TSYS Reports Second Quarter Earnings

Increases 2017 Outlook for Revenue and Earnings per Share, Increases Quarterly Dividend by 30%

TSYS TSS today reported results for the second quarter of 2017.

"Our second quarter results were outstanding driven by solid revenue growth that converted into very strong operating income and diluted earnings per share (EPS). These results are all organic as this is the first quarter that the TransFirst acquisition is in both quarters reflecting the execution of our strategic goals," said M. Troy Woods, chairman and chief executive officer of TSYS.

"With our strong cash flow, we reduced our debt another $125 million during the quarter bringing our year to date reduction to $225 million. We are also pleased to announce that we are increasing our quarterly dividend by 30% to $0.13 per share from $0.10 per share and raising our revenue and EPS guidance," said Woods.

Highlights for the second quarter of 2017 vs. 2016:

Total revenues were $1.2 billion, an increase of 6.1%.
Net revenue (non-GAAP), which excludes reimbursable items, interchange and assessment expenses, was $844.1 million, an increase of 6.2%.
Net income attributable to TSYS common shareholders was $115.0 million, an increase of 65.0%. Diluted EPS were $0.62, an increase of 64.3%.
Adjusted earnings (non-GAAP) were $158.2 million, an increase of 16.8%. Adjusted diluted EPS (non-GAAP) were $0.85, an increase of 16.4%.
Adjusted EBITDA (non-GAAP) was $307.7 million, an increase of 12.3%.

Dividend Increase

TSYS' Board of Directors approved a 30% increase in the regular quarterly dividend payable on TSYS common stock from $0.10 per share to $0.13 per share, payable on October 2, 2017 to shareholders of record as of the close of business on September 21, 2017.

2017 Revised Outlook

The 2017 revised guidance is below.

	2017 Revised Financial Outlook Range			Percent Change
(in millions, except per share amounts)
Revenue:
Total revenues (GAAP)	$4,809	to	$4,889	15%	to	17%
Net revenue (non-GAAP)	$3,315	to	$3,395	9%	to	12%

Earnings per share:
Diluted EPS (GAAP)	$2.30	to	$2.38	33%	to	37%
Adjusted diluted EPS attributable to TSYS common shareholders (non-GAAP)	$3.22	to	$3.30	15%	to	18%
Weighted average diluted shares outstanding	185

Conference Call

TSYS will host its quarterly conference call at 5:00 p.m. ET on Tuesday, July 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 diluted EPS, and a reconciliation of those measures to the most directly comparable GAAP measures is included on pages 11 to 14 in the financial schedules of this release.

About TSYS

TSYS^® TSS is a leading global payments provider, offering seamless, secure and innovative solutions across the payments spectrum — from issuer processing and merchant acquiring to prepaid program management. 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 headquarters are located in Columbus, Ga., U.S.A., with approximately 11,500 team members and local offices spread across 13 countries. TSYS generated revenue of $4.2 billion in 2016, while processing more than 25.5 billion transactions. We are a member of The Civic 50 and were named one of the 2017 World's Most Ethical Companies by Ethisphere magazine. TSYS is a member of the S&P 500 and routinely posts all important information on its website. For more, visit 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							Six Months Ended
	June 30,							June 30,
						Percent							Percent
	2017			2016		Change		2017			2016		Change

Total revenues	$	1,222,375		1,151,587		6.1	%	$	2,407,100		1,890,965		27.3	%

Cost of services*		877,887		841,923		4.3			1,739,744		1,326,430		31.2
Selling, general and administrative expenses*		151,240		173,843		(13.0	)		306,925		277,027		10.8
Total expenses		1,029,127		1,015,766		1.3			2,046,669		1,603,457		27.6

Operating income		193,248		135,821		42.3			360,431		287,508		25.4

Nonoperating expenses*		(30,042	)	(29,760	)	(0.9	)		(59,945	)	(51,857	)	(15.6	)

Income before income taxes and equity in income of equity investments		163,206		106,061		53.9			300,486		235,651		27.5
Income taxes		56,207		40,290		39.5			99,289		83,719		18.6
Income before equity in income of equity investments		106,999		65,771					201,197		151,932
Equity in income of equity investments, net of tax*		9,513		5,977		59.2			22,422		12,224		83.4
Net income		116,512		71,748		62.4			223,619		164,156		36.2
Net income attributable to noncontrolling interests		(1,498	)	(2,040	)	26.6			(2,737	)	(3,820	)	28.4

