan,” “will,” “could,” and similar expressions. These forward-looking statements include, among others, statements regarding TSYS’ belief that it will achieve its financial guidance for 2011, and the assumptions underlying such statements. These statements are based on the current beliefs and expectations of TSYS' management and are subject to significant risks and uncertainties. Actual results may differ materially from those contemplated by the forward-looking statements. A number of important factors could cause actual results to differ materially from those contemplated by our forward-looking statements in this press release. Many of these factors are beyond TSYS' ability to control or predict. These factors include, but are not limited to: adverse developments with respect to entering into contracts with new clients and retaining current clients; continued consolidation and turmoil in the financial services and other industries during 2011, including the merger of TSYS clients with entities that are not TSYS processing clients, the sale of portfolios by TSYS clients to entities that are not TSYS processing clients and the nationalization or seizure by banking regulators of TSYS clients; TSYS is unable to control expenses and increase market share both domestically and internationally; TSYS is unable to manage the impact of slowing economic conditions and consumer spending; the material breach of security of any of TSYS' systems; the impact of potential and completed acquisitions, including the costs associated therewith and their being more difficult to integrate than anticipated; the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act on TSYS and on our clients; changes occur in laws, rules, regulations, credit card association rules or other industry standards affecting TSYS and our clients that may result in costly new compliance burdens on TSYS and our clients and lead to a decrease in the volume and/or number of transactions processed; the costs and effects of litigation, investigations or similar matters or adverse facts and developments relating thereto; adverse developments with respect to the credit card industry in general, including a decline in the use of credit cards as a payment mechanism; and internal growth rates of TSYS’ existing clients are lower than anticipated whether as a result of unemployment rates, card delinquencies and charge-off rates or otherwise. Additional risks and other factors that could cause actual results to differ materially from those contemplated in this release can be found in TSYS' filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K. We believe these forward-looking statements are reasonable; however, undue reliance should not be placed on any forward-looking statements, which are based on current expectations. We do not assume any obligation to update any forward-looking statements as a result of new information, future developments or otherwise.
| TSYS | ||||||||||||||||||||||||||||
| Financial Highlights | ||||||||||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||||||||||
| (in thousands, except per share data) | ||||||||||||||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||
| June 30, | June 30, | |||||||||||||||||||||||||||
| Percent | Percent | |||||||||||||||||||||||||||
| 2011 | 2010 | Change | 2011 | 2010 | Change | |||||||||||||||||||||||
| Total revenues | $ | 447,554 | 430,887 | 3.9 | % | $ | 876,985 | 844,350 | 3.9 | % | ||||||||||||||||||
| Cost of services | 312,052 | 295,880 | 5.5 | 613,543 | 586,418 | 4.6 | ||||||||||||||||||||||
| Selling, general and administrative expenses | 56,973 | 55,178 | 3.3 | 111,885 | 98,391 | 13.7 | ||||||||||||||||||||||
