TSS Total System Services

Provides 2017 Guidance

TSYS (NYSE: TSS) today reported results for the fourth quarter and full year of 2016.

“2016 was truly an exceptional year in the history of our company. We delivered record financial results, completed our largest acquisition in TransFirst that doubled the size of our Merchant business, and finished the year with results in all four segments having met or exceeded our goals,“ said M. Troy Woods, chairman and chief executive officer of TSYS.

Highlights for the fourth quarter of 2016 include:

• Total revenues were $1.1 billion, an increase of 57.9% over last year’s $716.8 million.
• Net revenue (non-GAAP), which excludes reimbursable items, interchange and assessment expense, was $785.7 million, an increase of 21.8% over last year’s $645.1 million.
• Income from continuing operations attributable to TSYS common shareholders was $74.0 million, a decrease of 9.2% from last year’s $81.4 million. Basic earnings per share (EPS) from continuing operations were $0.40 per share, a decrease of 9.3% from last year’s $0.44.
• Adjusted earnings from continuing operations (non-GAAP) were $129.6 million, an increase of 24.7% over last year’s $103.9 million. 4th quarter ‘16 adjusted EPS from continuing operations (non-GAAP) was $0.71, an increase of 24.5% over last year’s $0.57.
• Adjusted EBITDA (non-GAAP) was $266.5 million, an increase of 36.7% over last year’s $195.0 million.

Highlights for the full year of 2016 include:

• Total revenues were $4.2 billion, an increase of 50.0% over last year’s $2.8 billion.
• Net revenue (non-GAAP), which excludes reimbursable items, interchange and assessment expense, was $3.0 billion, an increase of 21.7% over last year’s $2.5 billion.
• Income from continuing operations attributable to TSYS common shareholders was $319.6 million, a decrease of 11.9% from last year’s $362.6 million. Basic EPS was $1.74 per share, a decrease of 11.6% from last year’s $1.97.
• Adjusted earnings from continuing operations (non-GAAP) were $516.4 million, an increase of 14.2% over last year’s $452.1 million. Adjusted EPS from continuing operations (non-GAAP) was $2.81, an increase of 14.5% over last year’s $2.46.
• Adjusted EBITDA (non-GAAP) was $1.0 billion, an increase of 24.8% over last year’s $833.9 million.

“We expect the momentum of 2016 to continue in 2017. We are projecting strong organic revenue growth and double digit earnings growth as we remain laser focused on executing our strategic plans and delivering outstanding results,” said Woods.

2017 Segment Changes

As a result of combining our North America and International segments, TSYS has included in the financial schedules of this release a schedule recasting its 2016 and 2015 quarterly segment results as if its Issuer Solutions Segment was combined for all of 2016 and 2015.

2017 Outlook

Beginning in 2017, TSYS will provide adjusted EPS figures based upon diluted shares to be more comparative to our industry peers. The 2017 guidance is below.

           

2017 Financial

Outlook Range

   

Percent

Change

(in millions, except per share amounts)     Revenue: Total revenues (GAAP) $4,750 to $4,850 14% to 16% Net revenue (non-GAAP) $3,275 to $3,375 8% to 11%   Earnings per share: Diluted EPS (GAAP) $2.14 to $2.21 23% to 28%

Adjusted diluted EPS attributable to TSYS common shareholders (non-GAAP)

$3.05

to

$3.15

9%

to

12%

Average diluted weighted shares

 

185

 

Conference Call

TSYS will host its quarterly conference call at 5:00 p.m. ET on Tuesday, January 24. 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 in the financial schedules 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’ earnings guidance for 2017 total revenues, net revenue, diluted EPS and adjusted diluted 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 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 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)             Three Months Ended Twelve Months Ended December 31, December 31, Percent Percent 2016 2015 Change 2016 2015 Change   Total revenues $ 1,132,224 716,843 57.9 % $ 4,170,077 2,779,541 50.0 %   Cost of services 826,332 489,040 69.0 2,993,062 1,855,181 61.3 Selling, general and administrative expenses 175,345   109,898   59.6 603,633   390,253   54.7 Total expenses 1,001,677   598,938   67.2 3,596,695   2,245,434   60.2   Operating income 130,547 117,905 10.7 573,382 534,107 7.4   Nonoperating expenses (29,662 ) (9,237 ) nm (112,168 ) (37,219 ) nm  

