Exhibit 99.1

 

 

Total System Services, Inc. One TSYS Way P.O. Box 2567 Columbus, GA 31902-2567		+1.706.649.2307 +1.706.649.5740     www.tsys.com

For immediate release:

Contacts:

 

Shawn Roberts TSYS Investor Relations +1.706.644.6081 shawnroberts@tsys.com

TSYS Reports First Quarter 2014 Total Revenues Increased 32.1%

COLUMBUS, Ga., April 22, 2014 — TSYS (NYSE: TSS) today reported results for the first quarter of 2014 and announced the sale of its business interests in Japan. The accompanying financial statements have been adjusted to exclude the Japanese results from ongoing operations in 2014 and 2013 with those results reported as “discontinued operations” for all periods presented.

Total revenues for the quarter were $592.8 million, an increase of 32.1%. Revenues before reimbursable items were $532.8 million, an increase of 37.3%. The reported results for the quarter for both total revenues and revenues before reimbursable items exclude $16.2 million of revenue for Japan as a result of moving these results to discontinued operations. Adjusted EBITDA was $149.6 million, an increase of 21.2%. Income from continuing operations was $50.6 million. Adjusted cash earnings per share (EPS) from continuing operations was $0.38. On a GAAP basis, basic EPS from continuing operations was $0.26. Diluted EPS from continuing operations was $0.26.

“We are pleased with the first quarter as the financial results met or exceeded our plans. Our cash flow from operations was $148.7 million and our free cash flow was $101.5 million, which were increases of $96.3 million and $104.4 million, respectively, over last year. During the quarter, we also deployed $37.5 million of our capital to increase our stake in our Central Payment joint venture from 60% to 75% as it continues to outperform our expected goals,” said Philip W. Tomlinson, chairman and chief executive officer of TSYS.

“Our revised guidance for 2014 is included in the table below and is only adjusted for the discontinued Japan operations. TSYS’ previous revenue guidance included approximately $70 million of revenue associated with its operations in Japan for 2014, and $68 million in 2013. The financial impact from the sale of our businesses in Japan had no material impact on our previous guidance. Revenue and earnings growth ranges remain strong year over year, while adjusted cash EPS remained the same. Our revised guidance for 2014 reflects our focus on diversification, growth and the exceptional performance of our TSYS team,” said Tomlinson.

2014

---

 

TSYS Reports First Quarter 2014 Total Revenues Increased 32.1%/p.2

TSYS’ new guidance is as follows:

 

		2014 Revised Guidance
			Range
		(in millions, except per share amounts)												Percent Change
Total revenues		$	2,422				to			$	2,471				17	%			to				20	%
Revenues before reimbursable items		$	2,182				to			$	2,226				20	%			to				22	%
Adjusted EBITDA		$	732				to			$	746				17	%			to				20	%
Adjusted cash EPS attributable to TSYS common shareholders*		$	1.90				to			$	1.93				10	%			to				12	%
* Average Basic Weighted Shares			188.4

Conference Call

TSYS will host its quarterly conference call at 5:00 p.m. ET on Tuesday, April 22. The conference call can be accessed via simultaneous Internet broadcast at tsys.com by clicking on the link under “Webcasts” on the main homepage. The replay will be archived for 12 months and will be available approximately 30 minutes after the completion of the call. A slide presentation to accompany the call will be available by clicking on the link under “Webcasts” on the main homepage of tsys.com.

Non-GAAP Measures

This press release contains information prepared in conformity with GAAP as well as non-GAAP information. It is management’s intent to provide non-GAAP financial information to enhance understanding of its consolidated financial information as prepared in accordance with GAAP. This non-GAAP information should be considered by the reader in addition to, but not instead of, the financial statements prepared in accordance with GAAP. Each non-GAAP financial measure and the corresponding GAAP financial measure are presented so as not to imply that more emphasis should be placed on the non-GAAP measure. The non-GAAP financial information presented may be determined or calculated differently by other companies.

Additional information about non-GAAP financial measures and a reconciliation of those measures to the most directly comparable GAAP measures are included on pages 12 to 14 of this release.

