Document and Entity Information
Document and Entity Information | 6 Months Ended |
Jun. 30, 2019shares | |
Document And Entity Information | |
Entity Registrant Name | Total System Services, Inc. |
Entity Central Index Key | 0000721683 |
Document Quarterly Report | true |
Document Transition Report | false |
Entity File Number | 1-10254 |
Entity Incorporation, State or Country Code | GA |
Entity Tax Identification Number | 58-1493818 |
Document Type | 10-Q |
Document Period End Date | Jun. 30, 2019 |
Entity Address, Address Line One | Georgia |
Entity Address, Address Line Two | Post Office Box 1755 |
Entity Address, City or Town | Columbus |
Entity Address, State or Province | GA |
Entity Address, Postal Zip Code | 31902 |
City Area Code | 706 |
Title of 12(b) Security | Common Stock |
Security Exchange Name | NYSE |
Local Phone Number | 644-4388 |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Common Stock, Shares Outstanding | 176,977,106 |
Document Fiscal Year Focus | 2019 |
Document Fiscal Period Focus | Q2 |
Trading Symbol | TSS |
Entity Emerging Growth Company | false |
Entity Small Business | false |
Entity Shell Company | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents (Note 2) | $ 458,220 | $ 471,156 |
Accounts receivable, net of allowances for doubtful accounts and billing adjustments of $6.1 million and $6.0 million as of 2019 and 2018, respectively | 513,712 | 450,322 |
Contract assets (Note 3) | 43,847 | 30,950 |
Prepaid expenses and other current assets (Note 2) | 224,048 | 188,355 |
Total current assets | 1,239,827 | 1,140,783 |
Contract assets (Note 3) | 56,925 | 47,839 |
Goodwill | 4,114,851 | 4,114,838 |
Other intangible assets, net of accumulated amortization of $891.1 million and $802.0 million as of 2019 and 2018, respectively | 703,617 | 796,702 |
Intangible assets - computer software, net of accumulated amortization of $955.2 million and $893.4 million as of 2019 and 2018, respectively | 520,494 | 534,536 |
Property and equipment, net of accumulated depreciation and amortization of $530.4 million and $522.7 million as of 2019 and 2018, respectively (Note 4) | 373,868 | 383,074 |
Operating lease right-of-use assets, net (Note 4) | 198,539 | |
Contract cost assets, net of accumulated amortization | 148,938 | 145,598 |
Equity investments, net | 206,504 | 180,661 |
Deferred income tax assets | 7,516 | 7,773 |
Other assets | 135,727 | 116,905 |
Total assets | 7,706,806 | 7,468,709 |
Current liabilities: | ||
Accounts payable | 57,911 | 97,956 |
Contract liabilities (Note 3) | 51,553 | 47,227 |
Current portion of operating lease liabilities (Note 4) | 43,346 | |
Accrued salaries and employee benefits | 34,922 | 73,143 |
Current portion of long-term borrowings (Note 5) | 17,811 | 20,807 |
Current portion of obligations under finance leases and license agreements (Note 4) | 17,712 | 8,318 |
Other current liabilities (Note 2) | 278,072 | 268,150 |
Total current liabilities | 501,327 | 515,601 |
Long-term borrowings, excluding current portion (Note 5) | 4,003,248 | 3,843,394 |
Deferred income tax liabilities | 401,486 | 380,278 |
Operating lease liabilities, excluding current portion (Note 4) | 167,102 | |
Obligations under finance leases and license agreements, excluding current portion (Note 4) | 39,490 | 46,147 |
Contract liabilities (Note 3) | 25,281 | 21,489 |
Finance Lease And License Agreement, Liability, Noncurrent | 39,490 | 46,147 |
Other long-term liabilities | 74,278 | 75,894 |
Total liabilities | 5,212,212 | 4,882,803 |
Commitments and contingencies (Note 6) | ||
Shareholders' Equity | ||
Common stock- $0.10 par value. Authorized 600,000 shares; 202,765 issued as of 2019 and 2018; 00 and 180,586 outstanding as of 2019 and 2018, respectively | 20,277 | 20,277 |
Additional paid-in capital | 203,098 | 189,889 |
Accumulated other comprehensive loss, net (Notes 1 and 2) | (64,200) | (60,223) |
Treasury stock, at cost (25,788 and 22,179 shares as of 2019 and 2018, respectively | (1,426,177) | (1,042,687) |
Retained earnings | 3,761,596 | 3,478,650 |
Total shareholders' equity | 2,494,594 | 2,585,906 |
Total liabilities and shareholders' equity | $ 7,706,806 | $ 7,468,709 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) shares in Thousands, $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Consolidated Balance Sheets | ||
Accounts receivable, allowances for doubtful accounts and billing adjustments | $ 6.1 | $ 6 |
Other intangible assets, accumulated amortization | 891.1 | 802 |
Intangible assets - computer software, accumulated amortization | 955.2 | 893.4 |
Property and equipment, accumulated depreciation and amortization | $ 530.4 | $ 522.7 |
Common stock, par value (in dollars per share) | $ 0.10 | $ 0.10 |
Common stock, authorized (in shares) | 600,000 | 600,000 |
Common stock, issued (in shares) | 202,765 | 202,765 |
Common stock, outstanding (in shares) | 176,977 | 180,586 |
Treasury stock (in shares) | 25,788 | 22,179 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Consolidated Statements of Income | ||||
Total revenues (Notes 3 and 11) | $ 1,035,485 | $ 1,007,580 | $ 2,070,016 | $ 1,994,750 |
Cost of services | 630,820 | 617,818 | 1,263,032 | 1,231,183 |
Selling, general and administrative expenses | 185,578 | 181,064 | 364,627 | 366,598 |
Total operating expenses | 816,398 | 798,882 | 1,627,659 | 1,597,781 |
Operating income | 219,087 | 208,698 | 442,357 | 396,969 |
Nonoperating expenses, net | (37,416) | (41,170) | (80,407) | (78,812) |
Income before income taxes and equity in income of equity investments | 181,671 | 167,528 | 361,950 | 318,157 |
Income taxes (Note 8) | 31,128 | 37,415 | 61,027 | 55,549 |
Income before equity in income of equity investments | 150,543 | 130,113 | 300,923 | 262,608 |
Equity in income of equity investments, net of tax | 12,217 | 12,322 | 23,444 | 22,929 |
Net income | 162,760 | 142,435 | 324,367 | 285,537 |
Net income attributable to noncontrolling interests | (1,261) | |||
Net income attributable to Total System Services, Inc. (TSYS) common shareholders | $ 162,760 | $ 142,435 | $ 324,367 | $ 284,276 |
Basic earnings per share (EPS) attributable to TSYS common shareholders (Note 9) (in dollars per share) | $ 0.92 | $ 0.78 | $ 1.83 | $ 1.56 |
Diluted EPS attributable to TSYS common shareholders (Note 9) | $ 0.91 | $ 0.78 | $ 1.81 | $ 1.55 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Consolidated Statements of Comprehensive Income | ||||
Net income | $ 162,760 | $ 142,435 | $ 324,367 | $ 285,537 |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency translation adjustments | (10,009) | (21,752) | 416 | (9,257) |
Postretirement healthcare plan adjustments | 837 | (211) | 659 | (358) |
Unrealized (loss) gain on available-for-sale securities (Note 1) | (1,840) | 741 | ||
Other comprehensive (loss) income | (9,172) | (23,803) | 1,075 | (8,874) |
Comprehensive income | 153,588 | 118,632 | 325,442 | 276,663 |
Comprehensive income attributable to noncontrolling interests | (1,261) | |||
Comprehensive income attributable to TSYS common shareholders | $ 153,588 | $ 118,632 | $ 325,442 | $ 275,402 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Cash flows from operating activities: | ||
Net income | $ 324,367 | $ 285,537 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 208,483 | 208,679 |
Amortization of operating lease right of use assets | 25,555 | |
Provisions for cardholder losses | 25,540 | 34,433 |
Share-based compensation | 22,214 | 20,524 |
Provisions for bad debt expenses and billing adjustments | 5,587 | 5,170 |
Charges for transaction processing provisions | 1,319 | 3,177 |
Amortization of debt issuance costs | 2,652 | 2,362 |
Dividends received from equity investments | 892 | |
Loss (gain) on foreign currency | 287 | (107) |
Amortization of bond discount | 557 | 482 |
(Gain) Loss on disposal of equipment, net | (801) | 32 |
Deferred income tax expense | 21,258 | 18,657 |
Change in value of equity investments | (5,196) | |
Equity in income of equity investments | (23,444) | (22,929) |
Changes in operating assets and liabilities, net of effects of acquisitions: | ||
Accounts receivable | (69,011) | (17,489) |
Contract assets and contract liabilities | (13,965) | (8,797) |
Contract cost assets | (3,214) | 2,989 |
Prepaid expenses, other current assets and other long-term assets | (52,859) | 5,111 |
Accounts payable | (9,156) | (3,368) |
Accrued salaries and employee benefits | (38,282) | (38,784) |
Other current liabilities and other long-term liabilities | (26,461) | (25,978) |
Net cash provided by operating activities | 395,430 | 470,593 |
Cash flows from investing activities: | ||
Additions to licensed computer software from vendors | (61,209) | (19,216) |
Purchases of property and equipment | (30,844) | (48,608) |
Additions to internally developed computer software | (24,817) | (19,934) |
Cash used in acquisitions, net of cash acquired | (1,051,629) | |
Other investing activities | (2,700) | (4,119) |
Net cash used in investing activities | (119,570) | (1,143,506) |
Cash flows from financing activities: | ||
Principal payments on long-term borrowings, finance lease obligations and license agreements | (299,499) | (2,626,534) |
Purchase of noncontrolling interest | (126,000) | |
Dividends paid on common stock | (46,534) | (47,190) |
Subsidiary dividends paid to noncontrolling shareholders | (3,778) | |
Repurchase of common stock under plans and tax withholding | (400,023) | (82) |
Debt issuance costs | (15,979) | |
Proceeds from borrowings of long-term debt | 450,000 | 3,477,000 |
Proceeds from exercise of stock options | 6,911 | 29,289 |
Net cash provided by (used in) financing activities | (289,145) | 686,726 |
Cash, cash equivalents and restricted cash: | ||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (332) | (4,143) |
Net increase (decrease) in cash, cash equivalents and restricted cash | (13,617) | 9,670 |
Cash, cash equivalents and restricted cash at beginning of period | 474,279 | 451,370 |
Cash, cash equivalents and restricted cash at end of period | 460,662 | 461,040 |
Supplemental cash flow information: | ||
Interest paid | 85,404 | 71,778 |
Income taxes paid, net | $ 59,411 | $ 21,475 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Equity - USD ($) $ in Thousands | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | Retained Earnings | Redeemable Noncontrolling Interest | Total |
Balance at Dec. 31, 2017 | $ 115,689 | ||||||
Changes in Redeemable Noncontrolling Interests | |||||||
Net income | 1,261 | ||||||
Adjustments to redemption value of redeemable noncontrolling interest | 9,051 | ||||||
Subsidiary dividends paid to noncontrolling interests | (1) | ||||||
Balance at Mar. 31, 2018 | 126,000 | ||||||
Balance at Dec. 31, 2017 | $ 20,277 | $ 162,806 | $ (36,148) | $ (909,960) | $ 3,004,018 | $ 2,240,993 | |
Balance (in shares) at Dec. 31, 2017 | 202,765 | ||||||
Changes in Total Equity | |||||||
Net income | 141,841 | 141,841 | |||||
Other comprehensive income (loss) | 14,929 | 14,929 | |||||
Common stock issued from treasury shares for exercise of stock options | 5,199 | 21,258 | 26,457 | ||||
Common stock unissued due to forfeiture of nonvested awards | 551 | (551) | |||||
Common stock issued from treasury shares for nonvested awards | (12,368) | 12,368 | |||||
Common stock issued from treasury for dividend equivalents | 925 | 9 | 934 | ||||
Share-based compensation (Note 7) | 6,835 | 6,835 | |||||
Cash dividends declared ($0.13 per share) | (23,895) | (23,895) | |||||
Purchase of treasury shares | (24) | (24) | |||||
Adjustments to redemption value of redeemable noncontrolling interest | (9,051) | (9,051) | |||||
Balance at Mar. 31, 2018 | $ 20,277 | 154,897 | (21,219) | (876,900) | 3,117,519 | 2,394,574 | |
Balance (in shares) at Mar. 31, 2018 | 202,765 | ||||||
Balance at Dec. 31, 2017 | 115,689 | ||||||
Balance at Dec. 31, 2017 | $ 20,277 | 162,806 | (36,148) | (909,960) | 3,004,018 | 2,240,993 | |
Balance (in shares) at Dec. 31, 2017 | 202,765 | ||||||
Changes in Total Equity | |||||||
Other comprehensive income (loss) | (8,874) | ||||||
Balance at Jun. 30, 2018 | $ 20,277 | 165,137 | (45,022) | (874,742) | 3,236,046 | 2,501,696 | |
Balance (in shares) at Jun. 30, 2018 | 202,765 | ||||||
Changes in Total Equity | |||||||
Cumulative effect adjustment from adoption of ASU No. 2014-09 (Note 3) | ASU 2014-09 | (4,445) | (4,445) | |||||
Balance at Mar. 31, 2018 | 126,000 | ||||||
Changes in Redeemable Noncontrolling Interests | |||||||
Subsidiary repurchase of noncontrolling interests | (126,000) | ||||||
Subsidiary dividends paid to noncontrolling interests | (3,777) | ||||||
Balance at Mar. 31, 2018 | $ 20,277 | 154,897 | (21,219) | (876,900) | 3,117,519 | 2,394,574 | |
Balance (in shares) at Mar. 31, 2018 | 202,765 | ||||||
Changes in Total Equity | |||||||
Net income | 142,435 | 142,435 | |||||
Other comprehensive income (loss) | (23,803) | (23,803) | |||||
Common stock issued from treasury shares for exercise of stock options | 1,110 | 1,717 | 2,827 | ||||
Common stock unissued due to forfeiture of nonvested awards | 78 | (78) | |||||
Common stock issued from treasury shares for nonvested awards | (577) | 577 | |||||
Share-based compensation (Note 7) | 13,406 | 13,406 | |||||
Cash dividends declared ($0.13 per share) | (23,908) | (23,908) | |||||
Purchase of treasury shares | (58) | (58) | |||||
Adjustments to redemption value of redeemable noncontrolling interest | (3,777) | $ 3,777 | (3,777) | ||||
Balance at Jun. 30, 2018 | $ 20,277 | 165,137 | (45,022) | (874,742) | 3,236,046 | 2,501,696 | |
Balance (in shares) at Jun. 30, 2018 | 202,765 | ||||||
Balance at Dec. 31, 2018 | $ 20,277 | 189,889 | (60,223) | (1,042,687) | 3,478,650 | $ 2,585,906 | |
Balance (in shares) at Dec. 31, 2018 | 202,765 | 202,765,000 | |||||
Changes in Total Equity | |||||||
Net income | 161,607 | $ 161,607 | |||||
Other comprehensive income (loss) | 10,247 | 10,247 | |||||
Common stock issued from treasury shares for exercise of stock options | 3,485 | 2,981 | 6,466 | ||||
Common stock unissued due to forfeiture of nonvested awards | 77 | (77) | |||||
Common stock issued from treasury shares for nonvested awards | (12,812) | 12,812 | |||||
Share-based compensation (Note 7) | 11,296 | 11,296 | |||||
Cash dividends declared ($0.13 per share) | (22,546) | (22,546) | |||||
Purchase of treasury shares | (400,013) | (400,013) | |||||
Balance at Mar. 31, 2019 | $ 20,277 | 191,935 | (55,028) | (1,426,984) | 3,622,560 | 2,352,760 | |
Balance (in shares) at Mar. 31, 2019 | 202,765 | ||||||
Balance at Dec. 31, 2018 | $ 20,277 | 189,889 | (60,223) | (1,042,687) | 3,478,650 | $ 2,585,906 | |
Balance (in shares) at Dec. 31, 2018 | 202,765 | 202,765,000 | |||||
Changes in Total Equity | |||||||
Other comprehensive income (loss) | $ 1,075 | ||||||
Balance at Jun. 30, 2019 | $ 20,277 | 203,098 | (64,200) | (1,426,177) | 3,761,596 | $ 2,494,594 | |
Balance (in shares) at Jun. 30, 2019 | 202,765 | 202,765,000 | |||||
Changes in Total Equity | |||||||
Cumulative effect adjustment from adoption of ASU No. 2014-09 (Note 3) | Adjustments for New Accounting Pronouncement | ASU 2016-01 | (5,052) | 5,052 | |||||
Cumulative effect adjustment from adoption of ASU No. 2014-09 (Note 3) | Adjustments for New Accounting Pronouncement | ASU 2016-02 | (203) | $ (203) | |||||
Balance at Mar. 31, 2019 | $ 20,277 | 191,935 | (55,028) | (1,426,984) | 3,622,560 | 2,352,760 | |
Balance (in shares) at Mar. 31, 2019 | 202,765 | ||||||
Changes in Total Equity | |||||||
Net income | 162,760 | 162,760 | |||||
Other comprehensive income (loss) | (9,172) | (9,172) | |||||
Common stock issued from treasury shares for exercise of stock options | 30 | 416 | 446 | ||||
Common stock issued from treasury shares for nonvested awards | (401) | 401 | |||||
Common stock issued from treasury for dividend equivalents | 602 | 602 | |||||
Share-based compensation (Note 7) | 10,932 | 10,932 | |||||