| Operating income | 78,529 | 79,829 | (1.6 | ) | 151,557 | 159,541 | (5.0 | ) | ||||||||||||||||||||
| Nonoperating expenses | (841 | ) | (1,172 | ) | 28.2 | (1,568 | ) | (1,433 | ) | (9.4 | ) | |||||||||||||||||
| Income from continuing operations before income | ||||||||||||||||||||||||||||
| taxes, noncontrolling interests and equity in income | ||||||||||||||||||||||||||||
| of equity investments | 77,688 | 78,657 | (1.2 | ) | 149,989 | 158,108 | (5.1 | ) | ||||||||||||||||||||
| Income taxes | 23,658 | 28,272 | (16.3 | ) | 48,815 | 56,369 | (13.4 | ) | ||||||||||||||||||||
| Income from continuing operations before noncontrolling | ||||||||||||||||||||||||||||
| interests and equity in income of equity investments | 54,030 | 50,385 | 7.2 | 101,174 | 101,739 | (0.6 | ) | |||||||||||||||||||||
| Equity in income of equity investments | 617 | 2,366 | (73.9 | ) | 2,885 | 3,259 | (11.5 | ) | ||||||||||||||||||||
| Income from continuing operations, net of tax | 54,647 | 52,751 | 3.6 | 104,059 | 104,998 | (0.9 | ) | |||||||||||||||||||||
| Loss from discontinued operations, net of tax | - | (273 | ) | nm | - | (701 | ) | nm | ||||||||||||||||||||
| Net income | 54,647 | 52,478 | 4.1 | 104,059 | 104,297 | (0.2 | ) | |||||||||||||||||||||
| Net income attributable to noncontrolling interests | (900 | ) | (2,774 | ) | 67.6 | (1,522 | ) | (3,267 | ) | 53.4 | ||||||||||||||||||
| Net income attributable to TSYS common shareholders | $ | 53,747 | 49,704 | 8.1 | % | $ | 102,537 | 101,030 | 1.5 | % | ||||||||||||||||||
| Basic earnings per share: | ||||||||||||||||||||||||||||
| Income from continuing operations to TSYS | ||||||||||||||||||||||||||||
| common shareholders | $ | 0.28 | 0.25 | 10.1 | % | $ | 0.53 | 0.52 | 3.0 | % | ||||||||||||||||||
| Loss from discontinued operations to TSYS | ||||||||||||||||||||||||||||
| common shareholders | - | (0.00 | ) | nm | - | (0.00 | ) | nm | ||||||||||||||||||||
| Net income attributable to TSYS common shareholders | $ | 0.28 | 0.25 | 10.8 | % | $ | 0.53 | 0.51 | 3.7 | % | ||||||||||||||||||
| Diluted earnings per share: | ||||||||||||||||||||||||||||
| Income from continuing operations to TSYS | ||||||||||||||||||||||||||||
| common shareholders | $ | 0.28 | 0.25 | 10.0 | % | $ | 0.53 | 0.52 | 2.8 | % | ||||||||||||||||||
| Loss from discontinued operations to TSYS | ||||||||||||||||||||||||||||
| common shareholders | - | (0.00 | ) | nm | - | (0.00 | ) | nm | ||||||||||||||||||||
| Net income attributable to TSYS common shareholders | $ | 0.28 | 0.25 | 10.5 | % | $ | 0.53 | 0.51 | 3.5 | % | ||||||||||||||||||
| Dividends declared per share | $ | 0.07 | 0.07 | $ | 0.14 | 0.14 | ||||||||||||||||||||||
| Amounts attributable to TSYS common shareholders: | ||||||||||||||||||||||||||||
| Income from continuing operations, net of tax | $ | 53,747 | 49,977 | 7.5 | % | $ | 102,537 | 101,731 | 0.8 | % | ||||||||||||||||||
| (Loss) income from discontinued operations, net of tax | - | (273 | ) | nm | - | (701 | ) | nm | ||||||||||||||||||||
| Net income | $ | 53,747 | 49,704 | 8.1 | % | $ | 102,537 | 101,030 | 1.5 | % | ||||||||||||||||||
| nm = not meaningful | ||||||||||||||||||||||||||||
| TSYS | ||||||||||||||||||||||||||||||
| Earnings Per Share | ||||||||||||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||||||||||||
| (in thousands, except per share data) | ||||||||||||||||||||||||||||||
| Three Months Ended | Three Months Ended | Six Months Ended | Six Months Ended | |||||||||||||||||||||||||||
| June 30, 2011 | June 30, 2010 | June 30, 2011 | June 30, 2010 | |||||||||||||||||||||||||||
