EX-99.1 2 g20936exv99w1.htm EX-99.1 exv99w1
Exhibit 99.1
(TSYS LOGO)
Total System Services, Inc.    
One TSYS Way   +1.706.649.2307
Post Office Box 2567   +1.706.649.5740
Columbus GA 31902-2567   www.tsys.com
For immediate release:
Contacts:
Shawn Roberts
TSYS Investor Relations
+1.706.644.6081
shawnroberts@tsys.com
TSYS Reports Third Quarter Results
Meets Expectations
Columbus, Ga., October 27, 2009 — TSYS (NYSE: TSS) today reported third quarter total revenues of $432.3 million, a 4.9% increase over the second quarter of 2009. Compared to last year, total revenues were down 1.6%, which included an unfavorable impact of $10.3 million from foreign currency exchange rates during the quarter. On a non-GAAP basis, total revenues on a constant currency basis would have been $442.6 million.
Basic earnings per share (EPS) were $0.28 for the third quarter of 2009 and EPS from continuing operations were $0.29. TSYS completed the sale of TSYS Total Debt Management, a subsidiary of TSYS, and recognized a one-time loss in discontinued operations of $3.3 million in the quarter, or approximately $0.01 per share.
Despite the headwinds of foreign currency exchange rates and upfront costs related to international expansion, TSYS’ third quarter operating margins excluding reimbursable items increased sequentially by 87 basis points, and income from continuing operations increased 10.1%. This was a result of expense management, new business added and a slight increase in transactions.
                         
Quarterly Highlights   Q3 2009     vs. Q2 2009     vs. Q3 2008  
 
                       
Total Revenues
  $432.3 million   Up $20.3 million   Down $7.2 million
 
                       
Revenues before Reimbursable Items
  $359.0 million   Up $8.2 million   Down $13.7 million
 
                       
Operating Income
  $87.9 million   Up $5.1 million   Down $7.4 million
 
                       
Income from Continuing Operations
  $58.3 million   Up $5.4 million   Down $5.9 million
 
                       
Net Income
  $55.0 million   Up $1.6 million   Down $9.0 million
 
                       
Basic Earnings Per Share
  28 cents   Up 1 cent   Down 4 cents

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(TSYS LOGO)
“For the second quarter in a row, we are pleased to report sequential quarterly growth across the board in revenues, operating income and net income despite the challenging economic environment,” said Philip W. Tomlinson, chairman of the board and chief executive officer of TSYS.
“Our balance sheet remains very strong with cash increasing $76 million in the quarter and $209 million year-to-date to $420 million. Our accumulation of cash during these tough economic times is part of our plan to build a large capital base to deploy in support of our strategic plans. We have been aggressively pursuing acquisition opportunities around the globe and are confident we will accomplish this very important part of our corporate strategy,” said Tomlinson.
TSYS reaffirms its previously released guidance for 2009 of declines in revenues of 5% to 3% and net income of 13% to 11%.
Non-GAAP Measures
TSYS has included a schedule with this release that provides revenues and operating results on a constant currency basis. This non-GAAP measure presents third quarter and year-to-date 2009 financial results using the previous year’s foreign currency exchange rates. On a year-to-date constant currency basis, TSYS’ International Services segment’s total revenues grew 20.7% as compared to a reported GAAP decline of 0.6%, and operating income declined 8.7% versus a GAAP-reported decline of 30.7%.
This release contains non-GAAP financial measures to describe TSYS’ performance. The reconciliation of those measures to the most directly comparable GAAP measures is included in the financial tables of this release.
The non-GAAP financial measures of constant currency presented by TSYS are utilized by management to better understand and assess TSYS’ operating results and financial performance. TSYS also uses the non-GAAP financial measures to evaluate and assess TSYS’ financial performance against budget, as well as to evaluate financial performance for executive and management compensation purposes.
TSYS believes that non-GAAP financial measures are important to enable investors to understand and evaluate its ongoing operating results. Accordingly, TSYS includes non-GAAP financial measures when reporting its financial results to shareholders and investors in order to provide them with an additional tool to evaluate TSYS’ ongoing business operations. TSYS believes that the non-GAAP financial measures are representative of comparative financial performance that reflects the economic substance of TSYS’ current and ongoing business operations.
Although non-GAAP financial measures are often used to measure TSYS’ operating results and assess its financial performance, they are not necessarily comparable to similarly titled captions of other companies due to potential inconsistencies in the method of calculation.
TSYS provides reconciliations for each of its non-GAAP financial measures with its most directly comparable GAAP financial measure, whenever it is used. This enables shareholders and

