Exhibit 99.1

 

 

Total System Services, Inc. One TSYS Way P.O. Box 2567 Columbus, GA 31902-2567		+1.706.649.2307 +1.706.649.5740 www.tsys.com

For immediate release:

Contacts:

Shawn Roberts

TSYS Investor Relations

+1.706.644.6081

shawnroberts@tsys.com

TSYS Reports 2013 Adjusted Cash EPS Increased 17.8%

Provides Guidance of 11-13% Growth in 2014 Adjusted Cash EPS

COLUMBUS, Ga., January 28, 2014 — TSYS (NYSE: TSS) today reported results for the fourth quarter and full year results for 2013.

Summary of Fourth Quarter and Full Year Financial Results Compared to 2012

 

•

Total revenues for the quarter were $600.8 million, an increase of 25.4%. For the year, total revenues were $2.1 billion, an increase of 14.0%. Total revenues for the quarter and year were negatively impacted by currency translation of $3.8 million and $20.6 million, respectively, as well as a decrease in reimbursable items of $2.7 million and $11.9 million, respectively.

 

•

Revenues before reimbursable items for the quarter were $543.0 million, an increase of 29.7%. For the year, revenues before reimbursable items were $1.9 billion, an increase of 16.9%. Revenues before reimbursable items were negatively impacted by currency translation of $3.9 million for the quarter and $20.3 million for the year.

 

•

Adjusted EBITDA* for the quarter was $184.2 million, an increase of 32.2%. For the year, adjusted EBITDA was $634.2 million, an increase of 16.0%.

 

•

Adjusted cash earnings per share (EPS)* for the quarter were $0.48, an increase of 26.9%. For the year, adjusted cash EPS was $1.72, an increase of 17.8%.

 

•

On a GAAP basis, net income attributable to common shareholders for the quarter was $65.7 million, an increase of 7.9%. For the year, net income attributable to common shareholders was $244.8 million, an increase of 0.2%.

 

•

Basic EPS for the quarter was $0.35, an increase of 6.2%. Diluted EPS was $0.34, an increase of 5.5%. For the year, basic EPS was $1.30, which was the same as last year. Diluted EPS was $1.29, a decrease of 0.2%.

 

*	Note: Adjusted EBITDA and adjusted cash EPS are non-GAAP measures which are detailed later in this press release in the section “Reconciliation of GAAP to Non-GAAP Financial Measures.”

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TSYS Reports 2013 Adjusted Cash EPS Increased 17.8%/p. 2

“Our total revenues exceeded $2 billion for the first time in our history, and we met the high end of the range of our adjusted cash EPS guidance of $1.72. This was truly a transformational year for TSYS,” said Philip W. Tomlinson, chairman and chief executive officer of TSYS.

“During the fourth quarter, we reduced our debt by $62.5 million, bringing our total reductions since the NetSpend acquisition to $124.9 million. Also during the quarter, we purchased 3.1 million shares of our stock for $97.6 million. We are pleased to announce our Board of Directors has approved increasing the number of shares that may be repurchased under our current share repurchase plan from up to 20 million shares to up to 28 million shares and extended the expiration date of the plan to April 30, 2015. With the increase, we have approximately 12 million shares available to be repurchased under the plan,” said Tomlinson.

“Our guidance for 2014 is included in the table below and we expect another year of strong growth in revenues and adjusted cash EPS. We expect growth in total revenues of 17% to 19%, revenues before reimbursable items of 19% to 21%, adjusted EBITDA of 17% to 20%, and adjusted cash EPS of 11% to 13%. The results for 2013 and our guidance for 2014 reflect our focus on diversification, growth and the exceptional performance of our TSYS team,” said Tomlinson.

 

		2014 Guidance
		Range (in millions, except per share amounts)												Percent Change
Total revenues		$	2,491				to			$	2,542				17	%			to				19	%
Revenues before reimbursable items		$	2,252				to			$	2,297				19	%			to				21	%
Adjusted EBITDA		$	744				to			$	759				17	%			to				20	%
Adjusted cash EPS attributable to TSYS common shareholders*		$	1.90				to			$	1.93				11	%			to				13	%

 

*	Average Basic Weighted Shares    188.4

Conference Call

TSYS will host its quarterly conference call at 5:00 p.m. ET on Tuesday, January 28. 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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TSYS Reports 2013 Adjusted Cash EPS Increased 17.8%/p. 3

Non-GAAP Measures

This press release contains information prepared in conformity with GAAP as well as non-GAAP information. It is management’s intent to provide non-GAAP financial information to enhance understanding of its consolidated financial information as prepared in accordance with GAAP. This non-GAAP information should be considered by the reader in addition to, but not instead of, the financial statements prepared in accordance with GAAP. Each non-GAAP financial measure and the corresponding GAAP financial measure are presented so as not to imply that more emphasis should be placed on the non-GAAP measure. The non-GAAP financial information presented may be determined or calculated differently by other companies.