Net income attributable to TSYS common shareholders	$	115,014		69,708		65.0	%	$	220,882		160,336		37.8	%

Earnings per share (EPS):
Basic EPS	$	0.62		0.38		64.6	%	$	1.20		0.87		37.3	%

Diluted EPS	$	0.62		0.38		64.3	%	$	1.19		0.87		37.2	%

Weighted average shares outstanding:
(includes participating securities)
Basic		184,153		183,724					184,019		183,489
Diluted		185,286		184,598					185,122		184,335

Dividends declared per share	$	0.10		0.10				$	0.20		0.20

Non-GAAP measures:**
Net revenue	$	844,068		794,937		6.2	%	$	1,676,960		1,466,581		14.3	%

Adjusted EBITDA	$	307,698		274,032		12.3	%	$	594,935		504,862		17.8	%

Adjusted earnings	$	158,215		135,416		16.8	%	$	310,480		256,126		21.2	%

Adjusted diluted EPS	$	0.85		0.73		16.4	%	$	1.68		1.39		20.7	%

* Certain prior year amounts have been reclassified between nonoperating expenses and equity in income of equity investments, net of tax and between income of equity investments, net of tax and between cost of services and selling, general and administrative expenses.
** See reconciliation of non-GAAP measures.







TSYS
Segment Breakdown
(unaudited)
(in thousands)

	Three Months Ended June 30,									Six Months Ended June 30,
						Change									Change
	2017			2016		$		%		2017			2016		$		%
Adjusted operating income by segment:
Issuer Solutions (a)	$	147,277		128,493		18,784		14.6	%	$	281,150		263,570		17,580		6.7	%
Merchant Solutions (b)		101,996		89,915		12,081		13.4			193,275		128,272		65,003		50.7
Netspend (c)		46,044		42,481		3,563		8.4			94,692		84,682		10,010		11.8
Corporate admin and other		(36,036	)	(33,340	)	(2,696	)	(8.1	)		(71,608	)	(62,808	)	(8,800	)	(14.0	)
Adjusted segment operating income (d)		259,281		227,549		31,732		13.9			497,509		413,716		83,793		20.3
Less:
Share-based compensation		11,008		12,566		(1,558	)	(12.4	)		20,055		20,723		(668	)	(3.2	)
TransFirst M&A and integration expenses		4,165		20,676		(16,511	)	(79.9	)		9,034		24,078		(15,044	)	(62.5	)
Litigation, claims, judgments or settlements		(83	)	-		(83	)	na			1,878		-		1,878		na
Acquisition intangible amortization		50,943		58,486		(7,543	)	(12.9	)		106,111		81,407		24,704		30.3
Operating income		193,248		135,821		57,427		42.3			360,431		287,508		72,923		25.4
Nonoperating expenses, net		(30,042	)	(29,760	)	(282	)	(0.9	)		(59,945	)	(51,857	)	(8,088	)	(15.6	)
Income before income taxes and equity in income of equity investments	$	163,206		106,061		57,145		53.9	%	$	300,486		235,651		64,835		27.5	%

Net revenue by segment:
Issuer Solutions (f)	$	392,760		377,862		14,898		3.9	%	$	780,015		755,871		24,144		3.2	%
Merchant Solutions (g)		278,588		261,467		17,121		6.5			539,149		382,079		157,070		41.1
Netspend (h)		183,065		162,620		20,445		12.6			380,530		347,613		32,917		9.5
Segment net revenue		854,413		801,949		52,464		6.5			1,699,694		1,485,563		214,131		14.4
Less: Intersegment revenues		10,345		7,012		3,333		47.5			22,734		18,982		3,752		19.8
Net revenue (i)		844,068		794,937		49,131		6.2			1,676,960		1,466,581		210,379		14.3
Add: reimbursable items, interchange and assessments expenses		378,307		356,650		21,657		6.1			730,140		424,384		305,756		72.0
Total revenues	$	1,222,375		1,151,587		70,788		6.1	%	$	2,407,100		1,890,965		516,135		27.3	%


Adjusted segment operating margin on segment net revenue:
Issuer Solutions (a)/(f)		37.5	%	34.0	%						36.0	%	34.9	%
Merchant Solutions (b)/(g)		36.6	%	34.4	%						35.9	%	33.6	%
Netspend (c)/(h)		25.2	%	26.1	%						24.9	%	24.4	%

