Attached files
| file | filename |
|---|---|
| 10-K/A - FORM 10-K/A - TOTAL SYSTEM SERVICES INC | g22921e10vkza.htm |
| EX-31.2 - EX-31.2 - TOTAL SYSTEM SERVICES INC | g22921exv31w2.htm |
| EX-31.1 - EX-31.1 - TOTAL SYSTEM SERVICES INC | g22921exv31w1.htm |
| EX-99.2 - EX-99.2 - TOTAL SYSTEM SERVICES INC | g22921exv99w2.htm |
| EX-23.1 - EX-23.1 - TOTAL SYSTEM SERVICES INC | g22921exv23w1.htm |
Exhibit 99.1
FORM 11-K
(Mark One)
| þ | ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the fiscal year ended December 31, 2009
OR
| o | 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.
ONE TSYS WAY
COLUMBUS, GEORGIA 31901
(706) 649-2310
ONE TSYS WAY
COLUMBUS, GEORGIA 31901
(706) 649-2310
TOTAL SYSTEM SERVICES, INC.
EMPLOYEE STOCK PURCHASE PLAN
EMPLOYEE STOCK PURCHASE PLAN
Financial Statements
December 31, 2009, 2008, and 2007
(With Report of Independent Registered Public Accounting Firm Thereon)
Report of Independent Registered Public Accounting Firm
The Plan Administrator
Total System Services, Inc.
Employee Stock Purchase Plan:
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 (the Plan) as of December 31, 2009 and 2008, and the related
statements of operations and changes in plan equity for each of the years in the three-year period
ended December 31, 2009. These financial statements are the responsibility of the Plan’s
management. Our responsibility is to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). 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 Plan as of December 31, 2009 and 2008, 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, 2009, in conformity with U.S. generally accepted accounting principles.
April 16, 2010
TOTAL SYSTEM SERVICES, INC.
EMPLOYEE STOCK PURCHASE PLAN
EMPLOYEE STOCK PURCHASE PLAN
Statements of Financial Condition
December 31, 2009 and 2008
| 2009 | 2008 | |||||||
Assets |
||||||||
Common stock of Total System Services, Inc., at fair
value – 2,108,879 shares (cost $39,836,249) in
2009
and 1,862,802 shares (cost $40,804,841) in 2008 |
$ | 36,420,340 | 26,079,226 | |||||
Dividends receivable |
145,449 | 122,992 | ||||||
Contributions receivable |
436,095 | 725,490 | ||||||
| $ | 37,001,884 | 26,927,708 | ||||||
Plan Equity |
||||||||
Plan equity (2,957 and 3,952 participants in
2009 and 2008, respectively) |
$ | 37,001,884 | 26,927,708 | |||||
See accompanying notes to financial statements.
2
TOTAL SYSTEM SERVICES, INC.
EMPLOYEE STOCK PURCHASE PLAN
EMPLOYEE STOCK PURCHASE PLAN
Statements of Operations and Changes in Plan Equity
Years ended December 31, 2009, 2008, and 2007
| 2009 | 2008 | 2007 | ||||||||||
Investment income (loss): |
||||||||||||
Dividend income |
$ | 579,840 | 443,434 | 4,123,361 | ||||||||
Realized (loss) gain on distributions to
participants (note 6) |
(3,907,982 | ) | (1,510,750 | ) | 6,786,714 | |||||||
Unrealized appreciation (depreciation)
in common stock of Total System Services, Inc. (note 5) |
11,309,706 | (20,444,540 | ) | (3,811,779 | ) | |||||||
Total investment income (loss) |
7,981,564 | (21,511,856 | ) | 7,098,296 | ||||||||
Contributions: |
||||||||||||
Participants |
10,728,659 | 11,490,341 | 10,668,877 | |||||||||
Participating Employers: |
||||||||||||
Total System Services, Inc. |
2,915,693 | 4,562,277 | 4,188,585 | |||||||||
Columbus Depot Equipment Company |
145 | 215 | 206 | |||||||||
Columbus Productions, Inc. |
23,299 | 43,325 | 40,830 | |||||||||
Merlin Solutions |
1,255 | — | — | |||||||||
TSYS Canada, Inc. |
38,679 | 62,451 | 54,578 | |||||||||
TSYS Total Debt Management, Inc. |
43,102 | 88,872 | 97,032 | |||||||||
ProCard, Inc. |
51,630 | 86,474 | 83,428 | |||||||||
TSYS Acquiring Solutions, L.L.C. |
366,778 | 563,313 | 586,276 | |||||||||
TSYS POS Systems and Services |
16,966 | — | — | |||||||||
TSYS Loyalty, Inc. |
94,689 | 150,551 | 147,771 | |||||||||
TSYS Technology Center |
80,628 | 125,934 | 111,118 | |||||||||