2014

---

 

TSYS Reports First Quarter 2014 Total Revenues Increased 32.1%/p.3

About TSYS

At TSYS^® (NYSE: TSS), we believe payments should revolve around people, not the other way around. We call this belief “People-Centered Payments^®.” By putting people at the center of every decision we make, TSYS supports financial institutions, businesses and governments in more than 80 countries. Through NetSpend^®, A TSYS Company, we empower consumers with the convenience, security, and freedom to be self-banked. TSYS offers issuer services and merchant payment acceptance for credit, debit, prepaid, healthcare and business solutions.

TSYS’ headquarters are located in Columbus, Ga., U.S.A., with local offices spread across the Americas, EMEA and Asia-Pacific. TSYS is a member of The Civic 50 and was named one of the 2013 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,” “potential,” “will,” “could,” and similar expressions. These forward-looking statements include, among others, statements regarding TSYS’ earnings guidance for 2014 total revenues, revenues before reimbursable items, adjusted EBITDA, and adjusted cash EPS, and the assumptions underlying such statements. These statements are based on the current beliefs and expectations of TSYS’ management, are based on management’s assumptions and are subject to significant risks and uncertainties. Actual results may differ materially from those contemplated by the forward-looking statements. A number of important factors could cause actual results or events 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, TSYS’ ability to integrate NetSpend and other acquisitions and achieve the anticipated growth opportunities and other benefits of the acquisitions; the effect of current domestic and worldwide economic conditions; the material breach of security of any of TSYS’ systems; risks associated with foreign operations, including adverse developments with respect to foreign currency exchange rates; expenses are incurred associated with the signing of a significant client; the deconversion of a significant client; changes occur in laws, rules, regulations, credit card association rules, the prepaid industry or other industry standards affecting TSYS and our clients that may result in costly new compliance burdens on TSYS and our clients and lead to a decrease in the volume and/or number of transactions processed; the costs and effects of litigation, investigations or similar matters or adverse facts and developments relating thereto; adverse developments with respect to the payment card industry in general, including a decline in the use of cards as a payment mechanism; and growth rates of TSYS’ existing clients are lower than anticipated or attrition rates of existing clients are higher than anticipated. Additional risks and other factors that could cause actual results or events to differ materially from those contemplated in this release can be found in TSYS’ filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K. We believe these forward-looking statements are reasonable; however, undue reliance should not be placed on any forward-looking statements, which are based on current expectations. We do not assume any obligation to update any forward-looking statements as a result of new information, future developments or otherwise.

— more —

2014

---

TSYS Announces First Quarter 2014 Earnings

Page 4 of 16

 

 

TSYS

Financial Highlights

(unaudited)

(in thousands, except per share data)

 

 

		Three Months Ended March 31,
		2014				2013				Percent Change
Total revenues		$	592,848				448,791				32.1	%
Cost of services			422,883				304,369				38.9
Selling, general and administrative expenses			87,963				66,421				32.4
Merger and acquisition expenses			1,305				3,481				(62.5	)
Operating income			80,697				74,520				8.3
Nonoperating income (expenses)			(324	)			1,003				nm
Merger and acquisition expenses - bridge loan facility & other financing			(9,489	)			(2,743	)			nm
Income before income taxes, noncontrolling interests and equity in income of equity investments			70,884				72,780				(2.6	)
Income taxes			24,335				17,463				39.4
Income before noncontrolling interests and equity in income of equity investments			46,549				55,317				(15.9	)
Equity in income of equity investments			4,096				3,817				7.3
Income from continuing operations, net of tax			50,645				59,134				(14.4	)
Income from discontinued operations, net of tax			980				15				nm
Net income			51,625				59,149				(12.7	)
Net income attributable to noncontrolling interests			(2,322	)			(2,121	)			(9.5	)
Net income attributable to TSYS common shareholders		$	49,303				57,028				(13.5	)%
Basic earnings per share:
Income from continuing operations to TSYS common shareholders*		$	0.26				0.31				(15.3	)%
Loss from discontinued operations to TSYS common shareholders*			(0.00	)			(0.00	)			97.9
Basic earnings per share (EPS)		$	0.26				0.31				(14.0	)%
Diluted earnings per share:
Income from continuing operations to TSYS common shareholders*		$	0.26				0.31				(15.8	)%
Loss from discontinued operations to TSYS common shareholders*			(0.00	)			(0.00	)			97.9
Diluted EPS		$	0.26				0.30				(14.6	)%
Dividends declared per share		$	0.10				0.10
Amounts attributable to TSYS common shareholders:
Income from continuing operations, net of tax		$	49,321				57,905				(14.8	)%
Loss from discontinued operations, net of tax			(18	)			(877	)			97.9
Net income		$	49,303				57,028				(13.5	)%
Non-GAAP measures:
Adjusted cash EPS from continuing operations		$	0.38				0.38				(1.1	)%
Adjusted EBITDA		$	149,596				123,446				21.	2%

nm = not meaningful

*	EPS amounts may not total due to rounding.

