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8-K - FORM 8-K - TOTAL SYSTEM SERVICES INCg27747ae8vk.htm
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Exhibit 99.1
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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 Reports Second Quarter 2011 Results
COLUMBUS, Ga., July 26, 2011 — TSYS (NYSE: TSS) today reported results for the second quarter of 2011 with total revenues of $447.6 million, an increase of 3.9% over 2010. Excluding a 2010 termination fee, total revenues were up 6.2%. Basic earnings per share from continuing operations were $0.28, an increase of 10.1% over 2010, and increased 25.4% excluding the 2010 termination fee.
“We continue to see the improvements that we expected in 2011 as evidenced by our year over year quarterly revenue growth with and without the termination fee. Our North America Services segment had an increase in revenues before reimbursable items of 3.2% and operating income growth of 13.0% excluding the 2010 termination fee. In our International Services segment, revenues before reimbursable items increased 14.1% on a constant currency basis as a result of new business and organic growth. Our Merchant Services segment had an increase in revenues before reimbursable items of 1.3% and operating income growth of 10.0%,” said Philip W. Tomlinson, chairman and chief executive officer of TSYS.
For the six months ended June 30, 2011, total revenues increased 3.9% over 2010 and were up 8.1% excluding 2010 termination fees. Basic earnings per share from continuing operations were $0.53, a 3.0% increase over 2010, and increased 29.8% excluding 2010 termination fees.
“Our year to date results confirm our confidence in the improving economic conditions and our expectation that we will be successful at achieving our full year guidance for 2011. Since the beginning of 2011, we have deployed approximately $252 million of capital for share repurchases and acquisitions as we continue to invest in our future growth,” said Tomlinson.
Conference Call
TSYS will host its quarterly conference call at 5:00 p.m. ET on Tuesday, July 26. The conference call can be accessed via simultaneous Internet broadcast at tsys.com by clicking on the link under “Webcasts” on the main homepage. The replay will be archived for 12 months and will be available approximately 30 minutes after the completion of the call. A slide presentation to accompany the call will be available by clicking on the link under “Webcasts” on the main homepage of tsys.com.

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Non-GAAP Measures
This press release and the financial highlights section of this release contain the non-GAAP financial measures of revenues and basic EPS excluding revenues from termination fees and revenues and operating results on a constant currency basis, respectively, to describe TSYS’ performance. Management uses these non-GAAP financial measures to better understand and assess TSYS’ operating results and financial performance. TSYS believes these non-GAAP financial measures provide meaningful additional information about TSYS to assist investors in understanding and evaluating its operating results.
Additional information about non-GAAP financial measures and a reconciliation of those measures to the most directly comparable GAAP measures are included on pages 10 and 11 of this release.
About TSYS
TSYS (NYSE: TSS) is reshaping a new era in digital commerce, connecting consumers, merchants, financial institutions, businesses and governments. Through unmatched customer service and industry insight, TSYS creates a better experience for buyers and sellers, supporting cross-border payments in more than 85 countries. Offering merchant payment-acceptance solutions as well as services in credit, debit, prepaid, mobile, chip, healthcare, installments, money transfer and more, TSYS makes it possible for those in the global marketplace to conduct safe and secure electronic transactions with trust and convenience.
TSYS’ headquarters are located in Columbus, Georgia, with local offices spread across the Americas, EMEA and Asia-Pacific. TSYS provides services to more than half of the top 20 international banks. For more information, please visit us at www.tsys.com.
Forward-Looking Statements
This press release contains “forward-looking statements” — that is, statements related to future, not past, events. Forward-looking statements often address our expected future business and financial performance and often contain words such as “expect,” “anticipate,” “intend,” “believe,” “should,” “plan,” “will,” “could,” and similar expressions. These forward-looking statements include, among others, statements regarding TSYS’ belief that it will achieve its financial guidance for 2011, and the assumptions underlying such statements. These statements are based on the current beliefs and expectations of TSYS’ management and are subject to significant risks and uncertainties. Actual results may differ materially from those contemplated by the forward-looking statements. A number of important factors could cause actual results to differ materially from those contemplated by our forward-looking statements in this press release. Many of these factors are beyond TSYS’ ability to control or predict. These factors include, but are not limited to: adverse developments with respect to entering into contracts with new clients and retaining current clients; continued consolidation and turmoil in the financial services and other industries during 2011, including the merger of TSYS clients with entities that are not TSYS processing clients, the sale of portfolios by TSYS clients to entities that are not TSYS processing clients and the nationalization or seizure by banking regulators of TSYS clients; TSYS is unable to control expenses and increase market share both domestically and internationally; TSYS is unable to manage the impact of slowing economic conditions and consumer spending; the material breach