Additional information about non-GAAP financial measures and a reconciliation of those measures to the most directly comparable GAAP measures are included on pages 13 to 15 of this release.

About TSYS

At TSYS, (NYSE: TSS), we believe payments should revolve around people — not the other way around. We call this belief “People-Centered Payments^SM.” By putting people at the center of every decision we make, TSYS supports financial institutions, businesses and governments in more than 80 countries. Through NetSpend, a TSYS Company, we empower consumers with the convenience, security, and freedom to be self-banked. TSYS offers issuer services and merchant payment acceptance for credit, debit, prepaid, healthcare and business solutions.

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, and has been named one of the 2013 World’s Most Ethical Companies by Ethisphere magazine. TSYS routinely posts all important information on its website, for more 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,” “potential,” “will,” “could,” and similar expressions. These forward-looking statements include, among others, statements regarding TSYS’ earnings guidance for 2014 total revenues, revenues before reimbursable items, adjusted EBITDA, and adjusted cash EPS, and the assumptions underlying such statements. These statements are based on the current beliefs and expectations of TSYS’ management, are based on management’s assumptions 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 or events 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, TSYS’ ability to integrate NetSpend and other acquisitions and achieve the anticipated growth opportunities and other benefits of the acquisitions; the effect of current domestic and worldwide economic conditions; the material breach of security of any of TSYS’ systems; risks associated with foreign operations, including adverse developments with respect to foreign currency exchange rates; expenses are incurred associated with the signing of a significant client; the deconversion of a significant client; 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

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TSYS Reports 2013 Adjusted Cash EPS Increased 17.8%/p. 4

cards as a payment mechanism; and growth rates of TSYS’ existing clients are lower than anticipated or attrition rates of existing clients are higher than anticipated. Additional risks and other factors that could cause actual results or events 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 and our Quarterly Report on Form 10-Q for the quarter ended September 30, 2013. 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.

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TSYS Announces Fourth Quarter 2013 Earnings

Page 5 of 15

 

TSYS

Financial Highlights

(unaudited)

(in thousands, except per share data)

 

		Three Months Ended												Twelve Months Ended
		December 31,												December 31,
										Percent												Percent
		2013				2012				Change				2013				2012				Change
Total revenues		$	600,840				479,100				25.4	%		$	2,132,353				1,870,972				14.0	%
Cost of services			403,475				315,698				27.8				1,436,331				1,262,310				13.8
Selling, general and administrative expenses			84,752				72,665				16.6				295,555				249,360				18.5
Merger and acquisition expenses			2,211				906				nm				14,220				1,650				nm
Operating income			110,402				89,831				22.9				386,247				357,652				8.0
Nonoperating income (expenses)			(960	)			5				nm				(1,108	)			(2,798	)			60.4
Merger and acquisition expenses—bridge loan facility & bonds			(9,755	)			—				na				(29,220	)			—				na
Income before income taxes, noncontrolling interests and equity in income of equity investments			99,687				89,836				11.0				355,919				354,854				0.3
Income taxes			33,985				30,767				10.5				112,369				115,102				(2.4	)
Income before noncontrolling interests and equity in income of equity investments			65,702				59,069				11.2				243,550				239,752				1.6
Equity in income of equity investments			3,691				3,188				15.8				13,047				10,171				28.3
Net income			69,393				62,257				11.5				256,597				249,923				2.7
Net income attributable to noncontrolling interests			(3,738	)			(1,395	)			nm				(11,847	)			(5,643	)			nm
Net income attributable to TSYS common shareholders		$	65,655				60,862				7.9	%		$	244,750				244,280				0.2	%
Basic earnings per share (EPS)		$	0.35				0.33				6.2	%		$	1.30				1.30				0.0	%
Diluted EPS		$	0.34				0.32				5.5	%		$	1.29				1.29				(0.2	)%
Dividends declared per share		$	0.10				0.10							$	0.40				0.40
Non-GAAP measures:
Adjusted cash EPS		$	0.48				0.37				26.9	%		$	1.72				1.46				17.8	%
Adjusted EBITDA		$	184,234				139,385				32.2	%		$	634,165				546,883				16.0	%

nm = not meaningful

 

