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8-K - FORM 8-K - TOTAL SYSTEM SERVICES INCg25854e8vk.htm
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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 Provides 2011 Guidance of 9% — 11% EPS Growth and
Reports 2010 Fourth Quarter and Full Year Financial Results
Columbus, Ga., January 25, 2011 — TSYS (NYSE: TSS) today reported results for the fourth quarter and full-year of 2010 that were in-line with consensus estimates for earnings per share (EPS).
For the fourth quarter, total revenues were $440.0 million, an increase of 1.7% over 2009. Basic EPS from continuing operations were $0.24, down $0.07 or 20.9%. Excluding termination fees in the fourth quarter of 2009, total revenues were up 6.0% and basic EPS from continuing operations were down 3.2%.
For the year 2010, total revenues were $1.7 billion, up 2.4% over 2009. Basic EPS from continuing operations were $1.00, down $0.12 or 10.7%. Excluding termination fees in 2009 and 2010, total revenues were up 3.0% and basic EPS from continuing operations were down 9.1%.
TSYS’ 2011 guidance includes revenues before reimbursable growth of 3% — 5% and basic EPS from continuing operations growth of 9% — 11%.
“While 2010 was a very challenging year, we are pleased to have met the high end range of our guidance for net income and EPS for the year. We continued to see growth in transactions in our card issuing services and merchant business for the fourth quarter that resulted in organic revenue growth of 4.0% and same client issuer transactions increased 5.3% for the year. Including the acquisition of TSYS Merchant Solutions (formerly First National Merchant Solutions), revenues from our Merchant Segment rose from 19% to 27% of consolidated total revenues. We believe this diversification will contribute to our growth and benefit our margins in the future,” said Philip W. Tomlinson, chairman and chief executive officer of TSYS.
“Our guidance for 2011 reflects our renewed enthusiasm for growth in all of our business segments. Excluding the termination fees in 2010, our 2011 guidance for revenues before reimbursable items are projected to be up 6% — 8%, and net income from continuing operations is projected to be up 20% — 22%,” said Tomlinson.

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(TSYS LOGO)   PRESS RELEASE
TSYS’ guidance for 2011 is as follows:
                                                 
    2011 Guidance
    Range    
    (in millions, except per   Percent
    share amounts)   Change
Total revenues
  $ 1,748     to   $ 1,788       2 %   to     4 %
Reimbursable items
  $ 260     to   $ 267       (5 %)   to     (3 %)
Revenues before reimbursable items
  $ 1,488     to   $ 1,521       3 %   to     5 %
Income from continuing operations
  $ 211     to   $ 216       7 %   to     9 %
EPS from continuing operations
  $ 1.09     to   $ 1.11       9 %*   to     11 %*
Average Shares Outstanding
    194.5                                          
 
NOTE: * Denotes rounding
Conference Call
TSYS will host its quarterly conference call at 5:00 p.m. ET on Tuesday, January 25. 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 the impact of 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 11 and 12 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 globally, supporting cross-border payments in more than 85 countries. Offering 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 payment transactions with trust and convenience.

Page 2 of 12


 

     
(TSYS LOGO)   PRESS RELEASE
TSYS’ global headquarters are located in Columbus, Georgia, with other local offices spread across the Americas, EMEA and Asia-Pacific. TSYS serves approximately 400 clients in 85 countries, including relationships with 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 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’ belief about the positive impact of diversification and TSYS’ earnings guidance for 2011 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 2011: (1) the economy will not worsen during 2011; (2) there will be no deconversions of large clients during the year; (3) there will be no significant movement in foreign currency exchange rates related to TSYS’ business during 2011; (4) 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 (5) 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’ 2011 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 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; (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) the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act on TSYS and on our clients; (9) 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; (10) the costs and effects of litigation, investigations or similar matters or adverse facts and developments relating thereto; (11) 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 (12) 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

Page 3 of 12


 

     
(TSYS LOGO)   PRESS RELEASE
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 4 of 12


 

TSYS Announces 2010 Earnings
Page 5 of 12
TSYS
Financial Highlights
(unaudited)
(in thousands, except per share data)
                                                 
    Three Months Ended     Twelve Months Ended  
    December 31,     December 31,  
                    Percent                     Percent  
    2010     2009     Change     2010     2009     Change  
Total revenues
  $ 439,991       432,529       1.7 %   $ 1,717,577       1,677,483       2.4 %
 