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(TSYS LOGO)
potential investors to easily assess the impact of any differences between the measure TSYS is presenting and similarly titled captions of other companies.
TSYS believes that its use of non-GAAP financial measures provides investors with the same key financial performance indicators that are utilized by management to assess TSYS’ operating results, evaluate the business and make operational decisions on a prospective, going-forward basis. Hence, management provides disclosure of non-GAAP financial measures to give shareholders and potential investors an opportunity to see TSYS as viewed by management, to assess TSYS with some of the same tools that management utilizes internally and to be able to compare such information with prior periods. TSYS believes that the presentation of GAAP financial measures alone would not provide its shareholders and potential investors with the ability to appropriately analyze its ongoing operational results, and therefore expected future results. TSYS therefore believes that inclusion of non-GAAP financial measures provides investors with additional information to help them better understand its financial statements just as management utilizes these non-GAAP financial measures to better understand the business, manage budgets and allocate resources.
Conference Call
TSYS will host its quarterly conference call at 5:00 p.m. EDT on Tuesday, October 27. The conference call can be accessed via simultaneous Internet broadcast at tsys.com by clicking on the “Conference Call” icon on the homepage. The replay will be archived for 12 months and will be available approximately 30 minutes after the completion of the call. A slide presentation to accompany the call will be available by clicking on the “Conference Call” icon on the homepage of tsys.com.
About TSYS
TSYS (NYSE: TSS) is one of the world’s largest companies for outsourced payment services, offering a broad range of issuer- and acquirer-processing technologies that support consumer-finance, credit, debit, healthcare, loyalty and prepaid services for financial institutions and retail companies in the Americas, EMEA and Asia-Pacific regions. For more information contact news@tsys.com or log on to www.tsys.com. TSYS routinely posts all important information on its Web site.
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’ earnings forecast for 2009, and the assumptions underlying such statements. These statements are based on the current beliefs and expectations of TSYS’ management and are subject to significant risks and uncertainties. Actual results may differ materially from those contemplated by the forward-looking statements. A number of important factors could cause actual results to differ materially from those contemplated by our 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: (1) movements in LIBOR are greater than expected and draws on the remaining balance of the credit facility are greater than expected; (2) TSYS incurs expenses associated with the signing of a significant client; (3) adverse developments with respect to foreign currency exchange rates; (4) adverse developments with respect to entering into contracts with new clients and retaining current clients; (5) continued consolidation and turmoil in the financial services industry throughout 2009, including the merger of TSYS clients with entities that are not TSYS processing clients, the sale of portfolios by TSYS clients to entities that are not

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(TSYS LOGO)
TSYS processing clients and the seizure by banking regulators of TSYS clients; (6) additional significant one-time spin costs are incurred; (7) TSYS is unable to control expenses and increase market share; (8) TSYS is unable to manage the impact of slowing economic conditions and consumer spending; (9) the material breach of security of any of TSYS’ systems; (10) the impact of acquisitions, including their being more difficult to integrate than anticipated; (11) changes occur in laws, rules, regulations, credit card association rules or other industry standards affecting TSYS’ business which require significant product development efforts or reduce the market demand for or value of its products; (12) adverse developments with respect to the credit card industry in general, including a decline in the use of credit cards as a payment mechanism; and (13) growth rates of TSYS’ existing clients are lower than anticipated whether as a result of unemployment rates, card delinquencies and charge-off rates or otherwise. 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 our 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. We do not assume any obligation to update any forward-looking statements as a result of new information, future developments or otherwise.
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TSYS Reports Third Quarter Results
Page 5 of 12
TSYS
Financial Highlights
(unaudited)
(in thousands, except per share data)
                                                 
