EX-99.1 2 d427322dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

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 Operating Income Growth of 12.0%

and EPS of $0.32 for the Third Quarter

COLUMBUS, Ga., October 23, 2012 — TSYS (NYSE: TSS) today reported results for the third quarter of 2012. For the quarter, basic earnings per share was $0.32, an increase of 5.7% over 2011. Revenues before reimbursable items were $406.1 million and operating income was $90.9 million, increases of 4.1% and 12.0%, respectively, as compared to 2011. Total revenues for the quarter were $468.1 million, an increase of 1.8% over 2011, and were impacted by a decrease of $7.6 million in reimbursable items.

The operating margin for the quarter was 22.4%, an increase of 157 basis points over the third quarter of last year. The increase is attributable to the 4.1% increase in revenues before reimbursable items while expenses before reimbursable items were up 2.0%.

POS transactions, excluding deconverted clients in the indirect merchant business, were up 9.5% and sales volume in the direct merchant business was up 17.4%. Excluding the impact of the acquisition, sales volume was up 9.3%. North America and International issuer processing businesses grew with same client transactions up 10.1% over last year.

“In August, TSYS formed a joint venture with Central Payment Co., LLC to further strengthen our sales distribution channels in the direct merchant business. Also during the quarter, we spent $61.2 million as we purchased 2.6 million shares of our stock bringing our share repurchases since September 2010 to 12.3 million and a total spend of $227.0 million. We continue to see value in our buyback program, absent a strategic acquisition, and have 7.7 million shares remaining under the plan that expires in April 2014. We also closed a new credit facility of $500 million this quarter with a 5-year term loan of $150 million and a 5-year revolver of $350 million that included nine banks. This new revolver, along with our free cash flow, will provide us with more financial flexibility as we continue to make investments that we expect to grow our company and enhance shareholder return,” said Tomlinson.

 

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Conference Call

TSYS will host its quarterly conference call at 5:00 p.m. ET on Tuesday, October 23. 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 pages 11 and 12 of this release.

About TSYS

At TSYS, (NYSE: TSS), we believe payments should revolve around people — not the other way around. We call this belief “People-Centered Payments.” By putting people at the center of every decision we make, with unmatched customer service and industry insight, TSYS is able to support financial institutions, businesses and governments in more than 80 countries. Offering merchant payment-acceptance solutions as well as services in credit, debit, prepaid, mobile, chip, healthcare and more, we make it possible for those in the global marketplace to conduct safe and secure electronic transactions with trust and convenience.

TSYS’ headquarters are located in Columbus, Georgia, with local offices spread across the Americas, EMEA and Asia-Pacific. TSYS provides services to more than half of the top 20 international banks, is a Fortune 1000 company and was named one of the 2012 World’s Most Ethical Companies by Ethisphere magazine. For more information, please visit us at www.tsys.com.

Forward-Looking Statements

This press release contains “forward-looking statements” – that is, statements related to future, not past, events. Forward-looking statements often address our expected future business and financial performance and often contain words such as “expect,” “anticipate,” “intend,” “believe,” “should,” “plan,” “will,” “could,” and similar expressions. These forward-looking statements include, among others, statements regarding TSYS expectation that the investments TSYS makes will grow the company and enhance shareholder return, and the assumptions underlying such statements. These statements are based on the current beliefs and expectations of TSYS’ management, are based on management’s assumptions and are subject to significant risks and uncertainties. Actual results may differ materially from those contemplated by the forward-looking

 

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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, the ultimate results of TSYS’ investments may not have a positive impact on TSYS’ business as is currently expected for a number of reasons including fluctuations in the price of our stock and acquired companies not performing as expected. Additional risks and other 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 most recent Annual Report on Form 10-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 Third Quarter 2012 Earnings

Page 4 of 12

 

TSYS

Financial Highlights

(unaudited)

(in thousands, except per share data)

 

     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
     2012     2011     Percent
Change
    2012     2011     Percent
Change
 

Total revenues

   $ 468,059        459,747        1.8   $ 1,391,872        1,336,732        4.1

Cost of services

     315,685        321,481        (1.8     946,612        935,024        1.2   

Selling, general and administrative expenses

     61,481        57,086        7.7        177,439        168,970        5.0   
  

 

 

   

 

 

     

 

 

   

 

 

   

Operating income

     90,893        81,180        12.0        267,821        232,738        15.1   

Nonoperating expenses

     (579     (3,794     84.7        (2,802     (5,363     47.8   
  

 

 

   

 

 

     

 

 

   

 

 

   

Income before income taxes, noncontrolling interests and equity in income of equity investments