Adjusted segment operating margin on net revenue: (d)/(i)		30.7	%	28.6	%						29.7	%	28.2	%

na = not applicable







TSYS
Segment Breakdown
(unaudited)
(in thousands)

	Three Months Ended June 30,							Six Months Ended June 30,
				Change									Change
	2017		2016	$		%		2017			2016		$	%
Depreciation and amortization by segment:
Issuer Solutions	$	35,735	35,649	86		0.2	%	$	72,588		71,268		1,320	1.9	%
Merchant Solutions		7,380	6,805	575		8.4			14,402		11,856		2,546	21.5
Netspend		4,180	3,116	1,064		34.1			8,272		6,224		2,048	32.9
Depreciation and amortization		47,295	45,570	1,725		3.8			95,262		89,348		5,914	6.6
Acquisition intangible amortization		50,943	58,486	(7,543	)	(12.9	)		106,111		81,407		24,704	30.3
Corporate admin and other		1,121	913	208		22.8			2,164		1,797		367	20.4
Total depreciation and amortization	$	99,359	104,969	(5,610	)	(5.3	)%	$	203,537		172,552		30,985	18.0	%



Segment statistical data:

Issuer Solutions
Total transactions (in millions)		5,340.6	4,985.1	355.5		7.1	%		10,217.2		9,573.1		644.1	6.7	%
Total Accounts on file (AOF) (in millions)									773.6		742.1		31.5	4.2	%
Total Traditional AOF (in millions)									542.0		501.1		40.9	8.2	%

Merchant Solutions
Point-of-sale transactions (in millions)		1,233.5	1,159.5	74.0		6.4	%		2,361.3		2,250.4		110.9	4.9	%
Dollar sales volume (in millions)	$	31,127.5	28,560.8	2,566.7		9.0	%	$	60,247.9		40,344.2		19,903.7	49.3	%
Segment net revenue per transaction	$	0.226	0.225	0.001		0.2	%	$	0.228		0.170		0.058	34.5	%

Netspend
Gross dollar volume (in millions)	$	7,605.5	6,614.7	990.8		15.0	%	$	17,212.8		15,776.2		1,436.6	9.1	%
Direct deposit 90-day active cards (in thousands)									2,416.7		2,192.5		224.2	10.2	%
90-day active cards (in thousands)									4,964.9		4,448.8		516.1	11.6	%
% of 90-day active cards with direct deposit									48.7	%	49.3	%








TSYS
Condensed Balance Sheet
(unaudited)
(in thousands)

	June 30, 2017		December 31, 2016
Assets
Current assets:
Cash and cash equivalents	$	427,589	425,354
Accounts receivable, net		442,094	432,847
Other current assets		156,297	164,488
Total current assets		1,025,980	1,022,689
Goodwill		3,271,975	3,270,952
Software and other intangible assets, net		1,213,871	1,329,864
Property and equipment, net		280,636	282,345
Other long term assets		481,619	460,327
Total assets	$	6,274,081	6,366,177

Liabilities
Current liabilities:
Accounts payable	$	52,095	38,712
Current portion of long-term borrowings and capital leases		573,075	50,727
Other current liabilities		315,077	330,914
Total current liabilities		940,247	420,353
Long-term borrowings and capital leases, excluding current portion		2,564,068	3,313,276
Deferred income tax liabilities		402,088	419,552
Other long-term liabilities		90,040	88,983
Total liabilities		3,996,443	4,242,164
Redeemable noncontrolling interest		13,102	24,093
Equity		2,264,536	2,099,920
Total liabilities and equity	$	6,274,081	6,366,177







TSYS
Selected Cash Flow Highlights
(unaudited)
(in thousands)

	Six Months Ended June 30,
	2017			2016
Cash flows from operating activities:
Net income	$	223,619		164,156
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in income of equity investments, net of tax		(22,422	)	(12,224	)
Dividends received from equity investments		943		808
Depreciation and amortization		203,537		172,552
Amortization of debt issuance costs		2,163		11,451
Share-based compensation		20,055		20,724
Deferred income tax (benefit) expense		(18,191	)	18,519
Other noncash adjustments		38,248		21,449
Changes in operating assets and liabilities		(47,160	)	(58,354	)
Net cash provided by operating activities		400,792		339,081

