-----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, JETt6toWI8PsdOxxz0tsRrvXMpKqBnCwGJWssOOgm9ZzPdcn6yS8wLYkADmiouaE Ml3xdsqGDIbpYrOT7mEsJg== 0000721683-02-000009.txt : 20020416 0000721683-02-000009.hdr.sgml : 20020416 ACCESSION NUMBER: 0000721683-02-000009 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20011231 FILED AS OF DATE: 20020410 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-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-10254 FILM NUMBER: 02606476 BUSINESS ADDRESS: STREET 1: 1600 FIRST AVENUE STREET 2: P O BOX 1755 CITY: COLUMBUS STATE: GA ZIP: 31901 BUSINESS PHONE: 7066492267 MAIL ADDRESS: STREET 1: 1600 FIRST AVENUE CITY: COLUMBUS STATE: GA ZIP: 31901 10-K/A 1 mainfile.txt FORM 10K/A SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K/A Amendment No. 1 (Mark One) [X] Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 2001 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 of incorporation (I.R.S. Employer or organization) Identification No.) 1600 First Avenue Columbus, Georgia 31901 (Address of principal executive offices) (Zip Code) (Registrant's telephone number, including area code) (706) 649-2204 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered ------------------- ----------------------------------------- Common Stock, $.10 Par Value New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: NONE Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. YES X NO___________ ----------- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] As of February 15, 2002, 196,965,670 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 $643,461,000 (based upon the closing per share price of such stock on said date.) Portions of Registrant's Proxy Statement, including Financial Appendix, dated March 8, 2002 are incorporated in Parts I, II, III and IV of this report. The undersigned registrant hereby amends Item 14 of its Annual Report on Form 10-K for the year ended December 31, 2001 by adding Exhibit 99.1, the Annual Report on Form 11-K for the Total System Services, Inc. Employee Stock Purchase Plan for the year ended December 31, 2001, and by adding Exhibit 99.2, the Annual Report on Form 11-K for the Total System Services, Inc. Director Stock Purchase Plan for the year ended December 31, 2001, as set forth below and in the attached exhibits. PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K (a) 1. Financial Statements The following Consolidated Financial Statements of TSYS are specifically incorporated by reference from pages F-14 through F-28 of the Financial Appendix to TSYS' Proxy Statement in connection with its Annual Shareholders' Meeting to be held on April 18, 2002 to Item 8, Part II, Financial Statements and Supplementary Data. Consolidated Balance Sheets - December 31, 2001 and 2000. Consolidated Statements of Income - Years Ended December 31, 2001, 2000 and 1999. Consolidated Statements of Cash Flows - Years Ended December 31, 2001, 2000 and 1999. Consolidated Statements of Shareholders' Equity and Comprehensive Income - Years Ended December 31, 2001, 2000 and 1999. 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, 2001, 2000 and 1999. All other schedules are omitted because they are inapplicable or the required information is included in the Notes to Consolidated Financial Statements. 2 3. Exhibits Exhibit Number Description ----- ----------- 3.1 Articles of Incorporation of Total System Services, Inc. ("TSYS"), as amended, incorporated by reference to Exhibit 4.1 of TSYS' Registration Statement on Form S-8 filed with the Commission on April 18, 1997 (File No. 333-25401). 3.2 Bylaws of TSYS, as amended, incorporated by reference to Exhibit 3.2 of TSYS' Annual Report on Form 10-K for the fiscal year ended December 31, 1999, as filed with the Commission on March 16, 2000. 10. EXECUTIVE COMPENSATION PLANS AND ARRANGEMENTS 10.1 Director Stock Purchase Plan of TSYS, incorporated by reference to Exhibit 10.1 of TSYS' Annual Report on Form 10-K for the fiscal year ended December 31, 1999, as filed with the Commission on March 16, 2000. 