-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UjawCN8Dyd0gWmpqCrRKpj6cQxOFeu8koGRCg6DXVyRCwyIsN8oBFgRhI/H49DqM /MVNdrHSzPDjw4F34K0Nfg== 0000721683-07-000001.txt : 20070117 0000721683-07-000001.hdr.sgml : 20070117 20070116183308 ACCESSION NUMBER: 0000721683-07-000001 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20070116 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070117 DATE AS OF CHANGE: 20070116 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TOTAL SYSTEM SERVICES INC CENTRAL INDEX KEY: 0000721683 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 581493818 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-10254 FILM NUMBER: 07533195 BUSINESS ADDRESS: STREET 1: 1600 FIRST AVENUE STREET 2: P O BOX 1755 CITY: COLUMBUS STATE: GA ZIP: 31901 BUSINESS PHONE: 7066492267 MAIL ADDRESS: STREET 1: 1600 FIRST AVENUE CITY: COLUMBUS STATE: GA ZIP: 31901 8-K 1 jan8k.htm TSYS FORM 8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

 

January 16, 2007

Date of Report

(Date of Earliest Event Reported)

 

Total System Services, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

Georgia
(State of Incorporation)

1-10254
(Commission File Number)

58-1493818
(IRS Employer Identification No.)

 

1600 First Avenue, Columbus, Georgia 31901

(Address of principal executive offices) (Zip Code)

 

(706) 649-2267

(Registrant's telephone number, including area code)

 

________________________________________________

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

 



Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

 



Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

 



Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

 



Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

Item 2.02

Results of Operations and Financial Condition.

 

 

On January 16, 2007, Total System Services, Inc. (“Registrant”) issued a press release and will hold an investor call and webcast on January 17, 2007 to disclose financial results for the year ended December 31, 2006. The press release and Supplemental Information for use at this investor call are attached hereto as Exhibits 99.1 and 99.2 and incorporated herein by reference. This information shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934 or incorporated by reference into any document filed under the Securities Act of 1933 or the Securities Exchange Act of 1934 except as shall be expressly set forth by specific reference in such filing.

 

 

Item 7.01

Regulation FD Disclosure.

 

See Item 2.02 above.

 

 

Item 9.01

Financial Statements and Exhibits.

 

 

 

 

 

 

(d)

Exhibits

 

 

Exhibit No.

Description

 

 

99.1

Registrant's press release dated January 16, 2007

 

99.2

Supplemental Information prepared for use with the press release

 

 

 

 

2

 

 

 

Signature

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, Registrant has caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

TOTAL SYSTEM SERVICES, INC.
("Registrant")

 

 

Dated: January 16, 2007

By:/s/ Kathleen Moates                
Kathleen Moates
Senior Deputy General Counsel

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3

 

 

 

 EX-99.1 2 newsrelease.htm TSYS PRESS RELEASE

Exhibit 99.1

Total System Services, Inc.

1600 First Ave.

+1.706.649.2307

P.O. Box 2567

+1.706.649.5740

Columbus, GA 31902-2567

www.tsys.com

 

For immediate release.

 

Contacts:

 

James B. Lipham

Chief Financial Officer

+1.706.649.2262

Shawn Roberts

TSYS Investor Relations

+1.706.644.6081

shawnroberts@tsys.com

 

 

TSYS Reports 28% Increase in Net Income for 2006

Company Also Increases 2007 Net Income Guidance Range

 

Columbus, Ga., Jan. 16, 2007 — TSYS today announced record annual results for the 23rd consecutive year with revenues of $1.8 billion, and a 75% increase in net income for the fourth quarter of 2006 over the same period in 2005.

 

“We exceeded our goals for 2006 with another record year and we are pleased to announce an improvement in our guidance for 2007, which is a direct result of the TSYS team approach of focusing on our growth strategy while streamlining costs,” said Philip W. Tomlinson, chairman and chief executive officer of TSYS.

