-----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, T1AdRzvZ11PqVovg2l8iW9ijWyZuZ4atufkVNCpJz0+tm1mY58DDg1Yhet3z3S1D IZ3CEYlsM0npK6goACXLUg== 0000721683-07-000006.txt : 20070723 0000721683-07-000006.hdr.sgml : 20070723 20070723162916 ACCESSION NUMBER: 0000721683-07-000006 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20070723 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070723 DATE AS OF CHANGE: 20070723 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: 07994000 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 july238k.htm TOTAL SYSTEM SERVICES, INC. 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

 

July 23, 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 July 23, 2007, Total System Services, Inc. (“Registrant”) issued a press release and will hold an investor call and webcast on July 24, 2007 to disclose financial results for the quarter ended June 30, 2007. 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 July 23, 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: July 23, 2007

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3

 

 

 

EX-99.1 2 pressrevised.htm REGISTRANT'S PRESS RELEASE DATED JULY 23, 2007

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 14.4% Increase in Net Income for Second Quarter 2007

 

Columbus, Ga., July 23, 2007 TSYS today announced the results for the second quarter with revenues of $460.2 million, and a 14.4% increase in net income over the same period in 2006. For the first six months of 2007, TSYS’ revenues were $889.8 million, operating income increased 16% to $181.6 million, and net income increased to $123.0 million, or 14.1%, over the same period in 2006.

 

“At 12.0%, internal revenue growth in our core processing business continues to be a strong driver of our results. Our growth in international operations continued as a result of both our acquisitions and strong demand resulting in revenue growth of 44.3%. These results are clearly reflected in the expansion of our operating margin to 25.7% in the first six months of 2007 over 23.3% in the same period of 2006, excluding reimbursable items. For the full year, we project this margin to be in the 25% to 26% range,” said Philip W. Tomlinson, chairman and chief executive officer of TSYS.

“Continuing the same pattern as the first quarter of this year, we experienced strong internal revenue growth and continued to manage expenses. As a result of these factors, we continue to expect to achieve our previously announced net income growth guidance of 20% to 22% on a non-GAAP basis and 0% to 2% on a GAAP basis. Our team’s performance has taken us well beyond the client losses from last year,” said Tomlinson.

 

Financial Highlights

 

(dollars in millions, except earnings per share data)

Three Months Ended

Six Months Ended

June 30,

June 30,

 

2007

 

2006

Percent Change

 

2007

 

2006

Percent Change

Revenues Before Reimbursables

$364.1

342.8

6.2%

$707.7

672.3

5.3%

Total Revenues

460.2

429.2

7.2%

889.8

841.5

5.7%

Operating Income

95.9

84.7

13.2%

181.6

156.6

16.0%

Net Income

65.7

57.4

14.4%

123.0

107.8

14.1%

Basic EPS

0.33

0.29

14.7%

0.63

0.55

14.4%

Diluted EPS

0.33

0.29

14.5%

0.62

0.55

14.2%

— more —

 

Page 1 of 4

 

Recent Highlights

TSYS successfully completed the pilot program for the Wal-Mart MoneyCard, issued by GE and reloaded through Green Dot’s national reloading network. The Visa-branded prepaid product was first piloted in November of 2006 with TSYS, and will be available in 2,600 Wal-Mart stores by the end of July 2007.

TSYS renewed merchant acquiring service agreements with Merchant Management Systems, as well as signed new agreements with mPay Gateway and The Bancorp Bank.

TSYS introduced Chip and PIN Secure Payments in Cyprus with the introduction of EMV cards through partnerships with three Cyprus-based banks, Marfin Popular Bank (formerly Laiki Bank, Cyprus), Hellenic Bank and Universal Bank. The Commercial Bank of Qatar also issued its first EMV card program utilizing TSYS’ card-management solution, PRIME.

TSYS launched the Rewards card pilot program in the United Kingdom with Norwich Union (NU), which is now the second program that NU has live on the TSYS Prepaid platform.

