-----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, A+LDbWfo3oYaU3KYkoHsRXKGQPzzJ8DLyFZWj8xqG8nbY6BSDWw4hB5/BBH5EsWj IcUWjobk3OVs6zSOpw0mWw== 0000721683-03-000071.txt : 20031014 0000721683-03-000071.hdr.sgml : 20031013 20031014160115 ACCESSION NUMBER: 0000721683-03-000071 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20031014 ITEM INFORMATION: ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20031014 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: 03939707 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 TSYS 8-K FILING 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 October 14, 2003 ----------------- Date of Report (Date of 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) (Zip Code) (706) 649-2267 -------------- (Registrant's telephone number, including area code) ------------------------------------------------ (Former name or former address, if changed since last report) Item 9. Regulation FD Disclosure. - ------- ------------------------ Item 12. Results of Operations and Financial Condition. - ------- --------------------------------------------- The following information is furnished pursuant to Item 9, "Regulation FD Disclosure" and Item 12, "Results of Operations and Financial Condition." On October 14, 2003, the Registrant issued a press release and will hold an investor call and webcast to disclose financial results for the third quarter ended September 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 herein by reference. Exhibit Index ------------- 99.1 - Registrant's press release dated October 14, 2003. 99.2 - Supplemental Information prepared for use with the press release. 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: October 14, 2003 By:/s/ Kathleen Moates ----------------------------- -------------------------------- Kathleen Moates Senior Deputy General Counsel 3 EX-99.1 3 news.txt REGISTRANT'S PRESS RELEASE DATED OCTOBER 14, 2003 Exhibit 99.1 TSYS 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 19.1% Increase in Operating Income and a 12.4% Increase in Net Income for First Nine Months of 2003 Columbus, Ga., October 14, 2003 -- TSYS(R) today announces that its financial results are in line with the Company's forecast for the three and nine months ended September 30, 2003. Highlights of the third quarter and first nine months of 2003 as compared to the same periods of 2002, are as follows:
--------------------------------------- -------------------------------------- (dollars in millions, Three Months Ended Nine Months Ended except earnings per share (EPS) data) ------------------------- --------------------------------------- ------------------------------------ September 30, September 30, ------------------------- ------------ ------------ ------------- ------------ ------------ ---------- Percent Percent 2003 2002 Change 2003 2002 Change ------------------------- ------------ ------------ ------------- ------------ ------------ ------------ Revenues Before Reimbursables $210.4 183.2 14.9% $606.3 535.6 13.2% Total Revenues 266.1 239.6 11.1% 775.2 709.1 9.3% Operating Income 48.9 40.7 20.2% 136.8 114.9 19.1% Net Income 35.5 32.8 8.2% 101.6 90.3 12.4% Basic EPS 0.18 0.17 8.4% 0.52 0.46 12.5% Diluted EPS 0.18 0.17 8.2% 0.51 0.46 12.6%
"The third quarter proved to be another solid quarter for TSYS and we expect another record year in 2003 as we celebrate our 20th anniversary," said Richard W. Ussery, chairman and CEO of TSYS. "Our core services demonstrated strong growth for the quarter and the nine months ended September 30, 2003 as illustrated by the double digit growth in revenues and operating income. Our growth in core service revenues continues to be driven by the strong internal annual growth of our existing customers' accounts on file of approximately 11.3%, the cross sell opportunities as evidenced by the year-to-date growth in revenues of 22.6% from value added services and the year-to-date growth of 39.0% in revenues from international clients." "Overall, TSYS' net income growth was reduced on a comparison basis with last year due to foreign currency translation gains included in 2002, as well as industry-wide pricing pressures experienced by Vital Processing Services, L.L.C. in 2003," said Ussery. "In addition to our earnings