TSYS earnings up 28% in 2006

"We exceeded our goals for 2006 with another record year and we are pleased to announce an improvement in our guidance for 2007, which is a direct result of the Tsys team approach of focusing on our growth strategy while streamlining costs," said Philip W Tomlinson, chairman and chief executive officer of TSYS.

"Our core processing business within our domestic-based support services segment continues to grow at a solid double digit rate, and remains stronger than ever. In addition, our international revenues for 2006 grew 22.7% over 2005, and we expect that strong growth to continue in 2007. On a non-GAAP (generally accepted accounting principles) basis, net income is now expected to increase between 14%-17% in 2007 compared to 2006. On a GAAP basis, TSYS' 2007 net income is expected to decline between 5%-3% as compared to 2006. We believe our 2006 performance provides a strong foundation upon which we can build for future growth opportunities," said Tomlinson.

Recent Highlights

• TSYS substantially completed the Capital One conversion in the fourth quarter of 2006.
• TSYS entered into an agreement with the No. 1 card issuer in The Netherlands, Rabobank, to process its consumer-credit portfolio. The multi-stage conversion of Rabobank's 1-million-plus accounts is scheduled to conclude in the second quarter of 2007, making TSYS the leading credit-card processor in The Netherlands.
• TSYS acquired majority control of a call center business to deliver a comprehensive range of managed services to financial institutions across Europe, the Middle East and Africa. The new business is named TSYS Managed Services Emea.
• Robert J Philbin was named president of Tsys Acquiring Solutions. Philbin will be responsible for the entire acquiring enterprise, and will report to M Troy Woods, president and chief operating officer of TSYS.
• Through its prepaid business, TSYS has grown its healthcare business to more than 11 million transaction-enabled accounts on file.

Projected Outlook for 2007

Excluding the one-time Bank of America contract-termination fee in 2006 of approximately $68.9 million and the acceleration of amortization of Bank of America contract acquisition costs of approximately $6 million, net income is now expected to increase between 14%-17% in 2007 compared to 2006, versus previous guidance of an increase between 8%-10%. Based on GAAP, TSYS' estimated 2007 net income is now expected to decline between 5%-3% as compared to 2006, versus previous guidance of a decline between 9%-7%.

TSYS' 2007 earnings guidance is based on the following assumptions:

1. Including the Bank of America termination fee of approximately $68.9 million and an acceleration of amortization of contract acquisition costs, estimated total revenues will decline 5%-3% in 2007. Excluding the termination fee and reimbursable items, revenues will increase by 2%-5% over 2006.
2. The conversion of the Capital One portfolio, which was substantially completed in the fourth quarter of 2006, will be fully completed in 2007.
3. J.P. Morgan Chase & Co. will discontinue its processing agreement according to the original schedule and will license TSYS' processing software in the third quarter of 2007.
4. Expense reductions in employment, equipment, leases and other areas that are included in 2007 estimates will be accomplished.
5. TSYS will not incur significant expenses associated with the conversion of new large clients or acquisitions, or any significant impairment of goodwill or other intangibles.

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