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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 1998 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 (I.R.S. Employer Identification No.)
of incorporation or organization)
1200 Sixth 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, 1999, 194,909,527 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 $750,067,000 (based upon the
closing per share price of such stock on said date.)
Portions of the 1998 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 12, 1999 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 22 through 29, 34 through Part I, Item 1, Business
37, and 41 through 43 of Registrant's
1998 Annual Report to Shareholders
Pages 34 through 37, and 41 of Part I, Item 2, Properties
Registrant's 1998 Annual
Report to Shareholders
Page 41 of Registrant's 1998 Part I, Item 3, Legal
Annual Report to Shareholders Proceedings
Page 46 of Registrant's 1998 Part II, Item 5, Market
Annual Report to Shareholders for Registrant's Common
Equity and Related Stockholder
Matters
Page 21 of Registrant's 1998 Part II, Item 6, Selected
Annual Report to Shareholders Financial Data
Pages 22 through 29 of Registrant's Part II, Item 7, Management's
1998 Annual Report to Shareholders Discussion and Analysis of
Financial Condition and
Results of Operations
Pages 30 through 44, and 46 Part II, Item 8, Financial
of Registrant's 1998 Annual Statements and Supplementary
Report to Shareholders Data
Pages 2 and 3, 5, and 17 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 15, 1999
Page 5, pages 7 through 9, and 13 Part III, Item 11,
of Registrant's Proxy Statement Executive Compensation
in connection with the Annual Meeting
of Shareholders to be held on
April 15, 1999
Page 6, and pages 14 and 15 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 15, 1999 Management
Pages 13 and 14, 16, and 17 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 15, 1999 and pages 36 and 37
of Registrant's 1998
Annual Report to Shareholders
Pages 30 through 44 of Registrant's Part IV, Item 14, Exhibits,
1998 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 6
7. Management's Discussion and Analysis 6
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 6
on Accounting and Financial Disclosure
Part III
10. Directors and Executive Officers of 6
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, 7
and Reports on Form 8-K
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.(R) ("TSYS (R)") 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.
Forward-looking statements involve risks and uncertainties which may cause
actual results to differ materially from those in such statements. Factors that
could cause actual results to differ from those discussed in the forward-looking
statements include, but are not limited to: (i) the strength of the U.S. economy
in general and other relevant economies; (ii) TSYS' performance under - and
retention of - current and future processing agreements with customers; (iii)
inflation, interest rate and foreign exchange rate fluctuations; (iv) timely and
successful implementation of processing systems to provide new products,
improved functionality and increased efficiencies; (v) changes in consumer
spending, borrowing and saving habits, including a shift from credit cards to
debit cards; (vi) technological changes; (vii) acquisitions; (viii) the ability
to increase market share and control expenses; (ix) changes in laws,
regulations, credit card association rules or other industry standards affecting
TSYS' business which require significant product redevelopment efforts; (x) the
effect of changes in accounting policies and practices, as may be adopted by the
regulatory agencies as well as the Financial Accounting Standards Board; (xi)
changes in TSYS' organization, compensation and benefit plans; (xii) the costs
and effects of litigation and of unexpected or adverse outcomes in such
litigation; (xiii) failure to successfully implement TSYS' Year 2000
modification plans substantially as scheduled and budgeted; and (xiv) the
success of TSYS at managing the risks involved in the foregoing.
Such forward-looking statements speak only as of the date on which such
statements are 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.
- ------------------------------------
Synovus Financial Corp., Synovus, Columbus Bank and Trust Company and CB&T
are federally registered service marks of Synovus Financial Corp. TSYS, TS2,
Total System Services, Inc., THE TOTAL SYSTEM and TSYS Total Solutions are
federally registered service marks of Total System Services, Inc.
1
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(R), TSYS is now one of the world's largest information technology
processors of credit, debit, commercial and private-label cards. Based in
Columbus, Georgia, and traded on the New York Stock Exchange under the symbol
"TSS," TSYS provides a comprehensive on-line system of data processing services
marketed as THE TOTAL SYSTEM(R) servicing issuing institutions throughout the
United States, Puerto Rico, Canada, Mexico and the Caribbean, representing more
than 117 million cardholder accounts on file as of December 31, 1998. TSYS
provides card production, statement preparation, electronic commerce services,
portfolio management services, account acquisition, credit evaluation, risk
management and customer service to clients. Synovus Financial Corp.(R), a $10.5
billion asset, multi-financial services company, owns 80.8 percent of TSYS.