- more -

---

TSYS Announces First Quarter 2014 Earnings

Page 5 of 16

 

 

TSYS

Consolidated Statements of Comprehensive Income

(unaudited)

(in thousands)

 

 

		Three Months Ended March 31,
		2014				2013
Net income		$	51,625				59,149
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments			1,581				(12,646	)
Postretirement healthcare plan adjustments			(75	)			155
Unrealized gain on available-for-sale securities			570				—
Other comprehensive income (loss)			2,076				(12,491	)
Comprehensive income			53,701				46,658
Comprehensive income attributable to noncontrolling interests			2,827				467
Comprehensive income attributable to TSYS common shareholders		$	50,874				46,191

- more -

---

TSYS Announces First Quarter 2014 Earnings

Page 6 of 16

 

 

TSYS

Earnings Per Share

(unaudited)

(in thousands, except per share data)

 

 

		Three Months Ended March 31, 2014								Three Months Ended March 31, 2013
		Common Stock				Participating Securities				Common Stock				Participating Securities
Basic earnings per share:
Net income		$	49,303								57,028
Less income allocated to nonvested awards			(516	)			516				(209	)			209
Net income allocated to common stock for EPS calculation ( a )		$	48,787				516				56,819				209
Average common shares outstanding ( b )			185,763				1,989				186,108				699
Average common shares and participating securities			187,752								186,807
Basic earnings per share ( a )/( b )		$	0.26				0.26				0.31				0.30
Diluted earnings per share:
Net income		$	49,303								57,028
Less income allocated to nonvested awards			(512	)			512				(208	)			208
Net income allocated to common stock for EPS calculation ( c )		$	48,791				512				56,820				208
Average common shares outstanding			185,763				1,989				186,108				699
Increase due to assumed issuance of shares related to common equivalent shares outstanding			2,632								1,274
Average common and common equivalent shares outstanding ( d )			188,395				1,989				187,382				699
Average common and common equivalent shares and participating securities			190,384								188,081
Diluted earnings per share ( c )/( d )		$	0.26				0.26				0.30				0.30

- more -

---

TSYS Announces First Quarter 2014 Earnings

Page 7 of 16

 

 

TSYS

Segment Breakdown

(unaudited)

(in thousands)

 

 

		Three Months Ended March 31,
										Change
		2014				2013				$				%
Revenues before reimbursable items
North America Services		$	224,368				205,596				18,772				9.1	%
International Services			76,773				76,387				386				0.5
Merchant Services			104,625				109,301				(4,676	)			(4.3	)
NetSpend			132,640				—				132,640				na
Intersegment revenues			(5,656	)			(3,252	)			(2,404	)			(73.9	)
Revenues before reimbursable items from external customers		$	532,750				388,032				144,718				37.3	%
Total revenues
North America Services		$	262,178				239,789				22,389				9.3	%
International Services			82,378				80,891				1,487				1.8
Merchant Services			122,690				132,901				(10,211	)			(7.7	)
NetSpend			132,640				—				132,640				na
Intersegment revenues			(7,038	)			(4,790	)			(2,248	)			(46.9	)
Revenues from external customers		$	592,848				448,791				144,057				32.1	%
Depreciation and amortization
North America Services		$	20,276				18,083				2,193				12.1	%
International Services			9,805				10,699				(894	)			(8.4	)
Merchant Services			3,400				3,142				258				8.2
NetSpend			1,735				—				1,735				na
Segment depreciation and amortization			35,216				31,924				3,292				10.3
Acquisition intangible amortization			24,313				8,532				15,781				nm
Corporate admin and other			506				396				110				27.8
Total depreciation and amortization		$	60,035				40,852				19,183				47.0	%
Adjusted segment operating income
North America Services		$	74,578				68,748				5,830				8.5	%
International Services			4,555				6,861				(2,306	)			(33.6	)
Merchant Services			30,168				37,636				(7,468	)			(19.8	)
NetSpend			28,717				—				28,717				na
Total adjusted segment operating income			138,018				113,245				24,773				21.9
Acquisition intangible amorization			(24,313	)			(8,532	)			(15,781	)			nm
NetSpend M&A operating expenses (non-recurring)			(1,253	)			(3,481	)			2,228				64.0
Share-based compensation			(7,611	)			(4,593	)			(3,018	)			(65.7	)
Corporate admin and other			(24,144	)			(22,119	)			(2,025	)			(9.2	)
Operating income		$	80,697				74,520				6,177				8.3	%
Other:
Reimbursable items:
North America Services		$	37,810				34,193				3,617				10.6	%
International Services			5,605				4,504				1,101				24.4
Merchant Services			18,065				23,600				(5,535	)			(23.5	)
NetSpend			—				—				—				na
Intersegment revenues			(1,382	)			(1,538	)			156				10.1
Reimbursable items		$	60,098				60,759				(661	)			(1.1	)%