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of security of any of TSYS’ systems; the impact of potential and completed acquisitions, including the costs associated therewith and their being more difficult to integrate than anticipated; the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act on TSYS and on our clients; changes occur in laws, rules, regulations, credit card association rules or other industry standards affecting TSYS and our clients that may result in costly new compliance burdens on TSYS and our clients and lead to a decrease in the volume and/or number of transactions processed; the costs and effects of litigation, investigations or similar matters or adverse facts and developments relating thereto; adverse developments with respect to the credit card industry in general, including a decline in the use of credit cards as a payment mechanism; and internal growth rates of TSYS’ existing clients are lower than anticipated whether as a result of unemployment rates, card delinquencies and charge-off rates or otherwise. Additional risks and other factors that could cause actual results to differ materially from those contemplated in this release can be found in TSYS’ filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K. We believe these forward-looking statements are reasonable; however, undue reliance should not be placed on any forward-looking statements, which are based on current expectations. We do not assume any obligation to update any forward-looking statements as a result of new information, future developments or otherwise.
— more —

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TSYS Announces Second Quarter 2011 Earnings
Page 4 of 11
TSYS
Financial Highlights
(unaudited)
(in thousands, except per share data)
                                                 
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
                    Percent                     Percent  
    2011     2010     Change     2011     2010     Change  
 
                                               
Total revenues
  $ 447,554       430,887       3.9 %   $ 876,985       844,350       3.9 %
 
                                               
Cost of services
    312,052       295,880       5.5       613,543       586,418       4.6  
Selling, general and administrative expenses
    56,973       55,178       3.3       111,885       98,391       13.7  
 
                                       
 
                                               
Operating income
    78,529       79,829       (1.6 )     151,557       159,541       (5.0 )
 
                                               
Nonoperating expenses
    (841 )     (1,172 )     28.2       (1,568 )     (1,433 )     (9.4 )
 
                                       
 
                                               
Income from continuing operations before income taxes, noncontrolling interests and equity in income of equity investments
    77,688       78,657       (1.2 )     149,989       158,108       (5.1 )
Income taxes
    23,658       28,272       (16.3 )     48,815       56,369       (13.4 )
 
                                       
Income from continuing operations before noncontrolling interests and equity in income of equity investments
    54,030       50,385       7.2       101,174       101,739       (0.6 )
Equity in income of equity investments
    617       2,366       (73.9 )     2,885       3,259       (11.5 )
 
                                       
Income from continuing operations, net of tax
    54,647       52,751       3.6       104,059       104,998       (0.9 )
Loss from discontinued operations, net of tax
          (273 )   nm             (701 )   nm  
 
                                       
Net income
    54,647       52,478       4.1       104,059       104,297       (0.2 )
Net income attributable to noncontrolling interests
    (900 )     (2,774 )     67.6       (1,522 )     (3,267 )     53.4  
 
                                       
 
                                               
Net income attributable to TSYS common shareholders
  $ 53,747       49,704       8.1 %   $ 102,537       101,030       1.5 %
 
                                       
 
                                               
Basic earnings per share:
                                               
Income from continuing operations to TSYS common shareholders
  $ 0.28       0.25       10.1 %   $ 0.53       0.52       3.0 %
 
                                       
Loss from discontinued operations to TSYS common shareholders
          (0.00 )   nm             (0.00 )   nm  
 
                                       
Net income attributable to TSYS common shareholders
  $ 0.28       0.25       10.8 %   $ 0.53       0.51       3.7 %
 
                                       
 
                                               
Diluted earnings per share:
                                               
Income from continuing operations to TSYS common shareholders
  $ 0.28       0.25       10.0 %   $ 0.53       0.52       2.8 %
 