TSYS has four wholly owned subsidiaries: (1) Columbus Depot Equipment
Company(sm), which sells and leases computer related equipment associated with
TSYS' bankcard data processing services; (2) TSYS Total Solutions,(R) Inc.,
which provides mail and correspondence processing services and account
solicitation services; (3) Columbus Productions, Inc.(sm), which provides
full-service commercial printing and related services; and (4) TSYS Canada,
Inc., which provides programming support and assistance with the conversion of
card portfolios to TS2(R).
TSYS also holds 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, and 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.
The services provided by TSYS are divided into two operating segments,
bankcard data processing services and other services. Bankcard data processing
services, including the programming services provided by TSYS Canada, Inc.,
account for approximately 90% 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 services
provided by TSYS Total Solutions, Inc. and the commercial printing services
provided by Columbus Productions, Inc., are aggregated into the segment referred
to as other 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 and TSYS Total Solutions, to which TSYS believes strong customer
identification
2
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, 1998, BankAmerica Corporation
accounted for 21% of TSYS' total revenues. As a result, the loss of BankAmerica
Corporation, or other major or significant customers, could have a material
adverse effect on TSYS' financial condition and results of operations.
Near the end of the first quarter of 1998, AT&T completed the sale of its
Universal Card Services to CITIBANK, now a part of Citigroup after CITIBANK's
merger with Travelers Group, Inc. CITIBANK accounted for approximately 13% of
total revenues for the year ended December 31, 1998. On February 26, 1999,
CITIBANK notified TSYS of its decision to terminate Universal Card Services'
processing agreement with TSYS for consumer credit card accounts at the end of
its original term on August 1, 2000. Consumer credit card accounts represented
11.4% of total revenues derived by TSYS from Universal Card Services for the
year ended December 31, 1998. TSYS' management believes that CITIBANK will
continue to be a major customer in 1999, but will not be a major customer in
2000 and that the loss of revenues from Universal Card Services for the months
of August through December 2000, should not have a material adverse effect on
TSYS' financial condition or results of operations for the year ending December
31, 2000.
Competition. TSYS encounters vigorous competition in providing bankcard
data processing services from several different sources. The national market in
third party bankcard data processors is presently being provided by
approximately five vendors. TSYS believes that it is the second largest third
party bankcard processor in the United States. In addition, TSYS competes
against 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 bankcard associations,
data processing and bankcard computer service firms and other such third party
vendors located throughout the United States.
TSYS' major competitor in the bankcard data processing industry is First
Data Resources, Inc., a wholly owned subsidiary of First Data Corporation, which
is headquartered in Omaha, Nebraska, and provides bankcard data 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 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
3
regulate the banks, savings institutions and credit unions 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 and is authorized to engage in only those
activities which Columbus Bank and Trust Company itself is authorized to engage
in directly, which includes the bankcard and other data processing services
presently being provided by TSYS. 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 February 28, 1999, TSYS had 3,935 full-time employees.
See the "Financial Review" Section on pages 22 through 29 and Note 1, Note
4, Note 9, Note 11 and Note 12 of Notes to Consolidated Financial Statements on
pages 34 through 36, page 37, page 41, and pages 42 and 43 of TSYS' 1998 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 for technical
staff. TSYS also owns a 104,000 square foot building on an 18-acre site in
Columbus which functions as a second data center.
The approximately 32,000 square foot Columbus Depot, located in Columbus,
Georgia, which is owned by TSYS and is on the National Register of Historic
Places, houses TSYS' executive offices and several corporate divisions.
TSYS owns its 73,000 square foot South Center located in Columbus, Georgia,
and owns its 60,000 square foot Annex Building located in Columbus, Georgia,
which house training and documentation, Year 2000 and client relations
personnel. TSYS also owns a warehouse facility, various other tracts of real
estate located near or adjacent to its South Center and Annex Building which are
used for parking and/or future expansion needs, and leases additional office
space in Columbus, Georgia, Atlanta, Georgia, and Jacksonville,
4
Florida.
