Exhibit 99.1

 

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 First Quarter 2013 Basic Earnings per Share of $0.31;

Excluding Merger and Acquisition Costs,

Basic EPS was $0.33 up 11.5%

COLUMBUS, Ga., April 23, 2013 — TSYS (NYSE: TSS) today reported results for the first quarter with basic earnings per share (EPS), excluding expenses in connection with the pending acquisition of NetSpend Holdings, Inc. (NetSpend), of $0.33, an increase of 11.5% over 2012. Basic EPS on a GAAP basis was $0.31, an increase of 2.2% over 2012. Diluted EPS was $0.30, an increase of 1.7% over 2012. Revenues before reimbursable items for the quarter were $404.2 million, an increase of 2.3% over 2012. Total revenues were $465.0 million, an increase of 0.8% as compared to 2012. Total revenues were impacted by a decrease of $5.2 million in reimbursable items for the quarter.

“Our issuer processing business had strong same client transaction growth of 8.7% in the quarter. Excluding deconverted clients in the indirect merchant business, point-of-sale transactions increased 6.6% and sales volume in the direct merchant business was up 15.5%, including acquisitions. Also contributing to our strong results was our consolidated internal revenue growth of 3.9%, excluding the Bank of America Merchant Services de-conversion, combined with acquisitions in the acquiring space, which added 4.4% to our growth in revenues before reimbursable items,” said Philip W. Tomlinson, chairman and chief executive officer of TSYS.

“We recognized the financial results associated with our acquisition of ProPay, Inc. during the quarter and we look forward to benefiting from the new sales channels they provide in our merchant segment. Merger and acquisition expenses associated with the pending acquisition of NetSpend were $6.2 million in the quarter,” said Tomlinson.

Conference Call

TSYS will host its quarterly conference call at 5:00 p.m. ET on Tuesday, April 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.

 

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Non-GAAP Measures

The financial highlights section of this release and this release contain the non-GAAP financial measures of revenues and operating results on a constant currency basis, basic EPS excluding merger and acquisition costs and revenues excluding reimbursable items, respectively, 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^SM.” 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. TSYS routinely posts all important information on its website, for more 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 the pending NetSpend acquisition and anticipated benefits from the ProPay acquisition. 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 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 risks described in TSYS’ filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K and Current Reports on Form 8-K. We believe these forward-looking statements are reasonable; however, undue reliance should not be placed on any forward-looking statements, which are based on current expectations. We do not assume any obligation to update any forward-looking statements as a result of new information, future developments or otherwise.

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TSYS Announces First Quarter 2013 Earnings

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TSYS

Financial Highlights

(unaudited)

(in thousands, except per share data)

 

 

		Three Months Ended March 31,
		2013				2012				Percent Change
Total revenues		$	464,996				461,162				0.8	%
Cost of services			320,558				318,258				0.7
Selling, general and administrative expenses			66,054				58,073				13.7
Merger and acquisition expenses			3,481				—				na
Operating income			74,903				84,831				(11.7	)
Nonoperating income (expenses)			1,018				(405	)			nm
Merger and acquisition expenses - bridge loan facility			(2,743	)			—				na
Income before income taxes, noncontrolling interests and equity in income of equity investments			73,178				84,426				(13.3	)
Income taxes			17,846				29,556				(39.6	)
Income before noncontrolling interests and equity in income of equity investments			55,332				54,870				0.8
Equity in income of equity investments			3,817				2,774				37.6
Net income			59,149				57,644				2.6
Net income attributable to noncontrolling interests			(2,121	)			(1,249	)			(69.8	)
Net income attributable to TSYS common shareholders		$	57,028				56,395				1.1	%
Basic earnings per share		$	0.31				0.30				2.2	%
Diluted earnings per share		$	0.30				0.30				1.7	%
Dividends declared per share		$	0.10				0.10
nm = not meaningful

 

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TSYS Announces First Quarter 2013 Earnings

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TSYS

Consolidated Statements of Comprehensive Income

(unaudited)

(in thousands)

 

 

		Three Months Ended March 31,
		2013				2012
Net income		$	59,149				57,644
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments			(12,646	)			2,963
Postretirement healthcare plan adjustments			155				263
Other comprehensive income (loss)			(12,491	)			3,226
Comprehensive income			46,658				60,870
Comprehensive income (loss) attributable to noncontrolling interests			467				541
Comprehensive income attributable to TSYS common shareholders		$	46,191				60,329

 

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TSYS Announces First Quarter 2013 Earnings

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TSYS

Earnings Per Share

(unaudited)

