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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] Annual report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended 2000 or
[ ] Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from to .
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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 (I.R.S. Employer Identification No.)
incorporation or organization)
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
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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 15, 2001, 194,761,020 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 $807,241,000 (based upon
the closing per share price of such stock on said date.)
Portions of the 2000 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 9, 2001 are incorporated in Part III of this
report.
Registrant's Documents Incorporated by Reference
Part Number and Item
Document Incorporated Number of Form 10-K
by Reference Into Which Incorporated
- ---------------------- ------------------------
Pages 20 through 25, 30 and 33, Part I, Item 1, Business
and 37 through 40 of
Registrant's 2000 Annual Report to
Shareholders
Pages 30 through 33, and 37 and 38 Part I, Item 2, Properties
of Registrant's 2000 Annual
Report to Shareholders
Pages 37 and 38 of Registrant's 2000 Part I, Item 3, Legal
Annual Report to Shareholders Proceedings
Page 43 of Registrant's 2000 Part II, Item 5, Market
Annual Report to Shareholders for Registrant's Common
Equity and Related Stockholder
Matters
Page 19 of Registrant's 2000 Part II, Item 6, Selected
Annual Report to Shareholders Financial Data
Pages 20 through 25 of Registrant's Part II, Item 7, Management's
2000 Annual Report to Shareholders Discussion and Analysis of
Financial Condition and
Results of Operations
Pages 26 through 41, and 43 Part II, Item 8, Financial
of Registrant's 2000 Annual Statements and Supplementary
Report to Shareholders Data
Pages 3 and 4, 7 and 24 Part III, Item 10,
of Registrant's Proxy Statement in Directors and Executive
connection with the Annual Meeting Officers of the Registrant
of Shareholders to be held
on April 19, 2001
Page 7, pages 14 through 16, and 20 Part III, Item 11,
of Registrant's Proxy Statement Executive Compensation
in connection with the Annual Meeting
of Shareholders to be held on
April 19, 2001
Pages 8 and 9, 21 and 22 of Part III, Item 12, Security
Registrant's Proxy Statement in connection Ownership of Certain
with the Annual Meeting of Shareholders Beneficial Owners and
to be held on April 19, 2001 Management
Pages 20 and 21, 23 and 24 Part III, Item 13,
of Registrant's Proxy Statement in Certain Relationships
connection with the Annual Meeting and Related Transactions
of Shareholders to be held on
April 19, 2001 and pages 31 and 32 of
Registrant's 2000 Annual Report to
Shareholders
Pages 26 through 41 of Registrant's Part IV, Item 14, Exhibits,
2000 Annual Report to Shareholders Financial Statement
Schedules and Reports
on Form 8-K
Cross Reference Sheet
Item No. Caption Page No.
- -------- ------- --------
Part I
Safe Harbor Statement 1
1. Business 2
2. Properties 4
3. Legal Proceedings 5
4. Submission of Matters to a Vote of 5
Security Holders
Part II
5. Market for Registrant's Common Equity 5
and Related Stockholder Matters
6. Selected Financial Data 5
7. Management's Discussion and Analysis 5
of Financial Condition and Results
of Operations
7A. Quantitative and Qualitative Disclosures About
Market Risk 6
8. Financial Statements and Supplementary 6
Data
9. Changes In and Disagreements With Accountants 7
on Accounting and Financial Disclosure
Part III
10. Directors and Executive Officers of 7
the Registrant
11. Executive Compensation 7
12. Security Ownership of Certain 7
Beneficial Owners and Management
13. Certain Relationships and Related 7
Transactions
Part IV
14. Exhibits, Financial Statement Schedules, 8
and Reports on Form 8-K
12
PART I
Safe Harbor Statement
Certain statements contained in this Annual Report on Form 10-K and the
exhibits hereto which are not statements of historical fact constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act (the "Act"). In addition, certain statements in future
filings by Total System Services, Inc. ("TSYS") with the Securities and Exchange
Commission, in press releases, and in oral and written statements made by or
with the approval of TSYS which are not statements of historical fact constitute
forward-looking statements within the meaning of the Act. Examples of
forward-looking statements include, but are not limited to: (i) projections of
revenues, income or loss, earnings or loss per share, the payment or non-payment
of dividends, capital structure and other financial items; (ii) statements of
plans and objectives of TSYS or its management or Board of Directors, including
those relating to products, services or conversions; (iii) statements of future
economic performance; and (iv) statements of assumptions underlying such
statements. Words such as "believes," "anticipates," "expects," "intends,"
"targeted," and similar expressions are intended to identify forward-looking
statements but are not the exclusive means of identifying such statements.
