EX-99.2 3 exhibit992.htm SUPPLEMENTAL INFORMATION PREPARED FOR USE WITH THE PRESS RELEASE

 

Exhibit 99.2

 

TSYS Announces Third Quarter 2005 Earnings

 

 

 

 

 

 

 

 

 

 

Page 4 of 9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

 

 

 

 

Percentage

 

 

 

 

 

 

Percentage

 

 

 

2005

 

2004

 

Change

 

 

2005

 

2004

 

Change

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Electronic payment processing services

$

224,394

 

198,892

 

12.8

%

$

646,199

 

561,270

 

15.1

%

Merchant services

 

74,207

 

6,518

 

nm

 

 

170,008

 

19,759

 

nm

 

Other services

 

43,499

 

43,006

 

1.1

 

 

137,337

 

125,681

 

9.3

 

Revenues before reimbursables

 

342,100

 

248,416

 

37.7

 

 

953,544

 

706,710

 

34.9

 

Reimbursable items

 

79,869

 

56,577

 

41.2

 

 

228,652

 

173,141

 

32.1

 

Total revenues

 

421,969

 

304,993

 

38.4

 

 

1,182,196

 

879,851

 

34.4

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Employment expenses*

 

121,389

 

99,561

 

21.9

 

 

334,341

 

269,647

 

24.0

 

Net occupancy & equipment expenses*

 

77,134

 

59,302

 

30.1

 

 

212,770

 

182,214

 

15.5

 

Other operating expense*

 

71,245

 

37,558

 

89.7

 

 

191,449

 

109,440

 

74.9

 

Expenses before reimbursables

 

269,768

 

196,421

 

37.3

 

 

738,560

 

563,301

 

31.1

 

Reimbursable items

 

79,869

 

56,577

 

41.2

 

 

228,652

 

173,141

 

32.1

 

Total operating expenses

 

349,637

 

252,998

 

38.2

 

 

967,212

 

736,442

 

31.3

 

Operating Income

 

72,332

 

51,995

 

39.1

 

 

214,984

 

143,409

 

49.9

 

Other Income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

1,592

 

667

 

138.7

 

 

3,889

 

1,709

 

127.6

 

Interest expense

 

(84)

 

(95)

 

(11.6)

 

 

(259)

 

(877)

 

(70.5)

 

Loss on foreign currency translation, net

 

66

 

146

 

(55.0)

 

 

(761)

 

45

 

nm

 

Other Income

 

1,574

 

718

 

119.2

 

 

2,869

 

877

 

227.3

 

Income before Income Taxes, Minority Interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

and Equity in Income of Joint Ventures

 

73,906

 

52,713

 

40.2

 

 

217,853

 

144,286

 

51.0

 

Income Taxes

 

26,777

 

20,410

 

31.2

 

 

78,186

 

55,636

 

40.5

 

Minority Interest

 

(64)

 

(80)

 

(20.9)

 

 

(176)

 

(240)

 

(26.8)

 

Equity in Income of Joint Ventures

 

991

 

6,918

 

(85.7)

 

 

5,331

 

19,178

 

(72.2)

 

Net Income

$

48,056

 

39,141

 

22.8

%

$

144,822

 

107,588

 

34.6

%

Basic Earnings Per Share

$

0.24

 

0.20

 

22.6

%

$

0.73

 

0.55

 

34.4

%

Diluted Earnings Per Share

$

0.24

 

0.20

 

22.7

%

$

0.73

 

0.55

 

34.5

%

Dividend Declared Per Share

$

0.06

 

0.04

 

 

 

$

0.16

 

0.10

 

 

 

Average Common Shares Outstanding

 

197,198

 

196,849

 

 

 

 

197,100

 

196,846

 

 

 

Average Common and Common

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equivalent Shares Outstanding

 

197,383

 

197,210

 

 

 

 

197,324

 

197,213

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

nm = not meaningful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

*Certain items have been reclassified for the prior periods to conform with the presentation adopted in the third quarter of 2005.