During 1997, TSYS entered into an operating lease for the purpose of
financing its 540,000 square foot new campus-type facility on approximately 46
acres of land in downtown Columbus, Georgia. The campus facility will
consolidate most of TSYS' multiple Columbus locations and will facilitate future
growth. The campus development will be a multiyear phased project. TSYS began
moving personnel into the new campus facilities in December 1998.
All of the properties listed above are utilized by TSYS for bankcard data
processing services.
TSYS Total Solutions, Inc. and Columbus Productions, Inc., which are
included in the segment other 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 34 through 37, and page 41 of TSYS' 1998 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 page 41 of
TSYS' 1998 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 Registrant's Common Equity and Related Stockholder Matters
The "Quarterly Financial Data, Stock Price, Dividend Information" Section
which is set forth on page 46 of TSYS' 1998 Annual Report to Shareholders is
specifically incorporated herein by reference.
On January 1, 1999, TSYS issued 854,042 shares of its common stock to
Columbus Bank and Trust Company in connection with its acquisition of the assets
used by Columbus Bank and Trust Company in the provision of collection, credit
evaluation and customer services to credit and issuers.
5
The shares of TSYS common stock referenced above were issued pursuant to
the exemption from registration set forth in Section 4(2) of the Securities Act
of 1933.
Item 6. Selected Financial Data
The "Selected Financial Data" Section which is set forth on page 21 of
TSYS' 1998 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 22 through 29 of
TSYS' 1998 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.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
None.
Item 8. Financial Statements and Supplementary Data
The "Quarterly Financial Data, Stock Price, Dividend Information" Section,
which is set forth on page 46, and the "Consolidated Balance Sheets,
Consolidated Statements of Income, Consolidated Statements of Shareholders'
Equity, Consolidated Statements of Cash Flows, Notes to Consolidated Financial
Statements and Report of Independent Auditors" Sections, which are set forth on
pages 30 through 44 of TSYS' 1998 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 2 and 3,
the "EXECUTIVE OFFICERS" Section which is set forth on page 5, and the "SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE" Section which is set forth on
page 17 of TSYS' Proxy Statement in connection with the Annual Meeting of
Shareholders of TSYS to be held on April 15, 1999 are specifically incorporated
herein by reference.
6
Item 11. Executive Compensation
The "DIRECTORS' COMPENSATION" Section which is set forth on page 5, the
"EXECUTIVE COMPENSATION - Summary Compensation Table; Stock Option Exercises and
Grants; and Change in Control Arrangements" Sections which are set forth on
pages 7 through 9, and the "COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION" Section which is set forth on page 13 of TSYS' Proxy Statement in
connection with the Annual Meeting of Shareholders of TSYS to be held on April
15, 1999 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 page 6, the "RELATIONSHIPS BETWEEN TSYS, SYNOVUS, CB&T AND CERTAIN
OF SYNOVUS' SUBSIDIARIES - Beneficial Ownership of TSYS Common Stock by CB&T"
Section which is set forth on page 14, and the "RELATIONSHIPS BETWEEN TSYS,
SYNOVUS, CB&T AND CERTAIN OF SYNOVUS' SUBSIDIARIES - Synovus Common Stock
Ownership of Directors and Management" Section which is set forth on pages 14
and 15 of TSYS' Proxy Statement in connection with the Annual Meeting of
Shareholders of TSYS to be held on April 15, 1999 are specifically incorporated
herein by reference.
Item 13. Certain Relationships and Related Transactions
The "TRANSACTIONS WITH MANAGEMENT" Section which is set forth on page 13,
the "RELATIONSHIPS BETWEEN TSYS, SYNOVUS, CB&T AND CERTAIN OF SYNOVUS'
SUBSIDIARIES - Beneficial Ownership of TSYS Common Stock by CB&T" Section which
is set forth on page 14, 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 14, 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 16 and 17 of TSYS' Proxy Statement in
connection with the Annual Meeting of Shareholders of TSYS to be held on April
15, 1999 are specifically incorporated herein by reference.
See also Note 2 of Notes to Consolidated Financial Statements on pages 36
and 37 of TSYS' 1998 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
7
The following Consolidated Financial Statements of TSYS are specifi-
cally incorporated by reference from pages 30 through 44 of TSYS' 1998 Annual
Report to Shareholders to Item 8, Part II, Financial Statements and
Supplementary Data.