Cash dividends declared ($0.13 per share) | (23,724) | (23,724) | |||||
Purchase of treasury shares | (10) | (10) | |||||
Balance at Jun. 30, 2019 | $ 20,277 | $ 203,098 | $ (64,200) | $ (1,426,177) | $ 3,761,596 | $ 2,494,594 | |
Balance (in shares) at Jun. 30, 2019 | 202,765 | 202,765,000 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2019 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | TOTAL SYSTEM SERVICES, INC. Notes to Unaudited Consolidate d Financial Statements Note 1 —Summary of Significant Accounting Policies Business Total System Services, Inc.’s (“TSYS’” or the “Company’s”) revenues are derived from providing payment processing, merchant services and related payment services to financial and nonfinancial institutions, generally under long-term processing contracts. The Company also derives revenues by providing general-purpose reloadable (“GPR”) prepaid debit and payroll cards, demand deposit accounts and other financial service solutions to the underbanked and other consumers and businesses. The Company’s services are provided through three operating segments: Issuer Solutions, Merchant Solutions and Consumer Solutions. Through the Company's Issuer Solutions segment, TSYS processes information through its cardholder systems for financial and nonfinancial institutions throughout the United States and internationally. The Company's Merchant Solutions segment provides merchant services to merchant acquirers and merchants mainly in the United States. The Company’s Consumer Solutions segment provides financial service solutions to consumers and businesses in the United States. Pending Merger with Global Payments Inc. On May 27, 2019, TSYS entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Global Payments Inc., a Georgia corporation (“Global Payments”). The Merger Agreement provides that, upon the terms and subject to the conditions set forth therein, TSYS will merge with and into Global Payments (the “Merger”), with Global Payments as the surviving entity in the Merger. Upon the terms and subject to the conditions set forth in the Merger Agreement, at the effective time of the Merger, each share of TSYS common stock outstanding immediately prior to the effective time of the Merger, other than certain shares held by TSYS or Global Payments, will be converted into the right to receive 0.8101 shares of common stock of Global Payments. Holders of common stock of TSYS will receive cash in lieu of fractional shares. Following the completion of the Merger, former holders of TSYS common stock will own approximately forty-eight percent (48%) and former holders of Global Payments common stock will own approximately fifty-two percent (52%) of the fully diluted shares of the combined company. The transaction, which is expected to close in the fourth quarter of 2019, is subject to the satisfaction or waiver of customary closing conditions for both parties, including receipt of required regulatory approvals, the approval of shareholders of both companies and other customary closing conditions. Refer to the definitive joint proxy statement/prospectus of TSYS and Global Payments dated July 23, 2019, as filed by TSYS with the U.S. Securities and Exchange Commission (the “SEC”) on July 25, 2019 for additional information on the Merger. Basis of Presentation The accompanying unaudited consolidated financial statements of TSYS include the accounts of TSYS and its wholly- and majority-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. These financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X and, therefore, do not include all information and footnotes required by U.S. GAAP for complete financial statements. The preparation of the consolidated financial statements requires management of the Company to make estimates and assumptions relating to the reported amounts of assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. These estimates and assumptions are developed based upon all information available. Actual results could differ from estimated amounts. All adjustments, consisting of normal recurring accruals, which, in the opinion of management, are necessary for a fair presentation of financial position and results of operations for the periods covered by this report, have been included. The accompanying unaudited consolidated financial statements should be read in conjunction with the Company’s summary of significant accounting policies, consolidated financial statements and related notes appearing in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the SEC. Results of interim periods are not necessarily indicative of results to be expected for the year. Out-of-period adjustment As of January 1, 2019, the Company recorded an adjustment to reclassify the cumulative unrealized gain of $5.1 million related to an investment in common stock with a readily determinable fair value from other comprehensive income to opening retained earnings. This adjustment was recorded to comply with the guidance in Accounting Standards Update (“ASU”) No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities Fair Value Measurement Refer to Note 3 of the Company’s audited financial statements for the year ended December 31, 2018, which is included as Exhibit 13.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the SEC, for a discussion regarding fair value measurement. The Company had no transfers between Level 1, Level 2 or Level 3 assets during the six months ended June 30, 2019 and 2018. As of June 30, 2019, the Company had recorded goodwill in the amount of $4.1 billion. The Company performs its annual impairment testing of its goodwill balance as of May 31 st Recently Adopted Accounting Pronouncements The Company adopted the following ASUs on January 1, 2019: In September 2017, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2017-13, Revenue Recognition (Topic 605), Revenues from Customers (Topic 606), Leases (Topic 840) and Leases (Topic 842), In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) Note 4 New Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments . The amendments in this update change how companies measure and recognize credit impairment for many financial assets. The new expected credit loss model will require companies to immediately recognize an estimate of credit losses expected to occur over the remaining life of the financial assets (including trade receivables) that are in the scope of the update. The update also made amendments to the current impairment model for held-to-maturity and available-for-sale debt securities and certain guarantees. The ASU is effective for the Company on January 1, 2020. Early adoption is permitted for periods beginning on or after January 1, 2019. The FASB has issued additional ASUs that provide clarification to certain issues identified after ASU 2016-13 was released. In May 2019, the FASB issued ASU 2019-05 Financial Instruments – Credit Losses (Topic 326): Targeted Transition Relief. ASU 2019-05 was issued to provide entities with more flexibility in applying the fair value option upon the adoption of the new standard. On adoption, an entity is allowed to irrevocably elect the fair value option on an instrument-by-instrument basis. This alternative is available for all instruments in the scope of Subtopic 326-20 except for existing held-to-maturity debt securities. If an entity elects the fair value option, the difference between the instrument’s fair value and carrying amount is recognized as a cumulative-effect adjustment. In April 2019, the FASB issued ASU 2019-04 Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. ASU 2019-04 makes several changes to how entities will estimate expected credit losses, including two changes that will likely have the most significant effect. The ASU clarifies that the estimate of expected credit losses should include expected recoveries of financial assets, including recoveries of amounts expected to be written off and those previously written off. The ASU also clarifies that contractual extension or renewal options that are not unconditionally cancellable by the lender are considered when determining the contractual term over which expected credit losses are measured. The effective date and transition requirements for the amendments in ASU 2019-05 and ASU 2019-04 are the same as the effective date and transition requirements in ASU 2016-13. The Company is continuing to evaluate the potential effects of ASU 2016-13 on its consolidated financial statements. Based upon the Company’s evaluation to date, the new guidance will apply to the Company’s accounts receivable and contract assets. The Company does not have any available-for-sale debt securities. The adoption of this guidance will require the implementation of new or updated accounting processes, procedures and internal controls over financial reporting. The new standard will also require expanded qualitative and quantitative disclosures about the Company’s financial assets and allowance for credit losses. Refer to Note 1 of the Company’s audited financial statements for the year ended December 31, 2018, which is included as Exhibit 13.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the SEC, for a discussion regarding other new accounting pronouncements. |
Supplementary Balance Sheet Inf
Supplementary Balance Sheet Information | 6 Months Ended |
Jun. 30, 2019 | |
Supplementary Balance Sheet Information | |
Supplementary Balance Sheet Information | Note 2 — Supplementary Balance Sheet Information Cash, Cash Equivalents and Restricted Cash The Company maintains accounts outside the United States denominated in currencies other than the U.S. dollar. All amounts in domestic accounts are denominated in U.S. dollars. The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Consolidated Statements of Cash Flows. Cash, cash equivalents and restricted cash balances are summarized as follows: (in thousands) June 30, 2019 December 31, 2018 Cash and cash equivalents in domestic accounts $ 405,000 405,535 Cash and cash equivalents in foreign accounts 53,220 65,621 Total cash and cash equivalents 458,220 471,156 Restricted cash included in other long-term assets 2,442 3,123 Total cash, cash equivalents and restricted cash shown in the statements of cash flows $ 460,662 474,279 Restricted cash included in other assets in the Consolidated Balance Sheets represents immaterial amounts required across the Company’s segments for operational purposes. Prepaid Expenses and Other Current Assets Significant components of prepaid expenses and other current assets are summarized as follows: (in thousands) June 30, 2019 December 31, 2018 Prepaid expenses $ 60,647 48,058 Income taxes receivable 48,509 19,362 R&D state tax credit 21,657 26,541 Supplies inventory 19,710 18,089 Other 73,525 76,305 Total $ 224,048 188,355 Other Current Liabilities Significant components of other current liabilities are summarized as follows: (in thousands) June 30, 2019 December 31, 2018 Accrued card brand fees $ 63,887 55,991 Accrued third-party commissions 53,705 46,977 Accrued expenses 28,431 25,178 Dividends payable 23,780 24,645 Accrued interest 21,818 22,191 Other 86,451 93,168 Total $ 278,072 268,150 Accumulated Other Comprehensive Loss The income tax effects allocated to and the cumulative balance of accumulated other comprehensive income (loss) are as follows: (in thousands) Foreign Currency Translation Adjustments Gain on Available-For-Sale Securities Change in Postretirement Healthcare Plans Total Accumulated Other Comprehensive Loss, Net of Tax Balance as of December 31, 2018 $ (63,186) 5,052 (2,089) $ (60,223) Reclassification from adoption of ASU No. 2016-01 (Note 1) - (5,052) - (5,052) Balance after reclassification (a) (63,186) - (2,089) (65,275) Pretax amount 420 - 966 1,386 Tax effect 4 - 307 311 Net-of-tax amount (b) 416 - 659 1,075 Balance as of June 30, 2019 (a)+(b) $ (62,770) - (1,430) $ (64,200) |
Revenues
Revenues | 6 Months Ended |
Jun. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Revenue from Contracts with Customers | Note 3 — Revenue from Contracts with Customers Description of service offerings Issuer Solutions The Company's Issuer Solutions revenues are derived from long-term processing contracts with financial and nonfinancial institutions. Payment processing services revenues are generated primarily from charges based on: ● The number of accounts on file; ● Transactions and authorizations processed; ● Statements generated and/or mailed; ● Managed services; and ● Cards embossed and mailed and other processing services for cardholder accounts on file. Most of these contracts have prescribed annual revenue minimums, penalties for early termination, and service level agreements which may impact contractual fees if certain service levels are not achieved. Issuer Solutions revenues also include loyalty redemption services and professional services. Merchant Solutions The Company’s Merchant Solutions revenues are partially derived from relationships with thousands of individual merchants whose contracts range from thirty days to five years. Additionally, part of the revenues are derived from long-term processing contracts with large financial institutions, other merchant acquirers and merchant organizations which generally range from three to eight years. Merchant services revenue is generated primarily from processing all payment forms including credit, debit and electronic benefits transfer for merchants of all sizes across a wide array of retail market segments. The products and services offered include: ● Authorizations and capture of electronic transactions; ● Clearing and settlement of electronic transactions; ● Information reporting services related to electronic transactions; ● Merchant billing services; and ● Point-of-sale equipment and services. Most of these contracts have prescribed revenue minimums, penalties for early termination, and service level agreements which may impact contractual fees if certain service levels are not achieved. Consumer Solutions The Company’s Consumer Solutions revenues principally consist of a portion of the service fees collected from cardholders Customers are charged fees in connection with the Consumer Solutions segment’s products and services as follows: ● Transactions - Customers are typically charged a fee for each Personal Identification Number (“PIN”) and signature-based purchase transaction made using their cards, unless the customer is on a monthly or annual service plan, in which case the customer is instead charged a monthly or annual subscription fee, as applicable. Customers are also charged fees for Automated Teller Machine (“ATM”) withdrawals and other transactions conducted at ATMs. ● Customer Service and Maintenance - Customers are typically charged fees for balance inquiries made through call centers. Customers are also charged a monthly maintenance fee after a specified period of inactivity. ● Additional Products and Services - Customers are charged fees associated with additional products and services offered in connection with certain cards, including the use of overdraft features, a variety of bill payment options, card replacement, foreign exchange and card-to-card transfers of funds initiated through the call centers. ● Other - Customers are charged fees in connection with the acquisition and reloading of the cards at retailers and the Company receives a portion of these amounts in some cases. Disaggregation of revenue The following table summarizes volume-based and non-volume related revenue from contracts with external customers for the three and six months ended June 30, 2019 and 2018: Three months ended June 30, 2019 (in thousands) Issuer Solutions Merchant Solutions Consumer Solutions Total Volume-based revenues $ 231,265 342,651 195,659 $ 769,575 Non-volume related revenues 241,441 23,985 484 265,910 Total revenues $ 472,706 366,636 196,143 $ 1,035,485 Six months ended June 