TSYS Staffing |
42,707 | 62,175 | 499 | |||||||||
TSYS Prepaid |
— | — | 24,444 | |||||||||
Total contributions |
14,404,230 | 17,235,928 | 16,003,644 | |||||||||
Increase (decrease) in Plan equity
before withdrawals |
22,385,794 | (4,275,928 | ) | 23,101,940 | ||||||||
Withdrawals by participants – common stock of Total System Services, Inc., at fair value
(828,472 shares in 2009, 475,504 shares in
2008, and 1,017,687 shares in 2007) (note 6) |
(12,311,618 | ) | (9,681,021 | ) | (29,638,418 | ) | ||||||
Increase (decrease) in Plan equity |
10,074,176 | (13,956,949 | ) | (6,536,478 | ) | |||||||
Plan equity at beginning of year |
26,927,708 | 40,884,657 | 47,421,135 | |||||||||
Plan equity at end of year |
$ | 37,001,884 | 26,927,708 | 40,884,657 | ||||||||
See accompanying notes to financial statements.
3
TOTAL SYSTEM SERVICES, INC.
EMPLOYEE STOCK PURCHASE PLAN
EMPLOYEE STOCK PURCHASE PLAN
Notes to Financial Statements
December 31, 2009, 2008, and 2007
| (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) and subsidiaries’ employees to purchase shares of common stock of TSYS at prevailing market prices from contributions made by them and by TSYS and its subsidiaries (the Participating Employers). | ||
| TSYS serves as the Plan Administrator. The Plan agent is Mellon Investor Services, LLC, hereafter referred to as “Agent.” | ||
| All employees who work 20 hours per week or more are eligible to participate in the Plan on the first payroll date after completing three months of continuous employment. Employees of TSYS or TSYS affiliates who are employed in a country other than the United States and are eligible to participate in a compensatory stock plan sponsored by TSYS or TSYS affiliates similar to the Plan that has been established pursuant to the laws of that country are not eligible to participate in the Plan. | ||
| Participants contribute to the Plan through payroll deductions as a percentage of compensation. The maximum allowable contribution ranges from 3% to 7% of compensation based on years of service. The minimum allowable contribution is 1% of compensation. Matching contributions to the Plan are to be made by the Participating Employers in an amount equal to 50% of each participant’s contribution prior to July 1, 2009 and 15% of each participant’s contribution subsequent to July 1, 2009. Participants are immediately vested in their contributions and Participating Employers’ 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, and transaction costs, which are included in the cost of each participant’s investment in common stock of TSYS. | ||
| The Plan provides that each participant may withdraw at any time all or some of his or her account balance. The participant may elect to receive the proceeds in the form of shares of common stock of TSYS or in a lump-sum cash distribution. Prior to January 23, 2002, participants who had previously withdrawn shares from their Plan account remained eligible to participate, but with certain exceptions were precluded from receiving matching contributions from the Plan sponsor for a specified period of time. Effective January 23, 2002, the Plan was amended to allow employees to make unlimited withdrawals without their Participating Employers matching contributions being suspended. | ||
| The Plan provides that upon termination of participation in the Plan, each former participant will receive, at his or her discretion, (i) the full number of shares of TSYS common stock held on his or her behalf by the Agent, together with a check for any fractional share interest, or (ii) a lump-sum cash distribution for the proceeds of the sale of all shares held on his or her behalf by the Agent. | ||
| Participation in the Plan shall automatically terminate upon termination of a participant’s employment whether by death, retirement, or otherwise. |
(continued)
4
TOTAL SYSTEM SERVICES, INC.