 

 

 

 

 

 

 

 



 

TSYS Announces Third Quarter 2005 Earnings

 

 

 

 

 

 

Page 5 of 9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TSYS

 

 

 

Segment Breakdown

 

 

 

(Unaudited)

 

 

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2005

 

Three Months Ended September 30, 2004

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Domestic-
based
support
services

International-
based
support
services

Merchant
Processing
services

Consolidated

 

Domestic-
based
support
services

International-
based
support
services

Merchant
processing
services

Consolidated

 

 

 

 

 

 

 

 

Revenue before reimbursables

$

244,302

31,389

70,333

346,024

 

218,530

29,886

-

248,416

 

 

Intersegment revenue

 

(3,867)

-

(57)

(3,924)

 

-

-

-

-

 

 

Revenues before reimbursables

 

 

 

 

 

 

 

 

 

 

 

 

from external customers

$

240,435

31,389

70,276

342,100

 

218,530

29,886

-

248,416

 

 

Total revenue

$

308,889

37,862

81,948

428,699

 

273,496

31,499

-

304,995

 

 

Intersegment revenue

 

(6,673)

-

(57)

(6,730)

 

(2)

-

-

(2)

 

 

Revenues from external customers

$

302,216

37,862

81,891

421,969

 

273,494

31,499

-

304,993

 

 

Depreciation and amortization

$

29,503

4,399

7,587

41,489

 

23,188

3,549

-

26,737

 

 

Intersegment expenses

$

5,627

(4,294)

(8,064)

(6,731)

 

3,119

(3,119)

-

-

 

 

Segment operating income

$

52,834

6,137

13,361

72,332

 

45,328

6,667

-

51,995

 

 

Income tax expense

$

18,381

3,227

5,169

26,777

 

14,737

3,469

2,204

20,410

 

 

Equity in income of joint ventures

$

-

991

-

991

 

-

549

6,369

6,918

 

 

Net Income

$

36,238

3,353

8,465

48,056

 

29,959

5,015

4,167

39,141

 

 

Identifiable assets

 

1,282,288

177,276

222,050

1,681,614

 

 

 

 

 

 

 

Intersegment assets

 

(305,569)

(6)

(15)

(305,590)

 

 

 

 

 

 

 

Total assets

 

976,719

177,270

222,035

1,376,024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2005

 

Nine Months Ended September 30, 2004

 

 

 

 

Domestic-
based
support
services

International-
based
support
services

Merchant
processing
services

Consolidated

 

Domestic-
based
support
services

International-
based
support
services

Merchant
processing
services

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

Revenue before reimbursables

$

713,390

92,717

156,486

962,593

 

628,042

78,668

-

706,710

 

 

Intersegment revenue

 

(8,946)

-

(103)

(9,049)

 

-

-

-

-

 

 

Revenues before reimbursables

 

 

 

 

 

 

 

 

 

 

 

 

from external customers

$

704,444

92,717

156,383

953,544

 

628,042

78,668

-

706,710

 

 

Total revenue

$

904,700

109,604

182,877

1,197,181

 

796,229

83,628

-

879,857

 

 

Intersegment revenue

 

(14,882)

-

(103)

(14,985)

 

(6)

-

-

(6)

 

 

Revenues from external customers

$

889,818

109,604

182,774

1,182,196

 

796,223

83,628

-

879,851

 

 

Depreciation and amortization

$

85,058

12,416

12,073

109,547

 

69,950

9,567

-

79,517

 

 

Intersegment expenses

$

24,861

(21,833)

(18,022)

(14,994)

 

4,268

(4,268)

-

-

 

 

Segment operating income

$

176,346

8,143

30,495

214,984

 

125,399

18,010

 

143,409

 

 

Income tax expense

$

61,003

4,294

12,889

78,186

 

41,876

7,600

6,160

55,636

 

 

Equity in income of joint ventures

$

-

2,090

3,241

5,331

 

-

1,242

17,936

19,178

 

 

Net Income

$

118,692

4,773

21,357

144,822

 

83,195

12,617

11,776

107,588

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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.
               Revenues from merchant processing services include Vital's merchant processing and related services.

