EVERTEC, Inc. - FORM 8-K - EX-99.1

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8-K - 8-K - EVERTEC, Inc.	d98643d8k.htm
EX-99.2 - EX-99.2 - EVERTEC, Inc.	d98643dex992.htm

Exhibit 99.1

LOGO

EVERTEC REPORTS FOURTH QUARTER AND FULL YEAR 2015 RESULTS

ANNOUNCES 2016 OUTLOOK

INCREASES AND EXTENDS AUTHORIZED SHARE REPURCHASE PLAN

SAN JUAN, PUERTO RICO – February 17, 2016 – EVERTEC, Inc. (NYSE: EVTC) (“EVERTEC” or the “Company”) today announced results for the fourth quarter and full year ended December 31, 2015.

Fourth Quarter 2015 Highlights

•

Revenue grew 2% to $95.5 million

•

GAAP Net Income was $21.8 million, or $0.29 per diluted share

•

Adjusted EBITDA decreased 2% to $46.8 million

•

Adjusted diluted earnings per share of $0.44 or flat to prior year

•

$28 million returned to shareholders in share repurchases and dividends

•

Increased share repurchase plan for a total of $120 million available for future use

Full Year 2015 Highlights

•

Revenue grew 3% to $372.9 million

•

GAAP Net Income was $74.6 million, or $0.97 per diluted share

•

Adjusted EBITDA increased 2% to $185.6 million

•

Adjusted diluted earnings per share grew 2% to $1.68

•

Net cash flow from operating activities increased 14%

•

$86 million returned to shareholders in share repurchases and dividends

Mac Schuessler, President and Chief Executive Officer, stated “In the past year with a challenging environment in Puerto Rico, we delivered on our financial goals, strengthened our management team, improved infrastructure and internal processes and made significant progress on our corporate development initiatives. I am pleased with the progress we have made so far, and we now have a focused leadership team to improve our level of execution and productivity across the Company.”

Schuessler continued, “Looking to 2016, we expect this to be an important year as we continue to make additional investments to enable the Company to expand our market reach and increase our growth potential.”

Fourth Quarter 2015 Results

Revenue. Total revenue for the quarter ended December 31, 2015 was $95.5 million, an increase of 2% compared with $93.5 million in the prior year.

Merchant Acquiring net revenue was $23.4 million, an increase of 12% compared with $20.8 million in the prior year. Revenue growth in the quarter was driven by sales volume growth as well as the addition of the FirstBank merchant contract portfolio in the quarter.

Payment Processing revenue was $27.7 million or approximately flat when compared with the prior year. Revenue in the quarter reflected an increase in transactions processed over the ATH® debit network, a reduction related to the classification of FirstBank revenues in Merchant Acquiring and reduced revenues from contracts with the Puerto Rican government.

Business Solutions revenue was $44.5 million, a decrease of 1% compared with $45.0 million in the prior year. Business Solutions revenue declined in the quarter reflecting a decrease in hardware sales and reduced item processing revenues, both of which were partially offset by additional volumes in core banking.

Adjusted EBITDA. For the quarter ended December 31, 2015, Adjusted EBITDA was $46.8 million, a decrease of 2% compared with $47.5 million in the prior year. Adjusted EBITDA margin (Adjusted EBITDA as a percentage of total revenues) decreased 190 basis points to 48.9% compared with 50.9% in the prior year. The decrease in Adjusted EBITDA margin was primarily driven by a change in revenue mix, increased bad debt expense and increased expenses related to the Company’s card issuing product initiative.

Net Income. For the quarter ended December 31, 2015, GAAP Net Income was $21.8 million, or $0.29 per diluted share, compared with $12.5 million or $0.16 per diluted share in the prior year.

For the quarter ended December 31, 2015, Adjusted Net Income was $33.1 million, a decrease of 4% compared with $34.4 million in the prior year. Adjusted Net Income per diluted share of $0.44 was unchanged from the prior year.

Net cash provided by operating activities. For the year ended December 31, 2015, net cash provided by operating activities was $160.2 million, an increase of 14% compared with $139.9 million in the prior year. The increase was primarily driven by working capital improvements.

