EX-99.2 4 exhibit992.htm TSYS FINANCIALS

Exhibit 99.2


TSYS Announces Earnings for 2006

 

 

 

 

 

 

 

 

Page 4 of 10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TSYS

Financial Highlights

(Unaudited)

(In thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

 

 

March 31,

 

 

 

 

 

 

 

 

Percentage

 

 

 

 

2006

 

2005

 

Change

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

 

Electronic payment processing services

$

221,061

 

204,756

 

8.0

%

 

Merchant services

 

63,949

 

27,105

 

135.9

 

 

Other services

 

44,542

 

48,514

 

(8.2)

 

 

Revenues before reimbursables

 

329,552

 

280,375

 

17.5

 

 

Reimbursable items

 

82,738

 

69,608

 

18.9

 

 

Total revenues

 

412,290

 

349,983

 

17.8

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

Employment expenses

 

119,966

 

96,978

 

23.7

 

 

Net occupancy & equipment expenses

 

75,350

 

66,068

 

14.0

 

 

Other operating expense

 

62,379

 

51,023

 

22.3

 

 

Expenses before reimbursables

 

257,695

 

214,069

 

20.4

 

 

Reimbursable items

 

82,738

 

69,608

 

18.9

 

 

Total operating expenses

 

340,433

 

283,677

 

20.0

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

71,857

 

66,306

 

8.4

 

 

 

 

 

 

 

 

 

 

 

Other Income:

 

 

 

 

 

 

 

 

Interest income

 

2,508

 

1,219

 

105.7

 

 

Interest expense

 

(44)

 

(70)

 

(36.5)

 

 

Gain (loss) on foreign currency translation, net

 

276

 

(333)

 

(183.0)

 

 

Other Income

 

2,740

 

816

 

nm

 

 

 

 

 

 

 

 

 

 

 

Income before Income Taxes, Minority Interest

 

 

 

 

 

 

 

 

and Equity in Income of Joint Ventures

 

74,597

 

67,122

 

11.1

 

 

Income Taxes

 

24,965

 

24,680

 

1.2

 

 

Minority Interest

 

(91)

 

(69)

 

31.2

 

 

Equity in Income of Joint Ventures

 

852

 

3,750

 

(77.3)

 

 

 

 

 

 

 

 

 

 

 

Net Income

$

50,393

 

46,123

 

9.3

%

 

 

 

 

 

 

 

 

 

 

Basic Earnings Per Share

$

0.26

 

0.23

 

9.2

%

 

 

 

 

 

 

 

 

 

 

Diluted Earnings Per Share

$

0.26

 

0.23

 

9.2

%

 

 

 

 

 

 

 

 

 

 

Dividend Declared Per Share

$

0.06

 

0.04

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Common Shares Outstanding

 

197,086

 

197,023

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Common and Common

 

 

 

 

 

 

 

 

Equivalent Shares Outstanding

 

197,326

 

197,233

 

 

 

 

 

 

 

 

 

 

 

 

 

nm = not meaningful

 

 

 

 

 

 

 

 

- more -

 

 

 

 

 

 

 

 

 

 

 

 

TSYS Announces Earnings for 2006

 

 

 

 

 

 

 

 

 

 

 

Page 5 of 10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TSYS

 

Segment Breakdown

 

(Unaudited)

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2006

 

Three Months Ended March 31, 2005

 

 

 

Domestic-
based
support
services

International-
based
support
services

Merchant
processing
services

Consolidated

 

Domestic-
based
support
services

International-
based
support
services

Merchant
processing
services

Consolidated

 

 

 

 

 

 

 

 

 

Revenues before reimbursables

$

244,443

30,713

58,862

334,018

 

230,012

30,847

20,798

281,657

 

Intersegment revenues

 

(4,434)

-

(32)

(4,466)

 

(1,282)

-

-

(1,282)

 

      Revenues before reimbursables

 

 

 

 

 

 

 

 

 

 

 

         from external customers

$

240,009

30,713

58,830

329,552

 

228,730

30,847

20,798

280,375

 

Total revenues

$

312,830

36,246

70,332

419,408

 

291,017

36,614

24,335

351,966

 

Intersegment revenues

 

(7,086)

-

(32)

(7,118)

 

(1,983)

-

-

(1,983)

 

      Revenues from external customers

$

305,744

36,246

70,300

412,290

 

289,034

36,614

24,335

349,983

 

Intersegment expenses

$

8,690

(7,575)