TSYS continued its focus on the healthcare industry with the appointment of Duane White, a 24-year veteran of the financial services and healthcare industries, to lead TSYS' healthcare initiatives.

TSYS announced that CUP Data, TSYS' joint venture with China UnionPay, has recently begun providing processing services for Huaxia Bank Co., Ltd, one of China's largest nationwide banks. CUP Data now provides processing services for three of the four largest issuing banks in China that use outsourced services to support their payment programs.

 

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 expected to increase between 20%–22% in 2007 compared to 2006. Based on GAAP, TSYS’ estimated 2007 net income is expected to increase between 0%–2% as compared to 2006.

 

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

1.

Including the Bank of America contract termination fee of approximately $68.9 million in 2006 and an acceleration of amortization of contract acquisition costs of approximately $6 million, estimated total revenues will decline 3%–2% in 2007. Excluding the termination fee and reimbursable items, revenues will increase by 3%-5% over 2006.

2.

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.

3.

Expense reductions in employment, equipment, leases and other areas that are included in 2007 estimates will be accomplished.

4.

TSYS will not incur significant expenses associated with the conversion of new large clients and/or acquisitions, or any significant impairment of goodwill or other intangibles.

— more —

Page 2 of 4

 

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

Percent Change

Net income

$250 to $255

$249

0% to 2%

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

$250 to $255

$208

20% to 22%

Total revenues

$1,742 to $1,760

$1,787

(3%) to (2%)

Less: reimbursable items

($329)

($353)

 

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

 

($65)

 

Revenues, excluding reimbursable items and net termination fee

$1,413 to $1,431

$1,369

3% 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 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. EDT, Tuesday, July 24. 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.

 

— more —

 

Page 3 of 4

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 81-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’ projection that its net operating margin, excluding reimbursable items, will be in the 25% to 26% range 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 contract termination fee of approximately $68.9 million in 2006 and an acceleration of amortization of contract-acquisition costs of approximately $6 million, estimated total revenues will decline 3-2% in 2007 and excluding the termination fee and reimbursable items, estimated revenues will increase by 3%-5% over 2006; (2) JP 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; (3) expense reductions in employment, equipment, leases and other areas which are included in 2007 estimates will be accomplished; and (4) 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.

 

— more —

 