                                       
Loss from discontinued operations to TSYS common shareholders
          (0.00 )   nm             (0.00 )   nm  
 
                                       
Net income attributable to TSYS common shareholders
  $ 0.28       0.25       10.5 %   $ 0.53       0.51       3.5 %
 
                                       
 
                                               
Dividends declared per share
  $ 0.07       0.07             $ 0.14       0.14          
 
                                       
 
                                               
Amounts attributable to TSYS common shareholders:
                                               
Income from continuing operations, net of tax
  $ 53,747       49,977       7.5 %   $ 102,537       101,731       0.8 %
(Loss) income from discontinued operations, net of tax
          (273 )   nm             (701 )   nm  
 
                                       
Net income
  $ 53,747       49,704       8.1 %   $ 102,537       101,030       1.5 %
 
                                       
nm = not meaningful
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TSYS Announces Second Quarter 2011 Earnings
Page 5 of 11
TSYS
Earnings Per Share
(unaudited)
(in thousands, except per share data)
                                                                 
    Three Months Ended     Three Months Ended     Six Months Ended     Six Months Ended  
    June 30, 2011     June 30, 2010     June 30, 2011     June 30, 2010  
    Common     Participating     Common     Participating     Common     Participating     Common     Participating  
    Stock     Securities     Stock     Securities     Stock     Securities     Stock     Securities  
 
                                                               
Basic Earnings per share:
                                                               
Net income
  $ 53,747               49,704             $ 102,537               101,030          
Less income allocated to nonvested awards
    (191 )     191       (250 )     250       (383 )     383       (514 )     514  
 
                                               
Net income allocated to common stock for EPS calculation ( a )
  $ 53,556       191       49,454       250     $ 102,154       383       100,516       514  
 
                                               
 
                                                               
Average common shares outstanding ( b )
    191,935       690       196,346       998       192,390       727       196,253       1,007  
 
                                               
 
                                                               
Average common shares and participating securities
    192,625               197,344               193,117               197,260          
 
                                                       
 
                                                               
Basic Earnings per share ( a )/( b )
  $ 0.28       0.28       0.25       0.25     $ 0.53       0.53       0.51       0.51  
 
                                               
 
                                                               
Diluted Earnings per share:
                                                               
Net income
  $ 53,747               49,704             $ 102,537               101,030          
Less income allocated to nonvested awards
    (190 )     190       (250 )     250       (382 )     382       (514 )     514  
 
                                               
Net income allocated to common stock for EPS calculation ( c )
  $ 53,557       190       49,454       250     $ 102,155       382       100,516       514  
 
                                               
 
                                                               
Average common shares outstanding
    191,935       690       196,346       998       192,390       727       196,253       1,007  
Increase due to assumed issuance of shares related to common equivalent shares outstanding
    459               85               366               87          
 
                                               
 
                                                               
Average common and common equivalent shares outstanding ( d )
    192,394       690       196,431       998       192,756       727       196,340       1,007  
 
                                               
 
                                                               
Average common and common equivalent shares and participating securities
    193,084               197,429               193,483               197,347          
 
                                                       
 
                                                               
Diluted Earnings per share ( c )/( d )
  $ 0.28       0.28       0.25       0.25     $ 0.53       0.53       0.51       0.51  
 
                                               
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TSYS Announces Second Quarter 2011 Earnings
Page 6 of 11
TSYS
Segment Breakdown
(unaudited)
(in thousands)
                                                                 
    Three Months Ended June 30,   Six Months Ended June 30,
                    Change                   Change
    2011   2010   $   %   2011   2010   $   %
         
Revenues before reimbursable items
                                                               
North America Services
  $ 198,775       202,061       (3,286 )     (1.6) %     393,365       417,371       (24,006 )     (5.8 )%
International Services
    93,778       74,769       19,009       25.4 %     181,198       151,050       30,148       20.0 %
Merchant Services
    93,041       91,889       1,152       1.3 %     179,560       148,661       30,899       20.8 %
Intersegment revenues
    (5,383 )     (5,980 )     597       10.0 %     (11,269 )     (11,682 )     413       3.5 %
                         
Revenues before reimbursable items from external customers
  $ 380,211       362,739       17,472       4.8 %     742,854       705,400       37,454       5.3 %
                         