| Common | Participating | Common | Participating | Common | Participating | Common | Participating | |||||||||||||||||||||||
| Stock | Securities | Stock | Securities | Stock | Securities | Stock | Securities | |||||||||||||||||||||||
| Basic Earnings per share: | ||||||||||||||||||||||||||||||
| Net income | $ | 53,747 | 49,704 | $ | 102,537 | 101,030 | ||||||||||||||||||||||||
| Less income allocated to nonvested awards | (191 | ) | 191 | (250 | ) | 250 | (383 | ) | 383 | (514 | ) | 514 | ||||||||||||||||||
| Net income allocated to common stock for | ||||||||||||||||||||||||||||||
| EPS calculation ( a ) | $ | 53,556 | 191 | 49,454 | 250 | $ | 102,154 | 383 | 100,516 | 514 | ||||||||||||||||||||
| Average common shares outstanding ( b ) | 191,935 | 690 | 196,346 | 998 | 192,390 | 727 | 196,253 | 1,007 | ||||||||||||||||||||||
| Average common shares and participating securities | 192,625 | 197,344 | 193,117 | 197,260 | ||||||||||||||||||||||||||
| Basic Earnings per share ( a )/( b ) | $ | 0.28 | 0.28 | 0.25 | 0.25 | $ | 0.53 | 0.53 | 0.51 | 0.51 | ||||||||||||||||||||
| Diluted Earnings per share: | ||||||||||||||||||||||||||||||
| Net income | $ | 53,747 | 49,704 | $ | 102,537 | 101,030 | ||||||||||||||||||||||||
| Less income allocated to nonvested awards | (190 | ) | 190 | (250 | ) | 250 | (382 | ) | 382 | (514 | ) | 514 | ||||||||||||||||||
| Net income allocated to common stock for | ||||||||||||||||||||||||||||||
| EPS calculation ( c ) | $ | 53,557 | 190 | 49,454 | 250 | $ | 102,155 | 382 | 100,516 | 514 | ||||||||||||||||||||
| Average common shares outstanding | 191,935 | 690 | 196,346 | 998 | 192,390 | 727 | 196,253 | 1,007 | ||||||||||||||||||||||
| Increase due to assumed issuance of shares related | ||||||||||||||||||||||||||||||
| to common equivalent shares outstanding | 459 | 85 | 366 | 87 | ||||||||||||||||||||||||||
| Average common and common | ||||||||||||||||||||||||||||||
| equivalent shares outstanding ( d ) | 192,394 | 690 | 196,431 | 998 | 192,756 | 727 | 196,340 | 1,007 | ||||||||||||||||||||||
| Average common and common | ||||||||||||||||||||||||||||||
| equivalent shares and participating securities | 193,084 | 197,429 | 193,483 | 197,347 | ||||||||||||||||||||||||||
| Diluted Earnings per share ( c )/( d ) | $ | 0.28 | 0.28 | 0.25 | 0.25 | $ | 0.53 | 0.53 | 0.51 | 0.51 | ||||||||||||||||||||
| TSYS | |||||||||||||||||||||||||||||||||||
| Segment Breakdown | |||||||||||||||||||||||||||||||||||
| (unaudited) | |||||||||||||||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
| Change | Change | ||||||||||||||||||||||||||||||||||
| 2011 | 2010 | $ | % | 2011 | 2010 | $ | % | ||||||||||||||||||||||||||||
| Revenues before reimbursable items | |||||||||||||||||||||||||||||||||||
| North America Services | $ | 198,775 | 202,061 | (3,286 | ) | (1.6 | ) | % | 393,365 | 417,371 | (24,006 | ) | (5.8 | ) | % | ||||||||||||||||||||
| International Services | 93,778 | 74,769 | 19,009 | 25.4 | % | 181,198 | 151,050 | 30,148 | 20.0 | % | |||||||||||||||||||||||||
| Merchant Services | 93,041 | 91,889 | 1,152 | 1.3 | % | 179,560 | 148,661 | 30,899 | 20.8 | % | |||||||||||||||||||||||||
| Intersegment revenues | (5,383 | ) | (5,980 | ) | 597 | 10.0 | % | (11,269 | ) | (11,682 | ) | 413 | 3.5 | % | |||||||||||||||||||||
| Revenues before reimbursable items | |||||||||||||||||||||||||||||||||||
| from external customers | $ | 380,211 | 362,739 | 17,472 | 4.8 | % | 742,854 | 705,400 | 37,454 | 5.3 | % | ||||||||||||||||||||||||
| Total revenues | |||||||||||||||||||||||||||||||||||
| North America Services | $ | 233,903 | 236,810 | (2,907 | ) | (1.2 | ) | % | 464,461 | 491,038 | (26,577 | ) | (5.4 | ) | % | ||||||||||||||||||||
