[October 25, 2016] |
|
TSYS Reports Third Quarter Earnings
TSYS (NYSE: TSS) reported results for the third quarter of 2016.
"We were very pleased with this quarter's financial performance as all
four of our operating segments exceeded our expectations. We remain on
track with our TransFirst integration activities and continue to be
laser-focused on successfully combining our legacy merchant businesses
with TransFirst," said M. Troy Woods, chairman and chief executive
officer of TSYS.
Highlights for the third quarter of 2016 include:
-
Total revenues were $1.1 billion, an increase of 62.0% over last
year's $707.9 million.
-
Net revenue (non-GAAP), which excludes reimbursable items, interchange
and assessment expense, was $789.6 million, an increase of 24.1% over
last year's $636.4 million.
-
GAAP net income attributable to TSYS common shareholders was $85.4
million, a decrease of 29.2% from last year's $120.6 million. GAAP
basic earnings per share (EPS) were $0.46 per share, a decrease of
29.2% from last year's $0.66.
-
Adjusted EBITDA (non-GAAP) was $269.1 million, an increase of 12.7%
over last year's $238.9 million. Q3 '15 results included tax benefits
of $15.1 million that did not recur in 2016.
-
Adjusted earnings (non-GAAP) were $130.7 million, a decrease of 8.8%
over last year's $143.3 million. Q3 '15 adjusted earnings and adjusted
EPS (non-GAAP) included $23.6 million and $0.13, respectively, of tax
related benefits that did not recur in 2016. Q3 '16 adjusted EPS was
$0.71, which included $0.06 of headwinds for currency and severance
expenses, a decrease of 8.7% over last year's $0.78.
"Our cash flow from operating activities and free cash flow for the
first nine months of the year were both records. This allowed us to
reduce our debt by $175 million during the quarter, bringing the total
debt reduction to $300 million year to date," said Woods.
During the third quarter, currencies, including the rapid and steep
decline in the British Pound compared to the U. S. Dollar, negatively
impacted total revenues and net revenue by $14 million and $13 million,
respectively, on a constant currency basis compared to 2015. A similar
impact is expected in Q4. This same constant currency comparison
negatively impacted EPS by $0.03 in Q3 '16 and is expected to have a
similar impact in Q4.
The Consumer Financial Protection Bureau released its long-awaited rule
on prepaid financial products on October 5, 2016. The new rule is not
expected to have a significant financial impact on 2016 results.
Additional details on the impact of the new rule will be discussed at
today's quarterly conference call.
Updated 2016 Outlook
As a result of currency headwinds, total and net revenue guidance are
being adjusted. EPS guidance remains unchanged. The resulting revised
guidance is below.
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2016 Revised Financial Outlook Range
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Percent
Change
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(in millions, except per share amounts)
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Revenue:
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Total revenues (GAAP)
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$4,150
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to
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$4,170
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49%
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to
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50%
|
Net revenue (non-GAAP)
|
|
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$3,030
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to
|
|
$3,045
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21%
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to
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22%
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Earnings per share:
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Basic EPS (GAAP)
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$1.77
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to
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$1.83
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(10%)
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to
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(7%)
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Adjusted EPS attributable to TSYS common shareholders from
continuing operations (non-GAAP)
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$2.78
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to
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$2.85
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13%
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to
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16%
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Average basic weighted shares
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183.7
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Conference Call
TSYS will host its quarterly conference call at 5:00 p.m. ET on Tuesday,
October 25. The conference call can be accessed via simultaneous
Internet broadcast on the "Investor Relations" section of TSYS' website
at investors.tsys.com
where an accompanying slide presentation will also be available. The
replay will be archived for 12 months and will be available
approximately 30 minutes after the completion of the call.
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 most directly
comparable 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, including, but
not limited to, net revenue, adjusted earnings, adjusted EBITDA and
adjusted EPS, and a reconciliation of those measures to the most
directly comparable GAAP measures is included on pages 11 to 15 of this
release.
About TSYS
TSYS® (NYSE: TSS) unlocks opportunities in payments for
payment providers, businesses and consumers. Our headquarters are in
Columbus, Georgia, USA, and we operate in more than 80 countries with
local offices across the Americas, EMEA and Asia-Pacific.
We provide seamless, secure and innovative solutions across the payments
spectrum - from issuer processing and merchant acquiring to prepaid
program management - delivered through partnership and expertise. We
succeed because we put people, and their needs, at the heart of every
decision. It's an approach we call 'People-Centered Payments®'.
Our industry is changing every day - and we're leading the way toward
the payments of tomorrow. We routinely post all important information on
our website. For more, visit us at 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' expectation with respect to the
impact of constant currency on revenues and EPS in the fourth quarter of
2016, the expected impact of the Consumer Financial Protection Bureau's
new rule regarding prepaid financial products on TSYS' 2016 results,
TSYS' earnings guidance for 2016 total revenues, net revenue, basic EPS
and adjusted 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, the material breach of security of any of TSYS' systems;
TSYS' ability to integrate acquisitions and achieve the anticipated
growth opportunities and other benefits of the acquisitions,
particularly the recently closed TransFirst acquisition; the effect of
current domestic and worldwide economic conditions; risks associated
with foreign operations, including adverse developments with respect to
foreign currency exchange rates, and in particular with respect to the
current environment, adverse developments with respect to foreign
currency exchange rates as a result of the United Kingdom's decision to
leave the European Union (Brexit); expenses are incurred associated with
the signing of a significant client; TSYS does not convert clients'
portfolios as scheduled; the deconversion of a significant client;
changes occur in laws, rules, regulations, credit card association
rules, prepaid industry rules 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 or limit the types and amounts of fees that can
be charged to customers, and in particular the CFPB's new rule regarding
prepaid financial products; 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. TSYS disclaims any obligation to
update any forward-looking statements as a result of new information,
future developments or otherwise except as required by law.