Share Repurchase

During the three months ended December 31, 2015, the Company repurchased 1.2 million shares of common stock at an average price of $16.95 per share for a total of $20.0 million. For the full year 2015, the Company repurchased a total of 3.0 million shares of common stock at an average price of $18.24 per share for a total of $54.9 million. As of December 31, 2015, a total of $20 million remained available for future use under the Company’s share repurchase program.

EVERTEC’s Board of Directors approved an increase and extension of the Company’s current stock repurchase program. The Board has increased the repurchase authorization by $100 million and extended the expiration to December 31, 2017. A total of $120 million is currently available for future use. The Company may repurchase shares in the open market, through an accelerated share repurchase program or in privately negotiated transactions, subject to market conditions, business opportunities and other factors.

Change to Adjusted Net Income Definition

Historically, the Company deducted cash taxes paid in the period from Pre-Tax Adjusted Income to derive Adjusted Net Income and Adjusted EPS. Prospectively, the Company will deduct the GAAP tax expense

applicable to Adjusted Income for purposes of calculating Adjusted Net Income and Adjusted EPS. Management believes this new measure of Adjusted Net Income provides a more accurate and comparable measure of operating performance and will use it to measure its performance.

To assist users with this change the Company has provided a retrospective quarterly reconciliation of the historical measure of Adjusted Net Income to the new measure for fiscal years 2013 through 2015 in a supplemental Schedule (Schedule 7).

2016 Outlook

The Company financial outlook for 2016 is as follows:

•

Total consolidated revenue between $373 and $380 million representing growth of 0 to 2%

•

Adjusted diluted earnings per share guidance of $1.57 to $1.64 representing a range of -2 to 2% as compared to $1.61 in 2015

•

Capital expenditures ranging between $35 and $40 million

Earnings Conference Call and Audio Webcast

The Company will host a conference call to discuss its Fourth quarter 2015 financial results today at 5:00 p.m. ET. Hosting the call will be Mac Schuessler, President and Chief Executive Officer, and Peter Smith, Executive Vice President and Chief Financial Officer. The conference call can be accessed live over the phone by dialing (888) 317-6016 or for international callers by dialing (412) 317-6016. A replay will be available one hour after the end of the conference call and can be accessed by dialing (877) 344-7529 or (412) 317-0088 for international callers; the pin number is 10079333. The replay will be available through Wednesday, February 24, 2016. The call will be webcast live from the Company’s website at www.evertecinc.com under the Investor Relations section or directly at http://ir.evertecinc.com. A supplemental slide presentation that accompanies this call and webcast can be found on the investor relations website at ir.evertecinc.com and will remain available after the call.

About EVERTEC

EVERTEC, Inc. (NYSE: EVTC) is a leading full-service transaction processing business in Latin America, providing a broad range of merchant acquiring, payment processing and business solutions services. The Company manages a system of electronic payment networks that process more than two billion transactions annually, and offers a comprehensive suite of services for core bank processing, cash processing and technology outsourcing. In addition, EVERTEC owns and operates the ATH® network, one of the leading personal identification number (“PIN”) debit networks in Latin America. Based in Puerto Rico, the Company operates in 19 Latin American countries and serves a diversified customer base of leading financial institutions, merchants, corporations and government agencies with “mission-critical” technology solutions. For more information, visit www.evertecinc.com.

About Non-GAAP Financial Measures

Generally Accepted Accounting Principles (GAAP) is the term used to refer to the standard framework of guidelines for financial accounting. GAAP includes the standards, conventions, and rules accountants follow in recording and summarizing transactions and in the preparation of financial statements. In addition to reporting financial results in accordance with GAAP, the company has provided non-GAAP financial measures, which it believes are useful to help investors better understand its financial performance, competitive position and prospects for the future. For these reasons, management also uses these measures in part to assess its performance. In addition, the Company’s presentation of Adjusted EBITDA is consistent with the equivalent measurements contained in the Credit Agreement in testing EVERTEC Group’s compliance with covenants therein such as the senior secured leverage ratio. Any non-GAAP measures should be considered in context with the GAAP financial presentation and should not be considered in isolation or as a substitute for GAAP measures. Further, EVERTEC’s non-GAAP measures may be calculated differently from similarly titled measures of other companies. Reconciliations of these non-GAAP measures to related GAAP measures, including footnotes describing the specific adjustments, are provided in the attached schedules and in the Investor Relations section of the EVERTEC web site, www.evertecinc.com.

