EX-99 3 press.htm PRESS RELEASE

For Immediate Release

Contacts:

James B. Lipham Leo S. Berard
Chief Financial Officer Investor Relations
706.649.2262 706.649.5220

TSYS Reports 20.5% Increase in Net Income for 2002

     Columbus, Ga., January 14, 2003 — TSYS® today announces that its financial results are in line with the Company’s forecast for the fourth quarter and for the year ended December 31, 2002.

     Net income for 2002 increased 20.5% to $125.8 million from $104.4 million in the same period last year. Basic earnings per share for 2002 increased to $0.64 from $0.54 one year ago. Diluted earnings per share for 2002 increased to $0.64 from $0.53 in 2001. Revenue for 2002 was $955.1 million, an increase of 7.0%, compared with revenue of $892.3 million in 2001. Revenue for 2002, excluding the amounts for reimbursable charges such as postage and courier charges, was $724.0 million, an increase of 9.8%, compared to $659.2 million in 2001.

     Net income for the quarter ending December 31, 2002, increased 18.7% to $35.5 million from $29.9 million in the same period last year. Basic and diluted earnings per share for the fourth quarter increased to $0.18 from $0.15 in the same period last year. Revenue for the fourth quarter was $246.0 million, an increase of 7.9%, compared with revenue of $228.1 million one year ago. Revenue for the fourth quarter of 2002, excluding the amounts for reimbursable charges, was $188.4 million, an increase of 9.2%, compared to $172.5 million in the same period last year.

     The financial results include the acquisition of ProCard, Inc. from Synovus Financial Corp., which was completed on November 1, 2002. Because the transaction involved entities under common control, TSYS has recorded the acquisition at historical cost and has restated all periods prior to the acquisition to reflect the combined results of TSYS and ProCard.

     “TSYS had another solid year despite a challenging economic environment and expects another record year in 2003 while celebrating the company’s 20th anniversary,” said Richard W. Ussery, chairman and CEO of TSYS. “Our fundamental business remains strong. Our internal growth from our existing customers of 11.3% for the quarter coupled with the dynamic shift to electronic transactions continues to be a solid foundation for our core business. Transactions for the 2002 holiday shopping season increased 6.7% over last year. In addition to the fundamental growth, TSYS has the opportunity to grow through new customers both domestically and internationally.”

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TSYS Announces 20.5% Increase for 2002 Earnings/Page 2 of 5

Ussery continued, “ During the fourth quarter of 2002, we announced:

  • Signing Sears Canada to become the exclusive processor for its 8 million retail cards, expanding on the successful partnership that Sears and TSYS have built in the United States. The conversion of the portfolio to our TS2 platform is expected to be completed in the second quarter of 2003; and

  • Renewing our processing agreement with Canadian Tire Financial Services for seven years.”

     “We continue to proceed with our long-term growth strategy of leveraging our technology into other vertical markets and acquiring new businesses,” said Ussery.

     TSYS expects its 2003 net income to exceed its 2002 net income by 12-15%. The assumptions underlying 2003’s net income forecast are an increase in revenues (excluding reimbursables) between 9-10%, an internal growth rate of accounts of existing clients of approximately 11% and a continued focus on expense management. The forecast does not include any revenues or expenses associated with signing and converting a major client.

     TSYS will host its quarterly conference call at 4:30 p.m. EDT, January 14, 2003. The conference call can be accessed at www.tsys.com by clicking on the designated icon within the Highlights section of the site. The replay will be available 30–45 minutes after the call.

About TSYS

     TSYS (NYSE: TSS) (www.tsys.com) brings integrity and innovation to the world of electronic payment services as the integral link between buyers and sellers in this rapidly evolving universe. Synovus (NYSE: SNV) owns an 81-percent interest in TSYS. For more information, contact news@tsys.com.

