TSYS (TSS) Comments on Merchant Processing Relationship with Bank of America (BAC)
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TSYS (NYSE: TSS) addressed developments regarding its merchant processing relationship with Bank of America Corporation (NYSE: BAC). Bank of America has indicated to TSYS that it is in the process of formulating its plans with respect to changes in its merchant processing relationship with TSYS but has not yet communicated to TSYS the timing or extent of the deconversion from TSYS' systems. TSYS provides a number of additional services to Bank of America, including commercial card processing, small business card processing and card production services.
On June 29, 2009, Bank of America announced that it and other parties are forming a new joint venture that will provide merchant processing services. TSYS provides accounting, settlement, authorization and other services to Bank of America pursuant to a contract that will expire in April 2010, which services accounted for approximately 4% of TSYS' total revenues for 2008 and approximately 4.6% of TSYS' total revenues for the first quarter of 2009. Approximately 29% and 31% of the total revenues derived from providing merchant processing services to Bank of America are attributable to reimbursable items for 2008 and the first quarter of 2009, respectively.
TSYS expects that the merchant processing business associated with Bank of America will contribute approximately $0.02 per share to TSYS' projected earnings per share in 2009. The potential loss of Bank of America as a merchant processing client is not expected to have a material adverse effect on TSYS' financial position, results of operations or cash flows. [SM]
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