-----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, JLffsvV3FWcFflNfLj7RvC27PlX4ZfaqpJKW7IeRg3k9EP/rf4iWVky9TKBGNoX1 4fUj61fCnYxgUchA2tIZAg== 0000721683-03-000037.txt : 20030715 0000721683-03-000037.hdr.sgml : 20030715 20030715160235 ACCESSION NUMBER: 0000721683-03-000037 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20030715 ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20030715 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TOTAL SYSTEM SERVICES INC CENTRAL INDEX KEY: 0000721683 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 581493818 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-10254 FILM NUMBER: 03787364 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 8-K 1 filing.txt FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 July 15, 2003 ------------- (Earliest Event Reported) Total System Services, Inc. --------------------------- (Exact Name of Registrant as Specified in its Charter) Georgia 1-10254 58-1493818 - -------------- ------------------ -------------- (State of (Commission File (IRS Employer Incorporation) Number) Identification Number) 1600 First Avenue, Columbus, Georgia 31901 ------------------------------------------- (Address of principal executive offices) (706) 649-2267 --------------- (Registrant's Telephone Number) ------------------------------------------------ (Former name or former address, if changed since last report) Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. - ------- ------------------------------------------------------------------ (a) Financial Statements - None. (b) Pro Forma Financial Information - None. (c) Exhibits 99.1 - Registrant's press release dated July 15, 2003. 99.2 - Supplemental Information prepared for use with the press release. Item 9. Regulation FD Disclosure. - ------- ------------------------ The Registrant is furnishing the information required by Item 12 of Form 8-K, "Results of Operation and Financial Condition," under this Item 9 in accordance with SEC Release No. 33-8216. On July 15, 2003, the Registrant issued a press release and will hold an investor call and webcast to disclose financial results for the second quarter ended June 30, 2003. The press release and Supplemental Information for use at this investor call are furnished herewith as Exhibits 99.1 and 99.2 and incorporated by reference in Item 9. All information in the Supplemental Information is presented as of June 30, 2003, and the Registrant does not assume any obligation to correct or update said information in the future. 2 Signature --------- Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, Registrant has caused this report to be signed on its behalf by the undersigned hereunto duly authorized. TOTAL SYSTEM SERVICES, INC. ("Registrant") Dated: July 15, 2003 By:/s/ Kathleen Moates ------------------------- ----------------------------------- Kathleen Moates Senior Deputy General Counsel 3 EX-99.1 3 news.txt REGISTRANT'S PRESS RELEASE DATED JULY 15, 2003 Exhibit 99.1 TSYS (R) News Release - -------------------------------------------------------------------------------- For Immediate Release Contacts: James B. Lipham Leo S. Berard Chief Financial Officer Investor Relations 706.649.2262 706.649.5220 TSYS Reports 14.8% Increase in Net Income for First Six Months of 2003 Columbus, Ga., July 15, 2003 -- TSYS(R) today announces that its financial results are in line with the Company's forecast for the three and six months ended June 30, 2003. Net income for the first six months of 2003 increased 14.8% to $66.0 million compared with $57.5 million in the same period last year. Basic earnings per share for the first six months of 2003 increased to $0.34 from $0.29 in the same period last year. Diluted earnings per share for the first six months of 2003 increased to $0.33 from $0.29 in the same period last year. Revenue for the first six months of 2003 was $509.1 million, an increase of 8.4%, compared with revenue of $469.5 million one year ago. Revenue for the first six months of 2003, excluding the amounts for reimbursable charges, was $395.9 million, an increase of 12.4%, compared to $352.4 million in the same period last year. Net income for the quarter ending June 30, 2003 increased 13.8% to $34.3 million from $30.2 million in the same period last year. Basic and diluted earnings per share for the second quarter increased to $0.17 from $0.15 in the same period last year. Revenue for the second quarter was $257.7 million, an increase of 6.7%, compared with revenue of $241.6 million one year ago. Revenue for the second quarter of 2003, excluding the amounts for reimbursable charges, was $203.1 million, an increase of 11.8%, compared to $181.6 million in the same period last year. The growth in revenues for 2003 continues to be driven by the increase in electronic payment processing revenues, which represent approximately 87% of TSYS' revenues before reimbursables. Electronic payment processing revenues for the second quarter of 2003 were $177.3 million, an increase of 15.5%, compared to $153.6 million in the same period last year. For the first six months of 2003, electronic payment processing