     This press release contains statements that constitute “forward-looking statements” within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934 as amended by the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, among others, statements regarding TSYS ’ expected growth in net income for 2003 and the assumptions underlying such statements, including, with respect to TSYS’ expected increase in net income for 2003; an increase in revenues (excluding reimbursables) between 9-10%; an internal growth rate of accounts of existing clients of approximately 11%; and continued aggressive expense management. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements. A number of important factors could cause actual results to differ materially from those contemplated by the forward-looking statements in this press release. Many of these factors are beyond TSYS’ ability to control or predict. These factors include, but are not limited to, lower than anticipated revenues; lower than anticipated internal growth rates for TSYS’ existing customers; TSYS’ inability to control expenses and increase market share; hostilities in the Middle East or elsewhere; TSYS’ inability to successfully bring new products to market, including, but not limited to, stored value and e-commerce products, loan processing products and other processing services; the inability of TSYS to grow its business through acquisitions; adverse developments with respect to entering into contracts with new clients and retaining current clients; TSYS’ inability to increase the revenues derived from international sources; the merger of TSYS clients with entities that are not TSYS clients or the sale of portfolios by TSYS clients to entities that are not TSYS clients; TSYS’ inability to anticipate and respond to technological changes, particularly with respect to e-commerce; adverse

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TSYS Announces 20.5% Increase for 2002 Earnings/Page 3 of 5

developments with respect to the successful conversion of clients; the absence of significant changes in foreign exchange spreads between the United States and the countries in which TSYS transacts business, to include Mexico, United Kingdom, Japan, Canada and the European Union; adverse developments with respect to the credit card industry in general; TSYS’ inability to successfully manage any impact from slowing economic conditions or consumer spending; the occurrence of catastrophic events that would impact TSYS’ or its major customers’ operating facilities, communications systems and technology, or that has a material negative impact on current economic conditions or levels of consumer spending; revenues generated by sub-prime lending clients being less than anticipated; successfully managing the potential both for patent protection and patent liability in the context of rapidly developing legal framework for expansive software patent protection; and overall market conditions. Additional factors that could cause actual results to differ materially from those contemplated in this press release can be found in TSYS’ filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K. We believe these forward-looking statements are reasonable; however, undue reliance should not be placed on any forward-looking statements, which are based on current expectations.











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TSYS Announces 20.5% Increase for 2002 Earnings
Page 4 of 6



TSYS
Financial Highlights
(In thousands, except per share data)


                                    Three months ended


                                Twelve months ended

December 31,

December 31,

Percentage

Percentage

  2002*

  2001*

Change

  2002*

  2001*

Change

Revenues

   Electronic payment processing services $

163,418

150,439

8.6

%

$

617,877

572,412

7.9

%

   Other services

24,989

22,063

13.3

106,086

86,816

22.2

      Revenues before reimbursables

188,407

172,502

9.2

723,963

659,228

9.8

   Reimbursable items

57,590

55,565

3.6

231,170

233,093

(0.8)

       Total revenues

245,997

228,067

7.9

955,133

892,321

7.0

Expenses

   Employment

78,951

70,147

12.6

300,240

267,792

12.1

   Occupancy & equipment

44,342

43,860

1.1

174,958

171,680

1.9

   Other

22,365

20,229

10.6

91,167

81,960

11.2

   (Gain)/Loss on disposal of equipment

(13)

(1)

nm

(75)

93

nm

       Expenses before reimbursables

145,645

134,235

8.5

566,290

521,525

8.6

   Reimbursable items

57,590

55,565

3.6

231,170

233,093

(0.8)

       Total operating expenses

203,235

189,800

7.1

797,460

754,618

5.7

Operating Income

42,762

38,267

11.7

157,673

137,703

14.5

Other Income

1,388

594

133.2

5,614

2,858

96.4

Income before Income Taxes, Minority Interest

   and Equity in Income of Joint Ventures

44,150

38,861

13.6

163,287

140,561

16.2

Income Taxes

14,613

14,531

0.6

57,908

53,892

7.5

Minority Interest in Income of

   Consolidated Subsidiary

(22)

16

nm

(155)

(76)

nm

Equity in Income of Joint Ventures

5,941

5,514

7.7

20,581

17,825

15.5

Net Income

$

35,456

29,860

18.7

$

125,805

104,418

20.5

Basic Earnings Per Share

$

0.18

0.15

17.4

%

$

0.64

0.54

19.1

%

Diluted Earnings Per Share

$

0.18

0.15

17.7

%

$

0.64

0.53

19.3

%

Dividend Declared Per Share

$

0.0175

0.0150

$

0.0675

0.0600

Average Common Shares Outstanding

197,049,470

194,778,670

197,016,699

194,772,766

Average Common and Common

    Equivalent Shares Outstanding

197,055,850

195,442,539

197,497,049

195,604,462

Note: nm = not meaningful

      In accordance with the accounting standards related to transactions between entities under common control, TSYS has recorded the
      acquisition of ProCard, Inc. at historical cost and has restated all periods prior to the acquisition to reflect the combined results of TSYS
      and ProCard.