(8,219)

(7,104)

 

8,525

(8,155)

(2,353)

(1,983)

 

Segment operating income

$

60,966

879

10,012

71,857

 

60,492

2,841

2,973

66,306

 

Income before income taxes, minority interest

 

 

 

 

 

 

 

 

 

 

 

      and equity income of joint ventures

 

63,479

728

10,390

74,597

 

61,597

2,492

3,033

67,122

 

Income tax expense

$

20,471

567

3,927

24,965

 

20,726

1,639

2,315

24,680

 

Equity in income of joint ventures

$

-

852

-

852

 

-

509

3,241

3,750

 

Net Income

$

42,819

1,111

6,463

50,393

 

40,406

1,756

3,961

46,123

 

Identifiable assets

 

1,323,429

171,529

234,653

1,729,611

 

 

 

 

 

 

Intersegment eliminations

 

(310,706)

(22)

(10)

(310,738)

 

 

 

 

 

 

      Total assets

 

1,012,723

171,507

234,643

1,418,873

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 Earnings for 2006

 

 

 

 

 

 

 

 

 

 

Page 6 of 10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TSYS

Segment Breakdown

(Unaudited)

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

Domestic-based Support Services

 

Merchant Processing Services

 

 

Three Months Ended

 

 

Three Months Ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jun 30,
2005

Sep 30,
2005

Dec 31,
2005

YTD

 

Jun 30,
2005

Sep 30,
2005

Dec 31,
2005

YTD

Revenues before reimbursables

$

241,119

245,118

248,081

964,330

 

63,313

69,517

61,927

215,555

Intersegment revenues

 

(3,812)

(3,883)

(4,878)

(13,855)

 

(31)

(41)

(31)

(103)

Revenues before reimbursables

 

 

 

 

 

 

 

 

 

 

from external customers

$

237,307

241,235

243,203

950,475

 

63,282

69,476

61,896

215,452

Total revenues

$

306,835

309,706

317,124

1,224,682

 

74,552

81,132

73,579

253,598

Intersegment revenues

 

(6,241)

(6,689)

(7,317)

(22,230)

 

(31)

(41)

(31)

(103)

Revenues from external customers

$

300,594

303,017

309,807

1,202,452

 

74,521

81,091

73,548

253,495

Intersegment expenses

$

10,709

5,627

9,733

34,594

 

(7,605)

(8,064)

(7,668)

(25,690)

Segment operating income

$

63,417

52,360

58,919

235,188

 

13,764

13,836

11,996

42,569

Income before income taxes, minority interest and

 

 

 

 

 

 

 

 

 

 

      equity income of joint ventures

 

64,527

54,340

61,226

241,690

 

13,927

14,083

12,221

43,264

Income tax expense

$

21,897

18,389

19,860

80,872

 

5,404

5,161

4,608

17,488

Equity in income of joint ventures

$

-

-

-

-

 

-

-

-

3,241

Net Income

$

42,430

35,755

42,290

160,881

 

8,549

8,949

7,613

29,072

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note:

Effective January 1, 2006, Golden Retriever Systems L.L.C. became a wholly owned subsidiary of Enhancement Services Corporation. Also effective January 1, 2006, Merlin Solutions L.L.C. became a wholly owned subsidiary of TSYS. Both entities were previously wholly owned subsidiaries of Vital Processing Services, L.L.C. and were reported under the Merchant Processing Services Support Services segment. Effective January 1, 2006, the financial results of the two entities are included in the Domestic-based Support Services Segment. The results for previous periods have been restated to reflect the change.

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TSYS Announces Earnings for 2006

 

 

 

 

Page 7 of 10

 

 

 

 

 

 

 

 

 

TSYS

Balance Sheet

(Unaudited)

(In thousands)

 

 

 

 

 

 

Mar 2006

Dec 2005

 

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

$

242,857

237,569

 

Restricted cash

 

31,596

29,688

 

Accounts receivable, net

 

206,619

184,532

 

Deferred income tax assets

 

17,524

15,264

 

Prepaid expenses and other current assets

 

43,816

45,236

 

Total current assets

 

542,412

512,289

 

Computer software, net

 

253,852

267,988

 

Property and equipment, net

 

263,646

267,979

 

Contract acquisition costs, net

 

162,129

163,861

 

Goodwill, net

 

113,173

112,865

 

Equity investments, net

 

43,865

42,731

 

Other intangible assets, net

 

