-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TVfdka67WhRnavf6Mz4TDSyG5BiFK0Kx/ez8hhyAMMD2Jv7yDCgYhnJ24DrHqpf0 exA1j0qHvIVDzfTKXrj+CQ== 0000721683-00-000007.txt : 20000427 0000721683-00-000007.hdr.sgml : 20000427 ACCESSION NUMBER: 0000721683-00-000007 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000426 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TOTAL SYSTEM SERVICES INC CENTRAL INDEX KEY: 0000721683 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] IRS NUMBER: 581493818 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: SEC FILE NUMBER: 001-10254 FILM NUMBER: 609052 BUSINESS ADDRESS: STREET 1: 1600 FIRST AVENUE STREET 2: P O BOX 1755 CITY: COLUMBUS STATE: GA ZIP: 31901 BUSINESS PHONE: 7066492267 MAIL ADDRESS: STREET 1: 1600 FIRST AVENUE CITY: COLUMBUS STATE: GA ZIP: 31901 10-K/A 1 AMENDED 10-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K/A Amendment No. 1 (Mark One) [X] Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended 1999 or [ ] Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from __________ to ______. Commission file number 1-10254 TOTAL SYSTEM SERVICES, INC. (Exact Name of Registrant as specified in its charter) Georgia 58-1493818 (State or other jurisdiction of incorporation (I.R.S. Employer or organization) Identification No.) 1600 First Avenue Columbus, Georgia 31901 (Address of principal executive offices) (Zip Code) (Registrant's telephone number, including area code) (706) 649-2204 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered ------------------- ----------------------------------------- Common Stock, $.10 Par Value New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: NONE Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. YES X NO___________ ----------- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] As of February 11, 2000, 194,832,720 shares of the $.10 par value common stock of Total System Services, Inc. were outstanding, and the aggregate market value of the shares of $.10 par value common stock of Total System Services, Inc. held by non-affiliates was approximately $482,000,000 (based upon the closing per share price of such stock on said date.) Portions of the 1999 Annual Report to Shareholders of Registrant are incorporated in Parts I, II, III and IV of this report. Portions of the Proxy Statement of Registrant dated March 10, 2000 are incorporated in Part III of this report. The undersigned registrant hereby amends Item 14 of its Annual Report on Form 10-K for the year ended December 31, 1999 by adding Exhibit 99.1, the Annual Report on Form 11-K for the Total System Services, Inc. Employee Stock Purchase Plan for the year ended December 31, 1999, and by adding Exhibit 99.2, the Annual Report on Form 11-K for the Total System Services, Inc. Director Stock Purchase Plan for the year ended December 31, 1999, as set forth below and in the attached exhibits. PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K (a) 1. Financial Statements The following Consolidated Financial Statements of TSYS are specifically incorporated by reference from pages 26 through 41 of TSYS' 1999 Annual Report to Shareholders to Item 8, Part II, Financial Statements and Supplementary Data. Consolidated Balance Sheets - December 31, 1999 and 1998. Consolidated Statements of Income - Years Ended December 31, 1999, 1998 and 1997. Consolidated Statements of Cash Flows - Years Ended December 31, 1999, 1998 and 1997. Consolidated Statements of Shareholders' Equity and Comprehensive Income - Years Ended December 31, 1999, 1998 and 1997. Notes to Consolidated Financial Statements. Report of Independent Auditors. 2. Index to Financial Statement Schedules The following report of independent auditors and consolidated financial statement schedule of Total System Services, Inc. are included: Report of Independent Auditors. Schedule II - Valuation and Qualifying Accounts - Years Ended December 31, 1999, 1998 and 1997. All other schedules are omitted because they are inapplicable or the required information is included in the Notes to Consolidated Financial Statements. 3. Exhibits Exhibit Number Description 3.1 Articles of Incorporation of Total System Services, Inc. ("TSYS"), as amended, incorporated by reference to Exhibit 4.1 of TSYS' Registration Statement on Form S-8 filed with the Commission on April 18, 1997 (File No. 333-25401). 3.2 Bylaws of TSYS, as amended. 