- more -

---

TSYS Announces First Quarter 2014 Earnings

Page 8 of 16

 

 

TSYS

Segment Breakdown

(unaudited)

(in thousands)

 

 

Other:
Volumes:		At								Change
FTEs (full-time equivalents)		3/31/2014				12/31/2013				$				%
North America Services			4,587				4,484				103				2.3	%
International Services			2,414				2,413				1				0.0
Merchant Services			1,595				1,599				(4	)			(0.3	)
NetSpend			508				470				38				8.1
Corporate Admin and Other			573				545				28				5.1
FTEs - Continuing Operations			9,677				9,511				166				1.7	%
Discontinued Operations			80				84				(4	)			(4.8	)
FTEs			9,757				9,595				162				1.7	%
Total assets (in thousands)
North America Services		$	3,247,258				3,215,333				31,925				1.0	%
International Services			410,902				417,379				(6,477	)			(1.6	)
Merchant Services			693,130				676,592				16,538				2.4
NetSpend			1,586,326				1,596,150				(9,824	)			(0.6	)
Intersegment assets			(2,219,689	)			(2,218,886	)			(803	)			(0.0	)
Total assets		$	3,717,927				3,686,568				31,359				0.9	%
		Three Months Ended March 31,
										Change
		2014				2013				Inc(Dec)				%
North America Segment:
Accounts on File (AOF) (in millions)			495.5				422.8				72.7				17.2	%
Transactions (in millions)			2,327.6				2,013.4				314.2				15.6	%
International Segment:
AOF (in millions)			60.7				55.7				5.0				9.0	%
Transactions (in millions)			517.9				434.0				83.9				19.3	%
Merchant Segment:
Point-of-sale Transactions (in millions)			982.2				1,099.1				(116.9	)			(10.6	)%
Dollar sales volume (in millions)		$	10,779.7			$	10,132.3			$	647.4				6.4	%
NetSpend Segment:
Gross Dollar Volume (in millions)		$	6,567.2			$	5,378.7			$	1,188.5				22.1	%
90-Day Active Cards (in thousands)			3,654.8				3,157.5				497.3				15.7
Direct Deposit 90-Day Active Cards (in thousands)			2,070.3				1,707.9				362.4				21.2
% of 90-Day Active Cards with Direct Deposit			56.6	%			54.1	%

- more -

---

TSYS Announces First Quarter 2014 Earnings

Page 9 of 16

 

 

TSYS

Balance Sheet

(unaudited)

(in thousands)

 

 