growth, we are also very pleased with our strong cash flow -- more -- TSYS Announces 19.1% Increase in Operating Income and a 12.4% Increase for First Nine Months of 2003 Earnins/Page 2 of 7 position. During the third quarter, we repaid the $20 million in financing used to fund the $93.5 million purchase of TSYS' corporate campus in June 2003," said Ussery. TSYS is strongly positioned to support future growth and expansion." TSYS will host its quarterly conference call at 4:30 p.m. EDT, October 14, 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 payments as the integral link between buyers and sellers in this rapidly evolving universe. With more than 267 million accounts on file, TSYS makes it possible for millions of consumers to use their credit, debit, stored value, commercial, smart and retail cards anytime, anywhere through any medium or portal. TSYS offers a full range of acquiring and issuing services from accepting and settling electronic payments for goods and services to designing, administering and fulfilling loyalty programs to credit applications, bankruptcy management and collection services. Based in Columbus, Ga., TSYS serves companies on three continents representing 16 currencies and seven languages. TSYS also maintains operations in Canada, Mexico, Japan, and the United Kingdom and is an 81-percent owned subsidiary of Synovus (NYSE: "SNV") (www.synovus.com), number nine on FORTUNE magazine's list of "The 100 Best Companies To Work For" in 2003. For more information, contact news@tsys.com. 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 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, 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 exhibit992.txt SUPPLEMENTAL INFORMATION PREPARED FOR USE WITH THE PRESS RELEASE Exhibit 99.2 TSYS Announces 19.1% Increase in Operating Income and a 12.4% Increase in Earnings for First Nine Months of 2003 Page 3 of 7
TSYS Financial Highlights (In thousands, except per share data) --------------------------------------------- ----------------------------------------- Three months ended Nine months ended September 30, September 30, --------------------------------------------- ----------------------------------------- Percentage Percentage 2003 2002 Change 2003 2002 Change ---------------- ---------------- ---------- ------------ ------------ ---------- Revenues Electronic payment processing services $ 179,447 157,722 13.8 % 524,579 454,458 15.4 % Other services 30,927 25,452 21.5 81,735 81,097 0.8 ---------------- ---------------- ------------ ------------ Revenues before reimbursables 210,374 183,174 14.9 606,314 535,555 13.2 Reimbursable items 55,740 56,432 (1.2) 168,852 173,580 (2.7) ---------------- ---------------- ------------ ------------ Total revenues 266,114 239,606 11.1 775,166 709,135 9.3 ---------------- ---------------- ------------ ------------ Expenses Employment 81,488 78,969 3.2 241,184 221,289 9.0 Occupancy & equipment 51,043 44,666 14.2 153,070 130,615 17.1 Other 28,944 18,940 52.8 75,272 68,804 9.4 (Gain)/Loss on disposal of equipment - (63) nm (35) (62) nm ---------------- ---------------- ------------ ------------ Expenses before reimbursables 161,475 142,512 13.3 469,491 420,646 11.6 Reimbursable items 55,740 56,432 (1.2) 168,852 173,580 (2.7) ---------------- ---------------- ------------ ------------ Total operating expenses 217,215 198,944 9.2 638,343 594,226 7.4 ---------------- ---------------- ------------ ------------ Operating Income 48,899 40,662 20.2 136,823 114,909 19.1 ---------------- ---------------- ------------ ------------ Other Income: Interest income, net 448 724 (38.1) 2,299 2,080 (10.5) Gain/(loss) on foreign currency translation, net (246) 2,150 nm 916 2,147 (57.3) ---------------- ---------------- ------------ ------------ Other Income 202 2,874 nm 3,215 4,227 (23.9) ---------------- ---------------- ------------ ------------ Income before Income Taxes, Minority Interest and Equity in Income of Joint Ventures 49,101 43,536 12.8 140,038 119,136 17.5 Income Taxes 17,509 15,884 10.2 51,131 43,295 18.1 Minority Interest (1) (100) nm (261) (133) nm Equity in Income of Joint Ventures 3,921 5,263 (25.5) 12,909 14,641 (11.8) ---------------- ---------------- ------------ ------------ Net Income $ 35,512 32,815 8.2 % 