EXHIBIT 99.4
Contact: Brian K. Miller
Vice President - Finance
Tyler Technologies, Inc.
(972) 713-3720
bmiller@tylertechnologies.com
FOR IMMEDIATE RELEASE
TYLER TECHNOLOGIES REPORTS RECORD EARNINGS FOR
FOURTH QUARTER AND FULL YEAR 2002
EBITDA INCREASES 41% TO $18.6 MILLION
DALLAS, TEXAS, FEBRUARY 27, 2003 -- Dallas-based Tyler Technologies, Inc. (NYSE:
TYL) today reported earnings for the fourth quarter and year ended December 31,
2002. Tyler provides a broad array of software products and related professional
services to meet the information management needs of counties, cities, schools
and other local government offices nationwide.
Revenues from continuing operations for the year ended December 31, 2002
increased 13% to $133.9 million from $118.8 million in 2001. EBITDA, or earnings
from continuing operations before interest, income taxes, depreciation and
amortization, grew 41% in 2002 to $18.6 million, or $0.37 per diluted share,
from $13.2 million, or $0.28 per share, in 2001.
Income from continuing operations before income taxes for 2002 was $10.0
million, compared to pretax income of $1.8 million for 2001. The Company's
effective income tax rate for 2002 was 38.5%, compared to 85.0% in 2001. After
taxes, income from continuing operations for the year ended December 31, 2002
was $6.2 million, or $0.12 per share, compared to income from continuing
operations of $272,000, or $0.01 per share, for the year ended December 31,
2001.
For the year ended December 31, 2002, Tyler had a gain on disposal of
discontinued operations, net of tax, of $1.8 million, or $0.04 per share,
compared to a loss on disposal of discontinued operations of $3,000, or $0.00
per share, in 2001. Net income for 2002 was $8.0 million, or $0.16 per share,
compared to $269,000, or $0.01 per share, in 2001.
Results for 2002 include legal fees of $704,000 ($458,000 after tax) associated
with the Company's investment in HTE, Inc. ("HTE"). Excluding those legal
expenses, Tyler's income from continuing operations for the year ended December
31, 2002 was $6.6 million, or $0.13 per share, and net income was $8.4 million,
or $0.17 per share. The legal issues between Tyler and HTE have been resolved,
and Tyler has agreed to tender its HTE shares to SunGard Data Systems in
connection with SunGard's pending cash acquisition of HTE.
Effective January 1, 2002, Tyler adopted the provisions of SFAS No. 142,
"Goodwill and Other Intangible Assets," which resulted in lower amortization
expense for acquisition intangibles and a lower effective income tax rate
beginning in 2002. Had the Company reported its 2001 results on the basis
required by SFAS No. 142, pro forma income from continuing operations would have
been $3.2 million, or $0.07 per share, and the Company's 2001 effective income
tax rate would have been approximately 40%.
-MORE-
Tyler Technologies Reports Record Earnings for 2002
February 27, 2003
Page 2
For the fourth quarter of 2002, revenues grew 16% (17% excluding hardware and
other revenues) to $36.4 million from $31.5 million in the fourth quarter of
2001. EBITDA in the fourth quarter of 2002 was $6.3 million, or $0.13 per share,
compared to EBITDA of $4.3 million, or $0.09 per share, in the fourth quarter of
2001.
Pretax income from continuing operations was $4.1 million for the three months
ended December 31, 2002, more than triple Tyler's pretax income of $1.3 million
for the same period in the prior year. Income from continuing operations for the
quarter ended December 31, 2002 was $2.6 million, or $0.05 per share, compared
to income from continuing operations of $163,000, or $0.00 per share, for the
quarter ended December 31, 2001.
During 2002, Tyler repurchased 1,500,000 shares of its common stock in
off-market transactions for an aggregate cash purchase price of $4 million. On
October 29, 2002, the Tyler Board approved the repurchase of up to an additional
1,000,000 shares of its common stock in open market transactions. During the
first quarter of 2003, Tyler has repurchased 339,400 shares of its common stock
in open market transactions at an average price of $3.96 per share.
"Tyler achieved tremendous improvement in financial performance during 2002,"
said John M. Yeaman, Tyler's President and CEO. "We exceeded our earnings goals,
despite a tough economic environment and the challenges associated with
introducing a major new product and expanding geographically. Our revenues,
earnings and EBITDA all grew stronger throughout the year and set new quarterly
highs from continuing operations in the fourth quarter. In addition, the fourth
quarter marked our seventh consecutive profitable quarter and our ninth
consecutive quarter of year-over-year improvement in operating income.
"Our revenue for the year grew 14%, excluding hardware, and the mix of revenues
continued to shift in a very positive manner. While each of our major revenue
categories, excluding hardware, improved from 2001, software licenses led the
way with an exceptionally strong 25% increase. Software services revenue was
also very robust, increasing by 19%. Growth of our recurring revenues was solid
in 2002, with an 11% increase in maintenance revenues compared to 2001.
