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

Exhibit 99.2


TSYS Announces Earnings for 2007

 

 

 

 

 

 

 

 

Page 6 of 11

 

 

 

 

 

 

 

 

TSYS

Financial Highlights

(Unaudited)

(In thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

 

March 31,

 

 

 

 

 

 

 

 

Percentage

 

 

 

 

2007

 

2006

 

Change

 

 

Revenues

 

 

 

 

 

 

 

 

Electronic payment processing services

$

230,165

 

221,061

 

4.1

%

 

Merchant acquiring services

 

60,680

 

63,949

 

(5.1)

 

 

Other services

 

52,766

 

44,542

 

18.5

 

 

Revenues before reimbursables

 

343,611

 

329,552

 

4.3

 

 

Reimbursable items

 

85,992

 

82,738

 

3.9

 

 

Total revenues

 

429,603

 

412,290

 

4.2

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

Salaries & other personnel expense

 

140,443

 

121,330

 

15.8

 

 

Net occupancy & equipment expense

 

66,136

 

75,350

 

(12.2)

 

 

Other operating expenses

 

51,353

 

61,015

 

(15.8)

 

 

Expenses before reimbursable items

 

257,932

 

257,695

 

0.1

 

 

Reimbursable items

 

85,992

 

82,738

 

3.9

 

 

Total operating expenses

 

343,924

 

340,433

 

1.0

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

85,679

 

71,857

 

19.2

 

 

 

 

 

 

 

 

 

 

 

Other income:

 

 

 

 

 

 

 

 

Interest income

 

5,488

 

2,508

 

118.8

 

 

Interest expense

 

(210)

 

(44)

 

nm

 

 

Gain on foreign currency translation, net

 

683

 

276

 

147.5

 

 

Dividend income

 

15

 

-

 

nm

 

 

Other income

 

5,976

 

2,740

 

118.1

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes, minority interest

 

 

 

 

 

 

 

 

and equity in income of equity investments

 

91,655

 

74,597

 

22.9

 

 

Income taxes*

 

34,892

 

24,965

 

39.8

 

 

Income before minority interest and equity

 

 

 

 

 

 

 

 

in income of equity investments

 

56,763

 

49,632

 

14.4

 

 

Minority interest

 

(350)

 

(91)

 

nm

 

 

Equity in income of equity investments

 

860

 

852

 

0.9

 

 

 

 

 

 

 

 

 

 

 

Net income

$

57,273

 

50,393

 

13.7

%

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

$

0.29

 

0.26

 

14.0

%

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share

$

0.29

 

0.26

 

13.9

%

 

 

 

 

 

 

 

 

 

 

Dividend declared per share

$

0.07

 

0.06

 

 

 

 

 

 

 

 

 

 

 

 

 

Average common shares outstanding

 

196,487

 

197,086

 

 

 

 

 

 

 

 

 

 

 

 

 

Average common and common

 

 

 

 

 

 

 

 

equivalent shares outstanding

 

196,938

 

197,326

 

 

 

 

 

 

 

 

 

 

 

 

 

* Includes $2.3 million of additional expense in 1st Quarter 2007 related to the recoverability of certain income tax credits.

nm = not meaningful

 

 

 

 

 

 

 

 

- more -


 

TSYS Announces Earnings for 2007

 

 

 

 

 

 

 

 

 

Page 7 of 11

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TSYS

Segment Breakdown

(Unaudited)

(In thousands)

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2007

 

Three Months Ended March 31, 2006

 

 

 

Domestic-
based
support
services

International-
based
support
services

Merchant
acquiring
services

Consolidated

 

Domestic-
based
support
services

International-
based
support
services

Merchant
acquiring
services

Consolidated

 

 

 

 

 

 

 

 

 

Revenues before reimbursables

$

240,969

52,963

54,818

348,750

 

244,443

30,713

58,862

334,018

 

Intersegment revenues

 

(4,781)

(223)

(135)

(5,139)

 

(4,434)

-

(32)

(4,466)

 

Revenues before reimbursables

 

 

 

 