revenues were $345.1 million, an increase of 16.3%, compared to $296.7 million in the same period last year. "The second quarter of 2003 was another solid quarter for TSYS and we expect another record year in 2003 as we celebrate TSYS' 20th anniversary," said Richard W. Ussery, chairman and CEO of TSYS. "Our core business continues to post strong results. The major contributors to our growth for the quarter continue to be strong internal growth from our existing customers of approximately 11%, the 39% revenue growth derived from international clients and the continued cross sell opportunities as evidenced by 15% growth from our value added services." -- more -- TSYS Announces 14.8% Increase for First Six Months of 2003 Earnings/Page 2 of 8 "We have a rich pipeline of accounts to be converted," Ussery said. "This pipeline is anchored by the conversion of Bank One during the latter half of 2004. We continue to be excited about the long-term agreement with Bank One. This agreement should have a slight positive impact to earnings in 2003, and the 2004 earnings per share contribution from the agreement is expected to range from $0.03 to $0.04. Beginning in 2005 and continuing thereafter through the payment term, the earnings per share contribution is expected to exceed $0.04 on an annual basis. This contract is expected to have a positive impact on cash flows throughout its term." Ussery continued, "During the second quarter of 2003: * TSYS announced that it had acquired Enhancement Services Corporation (ESC) which provides targeted loyalty consulting and travel, as well as gift card and merchandise reward programs to more than 40 national and regional financial institutions in the United States, including two top-ten banks. The integration of ESC's loyalty solutions with TSYS' processing systems provides marked advantages by adding distinct value differentiation for TSYS and its clients. * TSYS acquired on June 30, 2003 the corporate campus from the synthetic lease arrangement that had been in place since November 1997. The Company purchased the corporate campus for approximately $93.5 million. The payment was funded with cash of $73.5 million and a $20 million draw on a $45 million long-term line of credit arranged through a Synovus banking affiliate. * TSYS purchased 512,900 shares under its stock repurchase plan, which was announced in April 2003. The approved two-year plan allows for the purchase of up to 2 million shares, which represents slightly more than five percent of the shares of TSYS stock held by shareholders other than Synovus Financial Corp. Repurchased shares will be used for general corporate purposes. * TSYS created a wholly-owned subsidiary named TSYS Technology Center, Inc. (TTC) in Boise, Idaho. Initially employing 77 team members, the TTC team members will support technology efforts throughout TSYS, including government services, customer care, programming, and systems development. "We continue to expand our horizons through our competitive advantages in technology and service to gain market share both domestically and abroad, and continue to expand our opportunities and our core competencies into new non-card markets," said Ussery. TSYS will host its quarterly conference call at 4:30 p.m. EST, July 15, 2003. The conference call can be accessed at www.tsys.com by clicking on the designated icon within the Highlights section of the site. The replay will be available 30-45 minutes after the call. About TSYS TSYS (NYSE: TSS) (www.tsys.com) brings integrity and innovation to the world of electronic payment services as the integral link between buyers and sellers in this rapidly evolving universe. Synovus (NYSE: SNV) owns an 81-percent interest in TSYS. For more information, contact news@tsys.com. -- more -- TSYS Announces 14.8% Increase for First Six Months of 2003 Earnings/Page 2 of 8 This press release contains statements that constitute "forward-looking statements" within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934 as amended by the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, among others, statements regarding TSYS' expectation of another record year in 2003, the projected impact of TSYS' agreement with Bank One on its earnings for 2003, earnings per share for 2004 and 2005 and thereafter through the payment term of the license and the expected impact on cash flows of the Bank One contract and the assumptions underlying such statements. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements. A number of important factors could cause actual results to differ materially from those contemplated by the forward-looking statements in this press release. Many of these factors are beyond TSYS' ability to control or predict. These factors include, but are not limited to, delays in converting Bank One's accounts to its platforms; TSYS is unable to modify its software to meet Bank One's specifications; TSYS is unable to control its costs; changes occur in accounting literature and interpretations; TSYS' software is unable to perform in Bank One's operating environment; revenues are lower than anticipated; internal growth rates for TSYS' existing customers are lower than anticipated; TSYS is unable to control expenses and increase market share; hostilities increase in the Middle East or elsewhere; adverse developments with respect to the credit card industry in general; TSYS is unable to successfully manage any impact from slowing economic conditions or consumer spending; adverse developments with respect to sub-prime or retail clients; and overall market conditions. Additional factors that could cause actual results to differ materially from those contemplated in this press release can be found in TSYS' filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K. We believe these forward-looking statements are reasonable; however, undue reliance should not be placed on any forward-looking statements, which are based on current expectations. -- more -- EX-99.2 4 financials.txt SUPPLEMENTAL INFORMATION PREPARED FOR USE WITH THE PRESS RELEASE Exhibit 99.2 TSYS Announces 14.8% Increase in Earnings for First Six Months of 2003 Page 4 of 8 TSYS Financial Highlights (In thousands, except per share data)
-------------------------------------------- -------------------------------------- Three months ended Six months ended June 30, June 30, -------------------------------------------- --------------------------------------- Percentage Percentage 2003 2002 Change 2003 2002 Change --------------- ------------- ------------ -------------- --------- ------------- Revenues Electronic payment processing services $ 177,306 153,579 15.5 % 345,132 296,736 16.3 % Other services 25,755 27,986 (8.0) 50,808 55,645 (8.7) --------------- ------------- ------------ ------------ Revenues before reimbursables 203,061 181,565 11.8 395,940 352.381 12.4 Reimbursable items 54,638 60,041 (9.0) 113,112 117,148 (3.5) --------------- ------------- ------------ ------------ Total revenues 257,699 241,606 6.7 509,052 469,529 8.4 --------------- ------------- ------------ ------------ Expenses Employment 83,600 73,588 13.6 159,696 142,320 12.2 Occupancy & equipment 50,407 41,719 20.8 102,027 85,949 18.7 Other 24,311 27,984 (13.1) 46,328 49,864 (7.1) (Gain)/Loss on disposal of equipment (13) (1) nm (35) 1 nm --------------- ------------- ------------ ------------ Expenses before reimbursables 158,305 143,290 10.5 308,016 278,134 10.7 Reimbursable items 54,638 60,041 (9.0) 113,112 117,148 (3.5) --------------- ------------- ------------ ------------ Total operating expenses 212,943 203,331 4.7 421,128 395,282 6.5 --------------- ------------- ------------ ------------ Operating Income 44,756 38,275 16.9 87,924 74,247 18.4 Other Income 3,001 1,174 155.5 3,013 1,353 122.6 --------------- ------------- ------------ ------------ Income before Income Taxes, Minority Interest and Equity in Income of Joint Ventures 47,757 39,449 21.1 90,937 75,600 20.3 Income Taxes 18,108 14,154 27.9 33,622 27,411 22.7 Minority Interest (142) (47) nm (260) (33) nm Equity in Income of Joint Ventures 4,800 4,904 (2.1) 8,988 9,378 (4.2) --------------- ------------- ------------ ------------ Net Income $ 34,307 30,152 13.8 66,043 57,534 14.8 =============== ============= ============ ============ Basic Earnings Per Share $ 0.17 0.15 13.9 % 0.34 0.29 14.9 % =============== ============= ============ ============ Diluted Earnings Per Share $ 0.17 0.15 14.1 % 0.33 0.29 15.1 % =============== ============= ============ ============ Dividend Declared Per Share $ 0.0200 0.0175 0.0375 0.0325 =============== ============= ============ ============ Average Common Shares Outstanding 196,703,341 197,003,560 196,875,450 196,983,384 =============== ============= ============ ============ Average Common and Common Equivalent Shares Outstanding 197,207,696 197,690,794 197,242,500 197,735,727 =============== ============= ============ ============ Effective Tax Rate 34.6 % 32.0 % 33.7 % 32.3 % =============== ============= ============ ============
Note: nm = not meaningful TSYS Announces 14.8% Increase in Earnings for First Six Months of 2003 Page 5 of 8 TSYS Segment Breakdown (In thousands)
Three Months Ended June 30, 2003 Three Months Ended June 30, 2002 -------------------------------------------------- ------------------------------------------------------- Domestic-based International-based Domestic-based International-based Transaction Transaction Transaction Transaction Processing Processing Consolidated Processing Processing Consolidated ---------------- ------------------- ------------ ---------------- -------------------- ----------------- Total revenue $ 237,848 20,485 258,333 225,484 16,669 242,153 Intersegment revenue (1) (633) (634) (156) (391) (547) ---------------- ------------------- ------------ ---------------- -------------------- --------------- Revenues from external customers $ 237,847 19,852 257,699 225,328 16,278 241,606 ================ =================== ============ ================ ==================== =============== Depreciation and amortization $ 20,942 2,553 23,495 15,998 2,088 18,086 ================ =================== ============ ================ ==================== =============== Segment operating income $ 41,485 3,271 44,756 37,078 1,197 38,275 ================ =================== ============ ================ ==================== =============== Income tax expense $ 16,732 1,376 18,108 13,483 671 14,154 ================ =================== ============ ================ ==================== =============== Equity in income of joint ventures $ 4,550 250 4,800 4,690 214 4,904 ================ =================== ============ ================ ==================== =============== Net Income $ 32,181 2,126 34,307 29,147 1,005 30,152 ================ =================== ============ ================ ==================== =============== Average accounts on file 247,659 12,992 260,651 217,278 11,824 229,102 ================ =================== ============ ================ ==================== ===============