Appraisal services revenues grew 7% as we continued to build on the rapid growth
that our appraisal business experienced in the previous two years.
"As a result of the change in our revenue mix toward a greater proportion of
revenues from software licenses, combined with our ability to leverage our costs
of professional services, our gross margin improved to 35.8% in 2002 from 33.7%
in 2001. Our fourth quarter 2002 gross margin of 39.1% represented the highest
quarterly margin achieved in the last two years. Tyler also continued its trend
of reduced selling, general and administrative expenses as a percentage of
revenues at 25.3% in 2002, compared to 25.9% of revenues in 2001," continued Mr.
Yeaman.
"Our growth and profitability reflect the value that current and prospective
clients in the local government technology market find in our products and
services," added Mr. Yeaman. "The efforts of our employees to develop superior
products and to provide exceptional client service are evident in our results."
"Tyler's cash flow for the year was very robust. The Company generated nearly
$10 million of free cash flow, after capital expenditures, and ended the year
with $13.7 million in cash. We expect to receive approximately $39 million in
pretax proceeds from the pending sale of HTE, which will further improve our
already strong balance sheet. We plan to use our cash to continue to execute our
stock repurchase program and to maintain liquidity to take advantage of
opportunities to accelerate profitable growth, including possible strategic
acquisitions.
-MORE-
Tyler Technologies Reports Record Earnings for 2002
February 27, 2003
Page 3
"Our current outlook is for continued improvement in our 2003 results, assuming
that local government budgets do not deteriorate significantly," Mr. Yeaman
noted. "While the current economic and political environment adds a major
element of uncertainty to forecasting, we expect to continue to grow organically
and to leverage our costs so that earnings grow substantially faster than
revenues."
"We are cautiously optimistic that the robust growth we have experienced in
software license and related software services and maintenance revenues will
continue, offset somewhat by a reduction in appraisal services revenues. In the
current environment, we expect that software-related revenues will grow more
than 20% in 2003. Appraisal services revenues are expected to be flat or lower
than in 2002, reflecting the completion of the largest appraisal contract in our
history. As a result, we anticipate that our total revenue growth for 2003 will
be in the 8-10% range."
"With the continuing shift in our revenue mix toward a greater proportion of
software-related revenues, we expect that gross margins for the year 2003 will
continue to trend upward. EBITDA is expected to grow to between approximately
$21 and $23 million, and fully diluted earnings per share from continuing
operations (excluding any gain on the sale of our investment in HTE and related
activity) are expected to be in the $0.16 - $0.18 range for 2003."
"As was in the case in 2002, the second half of the year is expected to be
significantly stronger than the first half, with more than 65% of annual
earnings and EBITDA coming in the second half of 2003. Our estimated income tax
rate for 2003 is approximately 40%. Tyler's planned capital spending for 2003 is
approximately $12 million, including $9 million related to software development.
Once again, we anticipate generating significant free cash flow after capital
expenditures," concluded Mr. Yeaman.
Tyler Technologies has scheduled a conference call for today at 10:30 a.m.
Central Time, to discuss the Company's 2002 earnings and outlook for 2003. The
conference call can be accessed by visiting the Company's homepage at
http://www.tylertechnologies.com. A replay will also be available on Tyler's Web
site following the conference call.
Based in Dallas, Tyler Technologies is a leading provider of end-to-end
information management solutions and e-government services to local governments.
Tyler partners with clients to make local government more accessible to the
public, more responsive to needs of citizens, and more efficient. Tyler's client
base includes nearly 6,000 local government offices in 49 states, Canada and
Puerto Rico. More information about Tyler Technologies can be found on the World
Wide Web at http://www.tylertechnologies.com.
Tyler Technologies, Inc. has included in this press release "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995 concerning its business and operations. Tyler Technologies expressly
disclaims any obligation to release publicly any updates or revisions to these
forward-looking statements to reflect any change in its expectations. These
expectations and the related statements are inherently subject to risks and
uncertainties that could cause actual results to differ materially from those
set forth in, contemplated by, or underlying the forward-looking statements. The
risks and uncertainties which forward-looking statements are subject to include,
but are not limited to, changes in competition, changes in general economic
conditions, changes in the budgets and regulatory environments of the Company's
customers, risks associated with the development of new products and the
enhancement of existing products, the ability to attract and retain qualified
personnel, and other risks detailed from time to time in the Company's filings
with the Securities and Exchange Commission.