 

 

 

 

 

 

 

from external customers

$

236,188

52,740

54,683

343,611

 

240,009

30,713

58,830

329,552

 

Total revenues

$

314,458

55,400

66,884

436,742

 

312,830

36,246

70,332

419,408

 

Intersegment revenues

 

(6,781)

(223)

(135)

(7,139)

 

(7,086)

-

(32)

(7,118)

 

Revenues from external customers

$

307,677

55,177

66,749

429,603

 

305,744

36,246

70,300

412,290

 

Depreciation and amortization

$

25,967

5,800

6,830

38,597

 

31,910

3,978

7,273

43,161

 

Intersegment expenses

$

3,407

(3,239)

(7,302)

(7,134)

 

8,690

(7,575)

(8,219)

(7,104)

 

Segment operating income

$

61,587

12,129

11,963

85,679

 

60,966

879

10,012

71,857

 

Income before income taxes, minority interest

 

 

 

 

 

 

 

 

 

 

 

and equity income of equity investments

 

67,693

11,477

12,485

91,655

 

63,479

728

10,390

74,597

 

Income tax expense

$

26,249

4,172

4,471

34,892

 

20,471

567

3,927

24,965

 

Equity in income of equity investments

$

-

860

-

860

 

-

852

-

852

 

Net Income

$

41,563

7,696

8,014

57,273

 

42,819

1,111

6,463

50,393

 

Identifiable assets

 

1,543,651

318,241

218,378

2,080,270

 

 

 

 

 

 

Intersegment eliminations

 

(415,896)

(1,136)

(129)

(417,161)

 

 

 

 

 

 

Total assets

 

1,127,755

317,105

218,249

1,663,109

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note:

Revenues from 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 TSYS Acquiring's merchant acquiring and related services.

 

 

 

 

 

 

 

 

 

 

- more -

 

 

 


 

TSYS Announces Earnings for 2007

 

 

 

 

Page 8 of 11

 

 

 

 

 

 

 

 

 

TSYS

Balance Sheet

(Unaudited)

(In thousands)

 

 

 

 

 

 

Mar 2007

Dec 2006

 

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

$

421,711

389,123

 

Restricted cash

 

42,643

31,568

 

Accounts receivable, net

 

238,892

246,637

 

Deferred income tax assets

 

23,306

21,556

 

Prepaid expenses and other current assets

 

51,107

55,832

 

Total current assets

 

777,659

744,716

 

Property and equipment, net

 

275,567

271,321

 

Computer software, net

 

204,683

216,450

 

Contract acquisition costs, net

 

166,785

167,449

 

Goodwill, net

 

141,840

133,337

 

Equity investments, net

 

63,721

62,064

 

Other intangible assets, net

 

15,525

21,314

 

Other assets

 

17,329

17,590

 

Total assets

$

1,663,109

1,634,241

 

 

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

$

30,920

31,589

 

Accrued salaries and employee benefits

 

41,486

80,697

 

Current portion of obligations under capital leases

 

2,875

3,156

 

Other current liabilities

 

192,714

180,345

 

Total current liabilities

 

267,995

295,787

 

Deferred income tax liabilities

 

74,812

75,019

 

Notes payable

 

6,805

-

 

Obligations under capital leases excluding current portion

 

3,204

3,625

 

Other long-term liabilities

 

35,497

36,221

 

Total liabilities

 

388,313

410,652

 

Minority interest in consolidated subsidiary

 

6,623

6,229

 

Shareholders' Equity:

 

 

 

 

Common stock

 

19,911

19,868

 

Additional paid-in capital

 

75,070

66,677

 

Treasury stock

 

(34,547)

(35,233)

 

Accumulated other comprehensive income

 

20,533

20,641

 

Retained earnings

 

1,187,206

1,145,407

 

Total shareholders' equity

 

1,268,173

1,217,360

 

Total liabilities and shareholders' equity

$

1,663,109

1,634,241

 

 

 

 

 

 

 

 

 

 

 

- more -

 

 

 

 

 

 

 

 


 