Forward-Looking Statements

Certain statements in this press release constitute “forward-looking statements” within the meaning of, and subject to the protection of, the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause the actual results, performance or achievements of EVERTEC to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Statements preceded by, followed by, or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” and “plans” and similar expressions of future or conditional verbs such as “will,” “should,” “would,” “may,” and “could” are generally forward-looking in nature and not historical facts. Any statements that refer to expectations or other characterizations of future events, circumstances or results are forward-looking statements.

Various factors that could cause actual future results and other future events to differ materially from those estimated by management include, but are not limited to: the Company’s reliance on its relationship with Popular for a significant portion of revenue; our ability to renew our client contracts on terms favorable to us; the effectiveness of our risk management procedures; our dependence on our processing systems, technology infrastructure, security systems and fraudulent-payment-detection systems, and the risk that our systems may experience breakdowns or fail to prevent security breaches or fraudulent transfers; our ability to develop, install and adopt new technology; a decreased client base due to consolidations in the banking and financial-services industry; the credit risk of our merchant clients, for which we may also be liable; the continuing market position of the ATH® network; reduction in consumer confidence leading to decreased consumer spending; the Company’s dependence on credit card associations; regulatory limitations on our activities, including the potential need to seek regulatory approval to consummate transactions, due to our relationship with Popular and our role as a service provider to financial institutions; changes in the regulatory environment and changes in international, legal, tax, political, administrative or economic conditions; the geographical concentration of the Company’s business in Puerto Rico; operating an international business in multiple regions with potential political and economic instability; increased compliance risks associated with

operating an international business; operating in countries and counterparties that put us at risk of violating U.S. sanctions laws; our ability to execute our expansion and acquisition strategies; our ability to protect our intellectual property rights; our ability to recruit and retain qualified personnel; our ability to comply with federal, state, and local regulatory requirements; evolving industry standards; the Company’s high level of indebtedness and restrictions contained in the Company’s debt agreements; and the Company’s ability to generate sufficient cash to service the Company’s indebtedness and to generate future profits.

Consideration should be given to the areas of risk described above, as well as those risks set forth under the headings “Forward-Looking Statements” and “Risk Factors” in the reports the Company files with the SEC from time to time, in connection with considering any forward-looking statements that may be made by the Company and its businesses generally. We undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events unless we are required to do so by law.

Investor Contact

Kay Sharpton

(787) 773-5442

IR@evertecinc.com

EVERTEC, Inc.

Schedule 1: Unaudited Consolidated Statements of Income and Comprehensive Income


	Quarter ended December 31,						Year ended December 31,
(Dollar amounts in thousands, except per share data)	2015			2014			2015			2014
Revenues
Merchant Acquiring, net	$	23,370		$	20,791		$	85,411		$	79,136
Payment Processing		27,682			27,732			108,320			105,423
Business Solutions		44,481			44,961			179,153			176,570

Total revenues		95,533			93,484			372,884			361,129


Operating costs and expenses
Cost of revenues, exclusive of depreciation and amortization shown below		42,577			40,736			167,857			156,517
Selling, general and administrative expenses		10,199			15,647			37,278			41,276
Depreciation and amortization		15,207			16,531			64,974			65,988

Total operating costs and expenses		67,983			72,914			270,109			263,781


Income from operations		27,550			20,570			102,775			97,348


Non-operating income (expenses)
Interest income		124			83			495			328
Interest expense		(5,852	)		(6,301	)		(24,266	)		(26,081	)
(Losses) earnings of equity method investment		(49	)		235			147			1,140
Other income		876			248			2,306			2,375

Total non-operating expenses		(4,901	)		(5,735	)		(21,318	)		(22,238	)

Income before income taxes		22,649			14,835			81,457			75,110
Income tax expense		802			2,373			6,855			7,578

Net income		21,847			12,462			74,602			67,532
Other comprehensive loss, net of tax
Foreign currency translation adjustments		(1,018	)		(375	)		(545	)		(6,948	)
Loss on cash flow hedge		(515	)		—			(515	)		—

Total comprehensive income	$	20,314		$	12,087		$	73,542		$	60,584


Net income per common share:
Basic	$	0.29		$	0.16		$	0.97		$	0.86
Diluted	$	0.29		$	0.16		$	0.97		$	0.86

Shares used in computing net income per common share:
Basic		75,780,036			77,898,106			77,066,459			78,337,152
Diluted		75,923,316			78,057,312			77,181,123			78,891,139

EVERTEC, Inc.