 
                                                               
Total revenues
                                                               
North America Services
  $ 233,903       236,810       (2,907 )     (1.2) %     464,461       491,038       (26,577 )     (5.4 )%
International Services
    97,670       77,987       19,683       25.2 %     188,380       157,379       31,001       19.7 %
Merchant Services
    123,084       123,906       (822 )     (0.7) %     238,840       211,225       27,615       13.1 %
Intersegment revenues
    (7,103 )     (7,816 )     713       9.1 %     (14,696 )     (15,292 )     596       3.9 %
                         
Revenues from external customers
  $ 447,554       430,887       16,667       3.9 %     876,985       844,350       32,635       3.9 %
                         
 
                                                               
Depreciation and amortization
                                                               
North America Services
  $ 19,926       18,891       1,035       5.5 %     39,392       39,294       98       0.2 %
International Services
    11,960       8,597       3,363       39.1 %     23,668       17,192       6,476       37.7 %
Merchant Services
    9,313       12,253       (2,940 )     (24.0) %     18,460       20,791       (2,331 )     (11.2 )%
Corporate Admin
    768       611       157       25.7 %     1,515       1,593       (78 )     (4.9 )%
                         
Total depreciation and amortization
  $ 41,967       40,352       1,615       4.0 %     83,035       78,870       4,165       5.3 %
                         
 
                                                               
Segment operating income
                                                               
North America Services
  $ 64,068       66,218       (2,150 )     (3.2) %     119,268       136,006       (16,738 )     (12.3 )%
International Services
    10,122       11,673       (1,551 )     (13.3) %     21,147       22,956       (1,809 )     (7.9 )%
Merchant Services
    25,708       23,367       2,341       10.0 %     52,631       41,223       11,408       27.7 %
Corporate Admin
    (21,369 )     (21,429 )     60       0.3 %     (41,489 )     (40,644 )     (845 )     (2.1 )%
                         
Operating income
  $ 78,529       79,829       (1,300 )     (1.6) %     151,557       159,541       (7,984 )     (5.0 )%
                         
 
                                                               
Other:
                                                               
Reimbursable items:
                                                               
North America Services
  $ 35,128       34,749       379       1.1 %     71,096       73,667       (2,571 )     (3.5 )%
International Services
    3,892       3,218       674       20.9 %     7,183       6,329       854       13.5 %
Merchant Services
    30,043       32,017       (1,974 )     (6.2) %     59,280       62,563       (3,283 )     (5.2 )%
Intersegment revenues
    (1,719 )     (1,836 )     117       6.4 %     (3,428 )     (3,609 )     181       5.0 %
                         
Reimbursable items
  $ 67,344       68,148       (804 )     (1.2) %     134,131       138,950       (4,819 )     (3.5 )%
                         
 
                                                               
Volumes:
                                                               
FTEs (continuing operations)
                                                               
North America Services
                                    4,327       4,433       (106 )     (2.4 )%
International Services
                                    2,217       1,921       296       15.4 %
Merchant Services
                                    1,185       1,096       89       8.1 %
Corporate Admin
                                    380       330       50       15.2 %
                                             
FTEs
                                    8,109       7,780       329       4.2 %
                                             
 
                                                               
 
                                  At     Change  
 
                                                               
Total assets (in thousands)
                                    6/30/2011       12/31/2010     $     %  
                                     
North America Services
                                    1,605,973       1,632,882       (26,909 )     (1.6 )%
International Services
                                    434,458       408,880       25,578       6.3 %
Merchant Services
                                    492,929       460,750       32,179       7.0 %
Intersegment assets
                                    (701,082 )     (550,251 )     (150,831 )     (27.4 )%
                                             
Total assets
                                    1,832,278       1,952,261       (119,983 )     (6.1 )%
                                             
                                                                 
    Three Months Ended June 30,   Six Months Ended June 30,
                    Change                   Change
    2011     2010     Inc(Dec)     %     2011     2010     Inc(Dec)     %  
         
North America Segment:
                                                               
Accounts on File (AOF) (in millions)
                                    328.3       290.7       37.6       12.9 %
Transactions (in millions)
    1,795.1       1,563.7       231.4       14.8 %     3,421.9       3,021.9       400.0       13.2 %
 