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TSYS Announces Fourth Quarter 2013 Earnings

Page 6 of 15

 

TSYS

Consolidated Statements of Comprehensive Income

(unaudited)

(in thousands)

 

		Three Months Ended								Twelve Months Ended
		December 31,								December 31,
		2013				2012				2013				2012
Net income		$	69,393				62,257			$	256,597				249,923
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments			2,407				(1,393	)			(4,082	)			2,183
Postretirement healthcare plan adjustments			472				(415	)			1,895				(1,666	)
Unrealized gain on available-for-sale securities			294				—				1,773				—
Other comprehensive income (loss)			3,174				(1,808	)			(413	)			517
Comprehensive income			72,567				60,449				256,184				250,440
Comprehensive income attributable to noncontrolling interests			2,943				(177	)			9,092				4,307
Comprehensive income attributable to TSYS common shareholders		$	69,624				60,626			$	247,092				246,133

 

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TSYS Announces Fourth Quarter 2013 Earnings

Page 7 of 15

 

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, 2013								December 31, 2012								December 31, 2013								December 31, 2012
		Common				Participating				Common				Participating				Common				Participating				Common				Participating
		Stock				Securities				Stock				Securities				Stock				Securities				Stock				Securities
Basic earnings per share:
Net income		$	65,655								60,862							$	244,750								244,280
Less income allocated to nonvested awards			(643	)			643				(186	)			186				(1,595	)			1,595				(800	)			800
Net income allocated to common stock for EPS calculation (a)		$	65,012				643				60,676				186			$	243,155				1,595				243,480				800
Average common shares outstanding (b)			187,572				1,874				185,888				583				187,145				1,246				187,403				627
Average common shares and participating securities			189,446								186,471								188,391								188,030
Basic earnings per share (a)/(b)		$	0.35				0.34				0.33				0.32			$	1.30				1.28				1.30				1.28
Diluted earnings per share:
Net income		$	65,655								60,862							$	244,750								244,280
Less income allocated to nonvested awards			(638	)			638				(186	)			186				(1,585	)			1,585				(796	)			796
Net income allocated to common stock for EPS calculation (c)		$	65,017				638				60,676				186			$	243,165				1,585				243,484				796
Average common shares outstanding			187,572				1,874				185,888				583				187,145				1,246				187,403				627
Increase due to assumed issuance of shares related to common equivalent shares outstanding			2,176								983								1,648								1,262
Average common and common equivalent shares outstanding (d)			189,748				1,874				186,871				583				188,793				1,246				188,665				627
Average common and common equivalent shares and participating securities			191,622								187,454								190,039								189,292
Diluted earnings per share (c)/(d)		$	0.34				0.34				0.32				0.32			$	1.29				1.27				1.29				1.27

 

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TSYS Announces Fourth Quarter 2013 Earnings

Page 8 of 15

 

TSYS

Segment Breakdown

(unaudited)

(in thousands)

 

