WELCOME 2016 TSYS ANALYST DAY Unlocking Payment Opportunities SM
STRATEGIC OVERVIEW M. Troy Woods Chairman & Chief Executive Officer Pamela A. Joseph President & Chief Operating Officer Patricia A. Watson Senior Executive Vice President & Chief Information Officer BUSINESS REVIEW William A. Pruett Senior Executive Vice President & President, North America Services Gaylon Jowers Jr. Senior Executive Vice President & President, International Services Charles J. Harris Senior Executive Vice President & President, NetSpend John S. Shlonsky Senior Executive Vice President & President, Merchant Services FINANCIAL SUMMARY Paul M. Todd Senior Executive Vice President & Chief Financial Officer 2
STRATEGIC OVERVIEW FORWARD-LOOKING STATEMENTS This presentation and comments made by management contain forward-looking statements including, among others, statements regarding the expected future operating results of TSYS. These statements are based on management s current expectations and assumptions and are subject to risks, uncertainties and changes in circumstances. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words believe, expect, anticipate, intend, plan, potential, estimate or similar expressions. Actual results may differ materially from those set forth in the forward-looking statements due to a variety of factors. More information about these risks, uncertainties and factors may be found in TSYS filings with the Securities and Exchange Commission, including its 2015 Annual Report on Form 10-K. TSYS does not assume any obligation to update any forward-looking statements as a result of new information, future developments or otherwise. 3
STRATEGIC OVERVIEW USE OF NON-GAAP FINANCIAL MEASURES This slide presentation contains certain non-gaap financial measures determined by methods other than in accordance with generally accepted accounting principles. Such non-gaap financial measures include the following: net revenue; operating margin on net revenue; revenues measured on a constant currency basis; free cash flow; EBITDA, adjusted EBITDA, adjusted earnings per share, adjusted segment operating income and adjusted segment operating margin. The most comparable GAAP measures to these measures are revenues; operating margin; revenues; cash flows from operating activities; net income; net income; earnings per share, operating income and operating margin, respectively. Management uses these non-gaap financial measures to assess the performance of TSYS core business. TSYS believes that these non-gaap financial measures provide meaningful additional information about TSYS to assist investors in evaluating TSYS operating results. These non-gaap financial measures should not be considered as a substitute for operating results determined in accordance with GAAP and may not be comparable to other similarly titled measures of other companies. The computations of the non-gaap financial measures used in this slide presentation are set forth in the Appendix to this slide presentation. 4
WELCOME & OPENING REMARKS Shawn Roberts Senior Director, Investor Relations 5
STRATEGIC OVERVIEW M. Troy Woods Chairman & Chief Executive Officer Investment highlights TSYS today Strategic execution Diversification strength Industry trends Positioned for growth 6
STRATEGIC OVERVIEW INVESTMENT HIGHLIGHTS Market leadership positions across payments value chain Strong recurring revenue and scalable operating model Consistent returns from diversified business mix Significant free cash flow Capital allocation strategy to drive shareholder value Investment grade balance sheet 7
STRATEGIC OVERVIEW TSYS TODAY 23.1 billion transactions 2015 $3.8 trillion money moved 2015 ~650,000 merchants 80 countries ~11,000 team members Touching someone s life or business 64 million times a day 8
STRATEGIC OVERVIEW STRATEGIC EXECUTION A clear vision Strong alignment Collaboration TSYS 20/20 9
STRATEGIC OVERVIEW DIVERSIFIED BUSINESS ISSUER PROCESSING Issuer processor for the world s largest financial institutions and payments providers Blue chip relationships and 400+ global clients 18 billion transactions processed in key geographies 80 countries MERCHANT ACQUIRING Full-service merchant acquirer focused on serving the needs of SMBs ~650,000 merchants ~$117 billion annual transaction volume 2,000 distribution partners PREPAID PROGRAM MANAGEMENT Alternative financial solutions for consumers and businesses Large addressable market with significant runway 100,000 distributing employers and locations ~5 million active cards 130,000 reload locations 10