     90,314        77,386        16.7        265,019        227,375        16.6   

Income taxes

     30,228        24,286        24.5        84,336        73,102        15.4   
  

 

 

   

 

 

     

 

 

   

 

 

   

Income before noncontrolling interests and equity in income of equity investments

     60,086        53,100        13.2        180,683        154,273        17.1   

Equity in income of equity investments

     1,957        4,588        (57.3     6,983        7,475        (6.6
  

 

 

   

 

 

     

 

 

   

 

 

   

Net income

     62,043        57,688        7.5        187,666        161,748        16.0   

Net income attributable to noncontrolling interests

     (1,731     460        nm        (4,248     (1,064     nm   
  

 

 

   

 

 

     

 

 

   

 

 

   

Net income attributable to TSYS common shareholders

   $ 60,312        58,148        3.7   $ 183,418        160,684        14.1
  

 

 

   

 

 

     

 

 

   

 

 

   

Basic earnings per share

   $ 0.32        0.30        5.7   $ 0.97        0.83        16.6
  

 

 

   

 

 

     

 

 

   

 

 

   

Diluted earnings per share

   $ 0.32        0.30        5.2   $ 0.97        0.83        16.1
  

 

 

   

 

 

     

 

 

   

 

 

   

Dividends declared per share

   $ 0.10        0.07        $ 0.30        0.21     
  

 

 

   

 

 

     

 

 

   

 

 

   

nm = not meaningful

            

 

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TSYS Announces Third Quarter 2012 Earnings

Page 5 of 12

 

TSYS

Consolidated Statements of Comprehensive Income

(unaudited)

(in thousands)

 

     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
     2012     2011     2012     2011  

Net income

   $ 62,043        57,688        187,666        161,748   

Other comprehensive income (loss), net of tax:

        

Foreign currency translation adjustments

     9,999        (9,244     2,935        2,713   

Postretirement healthcare plan adjustments

     (1,537     1,156        (1,250     793   
  

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income (loss)

     8,462        (8,088     1,685        3,506   
  

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income

     70,505        49,600        189,351        165,254   

Comprehensive income attributable to noncontrolling interests

     1,709        (265     3,844        1,934   
  

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income attributable to TSYS common shareholders

   $ 68,796        49,865        185,507        163,320   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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TSYS Announces Third Quarter 2012 Earnings

Page 6 of 12

 

TSYS

Earnings Per Share

(unaudited)

(in thousands, except per share data)

 

    Three Months Ended
September 30, 2012
    Three Months Ended
September 30, 2011
    Nine Months Ended
September 30, 2012
    Nine Months Ended
September 30, 2011
 
    Common
Stock
    Participating
Securities
    Common
Stock
    Participating
Securities
    Common
Stock
    Participating
Securities
    Common
Stock
    Participating
Securities
 

Basic Earnings per share:

             

Net income

  $ 60,312          58,148        $ 183,418          160,684     

Less income allocated to nonvested awards

    (191     191        (208     208        (613     613        (592     592   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income allocated to common stock for EPS calculation ( a )

  $ 60,121        191        57,940        208      $ 182,805        613        160,092        592   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average common shares outstanding ( b )

    187,269        609        190,706        691        187,911        642        191,823        715   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average common shares and participating securities

    187,878          191,397          188,553          192,538     
 

 

 

     

 

 

     

 

 

     

 

 

   

Basic Earnings per share ( a )/( b )

  $ 0.32        0.31        0.30        0.30      $ 0.97        0.96        0.83        0.83   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted Earnings per share:

             

Net income

  $ 60,312          58,148        $ 183,418          160,684     

Less income allocated to nonvested awards

    (191     191        (208     208        (611     611        (591     591   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income allocated to common stock for EPS calculation ( c )

  $ 60,121        191        57,940        208      $ 182,807        611        160,093        591   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average common shares outstanding

    187,269        609        190,706        691        187,911        642        191,823        715   

Increase due to assumed issuance of shares related to common equivalent shares outstanding

    1,218          376          1,138          392     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average common and common equivalent shares outstanding ( d )

    188,487        609        191,082        691        189,049        642        192,215        715   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average common and common equivalent shares and participating securities

    189,096          191,773          189,691          192,930     
 

 

 

     

 

 

     

 

 

     

 

 

   

Diluted Earnings per share ( c )/( d )

  $ 0.32        0.31        0.30        0.30      $ 0.97        0.95        0.83        0.83   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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TSYS Announces Third Quarter 2012 Earnings

Page 7 of 12

 

TSYS

Segment Breakdown

(unaudited)