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
                    Percent                     Percent  
    2009     2008     Change     2009     2008     Change  
Revenues
                                               
Electronic payment processing services
  $ 238,448       254,558       (6.3 )%   $ 706,503       747,682       (5.5 )%
Merchant acquiring services
    71,834       64,567       11.3       207,005       191,888       7.9  
Other services
    48,684       53,579       (9.1 )     141,625       149,319       (5.2 )
 
                                       
Revenues before reimbursable items
    358,966       372,704       (3.7 )     1,055,133       1,088,889       (3.1 )
Reimbursable items
    73,330       66,742       9.9       198,089       200,013       (1.0 )
 
                                       
Total revenues
    432,296       439,446       (1.6 )     1,253,222       1,288,902       (2.8 )
 
                                       
 
                                               
Expenses
                                               
Salaries & other personnel expenses
    148,180       150,262       (1.4 )     441,031       439,791       0.3  
Net technology & facilities expenses
    76,903       75,042       2.5       224,176       221,875       1.0  
Spin related expenses
          1,719       (100.0 )           9,869       (100.0 )
Other operating expenses
    46,027       50,391       (8.7 )     141,177       139,120       1.5  
 
                                       
Expenses before reimbursable items
    271,110       277,414       (2.3 )     806,384       810,655       (0.5 )
Reimbursable items
    73,330       66,742       9.9       198,089       200,013       (1.0 )
 
                                       
Total operating expenses
    344,440       344,156       0.1       1,004,473       1,010,668       (0.6 )
 
                                       
 
                                               
Operating income
    87,856       95,290       (7.8 )     248,749       278,234       (10.6 )
 
                                               
Nonoperating (expenses) income
    574       (82 )   nm     (3,162 )     770     nm
 
                                       
Income from continuing operations before income taxes, noncontrolling interests and equity in income of equity investments
    88,430       95,208       (7.1 )     245,587       279,004       (12.0 )
Income taxes
    31,795       34,091       (6.7 )     88,439       100,979       (12.4 )
 
                                       
Income from continuing operations before noncontrolling interests and equity in income of equity investments
    56,635       61,117       (7.3 )     157,148       178,025       (11.7 )
Equity in income of equity investments
    1,623       3,062       (47.0 )     4,291       6,333       (32.2 )
 
                                       
Income from continuing operations, net of tax
    58,258       64,179       (9.2 )     161,439       184,358       (12.4 )
(Loss) income from discontinued operations, net of tax
    (2,932 )     269     nm     (5,155 )     736     nm
 
                                       
Net income
    55,326       64,448       (14.2 )     156,284       185,094       (15.6 )
Net income attributable to the noncontrolling interests
    (300 )     (374 )     19.8       (1,285 )     (1,322 )     2.8  
 
                                       
Net income attributable to TSYS
  $ 55,026       64,074       (14.1 )%   $ 154,999       183,772       (15.7 )%
 
                                       
 
                                               
Basic earnings per share:
                                               
Income from continuing operations to TSYS common shareholders*
  $ 0.29       0.32       (9.0 )%   $ 0.81       0.92       (12.1 )%
 
                                       
(Loss) income from discontinued operations to TSYS common shareholders*
    (0.01 )     0.00     nm     (0.03 )     0.00     nm
 
                                       
Net income attributable to TSYS common shareholders*
  $ 0.28       0.32       (13.9 )%   $ 0.79       0.93       (15.3 )%
 
                                       
 
                                               
Diluted earnings per share:
                                               
Income from continuing operations to TSYS common shareholders*
  $ 0.29       0.32       (8.9 )%   $ 0.81       0.92       (12.1 )%
 
                                       
(Loss) income from discontinued operations to TSYS common shareholders*
    (0.01 )     0.00     nm     (0.03 )     0.00     nm
 
                                       
Net income attributable to TSYS common shareholders*
  $ 0.28       0.32       (13.9 )%   $ 0.79       0.93       (15.3 )%
 
                                       
 
                                               
Dividends declared per share
  $ 0.07       0.07             $ 0.21       0.21          
 
                                       
 
                                               
Amounts attributable to TSYS common shareholders:
                                               
Income from continuing operations, net of tax
  $ 57,958       63,805             $ 160,154       183,036          
(Loss) income from discontinued operations, net of tax
    (2,932 )     269               (5,155 )     736          
 
                                       
Net income
  $ 55,026       64,074             $ 154,999       183,772          
 
                                       
nm = not meaningful
 
Note:   Certain amounts have been reclassified to conform with the presentation adopted in 2009.
 