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M]BCX#D$?\` MP51?X4?\,4_`?_HDGA'_`,%47^%'_#%/P'_Z))X1_P#!5%_A2-^Q3\!R./A) MX1_\%47^%F,#ZFO-KG_@ MD7\"+JY>5H_$$6XYV0WL2J/8#R:;_P`.@_@+_P!3)_X'P_\`QFC_`(=!_`7_ M`*F3_P`#X?\`XS1_PZ#^`O\`U,G_`('P_P#QFD_X=!_`;_J9,_\`7_#_`/&: M;_PZ#^!.#_R,6<_\_P!%_P#&:D_X="_`7^[XC_\``^+_`.,T?\.A?@+_`'?$ M?_@?%_\`&:/^'0OP%_N^(_\`P/B_^,T?\.A?@+_=\1_^!\7_`,9IDO\`P2#^ M`[*=O_"1@X(_X_XO_C-5KG_@CS\"K@Y\[Q1%DY/EZC$/_:'^>:B?_@CC\"78 MDW?BQ<]EU*$`?3]Q1_PYL^`O_/\`>,?_``:0_P#QBC_AS9\!?^?[QC_X-(?_ M`(Q1_P`.;/@+_P`_WC'_`,&D/_QBC_AS9\!?^?[QC_X-(?\`XQ2?\.;/@/\` M\_OC#_P:0_\`QBD_X+O\`P9P__&*/^'-GP)_Y_?%W_@TA_P#C M%*/^"-GP&[WWC'_P:0__`!BE_P"'-GP%_P"?[QC_`.#2'_XQ1_PYL^`O_/\` M>,?_``:0_P#QBC_AS9\!?^?[QC_X-(?_`(Q3#_P1L^!(=2M]XOP#R#J<)R,' M_IAZX_*D7_@C9\"U09OO%S/C&3J<./R\BJ$G_!&#X,M-(RZ_XNCC;;MC^V6Y MVX^]SY'.?TJC)_P13^$DAR/%_C"/V6:U/?\`ZX?A^%-_X3XR\7^;M.SS);7;G'&<0=*YQ_P#@BCX9`NMGC74\F=O(W/'Q#E]N M[]S]_'EYQQ][VKB_^')VN;[L_P#"+]+M-5TGQYH264\2X699]P=?ED!_=\?.&JX?\`@B5XZ`_Y'[P]_P!\S_\` MQNFO_P`$3O':)D>._#['TVS_`/QND_X'O^^9_P#XW2/_`,$3O':J2/'GAXG_ M`'9__C=*?^")GCHG/_">>'A_P&?_`.-T@_X(G>.@V#X\\.[3_LSY_P#1=!_X M(F^.AS_PGGA[\5G_`/C=06G_``1>\:ZD)1'XSTBV>WD:"0W$4ZK(PY#Q_N^4 MVLHSZAO2K'_#DOQU_P!#YX>_[YG_`/C='_#DOQU_T/GA[_OF?_XW0O\`P1-\ M=*?^1\\/'ZK/_P#&Z1?^")GCLCGQYX>_[YG_`/C=*/\`@B9XZ!_Y'SP]_P!\ MS_\`QNFS?\$3O'BK^[\=^'2?=9__`(W567_@BE\1QROCKPL!DGE+GIV_Y9]: M8?\`@BA\2I&)C\>>%=G;*W/_`,;I6_X(F_$PGCQYX5X'=;G_`.-T?\.3/B;_ M`-#YX4_[YNO_`(W1_P`.3/B;_P!#YX4_[YNO_C=+_P`.3OB61@>//"N>^4N? M_C=*/^")_P`2PNW_`(3OPL6SG[MSC_T77T5^PI_P3C\5_LK?&:?QEXA\1:%K M=LVF3644>GI-YJ.[(=V70#&%(_&OT$HHHHHHHHHHHHHHHHHHHHHHHHHHHHHH MHHHHHHHHHHHHHHHHHHHHHHHHHHHHHI&&Y2/48K.T'0;+PWIT=AI\/D6D;.R1 M[F;!9B[K$UI4F*,4M%(1FEJ)\^:/3'7\ZD(W#!H50HP*6BDQFBEI,5%, MN0`#@]J986\EO:1QS2>=(H.7"[<\^E6:**3%+2`8I:****************** M************************************************************ (********_]D_ ` end EX-99.2 4 exhibit992.htm SUPPLEMENTAL INFORMATION PREPARED FOR USE WITH THE PRESS RELEASE

Exhibit 99.2

TSYS Announces Earnings for 2007

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Page 5 of 10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TSYS
Financial Highlights
(Unaudited)
(In thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

 

 

 

 

Percentage

 

 

 

 

 

 

Percentage

 

 

 

2007

 

2006

 

Change

 

 

2007

 

2006

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Electronic payment processing services

$

244,840

 

232,301

 

5.4

%

$

475,004

 

453,362

 

4.8

%

Merchant acquiring services

 

64,277

 

65,820

 

(2.3)

 

 

124,957

 

129,769

 

(3.7)

 

Other services

 

54,977

 

44,670

 

23.1

 

 

107,744

 

89,212

 

20.8

 

Revenues before reimbursables

 

364,094

 

342,791

 

6.2

 

 

707,705

 

672,343

 

5.3

 

Reimbursable items

 

96,061

 

86,374

 

11.2

 

 

182,053

 

169,112

 

7.7

 

Total revenues

 

460,155

 

429,165

 

7.2

 

 

889,758

 

841,455

 

5.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries & other personnel expense

 

145,532

 

120,433

 

20.8

 

 

285,974

 

241,763

 

18.3

 

Net occupancy & equipment expense

 