 

“Our core processing business within our domestic-based support services segment continues to grow at a solid double digit rate, and remains stronger than ever. In addition, our international revenues for 2006 grew 22.7% over 2005, and we expect that strong growth to continue in 2007. On a non-GAAP (generally accepted accounting principles) basis, net income is now expected to increase between 14%-17% in 2007 compared to 2006. On a GAAP basis, TSYS’ 2007 net income is expected to decline between 5%-3% as compared to 2006. We believe our 2006 performance provides a strong foundation upon which we can build for future growth opportunities,” said Tomlinson.

 

 

 

 

 

— more —

 

2007

 

 

Financial Highlights

 

(dollars in millions, except earnings per share data)

Three Months Ended

Twelve Months Ended

December 31,

December 31,


2006


2005

Percent Change


2006


2005

Percent Change

Revenues Before
Reimbursables


$419.8


336.2


24.8%


$1,434.4


1,289.8


11.2%

Total Revenues

503.9

420.7

19.8%

1,787.2

1,602.9

11.5%

Operating Income

128.2

72.1

77.7%

357.1

287.1

24.4%

Net Income

87.1

49.7

75.2%

249.2

194.5

28.1%

Basic EPS

0.44

0.25

76.1%

1.27

0.99

28.4%

Diluted EPS

0.44

0.25

75.8%

1.26

0.99

28.3%

 

Recent Highlights

•

TSYS substantially completed the Capital One conversion in the fourth quarter of 2006.

•

TSYS entered into an agreement with the No. 1 card issuer in The Netherlands, Rabobank, to process its consumer-credit portfolio. The multi-stage conversion of Rabobank’s 1-million-plus accounts is scheduled to conclude in the second quarter of 2007, making TSYS the leading credit-card processor in The Netherlands.

•

TSYS acquired majority control of a call center business to deliver a comprehensive range of managed services to financial institutions across Europe, the Middle East and Africa. The new business is named TSYS Managed Services EMEA.

•

Robert J. Philbin was named president of TSYS Acquiring Solutions. Mr. Philbin will be responsible for the entire acquiring enterprise, and will report to M. Troy Woods, president and chief operating officer of TSYS.

•

Through its prepaid business, TSYS has grown its healthcare business to more than 11 million transaction-enabled accounts on file.

 

Projected Outlook for 2007

Excluding the one-time Bank of America contract-termination fee in 2006 of approximately $68.9 million and the acceleration of amortization of Bank of America contract acquisition costs of approximately $6 million, net income is now expected to increase between 14%–17% in 2007 compared to 2006, versus previous guidance of an increase between 8% to 10%. Based on GAAP, TSYS’ estimated 2007 net income is now expected to decline between 5%–3% as compared to 2006, versus previous guidance of a decline between 9%–7%.

 

TSYS’ 2007 earnings guidance is based on the following assumptions:

 

2007

 

 

1.    Including the Bank of America termination fee of approximately $68.9 million and an acceleration of amortization of contract acquisition costs, estimated total revenues will decline 5%–3% in 2007. Excluding the termination fee and reimbursable items, revenues will increase by 2%-5% over 2006.

2.

The conversion of the Capital One portfolio, which was substantially completed in the fourth quarter of 2006, will be fully completed in 2007.

3.

J.P. Morgan Chase & Co. will discontinue its processing agreement according to the original schedule and will license TSYS’ processing software in the third quarter of 2007.

4.

Expense reductions in employment, equipment, leases and other areas that are included in 2007 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.

Presentation of revenues and net income excluding the Bank of America termination fee, acceleration of amortization of contract acquisition costs and reimbursable items are non-GAAP financial measures. The following table reconciles the range of changes from 2006 to 2007, comparing non-GAAP financial measures to GAAP financial measures.

 

 

Range of Guidance
($ in millions)

 

2007
Forecast

2006
Actual

% change

Net income

$238 to $243

$249

(5%) to (3%)

Less: termination fee, net of acceleration of amortization of contract acquisition costs, net of tax

 

($41)

 

Net income, excluding impact of termination fee, net of acceleration of amortization of contract acquisition costs

$238 to $243

$208

14% to 17%

Total revenues

$1,691 to $1,725

$1,787

(5%) to (3%)

Less: reimbursable items

($294)

($353)

 

Less: termination fee, net of related contract acquisition cost amortization*

 

($65)

 

Revenues, excluding reimbursable items and estimated net termination fee

$1,397 to $1,431

$1,369

2% to 5%

 

*Note: TSYS accelerated the amortization of approximately $6 million in contract acquisition costs (comprised of $4 million of amortization related to payments for processing rights, which was recorded as a reduction of revenues, and $2 million of amortization expense related to conversion costs).