Six Months Ended June 30, 2003 Six Months Ended June 30, 2002 --------------------------------------------------- ----------------------------------------------------- Domestic-based International-based Domestic-based International-based Transaction Transaction Transaction Transaction Processing Processing Consolidated Processing Processing Consolidated ---------------- ------------------- -------------- --------------- -------------------- ---------------- Total revenue $ 470,968 39,196 510,164 438,882 31,743 470,625 Intersegment revenue (3) (1,109) (1,112) (307) (789) (1,096) ---------------- ------------------- ------------ --------------- -------------------- ---------------- Revenues from external customers $ 470,965 38,087 509,052 438,575 30,954 469,529 ================ =================== ============ =============== ==================== ================ Depreciation and amortization $ 40,548 5,050 45,598 30,672 4,089 34,761 ================ =================== ============ =============== ==================== ================ Segment operating income $ 82,966 4,958 87,924 73,105 1,142 74,247 ================ =================== ============ =============== ==================== ================ Income tax expense $ 31,629 1,993 33,622 26,634 777 27,411 ================ =================== ============ =============== ==================== ================ Equity in income of joint ventures $ 8,492 496 8,988 8,917 461 9,378 ================ =================== ============ =============== ==================== ================ Net Income $ 62,988 3,055 66,043 56,561 973 57,534 ================ =================== ============ =============== ==================== ================ Average accounts on file 243,612 12,817 256,429 220,383 11,764 232,147 ================ =================== ============ =============== ==================== ================
Note: Revenues for domestic-based processing services include electronic payment processing services and other services provided from the United States to clients domiciled in the United States or other countries. Revenues from international-based processing services include electronic payment processing services and other services provided outside the United States to clients based outside the United States. - more - TSYS Announces 14.8% Increase in Earnings for First Six Months of 2003 Page 6 of 8
Balance Sheet Information: (in thousands) Jun 2003 Dec 2002 ------------------------- -------------------- Assets Current assets: Cash and cash equivalents $ 48,175 109,171 Restricted cash 8,943 4,035 Accounts receivable, net 137,679 121,439 Prepaid expenses and other current assets 37,629 31,334 ------------------------- -------------------- Total current assets 232,066 265,979 Property, plant and equipment, net 218,950 120,835 Computer software, net 204,971 200,297 Contract acquisition costs, net 129,434 123,729 Goodwill, net 29,612 3,619 Equity investments, net 57,867 54,181 Other assets 20,047 14,228 ----------------------- -------------------- Total assets 892,947 782,868 $ ======================= ==================== Liabilities and Shareholders' Equity Current liabilities: Accounts payable 17,457 10,366 Accrued salaries and employee benefits 24,178 43,315 Current portion of long-term debt and obligations under capital leases 294 68 Billings in excess of costs on uncompleted contracts 28,473 - Other current liabilities 70,512 60,233 ------------------------- -------------------- Total current liabilities 140,914 113,982 Long-term debt and obligations under capital leases, excluding current portion 20,548 67 Other accounts payable 188 563 Deferred income tax liabilities 74,601 63,306 ------------------------- -------------------- Total liabilities 236,251 177,918 ------------------------- -------------------- Minority interest in consolidated subsidiary 3,013 2,744 ------------------------- -------------------- Shareholders' Equity: Common stock 19,725 19,725 Additional paid-in capital 35,104 35,143 Accumulated other comprehensive income (loss) 2,676 1,053 Treasury stock (12,087) (3,316) Retained earnings 608,265 549,601 ------------------------- -------------------- Total shareholders' equity 653,683 602,206 ------------------------- -------------------- Total liabilities and shareholders' equity $ 892,947 782,868 ========================= ====================