30, 2019 (in thousands) Issuer Merchant Solutions Consumer Solutions Total Volume-based revenues $ 461,476 665,464 414,354 $ 1,541,294 Non-volume related revenues 481,389 46,353 980 528,722 Total revenues $ 942,865 711,817 415,334 $ 2,070,016 Three months ended June 30, 2018 (in thousands) Issuer Solutions Merchant Solutions Consumer Solutions Total Volume-based revenues $ 223,677 329,295 199,490 $ 752,462 Non-volume related revenues 234,924 19,419 775 255,118 Total revenues $ 458,601 348,714 200,265 $ 1,007,580 Six months ended June 30, 2018 (in thousands) Issuer Merchant Solutions Consumer Solutions Total Volume-based revenues $ 442,949 628,242 409,211 $ 1,480,402 Non-volume related revenues 473,011 39,895 1,442 514,348 Total revenues $ 915,960 668,137 410,653 $ 1,994,750 Issuer Solutions Volume-based revenues are generated from charges based on the number of Accounts on File (“AOF”), transactions and authorizations processed, statements generated, and other processing services for cardholder AOF. Cardholder AOF includes active and inactive consumer credit, retail, prepaid, stored value and commercial card accounts. TSYS’ clients also have the option to use fraud and portfolio management services which are based on authorizations processed and AOF, respectively. Collectively, these services are considered volume-based revenues. Non-volume related revenues include processing fees which are not directly associated with AOF and transactional activity, such as value-added products and services, custom programming and certain other services, which are only offered to TSYS’ processing clients. Additionally, non-volume based revenues include licensing, managed services and output services such as card and document production. Merchant Solutions The Merchant Solutions segment’s revenues primarily consist of volume-based revenues generated from charges based on sales volume processed, and authorized transactions and settled transactions processed. Non-volume related revenues include chargeback and retrieval services, data transmissions, value added products and managed services which are not directly associated with transactional activity. Consumer Solutions The Consumer Solutions segment’s revenues primarily consist of volume-based revenues generated from a portion of the service fees collected from cardholders and interchange revenues. Non-volume related revenues include value-added products and services which are not directly associated with transactional activity. The following table summarizes revenue from contracts with customers, by currency, for the three and six months ended June 30, 2019 and 2018: Three months ended June 30, 2019 (in thousands) Issuer Solutions Merchant Solutions Consumer Solutions Total U.S. dollar $ 372,674 366,313 196,143 $ 935,130 British Pound Sterling 67,142 - - 67,142 Euro 25,750 - - 25,750 Other 7,140 323 - 7,463 Total revenues $ 472,706 366,636 196,143 $ 1,035,485 Six months ended June 30, 2019 (in thousands) Issuer Merchant Solutions Consumer Solutions Total U.S. dollar $ 744,674 711,184 415,334 $ 1,871,192 British Pound Sterling 132,294 - - 132,294 Euro 51,361 - - 51,361 Other 14,536 633 - 15,169 Total revenues $ 942,865 711,817 415,334 $ 2,070,016 Three months ended June 30, 2018 (in thousands) Issuer Merchant Solutions Consumer Solutions Total U.S. dollar $ 367,489 348,524 200,265 $ 916,278 British Pound Sterling 59,098 - - 59,098 Euro 25,419 - - 25,419 Other 6,595 190 - 6,785 Total revenues $ 458,601 348,714 200,265 $ 1,007,580 Six months ended June 30, 2018 (in thousands) Issuer Merchant Solutions Consumer Solutions Total U.S. dollar $ 727,359 667,743 410,653 $ 1,805,755 British Pound Sterling 122,219 - - 122,219 Euro 52,016 - - 52,016 Other 14,366 394 - 14,760 Total revenues $ 915,960 668,137 410,653 $ 1,994,750 See Note 11 Performance obligations The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting period. The purpose of this disclosure is to provide additional information about the amounts and expected timing For revenue which is recognized using (i) the “as-invoiced” practical expedient and (ii) the “direct allocation” method, (in thousands) Remainder of 2019 2020 2021 2022 2023 - 2029 Total Unsatisfied or partially unsatisfied performance obligations $ 382,746 630,966 528,869 392,712 470,584 $ 2,405,877 Contract balances Contract assets are defined as an entity’s right to consideration in exchange for goods or services that the entity has transferred to a customer when that right is conditioned on something other than the passage of time (for example, the entity’s future performance). Contract liabilities are defined as an entity’s obligation to transfer goods or services to a customer for which the entity has received consideration (or the amount is due) from the customer. Net contract assets and liabilities may include amounts related to signing incentives for signing or renewing long-term contracts. Capitalized signing incentives are amortized over the contract term and the amortization is included as a reduction of revenues in the Company’s Consolidated Statements of Income. ASC 606 requires an entity to present in its Consolidated Balance Sheets the net position in a customer contract on a contract-by-contract basis. The net position in a customer contract is presented as either contract assets or contract liabilities. Significant changes in the contract assets and liabilities balances during the six months ended June 30, 2019 are as follows: Six months ended June 30, 2019 (in thousands) Contract Assets Increase/(Decrease) Contract Liabilities (Increase)/Decrease Signing incentive additions $ 32,585 $ - Signing incentive amortization (13,336) (2,631) Revenue recognized in advance of billings 8,308 867 Billed amounts transferred to receivables (4,387) (316) Cash received from customers (1,460) (80,485) Deferred revenue that was recognized as revenue 3,499 68,548 Other changes in contract assets and contract liabilities primarily relate to movements in net contract position (between contract assets and contract liabilities) each period and foreign currency translation. |
Leases
Leases | 6 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
Leases | Note 4 – Leases The Company adopted ASU No. 2016-02 and related ASUs (“ASC 842”) as of January 1, 2019 using the cumulative effect method. Upon adoption, the Company recorded right-of-use (“ROU”) assets of $195.2 million and additional operating liabilities of approximately $190.7 million for existing operating leases. Also as part of the initial adoption, the Company wrote off the carrying value of favorable lease intangible assets of $2.1 million and increased the ROU assets by the same amount. The cumulative effect adjustment recorded to opening retained earnings was not material. The adoption of this ASU did not have a material impact on the Company’s results of operations or cash flows. Description of leases and lease policies - lessee TSYS enters into leases for datacenters, facilities, computer equipment and certain other equipment. Leases with an initial term of 12 months or less are not recorded on the balance sheet. TSYS recognizes lease expense or depreciation expense for leases on a straight-line basis over the lease term. Variable lease expense primarily relates to maintenance and other monthly expenses that do not depend on an index or rate. TSYS determines if an arrangement is a lease at contract inception. Operating leases are included in operating lease ROU assets, other current liabilities, and operating lease liabilities in our Consolidated Balance Sheet. Finance leases are included in property and equipment, net and current and long-term obligations under finance leases in our Consolidated Balance Sheet. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of the future lease payments. As most of its leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. TSYS uses the implicit rate when readily determinable. The operating lease ROU asset also includes any lease payments made and excludes lease incentives received. TSYS’ lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. TSYS has lease agreements with lease and non-lease components, which are combined and accounted for as a single lease component for all asset classes excluding computer equipment. For computer equipment leases, the Company accounts for the lease and non-lease components as separate components. The majority of computer equipment lease commitments come with a renewal option or an option to terminate the lease. These lease commitments may be replaced with new leases, which allow the Company to continually update its computer equipment. Practical expedients and policy elections The Company has elected to utilize the following practical expedients and accounting policy elections: ● Electing as a package, the Company did not reassess: (a) whether expired or existing contracts contain leases under the new definition of a lease, (b) lease classification for expired or existing leases, and (c) whether previously capitalized initial direct costs would qualify for capitalization under ASU No. 2016-02. ● The Company did not evaluate land easements that existed or expired before the Company’s adoption of ASU No. 2016-02 and that were not previously accounted for as leases. ● From a lessee perspective, the Company has elected to combine lease and non-lease components for all classes of assets except for computer equipment. Accordingly, for all asset classes excluding computer equipment, the Company accounts for the combined lease and non-lease components as a single lease component. For computer equipment, the Company accounts for lease and non-lease components, such as maintenance, separately. ● From a lessee perspective, the Company has elected, as an accounting policy election by class of underlying asset, not to recognize ROU assets and lease liabilities for short-term leases. ● From a lessor perspective, the Company has elected to utilize the practical expedient in ASU No. 2018-11 to not separate non-lease components from the associated lease component for arrangements including point-of-sale (“POS”) terminals. Since the predominant component in these arrangements is service revenue and not the POS terminal, the combined components in these arrangements will be accounted for under ASC 606 and not ASC 842. ● The Company utilized incremental borrowing rates in transition (as of January 1, 2019) based on the remaining lease payments and remaining lease term. The Company decided not to elect the use of hindsight in determining the lease term and in assessing impairment of the Company’s ROU assets. Supplemental Information Supplemental balance sheet information related to leases is as follows: (in thousands) June 30, 2019 December 31, 2018 Lease assets: Operating lease right-of-use assets, net: Computer equipment $ 68,179 na Facilities 130,162 na Other 198 na Total operating lease right-of-use assets, net 198,539 na Finance lease right-of-use assets: Computer and other equipment 62,896 91,526 Furniture and other equipment 3,894 6,104 Total finance lease assets 66,790 97,630 Less accumulated depreciation: Computer and other equipment (24,605) (47,903) Furniture and other equipment (3,000) (4,859) Total accumulated depreciation (27,605) (52,762) Total finance lease right-of-use assets, net 39,185 44,868 Total lease assets $ 237,724 44,868 Lease liabilities: Current portion of operating lease liabilities $ 43,346 na Operating lease liabilities, excluding current portion 167,102 na Current portion of obligations under finance leases 5,986 5,934 Obligations under finance leases, excluding current portion 28,247 31,243 Total lease liabilities $ 244,681 37,177 na = not applicable since TSYS adopted ASC 842 as of January 1, 2019 As of June 30, 2019, finance lease assets and finance lease accumulated depreciation decreased by approximately $30.8 million and $25.2 million, respectively, when compared to December 31, 2018. This decrease is related to the execution of purchase options for certain finance leases, the retirement of certain assets no longer in use as well as the expiration of certain leases at the end of their lease term. The balances of any finance leases subject to purchase options exercised during the six months ended June 30, 2019 were subsequently moved to Property and Equipment. Lease expense The components of lease expense are as follows: Three months ended Six months ended (in thousands) June 30, 2019 June 30, 2019 Operating lease expense: Fixed lease expense $ 15,050 30,025 Variable lease expense 1,726 3,695 Short-term lease expense 1,715 3,084 Total operating lease expense 18,491 36,804 Finance lease expense: Amortization of ROU assets 2,836 5,727 Interest on finance lease liabilities 375 763 Total finance lease expense 3,211 6,490 Total lease expense $ 21,702 43,294 Total rental expense under all operating leases for the year ended December 31, 2018 was $128.6 million. Other lease information Supplemental cash flow information related to leases is as follows: Six months ended (in thousands) June 30, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 41,703 Operating cash flows from finance leases 765 Financing cash flows from finance leases 2,927 Six months ended June 30, (in thousands) 2019 2018 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 44,125 na Finance leases - 7,382 na = not applicable since TSYS adopted ASC 842 as of January 1, 2019 The weighted-average remaining lease term and weighted-average discount rate are as follows: Six months ended June 30, 2019 Weighted-average remaining lease term (years): Operating leases 5.29 Finance leases 5.56 Weighted-average discount rate: Operating leases 4.21 % Finance leases 8.49 % Maturity of lease liabilities The future minimum lease payments under noncancelable operating and finance leases with remaining terms greater than one year for the next five years and thereafter and in the aggregate as of June 30, 2019 and December 31, 2018, are as follows: June 30, 2019 December 31, 2018 (in thousands) Operating Leases Finance Leases Operating Leases Finance Leases 2019 1 $ 23,552 3,714 54,818 7,393 2020 55,056 7,381 54,738 7,319 2021 52,898 7,145 50,794 7,085 2022 44,350 7,111 42,048 7,051 2023 20,990 6,719 19,089 6,658 Thereafter 41,107 6,930 32,894 6,868 Total lease payments 237,953 39,000 254,381 42,374 Less imputed interest (24,582) (4,488) na (5,197) Total $ 213,371 34,512 254,381 37,177 na = not applicable since TSYS adopted ASC 842 as of January 1, 2019 1 For the six months ended June 30, 2019, this row represents the remaining payments from July to December 2019. In 2019, the Company entered into operating and finance leases for certain computer equipment as well as an operating lease for a facility, whose commencement dates range from July 2019 to August 2019. Amounts related to these operating and finance leases totaling $3.5 million are not reflected on the Company’s consolidated balance sheet as of June 30, 2019. However, amounts related to these operating and finance leases are reflected in the above disclosure of future lease commitments as of June 30, 2019. |
Long-term Borrowings, Capital L
Long-term Borrowings, Capital Lease Obligations and License Agreements | 6 Months Ended |
Jun. 30, 2019 | |
Long-term Borrowings, Capital Lease Obligations and License Agreements | |
Long-Term Borrowings, Capital Lease Obligations and License Agreements | Note 5 — Long-Term Borrowings and License Agreements Refer to Note 12 of the Company’s audited financial statements for the year ended December 31, 2018, which is included as Exhibit 13.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the SEC, for further discussion regarding long-term borrowings and license agreements. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies | |
Commitments and Contingencies | Note 6 — Commitments and Contingencies Refer to Note 15 of the Company’s audited financial statements for the year ended December 31, 2018, which is included as Exhibit 13.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the SEC, for a discussion regarding commitments and contingencies. Legal Proceedings – General The Company is subject to various legal proceedings and claims and is also subject to information requests, inquiries and investigations arising out of the ordinary conduct of its business. The Company establishes accruals for litigation and similar matters when those matters present loss contingencies that TSYS determines to be both probable and reasonably estimable in accordance with GAAP. Legal costs are expensed as incurred. In the opinion of management, based on current knowledge and in part upon the advice of legal counsel, all matters not specifically discussed below are believed to be adequately covered by insurance, or, if not covered, the possibility of losses from such matters are believed to be remote or such matters are of such kind or involve such amounts that would not have a material adverse effect on the financial position, results of operations or cash flows of the Company if disposed of unfavorably. TelexFree Matter ProPay, Inc. (“ProPay”), a subsidiary of the Company, has been named as one of a number of defendants (including other merchant processors) in several purported class action lawsuits relating to the activities of TelexFree, Inc. and its affiliates and principals. TelexFree is a former merchant customer of ProPay. With regard to TelexFree, each purported class action lawsuit generally alleges that TelexFree engaged in an improper multi-tier marketing scheme involving voice-over Internet protocol telephone services. The plaintiffs in each of the purported class action complaints generally allege that the various merchant processor defendants, including ProPay, aided and abetted the improper activities of TelexFree. TelexFree filed for bankruptcy protection in Nevada. The bankruptcy proceeding was subsequently transferred to the Massachusetts Bankruptcy Court. Specifically, ProPay has been named as one of a number of defendants (including other merchant processors) in each of the following purported class action complaints relating to TelexFree: (i) Waldermara Martin, et al. v. TelexFree, Inc., et al. (Case No. BK-S-14-12524-ABL) (Bankr. D. Nev.); (ii) Anthony Cellucci, et al. v. TelexFree, Inc., et. al. (Case No. 4:14-BK-40987) (Bankr. D. Mass.); (iii) Maduako C. Ferguson Sr., et al. v. Telexelectric, LLP, et. al (Case No. 5:14-CV-00316-D) (E.D.N.C.); (iv) Todd Cook v. TelexElectric LLP et al. (Case No. 2:14-CV-00134) (N.D. Ga.); (v) Felicia Guevara v. James M. Merrill et al., CA No. 1:14-cv-22405-DPG) (S.D. Fla.); (vi) Reverend Jeremiah Githere, et al. v. TelexElectric LLP et al. (Case No. 1:14-CV-12825-GAO) (D. Mass.); (vii) Paulo Eduardo Ferrari et al. v. Telexfree, Inc. et al. (Case No. 14-04080) (Bankr. D. Mass); (viii) Magalhaes v. TelexFree, Inc., et al., No. 14-cv-12437 (D. Mass.); (ix) Griffith v. Merrill et al., No. 14-CV-12058 (D. Mass.); (x) Abelgadir v. Telexelectric, LLP, No. 14-09857 (S.D.N.Y.); and (xi) Rita Dos Santos, v. TelexElectric, LLP et al., 2:15-cv-01906-NVW (D. Ariz.) (together, the “Actions”). On October 21, 2014, the Judicial Panel on Multidistrict Litigation (“JPML”) transferred and consolidated the Actions filed before that date to the United States District Court for the District of Massachusetts (the “Consolidated Action”). The JPML subsequently transferred the remaining Actions to the Consolidated Action. The Consolidated Action is styled In Re: TelexFree Securities Litigation (4:14-md-02566-TSH) (D. Mass.). The plaintiffs in the Consolidated Action filed a First Consolidated Amended Complaint on March 31, 2015 and filed a Second Consolidated Amended Complaint (the “Second Amended Complaint”) on April 30, 2015. The Second Amended Complaint, which supersedes the complaints filed prior to consolidation of the Actions, purports to bring claims on behalf of all persons who purchased certain TelexFree “memberships” and suffered a “net loss” between January 1, 2012 and April 16, 2014. With respect to ProPay, the Second Amended Complaint alleges that ProPay aided and abetted tortious acts committed by TelexFree, and that ProPay was unjustly enriched in the course of providing payment processing services to TelexFree. Several defendants, including ProPay, moved to dismiss the Second Amended Complaint on June 2, 2015. The court held a hearing on the motions to dismiss on November 2, 2015. On January 29, 2019, the court granted in part and denied in part ProPay’s motion to dismiss the Second Amended Complaint. The court dismissed plaintiffs’ claim that ProPay was unjustly enriched by the alleged TelexFree fraud, but denied ProPay’s motion to dismiss the plaintiffs’ claim that ProPay allegedly aided and abetted TelexFree’s purported scheme. The court’s ruling does not reflect any determination of the merits of the plaintiffs’ aiding and abetting claim against ProPay, but instead is merely a ruling that the plaintiffs have alleged facts that could potentially entitle them to relief from ProPay if those facts were true. ProPay denies that it had any knowledge of TelexFree’s alleged fraud or that it aided and abetted that fraud in any way. After deciding the motions to dismiss filed by ProPay and some of the other defendants in the litigation, the court lifted the stay on discovery that had been in place since the outset of the Consolidated Action. Approximately 50 defendants remain in the litigation. The Court held a scheduling conference on March 20, 2019, but has not yet entered an order setting the case schedule. ProPay has also received various subpoenas, a seizure warrant and other inquiries requesting information regarding TelexFree from (i) the Commonwealth of Massachusetts, Securities Division, (ii) United States Securities and Exchange Commission, (iii) US Immigration and Customs Enforcement, and (iv) the bankruptcy Trustee of the Chapter 11 entities of TelexFree, Inc., TelexFree, LLC and TelexFree Financial, Inc. Pursuant to the seizure warrant served by the United States Attorney’s Office for the District of Massachusetts, ProPay delivered all funds associated with TelexFree held for chargeback and other purposes by ProPay to US Immigration and Customs Enforcement. In addition, ProPay received a notice of potential claim from the bankruptcy Trustee as a result of the relationship of ProPay with TelexFree and its affiliates. While the Company and ProPay intend to vigorously defend the Consolidated Action and other matters arising out of the relationship of ProPay with TelexFree and believe ProPay has substantial defenses related to these purported claims, the Company currently cannot reasonably estimate losses attributable to these matters. TSYS and Global Payments Merger Litigation As of the date of this report, three putative class action lawsuits challenging the Merger have been filed. Two of these lawsuits, captioned Peters v. Total System Services, Inc. et al. Wolf v. Total System Services, Inc., et al. (Case No. 4:19-cv-00115), were filed in the United States District Court for the Middle District of Georgia on July 18, 2019. The third lawsuit, captioned Drulias v. Global Payments Inc., et. al In addition, a lawsuit challenging the Merger on behalf of an individual plaintiff captioned Hickey v. Total System Services, Inc., et al. The Peters Wolf Drulias lawsuit names as defendants Global Payments and members of its board. The Hickey lawsuit names as defendants TSYS and the members of the TSYS board of directors. The complaints filed in the lawsuits assert, among other things, claims for filing a materially incomplete registration statement with the SEC. The plaintiffs in the lawsuits seek, among other things, an injunction barring the Merger, rescission of the Merger or rescissory damages, and an award of damages and attorney’s fees. TSYS believes that the claims asserted in the lawsuits are without merit. |
Share-Based Compensation
Share-Based Compensation | 6 Months Ended |
Jun. 30, 2019 | |
Share-Based Compensation | |
Share-Based Compensation | Note 7 — Share-Based Compensation Refer to Notes 1 and 18 of the Company’s audited financial statements for the year ended December 31, 2018, which are included as Exhibit 13.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the SEC, for a discussion regarding the Company’s share-based compensation plans and policy. Share-Based Compensation Share-based compensation costs are classified as selling, general and administrative expenses on the Company’s Consolidated Statements of Income and corporate administration and other expenses for segment reporting purposes. TSYS’ share-based compensation costs are expensed, rather than capitalized, as these awards are typically granted to individuals not involved in capitalizable activities. Below is a summary of share-based compensation expense for the three and six months ended June 30, 2019 and 2018: Three months ended Six months ended June 30, June 30, (in thousands) 2019 2018 2019 2018 Share-based compensation $ 11,500 14,230 22,214 20,524 Nonvested Share Awards - Time-Based The Company granted awards of TSYS common stock to certain key employees. The nonvested stock bonus awards are typically for services to be provided in the future and vest over a period of up to four years. The market value of the TSYS common stock as of the date of issuance is charged as compensation expense over the vesting periods of the awards. As of June 30, 2019, there was approximately $35.2 million of unrecognized compensation cost related to time-based nonvested share awards. Six months ended June 30, 2019 2018 Number of shares granted 316,755 320,853 Market value in millions $ 29.2 28.6 Performance- and Market-Based Awards The Company granted performance- and market-based awards to certain key employees. The performance- and market-based goals are established by the Compensation Committee of the Board of Directors and will vest up to a maximum of 200%. During the first six months of 2019 and 2018, the Compensation Committee established performance goals based primarily on various financial and market-based measures. The Company’s market-based awards are based upon the Company’s Total Shareholder Return (“TSR”) as compared to the TSR of the companies in the S&P 500 determined at the end of the performance period for 2018 awards and determined using a twenty day average of the fair market value at the beginning and end of the performance period for 2019 awards. Compensation expense for performance shares is measured on the grant date based on the quoted market price of TSYS common stock. The Company estimates the probability of achieving the goals through the performance period and expenses the awards on a straight-line basis. The fair value of market-based awards is estimated on the grant date using a Monte Carlo simulation model. The Company expenses market-based awards on a straight-line basis. Compensation costs related to performance- and market-based shares are recognized through the longer of the performance period or the vesting period. As of June 30, 2019, there was approximately $22.3 million of unrecognized compensation cost related to TSYS performance-based awards that is expected to be recognized through December 2021. As of June 30, 2019, there was approximately $3.4 million of unrecognized compensation cost related to TSYS market-based awards that is expected to be recognized through December 2021. During the six months ended June 30, 2019 and 2018, the Company granted performance-based awards based on non-financial metrics and the following performance measures: Performance Measure Definition of Measure Adjusted diluted EPS Adjusted earnings divided by weighted average diluted shares outstanding used for diluted EPS calculations. Adjusted earnings is net income excluding the after-tax impact of share-based compensation expense, amortization of acquisition intangibles, merger and acquisition expenses for completed acquisitions and litigation claims, judgments or settlement expenses and related legal expenses. Net revenue Net revenue is total revenues less reimbursable items that are recorded by TSYS as expense. Adjusted EBITDA Adjusted EBITDA is net income excluding equity in income of equity investments, nonoperating income/(expense), income taxes, depreciation, amortization, share-based compensation expenses and other items. The number of performance-based shares with a one- to two-year performance period granted during the six months ended June 30, 2019 and 2018 totaled 86,779 and 95,904, respectively. The number of performance-based shares with a three-year performance period granted during the six months ended June 30, 2019 and 2018, totaled 79,132 and 79,218, respectively. The grants awarded with a three-year performance period during the first six months of 2019 and 2018 will be expensed through December 31, 2021 and 2020, respectively. The number of market-based awards granted during the six months ended June 30, 2019 and 2018 were 30,856 and 33,940, respectively. The performance measure for the market-based awards is the Company’s TSR as compared to the TSR of the companies in the S&P 500 determined at the end of the performance period for 2018 awards and determined using a twenty day average of the fair market value at the beginning and end of the performance period for 2019 awards. Stock Option Awards The Company granted stock options to certain key executives. The grants will vest over a period of up to three years. The weighted average fair value of the option grants was estimated on the date of grant using the Black-Scholes-Merton option-pricing model with the following weighted average assumptions: Six months ended June 30, 2019 2018 Number of options granted 233,667 360,118 Weighted average exercise price $ 92.37 86.90 Risk-free interest rate 2.47 % 2.55 % Expected volatility 22.79 % 21.80 % Expected term (years) 4.8 4.8 Dividend yield 0.56 % 0.60 % Weighted average fair value $ 21.98 19.23 As of June 30, 2019, there was approximately $5.1 million of unrecognized compensation cost related to TSYS stock options that is expected to be recognized over a remaining weighted average period of 1.7 years. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2019 | |
Income Taxes | |