		Mar 31, 2014				Dec 31, 2013
Assets
Current assets:
Cash and cash equivalents		$	274,161				247,700
Accounts receivable, net			267,787				255,773
Deferred income tax assets			12,477				14,158
Prepaid expenses and other current assets			89,810				95,109
Current assets of discontinued operations			43,614				41,193
Total current assets			687,849				653,933
Goodwill			1,539,758				1,541,574
Other intangible assets, net			462,027				481,419
Computer software, net			359,696				363,880
Property and equipment, net			261,097				259,968
Contract acquisition costs, net			195,706				184,828
Equity investments, net			96,533				94,133
Deferred income tax assets, net			3,903				3,972
Other assets			97,410				87,146
Long-Term assets of discontinued operations			13,948				15,715
Total assets		$	3,717,927				3,686,568
Liabilities
Current liabilities:
Accounts payable		$	49,722				33,651
Current portion of borrowings			34,320				34,257
Current portion of obligations under capital leases			10,625				22,662
Accrued salaries and employee benefits			28,188				38,339
Other current liabilities			195,708				159,170
Current liabilities of discontinued operations			6,675				9,136
Total current liabilities			325,238				297,215
Long-term borrowings, excluding current portion			1,419,742				1,428,251
Deferred income tax liabilities			229,649				228,727
Obligations under capital leases, excluding current portion			6,096				7,500
Other long-term liabilities			83,195				81,600
Long-term liabilities of discontinued operations			1,244				1,197
Total liabilities			2,065,164				2,044,490
Redeemable noncontrolling interest			23,918				39,652
Equity
Shareholders’ equity:
Common stock			20,279				20,279
Additional paid-in capital			145,429				165,841
Accumulated other comprehensive income, net			5,320				3,749
Treasury stock			(312,843	)			(326,996	)
Retained earnings			1,748,141				1,718,204
Total shareholders’ equity			1,606,326				1,581,077
Noncontrolling interests in consolidated subsidiaries			22,519				21,349
Total equity			1,628,845				1,602,426
Total liabilities and equity		$	3,717,927				3,686,568

- more -

---

TSYS Announces First Quarter 2014 Earnings

Page 10 of 16

 

 

TSYS

Cash Flow

(unaudited)

(in thousands)

 

 

		Three Months Ended March 31,
		2014				2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	51,625				59,149
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in income of equity investments			(4,096	)			(3,817	)
Net gain on foreign currency			(425	)			(45	)
Depreciation and amortization			61,432				42,498
Amortization of debt issuance costs			452				2,860
Amortization of bond discount			94				—
Changes in fair value of private equity investments			(312	)			(1,227	)
Share-based compensation			7,611				4,593
Excess tax benefit from share-based compensation			(4,037	)			(536	)
Provisions for bad debt expense and billing adjustments			749				376
Charges for transaction processing provisions			1,826				4,160
Provision for fraud and other losses			9,639				—
Deferred income tax expense			4,751				9,442
Loss on disposal of equipment, net			2				55
Changes in operating assets and liabilities:
Accounts receivable			(11,418	)			(30,182	)
Prepaid expenses, other current assets and other long-term assets			(3,170	)			(32,247	)
Accounts payable			15,738				5,745
Accrued salaries and employee benefits			(9,986	)			(9,266	)
Other current liabilities and other long-term liabilities			28,231				879
Net cash provided by operating activities			148,706				52,437
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment, net			(13,641	)			(6,481	)
Additions to licensed computer software from vendors			(5,963	)			(29,904	)
Additions to internally developed computer software			(9,735	)			(5,297	)
Purchase of private equity investments			(822	)			(411	)
Additions to contract acquisition costs			(17,903	)			(13,666	)
Net cash used in investing activities			(48,064	)			(55,759	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term borrowings and capital lease obligations			(22,277	)			(9,784	)
Proceeds from exercise of stock options			9,539				2,551
Excess tax benefit from share-based compensation			4,037				536
Repurchase of common stock under plans and tax withholding			(5,173	)			(5,501	)
Debt issuance costs			—				(3,534	)
Purchase of noncontrolling interests			(37,500	)			—
Subsidiary dividends paid to noncontrolling shareholders			(2,312	)			(953	)
Dividends paid on common stock			(18,788	)			—
Net cash used in financing activities			(72,474	)			(16,685	)
CASH AND CASH EQUIVALENTS:
Effect of exchange rate changes on cash and cash equivalents			1,015				(4,508	)
Net increase in cash and cash equivalents			29,183				(24,515	)
Cash and cash equivalents at beginning of period			278,230				247,612
Cash and cash equivalents at end of period			307,413				223,097
Less cash and cash equivalents of discontinued operations at end of period			33,252				22,324
Cash and cash equivalents of continuing operations at end of period		$	274,161				200,773

