-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SNVRDC65L9PFdBqHeGxpMGjLW7r+E2f/1T3a0VLbFLxDkiwSOLCywvVs1TUwkDhI MP0pcrHSjLuH3k0cwrepPg== 0000721683-04-000005.txt : 20040120 0000721683-04-000005.hdr.sgml : 20040119 20040120160659 ACCESSION NUMBER: 0000721683-04-000005 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20040120 ITEM INFORMATION: ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20040120 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TOTAL SYSTEM SERVICES INC CENTRAL INDEX KEY: 0000721683 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 581493818 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-10254 FILM NUMBER: 04532735 BUSINESS ADDRESS: STREET 1: 1600 FIRST AVENUE STREET 2: P O BOX 1755 CITY: COLUMBUS STATE: GA ZIP: 31901 BUSINESS PHONE: 7066492267 MAIL ADDRESS: STREET 1: 1600 FIRST AVENUE CITY: COLUMBUS STATE: GA ZIP: 31901 8-K 1 filing8k.txt TSYS JANUARY 20, 2004 8-K FILING SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 January 20, 2004 ---------------- Date of Report (Date of Earliest Event Reported) Total System Services, Inc. (Exact Name of Registrant as Specified in its Charter) Georgia 1-10254 58-1493818 - -------------- ------------------ -------------- (State of (Commission File (IRS Employer Incorporation) Number) Identification Number) 1600 First Avenue, Columbus, Georgia 31901 ------------------------------------------ (Address of principal executive offices) (Zip Code) (706) 649-2267 -------------- (Registrant's telephone number, including area code) ------------------------------------------------ (Former name or former address, if changed since last report) Item 5. Other Events. - ------- ------------ On January 20, 2004, Total System Services, Inc. ("Registrant") issued a press release with respect to its earnings for the year ended December 31, 2003. A copy of Registrant's press release is attached hereto as Exhibit 99.1 and incorporated herein by reference. Item 7. Financial Statements and Exhibits. - ------ --------------------------------- (c) Exhibits 99.1 - Registrant's press release dated January 20, 2004 (filed for purposes of Items 5 and 12). 99.2 - Supplemental Information prepared for use with the press release (furnished for purposes of Items 9 and 12). Item 9. Regulation FD Disclosure. - ------- ------------------------ Item 12. Results of Operations and Financial Condition. - ------- --------------------------------------------- The following information is furnished pursuant to Item 9, "Regulation FD Disclosure" and Item 12, "Results of Operations and Financial Condition." On January 20, 2004, the Registrant issued a press release and will hold an investor call and webcast to disclose financial results for the year ended December 31, 2003. The Supplemental Information for use at this investor call is furnished herewith as Exhibit 99.2 and incorporated into Item 9 and Item 12 by reference. On January 20, 2004, Registrant issued a press release with respect to its earnings for the year ended December 31, 2003. A copy of Registrant's press release is attached hereto as Exhibit 99.1 and incorporated herein by reference. 2 Signature --------- Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, Registrant has caused this report to be signed on its behalf by the undersigned hereunto duly authorized. TOTAL SYSTEM SERVICES, INC. ("Registrant") Dated: January 20, 2004 By: /s/Kathleen Moates --------------------------- ---------------------------- Kathleen Moates Senior Deputy General Counsel EX-99.1 3 expressrelease.txt REGISTRANT'S PRESS RELEASE TSYS News Release For Immediate Release Contacts: James B. Lipham Leo S. Berard Chief Financial Officer TSYS Investor Relations +1.706.649.2262 +1.706.649.5220 leoberard@tsys.com TSYS Reports 12.1% Increase in Net Income for 2003 Total revenues surpass $1 billion for the first time Columbus, Ga., Jan. 20, 2004-- TSYS(R)today announced that its financial results are in line with the Company's forecast for the fourth quarter and year ended Dec. 31, 2003. Highlights of the fourth quarter and year, as compared to the same periods in 2002, are as follows:
Three Months Ended Twelve Months Ended (dollars in millions, December 31, December 31 -------------------------------- --------------------------------------- except earnings per Percent Percent share data) 2003 2002 Change 2003 2002 Change - --------------------------------------------------------------------------------------------------------- Revenues Before Reimbursables $222.0 188.4 17.8% $828.3 724.0 14.4% Total Revenues 278.3 246.0 13.1% 1,053.5 955.1 10.3% Operating Income 53.8 42.8 25.7% 190.6 157.7 20.9% Net Income 39.4 35.5 11.2% 141.0 125.8 12.1% Basic EPS 0.20 0.18 11.3% 0.72 0.64 12.2% Diluted EPS 0.20 0.18 10.9% 0.71 0.64 12.1%