10. EXECUTIVE COMPENSATION PLANS AND ARRANGEMENTS 10.1 Director Stock Purchase Plan of TSYS. 10.2 Group "Y" Key Executive Restricted Stock Bonus Plan of TSYS, incorporated by reference to Exhibit 10.2 of TSYS' Annual Report on Form 10-K for the fiscal year ended December 31, 1992, as filed with the Commission on March 18, 1993. 10.3 1985 Key Employee Restricted Stock Bonus Plan of TSYS, incorporated by reference to Exhibit 10.3 of TSYS' Annual Report on Form 10-K for the fiscal year ended December 31, 1992, as filed with the Commission on March 18, 1993. 10.4 1990 Key Employee Restricted Stock Bonus Plan of TSYS, incorporated by reference to Exhibit 10.4 of TSYS' Annual Report on Form 10-K for the fiscal year ended December 31, 1992, as filed with the Commission on March 18, 1993. 10.5 Total System Services, Inc. 1992 Long-Term Incentive Plan, which was renamed the Total System Services, Inc. 2000 Long- Term Incentive Plan, incorporated by reference to Exhibit 10.5 of TSYS' Annual Report on Form 10-K for the fiscal year ended December 31, 1992, as filed with the Commission on March 18, 1993. 10.6 Excess Benefit Agreement of TSYS, incorporated by reference to Exhibit 10.6 of TSYS' Annual Report on Form 10-K for the fiscal year ended December 31, 1992, as filed with the Commission on March 18, 1993. 10.7 Wage Continuation Agreement of TSYS, incorporated by reference to Exhibit 10.7 of TSYS' Annual Report on Form 10-K for the fiscal year ended December 31, 1992, as filed with the Commission on March 18, 1993. 10.8 Incentive Bonus Plan of Synovus Financial Corp. in which executive officers of TSYS participate, incorporated by reference to Exhibit 10.8 of TSYS' Annual Report on Form 10-K for the fiscal year ended December 31, 1992, as filed with the Commission on March 18, 1993. 10.9 Agreement in connection with use of aircraft, incorporated by reference to Exhibit 10.9 of TSYS' Annual Report on Form 10-K for the fiscal year ended December 31, 1992, as filed with the Commission on March 18, 1993. 10.10 Split Dollar Insurance Agreement of TSYS, incorporated by reference to Exhibit 10.10 of TSYS' Annual Report on Form 10-K for the fiscal year ended December 31, 1993, as filed with the Commission on March 22, 1994. 10.11 Synovus Financial Corp. 1994 Long-Term Incentive Plan in which executive officers of TSYS participate, incorporated by reference to Exhibit 10.11 of TSYS' Annual Report on Form 10-K for the fiscal year ended December 31, 1994, as filed with the Commission on March 9, 1995. 10.12 Synovus Financial Corp. Executive Bonus Plan in which executive officers of TSYS participate, incorporated by reference to Exhibit 10.12 of TSYS' Annual Report on Form 10-K for the fiscal year ended December 31, 1995, as filed with the Commission on March 19, 1996. 10.13 Change of Control Agreements for executive officers of TSYS, incorporated by reference to Exhibit 10.13 of TSYS' Annual Report on Form 10-K for the fiscal year ended December 31, 1995, as filed with the Commission on March 19, 1996. 10.14 Stock Option Agreement of Samuel A. Nunn, incorporated by reference to Exhibit 10.14 of TSYS' Annual Report on Form 10-K for the fiscal year ended December 31, 1996, as filed with the Commission on March 20, 1997. 10.15 Lease Agreement between First Security Bank, National Association, and TSYS incorporated by reference to Exhibit 10.15 of TSYS' Annual Report on Form 10-K for the fiscal year ended December 31, 1997, as filed with the Commission on March 23, 1998. 10.16 Synovus Financial Corp. 2000 Long-Term Incentive Plan in which executive officers of TSYS participate. 13.1 Certain specified pages of TSYS' 1999 Annual Report to Shareholders which are specifically incorporated herein by reference. 20.1 Proxy Statement for the Annual Meeting of Shareholders of TSYS to be held on April 13, 2000, certain pages of which are specifically incorporated herein by reference. 21.1 Subsidiaries of Total System Services, Inc. 23.1 Independent Auditors' Consents. 24.1 Powers of Attorney contained on the signature pages of the 1999 Annual Report on Form 10-K. 27.1 Financial Data Schedule (for SEC use only). 99.1 Annual Report on Form 11-K for the Total System Services, Inc. Employee Stock Purchase Plan for the year ended December 31, 1999. 99.2 Annual Report on Form 11-K for the Total System Services, Inc. Director Stock Purchase Plan for the year ended December 31, 1999. (b) Reports on Form 8-K On October 4, 1999, TSYS filed a Form 8-K with the Commission announcing a common stock repurchase program. On January 11, 2000, TSYS filed a Form 8-K with the Commission in connection with the announcement of its earnings for the year ended December 31, 1999. filings\tsys\tsys9911k-a.wpd SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, Total System Services, Inc. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. TOTAL SYSTEM SERVICES, INC. (Registrant) April 26, 2000 By:/s/James H. Blanchard --------------------- James H. Blanchard, Chairman of the Executive Committee INDEX TO EXHIBITS Sequentially Exhibit Numbered Number Description Page 23.1 Accountants' Consents 99.1 Annual Report on Form 11-K for the Total System Services, Inc. Employee Stock Purchase Plan for the year ended December 31, 1999. 99.2 Annual Report on Form 11-K for the Total System Services, Inc. Director Stock Purchase Plan for the year ended December 31, 1999. EX-23.1 2 CONSENTS Independent Auditors' Consent We consent to incorporation by reference in the Registration Statement (No. 2-92497) on Form S-8 of Total System Services, Inc. of our report dated March 31, 2000, relating to the statement of financial condition of the Total System Services, Inc. Employee Stock Purchase Plan as of December 31, 1999 and 1998, and the related statements of operations and changes in plan equity for each of the years in the three-year period ended December 31, 1999, which report appears in the 1999 annual report on Form 11-K of the Total System Services, Inc. Employee Stock Purchase Plan, included as Exhibit 99.1 to the 1999 annual report on Form 10-K/A of Total System Services, Inc. Atlanta, Georgia April 24, 2000 Independent Auditors' Consent We consent to incorporation by reference in the Registration Statement (No. 33-17376) on Form S-8 of Total System Services, Inc. of our report dated March 31, 2000, relating to the statement of financial condition of the Total System Services, Inc. Director Stock Purchase Plan as of December 31, 1999 and 1998, and the related statements of operations and changes in plan equity for each of the years in the three-year period ended December 31, 1999, which report appears in the 1999 annual report on Form 11-K of the Total System Services, Inc. Director Stock Purchase Plan, included as Exhibit 99.2 to the 1999 annual report on Form 10-K/A of Total System Services, Inc. Atlanta, Georgia April 24, 2000 EX-99.1 3 11-K EMPLOYEE STOCK PURCHASE PLAN FORM 11-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended 1999 ------------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ---------------------- ----------------- Commission file number 1-10254 -------------------- TOTAL SYSTEM SERVICES, INC. EMPLOYEE STOCK PURCHASE PLAN TOTAL SYSTEM SERVICES, INC. 1200 FIRST AVENUE COLUMBUS, GEORGIA 31901 (706) 649-2204 Exhibit 99.1 TOTAL SYSTEM SERVICES, INC. EMPLOYEE STOCK PURCHASE PLAN Financial Statements December 31, 1999, 1998, and 1997 (With Independent Auditors' Report Thereon) Independent Auditors' Report The Plan Administrator Total System Services, Inc. Employee Stock Purchase Plan: We have audited the accompanying statements of financial condition of the Total System Services, Inc. Employee Stock Purchase Plan as of December 31, 1999 and 1998, and the related statements of operations and changes in plan equity for each of the years in the three-year period ended December 31, 1999. These financial statements are the responsibility of the Plan's administrator. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial condition of the Total System Services, Inc. Employee Stock Purchase Plan as of December 31, 1999 and 1998, and the results of its operations and changes in its plan equity for each of the years in the three-year period ended December 31, 1999 in conformity with generally accepted accounting principles. Atlanta, Georgia March 31, 2000 TOTAL SYSTEM SERVICES, INC. EMPLOYEE STOCK PURCHASE PLAN Statements of Financial Condition December 31, 1999 and 1998
Assets 1999 1998 ------------------- ------------------- Common stock of Total System Services, Inc. at market value - 1,557,070 shares (cost $19,032,710) in 1999 and 1,460,648 shares (cost $14,900,070) in 1998 $ 25,399,712 34,325,229 Dividends receivable 15,573 14,599 Contributions receivable 326,837 335,028 ------------------- ------------------- $ 25,742,122 34,674,856 =================== =================== Plan Equity Plan equity (5,072 and 4,064 participants at December 31, 1999 and 1998, respectively) $ 25,742,122 34,674,856 =================== =================== See accompanying notes to financial statements.