Income before income taxes, noncontrolling interests and equity in income of equity investments

100,885 108,668 (7.2 ) 461,214 496,888 (7.2 ) Income taxes 33,209   32,160   3.3 161,175   151,364   6.5

Income before noncontrolling interests and equity in income of equity investments

67,676 76,508 (11.5 ) 300,039 345,524 (13.2 ) Equity in income of equity investments, net of tax 6,699   6,797   (1.4 ) 25,933   22,106   17.3 Income from continuing operations, net of tax 74,375 83,305 (10.7 ) 325,972 367,630 (11.3 ) Gain from discontinued operations, net of tax -   1,411   nm -   1,411   nm Net income 74,375 84,716 (12.2 ) 325,972 369,041 (11.7 )

Net income attributable to noncontrolling interests

(425 ) (1,888 ) 77.5 (6,334 ) (4,997 ) (26.8 )   Net income attributable to TSYS common shareholders $ 73,950   82,828   (10.7 ) % $ 319,638   364,044   (12.2 ) %   Earnings per share (EPS):

Income from continuing operations to TSYS common shareholders

$ 0.40 0.44 (9.3 ) % $ 1.74 1.97 (11.6 ) %

Gain from discontinued operations to TSYS common shareholders

-   0.01   nm -   0.01   nm Basic EPS $ 0.40   0.45   (10.8 ) % $ 1.74   1.98   (12.0 ) %   Diluted EPS:

Income from continuing operations to TSYS common shareholders

$ 0.40 0.44 (9.2 ) % $ 1.73 1.96 (11.5 ) %

Gain from discontinued operations to TSYS common shareholders

-   0.01   nm -   0.01   nm Diluted EPS $ 0.40   0.45   (10.7 ) % $ 1.73   1.97   (11.8 ) %   Weighted average shares outstanding: (includes participating securities) Basic 183,665   183,376   183,655   184,082   Diluted 184,533   184,581   184,448   185,239     Dividends declared per share $ 0.10   0.10   $ 0.40   0.40     Amounts attributable to TSYS common shareholders: Income from continuing operations, net of tax $ 73,950 81,417 (9.2 ) % $ 319,638 362,633 (11.9 ) % Gain from discontinued operations, net of tax -   1,411   nm -   1,411   nm Net income $ 73,950   82,828   (10.7 ) % $ 319,638   364,044   (12.2 ) %  