The double-digit growth in revenues and earnings is attributable to these factors: * Revenues from international clients increased 36.9% for the year, primarily due to conversions of new clients in Canada and Europe. * TSYS began a new relationship with Bank One, the world's largest issuer of Visa accounts. * Revenues from value-added services grew 22.1% in 2003. * Accounts on file for the year increased 11.4%. * Peak-season cardholder transaction volumes increased 17.5% over 2002. * Revenues from other services increased 55% for the quarter and 13.6% for the year, primarily due to the acquisition of ESC Loyalty and a new debt-collection services arrangement by TSYS Debt Management. "TSYS met its expectations for 2003, achieving our 20th straight year of earnings growth," said Philip W. Tomlinson, chief executive officer of TSYS. "I am proud of the hard-working and dedicated people in the TSYS family who made us one of the best companies to work for in America for another year. We reached milestones with important new clients and in revenues, controlled expenses and improved on the technologies and products that are changing the marketplace for electronic payments." -- more -- Exhibit 99.1 TSYS Reports 12.1% Increase in Net Income for 2003/Page 2 of 10 The impact of certain events in 2003 will persist in 2004: portfolio sales by multiple clients, continued issuer consolidation and pricing concessions for some large clients of TSYS and Vital Processing Services. In addition, the Company will continue to build and improve its infrastructure to support future domestic and international growth. Based on these factors, TSYS expects its revenues before reimbursables for the year to grow 11-13% over 2003, and expects earnings per share to grow 5-7% for the year. Based on discussions with executive management after the recent merger announcement regarding J.P. Morgan Chase & Co. and Bank One, TSYS expects to complete the conversion of Bank One's card portfolio to the TS2 platform in the second half of 2004, according to schedule. "We remain enthusiastic about the opportunities for growth that lie ahead," Tomlinson said. The company is developing opportunities to extend processing services in Europe, the Asia-Pacific and United States. TSYS also anticipates growing revenue contributions from the continuing roll-out of TSYS ProphIT, a new web-enabled workflow management system, and affiliate companies like TSYS Debt Management and ESC Loyalty. The Company anticipates 10-15% growth in earnings per share in 2005 based on the following assumptions: 1. Revenue before reimbursable items will increase 10-12%, driven by 6-9% growth in revenue from existing core-processing clients. 2. Vital Processing Services grows earnings by at least 5%. 3. No significant client losses occur through 2005. "We are focused intently on managing the growth of our fundamental operations with discipline, pursuing new clients and a diversification strategy of new products and potential acquisitions. We are working to create momentum for healthier growth in 2005 and beyond," Tomlinson said. "I am confident that we are investing in the opportunities that will position TSYS for sustained, long-term growth." Conference Call TSYS will host its quarterly conference call at 4:30 p.m. EST, Jan. 20, 2004. The conference call can be accessed at www.tsys.com by clicking on the designated icon within the "Highlights" section of the site. The replay will be available 30-45 minutes after the call. About TSYS TSYS (NYSE: TSS) brings integrity and innovation to the world of electronic payments as the integral link between buyers and sellers in this rapidly evolving universe. With 274 million accounts on file, TSYS makes it possible for millions of consumers to use their credit, debit, prepaid, commercial, smart and retail cards any time, anywhere through any medium or portal. TSYS offers a full range of acquiring and issuing services from accepting and settling electronic payments for goods and services to designing, administering and fulfilling loyalty programs to credit applications, bankruptcy management and collection services. Based in Columbus, Ga., TSYS serves companies on three continents representing 16 currencies and seven languages. TSYS also maintains