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. Many of these factors are beyond TSYS' ability to
control or predict. The factors include, but are not limited to: (i) lower than
anticipated internal growth rates for TSYS' existing clients; (ii) TSYS'
inability to control expenses and increase market share; (iii) TSYS' inability
to successfully bring new products to market, including, but not limited to,
stored value and e-commerce products; (iv) the inability of TSYS to grow its
business through acquisitions; (v) TSYS' inability to increase the revenues
derived from international sources; (vi) adverse developments with respect to
entering into contracts with new clients and retaining current clients; (vii)
the merger of TSYS clients with entities that are not TSYS clients; (viii) TSYS'
inability to anticipate and respond to technological changes, particularly with
respect to e-commerce; (ix) adverse developments with respect to the successful
conversion of clients; (x) the absence of significant changes in foreign
exchange spreads between the United States and the countries TSYS transacts
business in, to include Mexico, United Kingdom, Japan, Canada and the European
Union; (xi) changes in consumer spending, borrowing and saving habits, including
a shift from credit to debit cards; (xii) changes in laws, regulations, credit
card association rules or other industry standards affecting TSYS' business
which require significant product redevelopment efforts; (xiii) the effect of
changes in accounting policies and practices as may be adopted by the Financial
Accounting Standards Board or the Securities and Exchange Commission; (xiv) the
costs and effects of litigation; (xv) adverse developments with respect to the
credit card industry in general; and (xvi) overall market conditions.
Such forward-looking statements speak only as of the date on which such
statements are
1
made, and TSYS undertakes no obligation to update any forward-looking statement
to reflect events or circumstances after the date on which such statement is
made to reflect the occurrence of unanticipated events.
Item 1. Business
Business. Established in 1983 as an outgrowth of an on-line accounting
and bankcard data processing system developed for Columbus Bank and Trust
Company, TSYS is now one of the world's largest electronic payments processors
of consumer credit, debit, commercial, stored value and retail cards. Based in
Columbus, Georgia, and traded on the New York Stock Exchange under the symbol
"TSS," TSYS provides the electronic link between buyers and sellers with a
comprehensive on-line system of data processing services servicing issuing
institutions throughout the United States, Canada, Mexico, Honduras and the
Caribbean, representing more than 195 million cardholder accounts on file as of
December 31, 2000. TSYS will begin to offer its services to financial
institutions in Europe in 2001 and currently offers merchant services to
financial institutions and other organizations in Japan. TSYS also offers value
added products and services, such as credit evaluation, fraud control and
marketing, to support its core processing services. Synovus Financial Corp., a
$14.9 billion asset, multi-financial services company, owns 80.8 percent of
TSYS.
TSYS has five wholly owned subsidiaries: (1) Columbus Depot Equipment
Company, which sells and leases computer related equipment associated with TSYS'
transaction processing services; (2) TSYS Total Solutions, Inc., which provides
mail and correspondence processing services, teleservicing, data documentation
capabilities, offset printing, customer service, collections and account
solicitation services; (3) Columbus Productions, Inc., which provides
full-service commercial printing and related services; (4) TSYS Canada, Inc.,
which provides programming support and assistance with the conversion of card
portfolios to TS2; and (5) DotsConnect, Inc., which delivers e-payments software
that allows buyers and sellers to conduct commerce electronically.
TSYS also holds: (1) a 49% equity interest in a joint venture company
named Total System Services de Mexico, S.A. de C.V., which provides credit card
related processing services to Mexican banks; (2) a 50% interest in Vital
Processing Services L.L.C., a joint venture with Visa U.S.A. Inc., that offers
fully integrated merchant transaction and related electronic information
services to financial and nonfinancial institutions and their merchant
customers; and (3) a 53% equity interest in GP Network Corporation, a company
which provides merchant processing services to financial institutions and
retailers in Japan.