Non-GAAP measures:*

Net revenue $ 785,709   645,095   21.8 % $ 3,041,876   2,499,349   21.7 %   Adjusted EBITDA $ 266,547   195,031   36.7 % $ 1,040,551   833,920   24.8 %   Adjusted EPS $ 0.71   0.57   24.5 % $ 2.81   2.46   14.5 %   * See reconciliation of non-GAAP measures. nm = not meaningful       TSYS Segment Breakdown (unaudited) (in thousands)                     Three Months Ended December 31, Twelve Months Ended December 31, Change Change 2016   2015   $   % 2016   2015   $   % Operating income (a) $ 130,547 117,905 12,642 10.7 % $ 573,382 534,107 39,275 7.4 % Share-based compensation 9,937 10,080 (143 ) (1.4 ) 43,728 41,548 2,180 5.2 TransFirst M&A expenses 2,267 - 2,267 na 28,175 - 28,175 na Litigation, claims, judgments or settlements 21,719 - 21,719 na 21,719 - 21,719 na Acquisition intangible amortization 55,243     22,920     32,323   nm 189,991     92,522     97,469   nm Adjusted operating income (b) $ 219,713     150,905     68,808   45.6 % $ 856,995     668,177     188,818   28.3 %   Adjusted segment operating income: North America Services (c) $ 117,296 104,162 13,134 12.6 % $ 468,251 429,064 39,187 9.1 % International Services (d) 15,210 21,381 (6,171 ) (28.9 ) 56,774 60,087 (3,313 ) (5.5 ) Merchant Services (e) 88,539 33,033 55,506 nm 307,595 150,225 157,370 nm NetSpend (f) 34,834 28,614 6,220 21.7 160,371 137,837 22,534 16.3 Corporate admin and other (36,166 )   (36,285 )   119   0.3 (135,996 )   (109,036 )   (26,960 ) (24.7 ) Adjusted segment operating income $ 219,713     150,905     68,808   45.6 % $ 856,995     668,177     188,818   28.3 %   Total revenues (g) $ 1,132,224 716,843 415,381 57.9 % $ 4,170,077 2,779,541 1,390,536 50.0 % Less: reimbursable items 62,354     71,748     (9,394 ) (13.1 ) 259,543     280,192     (20,649 ) (7.4 ) Revenue before reimbursable items 1,069,870 645,095 424,775 65.8 3,910,534 2,499,349 1,411,185 56.5 Less: interchange and assessments expenses 284,161     -     284,161   na 868,658     -     868,658   na Net revenue (h) 785,709 645,095 140,614 21.8 3,041,876 2,499,349 542,527 21.7 Intersegment revenues 10,379     8,383     1,996   23.8 39,880     33,481     6,399   19.1 Segment net revenue $ 796,088     653,478     142,610   21.8 % $ 3,081,756     2,532,830     548,926   21.7 %   Segment net revenue North America Services (i) $ 304,450 300,265 4,185 1.4 % $ 1,206,013 1,147,254 58,759 5.1 % International Services (j) 77,061 87,126 (10,065 ) (11.6 ) 313,631 331,159 (17,528 ) (5.3 ) Merchant Services (k) 253,960 122,053 131,907 nm 898,533 474,040 424,493 89.5 NetSpend (l) 160,617     144,034     16,583   11.5 663,579     580,377     83,202   14.3 Segment net revenue $ 796,088     653,478     142,610   21.8 % $ 3,081,756     2,532,830     548,926   21.7 %   Segment revenue before reimbursable items North America Services $ 304,450 300,265 4,185 1.4 % $ 1,206,013 1,147,254 58,759 5.1 % International Services 77,061 87,126 (10,065 ) (11.6 ) 313,631 331,159 (17,528 ) (5.3 ) Merchant Services 538,121 122,053 416,068 nm 1,767,191 474,040 1,293,151 nm NetSpend 160,617     144,034     16,583   11.5 663,579     580,377     83,202   14.3 Segment revenue before reimbursable items $ 1,080,249     653,478     426,771   65.3 % $ 3,950,414     2,532,830     1,417,584   56.0 %   Operating margin (GAAP) (a)/(g) 11.53 %   16.45 % 13.75 %   19.22 %   Adjusted operating margin on net revenue (b)/(h) 27.96 %   23.39 % 28.17 %   26.73 %   Adjusted segment operating margin on net revenue North America Services(c)/(i) 38.53 %   34.69 % 38.83 %   37.40 % International Services (d)/(j) 19.74 %   24.54 % 18.10 %   18.14 % Merchant Services (e)/(k) 34.86 %   27.06 % 34.23 %   31.69 % NetSpend (f)/(l) 21.69 %   19.87 % 24.17 %   23.75 %   nm = not meaningful na = not applicable           TSYS Segment Breakdown (unaudited) (in thousands)                     Three Months Ended December 31, Twelve Months Ended December 31, Change Change 2016   2015   $   % 2016   2015   $   % Depreciation and amortization: North America Services $ 27,878 26,712 1,166 4.4 % $ 110,343 99,544 10,799 10.8 % International Services 7,572 8,808 (1,236 ) (14.0 ) 30,966 34,892 (3,926 ) (11.3 ) Merchant Services 6,851 4,874 1,977 40.6 25,553 18,268 7,285 39.9 NetSpend 3,667   3,139   528   16.8 13,133     10,686     2,447   22.9 Segment depreciation and amortization 45,968 43,533 2,435 5.6 179,995 163,390 16,605 10.2 Acquisition intangible amortization 55,243 22,920 32,323 nm 189,991 92,522 97,469 nm Corporate admin and other 866   593   273   46.0 3,560     2,352     1,208   51.4 Total depreciation and amortization $ 102,077   67,046   35,031   52.2 % $ 373,546     258,264     115,282   44.6 %      

Segment statistical data:

  Transactions (in millions) North America Services: 4,482.7 4,264.9 217.8 5.1 % 17,140.3 15,774.5 1,365.8 8.7 % International Services: 742.1   661.7   80.4   12.2 2,717.8     2,473.6     244.2   9.9 Total transactions 5,224.8   4,926.6   298.2   6.1 % 19,858.1     18,248.1     1,610.0   8.8 %   Accounts on file (AOF) (in millions) North America Services: 662.8 654.1 8.7 1.3 % International Services: 88.7     78.5     10.2   13.0 Total AOF 751.5     732.5     19.0   2.6 %   Traditional accounts on file (AOF) (in millions) North America Services: 454.1 415.1 39.0 9.4 % International Services: 67.7     65.1     2.6   4.1 Total Traditional AOF 521.8     480.2     41.6   8.7 %   Merchant Services Point-of-sale transactions (in millions) 1,120.5 1,075.2 45.3 4.2 % 4,548.1 4,266.5 281.6 6.6 % Dollar sales volume (in millions) $ 28,710.2 12,401.1 16,309.1 nm % $ 97,735.1 48,072.7 49,662.4 nm %   NetSpend Gross dollar volume (in millions) $ 6,579.1 5,692.0 887.1 15.6 % $ 28,722.3 24,274.9 4,447.4 18.3 %   Direct deposit 90-day active cards (in thousands) 2,136.0 1,895.0 241.0 12.7 % 90-day active cards (in thousands) 4,295.0 3,894.1 400.9 10.3 % % of 90-day active cards with direct deposit 49.7 % 48.7 %   nm = not meaningful       TSYS Condensed Balance Sheet (unaudited) (in thousands)   December 31, 2016 December 31, 2015 Assets Current assets: Cash and cash equivalents $ 425,354 389,328 Accounts receivable, net 432,847 314,705 Other current assets 164,488 154,199 Total current assets 1,022,689 858,232 Goodwill 3,270,952 1,545,424 Other intangible assets, net 906,676 328,320 Property, equipment and software, net 705,533 694,968 Other long term assets 460,327 450,951 Total assets $ 6,366,177 3,877,895   Liabilities Current liabilities: Accounts payable $ 38,712 52,213 Notes payable and capital leases 50,727 53,546 Other current liabilities 330,914 233,173 Total current liabilities 420,353 338,932 Bonds payable, notes payable and capital leases, excluding current portion 3,313,276 1,377,541 Deferred tax liability 419,552 192,445 Other long-term liabilities 88,983 96,885 Total liabilities 4,242,164 2,005,803 Redeemable noncontrolling interest 24,093 23,410 Equity Shareholders' equity 2,099,920 1,843,018 Noncontrolling interests in consolidated subsidiaries - 5,664 Total equity 2,099,920 1,848,682 Total liabilities and equity $ 6,366,177 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)   Twelve Months Ended December 31, 2016 2015 Cash flows from operating activities: Net income $ 325,972 369,041

Adjustments to reconcile net income to net cash provided by operating activities:

Gain on disposal of subsidiaries - (3,568 ) Equity in income of equity investments (25,933 ) (22,106 ) Dividends received from equity investments 15,246 12,097 Depreciation and amortization 373,546 258,264 Amortization of debt issuance costs 13,570 1,841 Share-based compensation 43,728 41,548 Deferred income tax expense (benefit) 7,435 (4,083 ) Other noncash adjustments 51,357 24,728 Changes in operating assets and liabilities (87,012 ) (77,568 ) Net cash provided by operating activities 717,909 600,194   Net cash used in investing activities (2,492,876 ) (202,184 )   Net cash provided by (used in) financing activities 1,822,190 (290,754 )   Cash and cash equivalents: Effect of exchange rate changes on cash and cash equivalents (11,197 ) (7,111 ) Net increase in cash and cash equivalents 36,026 100,145 Cash and cash equivalents at beginning of period 389,328   289,183   Cash and cash equivalents at end of period $ 425,354   389,328         TSYS Supplemental Information (unaudited)             Other AOF: Total Accounts on File (in millions)

At

December 2016

 

At

December 2015

  %

Change

Consumer 442.9 408.2 8.5 Commercial 47.9 45.4 5.4 Other 31.0     26.6   16.8 Traditional AOF 521.8 480.2 8.7 Prepaid*/Stored Value 57.8 97.2 (40.5 ) Government Services 88.7 79.3 11.7 Commercial Card Single Use 83.2     75.8   9.8 Total AOF 751.5     732.5   2.6 * Prepaid does not include NetSpend accounts  

Growth in Accounts on File (in millions):