| International Services | 97,670 | 77,987 | 19,683 | 25.2 | % | 188,380 | 157,379 | 31,001 | 19.7 | % | |||||||||||||||||||||||||
| Merchant Services | 123,084 | 123,906 | (822 | ) | (0.7 | ) | % | 238,840 | 211,225 | 27,615 | 13.1 | % | |||||||||||||||||||||||
| Intersegment revenues | (7,103 | ) | (7,816 | ) | 713 | 9.1 | % | (14,696 | ) | (15,292 | ) | 596 | 3.9 | % | |||||||||||||||||||||
| Revenues from external customers | $ | 447,554 | 430,887 | 16,667 | 3.9 | % | 876,985 | 844,350 | 32,635 | 3.9 | % | ||||||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||||||||||||||
| North America Services | $ | 19,926 | 18,891 | 1,035 | 5.5 | % | 39,392 | 39,294 | 98 | 0.2 | % | ||||||||||||||||||||||||
| International Services | 11,960 | 8,597 | 3,363 | 39.1 | % | 23,668 | 17,192 | 6,476 | 37.7 | % | |||||||||||||||||||||||||
| Merchant Services | 9,313 | 12,253 | (2,940 | ) | (24.0 | ) | % | 18,460 | 20,791 | (2,331 | ) | (11.2 | ) | % | |||||||||||||||||||||
| Corporate Admin | 768 | 611 | 157 | 25.7 | % | 1,515 | 1,593 | (78 | ) | (4.9 | ) | % | |||||||||||||||||||||||
| Total depreciation and amortization | $ | 41,967 | 40,352 | 1,615 | 4.0 | % | 83,035 | 78,870 | 4,165 | 5.3 | % | ||||||||||||||||||||||||
| Segment operating income | |||||||||||||||||||||||||||||||||||
| North America Services | $ | 64,068 | 66,218 | (2,150 | ) | (3.2 | ) | % | 119,268 | 136,006 | (16,738 | ) | (12.3 | ) | % | ||||||||||||||||||||
| International Services | 10,122 | 11,673 | (1,551 | ) | (13.3 | ) | % | 21,147 | 22,956 | (1,809 | ) | (7.9 | ) | % | |||||||||||||||||||||
| Merchant Services | 25,708 | 23,367 | 2,341 | 10.0 | % | 52,631 | 41,223 | 11,408 | 27.7 | % | |||||||||||||||||||||||||
| Corporate Admin | (21,369 | ) | (21,429 | ) | 60 | 0.3 | % | (41,489 | ) | (40,644 | ) | (845 | ) | (2.1 | ) | % | |||||||||||||||||||
| Operating income | $ | 78,529 | 79,829 | (1,300 | ) | (1.6 | ) | % | 151,557 | 159,541 | (7,984 | ) | (5.0 | ) | % | ||||||||||||||||||||
| Other: | |||||||||||||||||||||||||||||||||||
| Reimbursable items: | |||||||||||||||||||||||||||||||||||
| North America Services | $ | 35,128 | 34,749 | 379 | 1.1 | % | 71,096 | 73,667 | (2,571 | ) | (3.5 | ) | % | ||||||||||||||||||||||
| International Services | 3,892 | 3,218 | 674 | 20.9 | % | 7,183 | 6,329 | 854 | 13.5 | % | |||||||||||||||||||||||||
| Merchant Services | 30,043 | 32,017 | (1,974 | ) | (6.2 | ) | % | 59,280 | 62,563 | (3,283 | ) | (5.2 | ) | % | |||||||||||||||||||||
| Intersegment revenues | (1,719 | ) | (1,836 | ) | 117 | 6.4 | % | (3,428 | ) | (3,609 | ) | 181 | 5.0 | % | |||||||||||||||||||||
| Reimbursable items | $ | 67,344 | 68,148 | (804 | ) | (1.2 | ) | % | 134,131 | 138,950 | (4,819 | ) | (3.5 | ) | % | ||||||||||||||||||||
| Volumes: | |||||||||||||||||||||||||||||||||||
| FTEs (continuing operations) | |||||||||||||||||||||||||||||||||||
| North America Services | 4,327 | 4,433 | (106 | ) | (2.4 | ) | % | ||||||||||||||||||||||||||||
| International Services | 2,217 | 1,921 | 296 | 15.4 | % | ||||||||||||||||||||||||||||||
| Merchant Services | 1,185 | 1,096 | 89 | 8.1 | % | ||||||||||||||||||||||||||||||
| Corporate Admin | 380 | 330 | 50 | 15.2 | % | ||||||||||||||||||||||||||||||
| FTEs | 8,109 | 7,780 | 329 | 4.2 | % | ||||||||||||||||||||||||||||||
| At | Change | ||||||||||||||||||||||||||||||||||
| Total assets (in thousands) | 6/30/2011 | 12/31/2010 | $ | % | |||||||||||||||||||||||||||||||
| North America Services | 1,605,973 | 1,632,882 | (26,909 | ) | (1.6 | ) | % | ||||||||||||||||||||||||||||
| International Services | 434,458 | 408,880 | 25,578 | 6.3 | % | ||||||||||||||||||||||||||||||
| Merchant Services | 492,929 | 460,750 | 32,179 | 7.0 | % | ||||||||||||||||||||||||||||||