operations in Canada, Mexico, Japan, and the United Kingdom and is an 81-percent-owned subsidiary of Synovus (NYSE: "SNV") (www.synovus.com), No. 20 on FORTUNE magazine's list of "The 100 Best Companies To Work For" in 2004. For more information, contact news@tsys.com. This press release contains statements that constitute "forward-looking statements" within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934 as amended by the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, among others, statements regarding TSYS' expected growth in earnings -- more -- TSYS Reports 12.1% Increase in Net Income for 2003/Page 3 of 10 per share and revenues for 2004; TSYS' expected completion of the conversion of the Bank One portfolio in the second half of 2004; TSYS' anticipated growing revenue contributions from the continuing roll-out of TSYS ProphIT and from affiliated companies; TSYS' anticipated growth in earnings per share for 2005; and the assumptions underlying such statements, including, with respect to TSYS' expected increase in earnings per share for 2005, an increase in revenues before reimbursable items of 10-12%; a 6-9% growth in revenues from existing core-processing clients; Vital Processing Services growing earnings by at least 5%; and no significant client losses through 2005. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements. A number of important factors could cause actual results to differ materially from those contemplated by the 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, revenues that are lower than anticipated; internal growth rates for TSYS' existing customers are lower than anticipated; Vital's earnings are lower than anticipated; adverse developments with respect to foreign currency exchange rates; adverse developments with respect to entering into contracts with new clients and retaining current clients; the merger of TSYS clients with entities that are not TSYS clients or the sale of portfolios by TSYS clients to entities that are not TSYS clients; larger than anticipated pricing concessions; the potential impact of TSYS' proposal to Citibank for the long-term retention of the acquired Sears portfolio and the expansion of TSYS' private-label processing business; TSYS is unable to control expenses and increase market share; hostilities increase in the Middle East or elsewhere; adverse developments with respect to the credit card industry in general; TSYS is unable to successfully manage any impact from slowing economic conditions or consumer spending; adverse developments with respect to sub-prime or retail clients; and overall market conditions. Additional factors that could cause actual results to differ materially from those contemplated in this release can be found in TSYS' filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K. We believe these forward-looking statements are reasonable; however, undue reliance should not be placed on any forward-looking statements, which are based on current expectations. -- more -- EX-99.2 4 financials.txt SUPPLEMENTAL INFORMATION TSYS Announces 12.1% Increase in Earnings for 2003 Page 4 of 10
TSYS Financial Highlights (In thousands, except per share data) ------------------------------------- ------------------------------------- Three months ended Twelve months ended December 31, December 31, ------------------------------------- ------------------------------------- Percentage Percentage 2003 2002 Change 2003 2002 Change ---------- ------------ ---------- --------- ---------- ------------ Revenues Electronic payment processing services 183,237 163,419 12.1 % 707,816 617,877 14.6 % Other services 38,750 24,989 55.1 120,485 106,086 13.6 ---------- ------------ --------- ---------- Revenues before reimbursables 221,987 188,408 17.8 828,301 723,963 14.4 Reimbursable items 56,313 57,590 (2.2) 225,165 231,170 (2.6) ---------- ------------ --------- ---------- Total revenues 278,300 245,998 13.1 1,053,466 955,133 10.3 ---------- ------------ --------- ---------- Expenses Employment 85,384 78,951 8.1 326,568 300,240 8.8 Occupancy & equipment 52,775 44,343 19.0 205,845 174,958 17.7 Other 30,062 22,363 34.4 105,334 91,167 15.6 (Gain)/Loss on disposal of equipment 10 (13) nm (25) (75) nm ---------- ------------ --------- ---------- Expenses before reimbursables 168,231 145,644 15.5 637,722 566,290 12.6 Reimbursable items 56,313 57,590 (2.2) 225,165 231,170 (2.6) ---------- ------------ --------- ---------- Total operating expenses 224,544 203,234 10.5 862,887 797,460 8.2 ---------- ------------ --------- ---------- Operating Income 53,756 42,764 25.7 190,579 157,673 20.9 ---------- ------------ --------- ---------- Other Income: Interest income, net 449 521 (13.9) 2,748 2,601 5.6 Gain/(loss) on foreign currency translation, net 126 866 (85.4) 1,042 3,013 (65.4) ---------- ------------ --------- ---------- Other Income 575 1,387 (58.6) 3,790 5,614 (32.5) ---------- ------------ --------- ---------- Income before Income Taxes, Minority Interest and Equity in Income of Joint Ventures 54,331 44,151 23.1 194,369 163,287 19.0 Income Taxes 19,737 14,613 35.1 70,868 57,908 22.4 Minority Interest (77) (22) nm (338) (155) nm Equity in Income of Joint Ventures 4,901 5,940 (17.5) 17,810 20,581 (13.5) ---------- ------------ --------- ---------- Net Income $ 39,418 35,456 11.2 % 140,973 125,805 12.1 % =========== ============ =========== =========== Basic Earnings Per Share $ 0.20 0.18 11.3 % 0.72 0.64 12.2 % =========== ============ =========== =========== Diluted Earnings Per Share $ 0.20 0.18 10.9 % 0.71 0.64 12.1 % =========== ============ =========== =========== Dividend Declared Per Share $ 0.0200 0.0175 0.0775 0.0675 =========== ============ =========== =========== Average Common Shares Outstanding 196,821,929 197,049,470 196,829,802 197,016,699 =========== ============ =========== =========== Average Common and Common Equivalent Shares Outstanding 197,623,458 197,055,850 197,437,744 197,497,049 =========== ============ =========== =========== Effective Tax Rate 33.6% 29.3% 33.6% 31.7% =========== ============ =========== =========== EFFECTIVE INCOME TAX RATE CALCULATION Income taxes (A) $ 19,737 14,613 $ 70,868 57,908 =========== ============ =========== =========== Income before Income Taxes, Minority Interest and Equity in Income of Joint Ventures 54,331 44,151 194,369 163,287 Add Back: Equity in Income of Vital 4,554 5,791 16,666 19,753 Minority Interest (77) (22) (338) (155) ----------- ------------ ----------- ----------- Adjusted Income before income taxes (B) 58,808 49,920 210,697 182,885 =========== ============ =========== =========== Effective Tax Rate (A/B) 33.6% 29.3% 33.6% 31.7% =========== ============ =========== ===========
Note: nm = not meaningful - more - Exhibit 99.2 TSYS Announces 12.1% Increase in Earnings for 2003 Page 5 of 10 TSYS Segment Breakdown (In thousands) Three Months Ended December 31,2003 Three Months Ended December 31, 2002* ------------------------------------------------ ----------------------------------------------- Domestic-based International-based Domestic-based International-based Transaction Transaction Transaction Transaction Processing Processing Consolidated Processing Processing Consolidated ------------------------------------------------------------------------------------------------- Total revenue $ 256,092 22,277 278,369 228,575 17,581 246,156 Intersegment revenue (69) - (69) (158) - (158) ------------------------------------------------ ----------------------------------------------- Revenues from external customers $ 256,023 22,277 278,300 228,417 17,581 245,998 ================================================ =============================================== Depreciation and amortization $ 24,650 2,708 27,358 18,276 2,394 20,670 ================================================ =============================================== Segment operating income $ 50,453 3,303 53,756 44,637 (1,873) 42,764 ================================================ =============================================== Income tax expense $ 18,443 1,294 19,737 15,241 (628) 14,613 ================================================ =============================================== Equity in income of joint ventures $ 4,554 347 4,901 5,791 149 5,940 ================================================ =============================================== Net Income $ 37,204 2,214 39,418 36,461 (1,005) 35,456 ================================================ =============================================== Average accounts on file 258,063 13,643 271,706 231,410 11,984 243,394 ================================================ ===============================================