|
TSYS
|
Financial Highlights
|
(unaudited)
|
(in thousands, except per share data)
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Three Months Ended
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Nine Months Ended
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September 30,
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September 30,
|
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Percent
|
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Percent
|
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2016
|
|
2015
|
|
Change
|
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|
2016
|
|
2015
|
|
Change
|
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|
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Total revenues
|
|
$
|
1,146,888
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|
707,890
|
|
62.0
|
%
|
|
$
|
3,037,853
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|
2,062,698
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|
47.3
|
%
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|
Cost of services
|
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|
840,300
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|
456,465
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|
84.1
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|
2,166,731
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|
1,366,141
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|
58.6
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|
Selling, general and administrative expenses
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|
151,261
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|
88,321
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|
71.3
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|
428,287
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|
280,355
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52.8
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Total expenses*
|
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|
991,561
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|
544,786
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|
82.0
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|
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|
2,595,018
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1,646,496
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57.6
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Operating income
|
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155,327
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|
163,104
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|
(4.8)
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|
442,835
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|
416,202
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|
6.4
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Nonoperating expenses
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(30,005)
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(8,564)
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nm
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(82,506)
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(27,982)
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nm
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Income before income taxes, noncontrolling interests
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|
and equity in income of equity investments
|
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125,322
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|
154,540
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|
(18.9)
|
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|
360,329
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|
388,220
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|
(7.2)
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|
Income taxes
|
|
|
44,247
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|
37,825
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|
17.0
|
|
|
|
127,966
|
|
119,204
|
|
7.4
|
|
Income before noncontrolling interests and equity in income of
equity investments
|
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|
81,075
|
|
116,715
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|
(30.5)
|
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|
232,363
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|
269,016
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|
(13.6)
|
|
Equity in income of equity investments, net of tax
|
|
|
6,366
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|
5,336
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|
19.3
|
|
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|
19,234
|
|
15,309
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|
25.6
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|
Net income
|
|
|
87,441
|
|
122,051
|
|
(28.4)
|
|
|
|
251,597
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|
284,325
|
|
(11.5)
|
|
Net income attributable to noncontrolling interests
|
|
|
(2,089)
|
|
(1,429)
|
|
(46.2)
|
|
|
|
(5,909)
|
|
(3,109)
|
|
(90.1)
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|
Net income attributable to TSYS common shareholders
|
|
$
|
85,352
|
|
120,622
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|
(29.2)
|
%
|
|
$
|
245,688
|
|
281,216
|
|
(12.6)
|
%
|
|
|
|
|
|
|
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|
|
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|
|
Earnings per share (EPS):
|
|
|
|
|
|
|
|
|
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|
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|
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|
Basic EPS
|
|
$
|
0.46
|
|
0.66
|
|
(29.2)
|
%
|
|
$
|
1.34
|
|
1.53
|
|
(12.3)
|
%
|
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|
|
|
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|
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|
|
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|
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|
Diluted EPS
|
|
$
|
0.46
|
|
0.65
|
|
(29.0)
|
%
|
|
$
|
1.33
|
|
1.52
|
|
(12.1)
|
%
|
|
|
|
|
|
|
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|
Weighted average shares outstanding:
|
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(includes participating securities)
|
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|
Basic
|
|
|
183,830
|
|
183,954
|
|
|
|
|
|
183,601
|
|
184,320
|
|
|
|
Diluted
|
|
|
184,642
|
|
185,281
|
|
|
|
|
|
184,430
|
|
185,534
|
|
|
|
|
|
|
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|
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|
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|
Dividends declared per share
|
|
$
|
0.10
|
|
0.10
|
|
|
|
|
$
|
0.30
|
|
0.30
|
|
|
|
|
|
|
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|
|
|
|
|
|
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|
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|
|
Non-GAAP measures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue
|
|
$
|
789,588
|
|
636,386
|
|
24.1
|
%
|
|
$
|
2,256,169
|
|
1,854,254
|
|
21.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EPS
|
|
$
|
0.71
|
|
0.78
|
|
(8.7)
|
%
|
|
$
|
2.11
|
|
1.89
|
|
11.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
$
|
269,142
|
|
238,898
|
|
12.7
|
%
|
|
$
|
774,003
|
|
638,889
|
|
21.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Certain amounts in prior quarters in 2016 have been reclassed
between cost of services and selling, general and administrative
expenses.