Income Taxes | Note 8 — Income Taxes Refer to Notes 1 and 14 of the Company’s audited financial statements for the year ended December 31, 2018, which are included as Exhibit 13.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the SEC, for a discussion regarding income taxes. TSYS is the parent of an affiliated group that files a consolidated U.S. federal income tax return, consolidated income tax returns for most states and separate entity basis income tax returns for most foreign jurisdictions. In the normal course of business, the Company is subject to examinations by these taxing authorities unless statutory examination periods lapse. TSYS is no longer subject to U.S. federal income tax examinations for years before 2011 and with few exceptions, the Company is no longer subject to income tax examinations from state and local or foreign tax authorities for years before 2014. In March 2019, TSYS reached a closing agreement with the IRS for the federal income tax examinations in progress for the years 2011 through 2013. Additionally, a number of tax examinations are in progress by the relevant state tax authorities. Although TSYS is unable to determine the ultimate outcome of these examinations, TSYS believes that its liability for uncertain tax positions relating to these jurisdictions for such years is adequate. TSYS’ effective tax rate was 17.1% and 22.3% for the three months ended June 30, 2019 and 2018, respectively, and 16.9% and 17.5% for the six months ended June 30, 2019 and 2018, respectively. The primary reasons for the lower effective income tax rate for the three and six months ended June 30, 2019 as compared to the same periods last year are favorable differences in discrete items related to FIN 48 reserves and equity investment true-ups. During the six-month period ended June 30, 2019, these were mostly offset by unfavorable differences in excess tax benefits of share-based compensation. GAAP prescribes a recognition threshold and measurement attribute for the financial statement recognition, measurement and disclosure of a tax position taken or expected to be taken in a tax return. The unrecognized tax benefit amounts were $18.8 million and $22.3 million as of June 30, 2019 and December 31, 2018, respectively, which resulted in a decrease of $3.5 million during the period. TSYS recognizes potential interest and penalties related to the underpayment of income taxes as income tax expense in the Consolidated Statements of Income. Gross accrued interest and penalties on unrecognized tax benefits totaled $1.7 million and $2.5 million as of June 30, 2019 and December 31, 2018, respectively. The total amounts of unrecognized income tax benefits as of June 30, 2019 and December 31, 2018, that, if recognized, would affect the effective tax rates are $19.3 million and $23.5 million (net of the federal benefit on state tax issues), respectively, which include interest and penalties of $1.0 million and $1.7 million, respectively. TSYS does not expect any significant changes to its calculation of uncertain tax positions during the next twelve months. |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share | |
Earnings Per Share | Note 9 – Earnings Per Share The following tables illustrate basic and diluted EPS for the three and six months ended June 30, 2019 and 2018: Three months ended Six months ended June 30, June 30, 2019 2018 2019 2018 (in thousands, except per share data) Common Common Common Common Basic EPS: Net income attributable to TSYS common shareholders $ 162,760 142,435 324,367 284,276 Less income allocated to nonvested awards (3) (59) (41) (233) Net income allocated to common stock for EPS calculation (a) $ 162,757 142,376 324,326 284,043 Weighted average shares outstanding 176,962 182,355 177,697 181,992 Less participating securities (3) (76) (22) (150) Average common shares outstanding (b) 176,959 182,279 177,675 181,842 Basic EPS (a)/(b) $ 0.92 0.78 1.83 1.56 Diluted EPS: Net income attributable to TSYS common shareholders $ 162,760 142,435 324,367 284,276 Less income allocated to nonvested awards (3) (59) (41) (233) Add income reallocated to nonvested awards 1 3 59 41 233 Net income allocated to common stock for EPS calculation (c) $ 162,760 142,435 324,367 284,276 Weighted average shares outstanding 176,962 182,355 177,697 181,992 Less participating securities (3) (76) (22) (150) Average common shares outstanding 176,959 182,279 177,675 181,842 Increase due to assumed issuance of shares related to common equivalent shares outstanding 986 881 926 1,064 Average nonvested awards 1 569 415 597 551 Average common and common equivalent shares outstanding (d) 178,514 183,575 179,198 183,457 Diluted EPS (c)/(d) $ 0.91 0.78 1.81 1.55 1 In accordance with the diluted EPS guidance under the two-class method, the Company uses the approach- either the treasury stock method or the two-class method assuming a participating security is not exercised- that is more dilutive. The diluted EPS calculation excludes stock options and nonvested awards that are exercisable into 0.1 million and 0.2 million common shares for the three and six months ended June 30, 2019, respectively, and excludes 0.4 million common shares for the three and six months ended June 30, 2018, because their inclusion would have been anti-dilutive. |
Supplementary Cash Flow Informa
Supplementary Cash Flow Information | 6 Months Ended |
Jun. 30, 2019 | |
Supplementary Cash Flow Information | |
Supplementary Cash Flow Information | Note 10 — Supplementary Cash Flow Information Software Acquired Under License Agreements There was approximately $6.9 million and $3.4 million of software acquired under license agreements in the first six months of 2019 and 2018, respectively. Additionally, the Company did not acquire software through vendor financing and other arrangements during the first six months of 2019 compared to $39.6 million of software acquired through vendor financing and other arrangements during the first six months of 2018. |
Segment Reporting and Major Cus
Segment Reporting and Major Customers | 6 Months Ended |
Jun. 30, 2019 | |
Segment Reporting and Major Customers | |
Segment Reporting and Major Customers | Note 11 — Segment Reporting and Major Customers Refer to Note 21 of the Company’s audited financial statements for the year ended December 31, 2018, which is included as Exhibit 13.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the SEC, for a discussion regarding segment reporting and major customers. At TSYS, the chief operating decision maker (“CODM”) is a group consisting of Senior Executive Management. In the first quarter of 2019, the CODM changed the profitability measure for its operating segments to adjusted segment EBITDA. All periods presented have been adjusted to reflect this new measure. The following table presents the Company’s total assets by segment: As of (in thousands) June 30, 2019 December 31, 2018 Issuer Solutions $ 7,049,467 6,843,451 Merchant Solutions 4,204,758 4,248,183 Consumer Solutions 1,383,015 1,374,667 Intersegment assets (4,930,434) (4,997,592) Total assets $ 7,706,806 7,468,709 The Company maintains property and equipment, net of accumulated depreciation and amortization, in the following geographic areas: As of (in thousands) June 30, 2019 December 31, 2018 United States $ 312,707 321,119 Europe 46,466 45,872 Other 14,695 16,083 Total $ 373,868 383,074 The following table presents the Company’s depreciation and amortization by segment: Three months ended Six months ended June 30, June 30, (in thousands) 2019 2018 2019 2018 Depreciation and amortization by segment: Issuer Solutions $ 36,129 29,640 71,296 57,971 Merchant Solutions 8,257 7,523 15,940 15,348 Consumer Solutions 5,202 4,313 9,618 8,573 Segment depreciation and amortization 49,588 41,476 96,854 81,892 Acquisition intangible amortization 53,706 61,865 108,663 124,888 Corporate administration and other 1,479 949 2,966 1,899 Total depreciation and amortization $ 104,773 104,290 208,483 208,679 The following tables reconcile geographic revenues to external revenues by operating segment based on the domicile of the Company’s customers: Three months ended June 30, 2019 (in thousands) Issuer Solutions Merchant Solutions Consumer Solutions Total United States $ 243,000 365,703 196,143 $ 804,846 Europe 1 99,038 128 - 99,166 Canada 1 107,368 422 - 107,790 Other 1 23,300 383 - 23,683 Total $ 472,706 366,636 196,143 $ 1,035,485 1 Certain of these revenues are impacted by movements in foreign currency exchange rates. Six months ended June 30, 2019 (in thousands) Issuer Solutions Merchant Solutions Consumer Solutions Total United States $ 514,130 710,001 415,334 $ 1,639,465 Europe 1 193,425 288 - 193,713 Canada 1 187,001 810 - 187,811 Other 1 48,309 718 - 49,027 Total $ 942,865 711,817 415,334 $ 2,070,016 Three months ended June 30, 2018 (in thousands) Issuer Solutions Merchant Solutions Consumer Solutions Total United States $ 266,274 348,012 200,265 $ 814,551 Europe 1 89,339 127 - 89,466 Canada 1 81,076 279 - 81,355 Other 1 21,912 296 - 22,208 Total $ 458,601 348,714 200,265 $ 1,007,580 Six months ended June 30, 2018 (in thousands) Issuer Solutions Merchant Solutions Consumer Solutions Total United States $ 530,306 666,762 410,653 $ 1,607,721 Europe 1 184,483 252 - 184,735 Canada 1 158,657 558 - 159,215 Other 1 42,514 565 - 43,079 Total $ 915,960 668,137 410,653 $ 1,994,750 2 Certain of these revenues are impacted by movements in foreign currency exchange rates. The following table presents the Company’s operating results by segment: (in thousands) Three months ended Six months ended June 30, June 30, Operating Segments 2019 2018 2019 2018 Adjusted segment EBITDA 1 Issuer Solutions (a) $ 209,845 195,275 414,779 391,040 Merchant Solutions (b) 138,366 133,418 267,201 252,358 Consumer Solutions (c) 53,595 54,545 117,288 108,212 Corporate administration and other (32,867) (38,217) (73,042) (75,667) Total 368,939 345,021 726,226 675,943 Less: Share-based compensation 11,500 14,230 22,214 20,524 Merger & acquisition (M&A) and integration expenses 2 17,150 2,581 20,860 16,949 Depreciation and amortization 104,773 104,290 208,483 208,679 Contract asset amortization 8,250 6,711 16,288 13,584 Contract cost asset amortization 8,179 8,511 16,024 19,238 Operating income 219,087 208,698 442,357 396,969 Nonoperating expenses, net (37,416) (41,170) (80,407) (78,812) Income before income taxes and equity in income of equity investments $ 181,671 167,528 361,950 318,157 Net revenue by segment: Issuer Solutions (e) $ 432,445 421,015 865,919 844,589 Merchant Solutions (f) 364,210 346,389 707,166 663,792 Consumer Solutions (g) 196,143 200,293 415,321 410,781 Segment net revenue 992,798 967,697 1,988,406 1,919,162 Less: intersegment revenues 12,878 11,149 28,217 27,117 Net revenue 3 979,920 956,548 1,960,189 1,892,045 Add: reimbursable items 55,565 51,032 109,827 102,705 Total revenues $ 1,035,485 1,007,580 2,070,016 1,994,750 Adjusted segment EBITDA margin on net revenue: Issuer Solutions (a)/(e) 48.5% 46.4% 47.9% 46.3% Merchant Solutions (b)/(f) 38.0% 38.5% 37.8% 38.0% Consumer Solutions (c)/(g) 27.3% 27.2% 28.2% 26.3% 1 Adjusted segment EBITDA is net income excluding equity in income investments, interest expense (net of interest income), income taxes, depreciation, amortization, contract asset amortization, contract cost asset amortization, gains or losses on foreign currency translation, other nonoperating income or expenses, share-based compensation, litigation, claims, judgments or settlements and M&A and integration expenses. 2 Excludes share-based compensation 3 Net revenue is defined as total revenues less reimbursable items (such as postage) that are recorded by TSYS as expense . Major Customers For the three and six months ended June 30, 2019 and 2018, the Company did not have any major customers. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2019 | |
Subsequent Events | |
Subsequent Events | Note 12 — Subsequent Events Management performed an evaluation of the Company’s activity as of the date these consolidated financial statements were issued and has concluded that there are no significant subsequent events requiring disclosure, except for the TSYS and Global Payments merger litigation discussed in Note 6 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The accompanying unaudited consolidated financial statements of TSYS include the accounts of TSYS and its wholly- and majority-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. These financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X and, therefore, do not include all information and footnotes required by U.S. GAAP for complete financial statements. The preparation of the consolidated financial statements requires management of the Company to make estimates and assumptions relating to the reported amounts of assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. These estimates and assumptions are developed based upon all information available. Actual results could differ from estimated amounts. All adjustments, consisting of normal recurring accruals, which, in the opinion of management, are necessary for a fair presentation of financial position and results of operations for the periods covered by this report, have been included. The accompanying unaudited consolidated financial statements should be read in conjunction with the Company’s summary of significant accounting policies, consolidated financial statements and related notes appearing in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the SEC. Results of interim periods are not necessarily indicative of results to be expected for the year. Out-of-period adjustment As of January 1, 2019, the Company recorded an adjustment to reclassify the cumulative unrealized gain of $5.1 million related to an investment in common stock with a readily determinable fair value from other comprehensive income to opening retained earnings. This adjustment was recorded to comply with the guidance in Accounting Standards Update (“ASU”) No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities Fair Value Measurement Refer to Note 3 of the Company’s audited financial statements for the year ended December 31, 2018, which is included as Exhibit 13.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the SEC, for a discussion regarding fair value measurement. The Company had no transfers between Level 1, Level 2 or Level 3 assets during the six months ended June 30, 2019 and 2018. As of June 30, 2019, the Company had recorded goodwill in the amount of $4.1 billion. The Company performs its annual impairment testing of its goodwill balance as of May 31 st |
Recently Adopted and New Accounting Pronouncements | Recently Adopted Accounting Pronouncements The Company adopted the following ASUs on January 1, 2019: In September 2017, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2017-13, Revenue Recognition (Topic 605), Revenues from Customers (Topic 606), Leases (Topic 840) and Leases (Topic 842), In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) Note 4 New Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments . The amendments in this update change how companies measure and recognize credit impairment for many financial assets. The new expected credit loss model will require companies to immediately recognize an estimate of credit losses expected to occur over the remaining life of the financial assets (including trade receivables) that are in the scope of the update. The update also made amendments to the current impairment model for held-to-maturity and available-for-sale debt securities and certain guarantees. The ASU is effective for the Company on January 1, 2020. Early adoption is permitted for periods beginning on or after January 1, 2019. The FASB has issued additional ASUs that provide clarification to certain issues identified after ASU 2016-13 was released. In May 2019, the FASB issued ASU 2019-05 Financial Instruments – Credit Losses (Topic 326): Targeted Transition Relief. ASU 2019-05 was issued to provide entities with more flexibility in applying the fair value option upon the adoption of the new standard. On adoption, an entity is allowed to irrevocably elect the fair value option on an instrument-by-instrument basis. This alternative is available for all instruments in the scope of Subtopic 326-20 except for existing held-to-maturity debt securities. If an entity elects the fair value option, the difference between the instrument’s fair value and carrying amount is recognized as a cumulative-effect adjustment. In April 2019, the FASB issued ASU 2019-04 Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. ASU 2019-04 makes several changes to how entities will estimate expected credit losses, including two changes that will likely have the most significant effect. The ASU clarifies that the estimate of expected credit losses should include expected recoveries of financial assets, including recoveries of amounts expected to be written off and those previously written off. The ASU also clarifies that contractual extension or renewal options that are not unconditionally cancellable by the lender are considered when determining the contractual term over which expected credit losses are measured. The effective date and transition requirements for the amendments in ASU 2019-05 and ASU 2019-04 are the same as the effective date and transition requirements in ASU 2016-13. The Company is continuing to evaluate the potential effects of ASU 2016-13 on its consolidated financial statements. Based upon the Company’s evaluation to date, the new guidance will apply to the Company’s accounts receivable and contract assets. The Company does not have any available-for-sale debt securities. The adoption of this guidance will require the implementation of new or updated accounting processes, procedures and internal controls over financial reporting. The new standard will also require expanded qualitative and quantitative disclosures about the Company’s financial assets and allowance for credit losses. Refer to Note 1 of the Company’s audited financial statements for the year ended December 31, 2018, which is included as Exhibit 13.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the SEC, for a discussion regarding other new accounting pronouncements. |