Schedule 2: Unaudited Consolidated Balance Sheets


(Dollar amounts in thousands)	December 31, 2015			December 31, 2014
Assets
Current Assets:
Cash	$	28,747		$	32,114
Restricted cash		11,818			5,718
Accounts receivable, net		79,339			75,810
Deferred tax asset		5,918			399
Prepaid expenses and other assets		19,431			20,565


Total current assets		145,253			134,606
Investment in equity investee		12,264			11,756
Property and equipment, net		34,128			29,535
Goodwill		368,133			368,837
Other intangible assets, net		312,059			334,584
Other long-term assets		8,794			10,917

Total assets	$	880,631		$	890,235

Liabilities and stockholders’ equity
Current Liabilities:
Accrued liabilities	$	37,308		$	26,052
Accounts payable		26,839			22,879
Unearned income		12,676			9,825
Income tax payable		1,350			1,956
Current portion of long-term debt		22,750			19,000
Short-term borrowings		17,000			23,000
Deferred tax liability, net		—			1,799

Total current liabilities		117,923			104,511
Long-term debt		625,745			647,579
Long-term deferred tax liability, net		21,915			15,674
Other long-term liabilities		2,876			2,898

Total liabilities		768,459			770,662

Commitments and contingencies
Stockholders’ equity
Preferred stock, par value $0.01; 2,000,000 shares authorized; none issued		—			—
Common stock, par value $0.01; 206,000,000 shares authorized; 74,988,210 shares issued and outstanding at December 31, 2015 (December 31, 2013 - 77,893,144)		750			779
Additional paid-in capital		9,718			59,740
Accumulated earnings		109,286			65,576
Accumulated other comprehensive loss, net of tax		(7,582	)		(6,522	)

Total stockholders’ equity		112,172			119,573

Total liabilities and stockholders’ equity	$	880,631		$	890,235

EVERTEC, Inc.

Schedule 3: Unaudited Consolidated Statements of Cash Flows


	Year ended December 31,
(Dollar amounts in thousands)	2015			2014
Cash flows from operating activities
Net income	$	74,602		$	67,532
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		64,974			65,988
Amortization of debt issue costs and accretion of discount		3,329			3,094
Provision for doubtful accounts and sundry losses		2,130			1,360
Deferred tax benefit		(1,082	)		(1,713	)
Share-based compensation		5,204			4,587
Unrealized (gain) loss of indemnification assets		(14	)		446
Loss on disposition of property and equipment and other intangibles		143			734
Earnings of equity method investment		(147	)		(1,140	)
Dividend received from equity method investment		—			326
(Increase) decrease in assets:
Accounts receivable, net		(4,977	)		(6,608	)
Prepaid expenses and other assets		(321	)		(1,067	)
Other long-term assets		(71	)		3,365
Increase (decrease) in liabilities:
Accounts payable and accrued liabilities		14,204			(2,883	)
Income tax payable		(606	)		1,697
Unearned income		2,851			4,230

Total adjustments		85,617			72,416

Net cash provided by operating activities		160,219			139,948


Cash flows from investing activities
Net increase in restricted cash		(6,100	)		(285	)
Additions to software and purchase of customer relationship		(26,004	)		(15,046	)
Property and equipment acquired		(18,778	)		(10,898	)
Proceeds from sales of property and equipment		14			59

Net cash used in investing activities		(50,868	)		(26,170	)