2 TOTAL SYSTEM SERVICES, INC. EMPLOYEE STOCK PURCHASE PLAN Statements of Operations and Changes in Plan Equity Years ended December 31, 1999, 1998, and 1997
1999 1998 1997 ------------------ ------------------ ------------------ Dividend income $ 60,016 54,247 43,042 Realized gain on distributions to participants (note 4) 2,576,977 3,410,267 2,613,432 Unrealized appreciation (depreciation) of common stock of Total System Services, Inc. (note 3) (13,058,157) 6,909,967 (4,514,084) Contributions (notes 1 and 2): Participants 5,141,574 4,179,393 3,554,948 Employer: Total System Services, Inc. 2,071,247 1,695,051 1,454,293 Columbus Depot Equipment Company 411 358 334 TSYS Total Solutions, Inc. 183,889 79,930 67,093 Columbus Productions, Inc. 54,768 47,502 45,105 TSYS Canada, Inc. 17,887 10,438 -- Vital Processing Services, L.L.C. 248,987 211,072 155,937 ------------------ ------------------ ------------------ Total employer contributions 2,577,189 2,044,351 1,722,762 ------------------ ------------------ ------------------ (2,702,401) 16,598,225 3,420,100 Withdrawals by participants - common stock of Total System Services, Inc. at market value (321,694 shares in 1999, 281,516 shares in 1998, and 250,185 shares in 1997) - (notes 2 and 4) (6,230,333) (6,405,895) (4,350,111) ------------------ ------------------ ------------------ Increase (decrease) in Plan equity for the year (8,932,734) 10,192,330 (930,011) Plan equity at beginning of year 34,674,856 24,482,526 25,412,537 ------------------ ------------------ ------------------ Plan equity at end of year $ 25,742,122 34,674,856 24,482,526 ================== ================== ==================
See accompanying notes to financial statements. 3 TOTAL SYSTEM SERVICES, INC. EMPLOYEE STOCK PURCHASE PLAN Notes to Financial Statements December 31, 1999, 1998, and 1997 (1) Description of the Plan The Total System Services, Inc. Employee Stock Purchase Plan (the Plan) was implemented as of October 1, 1984. The Plan is designed to enable participating Total System Services, Inc. (TSYS) employees to purchase shares of common stock of TSYS at prevailing market prices from contributions made by them and TSYS. Synovus Service Corp. serves as the Plan administrator. State Street Bank and Trust Company serves as the Plan agent, hereafter referred to as "Agent." All employees who work twenty hours per week or more are eligible to participate in the Plan after completing three months of continuous employment prior to the beginning of a calendar quarter. Participants who have previously withdrawn shares from their Plan account remain eligible to participate, but with certain exceptions, are precluded from receiving matching contributions from the Plan sponsor for a specified period of time. A participant may contribute to the Plan based on a formula through payroll deductions in multiples of $1 with a minimum deduction of $10 per month and a maximum deduction not to exceed a specified percentage of compensation (ranging from 3% to 7%). Effective January 1, 1999, participants initially joining the Plan, requesting reinstatement in the Plan or making a change under the Plan must select their payroll deduction amount as a percentage of compensation, with a minimum contribution level of 0.5%. Participants in the Plan prior to January 1, 1999 may continue contributing to the Plan through payroll deductions in whole dollar amounts. Contributions to the Plan are to be made by TSYS in an amount equal to one-half of each participant's contribution. Participants are immediately vested in their contributions and TSYS' matching contributions. The Plan provides, among other things, that all expenses of the Plan and its administration shall be paid by TSYS with the exception of brokers' fees, commissions, postage, and transaction costs which are included in the cost of each participant's investment in common stock