12,721

13,580

 

Other assets

 

27,075

29,604

 

Total assets

$

1,418,873

1,410,897

 

 

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

$

37,904

29,464

 

Accrued salaries and employee benefits

 

39,465

84,348

 

Current portion of obligations under capital leases

 

2,208

2,078

 

Other current liabilities

 

164,466

161,122

 

Total current liabilities

 

244,043

277,012

 

Deferred income tax liabilities

 

90,869

89,478

 

Obligations under capital leases excluding current portion

 

3,028

3,555

 

Other long-term liabilities

 

23,192

24,398

 

Total liabilities

 

361,132

394,443

 

Minority interest in consolidated subsidiary

 

3,743

3,682

 

Shareholders' Equity:

 

 

 

 

Common stock

 

19,813

19,797

 

Additional paid-in capital

 

52,917

50,666

 

Treasury stock

 

(12,841)

(12,841)

 

Accumulated other comprehensive income

 

6,097

5,685

 

Retained earnings

 

988,012

949,465

 

Total shareholders' equity

 

1,053,998

1,012,772

 

Total liabilities and shareholders' equity

$

1,418,873

1,410,897

 

 

 

 

 

 

 

 

 

 

 

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TSYS Announces Earnings for 2006

 

 

 

 

 

Page 8 of 10

 

 

 

 

 

 

 

 

 

 

 

TSYS

 

Cash Flow

 

(Unaudited)

 

(In thousands)

 

 

 

Three Months Ended March 31,

 

 

 

 

2006

2005

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

Net income

$

50,393

46,123

 

 

Adjustments to reconcile net income to net cash provided by

 

 

 

 

 

operating activities:

 

 

 

 

 

Minority interests in consolidated subsidiaries' net income

 

91

69

 

 

Equity in income of joint ventures

 

(852)

(3,750)

 

 

Loss (gain) on currency translation adjustments, net

 

(276)

333

 

 

Depreciation and amortization

 

43,161

32,461

 

 

Share-based compensation

 

2,267

278

 

 

Impairment of developed software

 

-

3,137

 

 

Charges for (recoveries of) bad debt expense and billing

 

 

 

 

 

adjustments

 

567

679

 

 

Charges for transaction processing provisions

 

5,411

3,109

 

 

Deferred income tax (benefit) expense

 

(5,069)

10,566

 

 

Loss on disposal of equipment, net

 

92

323

 

 

(Increase) decrease in:

 

 

 

 

 

Accounts receivable

 

(22,684)

(15,398)

 

 

Prepaid expenses and other assets

 

4,405

2,932

 

 

Increase (decrease) in:

 

 

 

 

 

Accounts payable

 

8,718

(53,610)

 

 

Accrued salaries and employee benefits

 

(44,884)

(32,546)

 

 

Other liabilities

 

(2,955)

(39,241)

 

 

Net cash provided by operating activities

 

38,385

(44,535)

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

Purchase of property and equipment, net

 

(5,786)

(10,702)

 

 

Additions to licensed computer software from vendors

 

(1,816)

(3,694)

 

 

Additions to internally developed computer software

 

(3,733)

(2,884)

 

 

Cash acquired in acquisition

 

-

38,799

 

 

Cash used in acquisitions

 

-

(95,782)

 

 

Contract acquisition costs

 

(9,554)

(5,442)

 

 

Net cash used in investing activities

 

(20,889)

(79,705)

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

Proceeds from borrowings of long-term debt

 

-

14,125

 

 

Principal payments on long-term debt borrowings

 

-

(13,154)

 

 

Principal payments on capital lease obligations and software obligations

 

(402)

(550)

 

 

Dividends paid on common stock

 

(11,837)

(7,874)

 

 

Net cash used in financing activities

 

(12,239)

(7,453)

 

 

Effect of foreign currency translation on cash and cash equivalents

 

31

(2,197)

 

 

Net increase in cash and cash equivalents

 

5,288

(133,890)

 

 

Cash and cash equivalents at beginning of year

 

237,569

231,806

 

 

Cash and cash equivalents at end of period

$

242,857

97,916

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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TSYS Announces Earnings for 2006

 

 

 

 

 

 

 

 

 

 

 

 

Page 9 of 10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Geographic Area Data:

 

 

 

 

 

 

 

 

 

 

 

 

The following geographic area data represents revenues for the three months ended March 31 based on where the client

 

 

is domiciled:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

 

 

 