December 2015 to

December 2016

  December 2014 to

December 2015

Beginning balance 732.5 616.7 Change in accounts on file due to: Internal growth of existing clients 53.1 42.2 New clients 27.8 145.6 Purges/Sales (12.9 ) (29.0 ) Deconversions (49.0 )   (43.0 ) Ending balance 751.5     732.5       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 fourth quarter 2016 financial results using the previous year’s foreign currency exchange rates. On a constant currency basis, TSYS’ total revenues for 2016 grew 51.6% as compared to a reported GAAP increase of 50.0%.     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 cash flows from operating activities and capital expenditures to free cash flow.   The schedules below also provide a reconciliation of 2017 guidance of total revenues to net revenue and diluted EPS to adjusted diluted EPS. TSYS has also provided historical diluted EPS and adjusted diluted 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 December 31, Twelve Months Ended December 31, Percent Percent 2016     2015   Change 2016   2015   Change Consolidated Constant currency (1) $ 1,148,810 716,843 60.3 % $ 4,212,598 2,779,541 51.6 % Foreign currency impact (2) (16,586 )     - (42,521 )     - Total revenues $ 1,132,224       716,843 57.9 % $ 4,170,077       2,779,541 50.0 %   Constant currency (1) $ 801,145 645,095 24.2 % $ 3,081,534 2,499,349 23.3 % Foreign currency impact (2) (15,436 )     - (39,658 )     - Net revenue $ 785,709       645,095 21.8 % $ 3,041,876       2,499,349 21.7 %   Constant currency (1) $ 137,738 117,905 16.8 % $ 589,934 534,107 10.5 % Foreign currency impact (2) (7,191 )     - (16,552 )     - Operating income $ 130,547       117,905 10.7 % $ 573,382       534,107 7.4 %   International Services Constant currency (1) $ 99,180 93,128 6.5 % $ 378,512 354,725 6.7 % Foreign currency impact (2) (16,618 )     - (42,535 )     - Total revenues $ 82,562       93,128 (11.3 ) % $ 335,977       354,725 (5.3 ) %   Constant currency (1) $ 92,531 87,126 6.2 % $ 353,303 331,159 6.7 % Foreign currency impact (2) (15,470 )     - (39,672 )     - Net revenue $ 77,061       87,126 (11.6 ) % $ 313,631       331,159 (5.3 ) %   (1) Reflects current period results on a non-GAAP basis as if foreign currency rates did not change from the comparable prior year period. (2) Reflects the impact of calculated changes in foreign currency rates from the comparable period.           Net Revenue (unaudited) (in thousands)   Three Months Ended December 31, Twelve Months Ended December 31, Percent Percent 2016     2015   Change 2016     2015   Change Total revenues $ 1,132,224 716,843 57.9 % $ 4,170,077 2,779,541 50.0 % Less: reimbursable items 62,354       71,748 (13.1 ) 259,543       280,192 (7.4 ) Revenue before reimbursable items 1,069,870 645,095 65.8 3,910,534 2,499,349 56.5 Less: interchange and assessments expenses 284,161       - na 868,658       - na Net revenue $ 785,709       645,095 21.8 % $ 3,041,876       2,499,349 21.7 %   na = not applicable     Reconciliation of GAAP to Non-GAAP               Adjusted Earnings per Share (unaudited) (in thousands, except per share data)             Three Months Ended December 31, Twelve Months Ended December 31, Percent Percent 2016   2015   Change 2016   2015   Change

Income from continuing operations attributable to TSYS common shareholders

$ 73,950 81,417 (9.2 ) % $ 319,638 362,633 (11.9 ) %

Adjust for amounts attributable to TSYS common shareholders:

Add: Acquisition intangible amortization $ 54,967 22,645 nm $ 188,887 91,418 nm Add: Share-based compensation 9,925 10,076 (1.5 ) 43,691 41,535 5.2 Add: TransFirst M&A expenses* 2,268 - na 37,957 - na Add: Litigation, claims, judgments or settlements** 19,913 - na 19,913 - na Less: Tax impact of adjustments*** (31,403 )   (10,208 ) nm (93,667 )   (43,474 ) nm Adjusted earnings $ 129,620     103,930   24.7 % $ 516,419     452,112   14.2 %  

Basic EPS - Income from continuing operations attributable to TSYS common shareholders