|
|
|
|
** See reconciliation of non-GAAP measures.
|
nm = not meaningful
|
|
|
TSYS
|
Segment Breakdown
|
(unaudited)
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
|
|
|
|
|
Change
|
|
|
|
|
|
|
|
|
Change
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
$
|
|
|
%
|
|
|
|
|
2016
|
|
|
2015
|
|
|
$
|
|
|
%
|
|
|
Operating income (a)
|
|
$
|
155,327
|
|
|
163,104
|
|
|
(7,777
|
)
|
|
(4.8
|
)
|
%
|
|
$
|
442,835
|
|
|
416,202
|
|
|
26,633
|
|
|
6.4
|
|
%
|
Share-based compensation
|
|
|
13,069
|
|
|
11,295
|
|
|
1,774
|
|
|
15.7
|
|
|
|
|
33,792
|
|
|
31,468
|
|
|
2,324
|
|
|
7.4
|
|
|
TransFirst M&A expenses
|
|
|
1,830
|
|
|
-
|
|
|
1,830
|
|
|
na
|
|
|
|
|
25,908
|
|
|
-
|
|
|
25,908
|
|
|
na
|
|
|
Acquisition intangible amortization
|
|
|
53,341
|
|
|
22,883
|
|
|
30,458
|
|
|
nm
|
|
|
|
|
134,748
|
|
|
69,601
|
|
|
65,147
|
|
|
93.6
|
|
|
Adjusted operating income (b)
|
|
$
|
223,567
|
|
|
197,282
|
|
|
26,285
|
|
|
13.3
|
|
%
|
|
$
|
637,283
|
|
|
517,271
|
|
|
120,012
|
|
|
23.2
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted segment operating income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America Services (c)
|
|
$
|
113,425
|
|
|
113,946
|
|
|
(521
|
)
|
|
(0.5
|
)
|
%
|
|
$
|
350,955
|
|
|
324,902
|
|
|
26,053
|
|
|
8.0
|
|
%
|
International Services (d)
|
|
|
15,524
|
|
|
18,370
|
|
|
(2,846
|
)
|
|
(15.5
|
)
|
|
|
|
41,564
|
|
|
38,706
|
|
|
2,858
|
|
|
7.4
|
|
|
Merchant Services (e)
|
|
|
90,784
|
|
|
42,387
|
|
|
48,397
|
|
|
nm
|
|
|
|
|
219,056
|
|
|
117,192
|
|
|
101,864
|
|
|
86.9
|
|
|
NetSpend (f)
|
|
|
40,856
|
|
|
37,315
|
|
|
3,541
|
|
|
9.5
|
|
|
|
|
125,538
|
|
|
109,224
|
|
|
16,314
|
|
|
14.9
|
|
|
Corporate admin and other
|
|
|
(37,022
|
)
|
|
(14,736
|
)
|
|
(22,286
|
)
|
|
nm
|
|
|
|
|
(99,830
|
)
|
|
(72,753
|
)
|
|
(27,077
|
)
|
|
(37.2
|
)
|
|
Adjusted segment operating income
|
|
$
|
223,567
|
|
|
197,282
|
|
|
26,285
|
|
|
13.3
|
|
%
|
|
$
|
637,283
|
|
|
517,271
|
|
|
120,012
|
|
|
23.2
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues (g)
|
|
$
|
1,146,888
|
|
|
707,890
|
|
|
438,998
|
|
|
62.0
|
|
%
|
|
$
|
3,037,853
|
|
|
2,062,698
|
|
|
975,155
|
|
|
47.3
|
|
%
|
Less: reimbursable items, interchange and assessments expenses
|
|
|
357,300
|
|
|
71,504
|
|
|
285,796
|
|
|
nm
|
|
|
|
|
781,684
|
|
|
208,444
|
|
|
573,240
|
|
|
nm
|
|
|
Net revenue (h)
|
|
|
789,588
|
|
|
636,386
|
|
|
153,202
|
|
|
24.1
|
|
|
|
|
2,256,169
|
|
|
1,854,254
|
|
|
401,915
|
|
|
21.7
|
|
|
Intersegment revenues
|
|
|
8,454
|
|
|
7,000
|
|
|
1,454
|
|
|
20.8
|
|
|
|
|
29,498
|
|
|
25,098
|
|
|
4,400
|
|
|
17.5
|
|
|
Segment net revenue
|
|
$
|
798,042
|
|
|
643,386
|
|
|
154,656
|
|
|
24.0
|
|
%
|
|
$
|
2,285,667
|
|
|
1,879,352
|
|
|
406,315
|
|
|
21.6
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment net revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America Services (i)
|
|
$
|
300,754
|
|
|
293,571
|
|
|
7,183
|
|
|
2.4
|
|
%
|
|
$
|
901,563
|
|
|
846,989
|
|
|
54,574
|
|
|
6.4
|
|
%
|
International Services (j)
|
|
|
79,445
|
|
|
86,446
|
|
|
(7,001
|
)
|
|
(8.1
|
)
|
|
|
|
236,570
|
|
|
244,033
|
|
|
(7,463
|
)
|
|
(3.1
|
)
|
|
Merchant Services (k)
|
|
|
262,494
|
|
|
123,721
|
|
|
138,773
|
|
|
nm
|
|
|
|
|
644,573
|
|
|
351,987
|
|
|
292,586
|
|
|
83.1
|
|
|
NetSpend (l)
|
|
|
155,349
|
|
|
139,648
|
|
|
15,701
|
|
|
11.2
|
|
|
|
|
502,961
|
|
|
436,343
|
|
|
66,618
|
|
|
15.3
|
|
|
Segment net revenue
|
|
$
|
798,042
|
|
|
643,386
|
|
|
154,656
|
|
|
24.0
|
|
%
|
|
$
|
2,285,667
|
|
|
1,879,352
|
|
|
406,315
|
|
|
21.6
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin (GAAP) (a)/(g)
|
|
|
13.5
|
%
|
|
23.0
|
%
|
|
|
|
|
|
|
|
|
14.6
|
%
|
|
20.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating margin on net revenue (b)/(h)
|
|
|
28.3
|
%
|
|
31.0
|
%
|
|
|
|
|
|
|
|
|
28.3
|
%
|
|
27.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted segment operating margin on net revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America Services(c)/(i)
|
|
|
37.7
|
%
|
|
38.8
|
%
|
|
|
|
|
|
|
|
|
38.9
|
%
|
|
38.4
|
%
|
|
|
|
|
|
|
International Services (d)/(j)
|
|
|
19.5
|
%
|
|
21.3
|
%
|
|
|
|
|
|
|
|
|
17.6
|
%
|
|
15.9
|
%
|
|
|
|
|
|
|
Merchant Services (e)/(k)
|
|
|
34.6
|
%
|
|
34.3
|
%
|
|
|
|
|
|
|
|
|
34.0
|
%
|
|
33.3
|
%
|
|
|
|
|
|
|
NetSpend (f)/(l)
|
|
|
26.3
|
%
|
|
26.7
|
%
|
|
|
|
|
|
|
|
|
25.0
|
%
|
|
25.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
nm = not meaningful
|
na = not applicable
|
|
|
|
|
TSYS
|
Segment Breakdown
|
(unaudited)
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
|
|
|
|
Change
|
|
|
|
|
|
|
|
Change
|
|
|
|
|
2016
|
|
2015
|
|
$
|
|
%
|
|
|
|
|
2016
|
|
2015
|
|
$
|
|
%
|
|
Depreciation and amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America Services
|
|
$
|
27,540
|
|
25,300
|
|
2,240
|
|
|
8.9
|
|
%
|
|
$
|
82,464
|
|
|
72,831
|
|
|
9,633
|
|
|
13.2
|
|
%
|
International Services
|
|
|
7,050
|
|
8,678
|
|
(1,628
|
)
|
|
(18.8
|
)
|
|
|
|
23,394
|
|
|
26,084
|
|
|
(2,690
|
)
|
|
(10.3
|
)
|
|
Merchant Services
|
|
|
6,846
|
|
4,670
|
|
2,176
|
|
|
46.6
|
|
|
|
|
18,702
|
|
|
13,394
|
|
|
5,308
|
|
|
39.6
|
|
|
NetSpend
|
|
|
3,241
|
|
2,632
|
|
609
|
|
|
23.1
|
|
|
|
|
9,466