TSYS Announces Earnings for 2007

 

 

 

 

 

Page 9 of 11

 

 

 

 

 

TSYS

 

Cash Flow

 

(Unaudited)

 

(In thousands)

 

 

 

Three Months Ended March 31,

 

 

 

 

2007

2006

 

 

Cash flows from operating activities:

 

 

 

 

 

Net income

$

57,273

50,393

 

 

Adjustments to reconcile net income to net cash provided by

 

 

 

 

 

operating activities:

 

 

 

 

 

Minority interests in consolidated subsidiaries' net income

 

350

91

 

 

Equity in income of equity investments

 

(860)

(852)

 

 

(Gain) loss on currency translation adjustments, net

 

(683)

(276)

 

 

Depreciation and amortization

 

38,597

43,161

 

 

Share-based compensation

 

3,036

2,267

 

 

Impairment of developed software/contract acquisition costs

 

620

-

 

 

Provisions for (recoveries of) bad debt expense and billing

 

 

 

 

 

adjustments

 

(1,239)

567

 

 

Charges for transaction processing provisions

 

(792)

4,161

 

 

Deferred income tax (benefit) expense

 

(1,006)

(5,069)

 

 

Loss on disposal of equipment, net

 

20

92

 

 

(Increase) decrease in:

 

 

 

 

 

Accounts receivable

 

9,089

(22,684)

 

 

Prepaid expenses, other current assets and other long-term assets

 

(3,518)

4,405

 

 

Increase (decrease) in:

 

 

 

 

 

Accounts payable

 

735

8,718

 

 

Accrued salaries and employee benefits

 

(39,211)

(44,884)

 

 

Excess tax benefit from share-based payment arrangements

 

(2,503)

-

 

 

Other current liabilities and other long-term liabilities

 

6,542

(1,705)

 

 

Net cash provided by operating activities

 

66,450

38,385

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

Purchases of property and equipment, net

 

(17,232)

(5,786)

 

 

Additions to licensed computer software from vendors

 

(3,884)

(1,776)

 

 

Additions to internally developed computer software

 

(3,039)

(3,773)

 

 

Cash used in acquisitions

 

(472)

-

 

 

Additions to contract acquisition costs

 

(7,145)

(9,554)

 

 

Net cash used in investing activities

 

(31,772)

(20,889)

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

Proceeds from borrowings of long-term debt

 

6,805

-

 

 

Principal payments on long-term debt borrowings and

 

 

 

 

 

capital lease obligations

 

(562)

(402)

 

 

Proceeds from exercise of stock options

 

3,518

-

 

 

Excess tax benefit from share-based payment arrangements

 

2,503

-

 

 

Dividends paid on common stock

 

(13,783)

(11,837)

 

 

Net cash used in financing activities

 

(1,519)

(12,239)

 

 

Effect of exchange rate changes on cash and cash equivalents

 

(571)

31

 

 

Net increase in cash and cash equivalents

 

32,588

5,288

 

 

Cash and cash equivalents at beginning of year

 

389,123

237,569

 

 

Cash and cash equivalents at end of period

$

421,711

242,857

 

 

 

 

 

 

 

 

- more -

 

 

 


 

TSYS Announces Earnings for 2007

 

 

 

 

 

 

 

 

 

 

 

Page 10 of 11

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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):

 

2007

%

 

 

2006

%

 

% Chg

 

 

United States

$

337.7

 

78.6

%

 

$

349.8

 

84.8

%

 

(3.5)

%

 

 

Europe

 

45.9

 

10.7

 

 

 

32.7

 

7.9

 

 

40.4

 

 

 

Canada

 

30.0

 

7.0

 

 

 

22.1

 

5.4

 

 

35.8

 

 

 

Japan

 

5.3

 

1.2

 

 

 

3.9

 

0.9

 

 

37.0

 

 

 

Mexico

 

3.3

 

0.8

 

 

 

2.5

 

0.6

 

 

30.7

 

 

 

Other

 

7.4

 

1.7

 

 

 

1.3

 

0.4

 

 

nm

 

