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Exhibit 99.1
(TSYS LOGO)   PRESS RELEASE
     
Total System Services, Inc.    
One TSYS Way   +1.706.649.2307
Post Office Box 2567   +1.706.649.5740
Columbus GA 31902-2567   www.tsys.com
For immediate release:
Contact:
Shawn Roberts
TSYS Investor Relations
+1.706.644.6081
shawnroberts@tsys.com
TSYS Announces Third Quarter 2010 Financial Results
Annual Guidance Revised to Include Increased Earnings Per Share
Columbus, Ga., October 20, 2010 — TSYS (NYSE: TSS) today reported results for the third quarter of 2010. Total revenues were $433.2 million, an increase of 1.0% over 2009. Operating income was down 10.6% compared to 2009. Basic and diluted earnings per share from continuing operations attributable to TSYS shareholders for the quarter were $0.25, down $0.05 or 17.1%, from 2009’s $0.30.
Year to date, total revenues were up 2.6% and operating income was down 4.7% compared to 2009. On a normalized basis, total revenues were up approximately 1.0% and operating income increased 11.1%. Normalized results exclude revenues from termination fees and deconverted clients, and the impact of the acquisition of First National Merchant Solutions (FNMS). On a generally accepted accounting principles (GAAP) basis, basic and diluted earnings per share from continuing operations attributable to TSYS shareholders for the nine months were $0.76, down $0.06 or 6.9%, from 2009’s $0.82.
“Excluding the termination fees and revenues from deconverted clients in the second quarter, our sequential quarterly revenues increased 2.9% and operating income increased 12.9%. This is the second quarter in a row that revenues, operating income and transactions have increased. Same client transactions were up 5.3% in North America and up 4.3% in International. In the Merchant segment, transactions grew 1.1%,” said Philip W. Tomlinson, chairman of the board and chief executive officer of TSYS.
“With these quarterly results, we have increased the range of our guidance for earnings per share from continuing operations by $0.02 from $0.96 to $0.98 up to $0.98 to $1.00. We also adjusted our total revenues and revenues before reimbursable items for discontinued operations,” said Tomlinson.
On September 30, 2010, TSYS closed the sale of TSYS POS Systems and Services, L.L.C (TPOS), a third-party POS terminal deployment business which represented a small piece of its Merchant segment. The accompanying financial statements do not include any of TPOS’ revenues, expenses, nonoperating income (expense) or income taxes in continuing operations. The results of TPOS are reported net of income tax as “discontinued operations” for all periods presented, and are deemed immaterial for cash flow purposes.
TSYS’ previous revenue guidance included approximately $11.5 million of revenues associated with TPOS in 2010, and $10.6 million in 2009. TPOS’ results from operations were immaterial in both years.

Page 1 of 12


 

(TSYS LOGO)   PRESS RELEASE
During the quarter, TSYS purchased 3.1 million shares of its stock on the open market for $45.1 million, leaving 6.9 million shares remaining for purchase under the current approved share repurchase plan. TSYS is also revising the average shares outstanding for the number of shares repurchased in the third quarter of 2010.
TSYS’ new guidance is as follows:
                                                 
    2010 Revised Guidance
    Range    
    (in millions, except per   Percent
    share amounts)   Change
Total revenues
  $ 1,700     to   $ 1,734       1 %   to     3 %
Reimbursable items
  $ 279     to   $ 284       3 %   to     5 %
Revenues before reimbursable items
  $ 1,421     to   $ 1,450       1 %   to     3 %
Income from continuing operations
  $ 192     to   $ 196       (13 %)   to     (12 %)
EPS from continuing operations available to TSYS common shareholders
  $ 0.98     to   $ 1.00       (13 %)   to     (11 %)
Average Shares Outstanding
    196.4                                          
Conference Call
TSYS will host its quarterly conference call at 5:00 p.m. EDT on Wednesday, October 20. 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 operating income excluding revenues from termination fees and deconverted clients and, with respect to year to date revenues and operating income, the impact of the acquisition of FNMS, 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.