*   Basic and diluted EPS amounts for continuing operations and net income do not total due to rounding.
 
 
    Basic and diluted EPS is computed based on the two-class method in accordance with the update to Accounting Standards Codification 260 (ASC 260) (previously referred to as FSP EITF 03-6-1). EPS for 2009 and 2008 have been recast to show retroactive adoption of the ASC 260 update.
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TSYS Reports Third Quarter Results
Page 6 of 12
TSYS
Earnings Per Share
(unaudited)
(in thousands, except per share data)
                                                                 
    Three Months Ended     Three Months Ended     Nine Months Ended     Nine Months Ended  
    September 30, 2009     September 30, 2008     September 30, 2009     September 30, 2008  
    Common     Participating     Common     Participating     Common     Participating     Common     Participating  
    Stock     Securities     Stock     Securities     Stock     Securities     Stock     Securities  
 
                                                               
Basic Earnings per share:
                                                               
Net income
  $ 55,026               64,074               154,999               183,772          
Less income allocated to nonvested awards
    (407 )     407       (543 )     543       (1,225 )     1,225       (1,546 )     1,546  
 
                                               
Net income allocated to common stock for EPS calculation (a)
  $ 54,619       407       63,531       543       153,774       1,225       182,226       1,546  
 
                                               
 
                                                               
Average common shares outstanding (b)
    195,721       1,465       196,000       1,680       195,552       1,564       196,342       1,670  
 
                                               
 
                                                               
Average common shares and participating securities
    197,186               197,680               197,116               198,012          
 
                                                       
 
                                                               
Basic Earnings per share (a)/(b)
  $ 0.28       0.28       0.32       0.32       0.79       0.78       0.93       0.93  
 
                                               
 
                                                               
Diluted Earnings per share:
                                                               
Net income
  $ 55,026               64,074               154,999               183,772          
Less income allocated to nonvested awards
    (407 )     407       (543 )     543       (1,225 )     1,225       (1,546 )     1,546  
 
                                               
Net income allocated to common stock for EPS calculation (c)
  $ 54,619       407       63,531       543       153,774       1,225       182,226       1,546  
 
                                               
 
                                                               
Average common shares outstanding
    195,721       1,465       196,000       1,680       195,552       1,564       196,342       1,670  
Increase due to assumed issuance of shares related to common equivalent shares outstanding
    63               22               63               71          
 
                                               
 
                                                               
Average common and common equivalent shares outstanding (d)
    195,784       1,465       196,022       1,680       195,615       1,564       196,413       1,670  
 
                                               
 
                                                               
Average common and common equivalent shares and participating securities
    197,249               197,702               197,179               198,083          
 
                                                       
 
                                                               
Diluted Earnings per share (c)/(d)
  $ 0.28       0.28       0.32       0.32       0.79       0.78       0.93       0.93  
 
                                               
In June 2008, the Financial Accounting Standards Board (FASB) issued an update to the Accounting Standards Codification 260 (ASC 260), “Earnings Per Share” (previously referred to as FASB Staff Position Emerging Issues Task Force No. 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities,”) and it became effective for TSYS beginning January 1, 2009. Under this standard, unvested awards of share-based payments with rights to receive dividends or dividend equivalents, such as our nonvested awards, are considered participating securities for purposes of calculating earnings per share (“EPS”). Under the two-class method required by ASC 260, a portion of net income is allocated to these participating securities and therefore is excluded from the calculation of EPS allocated to common stock, as shown in the table above. This update to ASC 260 requires retrospective applications for periods prior to the effective date and as a result, all prior period earnings per share data presented herein have been adjusted to conform to these provisions.
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TSYS Reports Third Quarter Results
Page 7 of 12
TSYS
Segment Breakdown
(unaudited)
(in thousands)
                                                                 