|
|
|
7,547
|
|
|
1,919
|
|
|
25.4
|
|
|
Segment depreciation and amortization
|
|
|
44,677
|
|
41,280
|
|
3,397
|
|
|
8.2
|
|
|
|
|
134,026
|
|
|
119,856
|
|
|
14,170
|
|
|
11.8
|
|
|
Acquisition intangible amortization
|
|
|
53,341
|
|
22,883
|
|
30,458
|
|
|
nm
|
|
|
|
|
134,748
|
|
|
69,601
|
|
|
65,147
|
|
|
93.6
|
|
|
Corporate admin and other
|
|
|
898
|
|
336
|
|
562
|
|
|
nm
|
|
|
|
|
2,694
|
|
|
1,762
|
|
|
932
|
|
|
52.9
|
|
|
Total depreciation and amortization
|
|
$
|
98,916
|
|
64,499
|
|
34,417
|
|
|
53.4
|
|
%
|
|
$
|
271,468
|
|
|
191,219
|
|
|
80,249
|
|
|
42.0
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment statistical data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transactions (in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America Services:
|
|
|
4,361.5
|
|
4,156.7
|
|
204.8
|
|
|
4.9
|
|
%
|
|
|
12,657.7
|
|
|
11,509.6
|
|
|
1,148.1
|
|
|
10.0
|
|
%
|
International Services:
|
|
|
698.8
|
|
626.1
|
|
72.7
|
|
|
11.6
|
|
|
|
|
1,975.7
|
|
|
1,812.0
|
|
|
163.7
|
|
|
9.0
|
|
|
Total transactions
|
|
|
5,060.3
|
|
4,782.8
|
|
277.5
|
|
|
5.8
|
|
%
|
|
|
14,633.4
|
|
|
13,321.6
|
|
|
1,311.8
|
|
|
9.8
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts on file (AOF) (in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America Services:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
652.5
|
|
|
685.5
|
|
|
(33.0
|
)
|
|
(4.8
|
)
|
%
|
International Services:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
86.3
|
|
|
74.9
|
|
|
11.4
|
|
|
15.2
|
|
|
Total AOF
|
|
|
|
|
|
|
|
|
|
|
|
|
|
738.8
|
|
|
760.4
|
|
|
(21.6
|
)
|
|
(2.8
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Traditional accounts on file (AOF) (in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America Services:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
444.6
|
|
|
404.6
|
|
|
40.0
|
|
|
9.9
|
|
%
|
International Services:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
66.6
|
|
|
63.3
|
|
|
3.3
|
|
|
5.2
|
|
|
Total Traditional AOF
|
|
|
|
|
|
|
|
|
|
|
|
|
|
511.2
|
|
|
467.9
|
|
|
43.3
|
|
|
9.2
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merchant Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Point-of-sale transactions (in millions)
|
|
|
1,177.1
|
|
1,117.3
|
|
59.8
|
|
|
5.4
|
|
%
|
|
|
3,427.6
|
|
|
3,191.3
|
|
|
236.3
|
|
|
7.4
|
|
%
|
Dollar sales volume (in millions)
|
|
$
|
28,680.7
|
|
12,055.7
|
|
16,625.0
|
|
|
nm
|
|
%
|
|
$
|
69,024.9
|
|
|
35,671.5
|
|
|
33,353.4
|
|
|
93.5
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NetSpend
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross dollar volume (in millions)
|
|
$
|
6,367.0
|
|
5,391.2
|
|
975.8
|
|
|
18.1
|
|
%
|
|
$
|
22,143.3
|
|
|
18,582.8
|
|
|
3,560.5
|
|
|
19.2
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct deposit 90-day active cards (in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,079.8
|
|
|
1,796.0
|
|
|
283.8
|
|
|
15.8
|
|
%
|
90-day active cards (in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,162.7
|
|
|
3,643.4
|
|
|
519.3
|
|
|
14.3
|
|
%
|
% of 90-day active cards with direct deposit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50.0
|
%
|
|
49.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TSYS
|
Condensed Balance Sheet
|
(unaudited)
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
September 30, 2016
|
|
|
December 31, 2015
|
Assets
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
446,883
|
|
|
389,328
|
Accounts receivable, net
|
|
|
413,867
|
|
|
314,705
|
Other current assets
|
|
|
124,118
|
|
|
154,199
|
Total current assets
|
|
|
984,868
|
|
|
858,232
|
Goodwill
|
|
|
3,254,422
|
|
|
1,545,424
|
Other intangible assets, net
|
|
|
954,821
|
|
|
328,320
|
Property, equipment and software, net
|
|
|
722,749
|
|
|
694,968
|
Other long term assets
|
|
|
458,318
|
|
|
450,951
|
Total assets
|
|
$
|
6,375,178
|
|
|
3,877,895
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
36,659
|
|
|
52,213
|
Notes payable and capital leases
|
|
|
43,244
|
|
|
53,546
|
Other current liabilities
|
|
|
289,572
|
|
|
233,173
|
Total current liabilities
|
|
|
369,475
|
|
|
338,932
|
Bonds payable, notes payable and capital leases, excluding current
portion
|
|
|
3,425,147
|
|
|
1,377,541
|
Deferred tax liability
|
|
|
398,083
|
|
|
192,445
|
Other long-term liabilities
|
|
|
91,751
|
|
|
96,885
|
Total liabilities
|
|
|
4,284,456
|
|
|
2,005,803
|
Redeemable noncontrolling interest
|
|
|
25,053
|
|
|
23,410
|
Equity
|
|
|
|
|
|
|
Shareholders' equity
|
|
|
2,065,669
|
|
|
1,843,018
|
Noncontrolling interests in consolidated subsidiaries
|
|
|
-
|
|
|
5,664
|
Total equity
|
|
|
2,065,669
|
|
|
1,848,682
|
Total liabilities and equity
|
|
$
|
6,375,178
|
|
|
3,877,895
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: TSYS adopted Accounting Standards Update (ASU) 2015-03
"Interest - Imputation of Interest (Subtopic 835-30), Simplifying
the Presentation of Debt Issuance Cost" on January 1, 2016. This ASU
requires TSYS to present debt issuance costs in the balance sheet as
a direct deduction from the carrying amount of the corresponding
debt liability, consistent with debt discounts. All prior periods
presented have been restated for this ASU.