The services provided by TSYS are divided into two operating segments,
transaction processing services and support services. Transaction processing
services, which includes the programming services provided by TSYS Canada, Inc.,
the electronic commerce services provided by DotsConnect, Inc. and the merchant
processing services provided by GP Network Corporation, account for
approximately 86% of TSYS' revenues. The support services provided by TSYS'
other subsidiaries, including the equipment leasing services provided by
Columbus Depot Equipment Company, the correspondence processing and other
services provided by
2
TSYS Total Solutions, Inc. and the commercial printing services provided by
Columbus Productions, Inc., are aggregated into the segment referred to as
support services.
Seasonality. Due to the seasonal nature of the credit card industry,
TSYS' revenues and results of operations have generally increased in the fourth
quarter of each year because of increased transaction and authorization volumes
during the traditional holiday shopping season.
Service Marks. TSYS owns the federally registered service marks TSYS,
TS2, Total System Services, Inc., THE TOTAL SYSTEM, TOTAL ACCESS, ACE,
Partnership Card Services, TSYS Total Solutions, Transaction Special Processing
and TSP, to which TSYS believes strong customer identification attaches. TSYS
also owns other service marks. Management does not believe the loss of these
marks would have a material impact on the business of TSYS.
Major Customers. A significant amount of TSYS' revenues are derived
from long-term contracts with significant customers, including certain major
customers. For the year ended December 31, 2000, Bank of America Corporation,
Providian Financial Corporation and Sears Roebuck & Co. accounted for
approximately 15%, 11% and 10%, respectively, of TSYS' total revenues. As a
result, the loss of Bank of America Corporation, Providian Financial Corporation
or Sears Roebuck & Co., or other major or significant customers, could have a
material adverse effect on TSYS' financial condition and results of operations.
Competition. TSYS encounters vigorous competition in providing card
processing services from several different sources. The national market in third
party card processors is presently being provided by approximately seven
vendors. TSYS believes that it is the second largest third party card processor
in the United States. In addition, TSYS competes with in-house processors and
software vendors which provide their products to institutions which process
in-house. TSYS is presently encountering, and in the future anticipates
continuing to encounter, substantial competition from card associations, data
processing and bankcard computer service firms and other such third party
vendors located throughout the United States. Based upon available market share
data, TSYS estimates that at the end of 2000 it held a 25% share of the domestic
consumer card processing market, an 87% share of the Visa and MasterCard
domestic commercial card processing market, a 17% share of the domestic retail
card processing market and a 2% share of the domestic off-line debit processing
market. In addition to processing cards for United States clients, TSYS also
holds an approximately 42% market share of the Mexican card processing market
and an approximately 20% market share of the Canadian card processing market.
TSYS' major competitor in the card processing industry is First Data
Resources, Inc., a wholly owned subsidiary of First Data Corporation, which is
headquartered in Omaha, Nebraska, and provides card processing services,
including authorization and data entry services. The principal methods of
competition between TSYS and First Data Resources are price, quality, features
and functionality and reliability of service. Certain other subsidiaries of
First Data Corporation also compete with TSYS. In addition, there are a number
of other companies which have the necessary financial resources and the
technological ability to develop or acquire
3
products and, in the future, to provide services similar to those being offered
by TSYS.
Regulation and Examination. TSYS is subject to being examined, and is
indirectly regulated, by the Office of the Comptroller of the Currency, the
Federal Reserve Board, the Federal Deposit Insurance Corporation, the Office of
Thrift Supervision, the National Credit Union Administration, and the various
state financial regulatory agencies which supervise and regulate the financial
institutions for which TSYS provides bankcard data processing services. Matters
reviewed and examined by these federal and state financial institution
regulatory agencies have included TSYS' internal controls in connection with its
present performance of bankcard data processing services, and the agreements
pursuant to which TSYS provides such services.
As the Federal Reserve Bank of Atlanta has approved Synovus' indirect
ownership of TSYS through Columbus Bank and Trust Company, TSYS is subject to
direct regulation by the Federal Reserve Board. TSYS was formed with the prior
written approval of, and is subject to regulation and examination by, the
Department of Banking and Finance of the State of Georgia as a subsidiary of
Columbus Bank and Trust Company. In addition, as TSYS and its subsidiaries
operate as subsidiaries of Columbus Bank and Trust Company, they are subject to
regulation by the Federal Deposit Insurance Corporation.