(in thousands)

 

     Three Months Ended September 30,     Nine Months Ended September 30,  
                 Change                 Change  
     2012     2011     $     %     2012     2011     $     %  

Revenues before reimbursable items

                

North America Services

   $ 203,497        206,087        (2,590     (1.3 )%      613,111        599,451        13,660        2.3

International Services

     98,184        96,140        2,044        2.1     293,722        277,337        16,385        5.9

Merchant Services

     107,786        93,220        14,566        15.6     303,842        272,780        31,062        11.4

Intersegment revenues

     (3,415     (5,285     1,870        35.4     (10,753     (16,553     5,800        35.0
  

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

   

Revenues before reimbursable items from external customers

   $ 406,052        390,162        15,890        4.1     1,199,922        1,133,015        66,907        5.9
  

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

   

Total revenues

                

North America Services

   $ 237,625        243,899        (6,274     (2.6 )%      717,781        708,360        9,421        1.3

International Services

     102,691        99,891        2,800        2.8     306,466        288,271        18,195        6.3

Merchant Services

     132,746        122,933        9,813        8.0     383,167        361,774        21,393        5.9

Intersegment revenues

     (5,003     (6,976     1,973        28.3     (15,542     (21,673     6,131        28.3
  

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

   

Revenues from external customers

   $ 468,059        459,747        8,312        1.8     1,391,872        1,336,732        55,140        4.1
  

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

   

Depreciation and amortization

                

North America Services

   $ 18,583        19,996        (1,413     (7.1 )%      55,857        59,387        (3,530     (5.9 )% 

International Services

     14,701        12,847        1,854        14.4     42,617        36,515        6,102        16.7

Merchant Services

     9,290        8,772        518        5.9     26,743        27,232        (489     (1.8 )% 

Corporate Admin

     669        753        (84     (11.2 )%      2,112        2,269        (157     (6.9 )% 
  

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

   

Total depreciation and amortization

   $ 43,243        42,368        875        2.1     127,329        125,403        1,926        1.5
  

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

   

Segment operating income

                

North America Services

   $ 69,561        68,016        1,545        2.3     209,794        187,284        22,510        12.0

International Services

     7,725        8,278        (553     (6.7 )%      21,277        29,426        (8,149     (27.7 )% 

Merchant Services

     34,508        27,398        7,110        26.0     101,677        80,029        21,648        27.1

Corporate Admin

     (20,901     (22,512     1,611        7.2     (64,927     (64,001     (926     (1.4 )% 
  

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

   

Operating income

   $ 90,893        81,180        9,713        12.0     267,821        232,738        35,083        15.1
  

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

   

Other:

                

Reimbursable items:

                

North America Services

   $ 34,128        37,812        (3,684     (9.7 )%      104,670        108,910        (4,240     (3.9 )% 

International Services

     4,507        3,751        756        20.2     12,745        10,934        1,811        16.6

Merchant Services

     24,960        29,713        (4,753     (16.0 )%      79,324        88,993        (9,669     (10.9 )% 

Intersegment revenues

     (1,588     (1,690     102        6.0     (4,789     (5,118     329        6.4
  

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

   

Reimbursable items

   $ 62,007        69,586        (7,579     (10.9 )%      191,950        203,719        (11,769     (5.8 )% 
  

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

   

Volumes:

                

FTEs (full-time equivalents)

                

North America Services

             4,014        4,306        (292     (6.8 )% 

International Services

             2,517        2,318        199        8.6

Merchant Services

             1,427        1,167        260        22.3

Corporate Admin

             425        398        27        6.8
          

 

 

   

 

 

   

 

 

   

FTEs

             8,383        8,189        194        2.4
          

 

 

   

 

 

   

 

 

   
                 At     Change  
Total assets (in thousands)                            9/30/2012     12/31/2011     $     %  

North America Services

             1,693,048        1,621,664        71,384        4.4

International Services

             459,423        433,203        26,220        6.1

Merchant Services

             582,250        487,858        94,392        19.3

Intersegment assets

             (764,802     (684,333     (80,469     (11.8 )% 
          

 

 

   

 

 

   

 

 

   

Total assets

             1,969,919        1,858,392        111,527        6.0
          

 

 

   

 

 

   

 

 

   
     Three Months Ended September 30,     Nine Months Ended September 30,  
                 Change                 Change  
     2012     2011     Inc(Dec)     %     2012     2011     Inc(Dec)     %  

North America Segment:

                

Accounts on File (AOF) (in millions)

             413.4        341.9        71.5        20.9

Transactions (in millions)