As reported (GAAP) $ 0.40     0.44   (9.3 ) % $ 1.74     1.97   (11.6 ) %   Adjusted EPS $ 0.71     0.57   24.5 % $ 2.81     2.46   14.5 %   Weighted average shares outstanding 183,665     183,376   183,655     184,082     * Costs associated with the TransFirst acquisition and integration that are included in selling, general and administrative expenses and nonoperating expenses. ** Litigation settlement or settlement discussions and related legal expenses in the 4th quarter. *** 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 December 31, Twelve Months Ended December 31, Percent Percent 2016   2015   Change 2016     2015     Change Net income $ 74,375 84,716 (12.2 ) % $ 325,972 369,041 (11.7 ) % Adjust for: Less: Income from discontinued operations - (1,411 ) nm - (1,411 ) nm Less: Equity in income of equity investments (6,699 ) (6,797 ) 1.4 (25,933 ) (22,106 ) (17.3 ) Add: Income taxes 33,209 32,160 3.3 161,175 151,364 6.5 Add: Nonoperating expense 29,662 9,237 nm 112,168 37,219 nm Add: Depreciation and amortization 102,077     67,046   52.2 373,546     258,264   44.6 EBITDA $ 232,624 184,951 25.8 % $ 946,928 792,371 19.5 % Adjust for: Add: Share-based compensation 9,937 10,080 (1.4 ) 43,728 41,549 5.2 Add: TransFirst M&A expenses* 2,267 - na 28,176 - na Add: Litigation, claims, judgments or settlements 21,719     -   na 21,719     -   na Adjusted EBITDA $ 266,547     195,031   36.7 % $ 1,040,551     833,920   24.8 %   * 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                               Free Cash Flow (unaudited) (in thousands)   Twelve Months Ended       Free cash flow: December 31, 2016         2015     Net cash provided by operating activities (GAAP) $ 717,909 600,194 Capital expenditures (142,573 ) (203,315 ) Free cash flow (non-GAAP) $ 575,336   396,879                                   Guidance Summary (unaudited) (in millions, except per share data)     Revenue: 2017 % Change   Total revenues (GAAP) $ 4,750 to $ 4,850 14 % to 16 %  

Less: reimbursable items, interchange and assessments expenses

1,475     to     1,475             Net revenue (non-GAAP) $ 3,275 to $ 3,375 8 % to 11 %     Earnings per share (EPS):   Diluted EPS (GAAP) $ 2.14 to $ 2.21 23 % to 28 %  

Acquisition intangible amortization, share-based compensation, litigation, claims, judgments or settlements and TransFirst M&A expenses, less the tax impact of adjustments

0.91     to     0.94            

Adjusted diluted EPS attributable to TSYS common shareholders* (non-GAAP)

$ 3.05 to $ 3.15 9 % to 12 %   * Average diluted weighted shares 185     Reconciliation of GAAP to Non-GAAP   Adjusted Diluted Earnings per Share (unaudited) (in thousands, except per share data)                           2015 2016 Q1   Q2   Q3   Q4   YTD Q1   Q2   Q3   Q4   YTD

Income from continuing operations attributable to TSYS common shareholders

$ 77,755 82,839 120,622 81,417 362,633 $ 90,628 69,708 85,352 73,950 319,638 Adjust for amounts attributable to TSYS common shareholders: Add: Acquisition intangible amortization $ 23,590 22,576 22,607 22,645 91,418 $ 22,645 58,210 53,065 54,967 188,887 Add: Share-based compensation 8,144 12,024 11,291 10,076 41,535 8,150 12,557 13,059 9,925 43,691 Add: TransFirst M&A expenses - - - - - 13,183 20,676 1,830 2,268 37,957 Add: Litigation, claims, judgments or settlements - - - - - - - - 19,913 19,913 Less: Tax impact of adjustments (10,532 )   (11,484 )   (11,250 )   (10,208 )   (43,474 ) (13,896 )   (25,735 )   (22,633 )   (31,403 )   (93,667 ) Adjusted earnings $ 98,957     105,955     143,270     103,930     452,112   $ 120,710     135,416     130,673     129,620     516,419    

Diluted EPS - Income from continuing operations attributable to TSYS common shareholders

As reported (GAAP)