		Three Months Ended December 31,																Twelve Months Ended December 31,
										Change																Change
		2013				2012				$				%				2013				2012				$				%
Revenues before reimbursable items
North America Services		$	223,266				213,639				9,627				4.5	%		$	860,645				826,750				33,895				4.1	%
International Services			108,332				102,427				5,905				5.8				389,532				396,149				(6,617	)			(1.7	)
Merchant Services			110,375				105,855				4,520				4.3				446,277				409,698				36,579				8.9
NetSpend			104,144				—				104,144				na				207,851				—				207,851				na
Intersegment revenues			(3,121	)			(3,352	)			231				6.9				(12,550	)			(14,106	)			1,556				11.0
Revenues before reimbursable items from external customers		$	542,996				418,569				124,427				29.7	%		$	1,891,755				1,618,491				273,264				16.9	%
Total revenues
North America Services		$	259,067				247,612				11,455				4.6	%		$	1,000,072				965,393				34,679				3.6	%
International Services			113,866				107,000				6,866				6.4				409,597				413,467				(3,870	)			(0.9	)
Merchant Services			128,074				129,413				(1,339	)			(1.0	)			533,049				512,580				20,469				4.0
NetSpend			104,144				—				104,144				na				207,851				—				207,851				na
Intersegment revenues			(4,311	)			(4,925	)			614				12.5				(18,216	)			(20,468	)			2,252				11.0
Revenues from external customers		$	600,840				479,100				121,740				25.4	%		$	2,132,353				1,870,972				261,381				14.0	%
Depreciation and amortization
North America Services		$	19,420				18,816				604				3.2	%		$	74,480				74,673				(193	)			(0.3	)%
International Services			13,554				13,980				(426	)			(3.0	)			47,978				55,033				(7,055	)			(12.8	)
Merchant Services			3,004				2,699				305				11.3				12,034				12,083				(49	)			(0.4	)
NetSpend			1,651				—				1,651				na				3,121				—				3,121				na
Segment depreciation and amortization			37,629				35,495				2,134				6.0				137,613				141,789				(4,176	)			(2.9	)
Acquisition intangible amortization			24,751				7,340				17,411				nm				65,893				26,264				39,629				nm
Corporate admin and other			482				446				36				8.1				1,846				2,558				(712	)			(27.8	)
Total depreciation and amortization		$	62,862				43,281				19,581				45.2	%		$	205,352				170,610				34,742				20.4	%
Adjusted segment operating income
North America Services		$	85,205				78,834				6,371				8.1	%		$	314,577				289,492				25,085				8.7	%
International Services			19,463				6,584				12,879				nm				45,911				29,427				16,484				56.0
Merchant Services			35,526				37,248				(1,722	)			(4.6	)			154,047				156,284				(2,237	)			(1.4	)
NetSpend			28,470				—				28,470				na				59,717				—				59,717				na
Total adjusted segment operating income			168,664				122,666				45,998				37.5				574,252				475,203				99,049				20.8
Acquisition intangible amorization			(24,751	)			(7,340	)			(17,411	)			nm				(65,893	)			(26,264	)			(39,629	)			nm
NetSpend M&A operating expenses (non-recurring)			(2,211	)			—				(2,211	)			na				(14,220	)			—				(14,220	)			na
Corporate admin and other			(31,300	)			(25,495	)			(5,805	)			(22.8	)			(107,892	)			(91,287	)			(16,605	)			(18.2	)
Operating income		$	110,402				89,831				20,571				22.9	%		$	386,247				357,652				28,595				8.0	%
Other:
Reimbursable items:
North America Services		$	35,801				33,973				1,828				5.4	%		$	139,427				138,643				784				0.6	%
International Services			5,534				4,573				961				21.0				20,065				17,318				2,747				15.9
Merchant Services			17,699				23,558				(5,859	)			(24.9	)			86,772				102,882				(16,110	)			(15.7	)
NetSpend			—				—				—				na				—				—				—				na
Intersegment revenues			(1,190	)			(1,573	)			383				24.3				(5,666	)			(6,362	)			696				10.9
Reimbursable items		$	57,844				60,531				(2,687	)			(4.4	)%		$	240,598				252,481				(11,883	)			(4.7	)%

 

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TSYS Announces Fourth Quarter 2013 Earnings

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TSYS

Segment Breakdown

(unaudited)

(in thousands)

Other:

 

		At								Change
Volumes:		12/31/2013				12/31/2012				$				%
FTEs (full-time equivalents)
North America Services			4,484				4,096				388				9.5	%
International Services			2,489				2,404				85				3.5
Merchant Services			1,599				1,481				118				8.0
NetSpend			470				—				470				na
Corporate Admin and Other			553				425				128				30.1
FTEs			9,595				8,406				1,189				14.1	%
Total assets (in thousands)
North America Services		$	3,241,964				1,744,877				1,497,087				85.8	%
International Services			417,855				445,642				(27,787	)			(6.2	)
Merchant Services			676,592				703,725				(27,133	)			(3.9	)
NetSpend			1,594,197				—				1,594,197				na
Intersegment assets			(2,243,852	)			(870,406	)			(1,373,446	)			nm
Total assets		$	3,686,756				2,023,838				1,662,918				82.2	%

 