STRATEGIC OVERVIEW MEETING CUSTOMER NEEDS Through a deep understanding of our customer s needs we provide the right solutions for: PAYMENT PROVIDERS Expertise in payment processing Reduce regulatory and compliance burden Enhanced customer experiences BUSINESSES Sales growth Solutions to run their business Customer insights Omni-channel capabilities CONSUMERS Control over their financial lives Access to financial services Small business solutions Savings and alerts Safety & security Digital & mobile solutions 11
STRATEGIC OVERVIEW STRATEGIC PROGRESS #1 provider of solutions to consumer and commercial credit card issuers globally Progress on #1 globally closing the gap Solid performance of North America segment Achievement of margin goals for International Top-10 global acquirer Through TransFirst acquisition, achieved goal Solid performance legacy business in 2015 #1 provider of self-banking solutions in the U.S. #1 in Gross Dollar Volume Solid performance of NetSpend segment Optimize capital deployment and allocation to drive shareholder value Returned $315.8 million to shareholders 9 th Highest performing stock in S&P 500 Total shareholder return of 47.8% 12
STRATEGIC OVERVIEW FORCES INFLUENCING THE PAYMENTS ECOSYSTEM Connected world IMPLICATIONS Embedded payments Advances in technology and delivery Regulatory environment Empowered end-users Innovative business models & solutions MARKET REALITIES Heightened security Elegant and omni-channel experience New commerce experiences Unbundling of traditional financial services Market consolidation 13
STRATEGIC OVERVIEW ENTERPRISE STRATEGIC PRIORITIES Leverage and expand distribution Deliver new innovative products and services Enhance our technology infrastructure Increase operational scale and efficiency Drive shareholder value through capital allocation strategies 14
STRATEGIC OVERVIEW POSITIONED FOR GROWTH New markets and new customers Leverage cross-enterprise solutions Innovate and enhance suite of offerings Leverage end-to-end integrated platforms Adapt business models to meet evolving needs Grow the base Strong organic growth Cross-sell products and solutions Growth through distribution partners 15
Pamela A. Joseph President & Chief Operating Officer 16
GLOBAL TECHNOLOGY VISION Patricia A. Watson Senior Executive Vice President & Chief Information Officer 17
STRATEGIC OVERVIEW GLOBAL TECHNOLOGY VISION Advance and integrate technology platforms to leverage capabilities, drive growth and take advantage of the forces influencing the payments ecosystem. Connected world Empowered end-users Advances in technology and delivery Innovative business models & solutions 18
STRATEGIC OVERVIEW TRANSFORMATION STRATEGY Expose and extend Leverage TSYS platform capabilities in new and different ways Innovate around core New products to create platform synergies and enable digital engagement Streamline systems and process Develop a continuous approach to delivering value to customers 19
STRATEGIC OVERVIEW EXPOSE & EXTEND TSYS PLATFORMS Enabling clients, partners and teams to build the next generation of digital payment solutions NEW DIGITAL ECOSYSTEM Simple and developer-friendly Mobile-first Real-time access to data TSYS APPROACH User experience driven methodology Modern APIs that leverage open technology Ability to subscribe to real-time business events Unlock promise of big data 20
STRATEGIC OVERVIEW INNOVATE AROUND CORE Investments to reimagine TSYS core solutions Alignment of teams and talent - Leverage TSYS three businesses to stimulate ideas and innovation New digitally focused product teams - Iterative, roadmap-driven development approach 21
STRATEGIC OVERVIEW STREAMLINE SYSTEMS & PROCESSES SUPERCHARGE TSYS CORE Re-engineer key systems to fuel growth and reduce processing costs Data center strategy AUTOMATE SYSTEMS TO ACCELERATE DELIVERY Virtualize and automate to streamline provisioning and application deployment Leverage cloud as next-stage evolution SIMPLIFY DELIVERY PROCESS Continuous approach to delivery that enables innovation and agility 22