101,555 90,349 12.4 % ================ ================ ============ ============ Basic Earnings Per Share $ 0.18 0.17 8.4 % 0.52 0.46 12.5 % ================ ================ ============ ============ Diluted Earnings Per Share $ 0.18 0.17 8.2 % 0.51 0.46 12.6 % ================ ================ ============ ============ Dividend Declared Per Share $ 0.0200 0.0175 0.0575 0.0500 ================ ================ ============ ============ Average Common Shares Outstanding 196,747,867 197,049,470 196,832,455 197,005,655 ================ ================ ============= ============ Average Common and Common Equivalent Shares Outstanding 197,444,866 197,358,091 197,326,044 197,611,558 ================ ================ ============= ============ Effective Tax Rate 33.2 % 32.8 % 33.7 % 32.6 % ================ ================ ============= ============ EFFECTIVE INCOME TAX RATE CALCULATION Income taxes (A) $ 17,509 15,884 $ 51,131 43,295 ================ =============== =============== ============ Income before Income Taxes, Minority Interest and Equity in Income of Joint Ventures $ 49,101 43,536 140,038 119,136 Add Back: Equity in Income of Vital 3,620 5,045 12,112 13,962 Minority Interest (1) (100) (261) (133) ---------------- ----------------- --------------- -------------- Adjusted Income before income taxes (B) 52,720 48,481 151,889 132,965 ================ ================= =============== =============== Effective Tax Rate (A/B) 33.2 % 32.8 % 33.7 % 32.6 % ================ ================= =============== ===============
Note: nm = not meaningful - more - TSYS Announces 19.1% Increase in Operating Income and a 12.4% Increase in Earnings for First Nine Months of 2003 Page 4 of 7
TSYS Segment Breakdown (In thousands) Three Months Ended September 30,2003 Three Months Ended September 30, 2002 --------------------------------------------------- ------------------------------------------- Domestic-based International-based Domestic-based International-based Transaction Transaction Transaction Transaction Processing Processing Consolidated Processing Processing Consolidated ---------------- --------------------- ------------- -------------- -------------- ------------- Total revenue $ 246,191 20,425 266,616 223,373 16,701 240,074 Intersegment revenue (2) (500) (502) (181) (287) (468) ---------------- --------------------- ------------- -------------- -------------- ------------- Revenues from external customers $ 246,189 19,925 266,114 223,192 16,414 239,606 ================ ===================== ============= ============== ============== ============= Depreciation and amortization $ 22,308 3,152 25,460 15,846 2,277 18,123 ================ ===================== ============= ============== ============== ============= Segment operating income $ 47,587 1,312 48,899 39,913 749 40,662 ================ ===================== ============= ============== ============== ============= Income tax expense $ 16,635 874 17,509 15,014 870 15,884 ================ ===================== ============= ============== ============== ============= Equity in income of joint ventures $ 3,620 301 3,921 5,045 218 5,263 ================ ===================== ============= ============== ============== ============= Net Income $ 35,128 384 35,512 31,292 1,523 32,815 ================ ===================== ============= ============== ============== ============= Average accounts on file 252,668 13,240 265,908 220,084 11,687 231,771 ================ ===================== ============= ============== =============== ============ Nine Months Ended September 30, 2003 Nine Months Ended September 30, 2002 --------------------------------------------------- ------------------------------------------- Domestic-based International-based Domestic-based International-based Transaction Transaction Transaction Transaction Processing Processing Consolidated Processing Processing Consolidated ---------------- --------------------- ------------- -------------- -------------- ------------- Total revenue $ 717,160 59,620 776,780 662,255 48,444 710,699 Intersegment revenue (5) (1,609) (1,614) (488) (1,076) (1,564) ---------------- --------------------- ------------- -------------- -------------- ------------- Revenues from external customers $ 717,155 58,011 775,166 