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TSYS Reports Second Quarter Results And Raises 2013 Guidance With NetSpend Acquisition

Stocks in this article: TSS

Additional information about non-GAAP financial measures and a reconciliation of those measures to the most directly comparable GAAP measures are included on pages 13 to 15 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, 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, 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, and has been 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,” “will,” “could,” and similar expressions. These forward-looking statements include, among others, statements regarding the NetSpend acquisition and the anticipated benefits from the NetSpend acquisition, the expected conversion of TSYS’ pipeline of accounts, TSYS’ revised earnings guidance for 2013 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 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 achieve the anticipated growth opportunities and other benefits of the acquisition, the impact of consolidation among financial institutions and retail clients; TSYS ability to successfully renew or renegotiate agreements with its clients; the effect of current domestic and worldwide economic conditions; the material breach of security of any of TSYS’ systems; TSYS’ ability to adapt technology to changing industry and customer needs or trends; expenses TSYS incurs associated with the signing of a significant client; adverse developments with respect to the credit card industry in general, including a decline in the use of credit cards as a payment mechanism; the conversions and deconversions of clients; the impact of potential and completed acquisitions, including the costs associated therewith and TSYS’ ability to successfully integrate such acquisitions; risks associated with foreign operations, including adverse developments with respect to foreign currency exchange rates; the costs and effects of litigation, investigations or similar matters or adverse facts and developments relating thereto; TSYS’ ability to compete in a highly competitive market; changes occur in laws, rules, regulations, credit card association rules, the prepaid industry or other industry standards affecting TSYS and its clients; TSYS’ reliance on financial institution sponsors; the impact of business cycles and the credit risk of merchants; the costs associated with chargeback and fraud related liabilities; costs and reputational harm caused by interruptions in our processing systems; TSYS’ ability to protect its intellectual property and the costs associated therewith; and the loss of any key personnel and TSYS’ ability to attract qualified personnel. Additional risks and other factors that could cause actual results to differ materially from those contemplated in this release can be found in TSYS’ filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K. We believe these forward-looking statements are reasonable; however, undue reliance should not be placed on any forward-looking statements, which are based on current expectations. We do not assume any obligation to update any forward-looking statements as a result of new information, future developments or otherwise.

     
TSYS
Financial Highlights
(unaudited)
(in thousands, except per share data)
         
Three Months Ended Six Months Ended
June 30, June 30,
Percent Percent
2013   2012   Change 2013   2012   Change
 
Total revenues $ 478,443 462,651 3.4 % $ 943,439 923,813 2.1 %
 
Cost of services 317,656 312,669 1.6 638,214 630,927 1.2
Selling, general and administrative expenses 64,220 57,886 10.9 130,274 115,959 12.3
NetSpend merger and acquisition expenses 1,253   -   na 4,734   -   na
 
Operating income 95,314 92,096 3.5 170,217 176,927 (3.8 )
 
Nonoperating income (expenses) (620 ) (1,818 ) 65.9 398 (2,223 ) nm
NetSpend merger and acquisition expenses - bridge loan facility & bonds (6,934 ) -   na (9,677 ) -   na
 
Income before income taxes, noncontrolling interests
and equity in income of equity investments 87,760 90,278 (2.8 ) 160,938 174,704 (7.9 )
Income taxes 29,947   24,553   22.0 47,793   54,108   (11.7 )
Income before noncontrolling interests and
equity in income of equity investments 57,813 65,725 (12.0 ) 113,145 120,596 (6.2 )
Equity in income of equity investments 2,748   2,252   22.0 6,565   5,026   30.6
Net income 60,561 67,977 (10.9 ) 119,710 125,622 (4.7 )
Net income attributable to noncontrolling interests (2,845 ) (1,267 ) nm (4,965 ) (2,516 ) (97.3 )
 
Net income attributable to TSYS common shareholders $ 57,716   66,710   (13.5 ) % $ 114,745   123,106   (6.8 ) %
 