10.2 Total System Services, Inc. 2002 Long-Term Incentive Plan. 10.3 Synovus Financial Corp. 2002 Long-Term Incentive Plan in which executive officers of TSYS participate. 10.4 Synovus Financial Corp./Total System Services, Inc. Deferred Compensation Plan. 10.5 Total System Services, Inc. 1992 Long-Term Incentive Plan, which was renamed the Total System Services, Inc. 2000 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 Total System Services, Inc. Directors' Deferred Compensation Plan. 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. 3 10.8 Incentive Bonus Plan of Synovus Financial Corp. in which executive officers of TSYS participate, incorporated by reference to Exhibit 10.8 of TSYS' Annual Report on Form 10-K for the fiscal year ended December 31, 1992, as filed with the Commission on March 18, 1993. 10.9 Agreement in connection with use of aircraft, incorporated by reference to Exhibit 10.9 of TSYS' Annual Report on Form 10-K for the fiscal year ended December 31, 1992, as filed with the Commission on March 18, 1993. 10.10 Split Dollar Insurance Agreement of TSYS, incorporated by reference to Exhibit 10.10 of TSYS' Annual Report on Form 10-K for the fiscal year ended December 31, 1993, as filed with the Commission on March 22, 1994. 10.11 Synovus Financial Corp. 1994 Long-Term Incentive Plan in which executive officers of TSYS participate, incorporated by reference to Exhibit 10.11 of TSYS' Annual Report on Form 10-K for the fiscal year ended December 31, 1994, as filed with the Commission on March 9, 1995. 10.12 Synovus Financial Corp. Executive Bonus Plan in which executive officers of TSYS participate, incorporated by reference to Exhibit 10.12 of TSYS' Annual Report on Form 10-K for the fiscal year ended December 31, 1995, as filed with the Commission on March 19, 1996. 10.13 Change of Control Agreements for executive officers of TSYS, incorporated by reference to Exhibit 10.13 of TSYS' Annual Report on Form 10-K for the fiscal year ended December 31, 1995, as filed with the Commission on March 19, 1996. 10.14 Stock Option Agreement of Samuel A. Nunn, incorporated by reference to 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 Synovus Financial Corp. Deferred Stock Option Plan in which executive officers of TSYS participate. 10.16 Vital Processing Services, L.L.C. Restricted Unit Agreement for executive officers of TSYS, incorporated by reference to Exhibit 10.16 of TSYS' Annual Report on Form 10-K for the fiscal year ended December 31, 2000, as filed with the Commission on March 21, 2001. 4 10.17 Lease Agreement between First Security Bank, National Association, and TSYS incorporated by reference to Exhibit 10.15 of TSYS' Annual Report on Form 10-K for the fiscal year ended December 31, 1997, as filed with the Commission on March 23, 1998. 10.18 Synovus Financial Corp. 2000 Long-Term Incentive Plan in which executive officers of TSYS participate, incorporated by reference to Exhibit 10.16 of TSYS' Annual Report on Form 10-K for the fiscal year ended December 31, 1999, as filed with the Commission on March 16, 2000. 10.19 Split Dollar Insurance Agreement and related Executive Benefit Substitution Agreement of Synovus Financial Corp. in which executive officers of TSYS participate. 20.1 Proxy Statement, including Financial Appendix, for the Annual Meeting of Shareholders of TSYS to be held on April 18, 2002, 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 2001 Annual Report on Form 10-K. 99.1 Annual Report on Form 11-K for the Total System Services, Inc. Employee Stock Purchase Plan for the year ended December 31, 2001. 99.2 Annual Report on Form 11-K for the Total System Services, Inc. Director Stock Purchase Plan for the year ended December 31, 2001. (b) Reports on Form 8-K On October 16, 2001, TSYS filed a Form 8-K with the Commission in connection with the announcement of its earnings for the third quarter of 2001. 5 On October 22, 2001, TSYS filed a Form 8-K with the Commission in connection with the announcement of a 10-year extension to its long-term credit card processing agreement with Providian Financial Corporation. 