TSYS believes the table above presents meaningful information to assist investors in understanding the company’s financial estimates for changes in total revenues and net income from 2006 to 2007 as a result of the Bank of America consumer portfolio deconversion as the

 

2007

 

non-GAAP financial measures exclude amounts that the company does not consider part of ongoing operating results. The non-GAAP financial percentage changes should not be considered by themselves or as a substitute for the GAAP percentage changes year over year. The non-GAAP measures should be considered as an additional view of the way TSYS’ financial measures are affected by the one-time Bank of America contract termination fee, acceleration of amortization of contract acquisition costs and reimbursable items; and should be used in conjunction with all publicly filed financial statements and reports.

Conference Call

TSYS will host its quarterly conference call at 8:30 a.m. EST, Wednesday, Jan. 17. 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.

 

About TSYS

TSYS is one of the world’s largest payment-services companies, offering a broad range of packaged or outsourced issuing and acquiring technologies that support consumer finance, credit, debit and prepaid services for financial institutions and retail companies worldwide. Based in Columbus, Ga., TSYS (NYSE: TSS) is 80-percent held by Synovus (NYSE: SNV), one of FORTUNE magazine’s “Most Admired Companies” and a member of its “100 Best Companies to Work For” Hall of Fame. For more information, contact news@tsys.com.

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’ expectation that international revenue growth will continue to be strong in 2007 and TSYS’ expected net income growth for 2007, and the assumptions underlying such statements, including, with respect to TSYS’ expected increase in net income for 2007: (1) including the Bank of America termination fee of approximately $68.9 million and an acceleration of amortization of contract-acquisition costs of approximately $6 million, estimated total revenues will decline 5-3% in 2007 and excluding the termination fee and reimbursable items, estimated revenues will increase by 2%-5% over 2006; (2) the conversion of the Capital One portfolio, which was substantially completed in the fourth quarter of 2006, will be fully completed in 2007; (3) JP Morgan Chase & Co. will discontinue its processing agreement according to the original schedule and will license TSYS' processing software in 2007; (4) expense reductions in employment, equipment, leases and other areas which are included in 2007 estimates will be accomplished; and (5) TSYS will not incur significant expenses associated with the conversion of new large clients and/or acquisitions, or any other significant impairment of goodwill or other intangibles. 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, one or more of the assumptions upon which TSYS’ 2007 net income forecast is based are inaccurate. 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.

2007

— more —

 EX-99.2 3 page5of10.htm SUPPLEMENTAL INFORMATION PREPARED FOR USE WITH THE PRESS RELEASE

Exhibit 99.2

TSYS Announces Earnings for 2006

 

 

 

 

 

 

 

 

 

 

 

Page 5 of 10

 

 

 

 

 

 

 

 

 

 

 

TSYS

Financial Highlights

(Unaudited)

(In thousands, except per share data)

 

 

 

Three Months Ended

 

 

 

Twelve Months Ended

 

 

 

December 31,

 

 

 

December 31,

 

 

 

 

 

 

 

Percentage

 

 

 

 

 

 

 

Percentage

 

 

 

2006

 

2005

 

Change

 

 

 

2006

 

2005

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Electronic payment processing services

$

303,525

 

223,586

 

35.8

%

 

$

989,062

 

869,785

 

13.7

%

Merchant acquiring services

 

64,957

 

67,410

 

(3.6)

 

 

 

260,275

 

237,418

 

9.6

 

Other services

 

51,269

 

45,250

 

13.3

 

 

 

185,096

 

182,587

 

1.4

 

Revenues before reimbursables

 

419,751

 

336,246

 

24.8

 

 

 

1,434,433

 

1,289,790

 

11.2

 

Reimbursable items

 

84,149

 

84,489

 

(0.4)

 

 

 

352,737

 

313,141

 

12.6

 

Total revenues

 

503,900

 

420,735

 

19.8

 

 

 