STRATEGIC OVERVIEW ACCELERATE GROWTH & ADAPT TO CHANGE Deliver solutions to digitally empowered end-users Product-focused model for continuous delivery Drive efficiency by streamlining infrastructure and leveraging automation Leverage global team to bring new ideas and value 23
NORTH AMERICA SERVICES William A. Pruett Senior Executive Vice President & President, North America Services 24
BUSINESS REVIEW NORTH AMERICA SEGMENT OVERVIEW #1 in the U.S. and #1 in Canada Consumer and commercial credit card issuers Services Credit, debit and healthcare payment processing Customer engagement Card and print Loyalty Key Metrics ~120 clients 423.3 million accounts on file (traditional AOFs processed as of 1Q 2016) 15.8 billion transactions in 2015 Target Customers Large payment providers Regional banks and credit unions Healthcare 3 rd party administrators Emerging payment players 25
BUSINESS REVIEW 2016 FIRST QUARTER NORTH AMERICA SEGMENT HIGHLIGHTS Renewed focus on cross-sell and proactive delivery of innovative solutions Record number traditional AOF with double-digit transaction growth Record quarter for net revenue and adjusted segment operating income ($ in millions) Segment Net Revenue YOY Growth % (in millions) 49.4% 31.8% 46.3% 32.8% 36.9% 26.6% 37.3% 18.9% 6.8% 2.5% ( ) Growth Including Prepaid, Government Services and Single Use Accounts Adjusted Segment Operating Income Operating Margin* ($ in millions) 18.7% 23.1% 21.8% 17.5% 14.1% (*) Net Revenue 26
BUSINESS REVIEW MARKET & CLIENT DYNAMICS Trends in issuing Continued secular growth of bank-card issuers Consumer demand for more choice and control Innovative solutions attracting new entrants Enhanced compliance and regulatory programs Digitization of services expand across the entire commerce experience 27
BUSINESS REVIEW STRATEGIC PRIORITIES CROSS-SELL OPPORTUNITIES Value-added services Fraud-related tools Portfolio management Analytics Application processing TSYS QuickRemit Digital Engagement TSYS FlexCollect epayables 28
BUSINESS REVIEW CROSS-SELL OPPORTUNITIES ISSUER PRODUCT GROUP Includes all value-added services isolutions products, primarily Credit Care CentreSuite TSYS Customer Insight Collection systems MANAGED SERVICES Customer servicing Fraud strategy, detection and investigation Disputes and chargebacks Debt recovery and collections Interactive voice response OUTPUT SERVICES Card generation and production Statement generation and production Correspondence and inserts Image archiving and retrieval Material procurement, postage and shipping LOYALTY SERVICES Loyalty processing Redemption via multiple channels Fulfillment services Professional and marketing services around customer behavior insights and program strategy 29
BUSINESS REVIEW WHY WE WIN CLIENT ENGAGEMENT Deep understanding of business needs Solution sets to foster growth Consultative mindset RELATIONSHIPS Loyalty among financial institutions Significant market share Robust sales pipeline TRUSTED PERFORMANCE Global leader in performance Investment in innovative technology Operational excellence in data integrity Agility Scalability Creativity Flexibility 30
INTERNATIONAL SERVICES Gaylon Jowers Jr. Senior Executive Vice President & President, International Services 31
BUSINESS REVIEW INTERNATIONAL SEGMENT OVERVIEW #1 China 3 rd party issuer processor (CUP Data JV) #2 Europe 3 rd party issuer processor Top-tier global payments solutions provider (Licensing to processing continuum) Leverage Transformed Operating Model for Growth Services 3 rd party payments processing, licensing and hosted solutions Key Metrics ~125+ clients in 70+ countries Value-added products (direct and partner offerings) 65.5 million accounts on file (traditional AOFs processed as of 1Q 2016) Call center and BPO services 2.5 billion transactions processed in 2015 Target Customers Global financial institutions and retailers Alternative credit account providers Scheme and distribution product partners 32
BUSINESS REVIEW 2016 FIRST QUARTER INTERNATIONAL SEGMENT HIGHLIGHTS Continued focus on growth and margin expansion (in millions) Record number Traditional AOF along with transaction growth at 8.1% Net revenue up 9.2% constant currency 7.6% 8.4% 6.5% 8.5% 6.6% 16.1% 18.5% 16.9% 17.8% 14.7% ( ) Growth Including Single Use Accounts ($ in millions) Segment Net Revenue YOY Growth % Adjusted Segment Operating Income Operating Margin* ($ in millions) Reported (4.0%) (1.0%) (1.1%) (6.2%) 2.2% Constant Currency 5.1% 9.4% 7.9% (0.6%) 9.2% (*) Net Revenue 33