                                               
Cost of services
    311,901       294,403       5.9       1,201,012       1,149,883       4.4  
Selling, general and administrative expenses
    57,116       44,218       29.2       207,136       183,574       12.8  
 
                                       
 
Operating income
    70,974       93,908       (24.4 )     309,429       344,026       (10.1 )
 
                                               
Nonoperating income (expenses)
    (215 )     (279 )   nm       (1,617 )     (3,441 )   nm  
 
                                       
 
                                               
Income from continuing operations before income taxes, noncontrolling interests and equity in income of equity investments
    70,759       93,629       (24.4 )     307,812       340,585       (9.6 )
Income taxes
    21,840       33,002       (33.8 )     106,088       121,850       (12.9 )
 
                                       
Income from continuing operations before noncontrolling interests and equity in income of equity investments
    48,919       60,627       (19.3 )     201,724       218,735       (7.8 )
Equity in income of equity investments
    2,780       2,694       3.2       7,142       6,985       2.2  
 
                                       
Income from continuing operations, net of tax
    51,699       63,321       (18.4 )     208,866       225,720       (7.5 )
Loss from discontinued operations, net of tax
    (82 )     (429 )     80.9       (3,245 )     (6,544 )   nm  
 
                                       
Net income
    51,617       62,892       (17.9 )     205,621       219,176       (6.2 )
Net income attributable to noncontrolling interests
    (4,444 )     (2,678 )   nm       (11,674 )     (3,963 )   nm  
 
                                       
Net income attributable to TSYS common shareholders
  $ 47,173       60,214       (21.7 )%   $ 193,947       215,213       (9.9 )%
 
                                       
 
                                               
Basic earnings per share:
                                               
Income from continuing operations to TSYS common shareholders*
  $ 0.24       0.31       (20.9 )%   $ 1.00       1.12       (10.7 )%
 
                                       
Loss from discontinued operations to TSYS common shareholders*
    (0.00 )     (0.00 )   nm       (0.02 )     (0.03 )   nm  
 
                                       
Net income attributable to TSYS common shareholders*
  $ 0.24       0.31       (20.5 )%   $ 0.99       1.09       (9.5 )%
 
                                       
 
                                               
Diluted earnings per share:
                                               
Income from continuing operations to TSYS common shareholders*
  $ 0.24       0.31       (20.9 )%   $ 1.00       1.12       (10.8 )%
 
                                       
Loss from discontinued operations to TSYS common shareholders*
    (0.00 )     (0.00 )   nm       (0.02 )     (0.03 )   nm  
 
                                       
Net income attributable to TSYS common shareholders*
  $ 0.24       0.31       (20.5 )%   $ 0.99       1.09       (9.6 )%
 
                                       
 
                                               
Dividends declared per share
  $ 0.07       0.07             $ 0.28       0.28          
 
                                       
 
                                               
Amounts attributable to TSYS common shareholders:
                                               
Income from continuing operations, net of tax
  $ 47,255       60,643       (22.1 )%   $ 197,192       221,757       (11.1 )%
(Loss) income from discontinued operations, net of tax
    (82 )     (429 )   nm       (3,245 )     (6,544 )   nm  
 
                                       
Net income
  $ 47,173       60,214       (21.7 )%   $ 193,947       215,213       (9.9 )%
 
                                       
 
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 6 of 12
TSYS
Earnings Per Share
(unaudited)
(in thousands, except per share data)
                                                                 
    Three Months Ended     Three Months Ended     Twelve Months Ended     Twelve Months Ended  
    December 31, 2010     December 31, 2009     December 31, 2010     December 31, 2009  
    Common     Participating     Common     Participating     Common     Participating     Common     Participating  
    Stock     Securities     Stock     Securities     Stock     Securities     Stock     Securities  
Basic Earnings per share:
                                                               
Net income
  $ 47,173               60,214             $ 193,947             $ 215,213          
Less income allocated to nonvested awards
    (221 )     221       (413 )     413       (959 )     959       (1,644 )     1,644  
 
                                               
Net income allocated to common stock for EPS calculation (a)
  $ 46,952       221       59,801       413     $ 192,988       959     $ 213,569       1,644  
 
                                               
 
                                                               
Average common shares outstanding (b)
    193,352       914       195,835       1,356       195,378       975       195,623       1,511  
 