1,787,170

 

1,602,931

 

11.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Employment expenses

 

141,312

 

127,876

 

10.5

 

 

 

522,256

 

462,217

 

13.0

 

Net occupancy & equipment expenses

 

91,213

 

71,185

 

28.1

 

 

 

317,916

 

283,955

 

12.0

 

Other operating expenses

 

58,989

 

65,040

 

(9.3)

 

 

 

237,179

 

256,489

 

(7.5)

 

Expenses before reimbursables

 

291,514

 

264,101

 

10.4

 

 

 

1,077,351

 

1,002,661

 

7.4

 

Reimbursable items

 

84,149

 

84,489

 

(0.4)

 

 

 

352,737

 

313,141

 

12.6

 

Total operating expenses

 

375,663

 

348,590

 

7.8

 

 

 

1,430,088

 

1,315,802

 

8.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

128,237

 

72,145

 

77.7

 

 

 

357,082

 

287,129

 

24.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

4,816

 

2,123

 

126.8

 

 

 

14,113

 

6,012

 

134.7

 

Interest expense

 

(209)

 

(115)

 

(81.7)

 

 

 

(573)

 

(374)

 

(53.2)

 

Gain (loss) on foreign currency translation, net

 

1,037

 

(79)

 

nm

 

 

 

1,232

 

(840)

 

nm

 

Other Income

 

5,644

 

1,929

 

192.6

 

 

 

14,772

 

4,798

 

207.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before Income Taxes, Minority Interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

and Equity in Income of Equity Investments

 

133,881

 

74,074

 

80.7

 

 

 

371,854

 

291,927

 

27.4

 

Income Taxes

 

47,689

 

25,100

 

90.0

 

 

 

126,182

 

103,286

 

22.2

 

Income before Minority Interest and Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

in Income of Equity Investments

 

86,192

 

48,974

 

76.0

 

 

 

245,672

 

188,641

 

30.2

 

Minority Interest

 

(304)

 

(80)

 

(280.0)

 

 

 

(752)

 

(256)

 

(193.8)

 

Equity in Income of Equity Investments

 

1,169

 

804

 

45.4

 

 

 

4,243

 

6,135

 

(30.8)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

$

87,057

 

49,698

 

75.2

%

 

$

249,163

 

194,520

 

28.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic Earnings Per Share

$

0.44

 

0.25

 

76.1

%

 

$

1.27

 

0.99

 

28.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings Per Share

$

0.44

 

0.25

 

75.8

%

 

$

1.26

 

0.99

 

28.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividend Declared Per Share

$

0.07

 

0.06

 

 

 

 

$

0.27

 

0.22

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Common Shares Outstanding

 

196,307

 

197,277

 

 

 

 

 

196,744

 

197,145

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Common and Common

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equivalent Shares Outstanding

 

196,663

 

197,371

 

 

 

 

 

197,077

 

197,345

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

nm = not meaningful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- more -

 

 

 

TSYS Announces Earnings for 2006

 

 

 

 

 

 

 

 

 

 

Page 6 of 10

 

 

 

 

 

 

 

 

 

 

TSYS

 

Segment Breakdown

 

(Unaudited)

 

(In thousands)

 

 

 

 

 

 

 

 

 

Three Months Ended December 31, 2006

 

Three Months Ended December 31, 2005

 

 

 

Domestic-
based
support
services

International-
based
support
services

Merchant
acquiring
services

Consolidated

 

Domestic-
based
support
services

International-
based
support
services

Merchant
acquiring
services

Consolidated

 

 

 

 

 

 

 

 

 

Revenues before reimbursables

$

316,918

49,430

59,056

425,404

 

246,456

31,148

63,551

341,155

 

Intersegment revenues

 

(4,660)

(956)

(37)

(5,653)

 

(4,863)

-

(46)

(4,909)

 

Revenues before reimbursables

 

 

 

 

 

 

 

 

 

 

 

from external customers

$

312,258

48,474

59,019

419,751

 

241,593

31,148

63,505

336,246

 

Total revenues

$

385,941

55,263

70,448

511,652

 

315,501

37,378

75,204

428,083

 

Intersegment revenues

 

(6,759)