67,953

 

75,703

 

(10.2)

 

 

134,089

 

151,053

 

(11.2)

 

Other operating expenses

 

54,693

 

61,924

 

(11.7)

 

 

106,047

 

122,939

 

(13.7)

 

Expenses before reimbursable items

 

268,178

 

258,060

 

3.9

 

 

526,110

 

515,755

 

2.0

 

Reimbursable items

 

96,061

 

86,374

 

11.2

 

 

182,053

 

169,112

 

7.7

 

Total operating expenses

 

364,239

 

344,434

 

5.8

 

 

708,163

 

684,867

 

3.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

95,916

 

84,731

 

13.2

 

 

181,595

 

156,588

 

16.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

6,159

 

3,425

 

79.8

 

 

11,647

 

5,933

 

96.3

 

Interest expense

 

(366)

 

(85)

 

nm

 

 

(576)

 

(129)

 

nm

 

Loss on foreign currency translation, net

 

(845)

 

(363)

 

(132.8)

 

 

(162)

 

(87)

 

(86.2)

 

Dividend income

 

44

 

-

 

nm

 

 

58

 

-

 

nm

 

Other income

 

4,992

 

2,977

 

67.7

 

 

10,967

 

5,717

 

91.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes, minority interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

and equity in income of equity investments

 

100,908

 

87,708

 

15.0

 

 

192,562

 

162,305

 

18.6

 

Income taxes

 

35,603

 

31,148

 

14.3

 

 

70,495

 

56,113

 

25.6

 

Income before minority interest and equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

in income of equity investments

 

65,305

 

56,560

 

15.5

 

 

122,067

 

106,192

 

14.9

 

Minority interest

 

(602)

 

(173)

 

nm

 

 

(952)

 

(264)

 

nm

 

Equity in income of equity investments

 

985

 

1,019

 

(3.3)

 

 

1,845

 

1,871

 

(1.4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$

65,688

 

57,406

 

14.4

%

$

122,960

 

107,799

 

14.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

$

0.33

 

0.29

 

14.7

%

$

0.63

 

0.55

 

14.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share

$

0.33

 

0.29

 

14.5

%

$

0.62

 

0.55

 

14.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividend declared per share

$

0.07

 

0.07

 

 

 

$

0.14

 

0.13

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average common shares outstanding

 

196,693

 

197,093

 

 

 

 

196,591

 

197,089

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average common and common

 

 

 

 

 

 

 

 

 

 

 

 

 

 

equivalent shares outstanding

 

197,147

 

197,330

 

 

 

 

197,081

 

197,334

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

nm = not meaningful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- more -

 

 

 


 

TSYS Announces Earnings for 2007

 

 

 

 

 

 

 

 

 

 

 

 

Page 6 of 10

 

 

 

 

 

 

 

 

 

 

 

 

TSYS
Segment Breakdown
(Unaudited)
(In thousands)

 

 

 

 

Three Months Ended June 30, 2007

 

Three Months Ended June 30, 2006

 

 

 

Domestic-
based
support
services

International-
based
support
services

Merchant
acquiring
services

Consolidated

 

Domestic-
based
support
services

International-
based
support
services

Merchant
acquiring
services

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

Revenues before reimbursables

$

254,340

58,043

58,234

370,617

 

253,313

34,145

60,144

347,602

 

 

Intersegment revenues

 

(5,754)

(372)

(397)

(6,523)

 

(4,778)

-

(33)

(4,811)

 

 

Revenues before reimbursables

 

 

 

 

 

 

 

 

 

 

 

 

from external customers

$

248,586

57,671

57,837

364,094

 

248,535

34,145

60,111

342,791

 

 

Total revenues

$

333,872

60,733

74,114

468,719

 

325,106

40,326

70,736

436,168

 

 

Intersegment revenues

 

(7,795)

(372)

(397)

(8,564)

 

(6,970)

-

(33)

(7,003)

 

 

Revenues from external customers

$

326,077

60,361

73,717

460,155

 