Page 2 of 12


 

(TSYS LOGO)   PRESS RELEASE
About TSYS
TSYS (NYSE: TSS) is one of the world’s largest companies for outsourced payment services, offering a broad range of issuer- and acquirer-processing technologies that support consumer-finance, credit, debit, healthcare, loyalty and prepaid services for financial institutions and retail companies in the Americas, EMEA and Asia-Pacific regions. For more information contact news@tsys.com or log on to www.tsys.com. TSYS routinely posts all important information on its Web site.
Forward-Looking Statements
This press release contains statements that constitute “forward-looking statements” within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934 as amended by the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, among others, statements regarding TSYS’ earnings guidance for 2010 total revenues, revenues before reimbursable items, income from continuing operations and EPS from continuing operations, and the assumptions underlying such statements including, with respect to TSYS’ earnings guidance for 2010: (1) the economy will not worsen during 2010; (2) there will be no deconversions of large clients during the year other than as previously announced; (3) there will be no significant movement in foreign currency exchange rates related to TSYS’ business during 2010; (4) the anticipated levels in employment, technology and other expenses, which are included in 2010 estimates, will be accomplished; (5) TSYS will not incur significant expenses associated with the conversion of new large clients or acquisitions, or any significant impairment of goodwill or other intangibles; and (6) there will be no significant movements in LIBOR, and no significant draws on the remaining balance of TSYS’ revolving credit facility. 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: (1) one or more of the assumptions set forth above upon which TSYS’ 2010 earnings guidance is based is inaccurate; (2) adverse developments with respect to entering into contracts with new clients and retaining current clients; (3) continued consolidation and turmoil in the financial services and other industries during 2010, 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; (4) TSYS is unable to control expenses and increase market share both domestically and internationally; (5) TSYS is unable to manage the impact of slowing economic conditions and consumer spending; (6) the material breach of security of any of TSYS’ systems; (7) the impact of potential and completed acquisitions, including the costs associated therewith and their being more difficult to integrate than anticipated; (8) changes occur in laws, rules, regulations, credit card association rules or other industry standards affecting TSYS’ business which require significant product development efforts or reduce the market demand for or value of its products; (9) 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 (10) 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 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 Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. We believe these forward-looking statements are reasonable; however, undue reliance should not be placed on any forward-looking statements, which are based on current expectations. We do not assume any obligation to update any forward-looking statements as a result of new information, future developments or otherwise.
— more —

Page 3 of 12


 

TSYS Announces 2010 Earnings
Page 4 of 12
TSYS
Financial Highlights
(unaudited)
(in thousands, except per share data)
                                                 
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
                    Percent                     Percent  
    2010     2009     Change     2010     2009     Change  
Total revenues
  $ 433,236       428,917       1.0 %   $ 1,277,586       1,244,954       2.6 %
 
                                               
Cost of services
    302,692       294,596       2.7       889,110       855,480       3.9  
Selling, general and administrative expenses
    51,630       46,027       12.2       150,021       139,355       7.7  
 
                                       
 
                                               
Operating income
    78,914       88,294       (10.6 )     238,455       250,119       (4.7 )
 
                                               
Nonoperating income (expenses)
    31       575     nm       (1,402 )     (3,162 )   nm  
 
                                       
 
                                               
Income from continuing operations before income taxes, noncontrolling interests and equity in income of equity investments
    78,945       88,869       (11.2 )     237,053       246,957       (4.0 )
Income taxes
    27,879       31,911       (12.6 )     84,249       88,848       (5.2 )
 
                                       
Income from continuing operations before noncontrolling interests and equity in income of equity investments
    51,066       56,958       (10.3 )     152,804       158,109       (3.4 )
Equity in income of equity investments
    1,103       1,623       (32.0 )     4,363       4,292       1.7  
 