- more -

---

TSYS Announces First Quarter 2014 Earnings

Page 11 of 16

 

Supplemental Information:

				Accounts on File
				Total
(in millions)				March 2014				March 2013				% Change
Consumer Credit					234.8				203.7				15.3
Retail					27.5				25.2				9.3
Total Consumer					262.3				228.9				14.6
Commercial					40.4				37.9				6.7
Other					19.7				13.4				46.5
Subtotal					322.4				280.2				15.1
Prepaid/Stored Value					120.0				107.3				11.8
Government Services					63.0				59.4				6.1
Commercial Card Single Use					50.8				31.6				60.8
Total AOF					556.2				478.5				16.2

Growth in Accounts on File (in millions):

 

		March 2013 to March 2014				March 2012 to March 2013
Beginning balance			478.5				415.5
Change in accounts on file due to:
Internal growth of existing clients			38.6				32.2
New clients			64.6				77.1
Purges/Sales			(24.7	)			(44.6	)
Deconversions			(0.8	)			(1.7	)
Ending balance			556.2				478.5

- more -

---

TSYS Announces First Quarter 2014 Earnings

Page 12 of 16

 

Reconciliation of GAAP to Non-GAAP Financial Measures

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 first quarter 2014 financial results using the previous year’s foreign currency exchange rates. On a full year constant currency basis, TSYS’ total revenues grew 31.1% as compared to a reported GAAP increase of 32.1%.

The schedule below also provides a reconciliation of basic EPS, adjusted for the after-tax impact of acquisition intangible amortization, share-based compensation and merger and acquisition costs, to adjusted cash EPS.

The tax rate used in the calculation of cash EPS for the quarter and year is equal to an estimate of our annual effective tax rate on GAAP income. This effective rate is estimated annually and may be adjusted during the year to take into account events or trends that materially impact the effective tax rate including, but not limited to, significant changes resulting from tax legislation, material changes in the mix of revenues and expenses by entity and other signifcant events.

The schedule also provides a reconciliation of net income, adjusted for equity in income of equity investments, income taxes, nonoperating expense, depreciation and amortization, share-based compensation, and merger and acquisition expenses, to adjusted EBITDA.

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.

- more -

---

TSYS Announces First Quarter 2014 Earnings

Page 13 of 16

 

Reconciliation of GAAP to Non-GAAP

 

 

Constant Currency Comparison

(unaudited)

(in thousands)

 

 

		Three Months Ended March 31,
		2014				2013				Percent Change
Consolidated
Constant currency (1)		$	588,485				448,791				31.1	%
Foreign currency (2)			4,363				—
Total revenues		$	592,848				448,791				32.1	%
Constant currency (1)		$	528,701				388,032				36.3	%
Foreign currency (2)			4,049				—
Total revenues before reimbursable items		$	532,750				388,032				37.3	%
Constant currency (1)		$	78,152				74,520				4.9	%
Foreign currency (2)			2,545				—
Operating income		$	80,697				74,520				8.3	%
International Services
Constant currency (1)		$	78,134				80,891				(3.4	)%
Foreign currency (2)			4,244				—
Total revenues		$	82,378				80,891				1.8	%

 

(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.

 

 

Revenues Before Reimbursable Items

(unaudited)

(in thousands)

 

 

		Three Months Ended March 31,
		2014				2013				Percent Change
Total revenues		$	592,848				448,791				32.1	%
Reimbursable items			60,098				60,759				(1.1	)
Revenues before reimbursable items		$	532,750				388,032				37.3	%

- more -

---

TSYS Announces First Quarter 2014 Earnings

Page 14 of 16

 

Reconciliation of GAAP to Non-GAAP

 

 

Adjusted Cash Earnings

(unaudited)

(in thousands, except per share data)

 

 