| Intersegment assets | (701,082 | ) | (550,251 | ) | (150,831 | ) | (27.4 | ) | % | ||||||||||||||||||||||||||
| Total assets | 1,832,278 | 1,952,261 | (119,983 | ) | (6.1 | ) | % | ||||||||||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
| Change | Change | ||||||||||||||||||||||||||||||||||
| 2011 | 2010 | Inc(Dec) | % | 2011 | 2010 | Inc(Dec) | % | ||||||||||||||||||||||||||||
| North America Segment: | |||||||||||||||||||||||||||||||||||
| Accounts on File (AOF) (in millions) | 328.3 | 290.7 | 37.6 | 12.9 | % | ||||||||||||||||||||||||||||||
| Transactions (in millions) | 1,795.1 | 1,563.7 | 231.4 | 14.8 | % | 3,421.9 | 3,021.9 | 400.0 | 13.2 | % | |||||||||||||||||||||||||
| International Segment: | |||||||||||||||||||||||||||||||||||
| AOF (in millions) | 47.8 | 42.1 | 5.6 | 13.4 | % | ||||||||||||||||||||||||||||||
| Transactions (in millions) | 340.6 | 297.9 | 42.8 | 14.4 | % | 666.6 | 579.1 | 87.5 | 15.1 | % | |||||||||||||||||||||||||
| Merchant Segment: | |||||||||||||||||||||||||||||||||||
| Point-of-sale Transactions (in millions) | 1,269.0 | 1,420.5 | (151.5 | ) | (10.7 | ) | % | 2,475.8 | 2,734.8 | (258.9 | ) | (9.5 | ) | % | |||||||||||||||||||||
| TSYS | ||||||||
| Balance Sheet | ||||||||
| (in thousands) | ||||||||
| Jun 30, 2011 | Dec 31, 2010 | |||||||
| (unaudited) | (unaudited) | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 263,334 | 394,795 | |||||
| Restricted cash | 18 | 434 | ||||||
| Accounts receivable, net | 226,327 | 238,283 | ||||||
| Deferred income tax assets | 12,090 | 11,090 | ||||||
| Prepaid expenses and other current assets | 85,892 | 77,211 | ||||||
| Total current assets | 587,661 | 721,813 | ||||||
| Property and equipment, net | 293,637 | 300,102 | ||||||
| Computer software, net | 228,521 | 246,424 | ||||||
| Contract acquisition costs, net | 167,450 | 166,251 | ||||||
| Goodwill | 357,151 | 320,399 | ||||||
| Equity investments, net | 81,951 | 77,127 | ||||||
| Other intangible assets, net | 85,596 | 83,118 | ||||||
| Other assets | 30,311 | 37,027 | ||||||
| Total assets | $ | 1,832,278 | 1,952,261 | |||||
| Liabilities | ||||||||
| Current liabilities: | ||||||||
| Current portion of notes payable | $ | 38,813 | 39,557 | |||||
| Accrued salaries and employee benefits | 19,457 | 27,414 | ||||||
| Accounts payable | 29,189 | 36,068 | ||||||
| Current portion of obligations under capital leases | 13,293 | 13,191 | ||||||
| Other current liabilities | 128,452 | 111,040 | ||||||
| Total current liabilities | 229,204 | 227,270 | ||||||
| Notes payable, excluding current portion | 188,102 | 194,703 | ||||||
| Deferred income tax liabilities | 189 | 42,547 | ||||||
| Obligations under capital leases, excluding current portion | 25,913 | 30,573 | ||||||
| Other long-term liabilities | 60,212 | 53,363 | ||||||
| Total liabilities | 503,620 | 548,456 | ||||||
| Redeemable noncontrolling interest | - | 146,000 | ||||||
| Equity | ||||||||
| Shareholders' equity: | ||||||||
| Common stock | 20,140 | 20,133 | ||||||
| Additional paid-in capital | 136,072 | 119,722 | ||||||
| Accumulated other comprehensive income, net | 8,334 | (2,585 | ) | |||||
| Treasury stock | (149,194 | ) | (115,449 | ) | ||||
| Retained earnings | 1,294,877 | 1,219,303 | ||||||
| Total shareholders' equity | 1,310,229 | 1,241,124 | ||||||
| Noncontrolling interests in consolidated subsidiaries | 18,429 | 16,681 | ||||||
| Total equity | 1,328,658 | 1,257,805 | ||||||
| Total liabilities and equity | $ | 1,832,278 | 1,952,261 | |||||
| TSYS | ||||||||||
| Cash Flow | ||||||||||
| (unaudited) | ||||||||||
| (in thousands) | ||||||||||