Consolidated Balance Sheets - December 31, 1998 and 1997.
Consolidated Statements of Income - Years Ended December 31, 1998,
1997 and 1996.
Consolidated Statements of Shareholders' Equity - Years Ended
December 31, 1998, 1997 and 1996.
Consolidated Statements of Cash Flows - Years Ended December 31,
1998, 1997 and 1996.
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, 1998, 1997 and 1996.
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
8
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, 1992, as filed with
the Commission on March 18, 1993.
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,
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
9
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.
13.1 Certain specified pages of TSYS' 1998 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 15, 1999, 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
1998 Annual Report on Form 10-K.
27.1 Financial Data Schedule (for SEC use only).
10
99.1 Annual Report on Form 11-K for the Total System Services,
Inc. Employee Stock Purchase Plan for the year ended December
31, 1998 (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, 1998 (to be filed as an amendment hereto within 120 days
of the end of the period covered by this report.)
(b) Reports on Form 8-K
On March 1, 1999, TSYS filed a Form 8-K with the Commission in connection
with the announcement that Universal Card Services Corp., an affiliate of
CITIBANK, notified TSYS of its decision not to renew its processing agreement
with TSYS for consumer credit card accounts at the end of its original term on
August 1, 2000.
filings\tsys\tsys98.10k
11
Report of Independent Auditors
The Board of Directors
Total System Services, Inc.
Under date of January 7, 1999, we reported on the consolidated balance
sheets of Total System Services, Inc. and subsidiaries as of December 31, 1998
and 1997, and the related consolidated statements of income, shareholders'
equity, and cash flows for each of the years in the three-year period ended
December 31, 1998, as contained in the Total System Services, Inc. 1998 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 1998. In connection with our audits of the
aforementioned consolidated financial statements, we also audited the related
consolidated 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 7, 1999
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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
of period expenses describe describe period
- -----------------------------------------------------------------------------------------------------
Year ended December 31, 1996:
Allowance for doubtful accounts $714,374 94,500 - (104,392) $704,482
======== ======== ======= ======== ========
Year ended December 31, 1997:
Allowance for doubtful accounts $704,482 94,000 - (62,523) $735,959
======== ======== ======= ======== ========
Year ended December 31, 1998:
Allowance for doubtful accounts $735,959 18,000 - (43,367) $710,592
======== ======== ======= ======== ========
- ---------
Accounts deemed to be uncollectible and written off during the year.
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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 12, 1999 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 12, 1999
- -------------------------------------
James H. Blanchard,
Director and Chairman of the
Executive Committee
/s/Richard W. Ussery Date: March 12, 1999
- --------------------------------------
Richard W. Ussery,
Chairman of the Board
and Principal Executive Officer
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/s/Philip W. Tomlinson Date: March 12, 1999
- ---------------------------------------------
Philip W. Tomlinson,
President
and Director
/s/James B. Lipham Date: March 12, 1999
- ----------------------------------------------
James B. Lipham,
Executive Vice President, Treasurer, Principal
Accounting and Financial Officer
/s/Griffin B. Bell Date: March 12, 1999
- ----------------------------------------------
Griffin B. Bell,
Director
/s/Richard Y. Bradley Date: March 12, 1999
- ----------------------------------------------
Richard Y. Bradley,
Director
/s/Gardiner W. Garrard, Jr. Date: March 12, 1999
- ---------------------------------------------
Gardiner W. Garrard, Jr.,
Director
/s/John P. Illges, III Date: March 12, 1999
- ---------------------------------------------
John P. Illges, III,
Director
/s/Mason H. Lampton Date: March 12, 1999
- ---------------------------------------------
Mason H. Lampton,
Director
/s/Samuel A. Nunn Date: March 12, 1999
- ---------------------------------------------
Samuel A. Nunn,
Director
/s/H. Lynn Page Date: March 12, 1999
- ---------------------------------------------
H. Lynn Page,
Director
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/s/W. Walter Miller, Jr. Date: March 12, 1999
- --------------------------------------------
W. Walter Miller, Jr.,
Director
/s/William B. Turner Date: March 12, 1999
- --------------------------------------------
William B. Turner,
Director
/s/James D. Yancey Date: March 12, 1999
- --------------------------------------------
James D. Yancey,
Director
16