Employees. As of December 31, 2000, TSYS had 4,542 full-time employees.
See the "Financial Review" Section on pages 20 through 25 and Note 1,
Note 4, Note 9, Note 11 and Note 12 of Notes to Consolidated Financial
Statements on page 30, page 33, and pages 37 through 40 of TSYS' 2000 Annual
Report to Shareholders which are specifically incorporated herein by reference.
Item 2. Properties
TSYS owns a 377,000 square foot production center which is located on a
40.4 acre tract of land in north Columbus, Georgia. Primarily a production
center, this facility houses TSYS' primary data processing computer operations,
statement preparation, mail handling, microfiche production, purchasing and card
production, as well as other related operations.
TSYS owns a 110,000 square foot building on a 23-acre site in Columbus,
Georgia, which accommodates current and future office space needs. TSYS Total
Solutions, Inc., which is included in the segment support services, occupies
approximately 82,500 square feet of this building. TSYS also owns a 104,000
square foot building on an 18-acre site in Columbus which functions as a second
data center.
TSYS entered into an operating lease for the purpose of financing its
540,000 square foot campus-type facility on approximately 46 acres of land in
downtown Columbus, Georgia. The campus facility serves as TSYS' corporate
headquarters and houses administrative, client contact and programming team
members. The campus facility consolidated most of TSYS' multiple Columbus
locations.
4
All of the properties listed above are utilized by TSYS for card
processing services with the one exception noted above with respect to the space
occupied by TSYS Total Solutions, Inc.
TSYS Total Solutions, Inc. and Columbus Productions, Inc., which are
included in the segment support services, own a 72,000 square foot production
facility and own a 32,000 square foot production facility, respectively,
located in Columbus, Georgia.
All properties owned and leased by TSYS are in good repair and suitable
condition for the purposes for which they are used. In addition to its real
property, TSYS owns and/or leases a substantial amount of computer equipment.
See Note 1, Note 2, Note 3, Note 4 and Note 9 of Notes to Consolidated
Financial Statements on pages 30 through 33, and pages 37 and 38 of TSYS' 2000
Annual Report to Shareholders which are specifically incorporated herein by
reference.
Item 3. Legal Proceedings
See Note 9 of Notes to Consolidated Financial Statements on pages 37
and 38 of TSYS' 2000 Annual Report to Shareholders which is specifically
incorporated herein by reference.
Item 4. Submission of Matters to a Vote of Security Holders
None.
PART II
Item 5. Market for Registrants Common Equity and Related Stockholder Matters
The "Quarterly Financial Data, Stock Price, Dividend Information
Section" which is set forth on page 43 of TSYS' 2000 Annual Report to
Shareholders is specifically incorporated herein by reference.
Item 6. Selected Financial Data
The "Selected Financial Data" Section which is set forth on page 19 of
TSYS' 2000 Annual Report to Shareholders is specifically incorporated herein by
reference.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The "Financial Review" Section which is set forth on pages 20 through
25 of TSYS' 2000 Annual Report to Shareholders, which includes the information
encompassed within "Management's Discussion and Analysis of Financial Condition
and Results of Operations," is specifically incorporated herein by reference.
5
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
The foreign currency financial statements of TSYS' foreign operations
in Mexico, Canada and Japan are translated into U.S. dollars at current exchange
rates, except for revenues, costs and expenses, and net income which are
translated at the average exchange rate for each reporting period. Net exchange
gains or losses resulting from the translation of assets and liabilities of
TSYS' foreign operations, net of tax, are accumulated in a separate section of
shareholders' equity titled accumulated other comprehensive loss. Currently,
TSYS does not use financial instruments to hedge its exposure to exchange rate
changes in Mexico, Canada or Japan because TSYS believes that the use of such
instruments would not be cost effective. TSYS'carrying value of its investment
in its Mexican joint venture was approximately $8.5 million (U.S.) at December
31, 2000, and the carrying value of the assets of its Canadian operation was
approximately $354,100 (U.S.) at December 31, 2000.