| Six Months Ended June 30, | ||||||||||
| 2011 | 2010 | |||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||
| Net income | $ | 104,059 | 104,297 | |||||||
| Adjustments to reconcile net income to net cash | ||||||||||
| provided by operating activities: | ||||||||||
| Equity in income of equity investments | (2,885 | ) | (3,259 | ) | ||||||
| Dividends received from equity investments | 13 | 2,698 | ||||||||
| Net loss (gain) on currency translation adjustments | 574 | 136 | ||||||||
| Depreciation and amortization | 83,035 | 78,966 | ||||||||
| Amortization of debt issuance costs | 77 | 77 | ||||||||
| Share-based compensation | 8,644 | 7,956 | ||||||||
| Excess tax benefit from share-based payment arrangements | (54 | ) | (111 | ) | ||||||
| Asset impairments | 1,298 | - | ||||||||
| Provisions for (recoveries of) bad debt expense and billing | ||||||||||
| adjustments | 873 | (366 | ) | |||||||
| Charges for transaction processing provisions | 2,632 | 2,109 | ||||||||
| Deferred income tax expense (benefit) | (9,738 | ) | 7,754 | |||||||
| (Gain) loss on disposal of equipment, net | (1,429 | ) | 11 | |||||||
| Gain on disposal of subsidiary | - | (131 | ) | |||||||
| Changes in operating assets and liabilities: | ||||||||||
| Accounts receivable | 19,410 | (2,698 | ) | |||||||
| Prepaid expenses, other current assets and other long-term assets | 4,508 | (25,383 | ) | |||||||
| Accounts payable | (13,239 | ) | 27,276 | |||||||
| Accrued salaries and employee benefits | (11,489 | ) | (14,031 | ) | ||||||
| Other current liabilities and other long-term liabilities | 13,005 | 10,407 | ||||||||
| Net cash provided by operating activities | 199,294 | 195,708 | ||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||
| Purchases of property and equipment, net | (12,543 | ) | (17,189 | ) | ||||||
| Additions to licensed computer software from vendors | (5,882 | ) | (20,812 | ) | ||||||
| Additions to internally developed computer software | (9,242 | ) | (9,406 | ) | ||||||
| Proceeds from sale of tradename | 4,500 | - | ||||||||
| Cash used in acquisitions, net of cash acquired | (45,287 | ) | (148,531 | ) | ||||||
| Additions to contract acquisition costs | (16,007 | ) | (19,888 | ) | ||||||
| Net cash used in investing activities | (84,461 | ) | (215,826 | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||
| Principal payments on long-term debt borrowings and | ||||||||||
| capital lease obligations | (14,494 | ) | (7,858 | ) | ||||||
| Proceeds from exercise of stock options | 1,339 | 378 | ||||||||
| Excess tax benefit from share-based payment arrangements | 54 | 111 | ||||||||
| Repurchase of common stock | (35,700 | ) | (1,075 | ) | ||||||
| Purchase of noncontrolling interests | (174,050 | ) | - | |||||||
| Subsidiary dividends paid to noncontrolling shareholders | (448 | ) | (250 | ) | ||||||
| Dividends paid on common stock | (27,129 | ) | (27,605 | ) | ||||||
| Net cash used in financing activities | (250,428 | ) | (36,299 | ) | ||||||
| CASH AND CASH EQUIVALENTS: | ||||||||||
| Effect of exchange rate changes on cash and cash equivalents | 4,134 | (5,545 | ) | |||||||
| Net increase (decrease) in cash and cash equivalents | (131,461 | ) | (61,962 | ) | ||||||
| Cash and cash equivalents at beginning of period | 394,795 | 449,955 | ||||||||
| Cash and cash equivalents at end of period | $ | 263,334 | 387,993 | |||||||
| Supplemental Information: | |||||||||||||||||||
| Accounts on File | |||||||||||||||||||
| Total | |||||||||||||||||||
| (in millions) |
June
2011 |
June
2010 |
%
Change |
||||||||||||||||
| Consumer Credit | 187.6 | 180.9 | 3.7 | ||||||||||||||||
| Government Services | 30.0 | 27.0 | 11.3 | ||||||||||||||||