(dollars in millions):

 

2006

%

 

 

2005

%

 

% Chg

 

 

 

United States

$

349.8

 

84.8

%

$

290.0

82.9

%

20.7

%

 

 

Europe

 

32.5

 

7.9

 

 

33.0

9.4

 

(1.5)

 

 

 

Canada

 

22.1

 

5.4

 

 

21.0

6.0

 

5.2

 

 

 

Japan

 

3.9

 

0.9

 

 

3.7

1.1

 

4.0

 

 

 

Mexico

 

2.5

 

0.6

 

 

1.7

0.4

 

48.3

 

 

 

Other

 

1.5

 

0.4

 

 

0.6

0.2

 

138.0

 

 

 

 

$

412.3

 

100.0

%

$

350.0

100.0

%

17.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Geographic Area Revenue by Operating Segment:

 

 

 

 

 

 

 

 

 

 

The following table reconciles segment revenues to revenues by reporting segment for the three months ended March 31:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

 

 

 

Domestic-based

 

 

International-based

 

Merchant processing

 

 

 

 

support services

 

 

support services

 

services

 

 

(dollars in millions):

 

2006

2005

 

 

2006

2005

 

2006

2005

 

 

United States

$

279.8

 

265.7

 

 

-

-

 

70.0

24.2

 

 

Europe

 

0.1

 

0.1

 

 

32.4

33.0

 

-

-

 

 

Canada

 

22.0

 

21.0

 

 

-

-

 

0.1

-

 

 

Japan

 

-

 

-

 

 

3.9

3.7

 

-

-

 

 

Mexico

 

2.5

 

1.7

 

 

-

-

 

-

-

 

 

Other

 

1.3

 

0.5

 

 

-

-

 

0.2

0.1

 

 

 

$

305.7

 

289.0

 

 

36.3

36.7

 

70.3

24.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Geographic area revenue by operating segment has been restated in 2005 to reflect the changes in operating segment.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- more -

 

 

 

TSYS Announces Earnings for 2006

 

 

 

 

 

 

 

 

 

Page 10 of 10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental Information:

 

 

 

 

 

 

 

 

 

 

 

Accounts on File at March 31,

 

(in millions)

 

2006

%

 

2005

%

 

% Change

 

Consumer

 

272.5

61.8

%

213.4

57.6

%

27.7

%

Retail

 

94.7

21.5

 

94.1

25.4

 

0.6

 

Commercial

 

31.2

7.1

 

26.8

7.2

 

16.4

 

Government services/EBT

 

19.2

4.4

 

16.7

4.5

 

14.8

 

Stored Value

 

14.9

3.4

 

12.6

3.4

 

18.0

 

Debit

 

7.9

1.8

 

7.0

1.9

 

13.2

 

 

 

440.4

100.0

%

370.6

100.0

%

18.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in millions)

 

Mar 31, 2006

 

 

Mar 31, 2005

 

 

% Change

 

YTD Average Accounts on File

 

439.3

 

 

362.9

 

 

21.0

%

 

 

 

 

 

 

 

 

 

 

 

 

Accounts on File at March 31,

 

(in millions)

 

2006

%

 

2005

%

 

% Change

 

Domestic

 

383.5

87.1

%

319.7

86.3

%

20.0

%

International

 

56.9

12.9

 

50.9

13.7

 

11.7

 

 

 

440.4

100.0

%

370.6

100.0

%

18.8

%

 

 

 

 

 

 

 

 

 

 

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):

 

 

 

 

 

 

 

 

 

 

 

Mar 2005 to Mar 2006

 

 

Mar 2004 to Mar 2005

 

 

 

 

Beginning balance

 

370.6

 

 

 

280.4

 

 

 

 

 

Change in accounts on file due to:

 

 

 

 

 

 

 

 

 

 

 

Internal growth of existing clients

 

44.1

 

 

 

34.0

 

 

 

 

 

New clients

 

39.3

 

 

 

62.5

 

 

 

 

 

Purges/Sales

 

(12.3)

 

 

 

(5.1)

 

 

 

 

 

Deconversions

 

(1.3)

 

 

 

(1.2)

 

 

 

 

 

Ending balance

 

440.4

 

 

 

370.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of Employees (FTEs):

 

2006

 

 

2005

 

 

 

 

At March 31,

 

6,583

 

 

6,421

 

 

 

 

YTD average for period ended March 31,

 

6,644

 

 

5,867

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- ### -