Total System Services — Merger or Acquisition (February 2013)
21 slides from Total System Services's merger presentation, Feb 19, 2013
Slide 1: TSYS to Acquire NetSpend
TSYS to Acquire NetSpend February 19, 2013 © 2013 Total System Services, Inc.® All rights reserved worldwide.
Slide 2: Disclosure
Disclosure Cautionary Statement Regarding Forward‐Looking Statements This presentation contains statements that constitute "forward‐looking statements" within the meaning of the federal securities laws. These forward‐looking statements include, among others, statements about the benefits of the prop
Slide 3: Agenda
Agenda Introduction – Philip W. Tomlinson, Chairman of the Board and Chief Executive Officer, TSYS Transaction Overview and Strategic Rationale – M. Troy Woods, President and Chief Operating Officer, TSYS NetSpend Overview – Dan Henry, Chief Executive Officer, NetSpend 3 © 2013 Total System Services
Slide 4: Transaction Overview
Transaction Overview Structure • $16.00 per share; $1.4 billion enterprise value Financing • Cash on hand and $1.3 billion in debt • Expected to be accretive to GAAP EPS for the first 12 month period Pro Forma following closing (excluding one-time acquisition related fees and expenses) • CEO, Dan He
Slide 5: Strategic Rationale
Strategic Rationale Entry into large, fast-growing prepaid market; projected to double over next 4-5 years Huge Market Opportunity Prepaid category is still expanding with a large number of verticals and emerging applications Opportunity to create new partnerships with TSYS’ bank customers Dif
Slide 6: Huge Market Opportunity
Huge Market Opportunity Expands TSYS’ Addressable Market Exponentially $4 Billion (total pie) Large Addressable Market (U.S.)* $4 billion annual revenue opportunity for Industry spend $0.4B to Prepaid Program Managers/Issuers on processing $0.5B Provides Access to a Large, High-Growth Market Opp
Slide 7: Differentiation and Expansion Enhances Growth Prospects
Differentiation and Expansion Enhances Growth Prospects • GPR Financial • Paycard Institutions • Processing and program management Retail & Small • Payment acceptance • GPR Business • Private label • Paycard • Marketing offers • Financial Services Center Innovation, • Consumer product capabilities M
Slide 8: Industry Leader
Industry Leader Growth and Scale Excellent Superior, Diversified, Management Distribution Network Focus on Customers Extensive Reload for Life Network Innovative Products 8 © 2013 Total System Services, Inc.® All rights reserved worldwide.
Slide 9: Diversification and Compelling Financials
Diversification and Compelling Financials TSYS Mix by Segment - Revenue before Reimbursables 2012 Actual ($M) 2012 Pro Forma ($M) 20% Inter- Inter- national national $393 Diversification $393 North North America America NetSpend Merchant $351 $813 41% $813 $412 18% Merchant $412 21% • Expected to be
Slide 10: NetSpend Overview
NetSpend Overview • GPR Core Products • Paycard • Cardholders – Freedom to be self-banked at a significantly lower cost Value Proposition • Partners – Ongoing revenue share and reload income Target Market • Estimated 68M underbanked and unbanked consumers in the U.S. • 2.4M Active Debit Cards; 1,082
Slide 11: Strategy and Differentiators
Strategy and Differentiators Underserved Market Innovative Products Mission: To empower consumers with the convenience, security and freedom to be self-banked Technology Distribution Network 11 © 2013 Total System Services, Inc.® All rights reserved worldwide.
Slide 12: Product Capabilities
Product Capabilities NetSpend’s Value Proposition Additional Features • Online Load Options • Online Financial Planners • Budgeting Tools • Free Online Banking • Comprehensive Bill Pay Options • Online Checks and Money Orders • Companion Cards • Custom Cards • Refer a Friend Incentives • Marketplace
Slide 13: Distribution Network
Distribution Network Channel Retail Partner Direct Paycard Emerging leader in A leader in prepaid A leader in prepaid Leading corporate prepaid cards sold cards sold through cards sold through payroll card Description through traditional alternative financial online and direct provider retail mercha
Slide 14: Track Record of Growth
Track Record of Growth Revenue Adjusted EBITDA* (in millions) (in millions) 351.3 96.2 306.3 84.2 275.4 65.6 225.0 183.2 40.4 37.3 128.6 31.3 2007 2008 2009 2010 2011 2012 2007 2008 2009 2010 2011 2012 * EBITDA plus stock-based compensation expense and adjusted for non-recurring gains and losses 14
Slide 15: Winning Combination
Winning Combination • An industry leader in processing • An industry leader in prepaid and acquiring • Strong mix of distribution • Blue chip bank and merchant channels relationships • Innovative products People-Centered • Global brand and reputation Payments • Successful strategy focused • People-C
Slide 16: Appendix
Appendix 16 © 2013 Total System Services, Inc.® All rights reserved worldwide.
Slide 17: Non-GAAP Reconciliation – Description of Non-GAAP Financial Measures
Appendix Non-GAAP Reconciliation – Description of Non-GAAP Financial Measures TSYS Revenues Before Reimbursable Items – TSYS computes revenues before reimbursable items by adjusting revenues to remove the effect of revenue it receives for out-of-pocket expenses that are reimbursed by its clients. Th
Slide 18: Non-GAAP Reconciliation – Description of Non-GAAP Financial Measures (continued)
Appendix Non-GAAP Reconciliation – Description of Non-GAAP Financial Measures (continued) NetSpend and TSYS each use non-GAAP financial measures to evaluate and assess their financial performance against budgets, as well as to evaluate financial performance for executive and management compensation
Slide 19: Non-GAAP Reconciliation – Revenues Before Reimbursable Items
Appendix Non-GAAP Reconciliation – Revenues Before Reimbursable Items (in thousands) 2012 Total Revenues $ 1,870,972 Reimbursable Items 252,481 Revenues Before Reimbursable Items $ 1,618,491 Revenues Before Reimbursable Items 2012 By Segment (External Revenues) North America Services $ 813,462 Inter
Slide 20: Non-GAAP Reconciliation – NetSpend Adjusted EBITDA
Appendix Non-GAAP Reconciliation – NetSpend Adjusted EBITDA (in thousands) Years Ended December 31, 2007 2008 2009 2010 2011 2012 Net Income (loss) $ 14,726 $ (11,645) $ 18,174 $ 22,732 $ 33,246 $ 18,867 Adjusted for: Add: Income Taxes 9,368 7,307 12,503 14,368 21,814 12,603 Add: Nonoperating Expens
Slide 21: Non-GAAP Reconciliation – Combined EBITDA
Appendix Non-GAAP Reconciliation – Combined EBITDA (in thousands) TSYS NetSpend Combined Twelve Months Twelve Months Twelve Months Ended Ended Ended 12/31/2012 12/31/2012 12/31/2012 Net Income $ 249,922 $ 18,867 $ 268,789 Adjusted for: Deduct: Equity in Income of Equity Investments (10,171) - (10,17
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