Basic earnings per share $ 0.31   0.35   (12.9 ) % $ 0.61   0.65   (6.0 ) %
 
Diluted earnings per share $ 0.31   0.35   (12.4 ) % $ 0.61   0.65   (5.9 ) %
 
 
Dividends declared per share $ 0.10   0.10   $ 0.20   0.20  
 
Non-GAAP measures:
Basic EPS excluding M&A expenses, net of taxes $ 0.34   0.35   (4.3 ) % $ 0.67   0.65   2.9 %
 
Adjusted cash earnings per share $ 0.38   0.40   (3.5 ) % $ 0.77   0.73   5.2 %
 
Adjusted EBITDA $ 142,324   140,338   1.4 % $ 267,799   269,640   (0.7 ) %
 
 
nm = not meaningful
 
 
 
TSYS
Consolidated Statements of Comprehensive Income
(unaudited)
(in thousands)
         
 
Three Months Ended Six Months Ended
June 30, June 30,
 
2013   2012   2013   2012  
 
Net income $ 60,561 67,977 $ 119,710 125,622
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments (1,064 ) (10,027 ) (13,711 ) (7,065 )
Postretirement healthcare plan adjustments 155   23   310   287  
Other comprehensive income (loss) (909 ) (10,004 ) (13,401 ) (6,778 )
Comprehensive income 59,652 57,973 106,309 118,844
Comprehensive income attributable to
noncontrolling interests 2,455   1,594   2,922   2,135  
Comprehensive income attributable to
TSYS common shareholders $ 57,197   56,379   $ 103,387   116,709  
 
 
 
TSYS
Earnings Per Share
(unaudited)
(in thousands, except per share data)
                                             
 
Three Months Ended Three Months Ended Six Months Ended Six Months Ended
June 30, 2013 June 30, 2012 June 30, 2013 June 30, 2012
Common Participating Common Participating Common Participating Common Participating
Stock Securities Stock Securities Stock Securities Stock Securities
 
Basic Earnings per share:
Net income $ 57,716 66,710 $ 114,745 123,106
Less income allocated to nonvested awards (175 ) 175 (224 ) 224 (385 ) 385 (421 ) 421
Net income allocated to common stock for
EPS calculation ( a ) $ 57,541   175 66,486   224 $ 114,360   385 122,685   421
 
Average common shares outstanding ( b ) 187,147   591 188,420   650 186,633   644 188,236   658
 
Average common shares and participating securities 187,738   189,070   187,277   188,894  
 
Basic Earnings per share ( a )/( b ) $ 0.31   0.30 0.35   0.34 $ 0.61   0.60 0.65   0.64
 
Diluted Earnings per share:
Net income $ 57,716 66,710 $ 114,745 123,106
Less income allocated to nonvested awards (175 ) 175 (223 ) 223 (382 ) 382 (419 ) 419
Net income allocated to common stock for
EPS calculation ( c ) $ 57,541   175 66,487   223 $ 114,363   382 122,687   419
 
Average common shares outstanding 187,147 591 188,420 650 186,633 644 188,236 658
Increase due to assumed issuance of shares related
to common equivalent shares outstanding 981     1,270     1,576     1,159    
 
Average common and common
equivalent shares outstanding ( d ) 188,128   591 189,690   650 188,209   644 189,395   658
 
Average common and common
equivalent shares and participating securities 188,719   190,340   188,853   190,053  
 
Diluted Earnings per share ( c )/( d ) $ 0.31   0.30 0.35   0.34 $ 0.61   0.59 0.65   0.64
 
 
 
TSYS
Segment Breakdown
(unaudited)
(in thousands)
                       
