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10-K/A - 10-K/A - TOTAL SYSTEM SERVICES INCd524726d10ka.htm
EX-31.1 - EX-31.1 - TOTAL SYSTEM SERVICES INCd524726dex311.htm
EX-23.1 - EX-23.1 - TOTAL SYSTEM SERVICES INCd524726dex231.htm
EX-31.2 - EX-31.2 - TOTAL SYSTEM SERVICES INCd524726dex312.htm

Exhibit 99.1

 

 

FORM 11-K

 

 

(Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2012

OR

 

¨ TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      To                     

 

Commission file number 1-10254

 

 

 

TOTAL SYSTEM SERVICES, INC. 2012 EMPLOYEE STOCK PURCHASE PLAN

 

 

TOTAL SYSTEM SERVICES, INC.

ONE TSYS WAY

COLUMBUS, GEORGIA 31901

(706) 649-2310

 

 

 


TOTAL SYSTEM SERVICES, INC.

2012 EMPLOYEE STOCK PURCHASE PLAN

Financial Statements

December 31, 2012

(With Report of Independent Registered Public Accounting Firm Thereon)


LOGO    KPMG LLP
   Suite 2000
   303 Peachtree Street, N.E.
   Atlanta, GA 30308-3210

Report of Independent Registered Public Accounting Firm

The Plan Administrator

Total System Services, Inc.

2012 Employee Stock Purchase Plan:

We have audited the accompanying statement of financial condition of the Total System Services, Inc. 2012 Employee Stock Purchase Plan (the Plan) as of December 31, 2012, and the related statement of operations and changes in plan equity for the period from inception (July 1, 2012) to December 31, 2012. 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 audit.

We conducted our audit 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 audit provides 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, 2012, and the results of its operations and changes in its plan equity for the period from inception (July 1, 2012) to December 31, 2012, in conformity with U.S. generally accepted accounting principles.

 

LOGO

Atlanta, GA

April 24, 2013

 

  

KPMG LLP is a Delaware limited liability partnership,

the U.S. member firm of KPMG International Cooperative

(“KPMG International”), a Swiss entity.

  


TOTAL SYSTEM SERVICES, INC.

2012 EMPLOYEE STOCK PURCHASE PLAN

Statement of Financial Condition

December 31, 2012

 

Assets   

Common stock of Total System Services, Inc., at fair value – 2,002,641 shares (cost $37,856,766) in 2012

   $ 42,896,563  

Contributions receivable

     362,837  
  

 

 

 
   $ 43,259,400  
  

 

 

 
Plan Equity   

Plan equity (3,216 active participants and 2,329 actively contributing participants at December 31, 2012)

   $ 43,259,400  
  

 

 

 

See accompanying notes to financial statements.

 

2


TOTAL SYSTEM SERVICES, INC.

2012 EMPLOYEE STOCK PURCHASE PLAN

Statement of Operations and Changes in Plan Equity

Period from inception (July 1, 2012) to December 31, 2012

 

Investment income (loss):

  

Dividend income

   $ 395,846  

Realized gain on withdrawals/distributions to participants (note 6)

     862,186  

Unrealized depreciation in common stock of Total System Services, Inc. (note 5)

     (5,870,362
  

 

 

 

Total investment loss

     (4,612,330
  

 

 

 

Contributions:

  

Participants

     3,845,750  

Participating Employers:

  

Total System Services, Inc.

     431,625  

Columbus Depot Equipment Company

     36  

Columbus Productions, Inc.

     2,659  

TSYS Canada, Inc.

     8,284  

TermNet Merchant Services, Inc.

     1,907  

TSYS Merchant Solutions, L.L.C.

     13,713  

TSYS Acquiring Solutions, L.L.C.