     Certain reclassifications have been made to the 2001 financial statements to conform to the presentation adopted in 2002.

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TSYS Announces 20.5% Increase for 2002 Earnings
Page 5 of 6



 

TSYS

Segment Breakdown

(In thousands)

Three Months Ended December 31, 2002*

Three Months Ended December 31, 2001*

Domestic-based

International-based

Domestic-based

International-based

Transaction

Transaction

Transaction

Transaction

Processing

Processing

Consolidated

Processing

Processing

Consolidated

Total revenue

$

228,575

17,892

246,467

214,391

14,098

228,489

Intersegment revenue

(158)

(312)

(470)

(144)

(278)

(422)

      Revenues from external customers

$

228,417

17,580

245,997

214,247

13,820

228,067

Segment operating income

$

45,195

(2,433)

42,762

42,369

(4,102)

38,267

Income tax expense

$

15,275

(662)

14,613

15,782

(1,251)

14,531

Equity in income of joint ventures

$

5,792

149

5,941

5,252

262

5,514

Net Income

$

36,836

(1,380)

35,456

32,230

(2,370)

29,860

Twelve Months Ended December 31, 2002*

Twelve Months Ended December 31, 2001*

Domestic-based

International-based

Domestic-based

International-based

Transaction

Transaction

Transaction

Transaction

Processing

Processing

Consolidated

Processing

Processing

Consolidated

Total revenue

$

890,830

66,337

957,167

861,095

34,304

895,399

Intersegment revenue

(646)

(1,388)

(2,034)

(2,006)

(1,072)

(3,078)

     Revenues from external customers

$

890,184

64,949

955,133

859,089

33,232

892,321

Segment operating income

$

158,431

(758)

157,673

157,638

(19,935)

137,703

Income tax expense

$

56,923

985

57,908

60,464

(6,572)

53,892

Equity in income of joint ventures

$

19,753

828

20,581

15,985

1,840

17,825

Net Income

$

124,689

1,116

125,805

115,767

(11,349)

104,418

Note:   In accordance with the accounting standards related to transactions between entities under common control,
            TSYS has recorded the acquisition of ProCard, Inc. at historical cost and has restated all periods prior to the
            acquisition to reflect the combined results of TSYS and ProCard.



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TSYS Announces 20.5% Increase in Earnings for 2002

Page 6 of 6

Supplemental Information:

      Dec 2002
       Dec 2001
    % Chg

Accounts on File (in millions):

Consumer

148.8

127.2

16.9

%

Retail

77.3

73.5

5.2

Commercial

19.8

17.8

11.5

245.9

218.5

12.5

%

Dec 2002

Dec 2001

% Chg

Accounts on File (in millions):

Domestic

215.4

190.4

13.1

%

International

30.5

28.1

8.3

245.9

218.5

12.5

%

Cash Flow Information:

Twelve Months Ending:

(in thousands)

Dec 2002*

Dec 2001*

Cash flows from operating activities:

    Net income

$

125,805

104,418

       Adjustments to net income provided by operating activities:

       Minority interest in consolidated subsidiary's net income

155

76

       Equity in income of joint ventures

(20,581)

(17,825)

       Depreciation and amortization

63,862

58,649

       Provision for doubtful accounts and billing adjustments

3,263

569

       Provision for transaction processing accruals

6,532

1,438

       Other

18,577

(56,741)

          Net cash provided by operating activities

197,613

90,584

Cash flows from investing activities:

   Purchase of property and equipment

(14,781)

(32,476)

   Additions to computer software

(66,471)

(55,122)

   Increase in contract acquisition costs

(44,044)

(27,194)

   Cash used in acquisition of subsidiary

(30,000)

-

    Other

(20,875)

(11,494)

          Net cash used in investing activities

(134,421)

(103,298)

          Net cash used in financing activities

(12,671)

(10,954)

Effect of foreign currency translation on cash and cash equivalents

(9)

(665)

          Net increase (decrease) in cash and cash equivalents

50,512

(24,333)

Cash and cash equivalents at beginning of year

58,659

82,992

Cash and cash equivalents at end of period

$

109,171

58,659

Note: In accordance with the accounting standards related to transactions between entities under common control,
         TSYS has recorded the acquisition of ProCard, Inc, at historical cost and has restated all periods prior to the
         acquisition to reflect the combined results of TSYS and ProCard.

         Certain reclassifications have been made to the 2001 financial statements to conform to the presentation adopted in 2002.

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