Three Months Ended June 30,

Six Months Ended June 30,

 
Change Change
2013     2012     $     %   2013     2012     $     %  
Revenues before reimbursable items
North America Services $ 214,526 205,565 8,961 4.4 % $ 420,122 409,614 10,508 2.6 %
International Services 93,209 99,047 (5,838 ) (5.9 ) 185,802 195,538 (9,736 ) (5.0 )
Merchant Services 112,952 97,701 15,251 15.6 222,253 196,056 26,197 13.4
Intersegment revenues (3,175 )   (3,621 )   446   12.3 (6,428 )   (7,337 )   909   12.4
Revenues before reimbursable items
from external customers $ 417,512     398,692     18,820   4.7 % $ 821,749     793,871     27,878   3.5 %
 
Total revenues
North America Services $ 248,640 239,557 9,083 3.8 % $ 488,429 480,156 8,273 1.7 %
International Services 98,087 103,415 (5,328 ) (5.2 ) 195,183 203,775 (8,592 ) (4.2 )
Merchant Services 136,458 124,903 11,555 9.3 269,359 250,420 18,939 7.6
Intersegment revenues (4,742 )   (5,224 )   482   9.2 (9,532 )   (10,538 )   1,006   9.5
Revenues from external customers $ 478,443     462,651     15,792   3.4 % $ 943,439     923,813     19,626   2.1 %
 
Depreciation and amortization
North America Services $ 18,213 18,821 (608 ) (3.2 ) % $ 36,296 37,274 (978 ) (2.6 ) %
International Services 11,492 15,006 (3,514 ) (23.4 ) 24,343 27,917 (3,574 ) (12.8 )
Merchant Services 10,362 8,668 1,694 19.5 21,515 17,453 4,062 23.3
Corporate Admin and Other 479     718     (239 ) (33.3 ) 889     1,442     (553 ) (38.3 )
Total depreciation and amortization $ 40,546     43,213     (2,667 ) (6.2 ) % $ 83,043     84,086     (1,043 ) (1.2 ) %
 
Segment operating income
North America Services $ 79,896 72,231 7,665 10.6 % $ 147,099 140,578 6,521 4.6 %
International Services 8,056 9,438 (1,382 ) (14.6 ) 14,682 13,552 1,130 8.3
Merchant Services 33,590 32,950 640 1.9 62,917 67,169 (4,252 ) (6.3 )
Corporate Admin and Other (26,228 )   (22,523 )   (3,705 ) (16.4 ) (54,481 )   (44,372 )   (10,109 ) (22.8 )
Operating income $ 95,314     92,096     3,218   3.5 % $ 170,217     176,927     (6,710 ) (3.8 ) %
 
Other:
Reimbursable items:
North America Services $ 34,114 33,992 122 0.4 % $ 68,307 70,542 (2,235 ) (3.2 ) %
International Services 4,878 4,368 510 11.7 9,381 8,237 1,144 13.9
Merchant Services 23,506 27,202 (3,696 ) (13.6 ) 47,106 54,364 (7,258 ) (13.4 )
Intersegment revenues (1,567 )   (1,603 )   36   2.2 (3,104 )   (3,201 )   97   3.0
Reimbursable items $ 60,931     63,959     (3,028 ) (4.7 ) % $ 121,690     129,942     (8,252 ) (6.4 ) %
 
 
   
TSYS
Segment Breakdown
(unaudited)
(in thousands)
                     
Three Months Ended June 30,

Six Months Ended June 30,

 
Change Change
  2013       2012       $     %     2013       2012       $     %  
Other:
 
Adjusted EBITDA $ 142,324 140,338 1,986 1.4 % $ 267,799 269,640 (1,841 ) (0.7 ) %
Merger & acquisition expense (1,253 ) - (1,253 ) nm (4,734 ) - nm
Share-based compensation (5,211 ) (5,029 ) (182 ) 3.6 (9,804 ) (8,627 ) (1,177 ) 13.6
Depreciation and amortization (40,546 ) (43,213 ) 2,667 (6.2 ) (83,044 ) (84,086 ) 1,042 1.2
Nonopertaing expenses (7,554 ) (1,818 ) (5,736 ) 315.5 (9,279 ) (2,223 ) (7,056 ) (317.4 )
Income taxes (29,947 ) (24,553 ) (5,394 ) 22.0 (47,793 ) (54,108 ) 6,315 11.7
Equity in income of joint ventures   2,748       2,252       496   22.0   6,565       5,026       1,539   30.6
Net income $   60,561       67,977       (7,416 ) (10.9 ) % $   119,710       125,622       (1,178 ) (0.9 ) %
 