6 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) April 8, 2002 By:/s/James H. Blanchard ------------------------------------------- James H. Blanchard, Chairman of the Executive Committee 7 INDEX TO EXHIBITS Exhibit Number Description - ------- ------------ 23.1 Auditors' Consents 99.1 Annual Report on Form 11-K for the Total System Services, Inc. Employee Stock Purchase Plan for the year ended December 31, 2001. 99.2 Annual Report on Form 11-K for the Total System Services, Inc. Director Stock Purchase Plan for the year ended December 31, 2001. 8 EX-23.1 3 ex23-1.txt INDEPENDENT AUDITORS' CONSENTS Independent Auditors' Consent The Board of Directors Total System Services, Inc. We consent to incorporation by reference in the Registration Statement (No. 2-92497) on Form S-8 of Total System Services, Inc. of our report dated March 1, 2002, relating to the statements of financial condition of the Total System Services, Inc. Employee Stock Purchase Plan as of December 31, 2001 and 2000, and the related statements of operations and changes in plan equity for each of the years in the three-year period ended December 31, 2001, which report appears in the December 31, 2001 annual report on Form 11-K of the Total System Services, Inc. Employee Stock Purchase Plan, included as Exhibit 99.1 to the December 31, 2001 annual report on Form 10-K/A of Total System Services, Inc. /s/KPMG LLP Atlanta, Georgia April 9, 2002 Independent Auditors' Consent The Board of Directors Total System Services, Inc. We consent to incorporation by reference in the Registration Statement (No. 33-17376) on Form S-8 of Total System Services, Inc. of our report dated March 1, 2002, relating to the statements of financial condition of the Total System Services, Inc. Director Stock Purchase Plan as of December 31, 2001 and 2000, and the related statements of operations and changes in plan equity for each of the years in the three-year period ended December 31, 2001, which report appears in the December 31, 2001 annual report on Form 11-K of the Total System Services, Inc. Director Stock Purchase Plan, included as Exhibit 99.2 to the December 31, 2001 annual report on Form 10-K/A of Total System Services, Inc. /s/KPMG LLP Atlanta, Georgia April 9, 2002 Exhibit 23.1 EX-99.1 4 ex99-1.txt ANNUAL REPT. ON FORM 11-K FOR THE TSYS ESPP 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, 2001 ------------------------------------------------------ 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. EMPLOYEE STOCK PURCHASE PLAN TOTAL SYSTEM SERVICES, INC. 1600 FIRST AVENUE COLUMBUS, GEORGIA 31901 (706) 649-2204 Exhibit 99.1 TOTAL SYSTEM SERVICES, INC. EMPLOYEE STOCK PURCHASE PLAN Financial Statements December 31, 2001, 2000, and 1999 (With Independent Auditors' Report Thereon) Independent Auditors' Report The Plan Administrator 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 as of December 31, 2001 and 2000 and the related statements of operations and changes in plan equity for each of the years in the three-year period ended December 31, 2001. These financial statements are the responsibility of the Plan's administrator. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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 Total System Services, Inc. Employee Stock Purchase Plan as of December 31, 2001 and 2000 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, 2001 in conformity with accounting principles generally accepted in the United States of America. /s/KPMG LLP March 1, 2002 TOTAL SYSTEM SERVICES, INC. EMPLOYEE STOCK PURCHASE PLAN Statements of Financial Condition December 31, 2001 and 2000
Assets 2001 2000 ----------- ------------ Common stock of Total System Services, Inc. at market value - 1,599,286 shares (cost $25,822,977) in 2001 and 1,612,733 shares (cost $21,969,189) in 2000 (note 2) $33,872,868 36,084,906 Dividends receivable 23,979 20,204 Contributions receivable 433,493 370,049 ----------- ------------ $34,330,340 36,475,159 =========== ============ Plan Equity Plan equity (5,850 and 5,241 participants at December 31, 2001 and 2000, respectively) $34,330,340 36,475,159 =========== ============ See accompanying notes to financial statements.