Twelve Months Ended December 31, 2003* Twelve Months Ended December 31, 2002* ------------------------------------------------------------------------------------------------- Domestic-based International-based Domestic-based International-based Transaction Transaction Transaction Transaction Processing Processing Consolidated Processing Processing Consolidated ------------------------------------------------------------------------------------------------- Total revenue $ 973,252 80,288 1,053,540 890,831 64,948 955,779 Intersegment revenue (74) - (74) (646) - (646) ------------------------------------------------ ----------------------------------------------- Revenues from external customers $ 973,178 80,288 1,053,466 890,185 64,948 955,133 ================================================ =============================================== Depreciation and amortization $ 87,555 10,860 98,415 65,284 8,729 74,013 ================================================ =============================================== Segment operating income $ 179,580 10,999 190,579 155,974 1,699 157,673 ================================================ =============================================== Income tax expense $ 66,790 4,078 70,868 56,841 1,067 57,908 ================================================ =============================================== Equity in income of joint ventures $ 16,666 1,144 17,810 19,753 828 20,581 ================================================ =============================================== Net Income $ 133,860 7,113 140,973 123,146 2,659 125,805 ================================================ =============================================== Average accounts on file 249,489 13,129 262,618 220,383 11,764 232,147 ================================================ ===============================================
Note:Revenues for domestic-based processing services include electronic payment processing services and other services provided from the United States to clients domiciled in the United States or other countries. Revenues from international-based processing services include electronic payment processing services and other services provided from outside the United States to clients based mainly outside the United States. *- To conform with the way management evaluates TSYS' business, TSYS has reclassed the operations of its Canadian subsidiary from International-based processing services to Domestic-based processing services in the fourth quarter of 2003. The Canadian subsidiary's function is to provide programming services solely to TSYS. All prior period segment disclosures have been restated to conform with that presentation. - more - TSYS Announces 12.1% Increase in Earnings for 2003 Page 6 of 10 TSYS Prior Period Restatements for New Segment Classification (In thousands) First Quarter 2002 Second Quarter 2002 ---------------------------------------------------------------------- Domestic- International- Domestic- International- based based based based Transaction Transaction Consoli- Transaction Transaction Consoli- Processing Processing dated Processing Processing dated ----------- ------------------- ----------------------------------- Total revenue $ 213,399 14,675 228,074 225,484 16,278 241,762 Intersegment revenue (151) - (151) (156) - (156) ----------- ------------------- -------- ------------------------ Revenues from external customers 213,248 14,675 227,923 225,328 16,278 241,606 =========== =================== ======== ======================== Depreciation and amortization $ 14,684 1,990 16,674 16,063 2,078 18,141 =========== =================== ======== ======================== Segment operating income $ 35,413 559 35,972 36,404 1,869 38,273 =========== =================== ======== ======================== Income tax expense $ 13,163 93 13,256 13,462 692 14,154 =========== =================== ======== ======================== Equity in income of joint ventures $ 4,226 247 4,473 4,691 214 4,905 =========== =================== ======== ======================== Net Income $ 27,036 345 27,381 28,717 1,436 30,153 =========== =================== ======== ========================
Third Quarter 2002 Fourth Quarter 2002 2002 YTD -------------------------------- ---------------------------------- --------------------------------- Domestic- International- Domestic- International- Domestic- International- based based based based based based Transaction Transaction Consoli- Transaction Transaction Consoli- Transaction Transaction Consoli- Processing Processing dated Processing Processing dated Processing Processing dated ------------ -------------------- ---------------------------------- ----------- --------------------- Total revenue $ 223,373 16,414 239,787 228,575 17,581 246,156 890,831 64,948 955,779 Intersegment revenue (181) - (181) (158) - (158) (646) - (646) ------------ -------------------- ---------- ----------------------- ---------- --------------------- Revenues from external customers 223,192 16,414 239,606 228,417 17,581 245,998 890,185 64,948 955,133 ============ ==================== ========== ======================= ========== ===================== Depreciation and amortization $ 16,261 2,267 18,528 18,276 2,394 20,670 65,284 8,729 74,013 ============ ==================== ========== ======================= ========== ===================== Segment operating income $ 39,520 1,144 40,664 44,637 (1,873) 42,764 155,974 1,699 157,673 ============ ==================== ========== ====================== ========= ===================== Income tax expense $ 14,975 910 15,885 15,241 (628) 14,613 56,841 1,067 57,908 ============ ==================== ========== ====================== ========= ===================== Equity in income of joint ventures $ 5,045 218 5,263 5,791 149 5,940 19,753 828 20,581 ============ ==================== ========== ====================== ========= ===================== Net Income $ 30,932 1,883 32,815 36,461 (1,005) 35,456 123,146 2,659 125,805 ============ ==================== ========== ====================== ========= =====================
First Quarter 2003 Second Quarter 2003 --------------------------------- --------------------------------- Domestic- International- Domestic- International- based based based based Transaction Transaction Consoli- Transaction Transaction Consoli- Processing Processing dated Processing Processing dated --------------------------------- ----------------------------------- Total revenue $ 233,119 18,235 251,354 237,849 19,851 257,700 Intersegment revenue (1) - (1) (2) - (2) --------------------------------- ---------- ------------------------ Revenues from external customers $ 233,118 18,235 251,353 237,847 19,851 257,698 ================================= ========== ======================== Depreciation and amortization $ 19,619 2,483 22,102 20,958 2,537 23,495 ================================= ========== ======================== Segment operating income $ 41,036 2,132 43,168 41,015 3,740 44,755 ================================= ========== ======================== Income tax expense $ 14,917 597 15,514 16,799 1,308 18,107 ================================= ========== ======================== Equity in income of joint ventures $ 3,941 246 4,187 4,550 250 4,800 ================================= ========== ======================== Net Income $ 30,365 1,371 31,736 31,672 2,635 34,307 ================================= ========== ========================
Third Quarter 2003 Fourth Quarter 2003 2003 YTD -------------------------------- ---------------------------------- --------------------------------- Domestic- International- Domestic- International- Domestic- International- based based based based based based Transaction Transaction Consoli- Transaction Transaction Consoli- Transaction Transaction Consoli- Processing Processing dated Processing Processing dated Processing Processing dated ------------ -------------------- ---------------------------------- -------------------------------- Total revenue $ 246,192 19,925 266,117 256,092 22,277 278,369 973,252 80,288 1,053,540 Intersegment revenue (2) - (2) (69) - (69) (74) - (74) --------------------------------- --------- ------------------------ --------- --------------------- Revenues from external customers $ 246,190 19,925 266,115 256,023 22,277 278,300 973,178 80,288 1,053,466 ================================= ========== ======================== ========== ==================== Depreciation and amortization $ 22,328 3,132 25,460 24,650 2,708 27,358 87,555 10,860 98,415 ================================= ========== ======================== ========== ==================== Segment operating income $ 47,076 1,824 48,900 50,453 3,303 53,756 179,580 10,999 190,579 ================================= ========== ======================== ========== ==================== Income tax expense $ 16,631 879 17,510 18,443 1,294 19,737 66,790 4,078 70,868 ================================= ========== ======================== ========== ==================== Equity in income of joint ventures $ 3,621 301 3,922 4,554 347 4,901 16,666 1,144 17,810 ================================= ========== ======================== ========== ==================== Net Income $ 34,619 893 35,512 37,204 2,214 39,418 133,860 7,113 140,973 ================================= ========== ======================== ========== ====================
- more - TSYS Announces 12.1% Increase in Earnings for 2003 Page 7 of 10