 

 

 

$

429.6

 

100.0

%

 

$

412.3

 

100.0

%

 

4.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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
support services

 

 

International-based
support services

 

Merchant
processing services

 

 

 

 

 

 

 

 

 

(dollars in millions):

 

2007

2006

 

 

2007

2006

 

2007

2006

 

 

United States

$

271.2

 

279.8

 

 

 

-

 

-

 

 

66.5

 

70.0

 

 

 

Europe

 

0.4

 

0.3

 

 

 

45.5

 

32.4

 

 

-

 

-

 

 

 

Canada

 

29.9

 

22.0

 

 

 

-

 

-

 

 

0.1

 

0.1

 

 

 

Japan

 

-

 

-

 

 

 

5.3

 

3.9

 

 

-

 

-

 

 

 

Mexico

 

3.3

 

2.5

 

 

 

-

 

-

 

 

-

 

-

 

 

 

Other

 

2.9

 

1.1

 

 

 

4.4

 

-

 

 

0.1

 

0.2

 

 

 

 

$

307.7

 

305.7

 

 

 

55.2

 

36.3

 

 

66.7

 

70.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

nm = not meaningful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- more -

 

 

 

 

 


 

TSYS Announces Earnings for 2007

 

 

 

 

 

 

 

 

 

Page 11 of 11

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental Information:

 

 

 

 

 

 

 

 

 

 

 

Accounts on File at March 31,

 

(in millions)

 

2007

%

 

2006

%

 

% Change

 

Consumer

 

268.9

 

63.6

%

272.5

 

61.8

%

 

(1.3)

%

Retail

*

52.5

 

12.4

 

82.9

 

18.8

 

 

(36.7)

 

Commercial

 

32.8

 

7.8

 

31.2

 

7.1

 

 

5.2

 

Government services/EBT

 

21.5

 

5.1

 

19.2

 

4.4

 

 

12.4

 

Stored Value

*

42.2

 

10.0

 

26.7

 

6.1

 

 

57.8

 

Debit

 

4.8

 

1.1

 

7.9

 

1.8

 

 

(39.0)

 

 

 

422.7

 

100.0

%

440.4

 

100.0

%

 

(4.0)

%

 

 

 

 

 

 

 

 

 

 

 

*Certain accounts previously classified as Retail have been reclassified as Stored Value to conform with the presentation adopted

 

in the second quarter of 2006.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in millions)

 

March 31, 2007

 

 

March 31, 2006

 

 

% Change

 

 

YTD Average Accounts on File

 

418.3

 

 

 

439.3

 

 

 

(4.8)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts on File at March 31,

 

(in millions)

 

2007

%

 

2006

%

 

% Change

 

Domestic

 

353.5

 

83.6

%

 

383.5

 

87.1

%

(7.8)

%

 

International

 

69.2

 

16.4

 

 

56.9

 

12.9

 

21.5

 

 

 

 

422.7

 

100.0

%

 

440.4

 

100.0

%

(4.0)

%

 

 

 

 

 

 

 

 

 

 

 

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):

 

 

 

 

 

 

 

 

 

 

 

March 2006
to March 2007

 

March 2005
to March 2006

 

 

 

 

 

Beginning balance

 

440.4

 

 

 

370.6

 

 

 

 

 

 

Change in accounts on file due to:

 

 

 

 

 

 

 

 

 

 

 

 

Internal growth of existing clients

 

36.2

 

 

 

44.1

 

 

 

 

 

 

New clients

 

96.1

 

 

 

39.3

 

 

 

 

 

 

Purges/Sales

 

(19.2)

 

 

 

(12.3)

 

 

 

 

 

 

Deconversions

 

(130.8)

 

 

 

(1.3)

 

 

 

 

 

 

Ending balance

 

422.7

 

 

 

440.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of Employees (FTEs):

 

2007

 

 

2006

 

 

 

 

At March 31,

 

6,766

 

 

 

6,579

 

 

 

 

 

YTD average for period ended March 31,

 

6,721

 

 

 

6,641

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- ### -