- more - TSYS Announces 14.8% Increase in Earnings for First Six Months of 2003 Page 7 of 8
Cash Flow Information: Six Months Ending: (in thousands) June 2003 June 2002 -------------------------- -------------------- Cash flows from operating activities: Net income $ 66,043 57,534 Adjustments to reconcile net income to net cash provided by operating activities: Minority interest in consolidated subsidiary's net income 260 33 Equity in income of joint ventures (8,988) (9,378) (Gain) loss on currency translation adjustments, net (1,162) 4 Depreciation and amortization 45,598 34,761 Charges for bad debts and billing adjustments (97) 4,828 Charges for transaction processing 2,164 6,915 Billings in excess of costs on uncompleted contracts 28,472 - Accounts payable 4,597 (12,240) Accrued salaries and employee benefits (19,179) (19,580) Other working capital (7,044) 13,255 -------------------------- -------------------- Net cash provided by operating activities 110,664 76,132 -------------------------- -------------------- Cash flows from investing activities: Purchase of property and equipment (107,432) (7,815) Additions to computer software (29,033) (35,644) Increase in contract acquisition costs (13,379) (27,684) Cash acquired in acquisition of subsidiary 4,442 2,858 Cash used in acquisition (36,000) - Other 5,344 17,864 -------------------------- -------------------- Net cash used in investing activities (176,058) (50,421) -------------------------- -------------------- Cash flows from financing activities: Purchase of common stock (9,485) - Proceeds from issuance of long-term debt 20,234 - Other (6,312) (5,721) -------------------------- -------------------- Net cash used in financing activities 4,437 (5,721) -------------------------- -------------------- Effect of foreign currency translation on cash and cash equivalents (39) (1,615) -------------------------- -------------------- Net increase (decrease) in cash and cash equivalents (60,996) 18,375 Cash and cash equivalents at beginning of year 109,171 58,659 -------------------------- -------------------- Cash and cash equivalents at end of period $ 48,175 77,034 ========================== ====================
- more - TSYS Announces 14.8% Increase in Earnings for First Six Months of 2003 Page 8 of 8 Supplemental Information:
Accounts on file at: ------------------------------------------------------------------------------- June 2003 % June 2002 % % Chg -------------------- ------- ----------------------- --------- ---------------- Accounts on File (in millions): Consumer 144,998 55.2 121,817 53.8 19.0 % Debit/Stored Value 7,870 3.0 4,982 2.2 58.0 Government services/EBT 6,718 2.6 526 0.1 nm Retail 82,623 31.5 80,594 35.6 2.5 Commercial 20,245 7.7 18,738 8.3 8.0 -------------------- ------- ----------------------- --------- 262,454 100.0 226,657 100.0 15.8 % ==================== ======= ======================= ========= nm = not meaningful QTD Average Accounts on File (in millions) 260,651 229,102 13.8 % YTD Average Accounts on File (in millions) 256,429 232,147 10.5 % Accounts on file at: ------------------------------------------------------------------------------- June 2003 % June 2002 % % Chg -------------------- ------- ----------------------- --------- ---------------- Accounts on File (in millions): Domestic 217,249 82.8 197,772 87.8 9.8 % International 45,205 17.2 28,885 12.2 56.5 ----------------- ------- ----------------------- --------- 262,454 100.0 226,657 100.0 15.8 % ==================== ======= ======================= =========
Note: The accounts on file between domestic and international is based on the geographic domicile of processing clients. Geographic Area Data: The following geographic area data represents revenues for the three months and six months ended June 30 on where the client is located:
Three Months Ended June 30, ------------------------------------------------------------------------------- 2003 % 2002 % % Chg -------------------- ------- ----------------------- --------- ---------------- (dollars in millions): United States $ 209,024 81.2 206,685 85.6 1.1 % Canada* 19,137 7.4 11,016 4.6 73.7 Europe 16,921 6.6 13,782 5.7 22.8 Mexico 9,117 3.5 7,094 2.9 28.5 Japan 2,931 1.1 2,496 1.0 17.4 Other 569 0.2 533 0.2 6.8 -------------------- ------- ----------------------- --------- $ 257,699 100.0 241,606 100.0 6.7 ==================== ======= ======================= =========
Six Months Ended June 30, ------------------------------------------------------------------------------- 2003 % 2002 % % Chg -------------------- ------- ----------------------- --------- ---------------- (dollars in millions): United States $ 417,620 82.0 403,335 85.9 3.5 % Canada* 35,129 6.9 21,043 4.5 66.9 Europe 32,354 6.4 26,022 5.5 24.3 Mexico 17,086 3.4 13,105 2.8 30.4 Japan 5,733 1.1 4,931 1.1 16.2 Other 1,130 0.2 1,093 0.2 3.4 -------------------- ------- ----------------------- --------- $ 509,052 100.0 469,529 100.0 8.4 ==================== ======= ======================= =========
* These revenues include those generated from the Caribbean accounts owned by a Canadian institution. ### -----END PRIVACY-ENHANCED MESSAGE-----