Cash flows from financing activities
Net decrease in short-term borrowings		(6,000	)		(27,000	)
Repayments of short-term borrowing for purchase of equipment		(1,542	)		(1,200	)
Dividends paid		(30,921	)		(31,359	)
Statutory minimum withholding taxes paid on cashless exercises of stock options and restricted stock		(306	)		(2,001	)
Tax windfall benefits on exercises of stock options and vesting of restricted stocks		—			3,669
Issuance of common stock		—			543
Repurchase of common stock		(54,949	)		(26,197	)
Settlement of stock options		—			(1,604	)
Repayment and repurchase of long-term debt		(19,000	)		(19,000	)

Net cash used in financing activities		(112,718	)		(104,149	)


Net (decrease) increase in cash		(3,367	)		9,629
Cash at beginning of the period		32,114			22,485

Cash at end of the period	$	28,747		$	32,114

EVERTEC, Inc.

Schedule 4: Unaudited Income from Operations by Segment


	Quarter ended December 31,						Year ended December 31,
(Dollar amounts in thousands)	2015			2014			2015			2014
Segment income from operations

Merchant Acquiring, net	$	9,041		$	8,648		$	36,452		$	34,348
Payment Processing		14,585			15,144			55,413			59,882
Business Solutions		11,803			11,355			49,644			47,587

Total segment income from operations		35,429			35,147			141,509			141,817
Merger related depreciation and amortization and other unallocated expenses ⁽¹⁾		(7,879	)		(14,577	)		(38,734	)		(44,469	)

Income from operations	$	27,550		$	20,570		$	102,775		$	97,348

⁽¹⁾	Primarily represents non-operating depreciation and amortization expenses generated as a result of the Merger and certain non-recurring fees and expenses.

EVERTEC, Inc.

Schedule 5: Reconciliation of GAAP to Non-GAAP Operating Results


	Quarter ended December 31,						Year ended December 31,
(Dollar amounts in thousands, except per share data)	2015			2014			2015			2014

Net income	$	21,847		$	12,462		$	74,602		$	67,532
Income tax expense (benefit)		802			2,373			6,855			7,578
Interest expense, net		5,728			6,218			23,771			25,753
Depreciation and amortization		15,207			16,531			64,974			65,988

EBITDA		43,584			37,584			170,202			166,851

Software maintenance reimbursement and other costs⁽¹⁾		494			479			1,902			2,248
Equity income ⁽²⁾		49			(236	)		(147	)		(815	)
Compensation and benefits ⁽³⁾		2,302			4,579			12,237			6,152
Transaction, refinancing and other non-recurring fees ⁽⁴⁾		324			5,145			1,316			7,930
Purchase accounting ⁽⁵⁾		—			(13	)		82			446

Adjusted EBITDA		46,753			47,538			185,592			182,812

Operating depreciation and amortization ⁽⁶⁾		(7,634	)		(7,416	)		(29,301	)		(29,518	)
Cash interest expense, net ⁽⁷⁾		(4,942	)		(5,440	)		(20,665	)		(22,351	)
Cash income taxes ⁽⁸⁾		(1,082	)		(273	)		(5,682	)		(976	)

Adjusted Net Income	$	33,095		$	34,409		$	129,944		$	129,967


Adjusted net income per common share:
Basic	$	0.44		$	0.44		$	1.69		$	1.66
Diluted	$	0.44		$	0.44		$	1.68		$	1.65

Shares used in computing adjusted net income per common share:
Basic		75,780,036			77,898,106			77,066,459			78,337,152
Diluted		75,923,316			78,057,312			77,181,123			78,891,139

1)	Predominantly represents reimbursements received for certain software maintenance expenses as part of the Merger.

2)	Represents the elimination of non-cash equity earnings from our 19.99% equity investment in CONTADO, net of cash dividends received.

Represents non-cash equity based compensation expense of $1.5 million and $5.3 million for the quarter and year ended December 31, 2015 and severance payments of $0.2 million and $6.4 million for the quarter and year ended December 31, 2015. For 2014, primarily represents non-cash equity based compensation.

4)	Represents fees and expenses associated with corporate transactions as defined in the Credit Agreement.

5)	Represents the elimination of the effects of purchase accounting in connection with certain customer service and software-related arrangements whereby EVERTEC receives reimbursements from Popular.