                                       
Income from continuing operations, net of tax
    52,169       58,581       (10.9 )     157,167       162,401       (3.2 )
Loss from discontinued operations, net of tax
    (2,463 )     (3,255 )     24.3       (3,164 )     (6,116 )   nm  
 
                                       
Net income
    49,706       55,326       (10.2 )     154,003       156,285       (1.5 )
Net income attributable to noncontrolling interests
    (3,963 )     (300 )   nm       (7,230 )     (1,286 )   nm  
 
                                       
 
                                               
Net income attributable to TSYS common shareholders
  $ 45,743       55,026       (16.9 )%   $ 146,773       154,999       (5.3 )%
 
                                       
 
                                               
Basic earnings per share:
                                               
Income from continuing operations to TSYS common shareholders
  $ 0.25       0.30       (17.1 )%   $ 0.76       0.82       (6.9 )%
 
                                       
Loss from discontinued operations to TSYS common shareholders
    (0.01 )     (0.02 )   nm       (0.02 )     (0.03 )   nm  
 
                                       
Net income attributable to TSYS common shareholders
  $ 0.23       0.28       (16.7 )%   $ 0.74       0.79       (5.3 )%
 
                                       
 
                                               
Diluted earnings per share:
                                               
Income from continuing operations to TSYS common shareholders
  $ 0.25       0.30       (17.1 )%   $ 0.76       0.82       (6.9 )%
 
                                       
Loss from discontinued operations to TSYS common shareholders
    (0.01 )     (0.02 )   nm       (0.02 )     (0.03 )   nm  
 
                                       
Net income attributable to TSYS common shareholders
  $ 0.23       0.28       (16.7 )%   $ 0.74       0.79       (5.3 )%
 
                                       
 
                                               
Dividends declared per share
  $ 0.07       0.07             $ 0.21       0.21          
 
                                       
 
                                               
Amounts attributable to TSYS common shareholders:
                                               
Income from continuing operations, net of tax
  $ 48,206       58,281       (17.3 )%   $ 149,937       161,115       (6.9 )%
(Loss) income from discontinued operations, net of tax
    (2,463 )     (3,255 )   nm       (3,164 )     (6,116 )   nm  
 
                                     
Net income
  $ 45,743       55,026       (16.9 )%   $ 146,773       154,999       (5.3 )%
 
                                       
 
nm = not meaningful
 
*   Basic and diluted EPS amounts for continuing operations and net income do not total due to rounding.
- more -

 


 

TSYS Announces 2010 Earnings
Page 5 of 12
TSYS
Earnings Per Share
(unaudited)
(in thousands, except per share data)
                                                                 
    Three Months Ended     Three Months Ended     Nine Months Ended     Nine Months Ended  
    September 30, 2010     September 30, 2009     September 30, 2010     September 30, 2009  
    Common     Participating     Common     Participating     Common     Participating     Common     Participating  
    Stock     Securities     Stock     Securities     Stock     Securities     Stock     Securities  
Basic Earnings per share:
                                                               
Net income
  $ 45,743               55,026             $ 146,773             $ 154,999          
Less income allocated to nonvested awards
    (225 )     225       (407 )     407       (738 )     738       (1,225 )     1,225  
 
                                               
Net income allocated to common stock for EPS calculation ( a )
  $ 45,518       225       54,619       407     $ 146,035       738     $ 153,774       1,225  
 
                                               
 
                                                               
Average common shares outstanding ( b )
    195,679       974       195,721       1,465       196,060       996       195,552       1,564  
 
                                               
 
                                                               
Average common shares and participating securities
    196,653               197,186               197,056               197,116          
 
                                                       
 
                                                               
Basic Earnings per share ( a )/( b )
  $ 0.23       0.23       0.28       0.28     $ 0.74       0.74     $ 0.79       0.78  
 
                                               
 
                                                               
Diluted Earnings per share:
                                                               
Net income
  $ 45,743               55,026             $ 146,773             $ 154,999          
Less income allocated to nonvested awards
    (226 )     226       (407 )     407       (739 )     739       (1,225 )     1,225  
 