		Three Months Ended December 31,																Twelve Months Ended December 31,
										Change																Change
		2013				2012				Inc(Dec)				%				2013				2012				Inc(Dec)				%
North America Segment:
Accounts on File (AOF) (in millions)																			481.9				424.8				57.0				13.4	%
Transactions (in millions)			2,488.6				2,194.7				293.9				13.4	%			9,132.8				8,102.3				1,030.5				12.7	%
International Segment:
AOF (in millions)																			59.2				54.6				4.6				8.5	%
Transactions (in millions)			555.7				474.0				81.7				17.2	%			2,007.9				1,674.5				333.4				19.9	%
Merchant Segment:
Point-of-sale Transactions (in millions)			1,034.6				1,153.2				(118.6	)			(10.3	)%			4,359.8				4,877.6				(517.8	)			(10.6	)%
Dollar sales volume (in millions)		$	12,021.0			$	11,038.0			$	983.0				8.9	%		$	44,144.0			$	38,994.0			$	5,150				13.2	%
NetSpend Segment:
Gross Dollar Volume (in millions)		$	3,967.6			$	3,265.4			$	702.2				21.5	%		$	17,075.1			$	13,156.0			$	3,919.1				29.8	%
90-Day Active Cards (in thousands)																			2,835.1				—				2,835.1				na
Direct Deposit 90-Day Active Cards (in thousands)																			1,321.1				—				1,321.1				na
% of 90-Day Active Cards with Direct Deposit																			46.6	%							46.6	%

 

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TSYS Announces Fourth Quarter 2013 Earnings

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TSYS

Balance Sheet

(unaudited)

(in thousands)

 

		Dec 31, 2013				Dec 31, 2012
Assets
Current assets:
Cash and cash equivalents		$	278,230				247,612
Restricted cash			753				282
Accounts receivable, net			264,238				247,083
Deferred income tax assets			14,958				9,825
Prepaid expenses and other current assets			95,942				69,924
Total current assets			654,121				574,726
Goodwill			1,543,179				518,344
Property and equipment, net			265,216				260,389
Computer software, net			369,773				226,917
Contract acquisition costs, net			184,890				161,267
Other intangible assets, net			481,419				130,054
Equity investments, net			94,133				87,764
Deferred income tax assets, net			5,840				5,334
Other assets			88,185				59,043
Total assets		$	3,686,756				2,023,838
Liabilities
Current liabilities:
Accounts payable		$	36,463				63,370
Current portion of borrowings			34,257				27,361
Current portion of obligations under capital leases			23,032				13,263
Accrued salaries and employee benefits			38,775				26,243
Other current liabilities			168,736				100,282
Total current liabilities			301,263				230,519
Long-term borrowings, excluding current portion			1,428,251				174,859
Deferred income tax liabilities			224,867				48,074
Obligations under capital leases, excluding current portion			7,500				17,155
Other long-term liabilities			82,797				68,791
Total liabilities			2,044,678				539,398
Redeemable noncontrolling interest			39,652				39,505
Equity
Shareholders’ equity:
Common stock			20,279				20,247
Additional paid-in capital			165,841				141,793
Accumulated other comprehensive income (loss), net			3,749				1,408
Treasury stock			(326,996	)			(287,301	)
Retained earnings			1,718,204				1,549,063
Total shareholders’ equity			1,581,077				1,425,210
Noncontrolling interests in consolidated subsidiaries			21,349				19,725
Total equity			1,602,426				1,444,935
Total liabilities and equity		$	3,686,756				2,023,838

 

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TSYS

Cash Flow

(unaudited)

(in thousands)

 