| Retail | 23.7 | 23.6 | 0.4 | ||||||||||||||||
| Total Consumer | 241.3 | 231.5 | 4.2 | ||||||||||||||||
| Commercial | 55.2 | 48.2 | 14.7 | ||||||||||||||||
| Other | 6.7 | 5.5 | 20.1 | ||||||||||||||||
| Subtotal | 303.2 | 285.2 | 6.3 | ||||||||||||||||
| Prepaid/Stored Value | 72.8 | 47.6 | 53.1 | ||||||||||||||||
| Total AOF | 376.0 | 332.8 | 13.0 | ||||||||||||||||
| Growth in Accounts on File (in millions): | |||||||||||||||||||
|
June 2010 to
June 2011 |
June 2009 to
June 2010 |
||||||||||||||||||
| Beginning balance | 332.8 | 349.5 | |||||||||||||||||
| Change in accounts on file due to: | |||||||||||||||||||
| Internal growth of existing clients | 26.3 | 22.5 | |||||||||||||||||
| New clients | 33.0 | 31.4 | |||||||||||||||||
| Purges/Sales | (14.7) | (41.2) | |||||||||||||||||
| Deconversions | (1.4) | (29.4) | |||||||||||||||||
| Ending balance | 376.0 | 332.8 | |||||||||||||||||
| Reconciliation of GAAP to Non-GAAP | ||||||||||
| Non-GAAP Measures | ||||||||||
| The schedule below provides a reconciliation of revenues and operating results on a constant currency basis to reported revenues and operating income. This non-GAAP measure presents year-to-date 2011 financial results using the previous year’s foreign currency exchange rates. On a year-to-date constant currency basis, TSYS’ total revenues grew 3.9% as compared to a reported GAAP increase of 2.4%. The schedule below also provides a reconciliation of revenues and basic EPS excluding revenues from termination fees. | ||||||||||
| The non-GAAP financial measures of constant currency and revenues and basic EPS excluding revenues from termination fees, with respect to year to date revenues and basic EPS presented by TSYS, are utilized by management to better understand and assess TSYS’ operating results and financial performance. TSYS also uses the non-GAAP financial measures to evaluate and assess TSYS’ financial performance against budget, as well as to evaluate financial performance for executive and management compensation purposes. | ||||||||||
| TSYS believes that non-GAAP financial measures are important to enable investors to understand and evaluate its ongoing operating results. Accordingly, TSYS includes non-GAAP financial measures when reporting its financial results to shareholders and investors in order to provide them with an additional tool to evaluate TSYS’ ongoing business operations. TSYS believes that the non-GAAP financial measures are representative of comparative financial performance that reflects the economic substance of TSYS’ current and ongoing business operations. | ||||||||||
| Although non-GAAP financial measures are often used to measure TSYS’ operating results and assess its financial performance, they are not necessarily comparable to similarly titled captions of other companies due to potential inconsistencies in the method of calculation. | ||||||||||
|
TSYS believes that its use of non-GAAP financial measures provides investors with the same key financial performance indicators that are utilized by management to assess TSYS’ operating results, evaluate the business and make operational decisions on a prospective, going-forward basis. Hence, management provides disclosure of non-GAAP financial measures to give shareholders and potential investors an opportunity to see TSYS as viewed by management, to assess TSYS with some of the same tools that management utilizes internally and to be able to compare such information with prior periods. TSYS believes that the presentation of GAAP financial measures alone would not provide its shareholders and potential investors with the ability to appropriately analyze its ongoing operational results, and therefore expected future results. TSYS therefore believes that inclusion of non-GAAP financial measures provides investors with additional information to help them better understand its financial statements just as management utilizes these non-GAAP financial measures to better understand the business, manage budgets and allocate resources. |