of TSYS. The Plan provides that upon withdrawal from the Plan, each participant may elect to receive the proceeds from his account balance in the form of shares of common stock of TSYS and a check for any fractional shares and cash held, a lump-sum cash distribution, or a combination of both. TSYS expects to maintain the Plan indefinitely, but reserves the right to terminate or amend the Plan at any time, provided, however, that no termination or amendment shall affect or diminish any participant's right to the benefit of contributions made by him or TSYS prior to the date of such amendment or termination. On April 16, 1998, the TSYS Board of Directors approved a three-for-two stock split which was effected on May 8, 1998 in the form of a 50% stock dividend to shareholders of record as of April 27, 1998. 4 (Continued) TOTAL SYSTEM SERVICES, INC. EMPLOYEE STOCK PURCHASE PLAN Notes to Financial Statements December 31, 1999, 1998, and 1997 All share and per share data for all periods presented in the accompanying financial statements and related notes has been restated to reflect the additional shares resulting from these stock splits. (2) Summary of Accounting Policies The investment in common stock of TSYS is stated at market value. The 1999 and 1998 market values are based on the closing price at year-end. The December 31, 1999 and 1998 market values were $16.31 and $23.50 per share, respectively. The realized gain on distributions to participants is determined by computing the difference between the average cost per common stock share and the market value per share at the date of the distribution to the participants. Contributions to and withdrawals from the Plan are accounted for on the accrual basis. Common stock contributions are recorded at fair value. During the years ended December 31, 1999, 1998, and 1997, TSYS contributed one share of stock to each new employee, upon reaching three months of employment with TSYS. Such contributions were made to the employees' accounts with the Plan, and resulted in an increase of employer contributions of approximately $25,000, $21,000, and $23,000 for the years ended December 31, 1999, 1998, and 1997, respectively. Dividend income is accrued on the record date. The Plan is not qualified under Sections 401(a) or 501(a) of the Internal Revenue Code of 1986, as amended. The Plan does not provide for income taxes because any income is taxable to the participants. Participants in the Plan must treat as compensation income their pro rata share of contributions made to the Plan by TSYS. Cash dividends paid on common stock of TSYS purchased under the Plan will be taxed to the participants on a pro rata basis for Federal and state income tax purposes during the year any such dividend is received by the participant or the Plan. Upon disposition of the common stock of TSYS purchased under the Plan, participants must treat any gain or loss as long-term or short-term capital gain or loss depending upon when such disposition occurs. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates. 5 (Continued) TOTAL SYSTEM SERVICES, INC. EMPLOYEE STOCK PURCHASE PLAN Notes to Financial Statements December 31, 1999, 1998, and 1997 (3) Unrealized Appreciation (Depreciation) in Common Stock of TSYS Changes in unrealized appreciation (depreciation) in common stock of TSYS are as follows:
1999 1998 1997 ---------------- --------------- --------------- Unrealized appreciation at end of year $ 6,367,002 19,425,159 12,515,192 Unrealized appreciation at beginning of year 19,425,159 12,515,192 17,029,276 ---------------- --------------- --------------- Unrealized appreciation (depreciation) for the year $ (13,058,157) 6,909,967 (4,514,084) ================ =============== ===============
(4) Realized Gain on Withdrawal Distributions to Participants The gain realized on withdrawal distributions to participants is summarized as follows:
1999 1998 1997 ------------- ---------------- ---------------- Market value at dates of distribution or redemption of shares of common stock of TSYS $ 6,230,333 6,405,895 4,350,111 Less cost (computed on an average cost basis) of shares of common stock of TSYS distributed or redeemed 3,653,356 2,995,628 1,736,679 ------------- ---------------- ---------------- Total realized gain $ 2,576,977 3,410,267 2,613,432 ============= ================ ================
6 EX-99.2 4 11-K DIRECTOR STOCK PURCHASE PLAN FORM 11-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended 1999 ------------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ---------------------- ----------------- Commission file number 1-10254 -------------------- TOTAL SYSTEM SERVICES, INC. DIRECTOR STOCK PURCHASE PLAN TOTAL SYSTEM SERVICES, INC. 1200 FIRST AVENUE COLUMBUS, GEORGIA 31901 (706) 649-2204 Exhibit 99.2 TOTAL SYSTEM SERVICES, INC. DIRECTOR STOCK PURCHASE PLAN Financial Statements December 31, 1999, 1998, and 1997 (With Independent Auditors' Report Thereon) Independent Auditors' Report The Plan Administrator Total System Services, Inc. Director Stock Purchase Plan: We have audited the accompanying statements of financial condition of the Total System Services, Inc. Director Stock Purchase Plan as of December 31, 1999 and 1998, and the related statements of operations and changes in plan equity for each of the years in the three-year period ended December 31, 1999. These financial statements are the responsibility of the Plan's administrator. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial condition of the Total System Services, Inc. Director Stock Purchase Plan as of December 31, 1999 and 1998, and the results of its operations and changes in its plan equity for each of the years in the three-year period ended December 31, 1999 in conformity with generally accepted accounting principles. Atlanta, Georgia March 31, 2000 TOTAL SYSTEM SERVICES, INC. DIRECTOR STOCK PURCHASE PLAN Statements of Financial Condition December 31, 1999 and 1998
Assets 1999 1998 ---------------- --------------- Common stock of Total System Services, Inc. at market value - 122,465 shares (cost $474,192) in 1999 and 139,116 shares (cost $487,160) in 1998 $ 1,997,710 3,269,225 Dividends receivable 1,225 1,391 ---------------- --------------- $ 1,998,935 3,270,616 ================ =============== Plan Equity Plan equity (13 and 11 participants at December 31, 1999 and 1998, respectively) $ 1,998,935 3,270,616 ================ ===============
See accompanying notes to financial statements. 2 TOTAL SYSTEM SERVICES, INC. DIRECTOR STOCK PURCHASE PLAN Statements of Operations and Changes in Plan Equity Years ended December 31, 1999, 1998, and 1997 1999 1998 1997 ------------------ ------------------ ------------------ Dividend income $ 5,428 5,019 4,355 Realized gain on distributions to participants (notes 2 and 4) 277,688 356,245 -- Unrealized appreciation (depreciation) in common stock of Total System Services, Inc. (note 3) (1,258,547) 710,468 (217,211) Contributions (notes 1 and 2): Participants 38,333 35,333 29,334 Total System Services, Inc. 19,167 17,667 14,667 ------------------ ------------------ ------------------ (917,931) 1,124,732 (168,855) Withdrawals by participants - common stock of Total System Services, Inc. at market value (20,000 shares in 1999, 19,366 shares in 1998, and -0- shares in 1997) - (notes 2 and 4) (353,750) (420,001) -- ------------------ ------------------ ------------------ Increase (decrease) in Plan equity for the year (1,271,681) 704,731 (168,855) Plan equity at beginning of year 3,270,616 2,565,885 2,734,740 ------------------ ------------------ ------------------ Plan equity at end of year $ 1,998,935 3,270,616 2,565,885 ================== ================== ================== See accompanying notes to financial statements.
