To Our Shareholders

Dear Fellow Shareholders,

The year 2000 was a year of new beginnings—new products, new markets and new frontiers. For 17 consecutive years, TSYS^® has reported double digit increases in revenues and net income. Our shareholders received the benefit of a 37 percent increase in their investment in 2000. TSYS has also proven to be a solid investment for the long term, delivering an annualized shareholder return of 24.1 percent over the last ten years. Our formula for success is simple. We continue to grow our core business; we leverage our strengths to introduce new products and services; and we seek new markets and frontiers.

We also have a new look! Our new logo is on the front cover. We have a story to tell, and our new look expresses what we do and who we are. We are behind the scenes - providing our clients with the systems and the people to run their businesses effectively, profitably and efficiently. We are the action behind the transaction^SM—our new brand line. While our legal name will remain Total System Services, Inc. ^®, going forward you will know us as TSYS (tee-sis). We chose colors that are fresh and energetic, just like the TSYS team. We listen and respond to our clients’ needs and develop dynamic and customized services to ensure their success. We stand behind what we say and do by bringing integrity and innovation to the world of electronic payments.

We have another new announcement. We welcome a new director, Alfred W. (Bill) Jones III, Chairman and Chief Executive Officer, Sea Island Company, to the TSYS family. Bill’s vision and management expertise will prove valuable to us as we work to achieve our corporate goals. Welcome aboard!

We have embarked on an ambitious three-year plan we refer to as VisionWorks. VisionWorks consists of four strategic growth initiatives: grow core business, drive international expansion, expand portfolio management services and capitalize on e-business opportunities. We have set as our goal to increase net income by 20 – 25 percent a year for the next three years—with our net income reaching at least $160 million, on $1 billion in revenues, by 2003. By then, we also expect to have 300 million accounts on file.

VisionWorks

1. Grow Core Business

Core processing represents 75 percent of our total revenues. This part of our business includes transaction processing for consumer credit, retail, commercial, debit, chip and stored value card issuers. It also includes revenues from value-added products and services which are optional features clients choose to increase their portfolios’ financial performance.

We listened to our clients and the market that demanded more from legacy processing systems. Our answer was TS2^®, the industry’s most sought after consumer card processing platform available today. We used that same ingenuity to develop systems crossing multiple platforms for processing commercial, debit, stored value and retail cards. While we pride ourselves on our system capabilities, it’s really our people who make the difference. They understand electronic payments and actively respond to our clients’ needs.

We have a 25 percent market share in consumer credit cards of the reported top 200 issuers in the United States. With the most successful processing system on the market and the increasing trend toward outsourcing, we have tremendous opportunities for growth.

In the retail credit card arena, TSYS processes for 17 percent of the U.S. retail market. We help retailers who want to strengthen their brands and gain an even greater market share. We also work with retailers who want to convert inactive and less active retail accounts into cobranded MasterCard and Visa cards that are more widely used and more profitable for the retailer.

We have an 87 percent market share of the U.S. Visa and MasterCard commercial cards, which is a sector growing at 35 percent a year. This segment includes the issuers approved by the U.S. General Services Administration, all of whom process with TSYS. Today, only 15 of the 156 federal agencies have converted to electronic payments. The remainder must be converted by October 2002. As we introduce our TS2 commercial card platform, we expect to gain even greater market share.

This year, we will premier the industry’s newest debit platform that will provide one of the most sophisticated debit systems available. Debit card purchase volume gained 54 percent from 1999 to 2000, and projections indicate that 19 percent of all U.S. payments will be made with debit cards by 2010. Worldwide, debit is growing at a much faster rate than credit. Last year, we introduced a stored value processing platform for a new generation of cards not directly connected to lines of credit or bank accounts. These cards are incredibly versatile and powerful marketing tools, bringing new businesses, new clients and new revenues to the electronic payments marketplace.

In addition, Vital Processing Services^® (Vital^®), our joint venture with Visa U.S.A., provides merchants the ability to accept and process electronic payments at the point of sale. In 2000, Vital reported net income of $25.7 million on revenues of $176.5 million. The company set a goal to grow earnings between 20 – 25 percent a year for the next three years. Vital authorized more than 5 billion transactions in 2000, and cleared and settled 2 billion transactions. Vital continues to build on its comprehensive array of electronic payment processing capabilities: credit, debit, Electronic Benefits Transfer (EBT), electronic check and more for all types of merchants. During 2000, Vital substantially completed the reengineering of its Merchant Accounting System and made significant investments in its point of sale systems to accommodate both Web-based and physical merchants. This investment in technology positions Vital well for major growth in the acquiring industry. Also, Vital grew its client base, signed new contracts and brought many new merchant and acquirer solutions to the marketplace. To round out its full service offering of acquirer services, Vital added Vital Merchant Services^SM to its family as a wholly owned subsidiary that provides complete terminal management and deployment services.