                                                               
International Segment:
                                                               
AOF (in millions)
                                    47.8       42.1       5.6       13.4 %
Transactions (in millions)
    340.6       297.9       42.8       14.4 %     666.6       579.1       87.5       15.1 %
 
                                                               
Merchant Segment:
                                                               
Point-of-sale Transactions (in millions)
    1,269.0       1,420.5       (151.5 )     (10.7 )%     2,475.8       2,734.8       (258.9 )     (9.5) %
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TSYS Announces Second Quarter 2011 Earnings
Page 7 of 11
TSYS
Balance Sheet
(in thousands)
                 
    Jun 30, 2011   Dec 31, 2010
    (unaudited)   (unaudited)
     
Assets
               
Current assets:
               
Cash and cash equivalents
  $ 263,334       394,795  
Restricted cash
    18       434  
Accounts receivable, net
    226,327       238,283  
Deferred income tax assets
    12,090       11,090  
Prepaid expenses and other current assets
    85,892       77,211  
     
Total current assets
    587,661       721,813  
Property and equipment, net
    293,637       300,102  
Computer software, net
    228,521       246,424  
Contract acquisition costs, net
    167,450       166,251  
Goodwill
    357,151       320,399  
Equity investments, net
    81,951       77,127  
Other intangible assets, net
    85,596       83,118  
Other assets
    30,311       37,027  
     
Total assets
  $ 1,832,278       1,952,261  
     
 
               
Liabilities
               
Current liabilities:
               
Current portion of notes payable
  $ 38,813       39,557  
Accrued salaries and employee benefits
    19,457       27,414  
Accounts payable
    29,189       36,068  
Current portion of obligations under capital leases
    13,293       13,191  
Other current liabilities
    128,452       111,040  
     
Total current liabilities
    229,204       227,270  
Notes payable, excluding current portion
    188,102       194,703  
Deferred income tax liabilities
    189       42,547  
Obligations under capital leases, excluding current portion
    25,913       30,573  
Other long-term liabilities
    60,212       53,363  
     
Total liabilities
    503,620       548,456  
     
Redeemable noncontrolling interest
          146,000  
     
Equity
               
Shareholders’ equity:
               
Common stock
    20,140       20,133  
Additional paid-in capital
    136,072       119,722  
Accumulated other comprehensive income, net
    8,334       (2,585 )
Treasury stock
    (149,194 )     (115,449 )
Retained earnings
    1,294,877       1,219,303  
     
Total shareholders’ equity
    1,310,229       1,241,124  
     
Noncontrolling interests in consolidated subsidiaries
    18,429       16,681  
     
Total equity
    1,328,658       1,257,805  
     
Total liabilities and equity
  $ 1,832,278       1,952,261  
     
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TSYS Announces Second Quarter 2011 Earnings
Page 8 of 11
TSYS
Cash Flow
(unaudited)
(in thousands)
                 
    Six Months Ended June 30,
    2011   2010
     
CASH FLOWS FROM OPERATING ACTIVITIES:
               
Net income
  $ 104,059       104,297  
Adjustments to reconcile net income to net cash provided by operating activities:
               
Equity in income of equity investments
    (2,885 )     (3,259 )
Dividends received from equity investments
    13       2,698  
Net loss (gain) on currency translation adjustments
    574       136  
Depreciation and amortization
    83,035       78,966  
Amortization of debt issuance costs
    77       77  
Share-based compensation
    8,644       7,956  
Excess tax benefit from share-based payment arrangements
    (54 )     (111 )
Asset impairments
    1,298        
Provisions for (recoveries of) bad debt expense and billing adjustments
    873       (366 )
Charges for transaction processing provisions
    2,632       2,109  
Deferred income tax expense (benefit)
    (9,738 )     7,754  
(Gain) loss on disposal of equipment, net
    (1,429 )     11  
Gain on disposal of subsidiary
          (131 )
Changes in operating assets and liabilities:
               
Accounts receivable
    19,410       (2,698 )
Prepaid expenses, other current assets and other long-term assets
    4,508       (25,383 )
Accounts payable
    (13,239 )     27,276  
Accrued salaries and employee benefits
    (11,489 )     (14,031 )
Other current liabilities and other long-term liabilities
    13,005       10,407  
     