|
|
TSYS also adopted ASU 2015-17 "Income Taxes (Topic 740), Balance
Sheet Classification of Deferred Taxes" on January 1, 2016. This ASU
requires the classification of all deferred tax assets and
liabilities as noncurrent on the balance sheet instead of separating
deferred taxes into current and noncurrent amounts. All prior
periods presented have been restated for this ASU.
|
|
|
TSYS
|
Selected Cash Flow Highlights
|
(unaudited)
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
2016
|
|
|
2015
|
Cash flows from operating activities:
|
|
|
|
|
|
|
Net income
|
|
$
|
251,597
|
|
|
|
284,325
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
Equity in income of equity investments
|
|
|
(19,234
|
)
|
|
|
(15,309
|
)
|
Dividends received from equity investments
|
|
|
15,246
|
|
|
|
12,092
|
|
Depreciation and amortization
|
|
|
271,468
|
|
|
|
191,219
|
|
Amortization of debt issuance costs
|
|
|
12,499
|
|
|
|
1,378
|
|
Share-based compensation
|
|
|
33,792
|
|
|
|
31,468
|
|
Deferred income tax expense(benefit)
|
|
|
4,110
|
|
|
|
(25,960
|
)
|
Other noncash adjustments
|
|
|
35,508
|
|
|
|
29,039
|
|
Changes in operating assets and liabilities
|
|
|
(54,026
|
)
|
|
|
(47,698
|
)
|
Net cash provided by operating activities
|
|
|
550,960
|
|
|
|
460,554
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(2,457,138
|
)
|
|
|
(138,618
|
)
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
|
1,969,628
|
|
|
|
(158,429
|
)
|
|
|
|
|
|
|
|
Cash and cash equivalents:
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
(5,895
|
)
|
|
|
(4,840
|
)
|
Net increase in cash and cash equivalents
|
|
|
57,555
|
|
|
|
158,667
|
|
Cash and cash equivalents at beginning of period
|
|
|
389,328
|
|
|
|
289,183
|
|
Cash and cash equivalents at end of period
|
|
$
|
446,883
|
|
|
|
447,850
|
|
|
|
|
|
|
|
|
|
TSYS
|
Supplemental Information
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
AOF:
|
|
|
|
Total Accounts on File
|
(in millions)
|
|
|
|
At September 2016
|
|
At September 2015
|
|
% Change
|
Consumer
|
|
|
|
433.5
|
|
|
399.0
|
|
|
8.6
|
|
Commercial
|
|
|
|
48.0
|
|
|
44.1
|
|
|
8.9
|
|
Other
|
|
|
|
29.7
|
|
|
24.8
|
|
|
19.5
|
|
Traditional AOF
|
|
|
|
511.2
|
|
|
467.9
|
|
|
9.2
|
|
Prepaid*/Stored Value
|
|
|
|
58.9
|
|
|
133.8
|
|
|
(56.0
|
)
|
Government Services
|
|
|
|
85.7
|
|
|
78.7
|
|
|
9.0
|
|
Commercial Card Single Use
|
|
|
|
83.0
|
|
|
80.0
|
|
|
3.8
|
|
Total AOF
|
|
|
|
738.8
|
|
|
760.4
|
|
|
(2.8
|
)
|
* Prepaid does not include NetSpend accounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Growth in Accounts on File (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
September 2015 to September 2016
|
|
September 2014 to September 2015
|
|
|
Beginning balance
|
|
|
|
760.4
|
|
|
605.5
|
|
|
|
Change in accounts on file due to:
|
|
|
|
|
|
|
|
|
|
Internal growth of existing clients
|
|
|
53.8
|
|
|
41.0
|
|
|
|
|
New clients
|
|
|
31.6
|
|
|
153.7
|
|
|
|
|
Purges/Sales
|
|
|
(16.7
|
)
|
|
(38.3
|
)
|
|
|
|
Deconversions
|
|
|
(90.3
|
)
|
|
(1.5
|
)
|
|
|
Ending balance
|
|
|
|
738.8
|
|
|
760.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP to Non-GAAP Financial Measures
|
|
Non-GAAP Measures
|
|
The schedules below provide a reconciliation of revenues and
operating results on a constant currency basis to reported revenues
and operating income. This non-GAAP measure presents third quarter
2016 financial results using the previous year's foreign currency
exchange rates. On a constant currency basis, TSYS' total revenues
grew 48.5% as compared to a reported GAAP increase of 47.3%.
|
|
The schedules below also provide a reconciliation of EPS to adjusted
EPS.
|
|
The schedules below also provide a reconciliation of net income to
EBITDA and adjusted EBITDA.
|
|
The schedules below also provide a reconciliation of operating
margin to adjusted operating margin excluding severance.
|
|
The schedules below also provide a reconciliation of cash flows from
operating activities and capital expenditures to free cash flow.
|
|
The schedules below also provide a reconciliation of 2016 guidance
of total revenues to net revenue and EPS to adjusted EPS.