318,136

40,326

70,703

429,165

 

 

Depreciation and amortization

$

25,748

5,507

6,755

38,010

 

31,692

4,795

6,499

42,986

 

 

Intersegment expenses

$

2,982

(3,727)

(7,821)

(8,566)

 

6,591

(5,531)

(8,046)

(6,986)

 

 

Segment operating income

$

68,860

10,872

16,184

95,916

 

66,780

3,204

14,747

84,731

 

 

Income before income taxes,

 

 

 

 

 

 

 

 

 

 

 

 

minority interest and equity

 

 

 

 

 

 

 

 

 

 

 

 

income of equity investments

 

75,275

9,053

16,580

100,908

 

70,001

2,389

15,318

87,708

 

 

Income tax expense

$

27,404

2,235

5,964

35,603

 

23,443

1,926

5,779

31,148

 

 

Equity in income of equity investments

$

-

985

-

985

 

-

1,019

-

1,019

 

 

Net Income

$

48,172

6,900

10,616

65,688

 

46,712

1,155

9,539

57,406

 

 

Identifiable assets

 

1,582,154

337,571

182,751

2,102,476

 

 

 

 

 

 

 

Intersegment eliminations

 

(396,490)

(1,302)

(185)

(397,977)

 

 

 

 

 

 

 

Total assets

 

1,185,664

336,269

182,566

1,704,499

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2007

 

Six Months Ended June 30, 2006

 

 

 

 

Domestic-
based
support
services

International-
based
support
services

Merchant
acquiring
services

Consolidated

 

Domestic-
based
support
services

International-
based
support
services

Merchant
acquiring
services

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

Revenues before reimbursables

$

495,309

111,006

113,052

719,367

 

497,756

64,858

119,006

681,620

 

 

Intersegment revenues

 

(10,535)

(595)

(532)

(11,662)

 

(9,212)

-

(65)

(9,277)

 

 

Revenues before reimbursables

 

 

 

 

 

 

 

 

 

 

 

 

from external customers

$

484,774

110,411

112,520

707,705

 

488,544

64,858

118,941

672,343

 

 

Total revenues

$

648,329

116,134

140,998

905,461

 

637,936

76,572

141,068

855,576

 

 

Intersegment revenues

 

(14,576)

(595)

(532)

(15,703)

 

(14,056)

-

(65)

(14,121)

 

 

Revenues from external customers

$

633,753

115,539

140,466

889,758

 

623,880

76,572

141,003

841,455

 

 

Depreciation and amortization

$

51,715

11,307

13,585

76,607

 

63,603

8,773

13,772

86,148

 

 

Intersegment expenses

$

6,389

(6,965)

(15,123)

(15,699)

 

15,282

(13,105)

(16,265)

(14,088)

 

 

Segment operating income

$

130,447

23,001

28,147

181,595

 

127,745

4,083

24,760

156,588

 

 

Income before income taxes,

 

 

 

 

 

 

 

 

 

 

 

 

minority interest and equity

 

 

 

 

 

 

 

 

 

 

 

 

income of equity investments

 

142,967

20,530

29,065

192,562

 

133,481

3,116

25,708

162,305

 

 

Income tax expense

$

53,653

6,407

10,435

70,495

 

43,914

2,493

9,706

56,113

 

 

Equity in income of equity investments

$

-

1,845

-

1,845

 

-

1,871

-

1,871

 

 

Net Income

$

89,734

14,596

18,630

122,960

 

89,531

2,266

16,002

107,799

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note:

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

 

 

 

 

 

- more -

 

 

 

 

 

 

 


 

TSYS Announces Earnings for 2007

 

 

 

Page 7 of 10

 

 

 

 

 

 

 

TSYS

Balance Sheet

(In thousands)

 

 

June 30, 2007

Dec 31, 2006

 

 

(unaudited)

(audited)

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

452,194

389,123

Restricted cash

 

41,744

31,568

Accounts receivable, net

 