Net cash provided by operating activities
    199,294       195,708  
     
 
               
CASH FLOWS FROM INVESTING ACTIVITIES:
               
Purchases of property and equipment, net
    (12,543 )     (17,189 )
Additions to licensed computer software from vendors
    (5,882 )     (20,812 )
Additions to internally developed computer software
    (9,242 )     (9,406 )
Proceeds from sale of tradename
    4,500        
Cash used in acquisitions, net of cash acquired
    (45,287 )     (148,531 )
Additions to contract acquisition costs
    (16,007 )     (19,888 )
     
Net cash used in investing activities
    (84,461 )     (215,826 )
     
 
               
CASH FLOWS FROM FINANCING ACTIVITIES:
               
Principal payments on long-term debt borrowings and capital lease obligations
    (14,494 )     (7,858 )
Proceeds from exercise of stock options
    1,339       378  
Excess tax benefit from share-based payment arrangements
    54       111  
Repurchase of common stock
    (35,700 )     (1,075 )
Purchase of noncontrolling interests
    (174,050 )      
Subsidiary dividends paid to noncontrolling shareholders
    (448 )     (250 )
Dividends paid on common stock
    (27,129 )     (27,605 )
     
Net cash used in financing activities
    (250,428 )     (36,299 )
     
 
               
CASH AND CASH EQUIVALENTS:
               
Effect of exchange rate changes on cash and cash equivalents
    4,134       (5,545 )
     
Net increase (decrease) in cash and cash equivalents
    (131,461 )     (61,962 )
Cash and cash equivalents at beginning of period
    394,795       449,955  
     
Cash and cash equivalents at end of period
  $ 263,334       387,993  
     
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TSYS Announces Second Quarter 2011 Earnings
Page 9 of 11
Supplemental Information:
                         
    Accounts on File
    Total
    June   June   %
(in millions)   2011   2010   Change
Consumer Credit
    187.6       180.9       3.7  
Government Services
    30.0       27.0       11.3  
Retail
    23.7       23.6       0.4  
 
                       
Total Consumer
    241.3       231.5       4.2  
Commercial
    55.2       48.2       14.7  
Other
    6.7       5.5       20.1  
 
                       
Subtotal
    303.2       285.2       6.3  
Prepaid/Stored Value
    72.8       47.6       53.1  
 
                       
Total AOF
    376.0       332.8       13.0  
 
                       
Growth in Accounts on File (in millions):
                 
    June 2010 to   June 2009 to
    June 2011   June 2010
Beginning balance
    332.8       349.5  
Change in accounts on file due to:
               
Internal growth of existing clients
    26.3       22.5  
New clients
    33.0       31.4  
Purges/Sales
    (14.7 )     (41.2 )
Deconversions
    (1.4 )     (29.4 )
 