-
Volumes: At   Change
FTEs (full-time equivalents)   6/30/2013       12/31/2012       $     %  
North America Services 4,252 3,964 288 7.3 %
International Services 2,371 2,624 (253 ) (9.6 )
Merchant Services 1,599 1,242 357 28.7
Corporate Admin and Other   491       415       76   18.3
FTEs   8,713       8,245       468   5.7 %
 
 
Total assets (in thousands)
North America Services $ 2,935,826 1,744,877 1,190,949 68.3 %
International Services 388,144 445,642 (57,498 ) (12.9 )
Merchant Services 696,189 703,725 (7,536 ) (1.1 )
Intersegment assets   (831,982 )     (870,406 )     38,424   4.4
Total assets $   3,188,177       2,023,838       1,164,339   57.5 %
 
 
Three Months Ended June 30,

Six Months Ended June 30,

 
Change Change
  2013       2012     Inc(Dec)   %     2013       2012     Inc(Dec)   %  
North America Segment:
Accounts on File (AOF) (in millions) 430.7 387.3 43.4 11.2 %
Transactions (in millions) 2,235.0 2,003.8 231.2 11.5 % 4,248.4 3,871.0 377.3 9.7 %
 
International Segment:
AOF (in millions) 58.1 53.1 5.0 9.5 %
Transactions (in millions) 492.5 402.3 90.1 22.4 % 926.6 785.4 141.3 18.0 %
 
Merchant Segment:
Point-of-sale Transactions (in millions) 1,136.0 1,279.7 (143.7 ) (11.2 ) % 2,235.2 2,499.4 (264.3 ) (10.6 ) %
Dollar sales volume (in millions) $ 11,028 $ 9,235 $ 1,793 19.4 % $ 21,160 $ 18,010 $ 3,150 17.5 %
 
 
           
TSYS
Balance Sheet
(unaudited)
(in thousands)
Jun 30, 2013     Dec 31, 2012
Assets    
Current assets:
Cash and cash equivalents $ 1,374,209 247,612
Restricted cash 713 282
Accounts receivable, net 250,124 247,083
Deferred income tax assets 8,355 9,825
Prepaid expenses and other current assets 90,091 69,924
       
Total current assets 1,723,492 574,726
Goodwill 517,243 518,344
Property and equipment, net 248,778 260,389
Computer software, net 243,138 226,917
Contract acquisition costs, net 166,045 161,267
Other intangible assets, net 118,923 130,054
Equity investments, net 94,447 87,764
Deferred income tax assets, net 5,873 5,334
Other assets 70,238 59,043
       
Total assets $ 3,188,177     2,023,838
 
Liabilities
Current liabilities:
Accounts payable $ 28,623 63,370
Current portion of borrowings 21,032 27,361
Current portion of obligations under capital leases 23,025 13,263
Accrued salaries and employee benefits 17,783 26,243
Other current liabilities 117,961 100,282
       
Total current liabilities 208,424 230,519
Long-term borrowings, excluding current portion 1,260,625 174,859
Deferred income tax liabilities 66,885 48,074
Obligations under capital leases, excluding current portion 13,303 17,155
Other long-term liabilities 65,021 68,791
       
Total liabilities 1,614,258     539,398
Redeemable noncontrolling interest 39,101     39,505
Equity
Shareholders' equity:
Common stock 20,281 20,247
Additional paid-in capital 138,936 141,793
Accumulated other comprehensive income (loss), net (9,950) 1,408
Treasury stock (259,661) (287,301)
Retained earnings 1,626,300     1,549,063
Total shareholders' equity 1,515,906     1,425,210
Noncontrolling interests in consolidated subsidiaries 18,912     19,725
Total equity 1,534,818     1,444,935
Total liabilities and equity $ 3,188,177     2,023,838
 