 

 

 

 

- more -

 

 

 

 

 

 

 

 



 

TSYS Announces Third Quarter 2005 Earnings

 

 

 

 

Page 6 of 9

 

 

 

 

 

 

 

 

 

TSYS

Balance Sheet

(Unaudited)

(In thousands)

 

 

September 30,

December 31,

 

 

 

2005

2004

 

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

$

199,356

231,806

 

Restricted cash

 

29,382

24,993

 

Accounts receivable, net

 

210,162

144,827

 

Deferred income tax assets

 

18,734

10,791

 

Prepaid expenses and other current assets

 

48,667

35,739

 

Total current assets

 

506,301

448,156

 

Computer software, net

 

278,450

268,647

 

Property and equipment, net

 

272,696

263,584

 

Contract acquisition costs, net

 

159,234

132,428

 

Goodwill, net

 

108,798

70,561

 

Other intangible assets, net

 

14,467

4,692

 

Equity investments, net

 

5,084

54,400

 

Other assets

 

30,994

39,475

 

Total assets

$

1,376,024

1,281,943

 

 

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

$

33,237

75,188

 

Accrued salaries and employee benefits

 

67,349

46,725

 

Current portion of debt and obligations under capital leases

 

2,005

1,828

 

Other current liabilities

 

133,145

148,124

 

Total current liabilities

 

235,736

271,865

 

Obligations under capital leases excluding current portion

 

3,139

4,508

 

Long-term debt

 

93

-

 

Deferred income tax liabilities

 

140,064

131,106

 

Other long-term liabilities

 

19,258

6,038

 

Total liabilities

 

398,290

413,517

 

Minority interests in consolidated subsidiaries

 

3,765

3,814

 

Shareholders' Equity:

 

 

 

 

Common stock

 

19,808

19,759

 

Additional paid-in capital

 

47,751

44,732

 

Treasury stock

 

(12,874)

(13,573)

 

Accumulated other comprehensive income

 

7,681

15,373

 

Retained earnings

 

911,603

798,321

 

Total shareholders' equity

 

973,969

864,612

 

Total liabilities and shareholders' equity

$

1,376,024

1,281,943

 

 

 

 

 

 

* Certain items from prior periods have been reclassified to conform with the presentation adopted in 2005.

 

 

 

 

 

- more -

 

 

 

 

 



 

TSYS Announces Third Quarter 2005 Earnings

 

 

 

 

Page 7 of 9

 

 

 

 

 

 

 

 

 

TSYS

Cash Flow

(Unaudited)

(In thousands)

 

 

Nine Months Ended September 30:

 

 

 

2005

2004

 

 

 

 

Cash flows from operating activities:

 

 

 

 

Net income

$

144,822

107,588

 

Adjustments to reconcile net income to net cash provided by

 

 

 

 

operating activities:

 

 

 

 

Minority interests in consolidated subsidiaries' net income

 

176

240

 

Equity in income of joint ventures

 

(5,331)

(19,178)

 

Loss on currency translation adjustments, net

 

761

(45)

 

Depreciation and amortization

 

109,547

79,517

 

Impairment of developed software

 

3,646

10,059

 

Charges for (recoveries of) bad debt expense and billing

 

 

 

 

adjustments

 

5,451

(1,147)

 

Charges for transaction processing provisions

 

7,634

5,621

 

Deferred income tax expense (benefit)

 

6,574

29,590

 

Loss on disposal of equipment, net

 

1,775

384

 

(Increase) decrease in:

 

 

 

 

Accounts receivable

 

(32,395)

(36,139)

 

Prepaid expenses and other assets

 

6,270

(4,822)

 

Increase (decrease) in:

 

 

 

 

Accounts payable

 

(53,901)

6,066

 

Accrued salaries and employee benefits

 

4,393

4,584

 

Billings in excess of costs and profits on uncompleted contracts

 

-

(24,845)

 

Other liabilities

 

(67,817)

22,210

 

