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TNS Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: November 7, 2011 04:00PM

TNS Inc. (TNS) filed Quarterly Report for the period ended 2011-09-30. Tns Inc. has a market cap of $522.68 million; its shares were traded at around $20.47 with a P/E ratio of 11.83 and P/S ratio of 0.99. Tns Inc. had an annual average earning growth of 17.3% over the past 5 years.



Highlight of Business Operations:

Engineering and development expense. Engineering and development expense increased $2.7 million, or 29.4%, to $11.9 million for the three months ended September 30, 2011, from $9.2 million for the three months ended September 30, 2010. On a constant dollar basis, engineering and development expense increased $2.3 million, or 25.3%, to $11.5 million, and represented 8.2% and 7.0 % of revenues for the three months ended September 30, 2011 and 2010, respectively. The increase in engineering and development costs was primarily due to the following: $2.7 million in costs resulting from our acquisition of Cequint; $1.5 million in additional headcount related costs; $0.4 million in performance cash compensation; and $0.2 million in system maintenance costs to support our payment gateway, verification and IP registry services. This was partially offset by an increase in capitalized software development costs, which are offset against engineering and development costs, of $2.3 million due to incremental investments in our growth initiatives, which include Cequint.

Selling, general and administrative expense. Selling, general and administrative expenses increased $4.5 million, or 20.0%, to $27.0 million for the three months ended September 30, 2011, from $22.5 million for the three months ended September 30, 2010. On a constant dollar basis and excluding $0.7 million of Cequint acquisition costs for the three months ended September 30, 2010, selling, general and administrative expenses would have increased $4.2 million, or 18.7%, to $26.0 million and represented 18.7% and 17.2% of revenues for the three months ended September 30, 2011 and 2010, respectively. This was due to the following increases: $1.9 million in costs resulting from the inclusion of Cequint; $1.3 million in performance cash compensation; $0.5 million in headcount and related costs required to support our growth initiatives; and $0.2 million related to stock compensation.

Cost of network services. Cost of network services increased $13.7 million, or 7.1%, to $206.8 million for the nine months ended September 30, 2011, from $193.1 million for the nine months ended September 30, 2010. On a constant dollar basis, cost of network services would have increased $10.4 million, or 5.4%, to $203.5 million. This was due to the following increases: $2.4 million in our payments division due to $3.0 million in dial access rates in North America partially offset by $1.5 million due to reduced transaction volumes and $0.9 million to support our payments revenue growth in Europe and Asia Pacific; $2.1 million from the inclusion of Cequint; $1.8 million due to higher volumes in our telecommunications services division, primarily related to increased demand for our identity and verification services; $1.1 million in our financial services division due primarily to increased connectivity costs in North America and to a lesser extent increases to support revenue growth in Europe and Asia Pacific; and $3.0 million in shared network, payroll and overhead expense primarily to support our IP registry, roaming and clearing and payment gateway platforms.

Engineering and development expense. Engineering and development expense increased $6.7 million, or 24.2%, to $34.2 million for the nine months ended September 30, 2011, from $27.5 million for the nine months ended September 30, 2010. On a constant dollar basis, engineering and development expense increased $5.7 million, or 20.8% to $33.0 million, and represented 8.0% and 7.1% of revenues for the nine months ended September 30, 2011 and 2010, respectively. The increase in engineering and development costs was primarily due to the following: $7.0 million in costs resulting from the inclusion of Cequint; $2.9 million in additional headcount and related costs; $1.6 million in system maintenance costs to support our support our payment gateway, verification and IP registry services; and $0.8 million in performance cash compensation. This was partially offset by an increase in capitalized software development costs, which are offset against engineering and development costs, of $6.6 million due to incremental investments in our growth initiatives, which include Cequint.

Selling, general and administrative expense. Selling, general and administrative expenses increased $6.7 million, or 9.4%, to $78.0 million for the nine months ended September 30, 2011, from $71.3 million for the nine months ended September 30, 2010. On a constant dollar basis, selling, general and administrative expenses would have increased $4.4 million, or 6.2%, to $75.7 million and represented 18.6% and 18.4% of revenues for the nine months ended September 30, 2011 and 2010, respectively. This was due to the following increases: $4.4 million in costs resulting from the inclusion of Cequint and $2.5 million in performance cash compensation. These increases were partially offset by the following decreases: $1.0 million in stock compensation due primarily to a decrease in performance related stock compensation; $0.9 million in headcount and other cost synergies related to the integration of CSG; and $0.4 million in severance charges related to restructuring activities in North America.

Read the The complete Report



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