EX-99.1 2 g22965exv99w1.htm EX-99.1 exv99w1
Exhibit 99.1
     
(TSYS Logo)   PRESS RELEASE
Total System Services, Inc.
One TSYS Way
Post Office Box 2567
Columbus GA 31902-2567 		  +1.706.649.2307
+1.706.649.5740
www.tsys.com
For immediate release:
Contacts:
Shawn Roberts
TSYS Investor Relations
+1.706.644.6081
shawnroberts@tsys.com
TSYS Announces First Quarter 2010 Financial Results
Columbus, Ga., April 20, 2010 — TSYS (NYSE: TSS) today reported results for the first quarter of 2010. Total revenues were $415.4 million for an increase of 1.6% over 2009.
Income from continuing operations increased 3.1% to $51.8 million and net income was up 10.3% compared to 2009. Basic earnings per share (EPS) from continuing operations were $0.26.
As previously reported, TSYS completed its acquisition of 51% of Omaha, Nebraska-based First National Merchant Solutions, LLC (FNMS) on April 1, 2010. TSYS will consolidate this new entity in its financial statements in its Merchant Services segment for the remaining nine months of 2010. TSYS’ guidance for 2010 has been updated to reflect this acquisition. For 2010, it is expected that FNMS will contribute $95 to $97 million to TSYS’ total revenues; $2 to $3 million to net income, net of acquisition costs of approximately $2.5 million; and approximately $0.01 to basic earnings per share. While TSYS will consolidate and report all of FNMS’ revenues and expenses, it will report only 51% of FNMS’ net income.
“Our new FNMS joint venture is transformational for TSYS as it advances our goal to diversify our business from being just a transaction processor to being a full service payments company. FNMS is a “top-tier” merchant acquirer with a deep and talented pool of experienced management and team members that mirrors our TSYS culture,” said Philip W. Tomlinson, chairman of the board and chief executive officer of TSYS.
“With the economy showing signs of improvement for the first time in two years, we remain optimistic about our ability to achieve our original guidance for 2010, and are pleased to be able to raise it as a result of the FNMS joint venture,” added Tomlinson.
TSYS also announced today a new stock repurchase plan to purchase up to 10 million shares of TSYS stock. This equates to approximately $162 million of TSYS stock based on current market prices. The shares may be purchased from time to time over the next two years at prices considered attractive to the company.
TSYS’ revised guidance for 2010 is set forth below and includes the impact of deconverted portfolios (whether as the result of bank failures, portfolio sales or otherwise), price compression, reduction in one-time termination fees and currency impact, and the current economic environment of the credit card market.

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(TSYS Logo)   PRESS RELEASE
                                                 
    2010 Revised Guidance  
            Range                
    (in millions, except per     Percent  
    share amounts)     Change  
Total revenues
   $ 1,711     to   $ 1,745       1 %   to     3 %
Reimbursable items
   $ 279     to   $ 284       3 %   to     5 %
Revenues before reimbursable items
   $ 1,432     to   $ 1,461       1 %   to     3 %
Income from continuing operations
   $ 189     to   $ 194       (14 %)   to     (12 %)
EPS from continuing operations available to TSYS common shareholders
   $ 0.96     to   $ 0.98       (14 %)   to     (12 %)
Average Shares Outstanding
             197.3                                  
Conference Call
TSYS will host its quarterly conference call at 5:00 p.m. ET on Tuesday, April 20. The conference call can be accessed via simultaneous Internet broadcast at tsys.com by clicking on the link under “Webcasts” on the main 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 link under “Webcasts” on the main homepage of tsys.com.
Non-GAAP Measures
The financial highlights section of this release contains the non-GAAP financial measures of revenues and operating results on a constant currency basis to describe TSYS’ performance. Management uses these non-GAAP financial measures to better understand and assess TSYS’ operating results and financial performance. TSYS believes these non-GAAP financial measures provide meaningful additional information about TSYS to assist investors in understanding and evaluating its operating results.
Additional information about non-GAAP financial measures and a reconciliation of those measures to the most directly comparable GAAP measures are included on page 11 of this release.
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.
Forward-Looking Statements
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

