EX-99.2 4 financialpages.htm FINANCIAL PAGES

Exhibit 99.2

TSYS Announces Third Quarter 2004 Earnings
Page 4 of 9

TSYS
Financial Highlights
(In thousands, except per share data)

Three months ended
September 30,
Nine months ended
September 30,
2004
2003
Percentage
Change
2004
2003
Percentage
Change
Revenues                                        
    Electronic payment processing services     $ 205,410     179,447     14 .5% $          581,029     524,579     10 .8%
    Other services       43,006     30,927     39 .1   125,681     81,735     53 .8
      Revenues before reimbursables       248,416     210,374     18 .1   706,710     606,314     16 .6
    Reimbursable items       56,577     55,740     1 .5   173,141     168,852     2 .5
       Total revenues       304,993     266,114     14 .6   879,851     775,166     13 .5
Expenses    
    Employment expenses       99,561     81,488     22 .2   269,647     241,184     11 .8
    Net occupancy & equipment expenses       58,909     51,043     15 .4   183,073     153,070     19 .6
    Other expenses       37,945     28,944     31 .1   110,197     75,272     46 .4
    (Gain)/Loss on disposal of equipment       6     -   nm     384     (35 )   nm  
       Expenses before reimbursables       196,421     161,475     21 .6   563,301     469,491     20  .0
    Reimbursable items       56,577     55,740     1 .5   173,141     168,852     2 .5
       Total operating expenses       252,998     217,215     16 .5   736.442     638,343     15 .4
Operating Income       51,995     48,899     6 .3   143,409     136,823     4 .8
Other Income:    
   Interest income       667     484     37 .8   1,709     2,365     (27 .8)
   Interest expense       (95 )   (36 )   nm     (877 )   (66 )   nm  
   (Loss) Gain on foreign currency translation, net       146   (246  )   nm     45     916     nm  
     Other Income (Expense)       718     202     nm     877     3,215     (72  .7)
Income before Income Taxes, Minority Interest    
   and Equity in Income of Joint Ventures       52,713     49,101     7 .4   144,286     140,038     3 .0
Income Taxes       20,410     17,509     16 .6   55,636     51,131     8 .8
Minority Interest       (80 )   (1 )   nm   (240 )   (261 )   8 .1
Equity in Income of Joint Ventures       6,918     3,921     76 .4   19,178     12,909     48 .6
Net Income     $ 39,141     35,512     10 .2% $          107,588     101,555     5 .9%
Basic Earnings Per Share     $ 0.20     0.18     10 .1% $              0.55     0.52     6 .0%
Diluted Earnings Per Share     $ 0.20     0.18     10 .3% $              0.55     0.51     6 .0%
Dividend Declared Per Share     $ 0.0400     0.0200       $          0.1000     0.0575      
Average Common Shares Outstanding       196,848,529     196,747,867         196,846,349     196,832,455      
Average Common and Common    
  Equivalent Shares Outstanding       197,210,491     197,443,720         197,212,532     197,326,044      
Effective Tax Rate       34.6 %   33.2 %       34.3 %   33.7 %    
 
EFFECTIVE INCOME TAX RATE CALCULATION
  
Income taxes (A)     $ 20,410     17,509         $        55,636   51,131  
Income before Income Taxes, Minority Interest    
   and Equity in Income of Joint Ventures     $ 52,713     49,101       $  144,286   140,038  
   Adjustments: Equity in Income of Vital       6,369     3,620         17,936   12,112  
                        Minority Interest       (80 )   (1 )       (240

)

 (261 )
   Adjusted Income before income taxes (B)     $ 59,002     52,720       $  161,982   151,889  
Effective Tax Rate (A/B)       34.6 %   33.2 %      34.3 % 33.7 %      


Note: nm = not meaningful

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TSYS Announces Third Quarter 2004 Earnings
Page 5 of 9

TSYS
Segment Breakdown
(In thousands)

Three Months Ended September 30, 2004
Three Months Ended September 30, 2003
Domestic-based
Services
International-based
Services
Consolidated
Domestic-based
Services
International-based
Services
Consolidated
Total revenue   $ 273,496   31,499   304,995   246,191   19,925   266,116  
Intersegment revenue   (2 ) --   (2 ) (2 ) --   (2 )
     Revenues from external  
        customers   $ 273,494   31,499   304,993   246,189   19,925   266,114  
Depreciation and amortization   $   23,190   3,549   26,739   22,328   3,132 25,460  
Segment operating income   $   45,328   6,667   51,995   47,075   1,824   48,899  
Income tax expense   $ 16,940    3,470   20,410   16,630   879   17,509  
Equity in income of joint  
  ventures   $     6,369   549   6,918   3,620   301   3,921  
Net Income   $   34,126   5,015   39,141   34,619   893   35,512  
Average accounts on file   289,537   15,391   304,928   252,668   13,240   265,908  