Balance Sheet Information: (in thousands) Dec 2003 Dec 2002 ------------------------------------- Assets Current assets: Cash and cash equivalents $ 122,874 109,171 Restricted cash 7,679 4,035 Accounts receivable, net 120,646 121,439 Deferred income tax assets 9,620 8,786 Prepaid expenses and other current assets 24,081 22,548 ------------------------------------- Total current assets 284,900 265,979 Property and equipment, net 232,076 120,835 Computer software, net 212,729 200,297 Contract acquisition costs, net 125,472 123,729 Goodwill, net 29,626 3,619 Equity investments, net 66,708 54,181 Other assets 16,242 14,228 ------------------------------------- Total assets $ 967,753 782,868 ===================================== Liabilities and Shareholders' Equity Current liabilities: Accounts payable $ 17,549 10,366 Accrued salaries and employee benefits 32,562 43,315 Current portion of long-term debt and obligations under capital leases 889 68 Billings in excess of costs on uncompleted contracts 17,573 - Other current liabilities 71,705 60,233 ------------------------------------- Total current liabilities 140,278 113,982 Long-term debt and obligations under capital leases, excluding current portion 2,702 67 Other accounts payable - 563 Deferred income tax liabilities 88,800 63,306 ------------------------------------- Total liabilities 231,780 177,918 ------------------------------------- Minority interest in consolidated subsidiary 3,439 2,744 ------------------------------------- Shareholders' Equity: Common stock 19,750 19,725 Additional paid-in capital 41,574 35,143 Accumulated other comprehensive income (loss) 8,314 1,053 Treasury stock (12,426) (3,316) Retained earnings 675,322 549,601 ------------------------------------- Total shareholders' equity 732,534 602,206 ------------------------------------- Total liabilities and shareholders' equity $ 967,753 782,868 =====================================
- more - TSYS Announces 12.1% Increase in Earnings for 2003 Page 8 of 10
Cash Flow Information: Twelve Months Ending: (in thousands) Dec 2003 Dec 2002 ------------------------------------- Cash flows from operating activities: Net income $ 140,973 125,805 Adjustments to reconcile net income to net cash provided by operating activities: Minority interest in consolidated subsidiary's net income 338 155 Equity in income of joint ventures (17,810) (20,581) (Gain) loss on currency translation adjustments, net (1,042) (3,013) Depreciation and amortization 98,415 74,013 Charges for bad debts and billing adjustments 2,690 3,263 Charges for transaction processing 3,450 6,532 Deferred income tax expense 22,884 13,621 Gain on disposal of equipment,net (25) (75) (Increase)decrease in: Accounts receivable 3,624 (5,355) Prepaid expenses and other assets 3,828 1,663 Increase(decrease) in: Accounts payable 3,028 (11,340) Accrued salaries and employee benefits (10,819) 3,276 Billings in excess of costs on uncompleted contracts 17,573 - Other current liabilities (752) 9,650 ------------------------------------- Net cash provided by operating activities 266,355 197,614 ------------------------------------- Cash flows from investing activities: Purchase of property and equipment (128,438) (14,781) Additions to purchased computer software programs (47,312) (37,020) Additions to developed software (17,689) (29,451) Proceeds from disposal of equipment 66 162 Cash acquired in acquisition of subsidiary 4,442 2,858 Cash used in acquisition (36,000) (30,000) Dividends received from joint ventures 5,278 17,855 Increase in contract acquisition costs (18,129) (44,044) ------------------------------------- Net cash used in investing activities (237,782) (134,421) ------------------------------------- Cash flows from financing activities: Purchase of common stock (9,825) - Proceeds from issuance of long-term debt 23,370 - Principal payments on long-term debt (20,234) - Other (11,040) (12,672) ------------------------------------- Net cash used in financing activities (17,729) (12,672) ------------------------------------- Effect of foreign currency translation on cash and cash equivalents 2,859 (9) ------------------------------------- Net increase (decrease) in cash and cash equivalents 13,703 50,512 Cash and cash equivalents at beginning of year 109,171 58,659 ------------------------------------- Cash and cash equivalents at end of period $ 122,874 109,171 =====================================