                                               
 
                                                               
Average common shares and participating securities
    194,266               197,191               196,353               197,134          
 
                                                       
 
                                                               
Basic Earnings per share (a)/(b)
  $ 0.24       0.24       0.31       0.30     $ 0.99       0.98     $ 1.09       1.09  
 
                                               
 
                                                               
Diluted Earnings per share:
                                                               
Net income
  $ 47,173               60,214             $ 193,947             $ 215,213          
Less income allocated to nonvested awards
    (221 )     221       (413 )     413       (959 )     959       (1,644 )     1,644  
 
                                               
Net income allocated to common stock for EPS calculation (c)
  $ 46,952       221       59,801       413     $ 192,988       959     $ 213,569       1,644  
 
                                               
 
                                                               
Average common shares outstanding
    193,352       914       195,835       1,356       195,378       975       195,623       1,511  
Increase due to assumed issuance of shares related to common equivalent shares outstanding
    214               63               193               63          
 
                                               
Average common and common equivalent shares outstanding (d)
    193,566       914       195,898       1,356       195,571       975       195,686       1,511  
 
                                               
 
                                                               
Average common and common equivalent shares and participating securities
    194,480               197,254               196,546               197,197          
 
                                                       
 
                                                               
Diluted Earnings per share (c)/(d)
  $ 0.24       0.24       0.31       0.30     $ 0.99       0.98     $ 1.09       1.09  
 
                                               
- more -

 


 

TSYS Announces 2010 Earnings
Page 7 of 12
TSYS
Segment Breakdown
(unaudited)
(in thousands)
                                                                 
    Three Months Ended December 31,   Twelve Months Ended December 31,
                    Change                   Change
    2010   2009   $   %   2010   2009   $   %
Revenues before reimbursable items
                                                               
North America Services
  $ 198,742       214,027       (15,285 )     (7.1) %     809,012       880,668       (71,656 )     (8.1) %
International Services
    88,547       96,264       (7,717 )     (8.0) %     321,846       322,697       (851 )     (0.3) %
Merchant Services
    93,482       56,365       37,117       65.9 %     337,178       232,262       104,916       45.2 %
Intersegment revenues
    (6,927 )     (6,216 )     (711 )     11.4 %     (25,600 )     (28,322 )     2,722       (9.6) %
                         
Revenues before reimbursable items from external customers
  $ 373,844       360,440       13,404       3.7 %     1,442,436       1,407,305       35,131       2.5 %
                         
 
                                                               
Total revenues
                                                               
North America Services
  $ 233,960       253,579       (19,619 )     (7.7) %     956,546       1,048,933       (92,387 )     (8.8) %
International Services
    92,248       101,350       (9,102 )     (9.0) %     334,954       337,757       (2,803 )     (0.8) %
Merchant Services
    122,519       85,654       36,865       43.0 %     458,921       327,055       131,866       40.3 %
Intersegment revenues
    (8,736 )     (8,054 )     (682 )     8.5 %     (32,844 )     (36,262 )     3,418       (9.4) %
                         
Revenues from external customers
  $ 439,991       432,529       7,462       1.7 %     1,717,577       1,677,483       40,094       2.4 %
                         
 
                                                               
Depreciation and amortization
                                                               
North America Services
  $ 20,017       20,359       (342 )     (1.7) %     78,834       84,577       (5,743 )     (6.8) %
International Services
    13,457       9,082       4,375       48.2 %     40,792       34,791       6,001       17.2 %
Merchant Services
    9,782       8,423       1,359       16.1 %     40,298       32,590       7,708       23.7 %
Corporate Admin
    748       1,046       (298 )     (28.5) %     3,003       3,690       (687 )     (18.6) %
                         
Total depreciation and amortization
  $ 44,004       38,910       5,094       13.1 %     162,927       155,648       7,279       4.7 %
                         
 
                                                               
Segment operating income
                                                               
North America Services
  $ 56,339       71,184       (14,845 )     (20.9) %     244,989       285,409       (40,420 )     (14.2) %
International Services
    7,429       21,240       (13,811 )     (65.0) %     42,689       57,654       (14,965 )     (26.0) %
Merchant Services
    29,782       19,457       10,325       53.1 %     102,444       71,438       31,006       43.4 %
Corporate Admin
    (22,576 )     (17,973 )     (4,603 )     25.6 %     (80,693 )     (70,475 )     (10,218 )     14.5 %
                         