BUSINESS REVIEW LINE OF BUSINESS COVERAGE TS2 3 rd party issuer processing for debit, credit, commercial and virtual cards TSYS Managed Services FCA regulated BPO and call center services PRIME Business Solutions Licensing, hosting and processing CUP Data Issuer processing JV in China and Southeast Asia TMS TS2 CUP Data PRIME Business Solutions PRIME Business Solutions PRIME Business Solutions Diversified Solutions Addressing Global Market Needs 34
BUSINESS REVIEW SEGMENT DYNAMICS TRENDS End-to-end user digital engagement Product: speed, ease and enablement Industry regulation: banking and payments Cost take-out and transformation initiatives at FI s 35
BUSINESS REVIEW STRATEGIC PRIORITIES Accelerate product delivery Leverage PRIME Business Solutions Enhance BPO and call center services Extend partners and distribution channels 36
BUSINESS REVIEW WHY WE WIN Trusted B2B brand with global reach Reliable, functionality rich and scalable processing platforms Extensive bank, retailer and partner relationships Market-leading, day-to-day client engagement model Global service delivery within secure infrastructure environment Operational excellence with robust data protection and compliant processes and controls Agility Scalability Creativity Flexibility 37
NETSPEND Charles J. Harris Senior Executive Vice President & President, NetSpend 38
BUSINESS REVIEW NETSPEND SEGMENT OVERVIEW #1 Prepaid Provider Prepaid program manager by gross dollar volume Services Consumer general purpose reloadable prepaid accounts and services Commercial prepaid: payroll cards and incentive disbursement Small business expense management Key Metrics 4.9 million debit active cards Target Customers 2.8 million direct deposit active cards 130+ thousand reload locations U.S. consumers Employers Banks and partners 100+ thousand distributing locations and employers Small businesses 39
BUSINESS REVIEW 2016 FIRST QUARTER NETSPEND SEGMENT HIGHLIGHTS Launched small business pilot; signed 3 year renewal with Family Dollar Gross Dollar Volume (GDV) up 19.6% exceeded 100,000 distributing locations and employers Record quarterly net revenue and adjusted segment operating income high ($ in billions) $7.7 Gross Dollar Volume YOY Growth % $5.5 $5.4 $5.7 $9.2 16.7% 19.5% 22.3% 21.3% 19.6% 1Q15 2Q15 3Q15 4Q15 1Q16 ($ in millions) Segment Net Revenue YOY Growth % Adjusted Segment Operating Income Operating Margin* ($ in millions) $185.0 $35.5 $36.4 $37.3 $42.2 $155.1 $141.6 $139.6 $144.0 $28.6 16.9% 21.2% 22.4% 20.9% 19.3% 22.9% 25.7% 26.7% 19.9% 22.8% 1Q15 2Q15 3Q15 4Q15 1Q16 1Q15 2Q15 3Q15 4Q15 1Q16 (*) Percent of Net Revenue 40
BUSINESS REVIEW MARKET DYNAMICS Prepaid is mainstream of U.S. households owned a general purpose reloadable card ** 25% Gig economy 22% of American adults have already offered a good or service in the gig economy * Rise of millennials 60% of millennials earning more than $100,000 per year used a general purpose reloadable card ** Sources: *Philadelphia Fed Study: Millennials with Money (Dec 2015); **2014 Time Magazine Poll (Nov 2015) 41
BUSINESS REVIEW WHY WE WIN Large Addressable Market 68 million adults are underserved by the financial system 28% of U.S. households are either unbanked or underbanked 27 million U.S. small businesses have <10 employees 63% of SMBs do not have a commercial bank account PRODUCT INNOVATION DISTRIBUTION CUSTOMER EXPERIENCE Deep customer knowledge Design for needs Pilot, test and scale Where our customers live, work and shop Sources: 2013 FDIC National Survey of Unbanked and Underbanked Households; U.S. Census Bureau; Javelin Research Focus on lifetime value Drive promoters and advocates 42
BUSINESS REVIEW STRATEGIC PRIORITIES PRODUCT INNOVATION Bank account replacement features Small business focused products Embedded accounts DISTRIBUTION Offer new products in current distribution Partner with small business aggregators Leverage app economy CUSTOMER EXPERIENCE Focus on mobile experiences Simplify taking and making business payments Integrate seamlessly CONTINUALLY IMPROVE THE DELIVERY PLATFORM Invest in our proprietary platform Integrate deeper with partners Enhance self-service capabilities 43
MERCHANT SERVICES John S. Shlonsky Senior Executive Vice President & President, Merchant Services 44