Net cash provided by operating activities

 

131,605

179,683

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

Purchase of property and equipment, net

 

(33,760)

(49,815)

 

Additions to licensed computer software from vendors*

 

(10,049)

(19,237)

 

Additions to internally developed computer software*

 

(17,435)

(3,996)

 

Cash acquired in acquisition

 

38,798

2,422

 

Cash used in acquisition

 

(95,782)

(53,000)

 

Dividends received from joint ventures

 

1,658

15,876

 

Contract acquisition costs

 

(11,756)

(22,441)

 

Net cash used in investing activities

 

(128,326)

(130,191)

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

Purchases of common stock

 

-

(1,188)

 

Proceeds from borrowings of long-term debt

 

48,143

-

 

Principal payments on long-term debt borrowings

 

(48,135)

-

 

Principal payments on capital lease obligations and software obligations

 

(1,225)

(42,321)

 

Dividends paid on common stock

 

(27,582)

(15,747)

 

Proceeds from exercise of stock options

 

2,920

1,193

 

Net cash used in financing activities

 

(25,879)

(58,063)

 

Effect of foreign currency translation on cash and cash equivalents

 

(9,850)

575

 

Net decrease in cash and cash equivalents

 

(32,450)

(7,996)

 

Cash and cash equivalents at beginning of year

 

231,806

122,874

 

Cash and cash equivalents at end of period

$

199,356

114,878

 

 

 

 

 

 

*Certain items have been reclassified for the prior periods to conform with the presentation adopted in the third quarter of 2005.

 

 

 

 

 



 

TSYS Announces Third Quarter 2005 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,

 

 

 

 

 

 

 

(dollars in millions):

 

2005

%

 

 

2004

%

 

 

 

 

 

 

 

United States

$

358.3

84.9

%

$

247.9

81.3

%

 

 

 

 

 

 

Europe

 

34.0

8.1

 

 

28.2

9.3

 

 

 

 

 

 

 

Canada*

 

23.2

5.5

 

 

21.4

7.0

 

 

 

 

 

 

 

Japan

 

4.0

0.9

 

 

3.5

1.1

 

 

 

 

 

 

 

Mexico

 

1.9

0.5

 

 

3.3

1.1

 

 

 

 

 

 

 

Other

 

0.6

0.1

 

 

0.7

0.2

 

 

 

 

 

 

 

 

$

422.0

100.0

%

$

305.0

100.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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,

 

 

 

 

 

 

 

(dollars in millions):

 

2005

%

 

 

2004

%

 

 

 

 

 

 

 

United States

$

998.4

84.5

%

$

722.3

82.1

%

 

 

 

 

 

 

Europe

 

98.3

8.3

 

 

73.7

8.4

 

 

 

 

 

 

 

Canada*

 

66.6

5.6

 

 

62.4

7.1

 

 

 

 

 

 

 

Japan

 

11.6

1.0

 

 

10.3

1.2

 

 

 

 

 

 

 

Mexico

 

5.3

0.4

 

 

9.2

1.0

 

 

 

 

 

 

 

Other

 

2.0

0.2

 

 

2.0

0.2

 

 

 

 

 

 

 

 

$

1,182.2

100.0

%

$

879.9

100.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Geographic Area Revenue by Operating Segment:

 

 

 

 

 

 

 

 

 

 

The following table reconciles segment revenues to revenues by reporting segment for the three months ended September 30:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

 

 

 

 

 

 

Domestic-based

 

 

International-based

Merchant processing

 

 

 

 

 

 

 

support services

 

 

support services

services

 

 

 

 

 

(dollars in millions):

 

2005

2004

 

 

2005

2004

2005

2004

 

 

 

 

 

United States

$

276.7

247.9

 

 

-

-

81.6

-

 

 

 

 

 

Europe

 

0.1

0.2

 

 

33.9

28.0

-

-

 

 

 

 

 

Canada*

 

23.0

21.4

 

 

-

-

0.2

-

 

 

 

 

 

Japan

 

-

-

 

 