Operating income
  $ 70,974       93,908       (22,934 )     (24.4) %     309,429       344,026       (34,597 )     (10.1) %
                         
 
                                                               
Other:
                                                               
Reimbursable items:
                                                               
North America Services
  $ 35,219       39,552       (4,333 )     (11.0) %     147,534       168,264       (20,730 )     (12.3) %
International Services
    3,701       5,087       (1,386 )     (27.2) %     13,108       15,060       (1,952 )     (13.0) %
Merchant Services
    29,036       29,288       (252 )     (0.9) %     121,743       94,794       26,949       28.4 %
Intersegment revenues
    (1,809 )     (1,838 )     29       (1.6) %     (7,244 )     (7,940 )     696       (8.8) %
                         
Reimbursable items
  $ 66,147       72,089       (5,942 )     (8.2) %     275,141       270,178       4,963       1.8 %
                         
 
                                                               
Volumes:
                                                               
FTEs (continuing operations)
                                                               
North America Services
                                    4,296       4,726       (430 )     (9.1) %
International Services
                                    2,043       1,805       238       13.2 %
Merchant Services
                                    1,115       726       389       53.6 %
Corporate Admin
                                    334       322       12       3.7 %
                                             
FTEs
                                    7,788       7,579       209       2.8 %
                                             
                                 
    At   Change
    12/31/2010   12/31/2009   $   %
     
Total assets (in thousands)
                               
North America Services
  $ 1,647,980       1,535,129       112,851       7.4 %
International Services
    408,880       379,606       29,274       7.7 %
Merchant Services
    461,050       215,855       245,195       113.6 %
Intersegment assets
    (550,251 )     (419,636 )     (130,615 )     31.1 %
             
Total assets
  $ 1,967,659       1,710,954       256,705       15.0 %
             
                                                                 
    Three Months Ended December 31,   Twelve Months Ended December 31,
                    Change                   Change
    2010   2009   Inc(Dec)   %   2010   2009   Inc(Dec)   %
North America Segment:
                                                               
Accounts on File (AOF) (in millions)
                                    296.7       305.2       (8.6 )     (2.8 )%
Transactions (in millions)
    1,730.6       1,577.8       152.8       9.7 %     6,410.6       6,136.9       273.6       4.5 %
 
                                                               
International Segment:
                                                               
AOF (in millions)
                                    46.3       39.5       6.8       17.1 %
Transactions (in millions)
    357.9       317.3       40.6       12.8 %     1,259.9       1,136.0       123.9       10.9 %
Certain amounts have been reclassified to conform with the presentation adopted in 2010.
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TSYS Announces 2010 Earnings
Page 8 of 12
TSYS
Balance Sheet
(in thousands)
                 
    Dec 31, 2010   Dec 31, 2009
    (unaudited)   (unaudited)
Assets
               
Current assets:
               
Cash and cash equivalents
  $ 394,795       450,254  
Restricted cash
    434       46,190  
Accounts receivable, net
    238,283       231,162  
Deferred income tax assets
    11,403       11,302  
Prepaid expenses and other current assets
    92,296       68,527  
Assets of discontinued operations
          3,461  
     
Total current assets
    737,211       810,896  
Property and equipment, net
    300,102       289,069  
Computer software, net
    246,424       196,764  
Contract acquisition costs, net
    166,251       128,038  
Goodwill
    320,399       165,896  
Equity investments, net
    77,127       75,495  
Other intangible assets, net
    83,118       14,132  
Other assets
    37,027       27,940  
Assets of discontinued operations
          2,724  
     
Total assets
  $ 1,967,659       1,710,954  
     
 
               
Liabilities
               
Current liabilities:
               
Current portion of notes payable
  $ 14,845       6,988  
Accrued salaries and employee benefits
    27,414       32,231  
Accounts payable
    36,068       21,487  
Current portion of obligations under capital leases
    13,191       6,289  
Other current liabilities
    108,119       152,742  
Current liabilities of discontinued operations
          1,042  
     
Total current liabilities
    199,637       220,779  
Notes payable, excluding current portion
    219,416       192,367  
Deferred income tax liabilities
    60,865       47,162  
Obligations under capital leases, excluding current portion
    30,573       12,756  
Other long-term liabilities
    53,363       48,443  
     