BUSINESS REVIEW MERCHANT SEGMENT OVERVIEW #3 in U.S. in integrated payments Services Payment technology solutions #6 in U.S. by net revenue Partner-centric distribution model with end-to-end payment solutions Customer service and omni-channel acceptance services Key Metrics $117 billion annual transaction volume 1.2 billion transactions 1/3 of TSYS net revenue * Target Partners & Customers Integrated technology partners Referral banks and associations Ecommerce and ISO agents Sources: *Pro forma ranking per First Annapolis Consulting and based on 2014 net revenue (gross revenue less interchange, assessments and card brand pass-throughs) 2016 Total System Services, Inc. Proprietary. All rights reserved worldwide. 45
BUSINESS REVIEW 2016 FIRST QUARTER EXCLUDING TRANSFIRST MERCHANT SEGMENT HIGHLIGHTS Strong performance leading up to the TransFirst acquisition ($ in millions) Segment Revenue by LOB YOY Growth % SMB sales volume up 11.9% YOY (4%) (0%) (1%) 10% 7% Net revenue up 9.3% 13% 16% 14% 15% 11% Indirect Direct ($ in millions) Segment Net Revenue YOY Growth % ($ in millions) Adjusted Segment Operating Income Operating Margin* 5.5% 8.8% 7.6% 13.4% 9.3% (*) Net Revenue 46
BUSINESS REVIEW TRENDS IN PAYMENTS Spending $4.8 trillion was spent on Visa, MasterCard, American Express and Discover in the U.S. in 2015 9% CAGR spending on these cards has increased 9% over the past five years $4 trillion amount US healthcare total spending will reach by 2016 ** EMV and NFC Migration 37% of U.S. merchants are EMV capable 43% of processors are ready 46% of processors are payment gateway ready 86% of POS terminals in North America will accept NFC payments by 2017 POS Capabilities Tablet POS 27% of U.S. merchants utilize a tablet-based POS system Omni-channel 50% of consumers want the ability to buy online and pick up that item at a brick-and-mortar Big Data & Loyalty 73% of businesses have invested, or plan to invest, in big data in the next two years Sources: The Strawhecker Group **National Health Statistics Group at the Centers for Medicare and Medicaid Services 47
BUSINESS REVIEW STRATEGIC PRIORITIES DISTRIBUTION Continue to add and expand partnerships Maintain focus on high growth verticals PRODUCT INNOVATION Enhance and expand offerings Bring to market relevant solutions HOLISTIC APPROACH Organic partner growth Cross-enterprise opportunities TECHNOLOGY & OPERATIONAL INTEGRATION Retool the platform for seamless delivery Cross-leverage tools to accelerate growth High levels of satisfaction to maximize retention 48
BUSINESS REVIEW WHY WE WIN $406 billion Out-of-pocket Medical Expenses * 50% of U.S. consumers used their credit or debit card $115 million U.S. mobile & tablet commerce ** 25% of U.S. consumers use their mobile in-store to make purchases Average net promoter score for financial service companies is *** 36.2 TSYS Merchant Segment score is >60 DISTRIBUTION ~2000 distribution partners 650,000+ merchant locations PRODUCT INNOVATION Small business solutions Integration Mobile and ipos Security and compliance CUSTOMER EXPERIENCE Leading net promoter score Low teens attrition Ease of business Vertical expertise Sources: *Aite Group; **Forrester; *** Net Promoter Score benchmarks 49
BUSINESS REVIEW THE WINNING FORMULA 50
BUSINESS REVIEW OUR WINNING FORMULA Expertise in partner-centric distribution Seamless delivery of relevant products Multi-channel integrated technology solution Customer focused and operational excellence 51
2016 FINANCIAL SUMMARY Paul M. Todd Senior Executive Vice President & Chief Financial Officer Financial performance Capital allocation Investment highlights 52
FINANCIAL SUMMARY FINANCIAL PERFORMANCE 13 15 CAGR 1Q2016 Growth NET REVENUE 17.1% 12.7% ADJUSTED EBITDA 15.6% 19.3% ADJUSTED EPS 19.2% 22.8% 53
FINANCIAL SUMMARY 2016 REVISED GUIDANCE* (in millions, except per share data) Range Range Percent Change Total Revenues $4,182 to $4,264 50 % to 53 % Net Revenue $3,040 to $3,102 22 % to 24 % Adjusted EPS attributable to TSYS common shareholders from continuing operations $2.78 to $2.85 13 % to 16 % Average Basic Weighted Shares 183.6 (*) See Appendix for guidance assumptions 54
FINANCIAL SUMMARY CAPITAL ALLOCATION Delever to mid-to-low 2x EBITDA in the next 24 months Support CapEx and working capital requirements Maintain sufficient revolver capacity Maintain dividend Limit share buybacks during debt reduction Limited acquisition activity focused on tuck-in/products acquisitions 55