                                               
Net income allocated to common stock for EPS calculation ( c )
  $ 45,517       226       54,619       407     $ 146,034       739     $ 153,774       1,225  
 
                                               
 
                                                               
Average common shares outstanding
    195,679       974       195,721       1,465       196,060       996       195,552       1,564  
Increase due to assumed issuance of shares related to common equivalent shares outstanding
    79               63               86               63          
 
                                               
 
                                                               
Average common and common equivalent
shares outstanding ( d )
    195,758       974       195,784       1,465       196,146       996       195,615       1,564  
 
                                               
 
                                                               
Average common and common equivalent shares and participating securities
    196,732               197,249               197,142               197,179          
 
                                                       
 
                                                               
Diluted Earnings per
share ( c )/( d )
  $ 0.23       0.23       0.28       0.28     $ 0.74       0.74     $ 0.79       0.78  
 
                                               
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TSYS Announces 2010 Earnings
Page 6 of 12
TSYS
Segment Breakdown
(unaudited)
(in thousands)
                                                                 
    Three Months Ended September 30,   Nine Months Ended September 30,  
                    Change                   Change  
    2010   2009   $   %   2010   2009   $   %
         
Revenues before reimbursable items
                                                               
North America Services
  $ 192,900       219,909       (27,009 )     (12.3) %     610,271       666,641       (56,370 )     (8.5) %
International Services
    82,249       82,566       (317 )     (0.4) %     233,299       226,433       6,866       3.0 %
Merchant Services
    95,034       60,427       34,607       57.3 %     243,695       175,896       67,799       38.5 %
Intersegment revenues
    (6,991 )     (7,315 )     324       (4.4) %     (18,673 )     (22,105 )     3,432       (15.5) %
                         
Revenues before reimbursable items from external customers
  $ 363,192       355,587       7,605       2.1 %     1,068,592       1,046,865       21,727       2.1 %
                         
 
                                                               
Total revenues
                                                               
North America Services
  $ 231,547       261,580       (30,033 )     (11.5) %     722,585       795,354       (72,769 )     (9.1) %
International Services
    85,327       86,172       (845 )     (1.0) %     242,706       236,406       6,300       2.7 %
Merchant Services
    125,178       90,455       34,723       38.4 %     336,402       241,402       95,000       39.4 %
Intersegment revenues
    (8,816 )     (9,290 )     474       (5.1) %     (24,107 )     (28,208 )     4,101       (14.5) %
                         
Revenues from external customers
  $ 433,236       428,917       4,319       1.0 %     1,277,586       1,244,954       32,632       2.6 %
                         
 
                                                               
Depreciation and amortization
                                                               
North America Services
  $ 19,523       20,189       (666 )     (3.3) %     58,817       64,218       (5,401 )     (8.4) %
International Services
    10,143       9,860       283       2.9 %     27,335       25,709       1,626       6.3 %
Merchant Services
    9,725       8,111       1,614       19.9 %     30,516       24,167       6,349       26.3 %
Corporate Admin
    663       986       (323 )     (32.8) %     2,255       2,644       (389 )     (14.7) %
                         
Total depreciation and amortization
  $ 40,054       39,146       908       2.3 %     118,923       116,738       2,185       1.9 %
                         
 
                                                               
Segment operating income
                                                               
North America Services
  $ 52,645       72,173       (19,528 )     (27.1) %     188,650       214,224       (25,574 )     (11.9) %
International Services
    12,305       14,047       (1,742 )     (12.4) %     35,260       36,415       (1,155 )     (3.2) %
Merchant Services
    31,439       19,198       12,241       63.8 %     72,662       51,981       20,681       39.8 %
Corporate Admin
    (17,475 )     (17,124 )     (351 )     2.0 %     (58,117 )     (52,501 )     (5,616 )     10.7 %
                         
Operating income
  $ 78,914       88,294       (9,380 )     (10.6) %     238,455       250,119       (11,664 )     (4.7) %
                         