 
 
TSYS
Cash Flow
(unaudited)
(in thousands)
Six Months Ended June 30,
2013     2012  
 
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 119,710 125,622
Adjustments to reconcile net income to net cash
provided by operating activities:
Equity in income of equity investments (6,565 ) (5,026 )
Dividends received from equity investments 1,016 1,098
Net loss on foreign currency translation (72 ) 1,635
Depreciation and amortization 83,043 84,086
Amortization of debt issuance costs 6,315 94
Amortization of bond discount 39 -
Changes in fair value of private equity investments (1,227 ) -
Share-based compensation 9,804 8,626
Excess tax benefit from share-based payment arrangements (2,040 ) (653 )
Provisions for bad debt expense and billing
adjustments 1,541 356
Charges for transaction processing provisions 7,093 971
Deferred income tax expense 20,420 1,746
Loss on disposal of equipment, net 55 29
Changes in operating assets and liabilities:
Restricted cash (404 ) -
Accounts receivable (8,031 ) (376 )
Prepaid expenses, other current assets and other long-term assets (24,507 ) (4,691 )
Accounts payable (34,602 ) 2,743
Accrued salaries and employee benefits (7,989 ) (18,602 )
Other current liabilities and other long-term liabilities (6,351 )   5,746  
Net cash provided by operating activities 157,248     203,404  
 
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment, net (13,701 ) (13,810 )
Additions to licensed computer software from vendors (27,711 ) (17,278 )
Additions to internally developed computer software (12,522 ) (10,121 )
Cash used in acquisitions, net of cash acquired - (1,750 )
Purchase of private equity investments (1,006 ) (623 )
Additions to contract acquisition costs (24,506 )   (16,740 )
Net cash used in investing activities (79,446 )   (60,322 )
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term borrowings and
capital lease obligations (20,073 ) (13,038 )
Proceeds from borrowings of long-term borrowings 1,095,661 8,633
Proceeds from exercise of stock options 19,449 4,698
Excess tax benefit from share-based payment arrangements 2,040 653
Repurchase of common stock under plans and tax withholding (6,268 ) (338 )
Debt issuance costs (13,018 ) -
Subsidiary dividends paid to noncontrolling shareholders (4,139 ) (1,087 )
Dividends paid on common stock (18,758 )   (37,809 )
Net cash provided by (used in) financing activities 1,054,894     (38,288 )
 
CASH AND CASH EQUIVALENTS:
Effect of exchange rate changes on cash and cash equivalents (6,099 )   (2,488 )
Net increase in cash and cash equivalents 1,126,597 102,306
Cash and cash equivalents at beginning of period 247,612     316,337  
Cash and cash equivalents at end of period $ 1,374,209     418,643  
 
 
Supplemental Information:
        Accounts on File
Total
(in millions)  

June2013

   

June2012

 

%Change

 
Consumer Credit 208.6   199.4 4.7
Retail 25.9   25.2 2.8
Total Consumer 234.5 224.6 4.5
Commercial 38.6 36.1 6.7
Other 15.3   9.6 60.5
Subtotal 288.4 270.3 6.7
Prepaid/Stored Value 102.8 105.4 (2.4 )
Government Services 60.6 30.8 96.4
Commercial Card Single Use 37.0   34.0 8.8
Total AOF 488.8   440.5 11.0
 
 
 

Growth in Accounts on File (in millions):

June 2012 toJune 2013

June 2011 toJune 2012

Beginning balance

440.5

376.0
Change in accounts on file due to:
Internal growth of existing clients 35.2 33.9
New clients 76.1 51.0
Purges/Sales (62.7 ) (17.6 )
Deconversions (0.3 )   (2.8 )  
Ending balance 488.8     440.5    
 
 
 
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 3.2% as compared to a reported GAAP increase of 2.1%.
 