(956)

(37)

(7,752)

 

(7,302)

-

(46)

(7,348)

 

Revenues from external customers

$

379,182

54,307

70,411

503,900

 

308,199

37,378

75,158

420,735

 

Depreciation and amortization

$

41,334

6,388

6,866

54,588

 

29,925

4,153

7,298

41,376

 

Intersegment expenses

$

3,526

(3,336)

(7,927)

(7,737)

 

9,452

(9,413)

(7,668)

(7,629)

 

Segment operating income

$

103,629

7,562

17,046

128,237

 

58,921

1,230

11,994

72,145

 

Income before income taxes, minority interest and

 

 

 

 

 

 

 

 

 

 

 

equity income of equity investments

 

109,133

7,240

17,508

133,881

 

61,107

628

12,339

74,074

 

Income tax expense

$

38,860

3,357

5,472

47,689

 

19,860

632

4,608

25,100

 

Equity in income of equity investments

$

-

1,169

-

1,169

 

-

804

-

804

 

Net Income

$

70,342

4,679

12,036

87,057

 

42,172

(205)

7,731

49,698

 

Identifiable assets

 

1,517,053

320,022

210,118

2,047,193

 

 

 

 

 

 

Intersegment eliminations

 

(400,957)

(860)

(37)

(401,854)

 

 

 

 

 

 

Total assets

 

1,116,096

319,162

210,081

1,645,339

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Twelve Months Ended December 31, 2006

 

Twelve Months Ended December 31, 2005

 

 

 

Domestic-
based
support
services

International-
based
support
services

Merchant
acquiring
services

Consolidated

 

Domestic-
based
support
services

International-
based
support
services

Merchant
acquiring
services

Consolidated

 

 

 

 

 

 

 

 

 

Revenues before reimbursables

$

1,057,257

158,608

237,786

1,453,651

 

959,846

123,865

220,038

1,303,749

 

Intersegment revenues

 

(18,130)

(956)

(132)

(19,218)

 

(13,809)

-

(150)

(13,959)

 

Revenues before reimbursables

 

 

 

 

 

 

 

 

 

 

 

from external customers

$

1,039,127

157,652

237,654

1,434,433

 

946,037

123,865

219,888

1,289,790

 

Total revenues

$

1,349,796

183,425

282,108

1,815,329

 

1,220,199

146,982

258,082

1,625,263

 

Intersegment revenues

 

(27,071)

(956)

(132)

(28,159)

 

(22,183)

-

(149)

(22,332)

 

Revenues from external customers

$

1,322,725

182,469

281,976

1,787,170

 

1,198,016

146,982

257,933

1,602,931

 

Depreciation and amortization

$

137,093

20,489

27,312

184,894

 

114,134

16,569

19,371

150,074

 

Intersegment expenses

$

22,476

(18,784)

(31,791)

(28,099)

 

33,920

(31,245)

(25,691)

(23,016)

 

Segment operating income

$

280,041

19,591

57,450

357,082

 

235,267

9,373

42,489

287,129

 

Income before income taxes, minority interest and

 

 

 

 

 

 

 

 

 

 

 

equity income of equity investments

 

295,303

16,958

59,593

371,854

 

241,666

6,972

43,289

291,927

 

Income tax expense

$

97,497

5,818

22,867

126,182

 

80,876

4,925

17,485

103,286

 

Equity in income of equity investments

$

-

4,243

-

4,243

 

-

2,893

3,242

6,135

 

Net Income

$

198,694

13,743

36,726

249,163

 

160,853

4,567

29,100

194,520

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note:

Revenues from domestic-based services include electronic payment processing services and other services provided from the United States to clients domiciled in the United States or other countries. Revenues from international-based services include electronic payment processing services and other services provided from outside the United States to clients based mainly outside the United States. Revenues from merchant processing services include TSYS Acquiring's merchant acquiring and related services.