Purchases of property and equipment		(26,739	)	(20,669	)
Additions to licensed computer software from vendors		(10,568	)	(11,379	)
Additions to internally developed computer software		(13,581	)	(18,484	)
Additions to contract acquisition costs		(14,655	)	(31,276	)
Cash used in acquisitions, net of cash acquired		-		(2,345,438	)
Other investing activities		(759	)	(1,730	)
Net cash used in investing activities		(66,302	)	(2,428,976	)

Principal payments on long-term borrowings and capital lease obligations		(234,093	)	(435,953	)
Proceeds from long-term borrowings		-		2,666,295
Debt issuance costs		-		(26,554	)
Purchase of noncontrolling interests		(70,000	)	(5,878	)
Dividends paid on common stock		(36,734	)	(36,622	)
Proceeds from exercise of stock options		8,987		9,737
Other financing activities		(3,909	)	(829	)
Net cash (used in) provided by financing activities		(335,749	)	2,170,196

Cash and cash equivalents:
Effect of exchange rate changes on cash and cash equivalents		3,494		(4,310	)
Net increase in cash and cash equivalents		2,235		75,991
Cash and cash equivalents at beginning of period		425,354		389,328
Cash and cash equivalents at end of period	$	427,589		465,319

Supplemental
Capital expenditures	$	65,543		81,808
Free cash flow (non-GAAP)*	$	335,249		257,273

* See reconciliation of non-GAAP measures.







TSYS
Supplemental Information
(unaudited)

Other
AOF:	Total Accounts on File
(in millions)	At June 2017		At June 2016		% Change
Consumer	457.0		425.3		7.4
Commercial	51.5		47.0		9.6
Other	33.5		28.8		16.2
Traditional AOF	542.0		501.1		8.2
Prepaid*/Stored Value	50.6		79.5		(36.3	)
Government Services	91.3		84.6		7.9
Commercial Card Single Use	89.7		76.9		16.6
Total AOF	773.6		742.1		4.2
* Prepaid does not include Netspend accounts

Growth in Accounts on File (in millions):
	June 2016 to June 2017		June 2015 to June 2016
Beginning balance	742.1		751.4
Change in accounts on file due to:
Internal growth of existing clients	53.1		51.8
New clients	23.7		32.9
Purges/Sales	(23.3	)	(24.0	)
Deconversions	(22.0	)	(70.0	)
Ending balance	773.6		742.1

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 second quarter and year-to-date 2017 financial results using the previous year's foreign currency exchange rates. On a constant currency basis, TSYS' total year-to-date revenues for the second quarter of 2017 grew 28.4% as compared to a reported GAAP increase of 27.3%.

The schedules below also provide a reconciliation of diluted EPS to adjusted diluted EPS.

The schedules below also provide a reconciliation of net income to 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.

The tax rate used in the calculation of adjusted diluted 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 June 30,						Six Months Ended June 30,
					Percent						Percent
	2017			2016	Change		2017			2016	Change
Consolidated
Constant currency (1)	$	1,232,358		1,151,587	7.0	%	$	2,428,207		1,890,965	28.4	%
Foreign currency impact (2)		(9,983	)	-				(21,107	)	-
Total revenues	$	1,222,375		1,151,587	6.1	%	$	2,407,100		1,890,965	27.3	%

Constant currency (1)	$	853,368		794,937	7.4	%	$	1,696,600		1,466,581	15.7	%
Foreign currency impact (2)		(9,300	)	-				(19,640	)	-
Net revenue	$	844,068		794,937	6.2	%	$	1,676,960		1,466,581	14.3	%

Constant currency (1)	$	197,922		135,821	45.7	%	$	369,893		287,508	28.7	%
Foreign currency impact (2)		(4,674	)	-				(9,462	)	-
Operating income	$	193,248		135,821	42.3	%	$	360,431		287,508	25.4	%

Issuer Solutions
Constant currency (1)	$	452,597		429,864	5.3	%	$	900,832		859,577	4.8	%
Foreign currency impact (2)		(9,961	)	-				(21,079	)	-
Total revenues	$	442,636		429,864	3.0	%	$	879,753		859,577	2.3	%

Constant currency (1)	$	402,038		377,862	6.4	%	$	799,627		755,871	5.8	%
Foreign currency impact (2)		(9,278	)	-				(19,612	)	-
Segment net revenue	$	392,760		377,862	3.9	%	$	780,015		755,871	3.2	%

(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.