(in thousands, except per share data)

 

 

		Three Months Ended March 31, 2013								Three Months Ended March 31, 2012
		Common Stock				Participating Securities				Common Stock				Participating Securities
Basic Earnings per share:
Net income		$	57,028								56,395
Less income allocated to nonvested awards			(209	)			209				(196	)			196
Net income allocated to common stock for EPS calculation ( a )		$	56,819				209				56,199				196
Average common shares outstanding ( b )			186,108				699				188,052				667
Average common shares and participating securities			186,807								188,719
Basic Earnings per share ( a )/( b )		$	0.31				0.30				0.30				0.29
Diluted Earnings per share:
Net income		$	57,028								56,395
Less income allocated to nonvested awards			(208	)			208				(196	)			196
Net income allocated to common stock for EPS calculation ( c )		$	56,820				208				56,199				196
Average common shares outstanding			186,108				699				188,052				667
Increase due to assumed issuance of shares related to common equivalent shares outstanding			1,274								1,010
Average common and common equivalent shares outstanding ( d )			187,382				699				189,062				667
Average common and common equivalent shares and participating securities			188,095								189,729
Diluted Earnings per share ( c )/( d )		$	0.30				0.30				0.30				0.29

 

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TSYS

Segment Breakdown

(unaudited)

(in thousands)

 

 

		Three Months Ended March 31,
										Change
		2013				2012				$				%
Revenues before reimbursable items
North America Services		$	205,596				204,050				1,546				0.8	%
International Services			92,593				96,491				(3,898	)			(4.0	)
Merchant Services			109,301				98,356				10,945				11.1
Intersegment revenues			(3,253	)			(3,717	)			464				12.5
Revenues before reimbursable items from external customers		$	404,237				395,180				9,057				2.3	%
Total revenues
North America Services		$	239,789				240,599				(810	)			(0.3	)%
International Services			97,096				100,360				(3,264	)			(3.3	)
Merchant Services			132,901				125,518				7,383				5.9
Intersegment revenues			(4,790	)			(5,315	)			525				9.9
Revenues from external customers		$	464,996				461,162				3,834				0.8	%
Depreciation and amortization
North America Services		$	18,083				18,453				(370	)			(2.0	)%
International Services			12,852				12,911				(59	)			(0.5	)
Merchant Services			11,153				8,786				2,367				26.9
Corporate Admin and Other			410				723				(313	)			(43.3	)
Total depreciation and amortization		$	42,498				40,873				1,625				4.0	%
Segment operating income
North America Services		$	67,202				68,347				(1,145	)			(1.7	)%
International Services			6,626				4,113				2,513				61.1
Merchant Services			29,327				34,219				(4,892	)			(14.3	)
Corporate Admin and Other			(28,252	)			(21,848	)			(6,404	)			(29.3	)
Operating income		$	74,903				84,831				(9,928	)			(11.7	)%
Other:
Reimbursable items:
North America Services		$	34,193				36,549				(2,356	)			(6.4	)%
International Services			4,503				3,869				634				16.4
Merchant Services			23,600				27,162				(3,562	)			(13.1	)
Intersegment revenues			(1,537	)			(1,598	)			61				3.8
Reimbursable items		$	60,759				65,982				(5,223	)			(7.9	)%
Volumes:
FTEs (full-time equivalents)
North America Services			4,214				3,886				328				8.4	%
International Services			2,322				2,697				(375	)			(13.9	)
Merchant Services			1,581				1,213				368				30.3
Corporate Admin and Other			435				407				28				6.9
FTEs			8,552				8,203				349				4.3	%
		At								Change
Total assets (in thousands)		3/31/2013				12/31/2012				$				%
North America Services		$	1,769,195				1,744,877				24,318				1.4	%
International Services			396,529				445,642				(49,113	)			(11.0	)
Merchant Services			710,928				703,725				7,203				1.0
Intersegment assets			(837,458	)			(870,406	)			32,948				3.8
Total assets		$	2,039,194				2,023,838				15,356				0.8	%
		Three Months Ended March 31,
										Change
		2013				2012				Inc(Dec)				%
North America Segment:
Accounts on File (AOF) (in millions)			422.8				361.8				61.0				16.9	%
Transactions (in millions)			2,013.4				1,867.2				146.2				7.8	%
International Segment:
AOF (in millions)			55.8				54.1				1.7				3.2	%
Transactions (in millions)			434.2				383.0				51.2				13.4	%
Merchant Segment:
Point-of-sale Transactions (in millions)			1,099.1				1,219.7				(120.6	)			(9.9	)%
Dollar sales volume (in millions)		$	10,132.3			$	8,775.1				1,357.2				15.5	%