2 TOTAL SYSTEM SERVICES, INC. EMPLOYEE STOCK PURCHASE PLAN Statements of Operations and Changes in Plan Equity Years ended December 31, 2001, 2000, and 1999
2001 2000 1999 ------------ ------------ ------------- Dividend income $ 93,195 75,035 60,016 Realized gain on distributions to participants (note 4) 4,686,645 2,093,104 2,576,977 Unrealized appreciation (depreciation) in common stock of Total System Services, Inc. (note 3) (6,065,826) 7,748,715 (13,058,157) Contributions (notes 1 and 2): Participants 6,650,650 5,684,730 5,141,574 Participating employers: Total System Services, Inc. 2,518,911 2,220,960 2,071,247 Columbus Depot Equipment Company 149 365 411 TSYS Total Solutions, Inc. 264,872 239,780 183,889 Columbus Productions, Inc. 57,972 54,049 54,768 TSYS Canada, Inc. 18,592 16,278 17,887 DotsConnect, Inc. 56,101 28,769 -- Vital Processing Services, L.L.C 423,270 305,280 248,987 ------------ ------------ ------------- Total employer contributions 3,339,867 2,865,481 2,577,189 ------------ ------------ ------------- 8,704,531 18,467,065 (2,702,401) Withdrawals by participants - common stock of Total System Services, Inc. at market value (418,335 shares in 2001, 435,792 shares in 2000, and 321,694 shares in 1999) (notes 2 and 4) (10,849,350) (7,734,028) (6,230,333) ------------ ------------ ------------- Increase (decrease) in Plan equity for the year (2,144,819) 10,733,037 (8,932,734) Plan equity at beginning of year 36,475,159 25,742,122 34,674,856 ------------ ------------ ------------- Plan equity at end of year $34,330,340 36,475,159 25,742,122 ============ ============ =============
See accompanying notes to financial statements. 3 TOTAL SYSTEM SERVICES, INC. EMPLOYEE STOCK PURCHASE PLAN Notes to Financial Statements December 31, 2001, 2000, and 1999 (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 TSYS and subsidiaries (the Participating Employers). Synovus serves as the Plan administrator. State Street Bank and Trust Company serves as the Plan agent, hereafter referred to as "Agent." All employees who work twenty hours per week or more are eligible to participate in the Plan after completing three months of continuous employment prior to the beginning of a calendar quarter. Participants who have previously withdrawn shares from their Plan account remain eligible to participate, but with certain exceptions, are precluded from receiving matching contributions from the Plan sponsor for a specified period of time. A participant may contribute to the Plan based on a formula through payroll deductions in multiples of $1 with a minimum deduction of $10 per month and a maximum deduction not to exceed a specified percentage of compensation (ranging from 3% to 7%). Effective January 1, 1999, participants initially joining the Plan, requesting reinstatement in the Plan or making a change under the Plan must select their payroll deduction amount as a percentage of compensation, with a minimum contribution level of 0.5%. Participants in the Plan prior to January 1, 1999 may continue contributing to the Plan through payroll deductions in whole dollar amounts. Contributions to the Plan are to be made by the Participating Employers in an amount equal to one-half of each participant's contribution. 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, postage, and transaction costs which are included in the cost of each participant's investment in common stock of TSYS. The Plan provides that upon withdrawal from the Plan, each participant may elect to receive the proceeds from his account balance in the form of shares of common stock of TSYS and a check for any fractional shares and cash held, a lump-sum cash distribution, or a combination of both. Effective January 23, 2002, the Plan was amended to allow employees to make unlimited withdrawals without their employer matching contributions being suspended for a specific period of time. 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 TSYS prior to the date of such amendment or termination. 4 (Continued) TOTAL SYSTEM SERVICES, INC. EMPLOYEE STOCK PURCHASE PLAN Notes to Financial Statements December 31, 2001, 2000, and 1999 (2) Summary of Accounting Policies The investment in common stock of TSYS is stated at market value. The 2001 and 2000 market values are based on the closing price at year-end. The December 31, 2001 and 2000 market values were $21.18 and $22.375 per share, respectively. The realized gain on distributions to participants is determined by computing the difference between the average cost per share of common stock and the market value per share at the date of the distribution to the participants. Contributions to and withdrawals from the Plan are accounted for on the accrual basis. Common stock contributions are recorded at fair value. During the years ended December 31, 2001, 2000, and 1999, TSYS contributed one share of stock to each new employee, upon reaching three months of employment with TSYS. Such contributions were made to the employees' accounts with the Plan, and resulted in an increase of employer contributions of approximately $28,587, $22,650, and $25,000 for the years ended December 31, 2001, 2000, and 1999, respectively. Effective January 23, 2002, the Plan was amended to eliminate this gift stock program. Dividend income is accrued on the record date. 