    Three Months Ended September 30,     Nine Months Ended September 30,  
                    Change                     Change  
    2009     2008     $     %     2009     2008     $     %  
         
Revenues before reimbursable items
                                                               
North America Services
  $ 219,910       235,076       (15,166 )     (6.5) %     666,641       703,865       (37,224 )     (5.3) %
International Services
    82,566       85,119       (2,553 )     (3.0) %     226,433       230,107       (3,674 )     (1.6) %
Merchant Services
    63,805       58,357       5,448       9.3  %     184,165       171,777       12,388       7.2  %
Intersegment revenues
    (7,315 )     (5,848 )     (1,467 )     25.1  %     (22,106 )     (16,860 )     (5,246 )     31.1  %
                         
Revenues before reimbursable items from external customers
  $ 358,966       372,704       (13,738 )     (3.7) %     1,055,133       1,088,889       (33,756 )     (3.1) %
                         
 
                                                               
Total revenues
                                                               
North America Services
  $ 261,580       284,935       (23,355 )     (8.2) %     795,354       854,632       (59,278 )     (6.9) %
International Services
    86,172       88,090       (1,918 )     (2.2) %     236,406       237,816       (1,410 )     (0.6) %
Merchant Services
    93,834       74,613       19,221       25.8  %     249,670       220,117       29,553       13.4  %
Intersegment revenues
    (9,290 )     (8,192 )     (1,098 )     13.4  %     (28,208 )     (23,663 )     (4,545 )     19.2  %
                         
Revenues from external customers
  $ 432,296       439,446       (7,150 )     (1.6) %     1,253,222       1,288,902       (35,680 )     (2.8) %
                         
 
                                                               
Depreciation and amortization
                                                               
North America Services
  $ 20,757       23,550       (2,793 )     (11.9) %     65,810       72,992       (7,182 )     (9.8) %
International Services
    10,278       9,658       620       6.4  %     26,761       26,150       611       2.3  %
Merchant Services
    8,159       6,783       1,376       20.3  %     24,394       20,019       4,375       21.9  %
                         
Total depreciation and amortization
  $ 39,194       39,991       (797 )     (2.0) %     116,965       119,161       (2,196 )     (1.8) %
                         
 
                                                               
Segment operating income
                                                               
North America Services
  $ 60,703       63,168       (2,465 )     (3.9) %     176,914       201,916       (25,002 )     (12.4) %
International Services
    9,691       16,751       (7,060 )     (42.1) %     24,913       35,937       (11,024 )     (30.7) %
Merchant Services
    17,462       17,090       372       2.2  %     46,922       50,250       (3,328 )     (6.6) %
Spin-related costs
          (1,719 )     1,719       (100.0) %           (9,869 )     9,869       (100.0) %
                         
Operating income
  $ 87,856       95,290       (7,434 )     (7.8) %     248,749       278,234       (29,485 )     (10.6) %
                         
 
                                                               
Total assets
                                                               
North America Services
  $ 1,502,435       1,378,651       123,784       9.0  %     1,502,435       1,378,651       123,784       9.0  %
International Services
    363,257       360,002       3,255       0.9  %     363,257       360,002       3,255       0.9  %
Merchant Services
    228,944       169,388       59,556       35.2  %     228,944       169,388       59,556       35.2  %
Intersegment assets
    (418,369 )     (321,499 )     (96,870 )     30.1  %     (418,369 )     (321,499 )     (96,870 )     30.1  %
                         
Total assets
  $ 1,676,267       1,586,542       89,725       5.7  %     1,676,267       1,586,542       89,725       5.7  %
                         
Note:   Revenues from North America 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 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 Services include TSYS Acquiring’s merchant acquiring and related services.
 