 

 

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TSYS

Reclassification of Operating Segment Breakdown Due to Two Corporate Initiatives

(unaudited)

(in thousands)

 

 

		Three Months Ended
		Mar 31, 2012				Jun 30, 2012				Sep 30, 2012				Dec 31, 2012				Total 2012				Three Months Ended Mar 31, 2013
Depreciation and amortization
North America Services		$	18,453				18,821				18,582				18,816				74,672				18,083
International Services			12,911				15,006				14,701				14,510				57,128				12,852
Merchant Services			8,786				8,667				9,290				9,509				36,252				11,153
Corporate Admin			723				719				669				446				2,557				410
Total depreciation and amortization		$	40,873				43,213				43,242				43,281				170,609				42,498
Segment operating income
North America Services		$	68,347				72,231				70,080				78,835				289,493				67,202
International Services			4,113				9,438				7,725				6,058				27,334				6,626
Merchant Services			34,219				32,950				34,508				30,438				132,115				29,327
Corporate Admin			(21,848	)			(22,523	)			(21,420	)			(25,500	)			(91,291	)			(28,252	)
Operating income		$	84,831				92,096				90,893				89,831				357,651				74,903
Volumes:
FTEs (full-time equivalents)
North America Services			3,886				3,964				4,014				4,096								4,214
International Services			2,697				2,624				2,517				2,404								2,322
Merchant Services			1,213				1,242				1,427				1,481								1,581
Corporate Admin			407				415				425				425								435
FTEs			8,203				8,245				8,383				8,406								8,552

 

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TSYS Announces First Quarter 2013 Earnings

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TSYS

Balance Sheet

(unaudited)

(in thousands)

 

 

		Mar 31, 2013				Dec 31, 2012
Assets
Current assets:
Cash and cash equivalents		$	223,097				247,612
Restricted cash			9,046				282
Accounts receivable, net			237,257				247,083
Deferred income tax assets			8,232				9,825
Prepaid expenses and other current assets			89,070				69,924
Total current assets			566,702				574,726
Goodwill			517,147				518,344
Property and equipment, net			252,797				260,389
Computer software, net			254,785				226,917
Contract acquisition costs, net			162,094				161,267
Other intangible assets, net			124,325				130,054
Equity investments, net			91,751				87,764
Deferred income tax assets, net			5,125				5,334
Other assets			64,468				59,043
Total assets		$	2,039,194				2,023,838
Liabilities
Current liabilities:
Accounts payable		$	33,143				63,370
Current portion of notes payable			24,363				27,361
Current portion of obligations under capital leases			23,007				13,263
Accrued salaries and employee benefits			16,539				26,243
Other current liabilities			123,145				100,282
Total current liabilities			220,197				230,519
Long-term debt, excluding current portion			169,229				174,859
Deferred income tax liabilities			54,103				48,074
Obligations under capital leases, excluding current portion			16,517				17,155
Other long-term liabilities			65,602				68,791
Total liabilities			525,648				539,398
Redeemable noncontrolling interest			40,589				39,505
Equity
Shareholders’ equity:
Common stock			20,280				20,247
Additional paid-in capital			139,815				141,793
Accumulated other comprehensive income (loss), net			(9,431	)			1,408
Treasury stock			(283,403	)			(287,301	)
Retained earnings			1,587,540				1,549,063
Total shareholders’ equity			1,454,801				1,425,210
Noncontrolling interests in consolidated subsidiaries			18,156				19,725
Total equity			1,472,957				1,444,935
Total liabilities and equity		$	2,039,194				2,023,838

 

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TSYS

Cash Flow

(unaudited)

(in thousands)

 

 