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(TSYS Logo)   PRESS RELEASE
Litigation Reform Act of 1995. These forward-looking statements include, among others, statements regarding the expected impact of the FNMS joint venture on TSYS’ 2010 total revenues, net income and basic earnings per share, TSYS’ earnings guidance for 2010 total revenues, revenues before reimbursable items, income from continuing operations and EPS from continuing operations, and the assumptions underlying such statements including, with respect to TSYS’ earnings guidance for 2010: (1) the economy will not worsen during 2010; (2) there will be no deconversions of large clients during the year other than as previously announced; (3) there will be no significant movement in foreign currency exchange rates related to TSYS’ business during 2010; (4) the anticipated levels in employment, technology and other expenses, which are included in 2010 estimates, will be accomplished; (5) TSYS will not incur significant expenses associated with the conversion of new large clients or acquisitions, or any significant impairment of goodwill or other intangibles; and (6) there will be no significant movements in LIBOR, and no significant draws on the remaining balance of TSYS’ revolving credit facility. 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) one or more of the assumptions set forth above upon which TSYS’ 2010 earnings guidance is based is inaccurate; (2) adverse developments with respect to entering into contracts with new clients and retaining current clients; (3) continued consolidation and turmoil in the financial services and other industries during 2010, 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 TSYS processing clients and the nationalization or seizure by banking regulators of TSYS clients; (4) TSYS is unable to control expenses and increase market share both domestically and internationally; (5) TSYS is unable to manage the impact of slowing economic conditions and consumer spending; (6) the material breach of security of any of TSYS’ systems; (7) the impact of potential and completed acquisitions, including the costs associated therewith and their being more difficult to integrate than anticipated; (8) 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; (9) 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 (10) internal 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 Announces 2010 Earnings
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TSYS
Financial Highlights
(unaudited)
(in thousands, except per share data)
                         
    Three Months Ended  
    March 31,  
                    Percent  
    2010     2009     Change  
Total revenues
   $ 415,354       408,933       1.6 %
Cost of services
     292,191       284,675       2.6  
Selling, general and administrative expenses
     44,092       46,143       (4.4 )
 
                    
Operating income
     79,071       78,115       1.2  
Nonoperating expenses
     (262 )     (1,459 )   nm
 
                    
 
                        
Income from continuing operations before income taxes, noncontrolling interests and equity in income of equity investments
     78,809       76,656       2.8  
Income taxes
     27,883       27,415       1.7  
 
                    
Income from continuing operations before noncontrolling interests and equity in income of equity investments
     50,926       49,241       3.4  
Equity in income of equity investments
     893       1,043       (14.4 )
 
                    
Income from continuing operations, net of tax
     51,819       50,284       3.1  
Loss from discontinued operations, net of tax
     —       (3,343 )   nm
 
                    
Net income
     51,819       46,941       10.4  
Net income attributable to noncontrolling interests
     (492 )     (415 )   nm
 
                    
Net income attributable to TSYS common shareholders
   $ 51,327       46,526       10.3 %
 
                    
 
                        
Basic earnings per share:
                        
Income from continuing operations to TSYS common shareholders
   $ 0.26       0.26       1.1 %
 
                    
Loss from discontinued operations to TSYS common shareholders
     0.00       (0.02 )   nm
 
                    
Net income attributable to TSYS common shareholders
   $ 0.26       0.24       10.2 %
 
                    
 
                        
Diluted earnings per share:
                        
Income from continuing operations to TSYS common shareholders
   $ 0.26       0.26       1.2 %
 
                    
Loss from discontinued operations to TSYS common shareholders
     0.00       (0.02 )   nm
 
                    
Net income attributable to TSYS common shareholders
   $ 0.26       0.24       10.3 %
 
                    
 
                        
Dividends declared per share
   $ 0.07       0.07          
 
                    
Amounts attributable to TSYS common shareholders:
                        