    Certain amounts have been reclassified to conform with the presentation adopted in 2009.
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TSYS Reports Third Quarter Results
Page 8 of 12
TSYS
Balance Sheet
(in thousands)
                 
    September 30, 2009   Dec 31, 2008
    (unaudited)   (unaudited)
     
Assets
               
Current assets:
               
Cash and cash equivalents
  $ 420,141       211,365  
Restricted cash
    26,317       31,128  
Accounts receivable, net
    240,753       246,767  
Deferred income tax assets
    16,440       29,615  
Prepaid expenses and other current assets
    74,678       88,612  
Current assets of discontinued operations
          24,570  
     
Total current assets
    778,329       632,057  
Property and equipment, net
    286,554       291,341  
Computer software, net
    198,249       202,038  
Contract acquisition costs, net
    127,021       131,568  
Goodwill
    168,423       165,995  
Equity investments, net
    72,936       74,012  
Other intangible assets, net
    15,082       17,452  
Other assets
    29,673       28,316  
Long-term assets of discontinued operations
          7,245  
     
Total assets
  $ 1,676,267       1,550,024  
     
 
               
Liabilities
               
Current liabilities:
               
Current portion of notes payable
  $ 6,919       8,575  
Accrued salaries and employee benefits
    28,529       46,701  
Accounts payable
    36,387       32,440  
Current portion of obligations under capital leases
    5,423       6,344  
Other current liabilities
    150,042       130,751  
Current liabilities of discontinued operations
          10,993  
     
Total current liabilities
    227,300       235,804  
Notes payable, excluding current portion
    196,156       196,295  
Deferred income tax liabilities
    52,757       60,573  
Obligations under capital leases, excluding current portion
    12,827       13,576  
Other long-term liabilities
    47,073       40,709  
Long-term liabilities of discontinued operations
          2,217  
     
Total liabilities
    536,113       549,174  
     
Equity
               
Shareholders’ equity:
               
Common stock
    20,086       20,036  
Additional paid-in capital
    137,052       126,889  
Accumulated other comprehensive income, net
    7,975       (6,627 )
Treasury stock
    (69,950 )     (69,641 )
Retained earnings
    1,033,851       920,292  
     
Total shareholders’ equity
    1,129,014       990,949  
     
Noncontrolling interests in consolidated subsidiaries
    11,140       9,901  
     
Total equity
    1,140,154       1,000,850  
     
Total liabilities and equity
  $ 1,676,267       1,550,024  
     
Note: Certain amounts have been reclassified to conform with the presentation adopted in 2009.
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TSYS Reports Third Quarter Results
Page 9 of 12
TSYS
Cash Flow
(unaudited)
(in thousands)
                 
    Nine Months Ended September 30,
    2009   2008
     
CASH FLOWS FROM OPERATING ACTIVITIES:
               
Net income
  $ 156,284       185,094  
Adjustments to reconcile net income attributable to TSYS to net cash provided by operating activities:
               
Equity in income of equity investments
    (4,291 )     (6,333 )
Dividends received from equity investments
    4,942       6,421  
Net loss (gain) on currency translation adjustments
    2,857       (3,233 )
Depreciation and amortization
    117,514       124,852  
Amortization of debt issuance costs
    115       115  
Share-based compensation
    13,245       21,260  
Excess tax benefit from share-based payment arrangements
    (6 )     (82 )
Provisions for bad debt expense and billing adjustments
    3,855       2,779  
Charges for transaction processing provisions
    4,993       1,415  
Deferred income tax benefit
    (3,716 )     (12,471 )
(Gain) loss on disposal of equipment, net
    (20 )     180  
Loss on disposal of subsidiary
    5,701        
(Increase) decrease in:
               
Accounts receivable
    6,095       (10,701 )
Prepaid expenses, other current assets and other long-term assets
    23,770       (14,722 )
Increase (decrease) in:
               
Accounts payable
    (331 )     (1,150 )
Accrued salaries and employee benefits
    (16,166 )     (33,770 )
Other current liabilities and other long-term liabilities
    18,215       19,252  
     
Net cash provided by operating activities
    333,056       278,906  
     
 
               
CASH FLOWS FROM INVESTING ACTIVITIES:
               