Supplementary Balance Sheet I_2
Supplementary Balance Sheet Information (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Supplementary Balance Sheet Information | |
Schedule of cash and cash equivalent balances | (in thousands) June 30, 2019 December 31, 2018 Cash and cash equivalents in domestic accounts $ 405,000 405,535 Cash and cash equivalents in foreign accounts 53,220 65,621 Total cash and cash equivalents 458,220 471,156 Restricted cash included in other long-term assets 2,442 3,123 Total cash, cash equivalents and restricted cash shown in the statements of cash flows $ 460,662 474,279 |
Schedule of significant components of prepaid expenses and other current assets | (in thousands) June 30, 2019 December 31, 2018 Prepaid expenses $ 60,647 48,058 Income taxes receivable 48,509 19,362 R&D state tax credit 21,657 26,541 Supplies inventory 19,710 18,089 Other 73,525 76,305 Total $ 224,048 188,355 |
Schedule of significant components of other current liabilities | (in thousands) June 30, 2019 December 31, 2018 Accrued card brand fees $ 63,887 55,991 Accrued third-party commissions 53,705 46,977 Accrued expenses 28,431 25,178 Dividends payable 23,780 24,645 Accrued interest 21,818 22,191 Other 86,451 93,168 Total $ 278,072 268,150 |
Schedule of income tax effects allocated to and cumulative balance of each component of accumulated other comprehensive income (loss) | (in thousands) Foreign Currency Translation Adjustments Gain on Available-For-Sale Securities Change in Postretirement Healthcare Plans Total Accumulated Other Comprehensive Loss, Net of Tax Balance as of December 31, 2018 $ (63,186) 5,052 (2,089) $ (60,223) Reclassification from adoption of ASU No. 2016-01 (Note 1) - (5,052) - (5,052) Balance after reclassification (a) (63,186) - (2,089) (65,275) Pretax amount 420 - 966 1,386 Tax effect 4 - 307 311 Net-of-tax amount (b) 416 - 659 1,075 Balance as of June 30, 2019 (a)+(b) $ (62,770) - (1,430) $ (64,200) |
Revenues (Tables)
Revenues (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Schedule of disaggregation of revenue | Three months ended June 30, 2019 (in thousands) Issuer Solutions Merchant Solutions Consumer Solutions Total Volume-based revenues $ 231,265 342,651 195,659 $ 769,575 Non-volume related revenues 241,441 23,985 484 265,910 Total revenues $ 472,706 366,636 196,143 $ 1,035,485 Six months ended June 30, 2019 (in thousands) Issuer Merchant Solutions Consumer Solutions Total Volume-based revenues $ 461,476 665,464 414,354 $ 1,541,294 Non-volume related revenues 481,389 46,353 980 528,722 Total revenues $ 942,865 711,817 415,334 $ 2,070,016 Three months ended June 30, 2018 (in thousands) Issuer Solutions Merchant Solutions Consumer Solutions Total Volume-based revenues $ 223,677 329,295 199,490 $ 752,462 Non-volume related revenues 234,924 19,419 775 255,118 Total revenues $ 458,601 348,714 200,265 $ 1,007,580 Six months ended June 30, 2018 (in thousands) Issuer Merchant Solutions Consumer Solutions Total Volume-based revenues $ 442,949 628,242 409,211 $ 1,480,402 Non-volume related revenues 473,011 39,895 1,442 514,348 Total revenues $ 915,960 668,137 410,653 $ 1,994,750 |
Schedule of disaggregation of revenue by currency | Three months ended June 30, 2019 (in thousands) Issuer Solutions Merchant Solutions Consumer Solutions Total U.S. dollar $ 372,674 366,313 196,143 $ 935,130 British Pound Sterling 67,142 - - 67,142 Euro 25,750 - - 25,750 Other 7,140 323 - 7,463 Total revenues $ 472,706 366,636 196,143 $ 1,035,485 Six months ended June 30, 2019 (in thousands) Issuer Merchant Solutions Consumer Solutions Total U.S. dollar $ 744,674 711,184 415,334 $ 1,871,192 British Pound Sterling 132,294 - - 132,294 Euro 51,361 - - 51,361 Other 14,536 633 - 15,169 Total revenues $ 942,865 711,817 415,334 $ 2,070,016 Three months ended June 30, 2018 (in thousands) Issuer Merchant Solutions Consumer Solutions Total U.S. dollar $ 367,489 348,524 200,265 $ 916,278 British Pound Sterling 59,098 - - 59,098 Euro 25,419 - - 25,419 Other 6,595 190 - 6,785 Total revenues $ 458,601 348,714 200,265 $ 1,007,580 Six months ended June 30, 2018 (in thousands) Issuer Merchant Solutions Consumer Solutions Total U.S. dollar $ 727,359 667,743 410,653 $ 1,805,755 British Pound Sterling 122,219 - - 122,219 Euro 52,016 - - 52,016 Other 14,366 394 - 14,760 Total revenues $ 915,960 668,137 410,653 $ 1,994,750 |
Schedule of performance obligations | (in thousands) Remainder of 2019 2020 2021 2022 2023 - 2029 Total Unsatisfied or partially unsatisfied performance obligations $ 382,746 630,966 528,869 392,712 470,584 $ 2,405,877 |
Schedule of changes in contract balances | Six months ended June 30, 2019 (in thousands) Contract Assets Increase/(Decrease) Contract Liabilities (Increase)/Decrease Signing incentive additions $ 32,585 $ - Signing incentive amortization (13,336) (2,631) Revenue recognized in advance of billings 8,308 867 Billed amounts transferred to receivables (4,387) (316) Cash received from customers (1,460) (80,485) Deferred revenue that was recognized as revenue 3,499 68,548 |
ASU 2014-09 | |
Schedule of the impact of adoption of ASC 606 on the Company's consolidated balance sheets, statements of income, and statements of cash flows | |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
Supplemental balance sheet information related to leases | (in thousands) June 30, 2019 December 31, 2018 Lease assets: Operating lease right-of-use assets, net: Computer equipment $ 68,179 na Facilities 130,162 na Other 198 na Total operating lease right-of-use assets, net 198,539 na Finance lease right-of-use assets: Computer and other equipment 62,896 91,526 Furniture and other equipment 3,894 6,104 Total finance lease assets 66,790 97,630 Less accumulated depreciation: Computer and other equipment (24,605) (47,903) Furniture and other equipment (3,000) (4,859) Total accumulated depreciation (27,605) (52,762) Total finance lease right-of-use assets, net 39,185 44,868 Total lease assets $ 237,724 44,868 Lease liabilities: Current portion of operating lease liabilities $ 43,346 na Operating lease liabilities, excluding current portion 167,102 na Current portion of obligations under finance leases 5,986 5,934 Obligations under finance leases, excluding current portion 28,247 31,243 Total lease liabilities $ 244,681 37,177 na = not applicable since TSYS adopted ASC 842 as of January 1, 2019 |
Components of lease expense | Three months ended Six months ended (in thousands) June 30, 2019 June 30, 2019 Operating lease expense: Fixed lease expense $ 15,050 30,025 Variable lease expense 1,726 3,695 Short-term lease expense 1,715 3,084 Total operating lease expense 18,491 36,804 Finance lease expense: Amortization of ROU assets 2,836 5,727 Interest on finance lease liabilities 375 763 Total finance lease expense 3,211 6,490 Total lease expense $ 21,702 43,294 |
Supplemental cash flow information | Six months ended (in thousands) June 30, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 41,703 Operating cash flows from finance leases 765 Financing cash flows from finance leases 2,927 Six months ended June 30, (in thousands) 2019 2018 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 44,125 na Finance leases - 7,382 na = not applicable since TSYS adopted ASC 842 as of January 1, 2019 |
Schedule of weighted average remaining lease term and weighted average discount rate | Six months ended June 30, 2019 Weighted-average remaining lease term (years): Operating leases 5.29 Finance leases 5.56 Weighted-average discount rate: Operating leases 4.21 % Finance leases 8.49 % |
Schedule of future minimum lease payments | June 30, 2019 December 31, 2018 (in thousands) Operating Leases Finance Leases Operating Leases Finance Leases 2019 1 $ 23,552 3,714 54,818 7,393 2020 55,056 7,381 54,738 7,319 2021 52,898 7,145 50,794 7,085 2022 44,350 7,111 42,048 7,051 2023 20,990 6,719 19,089 6,658 Thereafter 41,107 6,930 32,894 6,868 Total lease payments 237,953 39,000 254,381 42,374 Less imputed interest (24,582) (4,488) na (5,197) Total $ 213,371 34,512 254,381 37,177 na = not applicable since TSYS adopted ASC 842 as of January 1, 2019 1 For the six months ended June 30, 2019, this row represents the remaining payments from July to December 2019. |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Share-based Compensation | |
Summary of share-based compensation expense | Three months ended Six months ended June 30, June 30, (in thousands) 2019 2018 2019 2018 Share-based compensation $ 11,500 14,230 22,214 20,524 |
Summary of weighted average assumptions, and weighted average fair value of options | Six months ended June 30, 2019 2018 Number of options granted 233,667 360,118 Weighted average exercise price $ 92.37 86.90 Risk-free interest rate 2.47 % 2.55 % Expected volatility 22.79 % 21.80 % Expected term (years) 4.8 4.8 Dividend yield 0.56 % 0.60 % Weighted average fair value $ 21.98 19.23 |
Nonvested Share Awards | |
Share-based Compensation | |
Summary of shares granted | Six months ended June 30, 2019 2018 Number of shares granted 316,755 320,853 Market value in millions $ 29.2 28.6 |
Performance and Market Based Awards | |
Share-based Compensation | |
Performance Based Award Non-Financial Metrics | Performance Measure Definition of Measure Adjusted diluted EPS Adjusted earnings divided by weighted average diluted shares outstanding used for diluted EPS calculations. Adjusted earnings is net income excluding the after-tax impact of share-based compensation expense, amortization of acquisition intangibles, merger and acquisition expenses for completed acquisitions and litigation claims, judgments or settlement expenses and related legal expenses. Net revenue Net revenue is total revenues less reimbursable items that are recorded by TSYS as expense. Adjusted EBITDA Adjusted EBITDA is net income excluding equity in income of equity investments, nonoperating income/(expense), income taxes, depreciation, amortization, share-based compensation expenses and other items. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share | |
Schedule of basic and diluted EPS | Three months ended Six months ended June 30, June 30, 2019 2018 2019 2018 (in thousands, except per share data) Common Common Common Common Basic EPS: Net income attributable to TSYS common shareholders $ 162,760 142,435 324,367 284,276 Less income allocated to nonvested awards (3) (59) (41) (233) Net income allocated to common stock for EPS calculation (a) $ 162,757 142,376 324,326 284,043 Weighted average shares outstanding 176,962 182,355 177,697 181,992 Less participating securities (3) (76) (22) (150) Average common shares outstanding (b) 176,959 182,279 177,675 181,842 Basic EPS (a)/(b) $ 0.92 0.78 1.83 1.56 Diluted EPS: Net income attributable to TSYS common shareholders $ 162,760 142,435 324,367 284,276 Less income allocated to nonvested awards (3) (59) (41) (233) Add income reallocated to nonvested awards 1 3 59 41 233 Net income allocated to common stock for EPS calculation (c) $ 162,760 142,435 324,367 284,276 Weighted average shares outstanding 176,962 182,355 177,697 181,992 Less participating securities (3) (76) (22) (150) Average common shares outstanding 176,959 182,279 177,675 181,842 Increase due to assumed issuance of shares related to common equivalent shares outstanding 986 881 926 1,064 Average nonvested awards 1 569 415 597 551 Average common and common equivalent shares outstanding (d) 178,514 183,575 179,198 183,457 Diluted EPS (c)/(d) $ 0.91 0.78 1.81 1.55 1 In accordance with the diluted EPS guidance under the two-class method, the Company uses the approach- either the treasury stock method or the two-class method assuming a participating security is not exercised- that is more dilutive. |
Segment Reporting and Major C_2
Segment Reporting and Major Customers (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Segment Reporting and Major Customers | |
Schedule of operating income and revenue by segment | (in thousands) Three months ended Six months ended June 30, June 30, Operating Segments 2019 2018 2019 2018 Adjusted segment EBITDA 1 Issuer Solutions (a) $ 209,845 195,275 414,779 391,040 Merchant Solutions (b) 138,366 133,418 267,201 252,358 Consumer Solutions (c) 53,595 54,545 117,288 108,212 Corporate administration and other (32,867) (38,217) (73,042) (75,667) Total 368,939 345,021 726,226 675,943 Less: Share-based compensation 11,500 14,230 22,214 20,524 Merger & acquisition (M&A) and integration expenses 2 17,150 2,581 20,860 16,949 Depreciation and amortization 104,773 104,290 208,483 208,679 Contract asset amortization 8,250 6,711 16,288 13,584 Contract cost asset amortization 8,179 8,511 16,024 19,238 Operating income 219,087 208,698 442,357 396,969 Nonoperating expenses, net (37,416) (41,170) (80,407) (78,812) Income before income taxes and equity in income of equity investments $ 181,671 167,528 361,950 318,157 Net revenue by segment: Issuer Solutions (e) $ 432,445 421,015 865,919 844,589 Merchant Solutions (f) 364,210 346,389 707,166 663,792 Consumer Solutions (g) 196,143 200,293 415,321 410,781 Segment net revenue 992,798 967,697 1,988,406 1,919,162 Less: intersegment revenues 12,878 11,149 28,217 27,117 Net revenue 3 979,920 956,548 1,960,189 1,892,045 Add: reimbursable items 55,565 51,032 109,827 102,705 Total revenues $ 1,035,485 1,007,580 2,070,016 1,994,750 Adjusted segment EBITDA margin on net revenue: Issuer Solutions (a)/(e) 48.5% 46.4% 47.9% 46.3% Merchant Solutions (b)/(f) 38.0% 38.5% 37.8% 38.0% Consumer Solutions (c)/(g) 27.3% 27.2% 28.2% 26.3% 1 Adjusted segment EBITDA is net income excluding equity in income investments, interest expense (net of interest income), income taxes, depreciation, amortization, contract asset amortization, contract cost asset amortization, gains or losses on foreign currency translation, other nonoperating income or expenses, share-based compensation, litigation, claims, judgments or settlements and M&A and integration expenses. 2 Excludes share-based compensation 3 Net revenue is defined as total revenues less reimbursable items (such as postage) that are recorded by TSYS as expense . |
Schedule of depreciation expense by segment | Three months ended Six months ended June 30, June 30, (in thousands) 2019 2018 2019 2018 Depreciation and amortization by segment: Issuer Solutions $ 36,129 29,640 71,296 57,971 Merchant Solutions 8,257 7,523 15,940 15,348 Consumer Solutions 5,202 4,313 9,618 8,573 Segment depreciation and amortization 49,588 41,476 96,854 81,892 Acquisition intangible amortization 53,706 61,865 108,663 124,888 Corporate administration and other 1,479 949 2,966 1,899 Total depreciation and amortization $ 104,773 104,290 208,483 208,679 |
Schedule of total assets by segment | As of (in thousands) June 30, 2019 December 31, 2018 Issuer Solutions $ 7,049,467 6,843,451 Merchant Solutions 4,204,758 4,248,183 Consumer Solutions 1,383,015 1,374,667 Intersegment assets (4,930,434) (4,997,592) Total assets $ 7,706,806 7,468,709 |