6)	Represents operating depreciation and amortization expense, which excludes amounts generated as a result of the Merger.

7)	Represents interest expense, less interest income, as they appear on our consolidated statements of income and comprehensive income, adjusted to exclude non-cash amortization of the debt issue costs, premium and accretion of discount.

8)	Represents cash taxes paid for each period presented.

EVERTEC, Inc.

Schedule 6: Reconciliation of Adjusted Net Income to GAAP Net Income


	Quarter ended December 31,
(Dollar amounts in thousands, except per share data)	2015									2014
	GAAP			Adjustments			Non-GAAP			GAAP			Adjustments			Non-GAAP

Revenues	$	95,533					$	95,533		$	93,484					$	93,484


Operating costs and expenses
Cost of revenues, exclusive of depreciation and amortization shown below		42,577			(1,661	)⁽¹⁾^,⁽³⁾		40,916			40,736			(1,655	)^(1),(3)		39,081
Selling, general and administrative expenses		10,199			(1,457	)⁽³⁾^,⁽⁴⁾^,⁽⁵⁾		8,742			15,647			(8,535	)^(3),(4),(5)		7,112
Depreciation and amortization		15,207			(7,573	)⁽⁶⁾		7,634			16,531			(9,115	)⁽⁶⁾		7,416

Total operating costs and expenses		67,983						57,292			72,914						53,609

Income from operations		27,550						38,241			20,570						39,875


Non-operating income (expenses)
Interest income		124			(136	)⁽⁷⁾		—			83			(83	)⁽⁷⁾		—
Interest expense		(5,852	)		922	⁽⁷⁾		(4,930	)		(6,301	)		861	⁽⁷⁾		(5,440	)
Earnings of equity method investment		(49	)		49	⁽²⁾		—			235			(235	)⁽²⁾		—
Other income		876						876			248						248

Total non-operating expenses		(4,901	)					(4,054	)		(5,735	)					(5,192	)

Income before income taxes		22,649						34,187			14,835						34,683
Income tax expense		802			280	⁽⁸⁾		1,082			2,373			(2,100	)⁽⁸⁾		273

Net income		21,847						33,104			12,462						34,410


Net income per common share:
Basic	$	0.29					$	0.44		$	0.16					$	0.44
Diluted	$	0.29					$	0.44		$	0.16					$	0.44

Shares used in computing net income per common share:
Basic		75,780,036									77,898,106
Diluted		75,923,316									78,057,312


	Year ended December 31,
(Dollar amounts in thousands, except per share data)	2015									2014
	GAAP			Adjustments			Non-GAAP			GAAP			Adjustments			Non-GAAP

Revenues
Total revenues	$	372,884					$	372,884		$	361,129					$	361,129


Operating costs and expenses
Cost of revenues, exclusive of depreciation and amortization shown below		167,857			(8,670	)^(1),(3)		159,187			156,517			(5,089	)^(1),(3)		151,428
Selling, general and administrative expenses		37,278			(6,867	)^(3),(4),(5)		30,411			41,276			(11,687	)^(3),(4),(5)		29,589
Depreciation and amortization		64,974			(35,673	)⁽⁶⁾		29,301			65,988			(36,470	)⁽⁶⁾		29,518

Total operating costs and expenses		270,109						218,899			263,781						210,535

Income from operations		102,775						153,985			97,348						150,594


Non-operating income (expenses)
Interest income		507			(507	)⁽⁷⁾		—			328			(328	)⁽⁷⁾		—
Interest expense		(24,278	)		3,613	⁽⁷⁾		(20,665	)		(26,081	)		3,730	⁽⁷⁾		(22,351	)
Earnings of equity method investment		147			(147	)⁽²⁾		—			1,140			(815	)⁽²⁾		325
Other income		2,306						2,306			2,375						2,375

Total non-operating expenses		(21,318	)					(18,359	)		(22,238	)					(19,651	)

Income before income taxes		81,457						135,626			75,110						130,943
Income tax expense		6,855			(1,173	)⁽⁸⁾		5,682			7,578			(6,602	)⁽⁸⁾		976

Net income		74,602						129,944			67,532						129,967


Net income per common share:
Basic	$	0.97					$	1.69		$	0.86					$	1.66
Diluted	$	0.97					$	1.68		$	0.86					$	1.65

Shares used in computing net income per common share:
Basic		77,066,459									78,337,152
Diluted		77,181,123									78,891,139

1)	Predominantly represents reimbursements received for certain software maintenance expenses as part of the Merger.