661,767 47,368 709,135 ================ ===================== ============= ============== ============== ============= Depreciation and amortization $ 62,856 8,201 71,057 46,519 6,365 52,884 ================ ===================== ============= ============== ============== ============= Segment operating income $ 130,553 6,270 136,823 112,556 2,353 114,909 ================ ===================== ============= ============== ============== ============= Income tax expense $ 48,264 2,867 51,131 41,648 1,647 43,295 ================ ===================== ============= ============== ============== ============= Equity in income of joint ventures $ 12,112 797 12,909 13,962 679 14,641 ================ ===================== ============= ============== ============== ============= Net Income $ 98,115 3,440 101,555 87,853 2,496 90,349 ================ ===================== ============= ============== ============== ============= Average accounts on file 246,631 12,958 259,589 216,708 11,690 228,398 ================ ===================== ============= ============== ============== =============
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 from outside the United States to clients based mainly outside the United States. - more - TSYS Announces 19.1% Increase in Operating Income and a 12.4% Increase in Earnings for First Nine Months of 2003 Page 5 of 7
Balance Sheet Information: (in thousands) Sept 2003 Dec 2002 ----------------------------------------- Assets Current assets: Cash and cash equivalents $ 55,631 109,171 Restricted cash 5,575 4,035 Accounts receivable, net 128,420 121,439 Deferred income tax assets 11,256 8,786 Prepaid expenses and other current assets 25,684 22,548 ---------------------------------------- Total current assets 226,566 265,979 Property and equipment, net 219,634 120,835 Computer software, net 211,846 200,297 Contract acquisition costs, net 128,231 123,729 Goodwill, net 29,620 3,619 Equity investments, net 61,810 54,181 Other assets 27,302 14,228 ---------------------------------------- Total assets $ 905,009 782,868 ======================================== Liabilities and Shareholders' Equity Current liabilities: Accounts payable 17,065 10,366 Accrued salaries and employee benefits 28,683 43,315 Current portion of long-term debt and obligations under capital leases 289 68 Billings in excess of costs on uncompleted contracts 24,074 - Other current liabilities 53,635 60,233 ---------------------------------------- Total current liabilities 123,746 113,982 Long-term debt and obligations under capital leases, excluding current portion 223 67 Other accounts payable - 563 Deferred income tax liabilities 88,800 63,306 ---------------------------------------- Total liabilities 212,769 177,918 ---------------------------------------- Minority interest in consolidated subsidiary 3,220 2,744 ---------------------------------------- Shareholders' Equity: Common stock 19,750 19,725 Additional paid-in capital 38,371 35,143 Accumulated other comprehensive income (loss) 3,146 1,053 Treasury stock (12,087) (3,316) Retained earnings 639,840 549,601 ---------------------------------------- Total shareholders' equity 689,020 602,206 ---------------------------------------- Total liabilities and shareholders' equity $ 905,009 782,868 ========================================
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Cash Flow Information: Nine Months Ending: (in thousands) Sept 2003 Sept 2002 ---------------------------------------- Cash flows from operating activities: Net income $ 101,555 90,349 Adjustments to reconcile net income to net cash provided by operating activities: Minority interest in consolidated subsidiary's net income 261 133 Equity in income of joint ventures (12,909) (14,641) (Gain) loss on currency translation adjustments, net (916) (2,147) Depreciation and amortization 71,057 52,884 Charges for bad debts and billing adjustments 1,892 3,405 Charges for transaction processing 3,093 5,666 Deferred income tax expense 21,248 2,332 Gain on disposal of equipment,net (35) (62) (Increase)decrease in: Accounts receivable (3,950) (6,215) Prepaid expenses and other assets (8,317) 2,924 Increase(decrease) in: Accounts payable 3,711 (14,374) Accrued salaries and employee benefits (14,659) (2,639) Billings