TSYS opened an office in the United Kingdom in 1999, which serves as
the headquarters for its European operations. During 2000, TSYS purchased a
building and machinery for approximately $13.0 million. TSYS signed a lease
agreement in England for data center services. TSYS also signed The Royal Bank
of Scotland Group plc and Allied Irish Banks plc to process their respective
portfolios beginning in 2001. Currently, TSYS does not use instruments to hedge
its foreign exposure in the United Kingdom.
TSYS acquired a controlling interest in an established electronic
payments company in Japan, GP Network Corporation, for a total of $4.8 million.
The carrying value of the assets of TSYS' operation in Japan was approximately
$6.9 million (U.S.) at December 31, 2000.
In addition, TSYS opened a branch office in Japan ("TSYS Japan") in an
effort to expand its business in the Asia Pacific region. At December 31, 2000,
the carrying value of TSYS' TSYS Japan operation was approximately $72,000
(U.S.) Currently, TSYS does not use instruments to hedge its foreign exposure in
Japan.
TSYS is also exposed to interest rate risk associated with the lease on
its campus facilities. The payments under the operating lease arrangement are
tied to the London Interbank Offered Rate ("LIBOR") and TSYS has evaluated the
hypothetical change in the lease obligation held at December 31, 2000 due to
changes in the LIBOR. The modeling technique used measured hypothetical changes
in lease obligations arising from selected hypothetical changes in the LIBOR.
Market changes reflected immediate hypothetical parallel shifts in the LIBOR
curve of plus or minus 50 basis points, 100 basis points and 150 basis points
over a 12-month period.
TSYS does not have any long-term liabilities other than an accounts
payable due in 2003 that is not material to TSYS' financial position.
Item 8. Financial Statements and Supplementary Data
The "Quarterly Financial Data, Stock Price, Dividend Information"
Section, which is set forth on page 43, and the "Consolidated Balance Sheets,
Consolidated Statements of Income,
6
Consolidated Statements of Cash Flows, Consolidated Statements of Shareholders'
Equity and Comprehensive Income, Notes to Consolidated Financial Statements and
Report of Independent Auditors" Sections, which are set forth on pages 26
through 41 of TSYS' 2000 Annual Report to Shareholders are specifically
incorporated herein by reference.
Item 9. Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
The "ELECTION OF DIRECTORS" Section which is set forth on pages 3 and
4, the "EXECUTIVE OFFICERS" Section which is set forth on page 7, and the
"SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE" Section which is set
forth on page 24 of TSYS' Proxy Statement in connection with the Annual Meeting
of Shareholders of TSYS to be held on April 19, 2001 are specifically
incorporated herein by reference.
Item 11. Executive Compensation
The "DIRECTORS' COMPENSATION" Section which is set forth on page 7, the
"EXECUTIVE COMPENSATION - Summary Compensation Table; Stock Option Exercises and
Grants; and Change in Control Arrangements" Sections which are set forth on
pages 14 through 16, and the "COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION" Section which is set forth on page 20 of TSYS' Proxy Statement in
connection with the Annual Meeting of Shareholders of TSYS to be held on April
19, 2001 are specifically incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The "STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS" Section which
is set forth on pages 8 and 9, the "RELATIONSHIPS BETWEEN TSYS, SYNOVUS, CB&T
AND CERTAIN OF SYNOVUS' SUBSIDIARIES - Beneficial Ownership of TSYS Stock by
CB&T' Section which is set forth on page 21, and the "RELATIONSHIPS BETWEEN
TSYS, SYNOVUS, CB&T AND CERTAIN OF SYNOVUS' SUBSIDIARIES - Synovus Stock
Ownership of Directors and Management" Section which is set forth on pages 21
and 22 of TSYS' Proxy Statement in connection with the Annual Meeting of
Shareholders of TSYS to be held on April 19, 2001 are specifically incorporated
herein by reference.