253,640

246,637

Deferred income tax assets

 

26,853

21,556

Prepaid expenses and other current assets

 

58,520

55,832

Total current assets

 

832,951

744,716

Property and equipment, net

 

272,560

271,321

Computer software, net

 

198,193

216,450

Contract acquisition costs, net

 

159,829

167,449

Goodwill, net

 

141,973

133,337

Equity investments, net

 

62,795

62,064

Other intangible assets, net

 

14,456

21,314

Other assets

 

21,742

17,590

Total assets

$

1,704,499

1,634,241

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

31,024

31,589

Accrued salaries and employee benefits

 

48,819

80,697

Current portion of notes payable and obligations under capital leases

 

6,008

3,156

Other current liabilities

 

160,818

180,345

Total current liabilities

 

246,669

295,787

Deferred income tax liabilities

 

75,468

75,019

Obligations under notes payable and capital leases excluding current portion

 

9,634

3,625

Other long-term liabilities

 

36,706

36,221

Total liabilities

 

368,477

410,652

Minority interest in consolidated subsidiary

 

7,022

6,229

Shareholders' Equity:

 

 

 

Common stock

 

19,920

19,868

Additional paid-in capital

 

81,317

66,677

Treasury stock

 

(34,312)

(35,233)

Accumulated other comprehensive income

 

23,317

20,641

Retained earnings

 

1,238,758

1,145,407

Total shareholders' equity

 

1,329,000

1,217,360

Total liabilities and shareholders' equity

$

1,704,499

1,634,241

 

 

 

 

 

 

 

 

- more -

 

 

 


 

TSYS Announces Earnings for 2007

 

 

 

 

Page 8 of 10

 

 

 

 

 

 

 

 

 

TSYS

 

Cash Flow

 

(Unaudited)

 

(In thousands)

 

 

 

Six Months Ended June 30,

 

 

 

2007

2006

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

Net income

$

122,960

107,799

 

Adjustments to reconcile net income to net cash provided by

 

 

 

 

operating activities:

 

 

 

 

Minority interests in consolidated subsidiaries' net income

 

952

264

 

Equity in income of equity investments

 

(1,845)

(1,871)

 

Dividends received from equity investments

 

2,994

2,371

 

Loss on currency translation adjustments, net

 

162

87

 

Depreciation and amortization

 

76,607

86,148

 

Share-based compensation

 

6,596

4,445

 

Impairment of developed software/contract acquisition costs

 

620

-

 

Provisions for bad debt expense and billing

 

 

 

 

adjustments

 

148

224

 

Charges for transaction processing provisions

 

437

7,501

 

Deferred income tax benefit

 

(2,760)

(17,041)

 

Loss on disposal of equipment, net

 

23

105

 

(Increase) decrease in:

 

 

 

 

Accounts receivable

 

(6,150)

(4,442)

 

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

 

(8,921)

3,830

 

Increase (decrease) in:

 

 

 

 

Accounts payable

 

(814)

451

 

Accrued salaries and employee benefits

 

(31,870)

(41,590)

 

Excess tax benefit from share-based payment arrangements

 

(3,869)

-

 

Other current liabilities and other long-term liabilities

 

(35,764)

(17,338)

 

Net cash provided by operating activities

 

119,506

130,943

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

Purchases of property and equipment, net

 

(21,438)

(14,306)

 

Additions to licensed computer software from vendors

 

(4,810)

(4,437)

 

Additions to internally developed computer software

 

(7,458)

(8,999)

 

Cash used in acquisitions

 

(472)

-

 

Additions to contract acquisition costs

 

(9,542)

(22,339)

 

Net cash used in investing activities

 

(43,720)

(50,081)

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

Proceeds from borrowings of long-term debt

 

6,805

-

 

Principal payments on long-term debt borrowings and

 

 

 

 

capital lease obligations

 

(1,744)

(1,060)

 

Proceeds from exercise of stock options

 

5,112

-

 

Excess tax benefit from share-based payment arrangements

 

3,869

-

 