 
                                                               
Other:
                                                               
Reimbursable items:
                                                               
North America Services
  $ 38,647       41,671       (3,024 )     (7.3) %     112,315       128,713       (16,398 )     (12.7) %
International Services
    3,078       3,606       (528 )     (14.6) %     9,407       9,973       (566 )     (5.7) %
Merchant Services
    30,144       30,028       116       0.4 %     92,707       65,505       27,202       41.5 %
Intersegment revenues
    (1,825 )     (1,975 )     150       (7.6) %     (5,435 )     (6,102 )     667       (10.9) %
                         
Reimbursable items
  $ 70,044       73,330       (3,286 )     (4.5) %     208,994       198,089       10,905       5.5 %
                         
 
                                                               
Volumes:
                                                               
FTEs (continuing operations)
                                                               
North America Services
                                    4,323       4,749       (426 )     (9.0) %
International Services
                                    2,006       1,872       134       7.2 %
Merchant Services
                                    1,110       725       385       53.1 %
Corporate Admin
                                    329       331       (2 )     (0.6) %
                                             
FTEs
                                    7,768       7,677       91       1.2 %
                                             
 
                                    At   Change
Total assets (in thousands)                                   9/30/2010   12/31/2009   $   %
North America Services
                                  $ 1,569,728       1,535,129       34,599       2.3 %
International Services
                                    416,066       379,606       36,460       9.6 %
Merchant Services
                                    519,806       215,855       303,951       140.8 %
Intersegment assets
                                    (584,645 )     (419,636 )     (165,009 )     39.3 %
                                             
Total assets
                                  $ 1,920,955       1,710,954       210,001       12.3 %
                                             
                                                                 
    Three Months Ended September 30,   Nine Months Ended September 30,
                    Change                   Change
    2010   2009   Inc(Dec)   %   2010   2009   Inc(Dec)   %
         
North America Segment:
                                                               
Accounts on File (AOF) (in millions)
                                    293.8       302.2       (8.4 )     (2.8) %
Transactions (in millions)
    1,658.3       1,555.8       102.5       6.6 %     4,680.2       4,559.1       121.1       2.7 %
 
                                                               
International Segment:
                                                               
AOF (in millions)
                                    45.4       39.9       5.5       13.8 %
Transactions (in millions)
    322.9       299.7       23.2       7.7 %     902.0       818.8       83.2       10.2 %
 
                                                               
Merchant Segment:
                                                               
POS Transactions (in millions)
    1,344.9       1,420.5       (75.6 )     (5.3) %     4,079.7       3,876.3       203.4       5.2 %
     Certain amounts have been reclassified to conform with the presentation adopted in 2010.
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TSYS Announces 2010 Earnings
Page 7 of 12
TSYS
Balance Sheet
(in thousands)
                 
    Sep 30, 2010   Dec 31, 2009
    (unaudited)   (unaudited)
     
Assets
               
Current assets:
               
Cash and cash equivalents
  $ 372,600       450,254  
Restricted cash
    498       46,190  
Accounts receivable, net
    264,775       231,162  
Deferred income tax assets
    7,195       11,302  
Prepaid expenses and other current assets
    100,980       68,527  
Assets of discontinued operations
    983       3,461  
     
Total current assets
    747,031       810,896  
Property and equipment, net
    298,766       289,069  
Computer software, net
    213,632       196,764  
Contract acquisition costs, net
    144,553       128,038  
Goodwill
    321,219       165,896  
Equity investments, net
    74,024       75,495  
Other intangible assets, net
    86,546       14,132  
Other assets
    35,184       27,940  
Assets of discontinued operations
          2,724  
     
Total assets
  $ 1,920,955       1,710,954  
     
 
               
Liabilities
               
Current liabilities:
               