		Twelve Months Ended December 31,
		2013				2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	256,597				249,923
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in income of equity investments			(13,047	)			(10,171	)
Dividends received from equity investments			8,595				7,524
Net loss on foreign currency			1,027				2,012
Depreciation and amortization			205,352				170,610
Amortization of debt issuance costs			7,269				298
Amortization of bond discount			225				—
Changes in fair value of private equity investments			(966	)			(898	)
Share-based compensation			28,933				18,621
Excess tax benefit from share-based payment arrangements			(3,528	)			(1,259	)
Provisions for bad debt expense and billing adjustments			2,000				1,054
Charges for transaction processing provisions			7,458				2,803
Provision for fraud and other losses			11,912				—
Deferred income tax expense			25,720				285
Loss on disposal of equipment, net			(79	)			324
Changes in operating assets and liabilities:
Restricted cash			(392	)			—
Accounts receivable			(8,667	)			2,855
Prepaid expenses, other current assets and other long-term assets			(179	)			(2,945	)
Accounts payable			(52,042	)			37,206
Accrued salaries and employee benefits			(403	)			(7,083	)
Other current liabilities and other long-term liabilities			(23,386	)			(15,406	)
Net cash provided by operating activities			452,399				455,753
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment, net			(40,598	)			(31,395	)
Additions to licensed computer software from vendors			(64,729	)			(33,001	)
Additions to internally developed computer software			(32,506	)			(19,285	)
Cash used in acquisitions, net of cash acquired			(1,314,660	)			(188,698	)
Purchase of private equity investments			(1,378	)			(3,031	)
Additions to contract acquisition costs			(55,965	)			(34,384	)
Net cash used in investing activities			(1,509,836	)			(309,794	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term borrowings and capital lease obligations			(166,805	)			(200,052	)
Proceeds from borrowings of long-term borrowings			1,395,661				150,000
Proceeds from exercise of stock options			40,691				9,672
Excess tax benefit from share-based payment arrangements			3,528				1,259
Repurchase of common stock under plans and tax withholding			(103,857	)			(74,939	)
Debt issuance costs			(13,575	)			(2,073	)
Subsidiary dividends paid to noncontrolling shareholders			(7,321	)			(2,797	)
Dividends paid on common stock			(56,510	)			(94,035	)
Net cash provided by (used in) financing activities			1,091,813				(212,965	)
CASH AND CASH EQUIVALENTS:
Effect of exchange rate changes on cash and cash equivalents			(3,758	)			(1,719	)
Net increase in cash and cash equivalents			30,618				(68,725	)
Cash and cash equivalents at beginning of period			247,612				316,337
Cash and cash equivalents at end of period		$	278,230				247,612

 

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Supplemental Information:

 

		Accounts on File
		Total
(in millions)		December 2013				December 2012				% Change
Consumer Credit			229.0				200.5				14.2
Retail			27.8				25.0				11.0
Total Consumer			256.8				225.5				13.9
Commercial			39.9				37.1				7.6
Other			18.9				12.8				47.6
Subtotal			315.6				275.4				14.6
Prepaid/Stored Value			118.0				115.9				1.8
Government Services			62.2				57.0				9.2
Commercial Card Single Use			45.3				31.1				45.4
Total AOF			541.1				479.4				12.9

Growth in Accounts on File (in millions):

 

		December 2012 to December 2013				December 2011 to December 2012
Beginning balance			479.4				404.2
Change in accounts on file due to:
Internal growth of existing clients			37.6				31.5
New clients			61.2				80.1
Purges/Sales			(36.4	)			(33.6	)
Deconversions			(0.7	)			(2.8	)
Ending balance			541.1				479.4

 

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Reconciliation of GAAP to Non-GAAP Financial Measures

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 fourth quarter and full year 2013 financial results using the previous year’s foreign currency exchange rates. On a full year constant currency basis, TSYS’ total revenues grew 15.1% as compared to a reported GAAP increase of 14.0%.

The schedule below also provides a reconciliation of basic EPS, adjusted for the after-tax impact of acquisition intangible amortization, share-based compensation and merger and acquisition costs, to adjusted cash EPS.

The tax rate used in the calculation of cash EPS for the quarter and year is equal to an estimate of our annual effective tax rate on GAAP income. This effective rate is estimated annually and may be adjusted during the year to take into account events or trends that materially impact the effective tax rate including, but not limited to, significant changes resulting from tax legislation, material changes in the mix of revenues and expenses by entity and other signifcant events.

The schedule also provides a reconciliation of net income, adjusted for equity in income of equity investments, income taxes, nonoperating expense, depreciation and amortization, share-based compensation, and merger and acquisition expenses, to adjusted EBITDA.

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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Reconciliation of GAAP to Non-GAAP

Constant Currency Comparison

(unaudited)

(in thousands)

 

		Three Months Ended December 31,												Twelve Months Ended December 31,
										Percent												Percent
		2013				2012				Change				2013				2012				Change
Consolidated
Constant currency (1)		$	604,665				479,100				26.2	%		$	2,152,961				1,870,972				15.1	%
Foreign currency (2)			(3,825	)			—								(20,608	)			—
Total revenues		$	600,840				479,100				25.4	%		$	2,132,353				1,870,972				14.0	%
Constant currency (1)		$	546,849				418,569				30.6	%		$	1,912,063				1,618,491				18.1	%
Foreign currency (2)			(3,853	)			—								(20,308	)			—
Total revenues before reimbursable items		$	542,996				418,569				29.7	%		$	1,891,755				1,618,491				16.9	%
Constant currency (1)		$	110,186				89,831				22.7	%		$	388,042				357,652				8.5	%
Foreign currency (2)			216				—								(1,795	)			—
Operating income		$	110,402				89,831				22.9	%		$	386,247				357,652				8.0	%
International Services
Constant currency (1)		$	117,806				107,000				10.1	%		$	430,521				413,467				4.1	%
Foreign currency (2)			(3,940	)			—								(20,924	)			—
Total revenues		$	113,866				107,000				6.4	%		$	409,597				413,467				(0.9	)%

 

(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.