EMPLOYEE STOCK PURCHASE PLAN
EMPLOYEE STOCK PURCHASE PLAN
Notes to Financial Statements
December 31, 2009, 2008, and 2007
| 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 her, or his or her Participating Employer prior to the date of such amendment or termination. | ||
| TSYS reserves the right to suspend Participating Employer contributions to the Plan if its board of directors feels that TSYS’ financial condition warrants such action. |
| (2) | Summary of Significant Accounting Policies | |
| The preparation of financial statements in conformity with U.S. 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. | ||
| The investment in common stock of TSYS is stated at fair value, which is based on the closing price at year-end obtained by using market quotations on the principal public exchange market for which such securities are traded. The December 31, 2009 and 2008 fair values were $17.27 per share and $14.00 per share, respectively. | ||
| The Plan’s investment in the common stock of TSYS is exposed to market and credit risks. Due to the level of risk associated with investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the Plan’s financial statements. | ||
| The realized gain or loss on distributions to participants is determined by computing the difference between the average cost per share and the fair value per share at the date of the distribution to the participants, less transaction costs. | ||
| Contributions to the Plan by TSYS and participating employees are accounted for on the accrual basis. Withdrawals are accounted for upon distribution. At December 31, 2009, Plan investments include 15,878 shares held by 30 terminated employees who have not yet requested distribution in accordance with the terms of the Plan. | ||
| Purchases and sales of TSYS common stock are reflected on a trade-date basis. Dividend income is accrued on the record date. | ||
| (3) | Fair Value Measurements | |
| The Plan estimates the fair value of its assets consistent with the provisions of the accounting standard for fair value measurements and disclosures. The accounting standard provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The three levels of the fair value hierarchy under the accounting standard are described below: |
| Level 1 — inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Plan has the ability to access. |
(continued)
5
TOTAL SYSTEM SERVICES, INC.
EMPLOYEE STOCK PURCHASE PLAN
EMPLOYEE STOCK PURCHASE PLAN
Notes to Financial Statements
December 31, 2009, 2008, and 2007
| Level 2 — inputs use other inputs that are observable, either directly or indirectly. These inputs include quoted prices for similar assets and liabilities in active markets, and other inputs such as interest rates and yield curves that are observable at commonly quoted intervals. | |||
| Level 3 — inputs are unobservable inputs, including inputs that are available in situations where there is little, if any, market activity for the related asset or liability. |
| In instances where inputs used to measure fair value fall into different levels of the fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation. The Plan’s investment in TSYS common stock is considered a Level 1 input under the fair value hierarchy. | ||
| Management of the Plan also believes that the carrying amount of the receivables is a reasonable approximation of fair value due to their short-term nature. | ||
| (4) | Tax Status of the Plan | |
| 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 their Participating Employer. 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. | ||
| (5) | Unrealized Appreciation (Depreciation) in Common Stock of TSYS | |
| Changes in unrealized appreciation (depreciation) in common stock of TSYS are as follows: |
| 2009 | 2008 | 2007 | ||||||||||
Unrealized (depreciation) appreciation
at end of year |
$ | (3,415,909 | ) | (14,725,615 | ) | 5,718,925 | ||||||
Unrealized (depreciation) appreciation
at beginning of year |
(14,725,615 | ) | 5,718,925 | 9,530,704 | ||||||||
Unrealized appreciation
(depreciation) for the year |
$ | 11,309,706 | (20,444,540 | ) | (3,811,779 | ) | ||||||
(continued)
6
TOTAL SYSTEM SERVICES, INC.
EMPLOYEE STOCK PURCHASE PLAN
EMPLOYEE STOCK PURCHASE PLAN
Notes to Financial Statements
December 31, 2009, 2008, and 2007
| (6) | Realized (Loss) Gain on Withdrawal/Distributions to Participants | |
| The (loss) gain realized on withdrawal/distributions to participants is summarized as follows: |
| 2009 | 2008 | 2007 | ||||||||||
Fair value at dates of distribution or
redemption of shares of common
stock of TSYS |
$ | 12,311,618 | 9,681,021 | 29,638,418 | ||||||||
Less cost (computed on an average
cost basis) of shares of common
stock of TSYS distributed or
redeemed |
16,219,600 | 11,191,771 | 22,851,704 | |||||||||
Total realized (loss) gain |
$ | (3,907,982 | ) | (1,510,750 | ) | 6,786,714 | ||||||
7