Income from continuing operations, net of tax
   $ 51,327       49,869          
Loss from discontinued operations, net of tax
     —       (3,343 )        
 
                    
Net income
   $ 51,327       46,526          
 
                    
 
nm = not meaningful

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TSYS Announces 2010 Earnings
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TSYS
Earnings Per Share
(unaudited)
(in thousands, except per share data)
                                 
    Three Months Ended     Three Months Ended  
    March 31, 2010     March 31, 2009  
    Common     Participating     Common     Participating  
    Stock     Securities     Stock     Securities  
Basic Earnings per share:
                                
Net income
   $ 51,327               46,526          
Less income allocated to nonvested awards
     (264 )     264       (361 )     361  
 
                        
Net income allocated to common stock for EPS calculation ( a )
   $ 51,063       264       46,165       361  
 
                        
 
                                
Average common shares outstanding ( b )
     196,160       1,016       195,461       1,534  
 
                        
 
                                
Average common shares and participating securities
     197,176               196,995          
 
                            
 
                                
Basic Earnings per share ( a )/( b )
   $ 0.26       0.26       0.24       0.24  
 
                        
 
                                
Diluted Earnings per share:
                                
Net income
   $ 51,327               46,526          
Less income allocated to nonvested awards
     (263 )     263       (360 )     360  
 
                        
Net income allocated to common stock for EPS calculation ( c )
   $ 51,064       263       46,166       360  
 
                        
 
                                
Average common shares outstanding
     196,160       1,016       195,461       1,534  
Increase due to assumed issuance of shares related to common equivalent shares outstanding
     86               67          
 
                        
 
                                
Average common and common equivalent shares outstanding ( d )
     196,246       1,016       195,528       1,534  
 
                        
 
                                
Average common and common equivalent shares and participating securities
     197,262               197,062          
 
                            
 
                                
Diluted Earnings per share ( c )/( d )
   $ 0.26       0.26       0.24       0.24  
 
                        
In June 2008, the Financial Accounting Standards Board (FASB) issued an update to the Accounting Standards Codification 260 (ASC 260), “Earnings Per Share” 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 Announces 2010 Earnings
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TSYS
Segment Breakdown
(unaudited)
(in thousands)
                                 
    Three Months Ended March 31,  
                    Change  
    2010     2009     $     %  
     
Revenues before reimbursable items
                                
North America Services
   $ 215,309       223,782       (8,473 )     (3.8 )%
International Services
     76,281       70,584       5,697       8.1 %
Merchant Services
     58,663       58,206       457       0.8 %
Intersegment revenues
     (5,702 )     (7,126 )     1,424       (20.0 )%
             
Revenues before reimbursable items from external customers
   $ 344,551       345,446       (895 )     (0.3 )%
             
 
                                
Total revenues
                                
North America Services
   $ 254,228       268,789       (14,561 )     (5.4 )%
International Services
     79,392       73,802       5,590       7.6 %
Merchant Services
     89,209       75,499       13,710       18.2 %
Intersegment revenues
     (7,475 )     (9,157 )     1,682       (18.4 )%
             
Revenues from external customers
   $ 415,354       408,933       6,421       1.6 %
             
 
                                
Depreciation and amortization
                                
North America Services
   $ 20,403       23,230       (2,827 )     (12.2 )%
International Services
     8,783       7,584       1,199       15.8 %
Merchant Services
     8,585       8,087       498       6.2 %
Corporate Admin
     793       577       216       37.4 %
             
Total depreciation and amortization
   $ 38,564       39,478       (914 )     (2.3 )%
             
 
                                
Segment operating income
                                
North America Services
   $ 69,788       71,494       (1,706 )     (2.4 )%
International Services
     11,283       9,532       1,751       18.4 %
Merchant Services
     17,325       15,519       1,806       11.6 %
Corporate Admin
     (19,325 )     (18,430 )     (895 )     4.9 %
             
Operating income
   $ 79,071       78,115       956       1.2 %
             
 
                                
Other:
                                
Reimbursable items:
                                