Purchases of property and equipment, net
    (21,344 )     (35,502 )
Additions to licensed computer software from vendors
    (18,710 )     (18,614 )
Additions to internally developed computer software
    (19,367 )     (14,976 )
Proceeds from disposition, net of expenses paid and cash disposed
    1,991        
Cash used in acquisitions
    (294 )     (965 )
Subsidiary repurchase of noncontrolling interest
          (343 )
Additions to contract acquisition costs
    (23,711 )     (34,612 )
     
Net cash used in investing activities
    (81,435 )     (105,012 )
     
 
               
CASH FLOWS FROM FINANCING ACTIVITIES:
               
Proceeds from borrowings of long-term debt
    5,334       2,506  
Principal payments on long-term debt borrowings and capital lease obligations
    (13,178 )     (11,501 )
Proceeds from exercise of stock options
    2       266  
Excess tax benefit from share-based payment arrangements
    6       82  
Repurchase of common stock
    (329 )     (23,594 )
Subsidiary dividends paid to noncontrolling shareholders
    (235 )     (241 )
Dividends paid on common stock
    (41,406 )     (41,358 )
     
Net cash used in financing activities
    (49,806 )     (73,840 )
     
Effect of exchange rate changes on cash and cash equivalents
    (1,693 )     (1,568 )
     
Net increase in cash and cash equivalents
    200,122       98,486  
Cash and cash equivalents at beginning of period
    220,019       210,518  
     
Cash and cash equivalents at end of period
  $ 420,141       309,004  
     
Note: Certain amounts have been reclassified to conform with the presentation adopted in 2009.
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TSYS Reports Third Quarter Results
Page 10 of 12
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,
                                    Percent
(dollars in millions)   2009   %   2008   %   Change
     
United States
  $ 304.9       70.5 %   $ 313.4       71.3 %     (2.7) %
Europe
    70.4       16.3       77.0       17.5       (8.6 )
Canada
    36.5       8.5       31.8       7.3       14.7  
Japan
    11.5       2.6       7.2       1.6       60.0  
Mexico
    2.1       0.5       3.5       0.8       (39.0 )
Other
    6.9       1.6       6.5       1.5       5.9  
             
 
  $ 432.3       100.0 %   $ 439.4       100.0 %     (1.6) %
             
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,
                                    Percent
(dollars in millions)   2009   %   2008   %   Change
     
United States
  $ 902.8       72.0 %   $ 937.7       72.7 %     (3.7) %
Europe
    188.9       15.1       204.1       15.8       (7.5 )
Canada
    100.7       8.0       94.7       7.4       6.2  
Japan
    33.6       2.7       22.8       1.8       47.9  
Mexico
    6.3       0.5       11.2       0.9       (43.4 )
Other
    20.9       1.7       18.4       1.4       13.6  
             
 
  $ 1,253.2       100.0 %   $ 1,288.9       100.0 %     (2.8) %
             
Geographic Area Revenue by Operating Segment:
The following table reconciles revenues by geography to revenues by reporting segment for the three months ended September 30:
                                                 
    Three Months Ended September 30,
    North America   International   Merchant
    Services   Services   Services
(dollars in millions)   2009   2008   2009   2008   2009   2008
     
United States
  $ 211.8       239.4                   93.1       74.0  
Europe
    0.2       0.2       70.2       76.8              
Canada
    36.4       31.7                   0.1       0.1  
Japan
                11.5       7.2              
Mexico
    2.1       3.5                          
Other
    2.5       2.5       4.2       3.8       0.2       0.2  
     
 
  $ 253.0       277.3       85.9       87.8       93.4       74.3  
     
The following table reconciles revenues by geography to revenues by reporting segment for the nine months ended September 30:
                                                 
    Nine Months Ended September 30,
    North America   International   Merchant
    Services   Services   Services
(dollars in millions)   2009   2008   2009   2008   2009   2008
     
United States
  $ 655.2       719.1             0.2       247.6       218.4  
Europe
    0.6       0.7       188.3       203.4              
Canada
    100.3       94.3                   0.4       0.4  
Japan
                33.6       22.8              
Mexico
    6.3       11.2                          
Other
    7.6       7.4       12.8       10.4       0.5       0.6  
     