|
|
The tax rate used in the calculation of adjusted 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
significant events.
|
|
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 potential
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 measures of
other companies due to potential inconsistencies in the method of
calculation.
|
|
TSYS believes that its provision of non-GAAP financial measures
provides investors with important 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 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 September 30,
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
|
|
|
|
|
|
Percent
|
|
|
|
|
|
|
|
|
|
Percent
|
|
|
|
|
|
|
2016
|
|
2015
|
|
Change
|
|
|
|
|
2016
|
|
|
2015
|
|
Change
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Constant currency (1)
|
|
|
$
|
1,161,181
|
|
|
707,890
|
|
64.0
|
|
%
|
|
$
|
3,063,788
|
|
|
|
2,062,698
|
|
48.5
|
|
%
|
Foreign currency impact (2)
|
|
|
|
(14,293
|
)
|
|
-
|
|
|
|
|
|
|
(25,935
|
)
|
|
|
-
|
|
|
|
|
Total revenues
|
|
|
$
|
1,146,888
|
|
|
707,890
|
|
62.0
|
|
%
|
|
$
|
3,037,853
|
|
|
|
2,062,698
|
|
47.3
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Constant currency (1)
|
|
|
$
|
802,958
|
|
|
636,386
|
|
26.2
|
|
%
|
|
$
|
2,280,389
|
|
|
|
1,854,254
|
|
23.0
|
|
%
|
Foreign currency impact (2)
|
|
|
|
(13,370
|
)
|
|
-
|
|
|
|
|
|
|
(24,220
|
)
|
|
|
-
|
|
|
|
|
Net revenue
|
|
|
$
|
789,588
|
|
|
636,386
|
|
24.1
|
|
%
|
|
$
|
2,256,169
|
|
|
|
1,854,254
|
|
21.7
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Constant currency (1)
|
|
|
$
|
161,567
|
|
|
163,104
|
|
(0.9
|
)
|
%
|
|
$
|
452,196
|
|
|
|
416,202
|
|
8.6
|
|
%
|
Foreign currency impact (2)
|
|
|
|
(6,240
|
)
|
|
-
|
|
|
|
|
|
|
(9,361
|
)
|
|
|
-
|
|
|
|
|
Operating income
|
|
|
$
|
155,327
|
|
|
163,104
|
|
(4.8
|
)
|
%
|
|
$
|
442,835
|
|
|
|
416,202
|
|
6.4
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Constant currency (1)
|
|
|
$
|
99,171
|
|
|
92,177
|
|
7.6
|
|
%
|
|
$
|
279,332
|
|
|
|
261,597
|
|
6.8
|
|
%
|
Foreign currency impact (2)
|
|
|
|
(14,338
|
)
|
|
-
|
|
|
|
|
|
|
(25,917
|
)
|
|
|
-
|
|
|
|
|
Total revenues
|
|
|
$
|
84,833
|
|
|
92,177
|
|
(8.0
|
)
|
%
|
|
$
|
253,415
|
|
|
|
261,597
|
|
(3.1
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Constant currency (1)
|
|
|
$
|
92,861
|
|
|
86,446
|
|
7.4
|
|
%
|
|
$
|
260,772
|
|
|
|
244,033
|
|
6.9
|
|
%
|
Foreign currency impact (2)
|
|
|
|
(13,416
|
)
|
|
-
|
|
|
|
|
|
|
(24,202
|
)
|
|
|
-
|
|
|
|
|
Net revenue
|
|
|
$
|
79,445
|
|
|
86,446
|
|
(8.1
|
)
|
%
|
|
$
|
236,570
|
|
|
|
244,033
|
|
(3.1
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenue
|
(unaudited)
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
|
|
|
|
|
|
Percent
|
|
|
|
|
|
|
|
|
|
Percent
|
|
|
|
|
|
|
2016
|
|
2015
|
|
Change
|
|
|
|
|
2016
|
|
|
2015
|
|
Change
|
|
|
Total revenues
|
|
|
$
|
1,146,888
|
|
|
707,890
|
|
62.0
|
|
%
|
|
$
|
3,037,853
|
|
|
|
2,062,698
|
|
47.3
|
|
%
|
Less: reimbursable items, interchange and assessments expenses
|
|
|
|
357,300
|
|
|
71,504
|
|
nm
|
|
|
|
|
781,684
|
|
|
|
208,444
|
|
nm
|
|
|
Net revenue
|
|
|
$
|
789,588
|
|
|
636,386
|
|
24.1
|
|
%
|
|
$
|
2,256,169
|
|
|
|
1,854,254
|
|
21.7
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
nm = not meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP to Non-GAAP
|
|
|
|
Adjusted Earnings per Share
|
(unaudited)
|
(in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
|
|
|
|
|
|
Percent
|
|
|
|
|
|
|
|
|
Percent
|
|
|
|
|
|
|
2016
|
|
2015
|
|
Change
|
|
|
|
|
2016
|
|
2015
|
|
Change
|
|
|
Income attributable to TSYS common shareholders
|
$
|
85,352
|
|
|
120,622
|
|
|
(29.2
|
)
|
%
|
|
$
|
245,688
|
|
|
281,216
|
|
|
(12.6
|
)
|
%
|
Adjust for amounts attributable to TSYS common shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add: Acquisition intangible amortization
|
$
|
53,065
|