To support core processing, our suite of products includes credit evaluation, fraud control, marketing and other services that add value to our clients’ business processes. Our goal is that these products represent 12 – 15 percent of our revenues by 2003. We also think some of these products, such as credit evaluation, can be extended to other types of lending.

2. Drive International Expansion

Today, outside of the United States, the worldwide* card market consists of 563 million Visa, MasterCard, JCB, and American Express credit and debit cards. Currently, TSYS processes 11 million of those cards—a 1.9 percent market share. With our investment in technology, knowledge of local cultural customs and overall industry expertise, TSYS is poised to capture a significant share of this market.

New contracts with The Royal Bank of Scotland Group plc and Allied Irish Banks plc marked the arrival of TSYS in Europe, a market that reports 200 million Visa and MasterCard cards and 18 percent annual growth in credit and debit transaction volumes. These clients will be converted onto TSYS’ systems by third quarter 2001. Our international revenues from Canada, Mexico, the Caribbean, Honduras and Japan provided 9 percent of TSYS’ revenues in 2000. By 2003, we project at least 20 percent of TSYS’ revenues will come from international markets.

TSYS bought a controlling interest in GP Network Corporation (GP Net), the payments gateway for more than 100,000 merchants and Japan’s first EMV-based chip-capable payments processor. TSYS joins seven institutional partners in GP Net. In addition to merchant processing, these financial institutions represent a combined 92.8 million cards or 61 percent of the card-issuing market. We are preparing our systems to process in Japan. With the establishment of TSYS Japan, we are working hard to build on our new relationships and one day hope to process for these issuers. The entire Asia-Pacific region reports more than 234 million MasterCard, Visa, JCB and American Express cards, with transaction volume growing more than 30 percent a year.

3. Expand Portfolio Management Services

Our subsidiary, TSYS Total Solutions^® (Total Solutions^®), provides telephone and e-mail customer service, collections, credit analysis, marketing solicitations and card activation services. Total Solutions supports our clients who determine that outsourcing customer service and collections makes good business sense, allowing them to concentrate on their core business.

Total Solutions increased its accounts managed by 132 percent to 6 million in 2000. Revenues increased more than 30 percent to more than $73 million in 2000.

But simply providing customer service and collections is just a small piece of the outsourcing opportunities. We see a day when our clients not only can see the credit card accounts customers have with them, but their insurance, mortgage, savings and securities accounts. Through strategic partnerships and our innovative systems, we will provide a customer care center that manages these multiple relationships clients have with their customers.

TSYS Total Debt Management^® (TDM), ranked 18th among the nation’s third-party collectors, provides software for bankruptcy process management and pre- and post-chargeoff collections. TDM’s debt management unit, National Attorney Network (NANSM), is the largest legal network in the United States, representing retailers, banks and finance companies. NAN facilitates and manages the placement of legal collection cases from the creditor to the collecting law firm.

4. Capitalize on E-business Opportunities

The volatile dot-com market has proven one thing…the Internet can be an invaluable distribution channel for delivering products and services, as well as strengthening customer relationships. Those business models that succeed will do so because they leverage their strengths in the real world within the complexities of the virtual world. When we launched DotsConnect^SM, our e-commerce subsidiary in March 2000, we took the best of what we offered in the real world to the Web.

The DotsConnect business plan is focused on four strategies. One, develop the most sophisticated, customer-friendly applications for online service, account management, and bill presentment and payment. Two, offer Web hosting for clients who demand highly sensitive, secure services. When you deal with someone’s credit cards and credit history, you must protect that confidentiality. At TSYS, we’ve had more than two decades of experience in dealing with sensitive data. Three, offer flexible solutions for clients who need e-services tailored to fit their particular needs. After all, at TSYS we never believe one size fits all. Four, seek strategic alliances with leading e-commerce providers — such as the alliances we have with Air2Web, which will enable DotsConnect to provide financial institutions with the ability to offer customers wireless access to manage their own credit card accounts, and Avolent, which will allow DotsConnect to enable billers to distribute bills to their customers through multiple devices, such as PDA’s and cell phones.

2000 was another strong year for our company. And if past performance is an indication of the possibilities, our future has never before looked brighter. We are well positioned domestically and internationally to continue to grow profitably. We know where we are and have a clear vision of our destination. We are confident that we have the team, the technology and the know-how to get there from here.

Sincerely, Richard W. Ussery Chairman of the Board and Chief Executive Officer * Asia-Pacific, Europe, Latin America and Canada

Philip W. Tomlinson, President (left) and Richard W. Ussery, Chairman of the Board and Chief Executive Officer