Item 13. Certain Relationships and Related Transactions
The "TRANSACTIONS WITH MANAGEMENT" Section which is set forth on page
20, the "RELATIONSHIPS BETWEEN TSYS, SYNOVUS, CB&T AND CERTAIN OF
7
SYNOVUS' SUBSIDIARIES - Beneficial Ownership of TSYS Stock by CB&T" Section
which is set forth on page 21, the "RELATIONSHIPS BETWEEN TSYS, SYNOVUS, CB&T
AND CERTAIN OF SYNOVUS' SUBSIDIARIES - Interlocking Directorates of TSYS,
Synovus and CB&T" Section which is set forth on page 21, and the "RELATIONSHIPS
BETWEEN TSYS, SYNOVUS, CB&T, AND CERTAIN OF SYNOVUS' SUBSIDIARIES - Bankcard
Data Processing Services Provided to CB&T and Certain of Synovus' Subsidiaries;
Other Agreements Between TSYS, Synovus, CB&T and Certain of Synovus'
Subsidiaries" Section which is set forth on pages 23 and 24 of TSYS' Proxy
Statement in connection with the Annual Meeting of Shareholders of TSYS to be
held on April 19, 2001 are specifically incorporated herein by reference.
See also Note 2 of Notes to Consolidated Financial Statements on pages
31 and 32 of TSYS' 2000 Annual Report to Shareholders which is specifically
incorporated herein by reference.
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' 2000
Annual Report to Shareholders to Item 8, Part II, Financial Statements and
Supplementary Data.
Consolidated Balance Sheets - December 31, 2000 and 1999.
Consolidated Statements of Income - Years Ended December 31,
2000, 1999 and 1998.
Consolidated Statements of Cash Flows - Years Ended December
31, 2000, 1999 and 1998.
Consolidated Statements of Shareholders' Equity and
Comprehensive Income - Years Ended December 31, 2000, 1999 and
1998.
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:
8
Report of Independent Auditors.
Schedule II - Valuation and Qualifying Accounts - Years Ended
December 31, 2000, 1999 and 1998.
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, incorporated by reference
to Exhibit 3.2 of TSYS' Annual Report on Form 10-K
for the fiscal year ended December 31, 1999, as filed
with the Commission on March 16, 2000.
10. EXECUTIVE COMPENSATION PLANS AND ARRANGEMENTS
10.1 Director Stock Purchase Plan of TSYS, incorporated by
reference to Exhibit 10.1 of TSYS' Annual Report on
Form 10-K for the fiscal year ended December 31,
1999, as filed with the Commission on March 16, 2000.
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,
9
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
10
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 DotsConnect, Inc. 2000 Long-Term Incentive Plan in
which executive officers of TSYS participate.
10.16 Vital Processing Services, L.L.C. Restricted Unit
Agreement for executive officers of TSYS.
10.17 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.
10.18 Synovus Financial Corp. 2000 Long-Term Incentive Plan
in which executive officers of TSYS participate,
incorporated by reference to Exhibit 10.16 of TSYS'
Annual Report on Form 10-K for the fiscal year ended
December 31, 1999, as filed with the Commission on
March 16, 2000.
13.1 Certain specified pages of TSYS' 2000 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 19, 2001,
certain pages of which are specifically incorporated
herein by reference.
21.1 Subsidiaries of Total System Services, Inc.
23.1 Independent Auditors' Consent.
24.1 Powers of Attorney contained on the signature pages
of the 2000 Annual Report on Form 10-K.
99.1 Annual Report on Form 11-K for the Total System
Services, Inc. Employee Stock Purchase Plan for the
year ended December 31, 2000 (to be filed as an
amendment hereto within 120 days of the end of the
period covered by this report.)
99.2 Annual Report on Form 11-K for the Total System
Services, Inc. Director Stock Purchase Plan for the
year ended December 31, 2000 (to be filed as an
amendment hereto within 120 days of the end of the
period covered by this report.)
11
(b) Reports on Form 8-K
On October 18, 2000, TSYS filed a Form 8-K with the Commission
in connection with the announcement of its earnings for the third quarter of
2000.
filings\tsys\tsys0010k.doc
12
Independent Auditors' Report
The Board of Directors
Total System Services, Inc.:
Under date of January 17, 2001, we reported on the consolidated balance sheets
of Total System Services, Inc. and subsidiaries as of December 31, 2000 and
1999, and the related consolidated statements of income, cash flows, and
shareholders' equity and comprehensive income for each of the years in the
three-year period ended December 31, 2000, as contained in the Total System
Services, Inc. 2000 Annual Report to Shareholders. These consolidated financial
statements and our report thereon are incorporated by reference in the Total
System Services, Inc. Annual Report on Form 10-K for the year 2000. In
connection with our audits of the aforementioned consolidated financial
statements, we also audited the related financial statement schedule as listed
in the accompanying index. This financial statement schedule is the
responsibility of the Company's management. Our responsibility is to express an
opinion on this financial statement schedule based on our audits.