		Three Months Ended March 31,
		2014				2013				Percent Change
Income from continuing operations attributable to TSYS common shareholders		$	49,321				57,905				(14.8	)%
Adjust for amounts attributable to TSYS common shareholders:
Add: Acquisition intangible amortization, net of taxes			15,813				5,492				nm	%
Add: Share-based compensation, net of taxes			5,017				3,148				59.4	%
Cash earnings			70,151				66,545				5.4	%
Add: NetSpend M&A expenses, net of taxes* (non-recurring)			1,204				5,222				(76.9	)%
Cash earnings adjusted		$	71,355				71,767				(0.6	)%
Basic EPS - Income from continuing operations attributable to TSYS common shareholders
As reported (GAAP)		$	0.26				0.31				(15.3	)%
Adjust for amounts attributable to TSYS common shareholders:
Add: Acquisition intangible amortization, net of taxes			0.08				0.03				nm	%
Add: Share-based compensation, net of taxes			0.03				0.02				58.0	%
Cash earnings per share			0.37				0.36				4.9	%
Add: NetSpend M&A expenses, net of taxes* (non-recurring)			0.01				0.03				(77.1	)%
Adjusted cash EPS **		$	0.38				0.38				(1.1	)%
Average common shares and participating securities			187,752				186,807

 

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

**	Adjusted cash EPS amounts may not total due to rounding.

 

 

Adjusted EBITDA

(unaudited)

(in thousands)

 

 

		Three Months Ended March 31,
		2014				2013				Percent Change
Net income		$	51,625				59,149				(12.7	)%
Adjust for:
Deduct: Income from discontinued operations			(980	)			(15	)			nm	%
Deduct: Equity in income of equity investments			(4,096	)			(3,817	)			(7.3	)%
Add: Income taxes			24,335				17,463				39.4	%
Add: Nonoperating expense			9,813				1,740				nm	%
Add: Depreciation and amortization			60,035				40,852				47.0	%
EBITDA			140,732				115,372				22.0	%
Adjust for:
Add: Share-based compensation			7,611				4,593				65.7	%
Add: NetSpend M&A operating expenses *(non-recurring)			1,253				3,481				(64.0	)%
Adjusted EBITDA		$	149,596				123,446				21.2	%

nm = not meaningful

*	Excludes share-based compensation

- more -

---

TSYS Announces First Quarter 2014 Earnings

Page 15 of 16

 

 

TSYS

Financial Highlights

(unaudited)

(in thousands, except per share data)

 

 

																		Twelve Months Ended
		Three Months Ended
		March 31,				June 30,				Sept 30,				Dec 31,				Dec 31,
		2013				2013				2013				2013				2013
Total revenues		$	448,791				461,860				570,551				583,103				2,064,305
Cost of services			304,369				301,627				377,147				386,295				1,369,438
Selling, general and administrative expenses			66,421				64,345				81,643				85,739				298,147
Merger and acquisition expenses			3,481				1,246				7,282				2,211				14,220
Operating income			74,520				94,642				104,479				108,858				382,500
Nonoperating income (expenses)			1,003				(590	)			(499	)			(718	)			(804	)
Merger and acquisition expenses - bridge loan facility & other financing			(2,743	)			(6,934	)			(9,789	)			(9,754	)			(29,220	)
Income before income taxes, noncontrolling interests and equity in income of equity investments			72,780				87,118				94,191				98,386				352,476
Income taxes			17,463				29,984				30,100				33,435				110,982
Income before noncontrolling interests and equity in income of equity investments			55,317				57,134				64,091				64,951				241,494
Equity in income of equity investments			3,817				2,748				2,792				3,691				13,048
Income from continuing operations, net of tax			59,134				59,882				66,883				68,642				254,542
income from discontinued operations, net of tax			15				678				611				751				2,055
Net income			59,149				60,560				67,494				69,393				256,597
Net income attributable to noncontrolling interests			(2,121	)			(2,844	)			(3,144	)			(3,738	)			(11,847	)
Net income attributable to TSYS common shareholders		$	57,028				57,716				64,350				65,655				244,750
Basic earnings per share:
Income from continuing operations to TSYS common shareholders*		$	0.31				0.31				0.34				0.35				1.31
Loss from discontinued operations to TSYS common shareholders*			(0.00	)			(0.00	)			(0.00	)			(0.00	)			(0.01	)
Basic earnings per share (EPS)		$	0.31				0.31				0.34				0.35				1.30
Diluted earnings per share:
Income from continuing operations to TSYS common shareholders*		$	0.31				0.31				0.34				0.34				1.30
Loss from discontinued operations to TSYS common shareholders*			(0.00	)			(0.00	)			(0.00	)			(0.00	)			(0.01	)
Diluted EPS		$	0.30				0.31				0.34				0.34				1.29
Dividends declared per share		$	0.10				0.10				0.10				0.10				0.40
Amounts attributable to TSYS common shareholders:
Income from continuing operations, net of tax		$	57,905				58,096				64,834				66,058				246,893
Loss from discontinued operations, net of tax			(877	)			(380	)			(484	)			(403	)			(2,143	)
Net income		$	57,028				57,716				64,350				65,655				244,750
Non-GAAP measures:
Adjusted cash EPS from continuing operations		$	0.38				0.37				0.49				0.48				1.72
Adjusted EBITDA		$	123,446				140,105				179,445				181,097				624,093