Revenues Before Reimbursable Items

(unaudited)

(in thousands)

 

		Three Months Ended December 31,												Twelve Months Ended December 31,
										Percent												Percent
		2013				2012				Change				2013				2012				Change
Total Revenues		$	600,840				479,100				25.4	%		$	2,132,353				1,870,972				14.0	%
Reimbursable Items			57,844				60,531				(4.4	)			240,598				252,481				(4.7	)
Revenues Before Reimbursable Items		$	542,996				418,569				29.7	%		$	1,891,755				1,618,491				16.9	%

 

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TSYS Announces Fourth Quarter 2013 Earnings

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Reconciliation of GAAP to Non-GAAP

Adjusted Cash Earnings

(unaudited)

(in thousands, except per share data)

 

		Three Months Ended December 31,												Twelve Months Ended December 31,
										Percent												Percent
		2013				2012				Change				2013				2012				Change
Net income attributable to TSYS common shareholders (a)		$	65,655				60,862				7.9	%		$	244,750				244,280				0.2	%
Adjust for amounts attributable to TSYS common shareholders:
Add: Acquisition intangible amortization, net of taxes		$	16,615				4,640				nm	%		$	43,759				17,282				nm	%
Add: Share-based compensation, net of taxes			6,408				4,272				50.0	%			19,838				12,683				56.4	%
Cash earnings			88,678				69,774				27.1	%			308,347				274,245				12.4	%
Add: NetSpend M&A expenses, net of taxes* (non-recurring)			1,317				—				na	%			15,251				—				na	%
Cash earnings adjusted		$	89,995				69,774				29.0	%		$	323,598				274,245				18.0	%
Basic EPS—Net income attributable to TSYS common shareholders
As reported (GAAP)		$	0.35				0.33				6.2	%		$	1.30				1.30				0.0	%
Adjust for amounts attributable to TSYS common shareholders:
Add: Acquisition intangible amortization, net of taxes			0.09				0.02				nm	%			0.23				0.09				nm	%
Add: Share-based compensation, net of taxes			0.03				0.02				47.6	%			0.11				0.07				56.0	%
Cash earnings per share			0.47				0.37				25.1	%			1.64				1.46				12.2	%
Add: NetSpend M&A expenses, net of taxes* (non-recurring)			0.01				—				na	%			0.08				—				na	%
Adjusted cash EPS **		$	0.48				0.37				26.9	%		$	1.72				1.46				17.8	%
Average common shares and participating securities			189,446				186,471								188,391				188,030

 

*	Certain merger and acquisition costs are nondeductible for income tax purposes

**	Adjusted cash EPS amounts may not total due to rounding.

Adjusted EBITDA

(unaudited)

(in thousands)

 

		Three Months Ended December 31,												Twelve Months Ended December 31,
										Percent												Percent
		2013				2012				Change				2013				2012				Change
Net income		$	69,393				62,257				11.5	%		$	256,597				249,923				2.7	%
Adjust for:
Deduct: Equity in income of equity investments			(3,691	)			(3,188	)			(15.8	)%			(13,047	)			(10,171	)			(28.3	)%
Add: Income taxes			33,985				30,767				10.5	%			112,369				115,102				(2.4	)%
Add: Nonoperating expense			10,715				(5	)			nm	%			30,328				2,798				nm	%
Add: Depreciation and amortization			62,862				43,281				45.2	%			205,352				170,610				20.4	%
EBITDA			173,264				133,112				30.2	%			591,599				528,262				12.0	%
Adjust for:
Add: Share-based compensation			9,345				6,273				49.0	%			28,933				18,621				55.4	%
Add: NetSpend M&A operating expenses *(non-recurring)			1,625				—				na	%			13,633				—				na	%
Adjusted EBITDA		$	184,234				139,385				32.2	%		$	634,165				546,883				16.0	%

 

*	Excludes share-based compensation

 

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