Current portion of notes payable
  $ 3,563       6,988  
Accrued salaries and employee benefits
    21,038       32,231  
Accounts payable
    56,733       21,487  
Current portion of obligations under capital leases
    10,296       6,289  
Other current liabilities
    127,128       152,742  
Current liabilities of discontinued operations
    380       1,042  
     
Total current liabilities
    219,138       220,779  
Notes payable, excluding current portion
    192,522       192,367  
Deferred income tax liabilities
    56,072       47,162  
Obligations under capital leases, excluding current portion
    32,292       12,756  
Other long-term liabilities
    45,531       48,443  
     
Total liabilities
    545,555       521,507  
     
Redeemable noncontrolling interest
    116,728        
     
Equity
               
Shareholders’ equity:
               
Common stock
    20,131       20,086  
Additional paid-in capital
    150,329       139,742  
Accumulated other comprehensive income, net
    2,375       5,673  
Treasury stock
    (115,449 )     (69,950 )
Retained earnings
    1,185,590       1,080,250  
     
Total shareholders’ equity
    1,242,976       1,175,801  
     
Noncontrolling interests in consolidated subsidiaries
    15,696       13,646  
     
Total equity
    1,258,672       1,189,447  
     
Total liabilities and equity
  $ 1,920,955       1,710,954  
     
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TSYS Announces 2010 Earnings
Page 8 of 12
TSYS
Cash Flow
(unaudited)
(in thousands)
                 
    Nine Months Ended September 30,
    2010   2009
     
CASH FLOWS FROM OPERATING ACTIVITIES:
               
Net income
  $ 154,003       156,285  
Adjustments to reconcile net income to net cash provided by operating activities:
               
Equity in income of equity investments
    (4,363 )     (4,292 )
Dividends received from equity investments
    6,572       4,942  
Net loss (gain) on currency translation adjustments
    34       2,857  
Depreciation and amortization
    119,107       117,514  
Amortization of debt issuance costs
    115       115  
Share-based compensation
    11,727       13,245  
Excess tax benefit from share-based payment arrangements
    (111 )     (6 )
Provisions for bad debt expense and billing adjustments
    (162 )     3,855  
Charges for transaction processing provisions
    2,860       4,993  
Deferred income tax benefit
    13,022       (3,716 )
(Gain) loss on disposal of equipment, net
    224       (20 )
Loss on disposal of subsidiary
    1,641       5,701  
(Increase) decrease in:
               
Accounts receivable
    (33,997 )     6,095  
Prepaid expenses, other current assets and other long-term assets
    (17,775 )     23,770  
Increase (decrease) in:
               
Accounts payable
    34,340       (331 )
Accrued salaries and employee benefits
    (27,616 )     (16,166 )
Other current liabilities and other long-term liabilities
    24,853       18,215  
     
Net cash provided by operating activities
    284,474       333,056  
     
 
               
CASH FLOWS FROM INVESTING ACTIVITIES:
               
Purchases of property and equipment, net
    (29,848 )     (21,344 )
Additions to licensed computer software from vendors
    (27,224 )     (18,710 )
Additions to internally developed computer software
    (15,220 )     (19,367 )
Proceeds from dispositions, net of expenses paid and cash disposed
    4,224       1,991  
Cash used in acquisitions, net of cash acquired
    (148,531 )     (294 )
Additions to contract acquisition costs
    (47,351 )     (23,711 )
     
Net cash used in investing activities
    (263,950 )     (81,435 )
     
 
               
CASH FLOWS FROM FINANCING ACTIVITIES:
               
Proceeds from borrowings of long-term debt
          5,334  
Principal payments on long-term debt borrowings and capital lease obligations
    (11,938 )     (13,178 )
Proceeds from exercise of stock options
    543       2  
Excess tax benefit from share-based payment arrangements
    111       6  
Repurchase of common stock
    (46,228 )     (329 )
Subsidiary dividends paid to noncontrolling shareholders
    (250 )     (235 )
Dividends paid on common stock
    (41,432 )     (41,406 )
     
Net cash used in financing activities
    (99,194 )     (49,806 )
     