North America Services
   $ 38,919       45,007       (6,088 )     (13.5 )%
International Services
     3,111       3,218       (107 )     (3.3 )%
Merchant Services
     30,546       17,293       13,253       76.6 %
Intersegment revenues
     (1,773 )     (2,031 )     258       (12.7 )%
             
Reimbursable items
   $ 70,803       63,487       7,316       11.5 %
             
 
                                
Volumes:
                                
FTEs
                                
North America Services
     4,519       5,056       (537 )     (10.6 )%
International Services
     1,895       1,818       77       4.2 %
Merchant Services
     705       836       (131 )     (15.7 )%
Corporate Admin
     314       358       (44 )     (12.3 )%
             
FTEs
     7,433       8,068       (635 )     (7.9 )%
             
 
                                
North America Segment:
                                
Accounts on File (AOF) (in millions)
     283.1       303.2       (20.1 )     (6.6 )%
Transactions (in millions)
     1,458.2       1,481.0       (22.8 )     (1.5 )%
 
                                
International Segment:
                                
AOF (in millions)
     40.2       37.2       3.0       8.1 %
Transactions (in millions)
     281.3       247.9       33.4       13.5 %
 
                                
Merchant Segment:
                                
POS Transactions (in millions)
     1,320.3       1,226.1       94.2       7.7 %
                                 
    At     Change  
Total assets (in thousands)   3/31/2010     12/31/2009     $     %  
     
North America Services
   $ 1,582,743       1,535,129       47,614       3.1 %
International Services
     374,072       379,606       (5,534 )     (1.5 )%
Merchant Services
     217,625       215,855       1,770       0.8 %
Intersegment assets
     (410,397 )     (419,636 )     9,239       (2.2 )%
             
Total assets
   $ 1,764,043       1,710,954       53,089       3.1 %
             
     Certain amounts have been reclassified to conform with the presentation adopted in 2010.
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TSYS Announces 2010 Earnings
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TSYS
Balance Sheet
(in thousands)
                 
    Mar 31, 2010   Dec 31, 2009
    (unaudited)   (unaudited)
     
Assets
                
Current assets:
                
Cash and cash equivalents
   $ 534,487       449,955  
Restricted cash
     30,348       46,190  
Accounts receivable, net
     218,815       231,325  
Deferred income tax assets
     9,980       11,302  
Prepaid expenses and other current assets
     66,775       72,124  
     
Total current assets
     860,405       810,896  
Property and equipment, net
     302,995       289,198  
Computer software, net
     195,674       197,134  
Contract acquisition costs, net
     123,482       128,038  
Goodwill
     166,370       168,121  
Equity investments, net
     76,021       75,495  
Other intangible assets, net
     13,009       14,132  
Other assets
     26,087       27,940  
     
Total assets
   $ 1,764,043       1,710,954  
       
 
                
Liabilities
                
Current liabilities:
                
Current portion of notes payable
   $ 7,057       6,988  
Accrued salaries and employee benefits
     15,336       32,457  
Accounts payable
     29,249       21,729  
Current portion of obligations under capital leases
     9,817       6,289  
Other current liabilities
     167,191       153,316  
     
Total current liabilities
     228,650       220,779  
Notes payable, excluding current portion
     190,308       192,367  
Deferred income tax liabilities
     49,324       47,162  
Obligations under capital leases, excluding current portion
     36,327       12,756  
Other long-term liabilities
     44,507       48,443  
     
Total liabilities
     549,116       521,507  
     
Equity
                
Shareholders’ equity:
                
Common stock
     20,130       20,086  
Additional paid-in capital
     141,617       139,742  
Accumulated other comprehensive income, net
     (7,145 )     5,673  
Treasury stock
     (70,881 )     (69,950 )
Retained earnings
     1,117,789       1,080,250  
     
Total shareholders’ equity
     1,201,510       1,175,801  
     
Noncontrolling interests in consolidated subsidiaries
     13,417       13,646  
     
Total equity
     1,214,927       1,189,447  
     
Total liabilities and equity
   $ 1,764,043       1,710,954  
       
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TSYS Announces 2010 Earnings
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TSYS
Cash Flow
(unaudited)
(in thousands)
                 