 

 

 

- more -

 

 

 

 

 

TSYS Announces Earnings for 2006

 

 

 

 

Page 7 of 10

 

 

 

 

 

 

 

 

 

TSYS

Balance Sheet

(Unaudited)

(In thousands)

 

 

At December 31,

 

 

 

2006

2005

 

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

$

386,694

237,569

 

Restricted cash

 

31,568

29,688

 

Accounts receivable, net

 

253,873

184,532

 

Deferred income tax assets

 

22,427

15,264

 

Prepaid expenses and other current assets

 

56,097

45,236

 

Total current assets

 

748,258

512,289

 

Computer software, net

 

213,298

267,988

 

Property and equipment, net

 

271,321

267,979

 

Contract acquisition costs, net

 

167,449

163,861

 

Goodwill, net

 

132,545

112,865

 

Equity investments, net

 

62,064

42,731

 

Other intangible assets, net

 

24,034

13,580

 

Other assets

 

23.969

29,604

 

Total assets

$

1,645,339

1,410,897

 

 

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

$

41,792

29,464

 

Accrued salaries and employee benefits

 

80,697

84,348

 

Current portion of obligations under capital leases

 

2,820

2,078

 

Other current liabilities

 

172,022

161,122

 

Total current liabilities

 

297,331

277,012

 

Deferred income tax liabilities

 

85,321

89,478

 

Obligations under capital leases excluding current portion

 

2,878

3,555

 

Other long-term liabilities

 

36,220

24,398

 

Total liabilities

 

421,750

394,443

 

Minority interest in consolidated subsidiary

 

6,229

3,682

 

Shareholders' Equity:

 

 

 

 

Common stock

 

19,868

19,797

 

Additional paid-in capital

 

66,677

50,666

 

Treasury stock

 

(35,233)

(12,841)

 

Accumulated other comprehensive income

 

20,641

5,685

 

Retained earnings

 

1,145,407

949,465

 

Total shareholders' equity

 

1,217,360

1,012,772

 

Total liabilities and shareholders' equity

$

1,645,339

1,410,897

 

 

 

 

 

 

 

 

 

 

 

- more -

 

 

 

 

 

 

 

 

TSYS Announces Earnings for 2006

 

 

 

 

 

Page 8 of 10

 

 

 

 

 

 

 

 

 

 

 

TSYS

 

Cash Flow

 

(Unaudited)

 

(In thousands)

 

 

 

Twelve Months Ended December 31,

 

 

 

 

2006

2005

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

Net income

$

249,163

194,520

 

 

Adjustments to reconcile net income to net cash provided by

 

 

 

 

 

operating activities:

 

 

 

 

 

Minority interests in consolidated subsidiaries' net income

 

752

256

 

 

Equity in income of equity investments

 

(4,243)

(6,135)

 

 

Dividends received from equity investments

 

2,371

1,659

 

 

(Gain) loss on currency translation adjustments, net

 

(1,232)

840

 

 

Depreciation and amortization

 

184,894

150,074

 

 

Share-based compensation

 

9,157

1,137

 

 

Impairment of developed software

 

-

3,619

 

 

Charges for (recoveries of) bad debt expense and billing

 

 

 

 

 

adjustments

 

1,614

4,589

 

 

Charges for transaction processing provisions

 

9,981

7,397

 

 

Deferred income tax (benefit) expense

 

(13,217)

(39,458)

 

 

Loss on disposal of equipment, net

 

147

2,535

 

 

(Increase) decrease in:

 

 

 

 

 

Accounts receivable

 

(54,237)

(13,164)

 

 

Prepaid expenses and other assets

 

12,386

11,496

 

 

Increase (decrease) in:

 

 

 

 

 

Accounts payable

 

9,716

(51,138)

 

 

Accrued salaries and employee benefits

 

(5,416)

21,420

 

 

Other liabilities

 

(16,230)

(49,058)

 

 

Net cash provided by operating activities

 

385,606

240,589

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

Purchase of property and equipment, net

 

(27,102)

(40,904)

 

 

Additions to licensed computer software from vendors

 

(10,587)

(12,875)

 

 

Additions to internally developed computer software

 

(14,639)

(22,602)

 

 

Cash acquired in acquisition

 

8,166

38,798

 

 

Cash used in acquisitions

 

(77,541)

(134,768)

 

 

Contract acquisition costs

 

(42,452)

(19,468)

 

 

Net cash used in investing activities

 

(164,155)

(191,819)