		Three Months Ended March 31,
		2013				2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	59,149				57,644
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in income of equity investments			(3,817	)			(2,774	)
Net loss on foreign currency translation			(45	)			504
Depreciation and amortization			42,498				40,873
Amortization of debt issuance costs			2,860				47
Changes in fair value of private equity investments			(1,227	)			—
Share-based compensation			4,593				3,598
Excess tax benefit from share-based payment arrangements			(536	)			(510	)
Provisions for bad debt expense and billing adjustments			376				(144	)
Charges for transaction processing provisions			4,160				1,063
Deferred income tax expense (benefit)			9,442				6,425
(Gain) loss on disposal of equipment, net			55				(2	)
Changes in operating assets and liabilities:
Restricted cash			(8,624	)			—
Accounts receivable			5,745				(5,424	)
Prepaid expenses, other current assets and other long-term assets			(23,623	)			(7,044	)
Accounts payable			(30,182	)			9,825
Accrued salaries and employee benefits			(9,266	)			(19,111	)
Other current liabilities and other long-term liabilities			879				12,943
Net cash provided by operating activities			52,437				97,913
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment, net			(6,481	)			(4,984	)
Additions to licensed computer software from vendors			(29,904	)			(2,593	)
Additions to internally developed computer software			(5,297	)			(4,435	)
Cash used in acquisitions, net of cash acquired			—				(1,750	)
Purchase of private equity investments			(411	)			(499	)
Additions to contract acquisition costs			(13,666	)			(5,099	)
Net cash used in investing activities			(55,759	)			(19,360	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt borrowings and capital lease obligations			(9,784	)			(6,505	)
Proceeds from exercise of stock options			2,551				2,701
Excess tax benefit from share-based payment arrangements			536				510
Repurchase of common stock under plans and tax withholding			(5,501	)			—
Debt issuance costs			(3,534	)			—
Subsidiary dividends paid to noncontrolling shareholders			(953	)			(1,087	)
Dividends paid on common stock			—				(18,913	)
Net cash used in financing activities			(16,685	)			(23,294	)
CASH AND CASH EQUIVALENTS:
Effect of exchange rate changes on cash and cash equivalents			(4,508	)			(641	)
Net increase (decrease) in cash and cash equivalents			(24,515	)			54,618
Cash and cash equivalents at beginning of period			247,612				316,337
Cash and cash equivalents at end of period		$	223,097				370,955

 

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Supplemental Information:

 

		Accounts on File
		Total
(in millions)		March 2013				March 2012				% Change
Consumer Credit			203.8				197.2				3.3
Retail			25.2				25.3				(0.3	)
Total Consumer			229.0				222.5				2.9
Commercial			37.9				35.5				6.6
Other			13.4				9.4				42.9
Subtotal			280.3				267.4				4.8
Prepaid/Stored Value			107.3				88.5				21.3
Government Services			59.4				30.5				94.4
Commercial Card Single Use			31.6				29.5				7.3
Total AOF			478.6				415.9				15.1

 

Growth in Accounts on File (in millions):
		March 2012 to March 2013				March 2011 to March 2012
Beginning balance			415.9				356.7
Change in accounts on file due to:
Internal growth of existing clients			32.2				36.7
New clients			77.1				41.8
Purges/Sales			(44.9	)			(18.5	)
Deconversions			(1.7	)			(0.8	)
Ending balance			478.6				415.9

 

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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 2013 financial results using the previous year’s foreign currency exchange rates. On a year-to-date constant currency basis, TSYS’ total revenues grew 1.7% as compared to a reported GAAP increase of 0.8%.

The schedule below also provides a reconciliation of basic EPS excluding merger and acquisition costs to basic EPS. On a year-to-date basis, TSYS’ basic EPS excluding merger and acqusiition costs grew 11.5% as compared to a reported GAAP increase of 2.2%.

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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Reconciliation of GAAP to Non-GAAP

 

 

Constant Currency Comparison

(unaudited)

(in thousands)

 

 

		Three Months Ended March 31,
										Percent
		2013				2012				Change
Consolidated
Constant currency (1)		$	469,016				461,162				1.7	%
Foreign currency (2)			(4,020	)			—
Total revenues		$	464,996				461,162				0.8	%
Constant currency (1)		$	74,961				84,831				(11.6	)%
Foreign currency (2)			(58	)			—
Operating income		$	74,903				84,831				(11.7	)%
International Services
Constant currency (1)		$	101,185				100,360				0.8	%
Foreign currency (2)			(4,089	)			—
Total revenues		$	97,096				100,360				(3.3	)%

 

(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.

 

 

Basic EPS Excluding Merger and Acquisition Costs

(unaudited)

(in thousands)

 

 

		Three Months Ended March 31,
		2013				2012				Percent Change
Net income attributable to TSYS common shareholders (a)		$	57,028				56,395				1.1
Add: Merger and acquisition expenses, net of taxes*			5,222				—
Net income before merger and acquisition expense (c)		$	62,250				56,395				10.4
Average common shares outstanding (b)			186,807				188,719
Basic Earnings per share ( a )/( b )		$	0.31				0.30				2.2
Basic Earnings per share excluding merger and acquisition expenses ( c )/( b )		$	0.33				0.30				11.5

* - Certain merger and acquisition costs are nondeductible for income tax purposes

 

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