3 TOTAL SYSTEM SERVICES, INC. DIRECTOR STOCK PURCHASE PLAN Notes to Financial Statements December 31, 1999, 1998, and 1997 (1) Description of the Plan The Total System Services, Inc. Director Stock Purchase Plan (Plan) was implemented as of October 15, 1987. The Plan is designed to enable participating Total System Services, Inc. (TSYS) directors to purchase shares of common stock of TSYS at prevailing market prices from contributions made by them and TSYS. Synovus Service Corp. serves as the Plan administrator. State Street Bank and Trust Company serves as the Plan agent, hereafter referred to as "Agent." Any person who currently serves or in the future is elected to serve as a member, advisory member, or emeritus member of the Board of Directors of TSYS is eligible to participate in the Plan. Cash contributions by a participant cannot exceed $1,000 per calendar quarter. Contributions to the Plan are to be made by TSYS in an amount equal to one-half of each participant's contribution. Participants are immediately vested in their contributions and TSYS' matching contributions. The Plan provides, among other things, that all expenses of the Plan and its administration shall be paid by TSYS with the exception of brokers' fees, commissions, postage and transaction costs which are included in the cost of each participant's investment in common stock of TSYS. The Plan provides that upon withdrawal from the Plan, each participant may elect to receive the shares of TSYS common stock held on his behalf by the Agent, together with a check for any fractional share interest and any remaining cash balance. TSYS expects to maintain the Plan indefinitely, but reserves the right to terminate or amend the Plan at any time, provided, however, that no termination or amendment shall affect or diminish any participant's right to the benefit of contributions made by him or TSYS prior to the date of such amendment or termination. On April 16, 1998, the TSYS Board of Directors approved a three-for-two stock split which was effected on May 8, 1998 in the form of a 50% stock dividend to shareholders of record as of April 27, 1998. All share and per share data for all periods presented in the accompanying financial statements and related notes has been restated to reflect the additional shares resulting from these stock splits. (2) Summary of Accounting Policies The investment in common stock of TSYS is stated at market value. The 1999 and 1998 market values are based on the closing price at year-end. The December 31, 1999 and 1998 market values were $16.31 and $23.50 per share, respectively. 4 (Continued) TOTAL SYSTEM SERVICES, INC. DIRECTOR STOCK PURCHASE PLAN Notes to Financial Statements December 31, 1999, 1998, and 1997 The realized gain on distributions to participants is determined by computing the difference between the average cost per common stock share and the market value per share at the date of distribution to the participants. Contributions by TSYS and participating directors, as well as withdrawals, are accounted for on the accrual basis. Dividend income is accrued on the date of record. The Plan is not qualified under Sections 401(a) or 501(a) of the Internal Revenue Code of 1986, as amended. The Plan does not provide for income taxes because any income is taxable to the participants. Participants in the Plan must treat as compensation income their pro rata share of contributions made to the Plan by TSYS. Cash dividends paid on common stock of TSYS purchased under the Plan will be taxable to the participants on a pro rata basis for Federal and state income tax purposes during the year any such dividend is received by the participant or the Plan. Upon disposition of the common stock of TSYS purchased under the Plan, participants must treat any gain or loss as long-term or short-term capital gain or loss depending upon when such disposition occurs. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates. (3) Unrealized Appreciation (Depreciation) in Common Stock of TSYS Changes in unrealized appreciation (depreciation) in common stock of TSYS are as follows:
1999 1998 1997 --------------- -------------- ------------- Unrealized appreciation at end of year $ 1,523,518 2,782,065 2,071,597 Unrealized appreciation at beginning of year 2,782,065 2,071,597 2,288,808 --------------- -------------- ------------- Unrealized appreciation (depreciation) for the year $ (1,258,547) 710,468 (217,211) =============== ============== =============
5 (Continued) TOTAL SYSTEM SERVICES, INC. DIRECTOR STOCK PURCHASE PLAN Notes to Financial Statements December 31, 1999, 1998, and 1997 (4) Realized Gain on Withdrawal Distributions to Participants The gain realized on withdrawal distributions to participants is summarized as follows:
1999 1998 -------------- ------------- Market value at dates of distribution or redemption of common stock of TSYS $ 353,750 420,001 Less cost (computed on an average cost basis) of shares of common stock of TSYS distributed or redeemed 76,062 63,756 -------------- ------------- Total realized gain $ 277,688 356,245 ============== =============
There were no distributions to participants during 1997. -----END PRIVACY-ENHANCED MESSAGE-----