Note: Certain amounts in 2002 have been reclassified to conform with the presentation adopted in 2003. - more - TSYS Announces 12.1% Increase in Earnings for 2003 Page 9 of 10 Geographic Area Data: The following geographic area data represents revenues for the three months and twelve months ended December 31 based on where the client is domiciled:
Three Months Ended December 31, ------------------------------------------------------------ 2003 % 2002 % % Chg ------------------------------------------------------------ (dollars in millions): United States $ 230.6 83% 207.9 85% 10.9 % Canada* 20.8 7% 11.1 5% 87.3 Europe 19.3 7% 14.9 6% 30.0 Mexico 3.6 1% 8.8 4% (59.0) Japan 3.3 1% 2.7 1% 22.5 Other 0.7 0% 0.6 0% 4.6 --------------------------------------------------- $ 278.3 100% 246.0 100% 13.1 % ===================================================
Twelve Months Ended December 31, ------------------------------------------------------------ 2003 % 2002 % % Chg ------------------------------------------------------------ (dollars in millions): United States $ 863.0 82% 816.0 85% 5.8 % Canada* 75.9 7% 42.8 4% 77.5 Europe 68.6 7% 54.6 6% 25.6 Mexico 31.4 3% 29.2 3% 7.5 Japan 12.1 1% 10.3 1% 16.6 Other 2.5 0% 2.2 0% 14.2 --------------------------------------------------- $ 1,053.5 100% 955.1 100% 10.3 % ===================================================
Geographic Area Revenue by Operating Segment: The following tables reconcile segment revenues to revenues by reporting segment for the three and twelve months ended December 31:
Three Months Ended December 31, --------------------------------------------------- Domestic-based International-based processing services processing services --------------------------------------------------- (dollars in millions): 2003 2002 2003 2002 --------------------------------------------------- United States $ 230.6 207.9 - - Canada* 20.8 11.1 - - Europe 0.2 - 19.1 14.9 Mexico 3.6 8.8 - - Japan 0.1 - 3.2 2.7 Other 0.7 0.6 - - --------------------------------------------------- $ 256.0 228.4 22.3 17.6 =================================================== Twelve Months Ended December 31, --------------------------------------------------- Domestic-based International-based processing services processing services --------------------------------------------------- (dollars in millions): 2003 2002 2003 2002 --------------------------------------------------- United States $ 863.0 816.0 - - Canada* 75.9 42.8 - - Europe 0.3 - 68.3 54.6 Mexico 31.4 29.2 - - Japan 0.1 - 12.0 10.3 Other 2.5 2.2 - - --------------------------------------------------- $ 973.2 890.2 80.3 64.9 ===================================================
* These revenues include those generated from the Caribbean accounts owned by a Canadian institution. - more - TSYS Announces 12.1% Increase in Earnings for 2003 Page 10 of 10 Supplemental Information:
Accounts on File at: ------------------------------------------------------------- Dec 31, 2003 % Dec 31, 2002 % % Chg ------------------------------------------------------------- Accounts on File (in millions): Consumer 143.5 52% 137.0 56% 4.5 % Retail 85.5 31% 77.3 31% 10.7 Commercial 21.5 8% 19.8 8% 8.4 Government services/EBT 13.8 5% 5.5 2% 148.5 Debit/Stored Value 9.6 4% 6.3 3% 53.2 ---------------------------------------------------- 273.9 100% 245.9 100% 11.4 % ==================================================== Dec 31, 2003 Dec 31, 2002 ------------------ ---------------- QTD Average Accounts on File (in thousands) 271,706 243,394 11.6 % YTD Average Accounts on File (in thousands) 262,618 232,147 13.1 % Accounts on File at: ------------------------------------------------------------- Dec 31, 2003 % Dec 31, 2002 % % Chg ------------------------------------------------------------- Accounts on File (in millions): Domestic 229.8 84% 215.4 88% 6.7 % International 44.1 16% 30.5 12% 44.8 ---------------------------------------------------- 273.9 100% 245.9 100% 11.4 % ====================================================
Note: The accounts on file between domestic and international is based on the geographic domicile of processing clients.
Growth in Accounts (in millions): - ------------------------------------------ 2002 to 2003 2001 to 2002 ------------------ ---------------- Beginning balance 245.9 218.5 Change in accounts on file due to: Internal growth of existing clients 25.1 22.9 New clients 19.9 14.2 Purges/Sales (13.2) (9.7) Deconversions (3.8) - ------------------ ---------------- Ending balance 273.9 245.9 ================== ================
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