     2,036.6        1,860.2        176.5        9.5     5,907.7        5,270.6        637.1        12.1

International Segment:

                

AOF (in millions)

             53.0        50.5        2.5        4.9

Transactions (in millions)

     415.1        360.5        54.6        15.1     1,200.5        1,027.2        173.3        16.9

Merchant Segment:

                

Point-of-sale Transactions (in millions)

     1,225.1        1,263.3        (38.2     (3.0 )%      3,724.5        3,739.1        (14.6     (0.4 )% 

 

 

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TSYS Announces Third Quarter 2012 Earnings

Page 8 of 12

 

TSYS

Balance Sheet

(unaudited)

(in thousands)

 

     Sep 30, 2012     Dec 31, 2011  

Assets

    

Current assets:

    

Cash and cash equivalents

   $ 356,569        316,337   

Accounts receivable, net

     248,441        248,541   

Deferred income tax assets

     8,987        12,872   

Prepaid expenses and other current assets

     76,956        72,431   
  

 

 

   

 

 

 

Total current assets

     690,953        650,181   

Goodwill

     422,508        355,498   

Property and equipment, net

     264,803        266,608   

Computer software, net

     198,973        215,244   

Contract acquisition costs, net

     162,790        162,987   

Equity investments, net

     83,037        82,924   

Other intangible assets, net

     102,278        81,250   

Deferred income tax assets, net

     6,037        4,069   

Other assets

     38,540        39,631   
  

 

 

   

 

 

 

Total assets

   $ 1,969,919        1,858,392   
  

 

 

   

 

 

 

Liabilities

    

Current liabilities:

    

Current portion of notes payable

   $ 23,743        181,251   

Accounts payable

     32,824        26,095   

Accrued salaries and employee benefits

     19,826        33,004   

Current portion of obligations under capital leases

     13,806        14,363   

Other current liabilities

     131,237        125,863   
  

 

 

   

 

 

 

Total current liabilities

     221,436        380,576   

Long-term debt, excluding current portion

     176,935        39,104   

Deferred income tax liabilities

     33,199        32,889   

Obligations under capital leases, excluding current portion

     20,422        24,489   

Other long-term liabilities

     67,575        60,325   
  

 

 

   

 

 

 

Total liabilities

     519,567        537,383   
  

 

 

   

 

 

 

Redeemable noncontrolling interest

     38,641        —     
  

 

 

   

 

 

 

Equity

    

Shareholders’ equity:

    

Common stock

     20,245        20,186   

Additional paid-in capital

     135,657        125,948   

Accumulated other comprehensive loss, net

     1,644        (445

Treasury stock

     (274,143     (225,034

Retained earnings

     1,507,542        1,380,634   
  

 

 

   

 

 

 

Total shareholders’ equity

     1,390,945        1,301,289   
  

 

 

   

 

 

 

Noncontrolling interests in consolidated subsidiaries

     20,766        19,720   
  

 

 

   

 

 

 

Total equity

     1,411,711        1,321,009   
  

 

 

   

 

 

 

Total liabilities and equity

   $ 1,969,919        1,858,392   
  

 

 

   

 

 

 

 

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TSYS Announces Third Quarter 2012 Earnings

Page 9 of 12

 

TSYS

Cash Flow

(unaudited)

(in thousands)

 

     Nine Months Ended September 30,  
     2012     2011  

CASH FLOWS FROM OPERATING ACTIVITIES:

    

Net income

   $ 187,666        161,748   

Adjustments to reconcile net income to net cash provided by operating activities:

    

Equity in income of equity investments

     (6,983     (7,475

Dividends received from equity investments

     7,523        6,835   

Net loss on foreign currency translation

     2,259        2,751   

Depreciation and amortization

     127,329        125,403   

Amortization of debt issuance costs

     180        115   

Share-based compensation

     12,348        12,693   

Excess tax benefit from share-based payment arrangements

     (1,236     (50

Asset impairments

     —          798   

Provisions for bad debt expense and billing adjustments

     813        328   

Charges for transaction processing provisions

     1,348        3,684   

Deferred income tax expense (benefit)

     (2,355     15,833   

(Gain) loss on disposal of equipment, net

     77        (1,396

Changes in operating assets and liabilities:

    

Accounts receivable

     1,730        (4,382

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

     4,406        (766

Accounts payable

     6,688        (15,629

Accrued salaries and employee benefits

     (13,567     (2,610

Other current liabilities and other long-term liabilities

     5,761        (215
  

 

 

   

 

 

 

Net cash provided by operating activities

     333,987        297,665   
  

 

 

   

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

    