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 employer. Cash dividends paid on common stock of TSYS purchased under the Plan will be taxed 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. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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. (3) Unrealized Appreciation (Depreciation) in Common Stock of TSYS Changes in unrealized appreciation (depreciation) in common stock of TSYS are as follows:
2001 2000 1999 ------------------- ------------------- -------------------- Unrealized appreciation at end of year $ 8,049,891 14,115,717 6,367,002 Unrealized appreciation at beginning of year 14,115,717 6,367,002 19,425,159 ------------------- ------------------- -------------------- Unrealized appreciation (depreciation) for the year $ (6,065,826) 7,748,715 (13,058,157) =================== =================== ====================
5 (Continued) TOTAL SYSTEM SERVICES, INC. EMPLOYEE STOCK PURCHASE PLAN Notes to Financial Statements December 31, 2001, 2000, and 1999 (4) Realized Gain on Withdrawal Distributions to Participants The gain realized on withdrawal distributions to participants is summarized as follows:
2001 2000 1999 ------------------- -------------------- -------------------- Market value at dates of distribution or redemption of shares of common stock of TSYS $ 10,849,350 7,734,028 6,230,333 Less cost (computed on an average cost basis) of shares of common stock of TSYS distributed or redeemed 6,162,705 5,640,924 3,653,356 ------------------- -------------------- -------------------- Total realized gain $ 4,686,645 2,093,104 2,576,977 =================== ==================== ====================
6 EX-99.2 5 ex99-2.txt ANNUAL REPT. ON FORM 11-K FOR THE TSYS DSPP 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, 2001 ----------------------------------------------------- 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. DIRECTOR STOCK PURCHASE PLAN TOTAL SYSTEM SERVICES, INC. 1200 FIRST AVENUE COLUMBUS, GEORGIA 31901 (706) 649-2204 Exhibit 99.2 TOTAL SYSTEM SERVICES, INC. DIRECTOR STOCK PURCHASE PLAN Financial Statements December 31, 2001, 2000, and 1999 (With Independent Auditors' Report Thereon) Independent Auditors' Report The Plan Administrator Total System Services, Inc. Director Stock Purchase Plan: We have audited the accompanying statements of financial condition of the Total System Services, Inc. Director Stock Purchase Plan as of December 31, 2001 and 2000 and the related statements of operations and changes in plan equity for each of the years in the three-year period ended December 31, 2001. These financial statements are the responsibility of the Plan's administrator. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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 Total System Services, Inc. Director Stock Purchase Plan as of December 31, 2001 and 2000 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, 2001 in conformity with accounting principles generally accepted in the United States of America. /s/KPMG LLP March 1, 2002 TOTAL SYSTEM SERVICES, INC. DIRECTOR STOCK PURCHASE PLAN Statements of Financial Condition December 31, 2001 and 2000
Assets 2001 2000 ---------- --------- Common stock of Total System Services, Inc. at market value 142,897 shares (cost $1,239,980) in 2001 and 144,507 shares (cost $861,490) in 2000 (note 2) $ 3,026,558 3,233,344 Dividends receivable 2,143 1,806 ---------- --------- $ 3,028,701 3,235,150 ========== ========= Plan Equity Plan equity (20 and 19 participants at December 31, 2001 and 2000, respectively) $ 3,028,701 3,235,150 ========== =========
See accompanying notes to financial statements. 2 TOTAL SYSTEM SERVICES, INC. DIRECTOR STOCK PURCHASE PLAN Statements of Operations and Changes in Plan Equity Years ended December 31, 2001, 2000, and 1999