Schedule of property and equipment, net by geographic area | As of (in thousands) June 30, 2019 December 31, 2018 United States $ 312,707 321,119 Europe 46,466 45,872 Other 14,695 16,083 Total $ 373,868 383,074 |
Schedule of reconciliation of geographic revenues to external revenues by operating segment | Three months ended June 30, 2019 (in thousands) Issuer Solutions Merchant Solutions Consumer Solutions Total United States $ 243,000 365,703 196,143 $ 804,846 Europe 1 99,038 128 - 99,166 Canada 1 107,368 422 - 107,790 Other 1 23,300 383 - 23,683 Total $ 472,706 366,636 196,143 $ 1,035,485 1 Certain of these revenues are impacted by movements in foreign currency exchange rates. Six months ended June 30, 2019 (in thousands) Issuer Solutions Merchant Solutions Consumer Solutions Total United States $ 514,130 710,001 415,334 $ 1,639,465 Europe 1 193,425 288 - 193,713 Canada 1 187,001 810 - 187,811 Other 1 48,309 718 - 49,027 Total $ 942,865 711,817 415,334 $ 2,070,016 Three months ended June 30, 2018 (in thousands) Issuer Solutions Merchant Solutions Consumer Solutions Total United States $ 266,274 348,012 200,265 $ 814,551 Europe 1 89,339 127 - 89,466 Canada 1 81,076 279 - 81,355 Other 1 21,912 296 - 22,208 Total $ 458,601 348,714 200,265 $ 1,007,580 Six months ended June 30, 2018 (in thousands) Issuer Solutions Merchant Solutions Consumer Solutions Total United States $ 530,306 666,762 410,653 $ 1,607,721 Europe 1 184,483 252 - 184,735 Canada 1 158,657 558 - 159,215 Other 1 42,514 565 - 43,079 Total $ 915,960 668,137 410,653 $ 1,994,750 2 Certain of these revenues are impacted by movements in foreign currency exchange rates. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies - Operating Segments (Details) $ in Millions | Jan. 01, 2019USD ($) | Jun. 30, 2019segment |
Segments | ||
Operating segments | segment | 3 | |
Common Stock | ||
Out-of-period adjustment | ||
Unrealized gain related to an investment in common stock | $ | $ 5.1 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Pending Merger with Global Inc. (Details) - USD ($) | May 27, 2019 | Jun. 30, 2019 | Dec. 31, 2018 |
Business Acquisition, Equity Interests Issued or Issuable [Line Items] | |||
Common stock, par value (in dollars per share) | $ 0.10 | $ 0.10 | |
Global Payments, Inc. | |||
Business Acquisition, Equity Interests Issued or Issuable [Line Items] | |||
Equity value of shares | $ 48 | ||
Interest acquired (as a percent) | 52.00% | ||
Global Payments, Inc. | Total Systems Services, Inc. | |||
Business Acquisition, Equity Interests Issued or Issuable [Line Items] | |||
Number of shares received | 0.8101 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Fair Value Measurement (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2019 | Dec. 31, 2018 | |
Summary of Significant Accounting Policies | ||
Asset transfers out of Level 1 into Level 2 | $ 0 | |
Asset transfers out of Level 2 into Level 1 | 0 | |
Asset transfers into (out of) Level 3 | 0 | |
Goodwill | $ 4,114,851,000 | $ 4,114,838,000 |
Supplementary Balance Sheet I_3
Supplementary Balance Sheet Information (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 | Jun. 30, 2018 | Dec. 31, 2017 |
Total cash and cash equivalents | $ 458,220 | $ 471,156 | ||
Total cash, cash equivalents and restricted cash shown in the statement of cash flows | 460,662 | 474,279 | $ 461,040 | $ 451,370 |
Domestic | ||||
Total cash and cash equivalents | 405,000 | 405,535 | ||
Foreign | ||||
Total cash and cash equivalents | 53,220 | 65,621 | ||
Other long-term assets | ||||
Restricted cash included in other long-term assets | $ 2,442 | $ 3,123 |
Supplementary Balance Sheet I_4
Supplementary Balance Sheet Information - Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Supplementary Balance Sheet Information | ||
Prepaid expenses | $ 60,647 | $ 48,058 |
Income taxes receivable | 48,509 | 19,362 |
R and D state tax credit | 21,657 | 26,541 |
Supplies inventory | 19,710 | 18,089 |
Other | 73,525 | 76,305 |
Total | $ 224,048 | $ 188,355 |
Supplementary Balance Sheet I_5
Supplementary Balance Sheet Information - Other Current Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Supplementary Balance Sheet Information | ||
Accrued card brand fees | $ 63,887 | $ 55,991 |
Accrued third-party commissions | 53,705 | 46,977 |
Accrued expenses | 28,431 | 25,178 |
Dividends payable | 23,780 | 24,645 |
Accrued interest | 21,818 | 22,191 |
Other | 86,451 | 93,168 |
Total | $ 278,072 | $ 268,150 |
Supplementary Balance Sheet I_6
Supplementary Balance Sheet Information - Accumulated Other Comprehensive Loss (AOCL) (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2019 | Dec. 31, 2018 | |
Accumulated Other Comprehensive Loss (AOCL) | ||
Beginning Balance | $ 2,585,906 | |
Ending Balance | 2,494,594 | $ 2,585,906 |
Accumulated Other Comprehensive Income (Loss) | ||
Accumulated Other Comprehensive Loss (AOCL) | ||
Beginning Balance | (65,275) | |
Reclassification from adoption of ASU 2016-01 (Note 1) | (5,052) | |
Pretax Amount | 1,386 | |
Tax Effect | 311 | |
Net-of-tax Amount | 1,075 | |
Ending Balance | (64,200) | (65,275) |
Accumulated Other Comprehensive Income (Loss) | Previously reported | ||
Accumulated Other Comprehensive Loss (AOCL) | ||
Beginning Balance | (60,223) | |
Ending Balance | (60,223) | |
Foreign currency translation adjustments and transfers from noncontrolling interests | ||
Accumulated Other Comprehensive Loss (AOCL) | ||
Beginning Balance | (63,186) | |
Pretax Amount | 420 | |
Tax Effect | 4 | |
Net-of-tax Amount | 416 | |
Ending Balance | (62,770) | (63,186) |
Foreign currency translation adjustments and transfers from noncontrolling interests | Previously reported | ||
Accumulated Other Comprehensive Loss (AOCL) | ||
Beginning Balance | (63,186) | |
Ending Balance | (63,186) | |
Gain on available-for-sale securities | ||
Accumulated Other Comprehensive Loss (AOCL) | ||
Reclassification from adoption of ASU 2016-01 (Note 1) | (5,052) | |
Gain on available-for-sale securities | Previously reported | ||
Accumulated Other Comprehensive Loss (AOCL) | ||
Beginning Balance | 5,052 | |
Ending Balance | 5,052 | |
Change in postretirement healthcare plans | ||
Accumulated Other Comprehensive Loss (AOCL) | ||
Beginning Balance | (2,089) | |
Pretax Amount | 966 | |
Tax Effect | 307 | |
Net-of-tax Amount | 659 | |
Ending Balance | (1,430) | (2,089) |
Change in postretirement healthcare plans | Previously reported | ||
Accumulated Other Comprehensive Loss (AOCL) | ||
Beginning Balance | $ (2,089) | |
Ending Balance | $ (2,089) |
Revenues - (Details)
Revenues - (Details) | 6 Months Ended |
Jun. 30, 2019 | |
Minimum | |
Disaggregation of revenue | |
Individual Merchants, Contract Term | 30 days |
Long Term Processing Contracts, Term | 3 years |
Maximum | |
Disaggregation of revenue | |
Individual Merchants, Contract Term | 5 years |
Long Term Processing Contracts, Term | 8 years |
Revenues - Disaggregated Revenu
Revenues - Disaggregated Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Disaggregation of revenue | ||||
Revenue | $ 1,035,485 | $ 1,007,580 | $ 2,070,016 | $ 1,994,750 |
U.S. dollar | ||||
Disaggregation of revenue | ||||
Revenue | 935,130 | 916,278 | 1,871,192 | 1,805,755 |
British Pound Sterling | ||||
Disaggregation of revenue | ||||
Revenue | 67,142 | 59,098 | 132,294 | 122,219 |
Euro | ||||
Disaggregation of revenue | ||||
Revenue | 25,750 | 25,419 | 51,361 | 52,016 |
Other | ||||
Disaggregation of revenue | ||||
Revenue | 7,463 | 6,785 | 15,169 | 14,760 |
Volume-based revenues | ||||
Disaggregation of revenue | ||||
Revenue | 769,575 | 752,462 | 1,541,294 | 1,480,402 |
Non-volume related revenues | ||||
Disaggregation of revenue | ||||
Revenue | 265,910 | 255,118 | 528,722 | 514,348 |
Issuer Solutions | ||||
Disaggregation of revenue | ||||
Revenue | 472,706 | 458,601 | 942,865 | 915,960 |
Issuer Solutions | U.S. dollar | ||||
Disaggregation of revenue | ||||
Revenue | 372,674 | 367,489 | 744,674 | 727,359 |
Issuer Solutions | British Pound Sterling | ||||
Disaggregation of revenue | ||||
Revenue | 67,142 | 59,098 | 132,294 | 122,219 |
Issuer Solutions | Euro | ||||
Disaggregation of revenue | ||||
Revenue | 25,750 | 25,419 | 51,361 | 52,016 |
Issuer Solutions | Other | ||||
Disaggregation of revenue | ||||
Revenue | 7,140 | 6,595 | 14,536 | 14,366 |
Issuer Solutions | Volume-based revenues | ||||
Disaggregation of revenue | ||||
Revenue | 231,265 | 223,677 | 461,476 | 442,949 |
Issuer Solutions | Non-volume related revenues | ||||
Disaggregation of revenue | ||||
Revenue | 241,441 | 234,924 | 481,389 | 473,011 |
Merchant Solutions | ||||
Disaggregation of revenue | ||||
Revenue | 366,636 | 348,714 | 711,817 | 668,137 |
Merchant Solutions | U.S. dollar | ||||
Disaggregation of revenue | ||||
Revenue | 366,313 | 348,524 | 711,184 | 667,743 |
Merchant Solutions | Other | ||||
Disaggregation of revenue | ||||
Revenue | 323 | 190 | 633 | 394 |
Merchant Solutions | Volume-based revenues | ||||
Disaggregation of revenue | ||||
Revenue | 342,651 | 329,295 | 665,464 | 628,242 |
Merchant Solutions | Non-volume related revenues | ||||
Disaggregation of revenue | ||||
Revenue | 23,985 | 19,419 | 46,353 | 39,895 |
Consumer Solutions | ||||
Disaggregation of revenue | ||||
Revenue | 196,143 | 200,265 | 415,334 | 410,653 |
Consumer Solutions | U.S. dollar | ||||
Disaggregation of revenue | ||||
Revenue | 196,143 | 200,265 | 415,334 | 410,653 |
Consumer Solutions | Volume-based revenues | ||||
Disaggregation of revenue | ||||
Revenue | 195,659 | 199,490 | 414,354 | 409,211 |
Consumer Solutions | Non-volume related revenues | ||||
Disaggregation of revenue | ||||
Revenue | $ 484 | $ 775 | $ 980 | $ 1,442 |
Revenues - Performance Obligati
Revenues - Performance Obligation (Details) $ in Thousands | Jun. 30, 2019USD ($) |
Revenue from Contract with Customer [Abstract] | |
Unsatisfied or partially unsatisfied performance obligations | $ 2,405,877 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-01-01 | |
Revenue from Contract with Customer [Abstract] | |
Unsatisfied or partially unsatisfied performance obligations | $ 382,746 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 84 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01 | |
Revenue from Contract with Customer [Abstract] | |
Unsatisfied or partially unsatisfied performance obligations | $ 630,966 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 12 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | |
Revenue from Contract with Customer [Abstract] | |
Unsatisfied or partially unsatisfied performance obligations | $ 528,869 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 12 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | |
Revenue from Contract with Customer [Abstract] | |
Unsatisfied or partially unsatisfied performance obligations | $ 392,712 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 12 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |
Revenue from Contract with Customer [Abstract] | |
Unsatisfied or partially unsatisfied performance obligations | $ 470,584 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 84 months |
Revenues - Changes in contract
Revenues - Changes in contract assets and liabilities (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2019USD ($) | |
Contract Assets | |
Increase in net contract assets related to signing incentives additions | $ 32,585 |
Decrease in net contract assets related to signing incentive amortization | (13,336) |
Increase in net contract assets related to revenue recognized in advance of billing | 8,308 |
Change in net contract assets due to amounts transferred to receivables | (4,387) |
Changes in net contract assets primarily relating to cash received from customers | (1,460) |
Deferred revenue that was released from the net contract asset balance | 3,499 |
Contract Liabilities | |
Increase in net contract liabilities related to signing incentive amortization | (2,631) |
Decrease in net contract liabilities related to revenue recognized in advance of billing | 867 |
Change in net contract liabilities due to amounts transferred to receivables | (316) |
Increase in net contract liabilities primarily relating to cash received from customers | (80,485) |
Deferred revenue that was released from net contract liabilities | $ 68,548 |
Lease (Details)
Lease (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2019 | Jan. 01, 2019 | Dec. 31, 2018 | |
Leases | |||
Operating leases, right to use assets | $ 198,539 | ||
Operating leases, liabilities | $ 213,371 | $ 254,381 | |
Practical expedients, package | false | ||
Practical expedient, hindsight | false | ||
Intangible assets | |||
Leases | |||
Operating leases, right to use assets | $ 2,100 | ||
ASU 2016-02 | |||
Leases | |||
Operating leases, right to use assets | 195,200 | ||
Operating leases, liabilities | $ 190,700 |
Lease - Supplemental Informatio
Lease - Supplemental Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended |
Jun. 30, 2019 | Jun. 30, 2019 | Dec. 31, 2018 | |
Leases | |||
Operating leases, right to use assets | $ 198,539 | $ 198,539 | |
Finance lease right-of-use assets | 66,790 | 66,790 | $ 97,630 |
Finance Lease, Right-of-Use Asset, Amortization | (2,836) | (5,727) | |
Total lease assets | 237,724 | 237,724 | 44,868 |
Current portion of operating lease liabilities (Note 4) | 43,346 | 43,346 | |
Operating lease liabilities, excluding current portion (Note 4) | 167,102 | 167,102 | |
Current portion of obligations under finance leases and license agreements (Note 4) | 5,986 | 5,986 | 5,934 |
Obligations under finance leases and license agreements, excluding current portion (Note 4) | 28,247 | 28,247 | 31,243 |
Total lease liabilities | 244,681 | 244,681 | 37,177 |
Decrease in finance lease asset | 30,800 | ||
Decrease in finance lease accumulated depreciation | 25,200 | ||
Finance Leased Asset | |||
Leases | |||
Finance Lease, Right-of-Use Asset, Amortization | (27,605) | (52,762) | |
Total finance lease right-of-use assets, net | 39,185 | 39,185 | 44,868 |
Computer and other equipment | |||
Leases | |||
Finance lease right-of-use assets | 62,896 | 62,896 | 91,526 |
Finance Lease, Right-of-Use Asset, Amortization | (24,605) | (47,903) | |
Furniture and other equipment | |||
Leases | |||
Finance lease right-of-use assets | 3,894 | 3,894 | 6,104 |
Finance Lease, Right-of-Use Asset, Amortization | (3,000) | $ (4,859) | |
Computer equipment | |||
Leases | |||
Operating leases, right to use assets | 68,179 | 68,179 | |
Facilities | |||
Leases | |||
Operating leases, right to use assets | 130,162 | 130,162 | |
Other | |||
Leases | |||
Operating leases, right to use assets | $ 198 | $ 198 |
Lease - Lease expense (Details)
Lease - Lease expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended |
Jun. 30, 2019 | Jun. 30, 2019 | Dec. 31, 2018 | |
Lease expense | |||
Fixed lease expense | $ 15,050 | $ 30,025 | |
Variable lease expense | 1,726 | 3,695 | |
Short-term lease expense | 1,715 | 3,084 | |
Total operating lease expense | 18,491 | 36,804 | |
Finance lease expense: | |||
Amortization of ROU assets | 2,836 | 5,727 | |
Interest on finance lease liabilities | 375 | 763 | |
Total finance lease expense | 3,211 | 6,490 | |
Total lease expense | $ 21,702 | $ 43,294 | |
Rental expense under all operating leases | $ 128,600 |
Lease - Other lease information
Lease - Other lease information (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Leases | ||
Operating cash flows from operating leases | $ 41,703 | |
Operating cash flows from finance leases | 765 | |
Financing cash flows from finance leases | 2,927 | |
Right-of-use assets obtained in exchange for lease obligations, operating leases | $ 44,125 | |
Right-of-use assets obtained in exchange for lease obligations, finance leases | $ 7,382 | |
Weighted-average remaining lease term (years), operating leases | 5 years 3 months 14 days | |
Weighted-average remaining lease term (years), finance leases | 5 years 6 months 21 days | |
Weighted-average discount rate, operating leases | 4.21% | |
