-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ty9VSbk+fetfoG6RwMu3gP4l1GvyVFqFqnA73aQFvYmIXP6kVvXW0kO7ZoWVqa59 qfZrmft1aNXkqTHNWQmIkw== 0000721683-96-000024.txt : 19961118 0000721683-96-000024.hdr.sgml : 19961118 ACCESSION NUMBER: 0000721683-96-000024 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TOTAL SYSTEM SERVICES INC CENTRAL INDEX KEY: 0000721683 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] IRS NUMBER: 581493818 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10254 FILM NUMBER: 96664485 BUSINESS ADDRESS: STREET 1: 1200 SIXTH AVE STREET 2: P O BOX 1755 CITY: COLUMBUS STATE: GA ZIP: 31902 BUSINESS PHONE: 7066492267 MAIL ADDRESS: STREET 1: P O BOX 2506 CITY: COLUMBUS STATE: GA ZIP: 31902-2506 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1996 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 incorporation or organization) Identification No.) 1200 Sixth Avenue, Post Office Box 1755, Columbus, Georgia 31902 (Address of principal executive offices) (Zip Code) (706) 649-2310 (Registrant's telephone number, including area code) APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. CLASS OUTSTANDING AS OF November 13, 1996 Common Stock, $.10 par value 129,289,680 TOTAL SYSTEM SERVICES, INC. INDEX Page Number Part I. Financial Information Item 1. Financial Statements Consolidated Balance Sheets - September 30, 1996 and December 31, 1995 3 Consolidated Statements of Income - Three months and nine months ended September 30, 1996 and 1995 4 Consolidated Statements of Cash Flows - Nine months ended September 30, 1996 and 1995 6 Notes to Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 Part II. Other Information Item 6. (a) Exhibits 15 (b) Reports on Form 8-K 15 Signatures 16 - 2 - TOTAL SYSTEM SERVICES, INC. Part I - Financial Information Consolidated Balance Sheets (Unaudited)
September 30, December 31, 1996 1995 ------------- ------------ Assets Current assets: Cash and cash equivalents (includes $23,268,022 and $16,742,926 on deposit with a related party at 1996 and 1995, respectively) $ 24,989,809 18,849,623 Short-term investments (includes $5,000,000 and $0 invested with a related party at 1996 and 1995, respectively) 5,000,000 -- Accounts receivable, net of allowance for doubtful accounts of $707,938 and $714,374 at 1996 and 1995, respectively 55,891,553 49,614,779 Prepaid expenses and other current assets 12,587,424 9,362,500 ----------- ----------- Total current assets 98,468,786 77,826,902 Property and equipment, less accumulated depreciation and amortization of $58,503,014 and $54,944,079 at 1996 and 1995, respectively 61,465,200 54,572,903 Computer software, less accumulated amortization of $22,547,632 and $16,317,318 at 1996 and 1995, respectively 38,295,115 39,215,561 Other assets 37,843,870 27,384,435 ----------- ----------- Total assets $ 236,072,971 198,999,801 =========== =========== Liabilities and Shareholders' Equity Current liabilities: Accounts payable $ 7,725,590 5,811,334 Current portion of long-term debt and obligations under capital leases 214,929 243,786 Accrued employee benefits 11,363,404 10,412,551 Other current liabilities (includes $1,568,640 and $1,578,899 payable to related parties at 1996 and 1995, respectively) 34,331,134 21,113,104 ----------- ----------- Total current liabilities 53,635,057 37,580,775 Long-term debt and obligations under capital leases, excluding current portion 549,556 686,955 Deferred income taxes 16,276,600 16,260,050 ----------- ----------- Total liabilities 70,461,213 54,527,780 ----------- ----------- Shareholders' equity: Common stock - $.10 par value. Authorized 300,000,000 shares; issued 129,483,522 and 129,461,544 at 1996 and 1995, respectively; 129,289,680 and 129,266,744 outstanding at 1996 and 1995, respectively 12,948,352 12,946,154 Additional paid-in capital 5,193,072 4,445,755 Treasury stock, at cost (473,544) (475,789) Cumulative currency translation adjustments (1,516,840) (1,052,081) Retained earnings 149,460,718 128,607,982 ----------- ----------- Total shareholders' equity 165,611,758 144,472,021 ----------- ----------- Total liabilities and shareholders' equity $ 236,072,971 198,999,801 =========== ===========
See accompanying notes to consolidated financial statements. - 3 - TOTAL SYSTEM SERVICES, INC. Consolidated Statements of Income (Unaudited)