Dividends paid on common stock

 

(27,598)

(23,683)

 

Net cash used in financing activities

 

(13,556)

(24,743)

 

Effect of exchange rate changes on cash and cash equivalents

 

841

1,795

 

Net increase in cash and cash equivalents

 

63,071

57,914

 

Cash and cash equivalents at beginning of year

 

389,123

237,569

 

Cash and cash equivalents at end of period

$

452,194

295,483

 

 

 

 

 

 

 

 

 

 

 

- more -

 

 

 

 

 

 

 

 


 

 

TSYS Announces Earnings for 2007

 

 

 

 

 

 

 

 

 

 

Page 9 of 10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Geographic Area Data:

 

 

 

 

 

 

 

 

 

 

 

 

The following geographic area data represents revenues for the three months ended June 30 based on where the client is domiciled:

 

 

 

Three Months Ended June 30,

 

 

 

(dollars in millions):

 

2007

%

 

 

2006

%

 

% Chg

 

 

 

United States

$

362.5

 

78.8

%

 

$

360.3

83.9

 

%

0.6

%

 

 

Europe

 

49.0

 

10.7

 

 

 

36.2

8.4

 

 

35.6

 

 

 

Canada

 

30.8

 

6.7

 

 

 

24.0

5.6

 

 

28.3

 

 

 

Japan

 

6.1

 

1.3

 

 

 

4.5

1.1

 

 

35.0

 

 

 

Mexico

 

3.3

 

0.7

 

 

 

2.9

0.7

 

 

13.7

 

 

 

Other

 

8.5

 

1.8

 

 

 

1.3

0.3

 

 

nm

 

 

 

 

$

460.2

 

100.0

%

 

$

429.2

100.0

 

%

7.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The following geographic area data represents revenues for the six months ended June 30 based on where the client is domiciled:

 

 

 

Six Months Ended June 30,

 

 

(dollars in millions):

 

2007

%

 

 

2006

%

 

% Chg

 

 

United States

$

700.3

 

78.7

%

 

$

710.2

84.4

 

%

(1.4)

%

 

Europe

 

95.0

 

10.7

 

 

 

68.9

8.2

 

 

37.9

 

 

Canada

 

60.8

 

6.8

 

 

 

46.1

5.5

 

 

31.9

 

 

Japan

 

11.4

 

1.3

 

 

 

8.4

1.0

 

 

35.9

 

 

Mexico

 

6.5

 

0.7

 

 

 

5.4

0.6

 

 

21.6

 

 

Other

 

15.8

 

1.8

 

 

 

2.5

0.3

 

 

nm

 

 

 

$

889.8

 

100.0

%

 

$

841.5

100.0

 

%

5.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Geographic Area Revenue by Operating Segment:

 

 

 

 

 

 

 

 

The following table reconciles segment revenues to revenues by reporting segment for the three months ended June 30:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

 

 

 

Domestic-based

 

 

International-based

 

Merchant acquiring

 

 

 

 

support services

 

 

support services

 

services

 

 

(dollars in millions):

 

2007

2006

 

 

2007

2006

 

2007

2006

 

 

United States

$

289.1

 

289.9

 

 

 

-

 

-

 

 

73.4

 

70.4

 

 

 

Europe

 

0.4

 

0.3

 

 

 

48.6

 

35.9

 

 

-

 

-

 

 

 

Canada

 

30.7

 

23.9

 

 

 

-

 

-

 

 

0.1

 

0.1

 

 

 

Japan

 

-

 

-

 

 

 

6.1

 

4.5

 

 

-

 

-

 

 

 

Mexico

 

3.3

 

2.9

 

 

 

-

 

-

 

 

-

 

-

 

 

 

Other

 

2.6

 

1.1

 

 

 

5.7

 

-

 

 

0.2

 

0.2

 

 

 

 

$

326.1

 

318.1

 

 

 

60.4

 

40.4

 

 

73.7

 

70.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The following table reconciles segment revenues to revenues by reporting segment for the six months ended June 30:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30,