||||||||||
| Reconciliation of GAAP to Non-GAAP | ||||||||||||||||||||||
| Constant Currency Comparison | ||||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||
| Percent | Percent | |||||||||||||||||||||
| 2011 | 2010 | Change | 2011 | 2010 | Change | |||||||||||||||||
| Consolidated | ||||||||||||||||||||||
| Constant currency (1) | $ | 438,806 | 430,887 | 1.8 | % | $ | 864,801 | 844,350 | 2.4 | % | ||||||||||||
| Foreign currency (2) | 8,748 | - | 12,184 | - | ||||||||||||||||||
| Total revenues | $ | 447,554 | 430,887 | 3.9 | % | $ | 876,985 | 844,350 | 3.9 | % | ||||||||||||
| Constant currency (1) | $ | 77,793 | 79,829 | (2.6 | ) | % | $ | 150,029 | 159,541 | (6.0 | ) | % | ||||||||||
| Foreign currency (2) | 736 | - | 1,528 | - | ||||||||||||||||||
| Operating income | $ | 78,529 | 79,829 | (1.6 | ) | % | $ | 151,557 | 159,541 | (5.0 | ) | % | ||||||||||
| International Services | ||||||||||||||||||||||
| Constant currency (1) | $ | 85,335 | 74,769 | 14.1 | % | |||||||||||||||||
| Foreign currency (2) | 8,443 | - | ||||||||||||||||||||
| Total revenues before reimbursable items | $ | 93,778 | 74,769 | 25.4 | % | |||||||||||||||||
| (1) Reflects current period results on a non-GAAP basis as if foreign currency rates did not change from the comparable prior year period. | ||||||||||||||||||||||
| (2) Reflects the impact of calculated changes in foreign currency rates from the comparable period. | ||||||||||||||||||||||
| Revenue and BASIC EPS Excluding Termination Fees | ||||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||||
| (in thousands except per share data) | ||||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||
| Percent | Percent | |||||||||||||||||||||
| 2011 | 2010 | Change | 2011 | 2010 | Change | |||||||||||||||||
| Consolidated | ||||||||||||||||||||||
| Total Revenues | $ | 447,554 | 430,887 | 3.9 | % | $ | 876,985 | 844,350 | 3.9 | % | ||||||||||||
| Less: | ||||||||||||||||||||||
| Termination Fees | - | 9,528 | - | 32,667 | ||||||||||||||||||
| Total revenues excluding termination fees | $ | 447,554 | 421,359 | 6.2 | % | $ | 876,985 | 811,683 | 8.0 | % | ||||||||||||
|
Income from continuing operations, net of tax, |
$ | 53,747 | 49,977 | 7.5 | % | $ | 102,537 | 101,731 | 0.8 | % | ||||||||||||
| Less: | ||||||||||||||||||||||
| Termination Fees, net of tax | - | 6,085 | - | 21,011 | ||||||||||||||||||
|
Income from continuing operations, net of tax, |
||||||||||||||||||||||
| excluding termination fees | $ | 53,747 | 43,892 | 22.5 | % | $ | 102,537 | 80,720 | 27.0 | % | ||||||||||||
| Average common shares and participating securities | 192,625 | 197,344 | 193,117 | 197,260 | ||||||||||||||||||
|
BASIC EPS - Income from continuing operations, |
||||||||||||||||||||||
| common shareholders | $ | 0.28 | 0.25 | 10.1 | % | $ | 0.53 | 0.52 | 3.0 | % | ||||||||||||
| Less: | ||||||||||||||||||||||
| Termination Fees, net of tax | - | 0.03 | - | 0.11 | ||||||||||||||||||
|
BASIC EPS - Income from continuing operations, |
||||||||||||||||||||||
| available to TSYS common shareholders | $ | 0.28 | 0.22 | 25.4 | % | $ | 0.53 | 0.41 | 29.8 | % | ||||||||||||
| Note: Earnings per share may not foot due to rounding. | ||||||||||||||||||||||
|
|
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