Net Revenue
(unaudited)
(in thousands)

	Three Months Ended June 30,						Six Months Ended June 30,
					Percent						Percent
	2017			2016	Change		2017			2016	Change
Total revenues	$	1,222,375		1,151,587	6.1	%	$	2,407,100		1,890,965	27.3	%
Less: reimbursable items, interchange and assessments expenses		378,307		356,650	6.1			730,140		424,384	72.0
Net revenue	$	844,068		794,937	6.2	%	$	1,676,960		1,466,581	14.3	%






Reconciliation of GAAP to Non-GAAP

Adjusted Diluted Earnings per Share
(unaudited)
(in thousands, except per share data)

	Three Months Ended June 30,							Six Months Ended June 30,
						Percent							Percent
	2017			2016		Change		2017			2016		Change
Net income attributable to TSYS common shareholders	$	115,014		69,708		65.0	%	$	220,882		160,336		37.8	%
Adjust for amounts attributable to TSYS common shareholders:
Add: Acquisition intangible amortization	$	50,783		58,210		(12.8	)	$	105,785		80,855		30.8
Add: Share-based compensation		11,009		12,557		(12.3	)		20,051		20,707		(3.2	)
Add: TransFirst M&A expenses*		4,149		20,676		(79.9	)		8,973		33,859		(73.5	)
Add: Litigation, claims, judgments or settlements**		(83	)	-		na			1,878		-		na
Less: Tax impact of adjustments***		(22,657	)	(25,735	)	12.0			(47,089	)	(39,631	)	(18.8	)
Adjusted earnings	$	158,215		135,416		16.8	%	$	310,480		256,126		21.2	%

Diluted EPS - Net income attributable to TSYS common shareholders
As reported (GAAP)	$	0.62		0.38		64.3	%	$	1.19		0.87		37.2	%

Adjusted diluted EPS	$	0.85		0.73		16.4	%	$	1.68		1.39		20.7	%

Weighted average diluted shares outstanding		185,286		184,598					185,122		184,335

* 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.
*** 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 June 30,							Six Months Ended June 30,
						Percent							Percent
	2017			2016		Change		2017			2016		Change
Net income	$	116,512		71,748		62.4	%	$	223,619		164,156		36.2	%
Adjust for:
Less: Equity in income of equity investments		(9,513	)	(5,977	)	(59.2	)		(22,422	)	(12,224	)	(83.4	)
Add: Income taxes		56,207		40,290		39.5			99,289		83,719		18.6
Add: Interest expense, net		29,537		30,770		(4.0	)		59,310		53,065		11.8
Add: Depreciation and amortization		99,359		104,969		(5.3	)		203,537		172,552		18.0
Less: (Gain)/loss on foreign currency translations		513		(960	)	nm			824		(1,469	)	nm
Less: Other nonoperating (income)/expenses		(8	)	(50	)	84.0			(189	)	261		nm
Add: Share-based compensation		11,008		12,566		(12.4	)		20,055		20,724		(3.2	)
Add: TransFirst M&A expenses*		4,166		20,676		(79.9	)		9,034		24,078		(62.5	)
Add: Litigation, claims, judgments or settlements		(83	)	-		na			1,878		-		na
Adjusted EBITDA	$	307,698		274,032		12.3	%	$	594,935		504,862		17.8	%

* 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)
		Six Months Ended
Free cash flow:		June 30,
		2017				2016

	Net cash provided by operating activities (GAAP)	$	400,792				339,081
	Capital expenditures		(65,543	)			(81,808	)
	Free cash flow (non-GAAP)	$	335,249				257,273


Revised Guidance Summary
(unaudited)
(in millions, except per share data)


Revenue:		2017							% Change

	Total revenues (GAAP)	$	4,809		to	$	4,889		15	%	to	17	%
	Less: reimbursable items, interchange and assessments expenses		1,494		to		1,494
	Net revenue (non-GAAP)	$	3,315		to	$	3,395		9	%	to	12	%


Earnings per share (EPS):

	Diluted EPS (GAAP)	$	2.30		to	$	2.38		33	%	to	37	%
	Acquisition intangible amortization, share-based compensation, litigation, claims, judgments or settlements and TransFirst M&A expenses, less the tax impact of adjustments		0.92		to		0.92
	Adjusted diluted EPS attributable to TSYS common shareholders* (non-GAAP)	$	3.22		to	$	3.30		15	%	to	18	%

	* Weighted average diluted shares outstanding				185

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