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TNS Inc. Reports Operating Results (10-K)
Posted by: gurufocus (IP Logged)
Date: March 14, 2012 06:52AM

TNS Inc. (TNS) filed Annual Report for the period ended 2011-12-31. Tns Inc has a market cap of $505.2 million; its shares were traded at around $20.85 with a P/E ratio of 10.7 and P/S ratio of 1. 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 $5.7 million, or 15.0%, to $43.7 million for the year ended December 31, 2011, from $38.0 million for the year ended December 31, 2010. On a constant dollar basis, engineering and development expenses would have increased $5.0 million, or 13.2%, to $43.0 million and represented 7.8% and 7.3% of revenues for the years ended December 31, 2011 and 2010, respectively. The increase in engineering and development costs was primarily due to the following: $9.9 million in costs resulting from the inclusion of Cequint, primarily from headcount and related costs; $2.3 million in additional headcount and related costs, as well as $1.8 million in system maintenance costs to support our support our payment gateway, verification and IP registry services; and $0.9 million in performance-based cash compensation. This was partially offset by an increase in capitalized software development costs, which are offset against engineering and development costs of $10.0 million due to incremental investments in our initiatives to support future growth, including $6.5 million for Cequint.

Selling, general and administrative expense. Selling, general and administrative expenses increased $7.8 million, or 8.2%, to $103.3 million for the year ended December 31, 2011, from $95.5 million for the year ended December 31, 2010. On a constant dollar basis, selling, general and administrative expenses would have increased $5.7 million, or 6.0%, to $101.2 million and would have represented 18.1% of revenues for the year ended December 31, 2011, compared to 18.3% of revenues for the year ended December 31, 2010. This was due to the following increases: $4.9 million in costs resulting from the inclusion of Cequint, inclusive of $0.6 million of earnout milestone compensation, and $3.2 million in performance-based compensation. These increases were partially offset by the following decreases: $0.6 million in stock compensation due primarily to a decrease in performance related stock compensation; $0.8 million reduction in commission payable to a financial services division customer in connection with the restructuring of their agreement on October 1, 2011, $0.7 million in headcount and other cost synergies related to the integration of CSG; and $0.4 million in severance charges in North America.

Depreciation and amortization of property and equipment. Depreciation and amortization of property and equipment decreased $0.5 million, or 1.1%, to $47.0 million for the year ended December 31, 2011, from $47.5 million for the year ended December 31, 2010. On a constant dollar basis, depreciation and amortization of property and equipment decreased $1.1 million to $46.4 million and represented 8.5% and 9.1% of revenue for the years ended December 31, 2011 and 2010, respectively. Included in depreciation and amortization of property and equipment are accelerated depreciation charges of $0.7 million and $5.5 million recorded for the years ended December 31, 2011, and 2010, respectively. These accelerated depreciation charges relate to the phasing out of $6.2 million of surplus network assets and software as a result of the integration of the CSG and TNS networks. In addition, in December 2011, the Company recorded a charge of $0.4 million on certain capitalized software assets which were no longer intended to be utilized. Excluding these charges, depreciation and amortization of property and equipment increased $3.4 million due to capital expenditures to support our growth initiatives, including Cequint.

Engineering and development expense. Engineering and development expense increased $1.8 million, or 5.0%, to $38.0 million for the year ended December 31, 2010, from $36.2 million for the year ended December 31, 2009. On a constant dollar basis, engineering and development expenses would have increased $1.4 million, or 4.0%, to $37.7 million and represented 7.2% and 7.6% of revenues for the years ended December 31, 2010 and 2009, respectively.

Selling, general and administrative expense. Selling, general and administrative expenses decreased $3.7 million, or 3.7%, to $95.5 million for the year ended December 31, 2010, from $99.2 million for the year ended December 31, 2009. On a constant dollar basis, selling, general and administrative expenses would have decreased $5.7 million, or 5.7%, to $94.9 million and would have represented 18.0% of revenues for the year ended December 31, 2010, compared to 21.2% of revenues for the year ended December 31, 2009. Included in selling, general and administrative expense for the year ended December 31, 2010 and 2009 were stock compensation expense of $4.9 million and $8.2 million, respectively. The decrease in stock compensation expense was due to the full vesting of stock awards granted in prior periods and a reduction in the number of performance based awards achieved in 2010. Included in selling, general and administrative expense for the years ended December 31, 2010 and 2009 were acquisition related costs of $0.7 million and $2.2 million related to the acquisition of Cequint and CSG, respectively. These costs were expensed in accordance with the provisions of FASB ASC 805, Business Combinations.

Read the The complete Report



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