 
               
CASH AND CASH EQUIVALENTS:
               
Effect of exchange rate changes on cash and cash equivalents
    1,310       (1,693 )
     
Net increase (decrease) in cash and cash equivalents
    (77,360 )     200,122  
Cash and cash equivalents at beginning of period
    449,955       220,019  
     
Cash and cash equivalents at end of period
  $ 372,595       420,141  
     
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TSYS Announces 2010 Earnings
Page 9 of 12
Supplemental Information:
                                         
    Accounts on File at September 30,
(in millions)   2010   %   2009   %   Percent
Change
Consumer
    180.2       53.1 %     189.2       55.3 %     (4.8 )%
Commercial
    51.9       15.3       46.0       13.4       12.9  
Stored Value
    51.4       15.2       37.7       11.1       36.3  
Government services
    26.9       7.9       24.6       7.2       9.3  
Retail
    23.1       6.8       39.2       11.4       (40.9 )
Debit
    5.1       1.5       5.3       1.6       (5.6 )
Healthcare
    0.6       0.2       0.1           nm  
             
 
    339.2       100.0 %     342.1       100.0 %     (0.8 )%
             
Growth in Accounts on File (in millions):
                 
    September 2009 to   September 2008 to
    September 2010   September 2009
Beginning balance
    342.1       355.5  
Change in accounts on file due to:
               
Internal growth of existing clients
    20.8       29.6  
New clients
    33.2       25.7  
Purges/Sales
    (40.3 )     (31.3 )
Deconversions
    (16.6 )     (37.4 )
 
               
Ending balance
    339.2       342.1  
 
               
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TSYS Announces 2010 Earnings
Page 10 of 12
Reconciliation of GAAP to Non-GAAP
Non-GAAP Measures
The schedule below provides a reconciliation of revenues and operating results on a constant currency basis to reported revenues and operating income. This non-GAAP measure presents year-to-date 2010 financial results using the previous year’s foreign currency exchange rates. On a year-to-date constant currency basis, TSYS’ total revenues grew 2.5% as compared to a reported GAAP increase of 2.6%, and operating income decreased 4.3% versus a GAAP-reported decrease of 4.7%. The schedule below also provides a reconciliation of revenues and operating income excluding revenues from termination fees and deconverted clients and, with respect to year to date revenues and operating income, the impact of the acquisition of FNMS to reported total revenues and operating income.
The non-GAAP financial measures of constant currency and revenues and operating income excluding revenues from termination fees and deconverted clients and, with respect to year to date revenues and operating income, the impact of the FNMS acquisition 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.
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TSYS Announces 2010 Earnings
Page 11 of 12
Reconciliation of GAAP to Non-GAAP
Constant Currency Comparison
(unaudited)
(in thousands)
                         
    Three Months Ended September 30,
                    Percent
    2010   2009   Change
     
Consolidated
                       
Constant currency (1)
  $ 435,981       428,917       1.6 %
Foreign currency (2)
    (2,745 )           (0.6 )
             
Total revenues
  $ 433,236       428,917       1.0 %
             
 
                       
Constant currency (1)
  $ 80,004       88,294       (9.4 )%
Foreign currency (2)
    (1,090 )           (1.2 )
             
Operating income
  $ 78,914       88,294       (10.6 )%
             
                         
    Nine Months Ended September 30,
                    Percent
    2010   2009   Change
     
Consolidated
                       
Constant currency (1)
  $ 1,275,834       1,244,954       2.5 %
Foreign currency (2)
    1,752             0.1  
             
Total revenues
  $ 1,277,586       1,244,954       2.6 %
             
 
                       
Constant currency (1)
  $ 239,348       250,119       (4.3 )%
Foreign currency (2)
    (893 )           (0.4 )
             
Operating income
  $ 238,455       250,119       (4.7 )%
             
 
(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.
Normalized Results — Revenue and Operating Income Excluding Termination Fees and
Deconverted Clients
(unaudited)
(in thousands)
                         