|
|
22,607
|
|
|
nm
|
|
|
|
$
|
133,920
|
|
|
68,774
|
|
|
94.7
|
|
|
Add: Share-based compensation
|
|
13,059
|
|
|
11,291
|
|
|
15.7
|
|
|
|
|
33,766
|
|
|
31,459
|
|
|
7.3
|
|
|
Add: TransFirst M&A expenses*
|
|
1,830
|
|
|
-
|
|
|
na
|
|
|
|
|
35,689
|
|
|
-
|
|
|
na
|
|
|
Less: Tax impact of adjustments**
|
|
(22,633
|
)
|
|
(11,250
|
)
|
|
nm
|
|
|
|
|
(62,264
|
)
|
|
(33,267
|
)
|
|
(87.2
|
)
|
|
Adjusted earnings
|
|
$
|
130,673
|
|
|
143,270
|
|
|
(8.8
|
)
|
%
|
|
$
|
386,799
|
|
|
348,182
|
|
|
11.1
|
|
%
|
Add: Severance impact
|
|
|
8,749
|
|
|
-
|
|
|
na
|
|
|
|
|
8,749
|
|
|
-
|
|
|
na
|
|
|
Add: Severance impact - Share-based compensation
|
|
147
|
|
|
-
|
|
|
na
|
|
|
|
|
147
|
|
|
-
|
|
|
na
|
|
|
Add: Currency impact
|
|
|
6,320
|
|
|
-
|
|
|
na
|
|
|
|
|
9,564
|
|
|
-
|
|
|
na
|
|
|
Less: Federal & state R&D tax credits and related expenses
|
|
-
|
|
|
(15,084
|
)
|
|
nm
|
|
|
|
|
-
|
|
|
(15,084
|
)
|
|
nm
|
|
|
Less: Tax impact of adjustments
|
|
(4,671
|
)
|
|
(8,473
|
)
|
|
nm
|
|
|
|
|
(5,686
|
)
|
|
(8,473
|
)
|
|
nm
|
|
|
Adjusted earnings excluding impact of severance, currency and tax
credits
|
$
|
141,218
|
|
|
119,713
|
|
|
18.0
|
|
%
|
|
$
|
399,573
|
|
|
324,625
|
|
|
23.1
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic EPS - Income attributable to TSYS common shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As reported (GAAP)
|
|
$
|
0.46
|
|
|
0.66
|
|
|
(29.2
|
)
|
%
|
|
$
|
1.34
|
|
|
1.53
|
|
|
(12.3
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EPS
|
|
|
$
|
0.71
|
|
|
0.78
|
|
|
(8.7
|
)
|
%
|
|
$
|
2.11
|
|
|
1.89
|
|
|
11.5
|
|
%
|
Add/Less: Impact of severance, currency and tax credits
|
|
0.06
|
|
|
(0.13
|
)
|
|
nm
|
|
|
|
|
0.07
|
|
|
(0.13
|
)
|
|
nm
|
|
|
Adjusted EPS without impact of severance, currency and tax credits
|
$
|
0.77
|
|
|
0.65
|
|
|
18.1
|
|
%
|
|
$
|
2.18
|
|
|
1.76
|
|
|
23.6
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
183,830
|
|
|
183,954
|
|
|
|
|
|
|
|
183,601
|
|
|
184,320
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Costs associated with the TransFirst acquisition and integration
that are included in selling, general and administrative expenses
and nonoperating expenses.
|
** Certain of these merger and acquisition costs are nondeductible
for income tax purposes. Income tax impact includes a discrete item
as a result of the acquisition.
|
|
Adjusted EBITDA
|
(unaudited)
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
|
|
|
|
|
|
Percent
|
|
|
|
|
|
|
|
|
Percent
|
|
|
|
|
|
|
2016
|
|
2015
|
|
Change
|
|
|
|
|
2016
|
|
2015
|
|
Change
|
|
|
Net income
|
|
|
$
|
87,441
|
|
|
122,051
|
|
|
(28.4
|
)
|
%
|
|
$
|
251,597
|
|
|
284,325
|
|
|
(11.5
|
)
|
%
|
Adjust for:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Equity in income of equity investments
|
|
(6,366
|
)
|
|
(5,336
|
)
|
|
(19.3
|
)
|
|
|
|
(19,234
|
)
|
|
(15,309
|
)
|
|
(25.6
|
)
|
|
Add: Income taxes
|
|
|
44,247
|
|
|
37,825
|
|
|
17.0
|
|
|
|
|
127,966
|
|
|
119,204
|
|
|
7.4
|
|
|
Add: Nonoperating expense
|
|
30,005
|
|
|
8,564
|
|
|
nm
|
|
|
|
|
82,506
|
|
|
27,982
|
|
|
nm
|
|
|
Add: Depreciation and amortization
|
|
98,916
|
|
|
64,499
|
|
|
53.4
|
|
|
|
|
271,468
|
|
|
191,219
|
|
|
42.0
|
|
|
EBITDA
|
|
|
$
|
254,243
|
|
|
227,603
|
|
|
11.7
|
|
%
|
|
$
|
714,303
|
|
|
607,421
|
|
|
17.6
|
|
%
|
Adjust for:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add: Share-based compensation
|
|
13,069
|
|
|
11,295
|
|
|
15.7
|
|
|
|
|
33,792
|
|
|
31,468
|
|
|
7.4
|
|
|
Add: TransFirst M&A expenses*
|
|
1,830
|
|
|
-
|
|
|
na
|
|
|
|
|
25,908
|
|
|
-
|
|
|
na
|
|
|
Adjusted EBITDA
|
|
$
|
269,142
|
|
|
238,898
|
|
|
12.7
|
|
%
|
|
$
|
774,003
|
|
|
638,889
|
|
|
21.1
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Costs associated with the TransFirst acquisition and integration
that are included in selling, general and administrative expenses.
