Loss from Discontinued Operations, net of tax Profit Margins and Reimbursable Items Net Income Non-GAAP Financial Measures Projected Outlook for 2011 20 As compared to 2010, TSYS expects its 2011 income from con- tinuing operations available to TSYS common shareholders to increase by 7%-9%, its EPS from continuing operations to increase by 9%-11%, its revenues before reimbursable items to increase by 3%-5% and its total revenues to increase by 2%-4%, based on the following assumptions: (1) there will be no significant movements in LIBOR and TSYS will not make any significant draws on the remaining balance of its revolving credit facility; (2) there will be no significant movement in foreign currency exchange rates related to TSYS’ business during 2011; (3) TSYS will not incur significant expenses associated with the conversion of new large clients or TSYS believes that its use of these non-GAAP financial measures provides investors with the same key financial performance indicators that are utilized by management to assess TSYS’ operating results, evaluate the business and make operational decisions on a prospec- tive, going-forward basis. Hence, management provides disclosure of non-GAAP financial measures in order to allow shareholders and potential investors an opportunity to see TSYS as viewed by man- agement, assess TSYS with some of the same tools that management utilizes internally and compare such information with prior periods. TSYS believes that these non-GAAP financial measures are rep- resentative measures of comparative financial performance that reflect the economic substance of TSYS’ current and ongoing business operations. Although non-GAAP financial measures are often used to measure TSYS’ operating results and assess its financial performance, they are not necessarily comparable to similarly titled captions of other companies due to potential inconsistencies in the method of calculation. Management evaluates the Company’s operating performance based upon operating and net profit margins excluding reimbursable items, a non-generally accepted accounting principles (non-GAAP) measure. TSYS also uses these non-GAAP financial measures to evaluate and assess TSYS’ financial performance against budget. TSYS believes that these non-GAAP financial measures are important to enable investors to understand and evaluate its ongoing operating results. Net income attributable to TSYS common shareholders decreased 9.9% to $193.9 million (basic and diluted EPS of $0.99) in 2010, compared to 2009. In 2009, net income attribut- able to TSYS common shareholders decreased 13.9% to $215.2 million (basic and diluted EPS of $1.09), compared to $250.1 million (basic and diluted EPS of $1.26) in 2008. Net income decreased 6.2% to $205.6 million in 2010, compared to 2009. In 2009, net income decreased 12.9% to $219.2 million, compared to $251.7 million in 2008. Loss from discontinued operations, net of tax contains the oper- ating results of TSYS Total Debt Management Inc. (TDM) and TSYS POS Systems and Services, LLC (TPOS) and the loss on the sale of both subsidiaries. Final adjustments related to the sales, if any, are expected to be included in the financial results of 2011. Refer to Note 2 in the consolidated financial statements for more infor- mation on discontinued operations. Management believes that operating and net profit margins excluding reimbursable items are more useful because reimburs- able items do not impact profitability as the Company receives reimbursement for expenses incurred on behalf of its clients. TSYS believes that the presentation of GAAP financial measures alone would not provide its shareholders and potential investors with the ability to appropriately analyze its ongoing operational results, and therefore expected future results. TSYS therefore believes that inclusion of these non-GAAP financial measures provides investors with more information to help them better understand its financial statements just as management utilizes these non-GAAP financial measures to better understand the business, measure performance and allocate its resources. Below is the reconciliation between reported margins and adjusted margins excluding reimbursable items for the years ended December 31, 2010, 2009 and 2008: (in thousands) 2010 2009 2008 Years Ended December 31, Operating income . . . . $ 309,429 344,026 371,122 Net income . . . . . . . . $ 205,621 219,176 251,676 Total revenues . . . . . . $1,717,577 1,677,483 1,711,534 Less reimbursable items ........... 275,141 270,178 264,892 Revenues before reimbursable items ........... $1,442,436 1,407,305 1,446,642 Operating margin (as reported). . . . . . . . . 18.0% 20.5% 21.7% Net profit margin (as reported). . . . . . . . . 12.0% 13.1% 14.7% Adjusted operating margin . . . . . . . . . . 21.5% 24.4% 25.7% Adjusted net profit margin . . . . . . . . . . 14.3% 15.6% 17.4%