FINANCIAL SUMMARY INVESTMENT HIGHLIGHTS Market leadership positions across payments value chain Strong recurring revenue and scalable operating model Consistent returns from diversified business mix Significant free cash flow Capital allocation strategy to drive shareholder value Investment grade balance sheet 56
QUESTION & ANSWER PANEL DISCUSSION 57
APPENDIX 58
2016 First Quarter APPENDIX: Non-GAAP Items Net Revenue, Adjusted EBITDA and Adjusted EPS Net revenue is defined as total revenues less reimbursable items (such as postage), as well as, merchant acquiring interchange and assessment fees charged by the card associations or payment networks that are recorded by TSYS as expense. Adjusted EBITDA is net income excluding equity in income of equity investments, nonoperating income/(expense), taxes, depreciation, amortization and stock-based compensation expenses and TransFirst merger & acquisition expenses. Adjusted EPS is adjusted earnings divided by weighted average shares outstanding used for basic EPS calculations. Adjusted earnings is net income excluding the after-tax impact of stock-based compensation expenses, amortization of acquisition intangibles, and TransFirst merger & acquisition expenses. Adjusted segment operating income is operating income at the segment level adjusted for amortization of acquisition intangibles. Adjusted segment operating margin is adjusted segment operating income divided by segment net revenue. The Company believes that these non-gaap financial measures it presents are useful to investors in evaluating the Company s operating performance for the following reasons: adjusted EBITDA and adjusted EPS are widely used by investors to measure a company s operating performance without regard to items, such as interest expense, income tax expense, depreciation and amortization, merger and acquisition expenses and employee stock-based compensation expense that can vary substantially from company to company depending upon their respective financing structures and accounting policies, the book values of their assets, their capital structures and the methods by which their assets were acquired; and securities analysts use adjusted EBITDA and adjusted EPS as supplemental measures to evaluate the overall operating performance of companies. By comparing the Company s adjusted EBITDA and adjusted EPS in different historical periods, investors can evaluate the Company s operating results without the additional variations caused by employee stock-based compensation expense, which may not be comparable from period to period due to changes in the fair market value of the Company s common stock (which is influenced by external factors like the volatility of public markets and the financial performance of the Company s peers) and is not a key measure of the Company s operations. The Company s management uses the non-gaap financial measures: as measures of operating performance, because they exclude the impact of items not directly resulting from the Company s core operations; for planning purposes, including the preparation of the Company s annual operating budget; to allocate resources to enhance the financial performance of the Company s business; to evaluate the effectiveness of the Company s business strategies; and in communications with the Company s board of directors concerning the Company s financial performance. 2016 Total System Services, Inc. Proprietary. All rights reserved worldwide. 59
2016 First Quarter APPENDIX: Accounts on File Portfolio Summary (in millions) March 2016 March 2015 % Change March 2016 December 2015 % Change Consumer 414.8 392.8 5.6 414.8 408.2 1.6 Commercial 46.3 42.3 9.3 46.3 45.4 1.9 Other 27.7 22.7 22.5 27.7 26.6 4.5 Traditional AOF 488.8 457.8 6.8 488.8 480.2 1.8 Prepaid*/ Stored Value 103.1 126.6 (18.6 ) 103.1 97.2 6.1 Government Services 82.7 74.5 11.1 82.7 79.3 4.3 Commercial Card Single Use 75.9 64.8 17.1 75.9 75.8 0.1 Total AOF 750.5 723.7 3.7 750.5 732.5 2.5 (* - Prepaid does not include NetSpend accounts) 2016 Total System Services, Inc. Proprietary. All rights reserved worldwide. 60