Three months ended September 30, ----------------------- 1996 1995 ----------- ----------- Revenues: Bankcard data processing services (includes $5,062,612 and $3,780,983 from related parties for the three months ended September 30, 1996 and 1995, respectively) $ 70,462,592 58,191,627 Other services 9,716,062 7,916,689 ----------- ----------- Total revenues 80,178,654 66,108,316 ----------- ----------- Expenses: Salaries and other personnel expense 31,385,770 23,353,826 Net occupancy and equipment expense 22,049,463 16,883,059 Other operating expenses (includes $2,451,803 and $1,713,976 to related parties for the three months ended September 30, 1996 and 1995, respectively) 12,137,859 15,125,002 ----------- ----------- Total operating expenses 65,573,092 55,361,887 ----------- ----------- Equity in income of joint ventures 2,663,249 328,870 ----------- ----------- Operating income 17,268,811 11,075,299 ----------- ----------- Nonoperating income: Gain(loss) on disposal of equipment, net (181,193) 67,103 Interest income, net (includes $337,714 and $149,136 from a related party for the three months ended September 30, 1996 and 1995, respectively) 346,759 155,057 ----------- ----------- Total nonoperating income 165,566 222,160 ----------- ----------- Income before income taxes 17,434,377 11,297,459 Income taxes 6,087,467 3,907,549 ----------- ----------- Net income $ 11,346,910 7,389,910 =========== =========== Net income per share $ .09 .06 =========== =========== Weighted average shares outstanding 129,289,565 129,262,588 =========== =========== Cash dividends per common share $ .012 .011 =========== ===========
See accompanying notes to consolidated financial statements. - 4 - TOTAL SYSTEM SERVICES, INC. Consolidated Statements of Income (Unaudited) Nine months ended September 30, ------------------------ 1996 1995 ---------- -------- Revenues: Bankcard data processing services (includes $15,045,970 and $5,451,953 from related parties for the nine months ended September 30, 1996 and 1995, respectively) $ 198,125,300 156,007,944 Other services 27,644,720 22,613,906 ----------- ----------- Total revenues 225,770,020 178,621,850 ----------- ----------- Expenses: Salaries and other personnel expense 91,865,416 68,419,687 Net occupancy and equipment expense 61,160,947 47,946,786 Other operating expenses (includes $7,253,910 and $1,975,597 to related parties for the nine months ended September 30, 1996 and 1995, respectively) 40,278,912 33,724,928 ----------- ----------- Total operating expenses 193,305,275 150,091,401 ----------- ----------- Equity in income(loss) of joint ventures 5,037,075 (335,254) ----------- ----------- Operating income 37,501,820 28,195,195 ----------- ----------- Nonoperating income: Gain on disposal of equipment, net 58,159 145,610 Interest income, net (includes $892,895 and $421,783 from a related party for the nine months ended September 30, 1996 and 1995, respectively) 918,056 447,327 ----------- ----------- Total nonoperating income 976,215 592,937 ----------- ----------- Income before income taxes 38,478,035 28,788,132 Income taxes 13,261,794 10,601,124 ----------- ----------- Net income $ 25,216,241 18,187,008 =========== =========== Net income per share $ .20 .14 =========== =========== Weighted average shares outstanding 129,285,759 129,262,588 =========== =========== Cash dividends per common share $ .034 .034 =========== ===========
See accompanying notes to consolidated financial statements. - 5 - TOTAL SYSTEM SERVICES, INC. Consolidated Statements of Cash Flows
Nine months ended September 30, ----------------------- 1996 1995 --------- -------- Cash flows from operating activities: Net income $ 25,216,241 18,187,008 Adjustments to reconcile net income to net cash provided by operating activities: Equity in (income)loss of joint ventures (5,037,075) 335,254 Depreciation and amortization 17,102,354 15,503,471 Provision for doubtful accounts 62,500 436,095 Deferred income tax expense 16,550 572,398 Gain on disposal of equipment, net (58,159) (145,610) (Increase) decrease in: Accounts receivable (6,339,274) (9,838,553) Prepaid expenses and other assets (2,664,634) 1,200,611 Increase (decrease) in: Accounts payable 1,914,256 2,454,603 Accrued expenses and other current liabilities 13,891,972 7,213,095 ----------- ----------- Net cash provided by operating activities 44,104,731 35,918,372 ----------- ----------- Cash flows from investing activities: Purchase of property and equipment (15,095,204) (8,084,356) Additions to computer software (5,601,218) (5,912,220) Proceeds from disposal of equipment 649,314 720,903 Investment in joint ventures (2,295,283) (3,455,865) Increase in contract acquisition costs (6,095,211) (9,004,205) Purchase of short-term investment (5,000,000) -- ----------- ----------- Net cash used in investing activities (33,437,602) (25,735,743) ----------- ----------- Cash flows from financing activities: Proceeds from long-term debt -- 1,965,775 Principal payments on long-term debt and capital lease obligations (166,256) (164,284) Dividends paid on common stock (4,363,247) (4,362,613) Proceeds from exercise of stock option 2,560 -- ----------- ----------- Net cash used in financing activities (4,526,943) (2,561,122) ----------- ----------- Net increase in cash and cash equivalents 6,140,186 7,621,507 Cash and cash equivalents at beginning of period 18,849,623 14,684,674 ----------- ----------- Cash and cash equivalents at end of period $ 24,989,809 22,306,181 =========== =========== Cash paid for interest $ 16,872 80,250 =========== =========== Cash paid for income taxes $ 13,011,752 10,842,190 =========== ===========
See accompanying notes to consolidated financial statements. - 6 - TOTAL SYSTEM SERVICES, INC. Notes to Consolidated Financial Statements (Unaudited) Note 1 - Basis of Presentation The accompanying unaudited consolidated financial statements represent the accounts of Total System Services, Inc. [service mark] (TSYS [registered service mark]) and its wholly owned subsidiaries, Columbus Depot Equipment Company [service mark] (CDEC [service mark]), Mailtek, Inc. [service mark] (Mailtek), Lincoln Marketing, Inc. [service mark] (LMI) and Columbus Productions, Inc. [service mark] (CPI). The statements have been prepared in accordance with the instructions to Form 10-Q and do not include all information and footnotes necessary for fair presentation of financial position, results of operations and cash flows in conformity with generally accepted accounting principles. All adjustments, consisting of normal recurring accruals, which, in the opinion of management, are necessary for a fair statement of financial position and results of operations for the periods covered by this report have been included. The accompanying unaudited consolidated financial statements should be read in conjunction with the Company's consolidated financial statements and related notes appearing in the Company's 1995 annual report previously filed on Form 10-K. Certain reclassifications have been made to the 1995 Consolidated Financial Statements contained herein to conform with the presentation adopted in 1996. Note 2 - Stock Split On March 29, 1996, TSYS declared a two-for-one stock split, which was effected on April 22, 1996, in the form of a 100% stock dividend on its $.10 par value common stock. All shareholders' equity, share and per share amounts in the accompanying consolidated financial statements have been restated to give effect to the split. Prior to the split, TSYS' charter was amended to increase authorized shares from 100 million to 300 million. Note 3 - Joint Venture Effective May 1, 1996, Vital Processing Services L.L.C. ("Vital") became operational. Vital is an equally owned joint venture between Visa U.S.A.'s Merchant Bank Services ("Visa") and Total System Services, Inc., to which TSYS contributed cash and other assets. The joint venture combines Visa's point-of-sale processing operations and TSYS' merchant accounting and settlement services and is being accounted for using the equity method of accounting. Note 4 - Supplementary Balance Sheet Information A significant component of other assets included on the consolidated balance sheets at September 30, 1996, and December 31, 1995, is contract acquisition costs, - 7 - Notes to Consolidated Financial Statements (continued) net, of $18,599,386 and $17,628,448, respectively. Also, included in other current liabilities at September 30, 1996 and December 31, 1995, are reserves of $4,101,011 and $1,830,791, respectively, to cover transaction processing provisions (see discussion included in Liquidity and Capital Resources). - 8 - TOTAL SYSTEM SERVICES, INC. Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations The following table sets forth certain revenue and expense items as a percentage of total revenues and the percentage increases or decreases in those items for the three months ended September 30: Percentage of Total Revenues Change in Dollars -------------------- ----------------- 1996 1995 1996 vs 1995 ---- ---- ------------ Revenues: Bankcard data processing services 87.9% 88.0% 21.1% Other services 12.1 12.0 22.7 ----- ----- Total revenues 100.0 100.0 21.3 ----- ----- Expenses: Salaries and other personnel expense 39.2 35.3 34.4 Net occupancy and equipment expense 27.5 25.5 30.6 Other operating expenses 15.1 22.9 (19.7) ----- ----- Total operating expense 81.8 83.7 18.4 ----- ----- Equity in income of joint ventures 3.3 0.5 nm ----- ----- Operating income 21.5 16.8 55.9 Nonoperating income 0.3 0.3 (25.5) ----- ----- Income before income taxes 21.8 17.1 54.3 Income taxes 7.6 5.9 55.8 ----- ----- Net income 14.2% 11.2% 53.5% ===== ===== nm - not meaningful - 9 - Results of Operations (continued) The following table sets forth certain revenue and expense items as a percentage of total revenues and the percentage increases or decreases in those items for the nine months ended September 30: Percentage of Total Revenues Change in Dollars ---------------------- ----------------- 1996 1995 1996 vs 1995 ---- ---- ------------ Revenues: Bankcard data processing services 87.8% 87.3% 27.0% Other services 12.2 12.7 22.2 ----- ----- Total revenues 100.0 100.0 26.4 ----- ----- Expenses: Salaries and other personnel expense 40.7 38.3 34.3 Net occupancy and equipment expense 27.1 26.8 27.6 Other operating expenses 17.8 18.9 19.4 ----- ----- Total operating expenses 85.6 84.0 28.8 ----- ----- Equity in income(loss) of joint ventures 2.2 (0.2) nm ----- ----- Operating income 16.6 15.8 33.0 Nonoperating income 0.4 0.3 64.6 ----- ----- Income before income taxes 17.0 16.1 33.7 Income taxes 5.8 5.9 25.1 ----- ----- Net income 11.2% 10.2% 38.6% ===== ===== nm - not meaningful Total revenues increased $14.1 million, or 21.3%, and $47.1 million, or 26.4%, during the three months and nine months ended September 30, 1996, compared to the same periods in 1995. Revenues from bankcard data processing services increased $12.3 million or 21.1%, and $42.1 million, or 27.0%, in the three months and nine months ended September 30, 1996, respectively, compared to the same periods of 1995. Increased revenues from bankcard data processing are attributable to the conversion of cardholder accounts of new customers and growth in the card portfolios of existing customers. Increases in the volume of authorizations and transactions associated with the additional cardholder - 10 - Results of Operations (continued) accounts, as well as growth in new services offered, also contributed to the increased revenues. Another significant factor in the growth in bankcard data processing revenues for the nine months ended September 30, 1996, is the more than 3.5 million cardholder accounts being processed for Total System Services de Mexico, S.A. de C.V. ("TSYS de Mexico"), TSYS' Mexican joint venture; the conversion of these accounts to THE TOTAL SYSTEM [service mark] was completed in July 1995. Average cardholder accounts on file for the three months and nine months ended September 30, 1996, were 75.7 million and 69.8 million, respectively; average cardholder accounts on file for the same periods in 1995 were 57.2 million and 50.4 million. Cardholder accounts on file at September 30, 1996, were 77.2 million, a 33.2% increase over the 58.0 million accounts on file at September 30, 1995. The joint venture between TSYS and Visa U.S.A., known as Vital Processing Services L.L.C., became operational on May 1, 1996. Vital merges TSYS' back- office merchant processing and Visa's Merchant Bank Services' point-of-sale processing operations. On TSYS' consolidated income statement, the results of operations of the joint venture subsequent to April 30, 1996, are included in equity in the income of joint ventures. The change in classification of the Company's revenues and expenses from its merchant operations to an equity interest in the Vital joint venture, effective May 1, 1996, affects the comparability between periods presented in the Company's income statements. A significant amount of the Company's revenues is derived from certain major customers who are processed under long-term contracts. For the three months and nine months ended September 30, 1996, two customers accounted for approximately 29% and 30% of total revenues, respectively. As a result, the