    Three Months Ended March 31,
    2010   2009
       
CASH FLOWS FROM OPERATING ACTIVITIES:
                
Net income
   $ 51,819       46,941  
Adjustments to reconcile net income to net cash provided by operating activities:
                
Equity in income of equity investments
     (893 )     (1,043 )
Net loss (gain) on currency translation adjustments
     (247 )     883  
Depreciation and amortization
     38,564       39,850  
Amortization of debt issuance costs
     38       38  
Share-based compensation
     2,913       5,297  
Excess tax benefit from share-based payment arrangements
     (111 )     —  
Provisions for bad debt expense and billing adjustments
     (658 )     (394 )
Charges for transaction processing provisions
     849       1,537  
Deferred income tax benefit
     3,665       (2,329 )
(Gain) loss on disposal of equipment, net
     30     7  
(Increase) decrease in:
                
Accounts receivable
     9,874       1,166  
Prepaid expenses, other current assets and other long-term assets
     2,892       (1,743 )
Increase (decrease) in:
                
Accounts payable
     8,319       (3,779 )
Accrued salaries and employee benefits
     (32,707 )     (25,567 )
Other current liabilities and other long-term liabilities
     49,188       37,806  
       
Net cash provided by operating activities
     133,535       98,670  
       
 
                
CASH FLOWS FROM INVESTING ACTIVITIES:
                
Purchases of property and equipment, net
     (9,170 )     (2,181 )
Additions to licensed computer software from vendors
     (3,769 )     (5,932 )
Additions to internally developed computer software
     (5,760 )     (5,828 )
Cash used in acquisitions, net of cash acquired
     —       (205 )
Additions to contract acquisition costs
     (9,914 )     (10,992 )
       
Net cash used in investing activities
     (28,613 )     (25,138 )
       
 
                
CASH FLOWS FROM FINANCING ACTIVITIES:
                
Proceeds from borrowings of long-term debt
     —       2,809  
Principal payments on long-term debt borrowings and capital lease obligations
     (3,731 )     (3,622 )
Proceeds from exercise of stock options
     109       —  
Excess tax benefit from share-based payment arrangements
     111       —  
Repurchase of common stock
     (1,075 )     (329 )
Dividends paid on common stock
     (13,797 )     (13,779 )
       
Net cash used in financing activities
     (18,383 )     (14,921 )
       
 
                
CASH AND CASH EQUIVALENTS:
                
Effect of exchange rate changes on cash and cash equivalents
     (2,007 )     (1,084 )
       
Net increase in cash and cash equivalents
     84,532       57,527  
Cash and cash equivalents at beginning of period
     449,955       220,018  
       
Cash and cash equivalents at end of period
   $ 534,487       277,545  
       
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TSYS Announces 2010 Earnings
Page 9 of 12
Supplemental Information:
                                         
    Accounts on File at March 31,  
(in millions)   2010     %     2009     %     Percent Change  
Consumer
     182.2       56.3 %     186.5       54.8 %     (2.3) %
Commercial
     44.1       13.6       44.4       13.0       (0.8 )
Stored Value
     40.9       12.7       26.0       7.6       57.2  
Government services
     26.3       8.1       21.7       6.4       21.2  
Retail
     24.4       7.6       56.5       16.6       (56.7 )
Debit
     5.1       1.6       5.2       1.5       (2.9 )
Healthcare
     0.3       0.1       0.1       0.1     nm
             
 
     323.3       100.0 %     340.4       100.0 %     (5.0) %
             
 
Growth in Accounts on File (in millions):
                 
    March 2009 to     March 2008 to  
    March 2010     March 2009  
Beginning balance
     340.4       364.9  
Change in accounts on file due to:
                
Internal growth of existing clients
     24.4       32.0  
New clients
     29.1       20.0  
Purges/Sales
     (43.4 )     (35.9 )
Deconversions
     (27.2 )     (40.6 )
 