     46,299  

TSYS International

     66,534  

Infonox on the web

     5,806  
  

 

 

 

Total contributions

     4,422,613  
  

 

 

 

Decrease in Plan equity before withdrawals

     (189,717

Withdrawals by participants – common stock of

  

Total System Services, Inc., at fair value (197,181 shares) (note 6)

     (4,552,547

Rollover from predecessor plan, at fair value (note 1)

     48,001,664  
  

 

 

 

Increase in Plan equity

     43,259,400  

Plan equity at inception

     —    
  

 

 

 

Plan equity at end of year

   $ 43,259,400  
  

 

 

 

See accompanying notes to financial statements.

 

3


TOTAL SYSTEM SERVICES, INC.

2012 EMPLOYEE STOCK PURCHASE PLAN

Notes to Financial Statements

December 31, 2012

 

(1) Description of the Plan

On January 31, 2012, the board of directors of Total System Services, Inc. (TSYS) adopted the Total System Services, Inc. 2012 Employee Stock Purchase Plan (the Plan). The Plan was approved by the TSYS shareholders on May 1, 2012, and became effective as of July 1, 2012. On July 1, 2012, the plan assets of the predecessor plan, the Total System Services, Inc. Employee Stock Purchase Plan, were rolled over into the Plan. The Plan is designed to enable participating Total System Services, Inc. (TSYS) and participating 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 ComputerShare, Shareowner Services, LLC, hereafter referred to as “Agent.”

All employees based in the United States 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, up to $250,000. The maximum amount of compensation that may be taken into account under the Plan on an annual basis is $250,000. The minimum allowable contribution is 1% of compensation. Matching contributions to the Plan are to be made subjectively by the Participating Employers in an amount equal to 0-50% of each participant’s contribution. As of December 31, 2012, the Participating Employers’ match was 15%. 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 maintains an account balance for each participant equal to the number of shares of TSYS common stock purchased on his/her behalf, plus related investment income or loss. Each participant has the rights and powers of ordinary TSYS shareholders over the shares of common stock held for his or her benefit in the Plan, including the right to vote his or her shares. Each participant will receive cash dividends, stock dividends, stock splits and similar changes in ownership for the shares held in the Plan to the same extent as other ordinary TSYS shareholders.

The Plan requires that TSYS shares purchased under the Plan be held for six months, and after that time, each participant may withdraw 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.

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.

 

   4    (Continued)


TOTAL SYSTEM SERVICES, INC.

2012 EMPLOYEE STOCK PURCHASE PLAN

Notes to Financial Statements

December 31, 2012

 

Participation in the Plan shall automatically terminate upon termination of a participant’s employment whether by death, retirement, or otherwise.

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 Plan’s 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, 2012, fair value was $21.42 per share.

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, 2012, Plan investments include 15,024 shares held by 30 terminated employees, who had 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.

 

   5    (Continued)


TOTAL SYSTEM SERVICES, INC.

2012 EMPLOYEE STOCK PURCHASE PLAN

Notes to Financial Statements

December 31, 2012

 

(3) Fair Value Measurements

The Plan determines 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.

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 Depreciation in Common Stock of TSYS

Changes in unrealized depreciation in common stock of TSYS are as follows:

 

Unrealized depreciation at inception

   $ —     

Unrealized depreciation at December 31, 2012

     (5,870,362
  

 

 

 

Total unrealized depreciation

   $ (5,870,362
  

 

 

 

 

   6    (Continued)


TOTAL SYSTEM SERVICES, INC.

2012 EMPLOYEE STOCK PURCHASE PLAN

Notes to Financial Statements

December 31, 2012

 

(6) Realized Gain on Withdrawal/Distributions to Participants

The gain realized on withdrawal/distributions to participants is summarized as follows:

 

Market value at dates of distribution or redemption of shares of commons stock of TSYS

   $ 4,552,547   

Less cost (computed on an average cost basis) of shares of common stock of TSYS distributed or redeemed

     3,690,361   
  

 

 

 

Total realized gain

   $ 862,186   
  

 

 

 

 

   7