loss of one of the Company's major customers could have a material adverse effect on the Company's results of operations. TSYS has had two successful conversions of certain Bank of America cardholder accounts to TS2. Conversions to TS2 of remaining portions of Bank of America's cardholder accounts are currently expected to continue into 1997. Management believes all of Bank of America's cardholder accounts will be successfully converted to TS2. During the second quarter, TSYS and Bank of America amended their processing agreement to, among other things, eliminate the financial penalties and termination rights associated with prior conversion delays. The conversion and processing of Bank of America's cardholder accounts is not expected to have a material impact on TSYS' 1996 financial condition or results of operations. Revenues from other services, primarily generated by TSYS' wholly owned subsidiaries, increased 22.7% and 22.2% for the three months and nine months ended September 30, 1996, compared to the same periods in 1995. The increase in revenues can - 11 - Results of Operations (continued) be attributed primarily to increased business from existing customers and the acquisition of two significant new customers by one subsidiary of TSYS. Total operating expenses increased 18.4% and 28.8% for the three months and nine months ended September 30, 1996, compared to the same periods in 1995. Increases in expenses are reflected in most categories and are attributable to the addition of personnel and equipment; the cost of materials associated with the services provided by all companies, particularly the supplies related to processing the increased number of accounts on THE TOTAL SYSTEM; certain processing provisions, and expenses associated with the converion of customers to TS2. Employment expenses increased 34.4% and 34.3% for the three months and nine months ended September 30, 1996, respectively, compared to the same periods in 1995. The average number of employees in the third quarter of 1996 increased to 2,551, a 23.9% increase over the 2,059 in the same period of 1995. For the nine months ended September 30, 1996, the average number of employees was 2,456, an 18.8% increase over the 2,068 in the same period of 1995. In addition to the growth in number of employees, the increase in employment expenses is attributable to normal salary increases and related employee benefits. Nonemployee compensation, primarily temporary help and contract programmers, increased 55.8% and 35.3% for the three months and nine months ended September 30, 1996, compared to the same periods in 1995; nonemployee compensation is included in employment expenses. At October 31, 1996, TSYS had 2,564 full-time and 91 part-time employees. Net occupancy and equipment expense was up 30.6% and 27.6% for the third quarter and first nine months of 1996, respectively, over the same periods in 1995. Equipment and software rentals, the largest components of occupancy and equipment expense, were up 45.4% and 36.5% in the third quarter and first nine months of 1996, respectively, compared to the same periods of 1995. Due to rapidly changing technology in computer equipment, TSYS fills a substantial portion of its equipment needs through operating leases. Computer upgrades and other additional equipment were leased subsequent to the first half of 1995 to accomodate increased volumes due to growth in the number of accounts being processed. Other operating expenses decreased 19.7% for the three months ended September 30, 1996, and increased 19.4% for the nine months ended September 30, 1996, compared to the same periods in 1995. Management fees totaling $2.4 million and $7.2 million were paid to affiliated companies for various services in the three months and nine months ended September 30, 1996, respectively, compared to $1.7 million and $1.9 million, respectively, for the same periods of 1995. The majority of these management fees resulted from the formation of Synovus Services Corp. and are included in other operating expenses in the third quarter and first nine months of 1996, but were primarily reflected as salaries and other personnel expenses prior to July of 1995. Other factors contributing to the - 12 - Results of Operations (continued) year-to-date increase in other operating expenses were supplies associated with processing the increased number of accounts and increased