2001 2000 1999 ----------- --------- ------------ Dividend income $ 8,134 6,379 5,428 Realized gain on distributions to participants (notes 2 and 4) 394,021 -- 277,688 Unrealized appreciation (depreciation) in common stock of Total System Services, Inc. (note 3) (585,276) 848,336 (1,258,547) Contributions (notes 1 and 2): Participants 344,000 254,333 38,333 Total System Services, Inc. 172,000 127,167 19,167 ----------- --------- ------------ 332,879 1,236,215 (917,931) Withdrawals by participants: Common stock of Total System Services, Inc. at market value (22,472 shares in 2001, -0- shares in 2000, 20,000 shares in 1999)- (notes 2 and 4) (539,328) -- (353,750) ----------- --------- ------------ Increase (decrease) in Plan equity for the year (206,449) 1,236,215 (1,271,681) Plan equity at beginning of year 3,235,150 1,998,935 3,270,616 ----------- --------- ------------ Plan equity at end of year $ 3,028,701 3,235,150 1,998,935 =========== ========= ============
See accompanying notes to financial statements. 3 TOTAL SYSTEM SERVICES,INC. DIRECTOR STOCK PURCHASE PLAN Notes to Financial Statements December 31, 2001, 2000, and 1999 (1) Description of the Plan The Total System Services, Inc. Director Stock Purchase Plan (Plan) was implemented as of October 15, 1987. The Plan is designed to enable participating Total System Services, Inc. (TSYS) directors to purchase shares of common stock of TSYS at prevailing market prices from contributions made by them and TSYS. Synovus serves as the Plan administrator. State Street Bank and Trust Company serves as the Plan agent, hereafter referred to as "Agent". Any person who currently serves or in the future is elected to serve as a member, advisory member, or emeritus member of the board of directors of TSYS is eligible to participate in the Plan. Prior to February 24, 2000, cash contributions by a participant could not exceed $1,000 per calendar quarter. Effective February 24, 2000, cash contributions by participants cannot exceed $5,000 per calendar quarter. Contributions to the Plan are to be made by TSYS in an amount equal to one-half of each participant's contribution. Participants are immediately vested in their contributions and TSYS' 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, postage, and transaction costs which are included in the cost of each participant's investment in common stock of TSYS. The Plan provides that upon withdrawal from the Plan, each participant may elect to receive the shares of TSYS common stock held on his behalf by the Agent, together with a check for any fractional share interest and any remaining cash balance. 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 TSYS prior to the date of such amendment or termination. (2) Summary of Accounting Policies The investment in common stock of TSYS is stated at market value. The 2001 and 2000 market values are based on the closing price at year-end. The December 31, 2001 and 2000 market values were $21.18 and $22.375 per share, respectively. The realized gain on distributions to participants is determined by computing the difference between the average cost per share of common stock and the market value per share at the date of distribution to the participants. Contributions by TSYS and participating directors, as well as withdrawals, are accounted for on the accrual basis. 4 (Continued) TOTAL SYSTEM SERVICES, INC. DIRECTOR STOCK PURCHASE PLAN Notes to Financial Statements December 31, 2001, 2000, and 1999 Dividend income is accrued on the record date. 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 TSYS. 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. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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. (3) Unrealized Appreciation (Depreciation) in Common Stock of TSYS Changes in unrealized appreciation (depreciation) in common stock of TSYS are as follows:
2001 2000 1999 ------------------- -------------------- -------------------- Unrealized appreciation at end of year $ 1,786,578 2,371,854 1,523,518 Unrealized appreciation at beginning of year 2,371,854 1,523,518 2,782,065 ------------------- -------------------- -------------------- Unrealized appreciation (depreciation for the year) $ (585,276) 848,336 (1,258,547) =================== ==================== ====================
(4) Realized Gain on Withdrawal Distributions to Participants The gain realized on withdrawal distributions to participants is summarized as follows:
2001 2000 1999 ------------------- -------------------- -------------------- Market value at dates of distribution or redemption of common stock of TSYS $ 539,328 -- 353,750 Less cost (computed on an average cost basis) of shares of common stock of TSYS distributed or redeemed 145,307 -- 76,062 ------------------- -------------------- -------------------- Total realized gain $ 394,021 -- 277,688 =================== ==================== ====================
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