The schedule below also provides a reconciliation of basic EPS, excluding merger and acquisition costs, net of taxes, to basic EPS, and operating income, excluding merger and acquisition costs, to operating income. On a year-to-date basis, TSYS’ basic EPS excluding merger and acquisition costs grew 2.9% as compared to a reported GAAP decrease of 6.0%.
 
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 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.
 
 
Reconciliation of GAAP to Non-GAAP
 
Constant Currency Comparison
(unaudited)
(in thousands)
   
Three Months Ended June 30,   Six Months Ended June 30,
Percent Percent
2013 2012 Change 2013 2012 Change
Consolidated
Constant currency (1) $ 484,810 462,651 4.8 % $ 953,825 923,813 3.2 %
Foreign currency (2) (6,367) - (10,386) -
Total revenues $ 478,443 462,651 3.4 % $ 943,439 923,813 2.1 %
 
Constant currency (1) $ 423,726 398,692 6.3 % $ 831,918 793,871 4.8 %
Foreign currency (2) (6,214) - (10,169) -
Total revenues before reimbursable items $ 417,512 398,692 4.7 % $ 821,749 793,871 3.5 %
 
Constant currency (1) $ 96,426 92,096 4.7 % $ 171,398 176,927 (3.1) %
Foreign currency (2) (1,112) - (1,181) -
Operating income $ 95,314 92,096 3.5 % $ 170,217 176,927 (3.8) %
 
International Services
Constant currency (1) $ 104,480 103,415 1.0 % $ 205,665 203,775 0.9 %
Foreign currency (2) (6,393) - (10,482) -
Total revenues $ 98,087 103,415 (5.2) % $ 195,183 203,775 (4.2) %
 
 
(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 June 30,   Six Months Ended June 30,
Percent Percent
2013 2012 Change 2013 2012 Change
Net income attributable to TSYS common shareholders (a) $ 57,716 66,710 (13.5) % $ 114,745 123,106 (6.8) %
 
Add: Merger and acquisition expenses, net of taxes* 5,653 - 10,875 -
Net income attributable to TSYS common shareholders (c) $ 63,369 66,710 (5.0) % $ 125,620 123,106 2.0 %
 
Average common shares outstanding (b) 187,738 189,070 187,277 188,894
 
Basic Earnings per share ( a )/( b ) $ 0.31 0.35 (12.9) % $ 0.61 0.65 (6.0) %
 
Basic Earnings per share excluding merger and acquisition
expenses ( c )/( b ) $ 0.34 0.35 (4.3) % $ 0.67 0.65 2.9 %
 
 
* - Certain merger and acquisition costs are nondeductible for income tax purposes
   
Operating Income Excluding Merger and Acquisition Costs
(unaudited)
(in thousands)
 
Three Months Ended June 30,   Six Months Ended June 30,
Percent Percent
2013 2012 Change 2013 2012 Change
Operating income $ 95,314 92,096 3.5 % $ 170,217 176,927 (3.8) %
Add: Merger and acquisition expenses 1,253 - 4,734 -
Operating income excluding merger and acquisition costs $ 96,567 92,096 4.9 % $ 174,951 176,927 (1.1) %
 
Revenues Before Reimbursable Items
(unaudited)
(in thousands)
 
Three Months Ended June 30,   Six Months Ended June 30,
Percent Percent
2013 2012 Change 2013 2012 Change
Total Revenues $ 478,443 462,651 3.4 % $ 943,439 923,813 2.1 %
Reimbursable Items 60,931 63,959 121,690 129,942
Revenues Before Reimbursable Items $ 417,512 398,692 4.7 % $ 821,749 793,871 3.5 %
 
 
           
Reconciliation of GAAP to Non-GAAP
 
Adjusted Cash Earnings Per Share
(unaudited)

(in thousands except per share data)

 