travel costs. Other operating expenses also increased as a result of certain provisions made for processing commitments and contingencies. These provisions were established in view of the increased risks associated with the significant increase in the number of accounts being processed. Factors contributing to the decrease in other expenses in the third quarter of 1996 were a significant reduction in the use of outside professional services as well as a decrease in provisions for processing commitments. TSYS'share of income from its equity in joint ventures was $2.7 million and $5.0 million for the third quarter and first nine months of 1996, respectively. TSYS has a 49% and 50% interest in Total System Services de Mexico, S.A. de C.V. and Vital Processing Services L.L.C., respectively. Vital became operational May 1, 1996. TSYS de Mexico continues to perform as expected, although current production volumes are showing signs of decreasing. The Mexican economy continues to stabilize relative to 1995; however, there remains uncertainty in the Mexican economy which management continues to monitor. Interest income, net, includes interest expense of $12,264 and $66,452 and interest income of $359,023 and $221,509 for the third quarters of 1996 and 1995, respectively. For the first nine months of 1996 and 1995, respectively, interest expense was $41,921 and $108,262, and interest income was $959,977 and $555,589. Interest expense has decreased due to a reduction in debt outstanding. The increase in interest income is the result of fluctuations in cash available for investment and short-term interest rates. Additionally, in the third quarter of 1996, $5.0 million was invested in a six-month certificate of deposit at a higher rate of interest. TSYS' effective income tax rate for the third quarter of 1996 was 34.9%, compared to 34.6% for the same period in 1995. For the nine months ended September 30, 1996, the effective tax rate was 34.5%, compared to 36.8% for the nine months ended September 30, 1995. The decline in TSYS' effective tax rate is primarily due to certain effective tax planning strategies. - 13 - Liquidity and Capital Resources During the third quarter of 1996, TSYS purchased property and equipment of $3.5 million for total purchases of $15.1 million in the first nine months of 1996. Computer software increased during the third quarter by $2.2 million, bringing the total additions for 1996 to $5.6 million; additions were primarily purchased software. Dividends on common stock of $1.5 million were paid in the third quarter of 1996, bringing the total dividends paid in 1996 to $4.4 million. In the third quarter of 1996, TSYS reevaluated its business insurance risks and determined it was more cost effective to accept the financial impact for normal risks associated with its business as a processor of significant transaction levels and utilize insurance to protect TSYS from catastrophic events. As a result, TSYS increased its coverage for errors and omissions and raised its deductible amount. TSYS has increased its accrual for provisions considered part of normal transaction processing risks. At September 30, 1996, the reserve for such risks was $4.1 million, compared to $1.8 million at December 31, 1995. These risks primarily relate to customer reimbursements or adjustments as a result of transaction processing errors which are inherent in the processing of the volume of business done by TSYS. During the first quarter of 1996, TSYS announced its decision to remain in Columbus, Georgia, and build a new campus-type facility on 50 acres of land north of downtown Columbus. The decision was based on a commitment by the state of Georgia to collegiate high-tech education and cooperation by the city of Columbus in making available a suitable building site. The campus facility will consolidate most of TSYS' multiple Columbus locations and will facilitate future growth. The campus development will be a multi-year phased project with initial construction scheduled to begin by mid 1997. Financing for the project is expected to be through the internal generation of funds and the use of funds from external sources, possibly through the issuance of industrial revenue bonds. On October 22, 1996, TSYS announced it has commissioned Cousins Properties Incorporated, headquartered in Atlanta, Georgia, for consultation and development management of the new