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8-K - FORM 8-K - TOTAL SYSTEM SERVICES INC | g25854e8vk.htm |
EX-99.2 - EX-99.2 - TOTAL SYSTEM SERVICES INC | g25854exv99w2.htm |
Exhibit 99.1
PRESS RELEASE |
Total System Services, Inc. |
||
One TSYS Way
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+1.706.649.2307 | |
Post Office Box 2567
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+1.706.649.5740 | |
Columbus GA 31902-2567
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www.tsys.com |
For immediate release:
Contact:
Shawn Roberts
TSYS Investor Relations
+1.706.644.6081
shawnroberts@tsys.com
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.
Page 1 of 12
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
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
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
Page 5 of 12
TSYS
Financial Highlights
(unaudited)
(in thousands, except per share data)
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
Page 6 of 12
TSYS
Earnings Per Share
(unaudited)
(in thousands, except per share data)
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
Page 7 of 12
TSYS
Segment Breakdown
(unaudited)
(in thousands)
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.
-more-
TSYS Announces 2010 Earnings
Page 8 of 12
Page 8 of 12
TSYS
Balance Sheet
(in thousands)
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)
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
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
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 years 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.
- more -
TSYS Announces 2010 Earnings
Page 12 of 12
Page 12 of 12
Reconciliation of GAAP to Non-GAAP
Constant Currency Comparison
(unaudited)
(in thousands)
(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)
(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)
(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 | )% | |||||||
- more -