 

 

 

Domestic-based

 

 

International-based

 

Merchant acquiring

 

 

 

support services

 

 

support services

 

services

 

(dollars in millions):

 

2007

2006

 

 

2007

2006

 

2007

2006

 

 

United States

$

560.5

 

569.8

 

 

-

 

-

 

 

139.8

 

140.4

 

 

 

Europe

 

0.9

 

0.7

 

 

94.1

 

68.2

 

 

-

 

-

 

 

 

Canada

 

60.5

 

45.8

 

 

-

 

-

 

 

0.3

 

0.3

 

 

 

Japan

 

-

 

-

 

 

11.4

 

8.4

 

 

-

 

-

 

 

 

Mexico

 

6.5

 

5.4

 

 

-

 

-

 

 

-

 

-

 

 

 

Other

 

5.4

 

2.2

 

 

10.0

 

-

 

 

0.4

 

0.3

 

 

 

 

$

633.8

 

623.9

 

 

115.5

 

76.6

 

 

140.5

 

141.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

nm = not meaningful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- more -

 

 

 

 


 

TSYS Announces Earnings for 2007

 

 

 

 

 

 

 

 

 

Page 10 of 10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental Information:

 

 

 

 

 

 

 

 

 

 

 

Accounts on File at June 30,

 

(in millions)

 

2007

%

 

2006

%

 

% Change

 

Consumer

 

277.0

 

63.1

%

241.2

 

65.8

%

14.9

%

Retail

 

57.3

 

13.0

 

36.8

 

10.1

 

55.6

 

Commercial

 

35.0

 

8.0

 

31.4

 

8.6

 

11.3

 

Government services/EBT

 

21.9

 

5.0

 

19.6

 

5.3

 

12.1

 

Stored Value

 

42.9

 

9.8

 

29.3

 

8.0

 

46.5

 

Debit

 

5.1

 

1.1

 

8.2

 

2.2

 

(38.3)

 

 

 

439.2

 

100.0

%

366.5

 

100.0

%

19.8

%

 

 

 

 

 

 

 

 

 

 

(in millions)

 

June 30, 2007

 

 

June 30, 2006

 

 

% Change

 

QTD Average Accounts on File

 

433.6

 

 

 

415.8

 

 

 

4.3

%

YTD Average Accounts on File

 

426.0

 

 

 

427.5

 

 

 

(0.4)

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts on File at June 30,

 

(in millions)

 

2007

%

 

2006

%

 

% Change

 

Domestic

 

368.0

 

83.8

%

308.5

 

84.2

%

19.3

%

International

 

71.2

 

16.2

 

58.0

 

15.8

 

22.7

 

 

 

439.2

 

100.0

%

366.5

 

100.0

%

19.8

%

 

 

 

 

 

 

 

 

 

 

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):

 

 

 

 

 

 

 

 

 

 

June 2006 to
June 2007

 

 

June 2005 to
June 2006

 

 

 

Beginning balance

 

366.5

 

 

 

388.6

 

 

 

 

Change in accounts on file due to:

 

 

 

 

 

 

 

 

 

 

Internal growth of existing clients

 

33.1

 

 

 

36.5

 

 

 

 

New clients

 

105.5

 

 

 

40.0

 

 

 

 

Purges/Sales

 

(14.0)

 

 

 

(12.3)

 

 

 

 

Deconversions

 

(51.9)

 

 

 

(86.3)

 

 

 

 

Ending balance

 

439.2

 

 

 

366.5

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of Employees (FTEs):

 

2007

 

 

2006

 

 

 

At June 30,

 

6,773

 

 

 

6,542

 

 

 

 

Quarterly average for period ended June 30,

 

6,783

 

 

 

6,540

 

 

 

 

YTD average for period ended June 30,

 

6,755

 

 

 

6,592

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

###

 

 

 

 

 

 

 

 

 

 

 

 

-----END PRIVACY-ENHANCED MESSAGE-----