                 
Three Months Ended YTD Three Months Ended   Six Months Ended
Mar 31, Jun 30, Sep 30, Dec 31, Dec 31, Mar 31, Jun 30, Jun 30, Jun 30,
  2012     2012     2012     2012     2012     2013     2013     2013     2012  
 
Net Income Available to TSYS Common Shareholders
As reported (GAAP) $ 56,395   $ 66,710   $ 60,312   $ 60,862   $ 244,280   $ 57,028   $ 57,716   $ 114,745   $ 123,106  
 
Adjust for amounts attributable to TSYS common shareholders (net of taxes):
Acquisition intangible amortization 3,933 4,409 4,383 4,528 17,282 6,096 4,847 10,848 8,355
Share-based compensation   2,363     3,686     2,489     4,169     12,683     3,494     3,431     6,917     6,004  
Cash earnings 62,691 74,805 67,184 69,559 274,245 66,618 65,994 132,510 137,465
M&A expenses   -     -     -     -     -     5,222     5,653     10,875     -  
Cash earnings adjusted $ 62,691   $ 74,805   $ 67,184   $ 69,559   $ 274,245   $ 71,840   $ 71,647   $ 143,385   $ 137,465  
 
Basic EPS - Net Income Available to TSYS Common Shareholders
As reported (GAAP) $ 0.30   $ 0.35   $ 0.32   $ 0.33   $ 1.30   $ 0.31   $ 0.31   $ 0.61   $ 0.65  
 
Adjust for amounts attributable to TSYS common shareholders (net of taxes):
Acquisition intangible amortization 0.02 0.02 0.02 0.02 0.09 0.03 0.03 0.06 0.04
Share-based compensation   0.01     0.02     0.01     0.02     0.07     0.02     0.02     0.04     0.03  
Cash earnings per share 0.33 0.40 0.36 0.37 1.46 0.36 0.35 0.71 0.73
M&A expenses   -     -     -     -     -     0.03     0.03     0.06     -  
Adjusted cash earnings per share $ 0.33   $ 0.40   $ 0.36   $ 0.37   $ 1.46   $ 0.38   $ 0.38   $ 0.77   $ 0.73  
 
Average common shares and participating securities   188,718     189,070     187,878     186,471     188,030     186,807     187,738     187,277     188,894  
 
* Basic and cash EPS amounts do not total due to rounding.
Adjusted EBITDA
(unaudited)

(in thousands )

 

                 
Three Months Ended YTD Three Months Ended   Six Months Ended
Mar 31, Jun 30, Sep 30, Dec 31, Dec 31, Mar 31, Jun 30, Jun 30, Jun 30,
  2012     2012     2012     2012     2012     2013     2013     2013     2012  
 
Net income $ 57,644 $ 67,977 $ 62,043 $ 62,257 $ 249,921 $ 59,149 $ 60,561 $ 119,710 $ 125,622
Adjusted for:
Deduct: Equity in Income of Equity Investments (2,774 ) (2,252 ) (1,957 ) (3,188 ) (10,171 ) (3,817 ) (2,748 ) (6,565 ) (5,026 )
Add: Income Taxes 29,556 24,553 30,228 30,767 115,104 17,845 29,947 47,793 54,108
Add: Nonoperating expense 405 1,818 579 (5 ) 2,797 1,726 7,554 9,279 2,223
Add: Depreciation and amortization   40,873     43,213     43,243     43,281     170,610     42,498     40,546     83,044     84,086  
EBITDA 125,704 135,309 134,136 133,112 528,261 117,401 135,860 253,261 261,013
Adjust for:
Add: Share-based compensation 3,598 5,029 3,722 6,273 18,622 4,593 5,211 9,804 8,627
Add: NetSpend merger and acquisition operating expenses   -     -     -     -     -     3,481     1,253     4,734     -  
Adjusted EBITDA $ 129,302   $ 140,338   $ 137,858   $ 139,385   $ 546,883   $ 125,475   $ 142,324   $ 267,799   $ 269,640  




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