2016 First Quarter APPENDIX: Non-GAAP Reconciliation Net Revenue (in thousands) Three Months Ended 3/31/16 3/31/15 Total revenues $739,378 $662,156 Reimbursable items 67,734 66,372 Interchange and assessments expense* - - Net revenue $671,644 $595,784 * Relates to acquisition of TransFirst, which closed April 1, 2016 2016 Total System Services, Inc. Proprietary. All rights reserved worldwide. 61
2016 First Quarter APPENDIX: Non-GAAP Reconciliation Adjusted Segment Operating Income and Operating Margin (in thousands) 2016 Total System Services, Inc. Proprietary. All rights reserved worldwide. 62 Three Months Ended 3/31/16 3/31/15 Adjusted segment operating income By segment: North America services (a) $124,788 $102,570 International services (b) 10,289 6,983 Merchant services (c) 38,357 34,115 NetSpend (d) 42,201 35,467 Less: Acquisition intangible amortization (22,921) (23,867) Less: Corporate admin and other (37,626) (32,772) Less: TransFirst M&A operating expenses (3,401) -- Operating income $151,687 $122,496 Net revenue By segment: North America services (e) $303,641 $266,219 International services (f) 75,354 73,730 Merchant services (g) 120,612 110,398 NetSpend (h) 184,992 155,074 Less: Intersegment revenues (12,955) (9,637) Add: Reimbursable items 67,734 66,372 Add: Interchange and assessments expense* -- -- Total revenues $739,378 $662,156 Adjusted segment operating margin: North America services (a) / (e) 41.10% 38.53% International services (b) / (f) 13.65% 9.47% Merchant services (c) / (g) 31.80% 30.90% NetSpend (d) / (h) 22.81% 22.87% * Relates to acquisition of TransFirst, which closed April 1, 2016
2016 First Quarter APPENDIX: Non-GAAP Reconciliation Constant Currency Net Revenue (in thousands) Three Months Ended 3/31/16 3/31/15 Percentage Change Consolidated: Constant currency (1) $676,845 $595,784 13.6 % Foreign currency (2) (5,201) -- Net revenue $671,644 $595,784 12.7 % International services: Constant currency (1) $80,497 $73,730 9.2 % Foreign currency (2) (5,143) -- Net revenue $75,354 $73,730 2.2 % (1) Reflects current period results on a non-gaap basis as if foreign currency rates did not change from the comparable prior year period. (2) Reflects the impact of calculated changes in foreign currency rates from the comparable period. 2016 Total System Services, Inc. Proprietary. All rights reserved worldwide. 63
2016 First Quarter APPENDIX: Non-GAAP Reconciliation Constant Currency Total Revenue (in thousands) Three Months Ended 3/31/16 3/31/15 Percentage Change Consolidated: Constant currency (1) $744,974 $662,156 12.5 % Foreign currency (2) (5,596) --- Total revenues $739,378 $662,156 11.7 % International services: Constant currency (1) $86,611 $79,802 8.5 % Foreign currency (2) (5,538) --- Total revenues $81,073 $79,802 1.6 % (1) Reflects current period results on a non-gaap basis as if foreign currency rates did not change from the comparable prior year period. (2) Reflects the impact of calculated changes in foreign currency rates from the comparable period. 2016 Total System Services, Inc. Proprietary. All rights reserved worldwide. 64
2016 First Quarter APPENDIX: Non-GAAP Reconciliation EBITDA and Adjusted EBITDA (in thousands) Net income : Three Months Ended 3/31/16 3/31/15 As reported (GAAP) $92,408 $78,899 Adjusted for: Deduct: Equity in income of equity investments (6,590) (5,394) Add: Income taxes 43,429 39,782 Add: Nonoperating expenses 22,440 9,209 Add: Depreciation and amortization 67,583 62,815 EBITDA $219,270 $185,311 Adjust for: Add: Share-based compensation 8,158 8,143 Add: TransFirst M&A expenses 3,401 -- Adjusted EBITDA $230,829 $193,454 2016 Total System Services, Inc. Proprietary. All rights reserved worldwide. 65
2016 First Quarter APPENDIX: Non-GAAP Reconciliation Adjusted EPS (in thousands) Income from continuing operations available to TSYS common shareholders: Three Months Ended Mar 2016 Mar 2015 As reported (GAAP) (a) $90,628 $77,755 Adjusted for amounts attributable to TSYS common shareholders (net of taxes): Acquisition intangible amortization 15,021 15,761 Share-based compensation 5,406 5,441 TransFirst M&A expenses 9,655 -- Adjusted earnings (b) $120,710 $98,957 Average common shares outstanding and participating securities (c) Basic EPS Available to TSYS common shareholders (a) / (c) Adjusted EPS Available to TSYS common shareholders (b) / (c) 183,256 184,481 $0.49 $0.42 $0.66 $0.54 2016 Total System Services, Inc. Proprietary. All rights reserved worldwide. 66