               
Ending balance
    376.0       332.8  
 
               
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TSYS Announces Second Quarter 2011 Earnings
Page 10 of 11
Reconciliation of GAAP to Non-GAAP
Non-GAAP Measures
The schedule below provides a reconciliation of revenues and operating results on a constant currency basis to reported revenues and operating income. This non-GAAP measure presents year-to-date 2011 financial results using the previous year’s foreign currency exchange rates. On a year-to-date constant currency basis, TSYS’ total revenues grew 3.9% as compared to a reported GAAP increase of 2.4%. The schedule below also provides a reconciliation of revenues and basic EPS excluding revenues from termination fees.
The non-GAAP financial measures of constant currency and revenues and basic EPS excluding revenues from termination fees, with respect to year to date revenues and basic EPS presented by TSYS, are utilized by management to better understand and assess TSYS’ operating results and financial performance. TSYS also uses the non-GAAP financial measures to evaluate and assess TSYS’ financial performance against budget, as well as to evaluate financial performance for executive and management compensation purposes.
TSYS believes that non-GAAP financial measures are important to enable investors to understand and evaluate its ongoing operating results. Accordingly, TSYS includes non-GAAP financial measures when reporting its financial results to shareholders and investors in order to provide them with an additional tool to evaluate TSYS’ ongoing business operations. TSYS believes that the non-GAAP financial measures are representative of comparative financial performance that reflects the economic substance of TSYS’ current and ongoing business operations.
Although non-GAAP financial measures are often used to measure TSYS’ operating results and assess its financial performance, they are not necessarily comparable to similarly titled captions of other companies due to potential inconsistencies in the method of calculation.
TSYS believes that its use of non-GAAP financial measures provides investors with the same key financial performance indicators that are utilized by management to assess TSYS’ operating results, evaluate the business and make operational decisions on a prospective, going-forward basis. Hence, management provides disclosure of non-GAAP financial measures to give shareholders and potential investors an opportunity to see TSYS as viewed by management, to assess TSYS with some of the same tools that management utilizes internally and to be able to compare such information with prior periods. TSYS believes that the presentation of GAAP financial measures alone would not provide its shareholders and potential investors with the ability to appropriately analyze its ongoing operational results, and therefore expected future results. TSYS therefore believes that inclusion of non-GAAP financial measures provides investors with additional information to help them better understand its financial statements just as management utilizes these non-GAAP financial measures to better understand the business, manage budgets and allocate resources.
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TSYS Announces Second Quarter 2011 Earnings
Page 11 of 11
Reconciliation of GAAP to Non-GAAP

Constant Currency Comparison
(unaudited)
(in thousands)
                                                 
    Three Months Ended June 30,   Six Months Ended June 30,
                    Percent                   Percent
    2011   2010   Change   2011   2010   Change
         
Consolidated
                                               
Constant currency (1)
  $ 438,806       430,887       1.8 %   $ 864,801       844,350       2.4 %
Foreign currency (2)
    8,748                     12,184                
                         
Total revenues
  $ 447,554       430,887       3.9 %   $ 876,985       844,350       3.9 %
                         
 
                                               
Constant currency (1)
  $ 77,793       79,829       (2.6) %   $ 150,029       159,541       (6.0) %
Foreign currency (2)
    736                     1,528                
                         
Operating income
  $ 78,529       79,829       (1.6) %   $ 151,557       159,541       (5.0) %
                         
 
                                               
International Services
                                               
Constant currency (1)
  $ 85,335       74,769       14.1 %                        
Foreign currency (2)
    8,443                                        
                                     
Total revenues before reimbursable items
  $ 93,778       74,769       25.4 %                        
                                     
 
(1)   Reflects current period results on a non-GAAP basis as if foreign currency rates did not change from the comparable prior year period.
 
(2)   Reflects the impact of calculated changes in foreign currency rates from the comparable period.
Revenue and BASIC EPS Excluding Termination Fees
(unaudited)
(in thousands except per share data)
                                                 
    Three Months Ended June 30,   Six Months Ended June 30,
                    Percent                   Percent
    2011   2010   Change   2011   2010   Change
         
Consolidated
                                               
Total Revenues
  $ 447,554       430,887       3.9 %   $ 876,985       844,350       3.9 %
Less:
                                               
Termination Fees
          9,528                     32,667          
                         
Total revenues excluding termination fees
  $ 447,554       421,359       6.2 %   $ 876,985       811,683       8.0 %
                         
 
                                               
Income from continuing operations, net of tax, available to TSYS common shareholders
  $ 53,747       49,977       7.5 %   $ 102,537       101,731       0.8 %
Less:
                                               
Termination Fees, net of tax
          6,085                     21,011          
                         
Income from continuing operations, net of tax, available to TSYS common shareholders, excluding termination fees
  $ 53,747       43,892       22.5 %   $ 102,537       80,720       27.0 %
                         
Average common shares and participating securities
    192,625       197,344               193,117       197,260          
                         
 
                                               
BASIC EPS — Income from continuing operations, net of tax, available to TSYS common shareholders
  $ 0.28       0.25       10.1 %   $ 0.53       0.52       3.0 %
Less:
                                               
Termination Fees, net of tax
          0.03                     0.11          
                         
BASIC EPS — Income from continuing operations, net of tax, excluding termination fees available to TSYS common shareholders
  $ 0.28       0.22       25.4 %   $ 0.53       0.41       29.8 %
                         
Note: Earnings per share may not foot due to rounding.
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