 
  $ 770.0       832.7       234.7       236.8       248.5       219.4  
     
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TSYS Reports Third Quarter
Results Page 11 of 12
Supplemental Information:
                                         
    Accounts on File at September 30,
                                    Percent
(in millions)   2009   %   2008   %   Change
 
Consumer
    189.2       55.3 %     211.1       59.4 %     (10.4 )%
Retail
    39.2       11.4       51.1       14.4       (23.4 )
Commercial
    46.0       13.4       41.8       11.7       10.1  
Government services
    24.6       7.2       20.5       5.8       19.9  
Stored Value
    37.8       11.1       26.1       7.3       45.0  
Debit
    5.3       1.6       4.9       1.4       8.8  
             
 
    342.1       100.0 %     355.5       100.0 %     (3.8 )%
             
                         
                    Percent
(in millions)   September 30, 2009   September 30, 2008   Change
QTD Average Accounts on File
    351.7       365.5       (3.8 )%
YTD Average Accounts on File
    349.8       369.1       (5.2 )%
                                         
    Accounts on File at September 30,
                                    Percent
(in millions)   2009   %   2008   %   Change
 
Domestic
    253.2       74.0 %     272.6       76.7 %     (7.1 )%
International
    88.9       26.0       82.9       23.3       7.3  
             
 
    342.1       100.0 %     355.5       100.0 %     (3.8 )%
             
Note: The accounts on file between domestic and international is based on the geographic domicile of processing clients.
                 
    September 2008 to   September 2007 to
Growth in Accounts on File (in millions):   September 2009   September 2008
Beginning balance
    355.5       357.1  
Change in accounts on file due to:
               
Internal growth of existing clients
    29.6       38.7  
New clients
    25.7       27.8  
Purges/Sales
    (31.3 )     (33.1 )
Deconversions
    (37.4 )     (35.0 )
         
Ending balance
    342.1       355.5  
         
                 
Number of Employees (FTEs):   2009   2008
At September 30,
    7,720       7,772  
Quarterly average for period ended September 30,
    7,893       7,761  
YTD average for period ended September 30,
    7,991       7,519  
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TSYS Reports Third Quarter Results
Page 12 of 12
Reconciliation of GAAP to Non-GAAP
Constant Currency Comparison
(unaudited)
(in thousands)
                                                 
    Three Months Ended September 30,   Nine Months Ended September 30,
                    Percent                   Percent
    2009   2008   Change   2009   2008   Change
         
Consolidated
                                               
Constant currency (1)
  $ 442,627       439,446       0.7 %   $ 1,303,914       1,288,902       1.2 %
Foreign currency (2)
    (10,331 )           (2.4 )     (50,692 )           (3.9 )
                         
Total revenues
  $ 432,296       439,446       (1.6 )%   $ 1,253,222       1,288,902       (2.8 )%
                         
 
                                               
Constant currency (1)
  $ 89,534       95,290       (6.0 )%   $ 256,634       278,234       (7.8 )%
Foreign currency (2)
    (1,678 )           (1.8 )     (7,885 )           (2.8 )
                         
Operating income
  $ 87,856       95,290       (7.8 )%   $ 248,749       278,234       (10.6 )%
                         
 
                                               
International Services
                                               
Constant currency (1)
  $ 96,503       88,090       9.6 %   $ 287,098       237,816       20.7 %
Foreign currency (2)
    (10,331 )           (11.7 )     (50,692 )           (21.3 )
                         
Total revenues
  $ 86,172       88,090       (2.2 )%   $ 236,406       237,816       (0.6 )%
                         
 
                                               
Constant currency (1)
  $ 11,369       16,751       (32.1 )%   $ 32,798       35,937       (8.7 )%
Foreign currency (2)
    (1,678 )           (10.0 )     (7,885 )           (21.9 )
                         
Operating income
  $ 9,691       16,751       (42.1 )%   $ 24,913       35,937       (30.7 )%
                         
 
(1)   Reflects current period results on a non-GAAP basis as if foreign currency rates did not change from the comparable prior year period.
 
(2)   Reflects the impact of calculated changes in foreign currency rates from the comparable period.
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