in excess of costs on uncompleted contracts 24,074 - Other current liabilties (16,399) 20,556 --------------- --------------------- Net cash provided by operating activities 169,706 138,171 --------------- --------------------- Cash flows from investing activities: Purchase of property and equipment (113,517) (12,983) Additions to purchased computer software programs (35,682) (22,659) Additions to developed software (13,945) (21,573) Proceeds from disposal of equipment 68 73 Cash acquired in acquisition of subsidiary 4,442 2,858 Cash used in acquisition (36,000) - Dividends received from joint ventures 5,278 17,855 Increase in contract acquisition costs (17,904) (34,317) --------------- --------------------- Net cash used in investing activities (207,260) (70,746) --------------- --------------------- Cash flows from financing activities: Purchase of common stock (9,485) - Proceeds from issuance of long-term debt 20,234 - Principal payments on long-term debt (20,234) - Other (7,046) (9,204) --------------- --------------------- Net cash used in financing activities (16,531) (9,204) --------------- --------------------- Effect of foreign currency translation on cash and cash equivalents 545 (1,286) --------------- --------------------- Net increase (decrease) in cash and cash equivalents (53,540) 56,935 Cash and cash equivalents at beginning of year 109,171 58,659 --------------- --------------------- Cash and cash equivalents at end of period 55,631 115,594 $ =============== =====================
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Supplemental Information: Accounts on File at: ------------------------------------------------------------------------- Sept 30, 2003 % Sept 30, 2002 % % Chg ------------------------ -------- ------------------ --------- ---------- Accounts on File (in millions): Consumer 142.2 53% 131.0 56% 8.6% Debit/Stored Value 7.9 3% 6.0 3% 31.9 Government services/EBT 13.1 5% 4.0 2% 225.1 Retail 83.7 31% 75.4 32% 11.0 Commercial 21.0 8% 19.4 8% 8.1 ------------------------ -------- ------------------ --------- 267.9 100% 235.8 100% 13.6% ======================== ======== ================== ========= nm = not meaningful Sept 30, 2003 Sept 30, 2002 ------------------------ ------------------ QTD Average Accounts on File (in thousands) 265,908 231,771 14.7 % YTD Average Accounts on File (in thousands) 259,589 228,398 13.7 % Accounts on File at: ------------------------------------------------------------------------- Sept 30, 2003 % Sept 30, 2002 % % Chg ------------------------ -------- ------------------ --------- ---------- Accounts on File (in millions): Domestic 221.9 83% 206.5 88% 7.5% International 46.0 17% 29.3 12% 56.9 ------------------------ -------- ------------------ --------- 267.9 100% 235.8 100% 13.6% ======================== ======== ================== =========
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 nine months ended September 30 based on where the client is domiciled:
Three Months Ended September 30, ------------------------------------------------------------------------- 2003 % 2002 % % Chg ------------------------ -------- ------------------ --------- ---------- (dollars in thousands): United States $ 214,799 81% 203,076 85% 5.8% Canada* 20,052 8% 12,317 5% 62.8 Europe 16,894 6% 13,731 6% 23.0 Mexico 10,693 4% 7,306 3% 46.4 Japan 2,992 1% 2,684 1% 11.5 Other 684 0% 492 0% 38.9 ------------------------ -------- ------------------ --------- $ 266,114 100% 239,606 100% 11.1% ======================== ======== ================== ========= Nine Months Ended September 30, ------------------------------------------------------------------------- 2003 % 2002 % % Chg ------------------------ -------- ------------------ --------- ---------- (dollars in thousands): United States $ 632,419 82% 606,460 86% 4.3% Canada* 55,181 7% 33,360 5% 65.4 Europe 49,249 6% 39,752 6% 23.9 Mexico 27,779 4% 20,411 3% 36.1 Japan 8,724 1% 7,616 1% 14.6 Other 1,814 0% 1,536 0% 18.1 ------------------------ -------- ------------------ --------- $ 775,166 100% 709.135 100% 9.3% ======================== ======== ================== =========
* These revenues include those generated from the Caribbean accounts owned by a Canadian institution. -----END PRIVACY-ENHANCED MESSAGE-----