Weighted-average discount rate, finance leases | 8.49% | |
Minimum | ||
Leases | ||
Lease terms | 1 year | |
Maximum | ||
Leases | ||
Lease terms | 5 years |
Lease - Maturity of lease liabi
Lease - Maturity of lease liabilities (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019 | Dec. 31, 2018 | |
Operating Leases | ||
2019 | $ 23,552 | $ 54,818 |
2020 | 55,056 | 54,738 |
2021 | 52,898 | 50,794 |
2022 | 44,350 | 42,048 |
2023 | 20,990 | 19,089 |
Thereafter | 41,107 | 32,894 |
Total lease payments | 237,953 | 254,381 |
Less imputed interest | (24,582) | |
Total | 213,371 | 254,381 |
Finance Leases | ||
2019 | 3,714 | 7,393 |
2020 | 7,381 | 7,319 |
2021 | 7,145 | 7,085 |
2022 | 7,111 | 7,051 |
2023 | 6,719 | 6,658 |
Thereafter | 6,930 | 6,868 |
Total lease payments | 39,000 | 42,374 |
Less imputed interest | (4,488) | (5,197) |
Total | 34,512 | $ 37,177 |
Operating And Finance Leases | $ 3,500 |
Commitments and Contingencies -
Commitments and Contingencies - Legal Proceedings (Details) | Jan. 29, 2019defendant |
Propay | |
Commitments and Contingencies | |
Number of defendants | 50 |
Share-Based Compensation - Expe
Share-Based Compensation - Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Share-Based Compensation | ||||
Share-based compensation | $ 11,500 | $ 14,230 | $ 22,214 | $ 20,524 |
Selling, general and administrative expenses | ||||
Share-Based Compensation | ||||
Share-based compensation | $ 11,500 | $ 14,230 | $ 22,214 | $ 20,524 |
Share-Based Compensation - Nonv
Share-Based Compensation - Nonvested Awards - Vesting and Grants Cost (Details) - Nonvested Share Awards - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Shares granted | ||
Number of shares granted | 316,755 | 320,853 |
Market value | $ 29.2 | $ 28.6 |
Unrecognized compensation cost (in dollars) | $ 35.2 | |
Maximum | ||
Share-based Compensation | ||
Award vesting period | 4 years |
Share-Based Compensation - Perf
Share-Based Compensation - Performance and Market- Based Awards Granted (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Performance Based Awards | ||
Share-based Compensation | ||
Performance period | 3 years | |
Unrecognized compensation cost (in dollars) | $ 22.3 | |
Number of shares granted | 86,779 | |
Performance Based Awards | Minimum | ||
Share-based Compensation | ||
Performance period | 1 year | |
Performance Based Awards | Maximum | ||
Share-based Compensation | ||
Performance period | 2 years | |
Vesting percentage | 200.00% | |
Performance Based Awards | Performance Period Ending December 2021 | ||
Share-based Compensation | ||
Number of shares granted | 79,132 | |
Performance Based Awards | Performance Period Ending December 2020 | ||
Share-based Compensation | ||
Number of shares granted | 79,218 | |
Performance Based Awards | Performance Period Ending December 2018 | ||
Share-based Compensation | ||
Number of shares granted | 95,904 | |
Market Based Share Awards | ||
Share-based Compensation | ||
Unrecognized compensation cost (in dollars) | $ 3.4 | |
Number of shares granted | 30,856 | 33,940 |
Market Based Share Awards | Maximum | ||
Share-based Compensation | ||
Vesting percentage | 200.00% | |
Nonvested Share Awards | ||
Share-based Compensation | ||
Unrecognized compensation cost (in dollars) | $ 35.2 | |
Number of shares granted | 316,755 | 320,853 |
Share-Based Compensation - Stoc
Share-Based Compensation - Stock Option Award Vesting and Weighted Average Assumptions (Details) - Stock Options - $ / shares | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Weighted average assumptions and weighted average fair value of options | ||
Number of options granted (in shares) | 233,667 | 360,118 |
Weighted average exercise price (in dollars per share) | $ 92.37 | $ 86.90 |
Risk-free interest rate (as a percent) | 2.47% | 2.55% |
Expected volatility (as a percent) | 22.79% | 21.80% |
Expected term (years) | 4 years 9 months 18 days | 4 years 9 months 18 days |
Dividend yield (as a percent) | 0.56% | 0.60% |
Weighted average fair value (in dollars per share) | $ 21.98 | $ 19.23 |
Maximum | ||
Share-based Compensation | ||
Award vesting period | 3 years |
Share-Based Compensation - St_2
Share-Based Compensation - Stock Option Award Unrecognized Compensation Cost (Details) - Stock Options $ in Millions | 6 Months Ended |
Jun. 30, 2019USD ($) | |
Unrecognized compensation cost | |
Unrecognized compensation cost | $ 5.1 |
Weighted average period of recognition of unrecognized compensation cost | 1 year 8 months 12 days |
Income Taxes - Effective Tax Ra
Income Taxes - Effective Tax Rate and Unrecognized Tax Benefits (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Uncertain tax positions | |||||
Effective tax rate (as a percent) | 17.10% | 22.30% | 16.90% | 17.50% | |
Amount of unrecognized tax benefits | $ 18.8 | $ 18.8 | $ 22.3 | ||
Net, current activity | (3.5) | ||||
Gross accrued interest and penalties on unrecognized tax benefits | 1.7 | 1.7 | 2.5 | ||
Unrecognized income tax benefits that, if recognized, would affect the effective tax rates | 19.3 | 19.3 | 23.5 | ||
Unrecognized income tax benefits that, if recognized, would affect the effective tax rates , interest and penalties | 1 | 1 | $ 1.7 | ||
Significant Change in Unrecognized Tax Benefits is Reasonably Possible, Amount of Unrecorded Benefit | $ 0 | $ 0 |
Earnings Per Share - Basic EPS
Earnings Per Share - Basic EPS (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Basic EPS: | ||||
Net income attributable to TSYS common shareholders | $ 162,760 | $ 142,435 | $ 324,367 | $ 284,276 |
Basic EPS | $ 0.92 | $ 0.78 | $ 1.83 | $ 1.56 |
Common Stock | ||||
Basic EPS: | ||||
Net income attributable to TSYS common shareholders | $ 162,760 | $ 142,435 | $ 324,367 | $ 284,276 |
Less income allocated to nonvested awards | (3) | (59) | (41) | (233) |
Net income allocated to common stock for EPS calculation | $ 162,757 | $ 142,376 | $ 324,326 | $ 284,043 |
Weighted average shares outstanding | 176,962 | 182,355 | 177,697 | 181,992 |
Less participating securities | (3) | (76) | (22) | (150) |
Average common shares outstanding | 176,959 | 182,279 | 177,675 | 181,842 |
Basic EPS | $ 0.92 | $ 0.78 | $ 1.83 | $ 1.56 |
Earnings Per Share - Diluted EP
Earnings Per Share - Diluted EPS (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Diluted EPS: | ||||
Net income attributable to TSYS common shareholders | $ 162,760 | $ 142,435 | $ 324,367 | $ 284,276 |
Diluted EPS | $ 0.91 | $ 0.78 | $ 1.81 | $ 1.55 |
Common Stock | ||||
Diluted EPS: | ||||
Net income attributable to TSYS common shareholders | $ 162,760 | $ 142,435 | $ 324,367 | $ 284,276 |
Less income allocated to nonvested awards | (3) | (59) | (41) | (233) |
Add income allocated to nonvested awards | 3 | 59 | 41 | 233 |
Net income allocated to common stock for EPS calculation | $ 162,760 | $ 142,435 | $ 324,367 | $ 284,276 |
Weighted average shares outstanding | 176,962 | 182,355 | 177,697 | 181,992 |
Less participating securities | (3) | (76) | (22) | (150) |
Average common shares outstanding | 176,959 | 182,279 | 177,675 | 181,842 |
Increase due to assumed issuance of shares related to common equivalent shares outstanding | 986 | 881 | 926 | 1,064 |
Average nonvested awards | 569 | 415 | 597 | 551 |
Average common and common equivalent shares outstanding | 178,514 | 183,575 | 179,198 | 183,457 |
Diluted EPS | $ 0.91 | $ 0.78 | $ 1.81 | $ 1.55 |
Earnings Per Share - Anti-dilut
Earnings Per Share - Anti-dilutive Securities (Details) - shares shares in Millions | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2019 | Jun. 30, 2018 | |
Earnings Per Share | |||
Anti-dilutive stock options and nonvested awards excluded from diluted EPS calculation | 0.1 | 0.2 | 0.4 |
Supplementary Cash Flow Infor_2
Supplementary Cash Flow Information (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Supplementary Cash Flow Information | ||
Software acquired under license agreements | $ 6.9 | $ 3.4 |
Software acquired through vendor financing arrangement | $ 39.6 |
Segment Reporting and Major C_3
Segment Reporting and Major Customers - Total Assets by Segment (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Segment Reporting | ||
Total assets | $ 7,706,806 | $ 7,468,709 |
Issuer Solutions | ||
Segment Reporting | ||
Total assets | 7,049,467 | 6,843,451 |
Merchant Solutions | ||
Segment Reporting | ||
Total assets | 4,204,758 | 4,248,183 |
Consumer Solutions | ||
Segment Reporting | ||
Total assets | 1,383,015 | 1,374,667 |
Intersegment | ||
Segment Reporting | ||
Total assets | $ (4,930,434) | $ (4,997,592) |
Segment Reporting and Major C_4
Segment Reporting and Major Customers - Property and Equipment, net (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Property and equipment, net, by geographic areas | ||
Property and equipment, net of accumulated depreciation and amortization | $ 373,868 | $ 383,074 |
United States | ||
Property and equipment, net, by geographic areas | ||
Property and equipment, net of accumulated depreciation and amortization | 312,707 | 321,119 |
Europe | ||
Property and equipment, net, by geographic areas | ||
Property and equipment, net of accumulated depreciation and amortization | 46,466 | 45,872 |
Other | ||
Property and equipment, net, by geographic areas | ||
Property and equipment, net of accumulated depreciation and amortization | $ 14,695 | $ 16,083 |
Segment Reporting and Major C_5
Segment Reporting and Major Customers - Depreciation and Amortization (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Segment Reporting | ||||
Total depreciation and amortization | $ 104,773 | $ 104,290 | $ 208,483 | $ 208,679 |
Operating Segments | ||||
Segment Reporting | ||||
Depreciation and amortization | 49,588 | 41,476 | 96,854 | 81,892 |
Operating Segments | Issuer Solutions | ||||
Segment Reporting | ||||
Depreciation and amortization | 36,129 | 29,640 | 71,296 | 57,971 |
Operating Segments | Merchant Solutions | ||||
Segment Reporting | ||||
Depreciation and amortization | 8,257 | 7,523 | 15,940 | 15,348 |
Operating Segments | Consumer Solutions | ||||
Segment Reporting | ||||
Depreciation and amortization | 5,202 | 4,313 | 9,618 | 8,573 |
Segment Reconciling Items | ||||
Segment Reporting | ||||
Acquisition intangible amortization | 53,706 | 61,865 | 108,663 | 124,888 |
Corporate Administration and Other | ||||
Segment Reporting | ||||
Depreciation and amortization | $ 1,479 | $ 949 | $ 2,966 | $ 1,899 |
Segment Reporting and Major C_6
Segment Reporting and Major Customers - Geographic Revenues to External Revenues (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Geographic revenues to external revenues by operating segment | ||||
Total revenues | $ 1,035,485 | $ 1,007,580 | $ 2,070,016 | $ 1,994,750 |
United States | ||||
Geographic revenues to external revenues by operating segment | ||||
Total revenues | 804,846 | 814,551 | 1,639,465 | 1,607,721 |
Europe | ||||
Geographic revenues to external revenues by operating segment | ||||
Total revenues | 99,166 | 89,466 | 193,713 | 184,735 |
Canada | ||||
Geographic revenues to external revenues by operating segment | ||||
Total revenues | 107,790 | 81,355 | 187,811 | 159,215 |
Other | ||||
Geographic revenues to external revenues by operating segment | ||||
Total revenues | 23,683 | 22,208 | 49,027 | 43,079 |
Issuer Solutions | ||||
Geographic revenues to external revenues by operating segment | ||||
Total revenues | 472,706 | 458,601 | 942,865 | 915,960 |
Issuer Solutions | United States | ||||
Geographic revenues to external revenues by operating segment | ||||
Total revenues | 243,000 | 266,274 | 514,130 | 530,306 |
Issuer Solutions | Europe | ||||
Geographic revenues to external revenues by operating segment | ||||
Total revenues | 99,038 | 89,339 | 193,425 | 184,483 |
Issuer Solutions | Canada | ||||
Geographic revenues to external revenues by operating segment | ||||
Total revenues | 107,368 | 81,076 | 187,001 | 158,657 |
Issuer Solutions | Other | ||||
Geographic revenues to external revenues by operating segment | ||||
Total revenues | 23,300 | 21,912 | 48,309 | 42,514 |
Merchant Solutions | ||||
Geographic revenues to external revenues by operating segment | ||||
Total revenues | 366,636 | 348,714 | 711,817 | 668,137 |
Merchant Solutions | United States | ||||
Geographic revenues to external revenues by operating segment | ||||
Total revenues | 365,703 | 348,012 | 710,001 | 666,762 |
Merchant Solutions | Europe | ||||
Geographic revenues to external revenues by operating segment | ||||
Total revenues | 128 | 127 | 288 | 252 |
Merchant Solutions | Canada | ||||
Geographic revenues to external revenues by operating segment | ||||
Total revenues | 422 | 279 | 810 | 558 |
Merchant Solutions | Other | ||||
Geographic revenues to external revenues by operating segment | ||||
Total revenues | 383 | 296 | 718 | 565 |
Consumer Solutions | ||||
Geographic revenues to external revenues by operating segment | ||||
Total revenues | 196,143 | 200,265 | 415,334 | 410,653 |
Consumer Solutions | United States | ||||
Geographic revenues to external revenues by operating segment | ||||
Total revenues | $ 196,143 | $ 200,265 | $ 415,334 | $ 410,653 |
Segment Reporting and Major C_7
Segment Reporting and Major Customers - Operating Results (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Segment Reporting | ||||
Adjusted operating income | $ 368,939 | $ 345,021 | $ 726,226 | $ 675,943 |
Share-based compensation | 11,500 | 14,230 | 22,214 | 20,524 |
Depreciation and amortization | 104,773 | 104,290 | 208,483 | 208,679 |
Contract asset amortization | 8,250 | 6,711 | 16,288 | 13,584 |
Contract cost asset amortization | 8,179 | 8,511 | 16,024 | 19,238 |
Operating income | 219,087 | 208,698 | 442,357 | 396,969 |
Nonoperating expenses, net | (37,416) | (41,170) | (80,407) | (78,812) |
Income before income taxes and equity in income of equity investments | 181,671 | 167,528 | 361,950 | 318,157 |
Net revenue | 979,920 | 956,548 | 1,960,189 | 1,892,045 |
Add: reimbursable items | 55,565 | 51,032 | 109,827 | 102,705 |
Total revenues | 1,035,485 | 1,007,580 | 2,070,016 | 1,994,750 |
Selling, general and administrative expenses | ||||
Segment Reporting | ||||
Share-based compensation | 11,500 | 14,230 | 22,214 | 20,524 |
Issuer Solutions | ||||
Segment Reporting | ||||
Total revenues | 472,706 | 458,601 | 942,865 | 915,960 |
Merchant Solutions | ||||
Segment Reporting | ||||
Total revenues | 366,636 | 348,714 | 711,817 | 668,137 |
Consumer Solutions | ||||
Segment Reporting | ||||
Total revenues | 196,143 | 200,265 | 415,334 | 410,653 |
Operating Segments | ||||
Segment Reporting | ||||
Net revenue | 992,798 | 967,697 | 1,988,406 | 1,919,162 |
Operating Segments | Issuer Solutions | ||||
Segment Reporting | ||||
Adjusted operating income | 209,845 | 195,275 | 414,779 | 391,040 |
Net revenue | $ 432,445 | $ 421,015 | $ 865,919 | $ 844,589 |
Operating margin on net revenue | 48.50% | 46.40% | 47.90% | 46.30% |
Operating Segments | Merchant Solutions | ||||
Segment Reporting | ||||
Adjusted operating income | $ 138,366 | $ 133,418 | $ 267,201 | $ 252,358 |
Net revenue | $ 364,210 | $ 346,389 | $ 707,166 | $ 663,792 |
Operating margin on net revenue | 38.00% | 38.50% | 37.80% | 38.00% |
Operating Segments | Consumer Solutions | ||||
Segment Reporting | ||||
Adjusted operating income | $ 53,595 | $ 54,545 | $ 117,288 | $ 108,212 |
Net revenue | $ 196,143 | $ 200,293 | $ 415,321 | $ 410,781 |
Operating margin on net revenue | 27.30% | 27.20% | 28.20% | 26.30% |
Corporate Administration and Other | Corporate administration and other. | ||||
Segment Reporting | ||||
Adjusted operating income | $ (32,867) | $ (38,217) | $ (73,042) | $ (75,667) |
Intersegment | ||||
Segment Reporting | ||||
Net revenue | 12,878 | 11,149 | 28,217 | 27,117 |
Segment Reconciling Items | ||||
Segment Reporting | ||||
Merger & acquisition (M&A) and integration expenses2 | $ 17,150 | $ 2,581 | $ 20,860 | $ 16,949 |