(Comparative results follow)
####
TYLER TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
<Table>
<Caption>
Three Months Ended December 31, Year Ended December 31,
------------------------------- ------------------------------
2002 2001 2002 2001
------------ ------------ ------------ ------------
Revenues (1) $ 36,396 $ 31,463 $ 133,897 $ 118,816
Cost of revenues (1) 22,168 20,117 85,915 78,797
------------ ------------ ------------ ------------
Gross profit 14,228 11,346 47,982 40,019
Selling, general and administrative expenses 9,242 8,195 33,914 30,830
Amortization of acquisition intangibles (1) 832 1,721 3,329 6,898
------------ ------------ ------------ ------------
Operating income 4,154 1,430 10,739 2,291
Legal fees associated with affiliated investment 54 -- 704 --
Interest expense (income), net 14 120 (6) 479
------------ ------------ ------------ ------------
Income from continuing operations
before income taxes 4,086 1,310 10,041 1,812
Income tax provision 1,505 1,147 3,869 1,540
------------ ------------ ------------ ------------
Income from continuing operations 2,581 163 6,172 272
Discontinued operations:
Income (loss) on disposal, after income taxes 1,817 35 1,817 (3)
------------ ------------ ------------ ------------
Net income $ 4,398 $ 198 $ 7,989 $ 269
============ ============ ============ ============
Basic earnings (loss) per common share:
Continuing operations $ 0.06 $ 0.00 $ 0.13 $ 0.01
Discontinued operations 0.04 0.00 0.04 (0.00)
------------ ------------ ------------ ------------
Net earnings per common share $ 0.09 $ 0.00 $ 0.17 $ 0.01
============ ============ ============ ============
Diluted earnings (loss) per common share:
Continuing operations $ 0.05 $ 0.00 $ 0.12 $ 0.01
Discontinued operations 0.04 0.00 0.04 (0.00)
------------ ------------ ------------ ------------
Net earnings per common share $ 0.09 $ 0.00 $ 0.16 $ 0.01
============ ============ ============ ============
Weighted average common shares outstanding:
Basic 46,348 47,224 47,136 47,181
Diluted 48,482 48,915 49,493 47,984
EBITDA (2) $ 6,267 $ 4,335 $ 18,557 $ 13,203
EBITDA per diluted share $ 0.13 $ 0.09 $ 0.37 $ 0.28
</Table>
(1) Effective January 1, 2002, we adopted the provisions of SFAS No. 142
"Goodwill and Other Intangible Assets". Under the new standard, goodwill
and intangible assets with indefinite useful lives are no longer
amortized but instead tested for impairment at least annually. In
accordance with the new standard, results of operations for 2001 are
reported under the previous accounting standards for goodwill and
intangible assets. Amortization expense related to goodwill (including
assembled workforce subsumed into goodwill) no longer expensed under the
new standard was $894,000 ($1.2 million after income tax), or $0.02 per
share, for the three months ended December 31, 2001, and $3.6 million
($3.0 million after income tax), or $0.06 per share, for the year ended
December 31, 2001. Also, previously reported net revenues and costs of
revenues for periods prior to October 1, 2002 were recast to reclassify
as revenues certain expenses reimbursable from customers.
(2) EBITDA consists of income from continuing operations before interest,
income taxes, depreciation and amortization. Although EBITDA is not a
calculation in accordance with accounting principles generally accepted
in the United States (GAAP), we believe that EBITDA is widely used as a
measure of operating performance. Nevertheless, the measure should not
be considered in isolation or as a substitute for operating income, cash
flows from operating activities or any other measure for determining
operating performance or liquidity that is calculated in accordance with
GAAP. In addition, since all companies do not calculate EBITDA in the
same manner, this measure may not be comparable to similarly titled
measures reported by other companies. The following reconciles to EBITDA
from income from continuing operations before
income taxes for the periods presented.
<Table>
<Caption>
Three Months Ended December 31, Year Ended December 31,
------------------------------- ------------------------------
2002 2001 2002 2001
------------ ------------ ------------ ------------
Income from continuing operations before
income taxes $ 4,086 $ 1,310 $ 10,041 $ 1,812
Amortization of acquisition intangibles 832 1,721 3,329 6,898
Depreciation and other amortization
included in cost of revenues and selling,
general and administrative expenses 1,335 1,184 5,193 4,014
Interest expense (income), net 14 120 (6) 479
------------ ------------ ------------ ------------
EBITDA $ 6,267 $ 4,335 $ 18,557 $ 13,203
============ ============ ============ ============
</Table>
TYLER TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31
(Dollars in thousands)
<Table>
<Caption>
2002 2001
---------- ----------
ASSETS
Current assets:
Cash and cash equivalents $ 13,744 $ 5,271
Accounts receivable, net 33,510 35,256
Other current assets 4,009 3,469
Deferred income taxes 1,197 1,329
---------- ----------
Total current assets 52,460 45,325
Property and equipment, net 6,819 6,967
Investment security available-for-sale 27,196 11,238
Goodwill and other intangibles, net 82,886 82,211
Other assets 484 1,234
---------- ----------
Total assets $ 169,845 $ 146,975
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $ 40,226 $ 39,606
Long-term obligations, less current portion 2,550 2,910
Deferred income taxes 8,413 3,575
Shareholders' equity 118,656 100,884
---------- ----------
Total liabilities and shareholders' equity $ 169,845 $ 146,975
========== ==========
</Table>