|
nm = not meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
na = not applicable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP to Non-GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TSYS
|
Operating Margins Excluding the Impact of Severance
|
(unaudited)
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
Nine Months Ended September 30,
|
|
|
As reported
|
|
Severance
|
|
Adjusted
|
|
|
As reported
|
|
Severance
|
|
Adjusted
|
|
|
2016
|
|
|
|
2016
|
|
|
2016
|
|
|
|
2016
|
Operating income (a)
|
$
|
155,327
|
|
|
8,749
|
|
164,076
|
|
|
$
|
442,835
|
|
|
8,749
|
|
451,584
|
|
Share-based compensation
|
|
13,069
|
|
|
147
|
|
13,216
|
|
|
|
33,792
|
|
|
147
|
|
33,939
|
|
TransFirst M&A expenses
|
|
1,830
|
|
|
-
|
|
1,830
|
|
|
|
25,908
|
|
|
-
|
|
25,908
|
|
Acquisition intangible amortization
|
|
53,341
|
|
|
-
|
|
53,341
|
|
|
|
134,748
|
|
|
-
|
|
134,748
|
|
Adjusted segment operating income (b)
|
$
|
223,567
|
|
|
8,896
|
|
232,463
|
|
|
$
|
637,283
|
|
|
8,896
|
|
646,179
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted segment operating income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America Services (c)
|
$
|
113,425
|
|
|
6,103
|
|
119,528
|
|
|
$
|
350,955
|
|
|
6,103
|
|
357,058
|
|
International Services (d)
|
|
15,524
|
|
|
1,882
|
|
17,406
|
|
|
|
41,564
|
|
|
1,882
|
|
43,446
|
|
Merchant Services (e)
|
|
90,784
|
|
|
81
|
|
90,865
|
|
|
|
219,056
|
|
|
81
|
|
219,137
|
|
NetSpend (f)
|
|
40,856
|
|
|
182
|
|
41,038
|
|
|
|
125,538
|
|
|
182
|
|
125,720
|
|
Corporate admin and other
|
|
(37,022
|
)
|
|
648
|
|
(36,374
|
)
|
|
|
(99,830
|
)
|
|
648
|
|
(99,182
|
)
|
Adjusted segment operating income (b)
|
$
|
223,567
|
|
|
8,896
|
|
232,463
|
|
|
$
|
637,283
|
|
|
8,896
|
|
646,179
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues (g)
|
$
|
1,146,888
|
|
|
|
|
1,146,888
|
|
|
$
|
3,037,853
|
|
|
|
|
3,037,853
|
|
Less: reimbursable items, interchange and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
assessments expenses
|
|
357,300
|
|
|
|
|
357,300
|
|
|
|
781,684
|
|
|
|
|
781,684
|
|
Net revenue (h)
|
$
|
789,588
|
|
|
|
|
789,588
|
|
|
$
|
2,256,169
|
|
|
|
|
2,256,169
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment net revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America Services (i)
|
$
|
300,754
|
|
|
|
|
300,754
|
|
|
$
|
901,563
|
|
|
|
|
901,563
|
|
International Services (j)
|
|
79,445
|
|
|
|
|
79,445
|
|
|
|
236,570
|
|
|
|
|
236,570
|
|
Merchant Services (k)
|
|
262,494
|
|
|
|
|
262,494
|
|
|
|
644,573
|
|
|
|
|
644,573
|
|
NetSpend (l)
|
|
155,349
|
|
|
|
|
155,349
|
|
|
|
502,961
|
|
|
|
|
502,961
|
|
Intersegment revenues
|
|
(8,454
|
)
|
|
|
|
(8,454
|
)
|
|
|
(29,498
|
)
|
|
|
|
(29,498
|
)
|
Net revenue (h)
|
$
|
789,588
|
|
|
|
|
789,588
|
|
|
$
|
2,256,169
|
|
|
|
|
2,256,169
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin (GAAP) (a)/(g)
|
|
13.5
|
%
|
|
|
|
14.3
|
%
|
|
|
14.6
|
%
|
|
|
|
14.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating margin on net revenue (b)/(h)
|
28.3
|
%
|
|
|
|
29.4
|
%
|
|
|
28.3
|
%
|
|
|
|
28.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted segment operating margin on net revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
North America Services(c)/(i)
|
|
37.7
|
%
|
|
|
|
39.7
|
%
|
|
|
38.9
|
%
|
|
|
|
39.6
|
%
|
International Services (d)/(j)
|
|
19.5
|
%
|
|
|
|
21.9
|
%
|
|
|
17.6
|
%
|
|
|
|
18.4
|
%
|
Merchant Services (e)/(k)
|
|
34.6
|
%
|
|
|
|
34.6
|
%
|
|
|
34.0
|
%
|
|
|
|
34.0
|
%
|
NetSpend (f)/(l)
|
|
26.3
|
%
|
|
|
|
26.4
|
%
|
|
|
25.0
|
%
|
|
|
|
25.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP to Non-GAAP
|
|
|
Free Cash Flow
|
(unaudited)
|
(in thousands)
|
|
|
|
Nine Months Ended
|
|
|
|
|
|
|
Free cash flow:
|
|
September 30,
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
$
|
550,960
|
|
|
|
|
460,554
|
|
|
|
|
|
|
|
Capital expenditures
|
|
(107,335)
|
|
|
|
|
(136,183)
|
|
|
|
|
|
|
|
Free cash flow
|
$
|
443,625
|
|
|
|
|
324,371
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Guidance Summary
|
(unaudited)
|
(in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue:
|
|
2016
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues (GAAP)
|
$
|
4,150
|
|
to
|
|
$
|
4,170
|
|
49%
|
|
to
|
|
50%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: reimbursable items, interchange and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
assessments expenses
|
|
1,120
|
|
to
|
|
|
1,125
|
|
|
|
|
|
|
|
Net revenue (non-GAAP)
|
$
|
3,030
|
|
to
|
|
$
|
3,045
|
|
21%
|
|
to
|
|
22%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share (EPS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic EPS (GAAP)
|
$
|
1.77
|
|
to
|
|
$
|
1.83
|
|
(10%)
|
|
to
|
|
(7%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition intangible amortization, share-based
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
compensation and TransFirst M&A expenses, less
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
the tax impact of adjustments
|
|
1.01
|
|
to
|
|
|
1.02
|
|
|
|
|
|
|
|
Adjusted EPS attributable to TSYS common
|
$
|
2.78
|
|
to
|
|
$
|
2.85
|
|
13%
|
|
to
|
|
16%
|
|
shareholders from continuing operations* (non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Average basic weighted shares
|
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183.7
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View source version on businesswire.com: http://www.businesswire.com/news/home/20161025006732/en/
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