$ 0.42     0.45     0.65     0.44     1.96   $ 0.49     0.38     0.46     0.40     1.73     Adjusted diluted EPS $ 0.53     0.57     0.77     0.56     2.44   $ 0.66     0.73     0.71     0.70     2.80     Average diluted weighted shares 185,563     185,020     185,281     184,581     185,239   183,886     184,598     184,640     184,533     184,448         TSYS Segment Breakdown Recast for New Segment Structure (unaudited) (in thousands)                         2015 2016 Q1   Q2   Q3   Q4   YTD Q1   Q2   Q3   Q4   YTD Operating income (a) $ 122,496 130,602 163,104 117,905 534,107 $ 151,687 135,821 155,327 130,547 573,382 Share-based compensation 8,143 12,030 11,295 10,080 41,548 8,158 12,566 13,069 9,937 43,730 TransFirst M&A expenses - - - - - 3,401 20,676 1,830 2,267 28,174 Litigation, claims, judgments or settlements - - - - - - - - 21,719 21,719 Acquisition intangible amortization 23,867     22,852     22,883     22,920     92,522   22,921     58,486     53,341     55,243     189,991   Adjusted operating income (b) $ 154,506     165,484     197,282     150,905     668,177   $ 186,167     227,549     223,567     219,713     856,996     Adjusted segment operating income: Issuer Solutions (c) $ 109,553 121,738 132,316 125,543 489,151 $ 135,077 128,493 128,949 132,506 525,025 Merchant Services (d) 34,115 40,690 42,387 33,033 150,225 38,357 89,915 90,784 88,539 307,595 NetSpend (e) 35,467 36,442 37,315 28,614 137,837 42,201 42,481 40,856 34,834 160,372 Corporate admin and other (24,629 )   (33,386 )   (14,736 )   (36,285 )   (109,036 ) (29,468 )   (33,340 )   (37,022 )   (36,166 )   (135,996 ) Adjusted segment operating income $ 154,506     165,484     197,282     150,905     668,177   $ 186,167     227,549     223,567     219,713     856,996     Total revenues (f) $ 662,156 692,652 707,890 716,843 2,779,541 $ 739,378 1,151,587 1,146,889 1,132,224 4,170,078

Less: reimbursable items, interchange and assessments expenses

66,372     70,568     71,504     71,748     280,192   67,734     356,649     357,302     346,517     1,128,202   Net revenue (g) 595,784 622,084 636,386 645,095 2,499,349 671,644 794,938 789,587 785,707 3,041,876 Intersegment revenues 8,569     7,256     5,950     7,207     28,982   11,969     7,011     7,401     9,316     35,697   Segment net revenue $ 604,353     629,340     642,336     652,302     2,528,331   $ 683,613     801,949     796,988     795,023     3,077,573     Segment net revenue Issuer Solutions (h) $ 338,881 369,851 378,967 386,215 1,473,914 $ 378,009 377,862 379,145 380,446 1,515,462 Merchant Services (i) 110,398 117,868 123,721 122,053 474,040 120,612 261,467 262,494 253,960 898,533 NetSpend (j) 155,074     141,621     139,648     144,034     580,377   184,992     162,620     155,349     160,617     663,578   Segment net revenue $ 604,353     629,340     642,336     652,302     2,528,331   $ 683,613     801,949     796,988     795,023     3,077,573     Operating margin (GAAP) (a)/(g) 18.50 %   18.86 %   23.04 %   16.45 %   19.22 % 20.52 %   11.79 %   13.54 %   11.53 %   13.75 %   Adjusted operating margin on net revenue (b)/(h) 25.93 %   26.60 %   31.00 %   23.39 %   26.73 % 27.72 %   28.62 %   28.31 %   27.96 %   28.17 %   Adjusted segment operating margin on net revenue Issuer Solutions(c)/(h) 32.33 %   32.92 %   34.91 %   32.51 %   33.19 % 35.73 %   34.01 %   34.01 %   34.83 %   34.64 % Merchant Services (d)/(i) 30.90 %   34.52 %   34.26 %   27.06 %   31.69 % 31.80 %   34.39 %   34.59 %   34.86 %   34.23 % NetSpend (e)/(j) 22.87 %   25.73 %   26.72 %   19.87 %   23.75 % 22.81 %   26.12 %   26.30 %   21.69 %   24.17 %

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TSYS Media RelationsCyle Mims, +1-706-644-3110cylemims@tsys.comorTSYS Investor RelationsShawn Roberts, +1-706-644-6081shawnroberts@tsys.com