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 =================== ==================== ====================
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