Purchases of property and equipment, net

     (24,296     (18,121

Additions to licensed computer software from vendors

     (19,385     (10,033

Additions to internally developed computer software

     (15,202     (13,331

Proceeds from sale of trade name

     —          4,500   

Cash used in acquisitions, net of cash acquired

     (66,250     (45,309

Purchase of private equity investments

     (2,370     (1,573

Additions to contract acquisition costs

     (25,700     (22,506
  

 

 

   

 

 

 

Net cash used in investing activities

     (153,203     (106,373
  

 

 

   

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

    

Principal payments on long-term debt borrowings and capital lease obligations

     (188,395     (21,052

Proceeds from borrowings of long-term debt

     158,633        —     

Proceeds from exercise of stock options

     9,451        1,743   

Excess tax benefit from share-based payment arrangements

     1,236        50   

Repurchase of common stock

     (61,556     (73,361

Debt issuance costs

     (1,996     —     

Purchase of noncontrolling interests

     —          (174,050

Subsidiary dividends paid to noncontrolling shareholders

     (2,797     (433

Dividends paid on common stock

     (56,719     (40,616
  

 

 

   

 

 

 

Net cash used in financing activities

     (142,143     (307,719
  

 

 

   

 

 

 

CASH AND CASH EQUIVALENTS:

    

Effect of exchange rate changes on cash and cash equivalents

     1,591        2,345   
  

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     40,232        (114,082

Cash and cash equivalents at beginning of period

     316,337        394,795   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 356,569        280,713   
  

 

 

   

 

 

 

 

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TSYS Announces Third Quarter 2012 Earnings

Page 10 of 12

 

Supplemental Information:

 

     Accounts on File  
     Total  
(in millions)    September
2012
     September
2011
     %
Change
 

Consumer Credit

     195.0         194.2         0.4   

Government Services

     48.8         32.6         49.7   

Retail

     24.1         23.2         4.1   
  

 

 

    

 

 

    

Total Consumer

     267.9         250.0         7.2   

Commercial

     36.3         33.4         8.7   

Other

     11.1         7.0         58.0   
  

 

 

    

 

 

    

Subtotal

     315.3         290.4         8.6   

Prepaid/Stored Value

     114.3         75.8         50.7   

Commercial Card Single Use

     36.8         26.2         40.6   
  

 

 

    

 

 

    

Total AOF

     466.4         392.4         18.9   
  

 

 

    

 

 

    

Growth in Accounts on File (in millions):

 

     September 2011 to
September 2012
    September 2010 to
September 2011
 

Beginning balance

     392.4        339.2   

Change in accounts on file due to:

    

Internal growth of existing clients

     30.3        31.2   

New clients

     75.5        32.9   

Purges/Sales

     (29.0     (10.0

Deconversions

     (2.8     (0.9
  

 

 

   

 

 

 

Ending balance

     466.4        392.4   
  

 

 

   

 

 

 

 

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TSYS Announces Third Quarter 2012 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 2012 financial results using the previous year’s foreign currency exchange rates. On a year-to-date constant currency basis, TSYS’ total revenues grew 4.6% as compared to a reported GAAP increase of 4.1%.

The non-GAAP financial measures of constant currency and revenues , with respect to year-to-date revenues and basic EPS 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 Third Quarter 2012 Earnings

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,  
     2012     2011      Percent
Change
    2012     2011      Percent
Change
 

Consolidated

              

Constant currency (1)

   $ 470,470        459,747         2.3   $ 1,397,952        1,336,732         4.6

Foreign currency (2)

     (2,411     —             (6,080     —        
  

 

 

   

 

 

      

 

 

   

 

 

    

Total revenues

   $ 468,059        459,747         1.8   $ 1,391,872        1,336,732         4.1
  

 

 

   

 

 

      

 

 

   

 

 

    

Constant currency (1)

   $ 89,038        81,180         9.7   $ 264,125        232,738         13.5

Foreign currency (2)

     1,855        —             3,696        —        
  

 

 

   

 

 

      

 

 

   

 

 

    

Operating income

   $ 90,893        81,180         12.0   $ 267,821        232,738         15.1
  

 

 

   

 

 

      

 

 

   

 

 

    

International Services

              

Constant currency (1)

   $ 105,290        99,891         5.4   $ 313,007        288,271         8.6

Foreign currency (2)

     (2,599     —             (6,541     —        
  

 

 

   

 

 

      

 

 

   

 

 

    

Total revenues

   $ 102,691        99,891         2.8   $ 306,466        288,271         6.3
  

 

 

   

 

 

      

 

 

   

 

 

    

 

(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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