DEAR SHAREHOLDER, We’re pleased with TSA’s solid performance in 2004. We added significant new customers, made progress with  new product rollouts, and showed year-over-year improvements in many key financial measures. Earnings were  $1.23 per diluted share on revenues of $292.8 million. This represents a substantial improvement in earnings and  a growth in revenue of 5.6 percent compared to fiscal 2003. Our cash flow continued to be strong as the company  generated $58.1 million from operating activities and closed the year with approximately $170 million in cash. In all,  we ended the year with strong fundamentals. In December 2004, we announced approval of a share repurchase  program of up to $80 million of the company’s Class A Common Stock. We believe the share repurchase represents  an excellent use of capital and reflects our commitment to enhancing shareholder value.  TSA continues to occupy a unique position as a trusted provider of electronic payment solutions. Hundreds of the  world’s largest and most progressive companies rely on TSA software to operate mission-critical applications. Our  products enjoy a world-class reputation for their ability to reliably process billions of transactions each year. Just as  important, customers value the depth of our employees’ expertise and their commitment to service. With a global  reach, we deliver and support our software in more than 75 countries around the world. Our financial stability gives  our customers assurance of our long-term viability. It’s not enough to excel in the established electronic payments world. Increasingly TSA customers need a trusted  partner who can help them protect their core payments business as they establish their relevance in newer  payment areas. That’s where TSA’s fundamentals pay off. With our proven track record, TSA is frequently tapped  by customers and industry partners to help address the next set of challenges in payment processing. This gives us  an excellent opportunity to apply our core capabilities to emerging needs, including: These initiatives demonstrate our ability to apply traditional strengths to new business challenges. They  are proven examples of our strategy to leverage TSA’s market position as a trusted provider of enterprise- class software. By adding value to customer relationships through new software and extensions of existing  products, we continue to enhance our profitability and financial strength, adding value for our shareholders.  Our investments in software, in new platforms and in a global delivery channel help us to continue winning  new business. And in an increasingly complex world, our scalable, flexible software with its high reliability is  ideally suited to a payments industry in which transaction volumes are steadily growing and customers are  faced with the need to integrate new technologies into legacy systems.  Fiscal 2005 will see us continue to extend our brand into new markets, geographies and transaction types  while we continue to manage expenses closely. We will continue to invest in R&D, service excellence and  technology enhancements that drive customer satisfaction. By leveraging TSA’s unique assets — our global  reach, strong balance sheet and solid position in the market—we will continue to create more scale for  TSA and enhanced value for our shareholders. We’re now celebrating our tenth year as a public company, while ACI marks its 30th year in the software  business. IntraNet’s track record is almost as long, and Insession’s roots as a software company go back  nearly 15 years.  At the end of fiscal 2004, I announced my plans to retire not later than June 2006. I am proud of the  company’s accomplishments and I am confident the company is well-positioned for the future, with solid  financial strength and a market-leading reputation. In closing, I would like to thank our employees for delivering another successful year of results. I would  also like to thank our shareholders, our partners and our customers for their continued confidence in  the company.  1/10/05 2:32:17 PM 8818_Fnl.indd 3 Mobility initiatives Smart card programs Risk management and fraud detection systems Enhanced authorization systems Electronic document distribution Automated workflow management Straight-through processing of corporate payments GREGORY D. DERKACHT PRESIDENT & CHIEF EXECUTIVE OFFICER