Tsys FY profit down on spin-off costs

Source: TSYS

TSYS today announced the results for the fourth quarter and full year of 2007.

On a generally accepted accounting principles (GAAP) basis, TSYS reported basic earnings per share of $1.21 for the year and $0.23 for the fourth quarter. On a non-GAAP basis excluding one-time spin costs of $0.11 for the year and $0.11 for the quarter, TSYS reported basic earnings per share of $1.32 for the year and $0.34 for the fourth quarter. Spin related costs are considered non-recurring by TSYS and were incurred in connection with the distribution of the 80.6% ownership of TSYS by Synovus Financial Corp. (Synovus) to its shareholders on December 31, 2007.
  • Total revenues in 2007 were $1.806 billion representing a 1% increase over 2006 total revenues of $1.787 billion. Excluding the Bank of America termination fee of $65 million in 2006, revenues increased 5% in 2007 over the $1.722 billion in 2006.
  • Operating income in 2007 was $354 million representing a 1% decline over 2006 operating income of $357 million. Excluding the $65 million Bank of America termination fee and $2 million of related amortization expense in 2006 and the one-time spin related operating costs of $14 million in 2007, operating income was $368 million in 2007 representing a 25% increase over 2006 operating income of $294 million.
  • Net Income in 2007 was $237 million representing a decline of 5% over 2006 net income of $249 million. Excluding the net tax effect of the Bank of America termination fee of $41 million in 2006 and the one-time spin related costs and taxes of $23 million in 2007, net income for the year 2007 was $260 million representing a 25% increase over net income of $208 million in 2006.

This press release includes pro forma financial information that is not in accordance with GAAP. A reconciliation of GAAP is included in this press release in the form of a table that should be read in conjunction with this information.

"As we celebrate our 25th anniversary as a public company, we will certainly remember 2007 as the year of the 'spin' from Synovus Financial Corp. Synovus has been a wonderful majority owner for 25 years and we salute them. Our new independence gives us greater flexibility as we move forward with our long-term growth strategy. With passion and dedication, our team overcame many one-time obstacles in 2007 and once again highlighted our unique position in the industry," said Philip W. Tomlinson, chairman of the board and chief executive officer.

"The year 2007 was an exceptional year for TSYS. Our international revenues grew 33% over 2006, and we expect strong growth to continue. We also generated 15% organic growth for the year in electronic payment processing revenues which contributed to our operating margin expanding to 25.7% of revenues before reimbursables," said Tomlinson.

"We are looking forward to 2008 and beyond as we continue to reach out across the globe as an international organization dedicated to being the best and most cost effective provider of payment processing services in the world. As indicated in our Guidance Table below, we expect TSYS' total revenues to grow in the range of 7% to 9% in 2008, and now expect net income and basic earnings per share to grow in the range of 7% to 9%, up from the previously announced 4% to 6%," said Tomlinson.

Recent Highlights
  • TSYS successfully completed its spin-off from Synovus on December 31, 2007 and is now a fully independent, publicly-traded company.
  • TSYS joined the S&P 500 Index upon being spun-off from Synovus.
  • In connection with the spin-off, G. Sanders Griffith III, Synovus' general counsel and secretary moved to TSYS to serve in the same capacity, and Paul Todd, Synovus' executive vice president, was named executive vice president of mergers and acquisitions and strategic planning for TSYS.
  • Standard & Poor's Rating Service assigned a 'BBB' investment grade corporate credit rating to TSYS with a stable outlook.
  • TSYS entered into a credit agreement with Bank of America N.A., Royal Bank of Scotland plc, and other lenders which provides for a $252 million five year unsecured revolving credit facility and a $168 million unsecured term loan. The proceeds will be used for working capital and other corporate purposes, including to finance the repurchase by TSYS of its capital stock.
  • China UnionPay Data Services Co., Ltd., TSYS' joint venture with China UnionPay, successfully completed a bankcard conversion of over one million accounts for Shanghai Pudong Development Bank, one of the largest joint-stock commercial banks in China.
  • TSYS reached an agreement with Discover Financial Services to process card payments on Discover's network. The agreement gives TSYS access to each of the four payment processing platforms: American Express, MasterCard, Visa, and now Discover.

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