    Three Months Ended
    September 30,   June 30,   Percent
    2010   2010   Change
     
Consolidated
                       
Total Revenues
  $ 433,236       430,887       0.5 %
Less:
                       
Termination Fees and Deconverted Clients
    41       9,939          
 
                       
             
Total revenues excluding termination fees and deconverted clients
  $ 433,195       420,948       2.9 %
             
 
                       
Operating income
  $ 78,914       79,830       (1.1 )%
Less:
                       
Termination Fees and Deconverted Clients
    41       9,939          
             
Operating income excluding termination fees and deconverted clients
  $ 78,873       69,891       12.9 %
             
Normalized Results — Revenue and Operating Income Excluding Termination Fees,
Deconverted Clients and Impact of FNMS
(unaudited)
(in thousands)
                         
    Nine Months Ended September 30,
                    Percent
    2010   2009   Change
     
Consolidated
                       
Total Revenues
  $ 1,277,586       1,244,954       2.6  
Less:
                       
Termination Fees, Deconverted Clients, and Acquisition of FNMS
    107,172       82,669          
             
Total revenues excluding termination fees, deconverted clients and FNMS
  $ 1,170,414       1,162,285       0.7  
             
 
                       
Operating income
  $ 238,455       250,119       (4.7 )%
Less:
                       
Termination Fees, Deconverted Clients and Acquisition of FNMS
    52,337       82,669          
             
Operating income excluding termination fees, deconverted clients and FNMS
  $ 186,118       167,450       11.1 %
             
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TSYS Announces 2010 Earnings
Page 12 of 12
2009 & 2010 Income Statement Presenting TPOS as Discontinued Operations
(unaudited)
(in thousands)
                                                                 
    Three Months Ended   YTD     Three Months Ended
    March 31,     June 30,     September 30,     December 31,     December 31,     March 31,     June 30,     September 30,  
    2009     2009     2009     2009     2009     2010     2010     2010  
                         
Total revenues
  $ 406,795       409,242       428,917       432,529     $ 1,677,483     $ 413,464       430,886       433,236  
                         
 
                                                               
Cost of services
    282,910       277,974       294,596       294,403       1,149,883       290,538       295,880       302,692  
Selling, general and administrative expenses
    45,114       48,214       46,027       44,218       183,573       43,213       55,178       51,630  
                         
Total expenses
                                                               
Operating income
    78,771       83,054       88,294       93,908       344,027       79,713       79,828       78,914  
Nonoperating income
    (1,458 )     (2,279 )     575       (279 )     (3,441 )     (261 )     (1,172 )     31  
                         
Income before income taxes
    77,313       80,775       88,869       93,629       340,586       79,452       78,656       78,945  
Income taxes
    27,657       29,280       31,911       33,002       121,850       28,096       28,273       27,879  
                         
Income before equity income
    49,656       51,495       56,958       60,627       218,736       51,356       50,383       51,066  
Equity income
    1,043       1,626       1,623       2,694       6,986       893       2,366       1,103  
                         
Income from continuing operations, net of tax
    50,699       53,121       58,581       63,321       225,722       52,249       52,749       52,169  
Income from discontinued operations, net of tax
    (3,758 )     897       (3,255 )     (429 )     (6,545 )     (428 )     (273 )     (2,463 )
                         
Net income
    46,941       54,018       55,326       62,892       219,177       51,821       52,476       49,706  
Noncontrolling interests
    (415 )     (571 )     (300 )     (2,678 )     (3,964 )     (493 )     (2,774 )     (3,963 )
                         
Net income attributable to TSYS common shareholders
  $ 46,526       53,447       55,026       60,214     $ 215,213     $ 51,328       49,702       45,743  
                         
 
                                                               
Income from continuing operations, net of tax attributable to TSYS commons shareholders
  $ 50,284       52,550       58,281       60,643     $ 221,758     $ 51,756       49,975       48,206  
                         
- #### -