2)	Represents the elimination of non-cash equity earnings from our 19.99% equity investment in CONTADO, net of cash dividends received.

4)	Represents fees and expenses associated with corporate transactions as defined in the Credit Agreement.

5)	Represents the elimination of the effects of purchase accounting in connection with certain customer service and software-related arrangements whereby EVERTEC receives reimbursements from Popular.

6)	Represents operating depreciation and amortization expense, which excludes amounts generated as a result of the Merger.

7)	Represents interest expense, less interest income, as they appear on our consolidated statements of income and comprehensive income, adjusted to exclude non-cash amortization of the debt issue costs, premium and accretion of discount.

8)	Represents cash taxes paid for each period presented.

EVERTEC, Inc.

Schedule 7: Reconciliation of new measure for Adjusted Net Income and Adjusted EPS


(in thousands)	2015
	Q1			Q2			Q3			Q4			Full Year
Adjusted net income - updated
Adjusted Net income, as historically reported	$	30,255		$	34,227		$	32,366		$	33,096		$	129,944
Add Back:
Cash Income Taxes		2,620			981			999			1,082			5,682

Adjusted Pre-Tax Income		32,875			35,208			33,365			34,178			135,626
Income Tax expense ⁽¹⁾ - updated		3,465			3,334			3,725			1,210			11,734

Adjusted net Income - updated	$	29,410		$	31,874		$	29,640		$	32,968		$	123,891


Applicable GAAP Tax Rate		10.5	%		9.5	%		11.2	%		3.5	%		8.6	%

Adjusted EPS - diluted, updated	$	0.38		$	0.41		$	0.38		$	0.43		$	1.61

Adjusted EPS as historically reported	$	0.39		$	0.44		$	0.42		$	0.44		$	1.68

	2014
	Q1			Q2			Q3			Q4			Full Year
Adjusted net income - updated
Adjusted Net income, as historically reported	$	31,986		$	32,185		$	31,387		$	34,409		$	129,967
Add Back:
Cash Income Taxes		—			402			300			274			976

Adjusted Pre-Tax Income		31,986			32,587			31,687			34,683			130,943
Income Tax expense ⁽¹⁾ - updated		3,394			3,240			1,700			5,548			13,881

Adjusted net Income - updated	$	28,592		$	29,347		$	29,990		$	29,132		$	117,062


Applicable GAAP Tax Rate		10.6	%		9.9	%		5.4	%		16.0	%		10.6	%

Adjusted EPS - diluted, updated	$	0.36		$	0.37		$	0.38		$	0.37		$	1.48

Adjusted EPS as historically reported	$	0.40		$	0.41		$	0.40		$	0.44		$	1.65

	2013
	Q1			Q2			Q3			Q4			Full Year
Adjusted net income - updated
Adjusted Net income, as historically reported	$	27,488		$	28,874		$	29,543		$	35,370		$	121,275
Add Back:
Cash Income Taxes		697			969			373			299			2,338

Adjusted Pre-Tax Income		28,185			29,843			29,916			35,669			123,613
Income Tax expense ⁽¹⁾ - updated		260			2,138			2,514			2,657			7,570

Adjusted net Income - updated	$	27,924		$	27,699		$	27,400		$	33,012		$	116,035


Applicable GAAP Tax Rate		0.9	%		7.2	%		8.4	%		7.4	%		6.1	%

Adjusted EPS - diluted, updated	$	0.36		$	0.33		$	0.33		$	0.40		$	1.42

Adjusted EPS as historically reported	$	0.36		$	0.35		$	0.36		$	0.43		$	1.49

(1)	Income tax expense reflects GAAP tax rate as applied adjusted pre-tax income.

EVERTEC, Inc. - FORM 8-K - EX-99.1 - February 17, 2016

Attached files

EVERTEC, Inc. Reports