Nine  Months Ended September 30, 2004
Nine Months Ended September 30, 2003
Domestic-based
Services
International-based
Services
Consolidated
Domestic-based
Services
International-based
Services
Consolidated
Total revenue   $ 796,230   83,628   879,858   717,160   58,011   775,171  
Intersegment revenue   (7 ) --   (7 ) (5 ) --   (5 )
     Revenues from external  
        customers   $ 796,223   83,628   879,851   717,155   58,011   775,166  
Depreciation and amortization   $   69,950   9,567   79,517   62,905   8,152   71,057  
Segment operating income   $   125,399   18,010   143,409   129,127   7,696   136,823  
Income tax expense   $   48,036   7,600   55,636   48,346   2,785   51,131  
Equity in income of joint  
  ventures   $   17,936   1,242   19,178   12,112   797   12,909  
Net Income   $   94,971   12,617   107,588   96,657   4,898   101,555  
Average accounts on file   274,615   14,779   289,394   246,631   12,958   259,589  

  Note: Revenues for domestic-based 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 services include electronic payment processing services and other services provided from outside the United States to clients based mainly outside the United States.

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TSYS Announces Third Quarter 2004 Earnings
Page 6 of 9

TSYS
Balance Sheet
(In thousands)

Sep 2004
Dec 2003
Assets      
  Current assets:  
      Cash and cash equivalents   $    114,878   122,874  
      Restricted cash   19,342   7,679  
      Accounts receivable, net   160,867   120,646  
      Deferred income tax assets   --   401  
      Costs in excess of billing on uncompleted contracts   7,272   --  
  Prepaid expenses and other current assets   26,149   22,764  
     Total current assets   328,508   274,364  
  Property and equipment, net   262,738   232,076  
  Computer software, net   234,346   258,090  
  Contract acquisition costs, net   130,037   125,472  
  Equity investments, net   69,919   66,708  
  Goodwill, net   73,464   29,626  
  Other assets   28,985   14,900  
       Total assets   $ 1,127,997   1,001,236  
  Liabilities and Shareholders' Equity  
  Current liabilities:  
      Accounts payable   $      22,989   17,549  
      Accrued salaries and employee benefits   37,142   32,562  
      Current portion of obligations under capital leases and  
          software arrangements   1,519   15,231  
      Billings in excess of costs on uncompleted contracts   --   17,573  
      Deferred income tax liabilities   22,903   --  
      Other current liabilities   117,972   64,056  
       Total current liabilities   202,525   146,971  
    Obligations under capital leases and software arrangements,  
        excluding current portion   4,290   29,748  
    Deferred income tax liabilities   95,865   88,544  
         Total liabilities   302,680   265,263  
  Minority interest in consolidated subsidiary   3,541   3,439  
  Shareholders' Equity:  
    Common stock   19,759   19,750  
    Additional paid-in capital   42,716   41,574  
    Accumulated other comprehensive income   9,649   8,314  
    Treasury stock   (13,573 ) (12,426 )
    Retained earnings   763,225   675,322  
        Total shareholders' equity   821,776   732,534  
        Total liabilities and shareholders' equity   $ 1,127,997   1,001,236  

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TSYS Announces Third Quarter 2004 Earnings
Page 7 of 9

TSYS Cash Flow
(In thousands)

Nine Months Ended
Sep 2004
Sep 2003
Cash flows from operating activities:      
   Net income   $   107,588   101,555  
    Adjustments to reconcile net income to net cash provided by  
    operating activities:  
    Minority interest in consolidated subsidiary's net income   240   261  
    Equity in income of joint ventures   (19,178 ) (12,909 )
    Loss (gain) on currency translation adjustments, net   (45)   (916 )
    Depreciation and amortization   79,517   71,057  
    Noncash charge related to impairment of developed software   10,059   --  
    Recoveries of bad debt expenses and billing adjustments   (1,147 ) 1,892
    Charges for transaction processing   5,621   3,093  
    Deferred income tax expense   29,590   21,248  
    Loss (gain) on disposal of equipment,net   384   (35 )
 (Increase)decrease in:  
    Accounts receivable   (36,139 )  (3,950 )
    Prepaid expenses and other assets   (4,822 ) (8,317 )
 Increase(decrease) in:  
    Accounts payable   6,066   3,711  
    Accrued salaries and employee benefits   4,584   (14,659 )
    Billings in excess of costs on uncompleted contracts   (24,845 ) 24,074  
    Other current liabilities   22,210   (16,399 )
     Net cash provided by operating activities   179,683   169,706  
 Cash flows from investing activities:  
   Purchase of property and equipment   (49,823 ) (113,517 )
   Additions to purchased computer software   (19,237 ) (35,682 )
   Additions to internally developed computer software   (3,996 ) (13,945 )
   Proceeds from disposal of equipment   8   68  
   Cash acquired in acquisition   2,422   4,442  
   Cash used in acquisition   (53,000 ) (36,000 )
   Dividends received from joint ventures   15,876   5,278  
   Increase in contract acquisition costs   (22,441 ) (17,904 )
     Net cash used in investing activities   (130,191 ) (207,260 )
 Cash flows from financing activities:  
   Purchase of common stock   (1,188 ) (9,485 )
   Proceeds from the issuance of long-term debt   --   20,234  
   Principal payments on long-term debt   (42,321 ) (20,234 )
   Other   (14,554 ) (7,046 )
     Net cash used infinancing activities   (58,063 ) (16,531 )
  Effect of foreign currency translation on cash and cash equivalents   575   545  
     Net increase (decrease) in cash and cash equivalents   (7,996 ) (53,540 )
 Cash and cash equivalents at beginning of year   122,874   109,171  
 Cash and cash equivalents at end of period   $ 114,878   55,631  