Note: Prior periods restated for discontinued operations.

nm = not meaningful

*	EPS amounts may not total due to rounding.

- more -

---

TSYS Announces First Quarter 2014 Earnings

Page 16 of 16

 

 

TSYS

Segment Breakdown

(unaudited)

(in thousands)

 

 

																		Twelve Months Ended
		Three Months Ended
		Mar 31, 2013				Jun 30, 2013				Sep 30, 2013				Dec 31, 2013				Dec 31, 2013
Revenues before reimbursable items
North America Services		$	205,596				214,526				217,257				223,266				860,645
International Services			76,387				76,626				77,876				90,595				321,484
Merchant Services			109,301				112,952				113,650				110,375				446,278
NetSpend			—				—				103,706				104,144				207,850
Intersegment revenues			(3,252	)			(3,175	)			(3,001	)			(3,121	)			(12,549	)
Revenues before reimbursable items from external customers		$	388,032				400,929				509,488				525,259				1,823,708
Total revenues
North America Services		$	239,789				248,640				252,577				259,067				1,000,073
International Services			80,891				81,504				83,025				96,129				341,549
Merchant Services			132,901				136,458				135,616				128,075				533,050
NetSpend			—				—				103,706				104,144				207,850
Intersegment revenues			(4,790	)			(4,742	)			(4,373	)			(4,312	)			(18,217	)
Revenues from external customers		$	448,791				461,860				570,551				583,103				2,064,305
Depreciation and amortization
North America Services		$	18,083				18,213				18,764				19,420				74,480
International Services			10,699				9,450				9,585				11,974				41,708
Merchant Services			3,142				2,998				2,890				3,004				12,034
NetSpend			—				—				1,470				1,651				3,121
Segment depreciation and amortization			31,924				30,661				32,709				36,049				131,343
Acquisition intangible amortization			8,532				7,879				24,731				24,751				65,893
Corporate admin and other			395				466				461				468				1,790
Total depreciation and amortization		$	40,851				39,006				57,901				61,268				199,026
Adjusted segment operating income
North America Services		$	68,748				81,318				84,443				87,110				321,619
International Services			6,861				7,693				9,528				17,986				42,068
Merchant Services			37,636				41,302				40,753				35,952				155,643
NetSpend			—				—				34,616				31,737				66,353
Total adjusted segment operating income			113,245				130,313				169,340				172,785				585,683
Acquisition intangible amorization			(8,532	)			(7,879	)			(24,732	)			(24,751	)			(65,894	)
NetSpend M&A operating expenses (non-recurring)			(3,481	)			(1,246	)			(7,282	)			(2,211	)			(14,220	)
Share-based compensation			(4,593	)			(5,211	)			(9,784	)			(9,345	)			(28,933	)
Corporate admin and other			(22,119	)			(21,334	)			(23,063	)			(27,620	)			(94,136	)
Operating income		$	74,520				94,643				104,479				108,858				382,500
Other:
Reimbursable items:
North America Services		$	34,193				34,114				35,320				35,801				139,428
International Services			4,504				4,878				5,149				5,534				20,065
Merchant Services			23,600				23,506				21,966				17,700				86,772
NetSpend			—				—				—				—				—
Intersegment revenues			(1,538	)			(1,567	)			(1,372	)			(1,191	)			(5,668	)
Reimbursable items		$	60,759				60,931				61,063				57,844				240,597

Note: prior periods restated for discontinued operations and the reclassification of all share-based compensation as corporate adminstration costs

- ### -