            
Ending balance
     323.3       340.4  
 
            
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TSYS Announces 2010 Earnings
Page 10 of 12
TSYS
Cost of Services/Selling, General and Administrative Expenses by Quarter in 2009
(unaudited)
(in thousands)
                                         
    Three Months Ended        
    Mar 31,     Jun 30,     Sep 30,     Dec 31,     YTD  
    2009     2009     2009     2009     2009  
Total revenues
   $ 408,933       411,993       432,296       434,840     $ 1,688,062  
Cost of services
     284,675       280,111       297,509       296,461       1,158,756  
Selling, general and administrative expenses
     46,143       49,105       46,931       45,094       187,273  
 
                              
Operating income
   $ 78,115       82,777       87,856       93,285     $ 342,033  
 
                              
TSYS
Segments by Quarter in 2009 Recast for Corporate Administration Segment
(unaudited)
(in thousands, except FTE data)
                                         
    Three Months Ended        
    Mar 31,     Jun 30,     Sep 30,     Dec 31,     YTD  
    2009     2009     2009     2009     2009  
Depreciation and amortization
                                        
North America Services
   $ 23,230       20,799       20,189       20,359     $ 84,577  
International Services
     7,584       8,596       10,043       9,324       35,547  
Merchant Services
     8,087       8,149       8,159       8,469       32,864  
Corporate Admin
     577       749       803       805       2,934  
 
                              
Total depreciation and amortization
   $ 39,478       38,293       39,194       38,957     $ 155,922  
 
                              
 
                                        
Segment operating income
                                        
North America Services
   $ 71,494       70,559       72,172       71,184     $ 285,409  
International Services
     9,532       12,836       14,047       21,240       57,655  
Merchant Services
     15,519       16,690       18,909       18,964       70,082  
Corporate Admin
     (18,430 )     (17,308 )     (17,272 )     (18,103 )     (71,113 )
 
                              
Operating income
   $ 78,115       82,777       87,856       93,285     $ 342,033  
 
                              
 
                                        
Reimbursable items:
                                        
North America Services
   $ 45,007       42,035       41,671       39,551     $ 168,264  
International Services
     3,218       3,150       3,606       5,087       15,061  
Merchant Services
     17,293       18,185       30,028       29,288       94,794  
Intersegment eliminations
     (2,031 )     (2,098 )     (1,975 )     (1,837 )     (7,941 )
 
                              
Reimbursable items
   $ 63,487       61,272       73,330       72,089     $ 270,178  
 
                              
 
                                        
FTEs
                                        
North America Services
     5,056       4,956       4,749       4,727          
International Services
     1,818       1,855       1,872       1,805          
Merchant Services
     836       832       763       762          
Corporate Admin
     358       358       336       326          
 
                                
FTEs
                                        
 
     8,068       8,001       7,720       7,620          
 
                                
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TSYS Announces 2010 Earnings
Page 11 of 12
Reconciliation of GAAP to Non-GAAP
Non-GAAP Measures
     The schedule below provides a reconciliation of revenues and operating results on a constant currency basis to reported revenues and operating income. This non-GAAP measure presents year-to-date 2010 financial results using the previous year’s foreign currency exchange rates. On a year-to-date constant currency basis, TSYS’ total revenues grew 0.1% as compared to a reported GAAP increase of 1.6%, and operating income increased 0.2% versus a GAAP-reported increase of 1.2%.
     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 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.

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TSYS Announces 2010 Earnings
Page 12 of 12
Reconciliation of GAAP to Non-GAAP
Constant Currency Comparison
(unaudited)
(in thousands)
                         
    Three Months Ended March 31,  
                    Percent  
    2010     2009     Change  
Consolidated
                        
Constant currency (1)
   $ 409,520       408,933       0.1 %
Foreign currency (2)
     5,834       —       1.5  
             
Total revenues
   $ 415,354       408,933       1.6 %
             
 
                        
Constant currency (1)
   $ 78,247       78,115       0.2 %
Foreign currency (2)
     824       —       1.0  
             
Operating income
   $ 79,071       78,115       1.2 %
             
 
(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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