In our opinion, such financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein.
/s/KPMG LLP
Atlanta, Georgia
January 17, 2001
13
TOTAL SYSTEM SERVICES, INC.
Schedule II
Valuation and Qualifying Accounts
Additions
------------------------------
Charged
Balance at Charged to to other Balance at
beginning costs and accounts-- Deductions-- end
of period expenses describe describe of period
--------------------------------------------------------------------------------------
Year ended December 31, 1998:
Allowance for doubtful accounts $ 735,959 18,000 - (43,367)(1) $ 710,592
============= ============== ============= =============== ==============
Year ended December 31, 1999:
Allowance for doubtful accounts $ 710,592 665,500 - (99,396)(1) $ 1,276,696
============= ============== ============= =============== ==============
Year ended December 31, 2000:
Allowance for doubtful accounts $ 1,276,696 1,575,486 - (176,560)(1) $ 2,675,622
============= ============== ============= =============== ==============
- -----------------------------------------------------------------------------------------------------------------------------------
(1) Accounts deemed to be uncollectible and written off during the year.
14
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)
March 21, 2001 By: /s/Richard W. Ussery
---------------------------------------
Richard W. Ussery,
Chairman and
Principal Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints James H. Blanchard, Richard W. Ussery and
Philip W. Tomlinson, and each of them, his true and lawful attorney(s)-in-fact
and agent(s), with full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities, to sign any or all
amendments to this report and to file the same, with all exhibits and schedules
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney(s)-in-fact and agent(s) full
power and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorney(s)-in-fact and agent(s), or their substitute(s), may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, this report has been signed by the following
persons in the capacities and on the dates indicated.
/s/James H. Blanchard Date: March 21, 2001
- --------------------------------------------------
James H. Blanchard,
Director and Chairman of the
Executive Committee
/s/Richard W. Ussery Date: March 21, 2001
- --------------------------------------------------
Richard W. Ussery,
Chairman of the Board
and Principal Executive Officer
/s/Philip W. Tomlinson Date: March 21, 2001
- --------------------------------------------------
Philip W. Tomlinson,
President
and Director
/s/James B. Lipham Date: March 21, 2001
- --------------------------------------------------
James B. Lipham,
Executive Vice President, Treasurer, Principal
Accounting and Financial Officer
/s/Richard Y. Bradley Date: March 21, 2001
- --------------------------------------------------
Richard Y. Bradley,
Director
/s/G. Wayne Clough Date: March 21, 2001
- --------------------------------------------------
G. Wayne Clough,
Director
/s/Thomas G. Cousins Date: March 21, 2001
- --------------------------------------------------
Thomas G. Cousins,
Director
/s/Gardiner W. Garrard, Jr. Date: March 21, 2001
- --------------------------------------------------
Gardiner W. Garrard, Jr.,
Director
/s/Sidney E. Harris Date: March 21, 2001
- --------------------------------------------------
Sidney E. Harris,
Director
/s/John P. Illges, III Date: March 21, 2001
- --------------------------------------------------
John P. Illges, III,
Director
/s/Mason H. Lampton Date: March 21, 2001
- --------------------------------------------------
Mason H. Lampton,
Director
/s/Samuel A. Nunn Date: March 21, 2001
- --------------------------------------------------
Samuel A. Nunn,
Director
/s/H. Lynn Page Date: March 21, 2001
- --------------------------------------------------
H. Lynn Page,
Director
/s/W. Walter Miller, Jr. Date: March 21, 2001
- --------------------------------------------------
W. Walter Miller, Jr.,
Director
/s/William B. Turner Date: March 21, 2001
- --------------------------------------------------
William B. Turner,
Director
/s/James D. Yancey Date: March 21, 2001
- --------------------------------------------------
James D. Yancey,
Director
/s/Rebecca K. Yarbrough Date: March 21, 2001
- --------------------------------------------------
Rebecca K. Yarbrough,
Director
Date:
- --------------------------------------------------
Alfred W. Jones III,
Director