Total liabilities
    563,854       521,507  
     
Redeemable noncontrolling interest
    146,000        
     
Equity
               
Shareholders’ equity:
               
Common stock
    20,133       20,086  
Additional paid-in capital
    119,722       139,742  
Accumulated other comprehensive income, net
    (2,585 )     5,673  
Treasury stock
    (115,449 )     (69,950 )
Retained earnings
    1,219,303       1,080,250  
     
Total shareholders’ equity
    1,241,124       1,175,801  
     
Noncontrolling interests in consolidated subsidiaries
    16,681       13,646  
     
Total equity
    1,257,805       1,189,447  
     
Total liabilities and equity
  $ 1,967,659       1,710,954  
     
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TSYS Announces 2010 Earnings
Page 9 of 12
TSYS
Cash Flow
(unaudited)
(in thousands)
                 
    Twelve Months Ended December 31,
    2010   2009
     
CASH FLOWS FROM OPERATING ACTIVITIES:
               
Net income
  $ 205,621       219,176  
Adjustments to reconcile net income to net cash provided by operating activities:
               
Equity in income of equity investments
    (7,142 )     (6,985 )
Dividends received from equity investments
    6,572       4,942  
Net loss (gain) on currency translation adjustments
    162       2,607  
Depreciation and amortization
    163,111       156,471  
Amortization of debt issuance costs
    154       154  
Share-based compensation
    15,832       16,128  
Excess tax benefit from share-based payment arrangements
    (111 )     (6 )
Provisions for bad debt expense and billing adjustments
    (798 )     6,381  
Charges for transaction processing provisions
    3,891       6,556  
Deferred income tax benefit
    13,616       (3,864 )
(Gain) loss on disposal of equipment, net
    145       375  
Loss on disposal of subsidiary
    1,591       5,713  
Changes in operating assets and liabilities:
               
Accounts receivable
    (7,138 )     10,807  
Prepaid expenses, other current assets and other long-term assets
    (16,579 )     27,893  
Accounts payable
    13,916       (11,883 )
Accrued salaries and employee benefits
    (21,965 )     (11,697 )
Other current liabilities and other long-term liabilities
    18,282       368  
     
Net cash provided by operating activities
    389,160       423,136  
     
 
               
CASH FLOWS FROM INVESTING ACTIVITIES:
               
Purchases of property and equipment, net
    (46,547 )     (34,017 )
Additions to licensed computer software from vendors
    (69,826 )     (20,059 )
Additions to internally developed computer software
    (25,466 )     (31,445 )
Proceeds from Disposition, net of expenses paid and cash disposed
    4,265       1,979  
Cash used in acquisitions, net of cash acquired
    (148,531 )     (294 )
Dividends received from equity investments
    68        
Additions to contract acquisition costs
    (75,669 )     (35,596 )
     
Net cash used in investing activities
    (361,706 )     (119,432 )
     
 
CASH FLOWS FROM FINANCING ACTIVITIES:
               
Proceeds from borrowings of long-term debt
    39,757       5,334  
Principal payments on long-term debt borrowings and capital lease obligations
    (11,741 )     (18,869 )
Proceeds from exercise of stock options
    543       2  
Excess tax benefit from share-based payment arrangements
    111       6  
Repurchase of common stock
    (46,228 )     (328 )
Subsidiary dividends paid to noncontrolling shareholders
    (9,030 )     (235 )
Dividends paid on common stock
    (55,088 )     (55,208 )
     
Net cash used in financing activities
    (81,676 )     (69,298 )
     
 
               
CASH AND CASH EQUIVALENTS:
               
Effect of exchange rate changes on cash and cash equivalents
    (938 )     (4,470 )
     
Net increase (decrease) in cash and cash equivalents
    (55,160 )     229,936  
Cash and cash equivalents at beginning of period
    449,955       220,019  
     
Cash and cash equivalents at end of period
  $ 394,795       449,955  
     
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TSYS Announces 2010 Earnings
Page 10 of 12
Supplemental Information:
                                         
    Accounts on File at December 31,
                                    Percent
(in millions)   2010   %   2009   %   Change
     