2016 First Quarter APPENDIX: Non-GAAP Reconciliation Free Cash Flow (in thousands) Trailing Twelve Months Ended 3/31/2016 Cash flows from operating activities $611,741 Less: Purchases of property and equipment (54,607) Additions to licensed computer software from vendors (44,041) Additions to internally developed computer software (38,201) Additions to contract acquisition costs (67,375) Free cash flow $407,517 2016 Total System Services, Inc. Proprietary. All rights reserved worldwide. 67
2016 First Quarter APPENDIX: Non-GAAP Reconciliation EBITDA and Adjusted EBITDA (in thousands) Trailing Twelve Months Ended 3/31/2016 Net Income $382,550 Adjusted for: Deduct: Discontinued operations (1,410) Deduct: Equity in Income of Equity Investments (23,303) Add: Income Taxes 155,012 Add: Nonoperating expense 50,449 Add: Depreciation and Amortization 263,033 EBITDA $826,331 Adjust for: Share-based compensation 41,563 TransFirst M&A Operating Expenses 3,401 Adjusted EBITDA $871,295 2016 Total System Services, Inc. Proprietary. All rights reserved worldwide. 68
APPENDIX: Supplemental Non-GAAP: (in thousands) 2015 Net cash provided by operating activities $ 600,194 Capital expenditures (203,315) Free cash flow 396,879 Principal payments on debt and capital leases (54,719) Available free cash flow $ 342,160 Dividends paid on common stock 73,677 Repurchase of common stock under plans 242,085 Available free cash flow returned to shareholders $ 315,762 Dividends paid on common stock 92.3 2016 Total System Services, Inc. Proprietary. All rights reserved worldwide. 69
APPENDIX: Non-GAAP Reconciliation Adjusted EPS (in thousands) Income from continuing operations available to TSYS common shareholders: Years Ended December 31, 2015 2014 2013 As reported (GAAP) (a) $362,633 $275,216 $246,893 Adjusted for amounts attributable to TSYS common shareholders (net of taxes): Acquisition intangible amortization 61,525 65,127 43,743 Share-based compensation 27,954 20,944 19,830 NetSpend merger and acquisition expenses 3,115 15,251 Adjusted earnings (b) $452,112 $364,402 $325,717 Average common shares outstanding and participating securities (c) 184,082 186,222 188,391 Basic EPS Available to TSYS common shareholders (a) / (c) $1.97 $1.48 $1.31 Adjusted EPS Available to TSYS common shareholders (b) / (c) $2.46 $1.96 $1.73 2016 Total System Services, Inc. Proprietary. All rights reserved worldwide. 70
APPENDIX: Non-GAAP Reconciliation EBITDA and Adjusted EBITDA (in thousands) Years Ended December 31, 2015 2014 2013 Net Income $369,041 $329,406 $256,597 Adjusted for: Deduct: Discontinued operations (1,411) (48,655) (2,055) Deduct: Equity in Income of Equity Investments (22,106) (17,583) (13,047) Add: Income Taxes 151,364 129,761 110,981 Add: Nonoperating expenses, net 37,219 38,711 30,024 Add: Depreciation and Amortization 285,264 246,620 199,026 EBITDA 792,371 678,260 581,526 Adjust for: Share-based compensation 41,549 30,790 28,933 NetSpend merger and acquisition expenses 3,217 13,634 Adjusted EBITDA $833,920 $712,267 $624,093 2016 Total System Services, Inc. Proprietary. All rights reserved worldwide. 71
APPENDIX: Non-GAAP Reconciliation Net Revenue (in thousands) Years Ended December 31, 2015 2014 2013 Total revenues $2,779,541 $2,446,877 $2,064,305 Reimbursable items 280,192 253,899 240,597 Interchange and assessments expense* Net revenue $2,499,349 $2,192,978 $1,823,708 * Relates to acquisition of TransFirst, which closed April 1, 2016 2016 Total System Services, Inc. Proprietary. All rights reserved worldwide. 72
2016 First Quarter APPENDIX: 2016 Revised Guidance Assumptions The guidance assumes: There will be no significant movements in the London Interbank Offered rate and TSYS will not make any significant draws on the remaining balance of its credit facility; There will be no significant movement in foreign currency exchange rates related to TSYS business; TSYS will not incur significant expenses associated with the conversion of new large clients, additional acquisitions, or any significant impairment of goodwill or other intangibles; There will be no deconversions of large clients during the year other than as previously disclosed; and The economy will not worsen. Additionally, the impact of future share repurchases is not included. 2016 Total System Services, Inc. Proprietary. All rights reserved worldwide. 73