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

Proceeds from borrowings of long-term debt

 

-

48,143

 

 

Principal payments on long-term debt borrowings and

 

 

 

 

 

capital lease obligations

 

(2,691)

(50,437)

 

 

Proceeds from exercise of stock options

 

4,252

2,957

 

 

Repurchase of common stock

 

(22,874)

-

 

 

Excess tax benefit from share-based payment arrangements

 

2,984

-

 

 

Dividends paid on common stock

 

(51,269)

(39,418)

 

 

Net cash used in financing activities

 

(69,598)

(38,755)

 

 

Effect of foreign currency translation on cash and cash equivalents

 

(2,728)

(4,252)

 

 

Net increase in cash and cash equivalents

 

149,125

5,763

 

 

Cash and cash equivalents at beginning of year

 

237,569

231,806

 

 

Cash and cash equivalents at end of period

$

386,694

237,569

 

 

 

 

 

 

 

 

- more -

 

 

 

 

 

 

 

 

 

TSYS Announces Earnings for 2006

 

 

 

 

 

 

 

 

 

 

Page 9 of 10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Geographic Area Data:

 

 

 

 

 

 

 

 

 

 

The following geographic area data represents revenues for the three months ended December 31 based on where the client is domiciled:

 

 

 

Three Months Ended December 31,

 

(dollars in millions):

 

2006

%

 

 

2005

%

 

% Chg

 

United States

$

412.2

 

81.8

%

 

$

356.1

84.6

%

15.7

%

Europe*

 

46.4

 

9.2

 

 

 

33.7

8.0

 

37.5

 

Canada

 

30.5

 

6.1

 

 

 

23.3

5.5

 

31.1

 

Japan

 

5.1

 

1.0

 

 

 

4.0

0.9

 

29.2

 

Mexico

 

3.7

 

0.7

 

 

 

2.3

0.6

 

60.6

 

Other*

 

6.0

 

1.2

 

 

 

1.3

0.4

 

nm

 

 

$

503.9

 

100.0

%

 

$

420.7

100.0

%

19.8

%

 

 

 

 

 

 

 

 

 

 

 

The following geographic area data represents revenues for the twelve months ended December 31 based on where the client is domiciled:

 

 

 

Twelve Months Ended December 31,

 

(dollars in millions):

 

2006

%

 

 

2005

%

 

% Chg

 

United States

$

1,481.9

 

82.9

%

 

$

1,354.1

84.5

%

9.4

%

Europe*

 

158.9

 

8.9

 

 

 

132.6

8.2

 

19.9

 

Canada

 

102.0

 

5.7

 

 

 

89.9

5.6

 

13.5

 

Japan

 

18.6

 

1.0

 

 

 

15.6

1.0

 

19.0

 

Mexico

 

12.3

 

0.7

 

 

 

7.6

0.5

 

60.8

 

Other*

 

13.5

 

0.8

 

 

 

3.1

0.2

 

nm

 

 

$

1,787.2

 

100.0

%

 

$

1,602.9

100.0

%

11.5

%

 

 

 

 

 

 

 

 

 

 

 

 

Geographic Area Revenue by Operating Segment:

 

 

 

 

 

 

 

 

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

 

 

 

Three Months Ended December 31,

 

 

Domestic-based

 

 

International-based

 

Merchant processing

 

 

support services

 

 

support services

 

services

(dollars in millions):

 

2006

2005

 

 

2006

2005

 

2006

2005

United States

$

342.0

 

281.2

 

 

 

-

-

 

70.1

74.9

Europe*

 

0.4

 

0.1

 

 

 

46.0

33.4

 

-

-

Canada

 

30.4

 

23.2

 

 

 

-

-

 

0.1

0.1

Japan

 

-

 

-

 

 

 

5.1

4.0

 

-

-

Mexico

 

3.7

 

2.3

 

 

 

-

-

 

-

-

Other*

 

2.7

 

1.3

 

 

 

3.2

-

 

0.2

0.2

 

$

379.2

 

308.1

 

 

 

54.3

37.4

 

70.4

75.2

 

 

 

 

 

 

 

 

 

 

 

The following table reconciles segment revenues to revenues by reporting segment for the twelve months ended December 31:

 

 

 

Twelve Months Ended December 31,

 

 

Domestic-based

 

 

International-based

 

Merchant processing

 

 

support services

 

 

support services

 

services

(dollars in millions):

 

2006

2005

 

 

2006

2005

 

2006

2005

United States

$

1,201.0

 

1,097.1

 

 

 

-

-

 

280.9

257.0

Europe*

 

1.5

 

0.5

 

 

 

157.4

131.4

 

-

-

Canada

 

101.5

 

89.5

 

 

 

-

-

 

0.5

0.4

Japan

 

-

 

-

 

 

 

18.6

15.6

 

-

-

Mexico

 

12.3

 

7.6

 

 

 

-

-

 

-

-

Other*

 

6.4

 

3.3

 

 

 

6.5

-

 

0.6

0.5

 

$

1,322.7

 

1,198.0

 

 

 

182.5

147.0

 

282.0

257.9

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

nm = not meaningful

 

 

 

 

 

 

 

 

 

 

- more -

 

 

 

TSYS Announces Earnings for 2006

 

 

 

 

 

 

 

 

 

 

Page 10 of 10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental Information:

 

 

 

 

 

 

 

 

 

 

 

 

Accounts on File at December 31,

 

 

(in millions)

 

2006

%

 

2005

%

 

% Change

 

 

Consumer

 

262.7

63.0

%

267.5

61.1

%

(1.8)

%

 

Retail

*

55.3

13.3

 

87.0

19.9

 

(36.4)

 

 

Commercial

 

32.1

7.7

 

30.1

6.9

 

6.5

 

 

Government services/EBT

 

21.2

5.1

 

18.8

4.3

 

12.7

 

 

Stored Value

*

40.7

9.8

 

26.9

6.1

 

51.5

 

 

Debit

 

4.4

1.1

 

7.6

1.7

 

(41.8)

 

 

 

 

416.4

100.0

%

437.9

100.0

%

(4.9)

%

 

 

 

 

 

 

 

 

 

 

 

 

* Certain accounts previously classified as Retail have been reclassified as Stored Value to conform with the presentation adopted in the second quarter of 2006.

 

 

 

 

 

 

 

 

 

 

 

 

(in millions)

 

December 31, 2006

 

 

December 31, 2005

 

 

% Change

 

 

QTD Average Accounts on File

 

421.7

 

 

 

436.0

 

 

 

(3.3)

%

 

YTD Average Accounts on File

 

415.6

 

 

 

401.1

 

 

 

3.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts on File at December 31,

 

 

(in millions)

 

2006

%

 

2005

%

 

% Change

 

 

Domestic

 

349.3

83.9

%

381.8

87.2

%

(8.5)

%

 

International

 

67.1

16.1

 

56.1

12.8

 

19.5

 

 

 

 

416.4

100.0

%

437.9

100.0

%

(4.9)

%

 

 

 

 

 

 

 

 

 

 

 

 

Note: The accounts on file between domestic and international is based on the geographic domicile of processing clients.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Growth in Accounts on File (in millions):

 

 

 

 

 

 

 

 

 

 

 

 

December 2005
to December 2006

 

 

December 2004
to December 2005

 

 

 

 

 

Beginning balance

 

437.9

 

 

 

357.6

 

 

 

 

 

 

Change in accounts on file due to:

 

 

 

 

 

 

 

 

 

 

 

 

Internal growth of existing clients

 

36.6

 

 

 

40.8

 

 

 

 

 

 

New clients

 

91.2

 

 

 

51.8

 

 

 

 

 

 

Purges/Sales

 

(16.4)

 

 

 

(9.6)

 

 

 

 

 

 

Deconversions

 

(132.9)

 

 

 

(2.7)

 

 

 

 

 

 

Ending balance

 

416.4

 

 

 

437.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of Employees (FTEs):

 

2006

 

 

2005

 

 

 

 

 

At December 31,

 

6,749

 

 

 

6,698

 

 

 

 

 

 

Quarterly average for period ended December 31,

6,743

 

 

 

6,601

 

 

 

 

 

 

YTD average for period ended December 31,

 

6,642

 

 

 

6,323

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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