Consumer
    179.5       52.3 %     187.8       54.5 %     (4.4 )%
Stored Value
    55.3       16.1       42.0       12.2       31.6  
Commercial
    49.7       14.5       41.1       11.9       20.9  
Government services
    28.1       8.2       25.5       7.4       10.0  
Retail
    24.2       7.1       42.9       12.4       (43.5 )
Debit
    5.3       1.6       5.2       1.5       2.9  
Healthcare
    0.8       0.2       0.3       0.1       nm  
             
 
    342.9       100.0 %     344.8       100.0 %     (0.5 )%
             
                 
    December 2009 to   December 2008 to
Growth in Accounts on File (in millions):   December 2010   December 2009
Beginning balance
    344.8       352.5  
Change in accounts on file due to:
               
Internal growth of existing clients
    22.4       25.2  
New clients
    30.8       28.1  
Purges/Sales
    (39.3 )     (34.1 )
Deconversions
    (15.8 )     (26.9 )
 
               
Ending balance
    342.9       344.8  
 
               
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TSYS Announces 2010 Earnings
Page 11 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 2.3% as compared to a reported GAAP increase of 2.4%, and operating income decreased 9.9% versus a GAAP-reported decrease of 10.1%. 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.
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TSYS Announces 2010 Earnings
Page 12 of 12
Reconciliation of GAAP to Non-GAAP
Constant Currency Comparison
(unaudited)
(in thousands)
                         
    Three Months Ended December 31,
                    Percent
    2010   2009   Change
     
Consolidated
                       
Constant currency (1)
  $ 440,742       432,529       1.9 %
Foreign currency (2)
    (751 )           (0.2 )
             
Total revenues
  $ 439,991       432,529       1.7 %
             
 
                       
Constant currency (1)
  $ 70,661       93,908       (24.8 )%
Foreign currency (2)
    313             0.4  
             
Operating income
  $ 70,974       93,908       (24.4 )%
             
                         
    Twelve Months Ended December 31,
                    Percent
    2010   2009   Change
     
Consolidated
                       
Constant currency (1)
  $ 1,716,576       1,677,483       2.3 %
Foreign currency (2)
    1,001             0.1  
             
Total revenues
  $ 1,717,577       1,677,483       2.4 %
             
 
                       
Constant currency (1)
  $ 310,009       344,026       (9.9 )%
Foreign currency (2)
    (580 )           (0.2 )
             
Operating income
  $ 309,429       344,026       (10.1 )%
             
 
(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 BASIC EPS Excluding Termination Fees
(unaudited)
(in thousands except per share data)
                         
    Three Months Ended December 31,
                    Percent
    2010   2009   Change
     
Consolidated
                       
Total Revenues
  $ 439,991       432,529       1.7 %
Less:
                       
Termination Fees
          17,328          
             
Total revenues excluding termination fees
  $ 439,991       415,201       6.0 %
             
 
                       
Income from continuing operations, net of tax, available to TSYS common shareholders
  $ 47,255       60,643       (22.1 )%
Less:
                       
Termination Fees, net of tax
          11,090          
 
                       
             
Income from continuing operations, net of tax, available to TSYS common shareholders, excluding termination fees
  $ 47,255       49,553       (4.6 )%
             
 
                       
Average common shares and participating securities
    194,266       197,191          
 
                       
             
BASIC EPS — Income from continuing operations, net of tax, available to TSYS common shareholders
  $ 0.24       0.25       (3.2 )%
             
Normalized Results — Revenue and Basic EPS Excluding Termination Fees
(unaudited)
(in thousands except per share data)
                         
    Twelve Months Ended December 31,
                    Percent
    2010   2009   Change
     
Consolidated
                       
Total Revenues
  $ 1,717,577       1,677,483       2.4  
Less:
                       
Termination Fees
    32,677       41,622          
             
Total revenues excluding termination fees
  $ 1,684,900       1,635,861       3.0  
             
 
                       
Income from continuing operations, net of tax, available to TSYS common shareholders
  $ 197,192       221,757       (11.1 )%
Less:
                       
Termination Fees, net of tax
    20,989       27,054          
 
                       
             
Income from continuing operations, net of tax, available to TSYS common shareholders, excluding termination fees
  $ 176,203       194,703       (9.5 )%
             
 
                       
Average common shares and participating securities
    196,353       197,134          
 
                       
             
BASIC EPS — Income from continuing operations, net of tax, available to TSYS common shareholders
  $ 0.90       0.99       (9.1 )%
             
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