4.0

3.5

-

-

 

 

 

 

 

Mexico

 

1.9

3.3

 

 

-

-

-

-

 

 

 

 

 

Other

 

0.5

0.7

 

 

-

-

0.1

-

 

 

 

 

 

 

$

302.2

273.5

 

 

37.9

31.5

81.9

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The following table reconciles segment revenues to revenues by reporting segment for the nine months ended September 30:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30,

 

 

 

 

 

 

 

Domestic-based

 

 

International-based

Merchant processing

 

 

 

 

 

 

 

support services

 

 

support services

services

 

 

 

 

 

(dollars in millions):

 

2005

2004

 

 

2005

2004

2005

2004

 

 

 

 

 

United States

$

816.3

722.3

 

 

-

-

182.1

-

 

 

 

 

 

Europe

 

0.3

0.4

 

 

98.0

73.3

-

-

 

 

 

 

 

Canada*

 

66.3

62.4

 

 

-

-

0.3

-

 

 

 

 

 

Japan

 

-

-

 

 

11.6

10.3

-

-

 

 

 

 

 

Mexico

 

5.3

9.2

 

 

-

-

-

-

 

 

 

 

 

Other

 

1.6

2.0

 

 

-

-

0.4

-

 

 

 

 

 

 

$

889.8

796.3

 

 

109.6

83.6

182.8

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

- more -

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

TSYS Announces Third Quarter 2005 Earnings

 

 

 

 

 

Page 9 of 9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental Information:

 

 

 

 

 

 

 

 

 

 

 

 

Accounts on File at September 30:

 

 

(in millions)

 

2005

%

 

2004

%

 

% Change

 

Consumer

 

264.1

61.4

%

170.7

54.1

%

54.7

%

 

Retail

 

96.5

22.4

 

88.8

28.2

 

8.5

 

 

Commercial

 

30.1

7.0

 

24.9

7.9

 

21.0

 

 

Government services/EBT

 

18.2

4.3

 

15.7

5.0

 

16.8

 

 

Stored Value

 

13.7

3.2

 

8.5

2.7

 

61.3

 

 

Debit

 

7.5

1.7

 

6.7

2.1

 

11.1

 

 

 

 

430.1

100.0

%

315.3

100.0

%

36.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sept. 30, 2005

 

Sept. 30, 2004

 

 

 

 

QTD Average Accounts on File (thousands)

424,609

 

304,928

 

 

 

 

YTD Average Accounts on File (thousands)

389,406

 

289,394

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts on File at September 30:

 

 

(in millions)

 

2005

%

 

2004

%

 

% Change

 

Domestic

 

375.3

87.4

%

267.2

84.7

%

40.5

%

 

International

 

54.8

12.6

 

48.1

15.3

 

13.8

 

 

 

 

430.1

100.0

%

315.3

100.0

%

36.4

%

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

Growth in Accounts on File (in millions):

 

 

 

 

 

 

 

 

 

 

 

 

Sept. 2004 to Sept. 2005

 

Sept. 2003 to Sept. 2004

 

 

 

 

Beginning balance

 

315.3

 

267.9

 

 

 

 

Change in accounts on file due to:

 

 

 

 

 

 

 

 

Internal growth of existing clients

 

44.5

 

33.0

 

 

 

 

New clients*

 

79.3

 

19.2

 

 

 

 

Purges/Sales*

 

(7.9)

 

(0.9)

 

 

 

 

Deconversions

 

(1.1)

 

(3.9)

 

 

 

 

Ending balance

 

430.1

 

315.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of Employees (FTEs):

 

2005

 

 

2004

 

 

 

 

 

At September 30,

 

6,513

 

 

5,626

 

 

 

 

 

Quarterly average for period ended September 30,

6,481

 

 

5,571

 

 

 

 

 

YTD average for period ended September 30,

6,222

 

 

5,571

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* Certain items have been reclassified for the prior periods to conform with the presentation adopted in the third quarter of 2005.

 

 

 

 

 

 

 

 

 

 

 

- ### -