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TSYS Announces Third Quarter 2004 Earnings
Page 8 of 9

       Geographic Area Data:

The following geographic area data represents revenues for the three months ended September 30 based on where the client is domiciled:

Three Months Ended September 30,
2004
%
2003
%
% Chg
(dollars in millions):            
       United States   $    247,919   82 % 214,799   81 % 15 .4%
       Europe       28,215   9 % 16,894   6 % 67 .0
              Canada*   21,395   7 % 20,052   8 % 6 .7
               Japan   3,447   1 % 2,992   1 % 15 .2
               Mexico   3,349   1 % 10,693   4 % (68 .7)
                Other   668   0 % 684   0 % (2 .3)
    $    304,993   100 % 266,114   100 % 14. .6%
  The following geographic area data represents revenues for the nine months ended September 30 based on where the client is domiciled:

Nine Months Ended September 30,
2004
%
2003
%
% Chg
(dollars in millions):            
       United States   $    722,300   83 % 632,419   82 % 14 .2%
               Europe   73,711   8 % 49,249   6 % 49 .7
              Canada*   62,354   7 % 55,181   7 % 13 .0
                Japan   10,302   1 % 8,724   1 % 18 .1
                  9,163   1 % 27,779   4 % (67 .0)
                Other   2,021   0 % 1,814   0 % 11 .4
    $    879,851   100 % 775,166   100 % 13 .5%

      Geographic Area Revenue by Operating Segment:

  The following tables reconcile segment revenues to revenues by reporting segment for the three months ended September 30:

Three Months Ended September 30,
Domestic-based
Services
International-based
Services
(dollars in millions):             
2004                     
2003                     
2004                     
2003               
United States   $    247,919   214,799   --   --  
Europe   162   --   28,053   16,894  
Canada*   21,395   20,052   --   --  
Japan   --   --   3,447   2,992  
Mexico   3,349   10,693   --   --  
Other   668   684   --   --  
  $    273,493   246,228   31,500   19,886  
  The following tables reconcile segment revenues to revenues by reporting segment for the nine months ended September 30:

Nine Months Ended September 30,
Domestic-based
services
International-based
services

(dollars in millions):

 2004
2003
2004
2003

United States

     $ 722,300     632,419     --     --  

       Europe

       384     --     73,327     49,249  

      Canada*

       62,354     55,181     --     --  

        Japan

       --     --     10,302     8,724  

       Mexico

       9,163     27,779     --     --  

        Other

       2,021     1,814     --     --  
      $ 796,222     717,193     83,629     57,973  

* These revenues include those generated from the Caribbean accounts owned by a Canadian institution.

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TSYS Announces Third Quarter 2004 Earnings
Page 9 of 9

   Supplemental Information:

Accounts on File at:
Sep 30, 2004
%
Sep 30, 2003
%
% Chg
Accounts on File (in millions):            
                      Consumer   170 .7 54 % 142 .2 53 % 20 .0%
                        Retail   88 .8 28 % 83 .7 31 % 6 .1
                    Commercial   24 .9 8 % 21 .0 8 % 18 .7
      Government services/EBT   15 .7 5 % 13 .1 5 % 19 .8
           Stored Value   8 .5 3 % 2 .3 1 % nm  
           Debit   6 .7 2 % 5 .6 2 % 19 .6
    315 .3 100 % 267 .9 100 % 17 .7%


Sep 30, 2004
Sep 30, 2003
QTD Average Accounts on File (in thousands)   304,928   265,908   14.7%  
YTD Average Accounts on File (in thousands)   289,394   259,589   11.5 %  


Accounts on File at:
Sep 30, 2004
%
Sep 30, 2003
%
% Chg
Accounts on File (in millions):            
                      Domestic   267 .2 85 % 221 .9 83 % 20 .4%
                        Internation   48 .1 15 % 46 .0 17 % 4 .5
    315 .3 100 % 267 .9 100 % 17 .7%


Note: The accounts on file between domestic and international is based on the geographic domicile of processing clients.

Growth in Accounts (in millions):
Sep 2003 to Sep 2004
Sep 2002 to Sep 2003
Beginning balance     267  .9 235  .8
Change in accounts on file due to:    
        Internal growth of existing clients     33  .0 25  .1
                                          New clients     18  .9 19  .8
                                         Purges/Sales     (0  .6) (0  .3)
                                    Deconversions     (3  .9) (12  .5)
Ending balance     315 

.3

 267  .9


 

Number of Employees (FTEs):

Sep 30, 2004
Sep 30, 2003
At September 30,   5,626   5,632  
Quarterly Average   5,571   5,607  
YTD Average   5,571   5,447  

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