campus. TSYS may seek external sources of capital in the future. The form of any such financing will vary depending upon prevailing market and other conditions and may include short-term or long-term borrowings from financial institutions, or the issuance of additional equity securities and/or industrial revenue bonds. However, there can be no assurance that funds will be available on terms acceptable to TSYS. Management expects that TSYS will continue to be able to fund a significant portion of its capital expenditure needs through internally generated cash in the future. At September 30, 1996, TSYS had working capital of $39.8 million compared to $40.2 million at December 31, 1995. - 14 - TOTAL SYSTEM SERVICES, INC. Part II - Other Information Item 6 - Exhibits and Reports on Form 8-K a) Exhibits (11) - Statement re Computation of Per Share Earnings (27) - Financial Data Schedule (For SEC use only) b) Form 8-K filed during the quarter ended September 30, 1996 1. The report dated September 16, 1996, included the following important event: On September 16, 1996, Total System Services, Inc. ("Registrant") announced that it is expected that earnings for 1996 will exceed current analysts' estimates by approximately 10%. - 15 - TOTAL SYSTEM SERVICES, INC. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TOTAL SYSTEM SERVICES, INC. Date: November 13, 1996 by: /s/ Richard W. Ussery --------------------- Richard W. Ussery Chairman of the Board and Chief Executive Officer Date: November 13, 1996 by: /s/ James B. Lipham --------------------- James B. Lipham Chief Financial Officer - 16 - EX-11 2 STATEMENT RE COMPUTATION OF PER SHARE EARNINGS TOTAL SYSTEM SERVICES, INC. Statement re Computation of Per Share Earnings The following computations set forth the calculations of primary and fully diluted earnings per share for the three months and nine months ended September 30, 1996 and 1995:
Three Months Ended Nine Months Ended September 30, 1996 September 30, 1996 -------------------- -------------------- Fully Fully Primary Diluted Primary Diluted Earnings Earnings Earnings Earnings Per Share Per Share Per Share Per Share --------- --------- --------- --------- Net income $ 11,346,910 $ 11,346,910 $ 25,216,241 $ 25,216,241 =========== =========== =========== =========== Weighted average number of common shares outstanding 129,289,565 129,289,565 129,285,759 129,285,759 Increase due to assumed issuance of shares related to stock options outstanding 164,151 167,193 160,594 167,193 ----------- ----------- ----------- ----------- Adjusted weighted average number of common and common equivalent shares outstanding 129,453,716 129,456,758 129,446,353 129,452,952 =========== =========== =========== =========== Net income per common and common equivalent share $ .09 $ .09 $ .20 $ .20 =========== =========== =========== ===========
Three Months Ended Nine Months Ended September 30, 1995 September 30, 1995 -------------------- -------------------- Fully Fully Primary Diluted Primary Diluted Earnings Earnings Earnings Earnings Per Share Per Share Per Share Per Share Net income $ 7,389,910 $ 7,389,910 $ 18,187,008 $ 18,187,008 =========== =========== =========== =========== Weighted average number of common shares outstanding 129,262,588 129,262,588 129,262,588 129,262,588 Increase due to assumed issuance of shares related to stock options outstanding 130,690 138,680 124,752 138,680 ----------- ----------- ----------- ----------- Adjusted weighted average number of common and common equivalent shares outstanding 129,393,278 129,401,268 129,387,340 129,401,268 =========== =========== =========== =========== Net income per common and common equivalent share $ .06 $ .06 $ .14 $ .14 =========== =========== ========== ===========
EX-27 3 ARTICLE 5 FINANCIAL DATA SCHEDULE FOR 3RD QTR 10-Q
5 0000721683 TOTAL SYSTEM SERVICES, INC. 9-MOS DEC-31-1996 JAN-01-1996 SEP-30-1996 24,989,809 0 56,599,491 707,938 0 93,468,786 119,968,214 58,503,014 236,072,971 53,635,057 0 0 0 12,948,352 152,663,406 236,072,971 225,770,020 225,770,020 0 193,305,275 0 0 0 38,478,035 13,261,794 0 0 0 0 25,216,241 .20 0 On March 29, 1996, TSYS announced a two-for-one stock split that was issued on April 22, 1996, to shareholders of record as of April 11, 1996. Financial data schedules have not been restated for prior periods for this recapitalization.
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