-----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, T5z0ewBzBWLWjWXgXSn/gOOB7tHvMsJfIWp1ggheODyJDEQyqqnJWIz3/vpqT49+ 41/ZsGjZfBxYId8z+BmmUQ== 0000721683-04-000037.txt : 20040405 0000721683-04-000037.hdr.sgml : 20040405 20040405121746 ACCESSION NUMBER: 0000721683-04-000037 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20031231 FILED AS OF DATE: 20040405 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: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-10254 FILM NUMBER: 04716288 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 tss11-k.txt TSYS FORM 10-K/A SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K/A Amendment No. 1 Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 2003 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. [ ] Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). YES X NO___________ ----------- As of February 17, 2004, 196,846,029 shares of the $.10 par value common stock of Total System Services, Inc. were outstanding. The aggregate market value of the shares of $.10 par value common stock of Total System Services, Inc. held by nonaffiliates on December 31, 2003 was approximately $612,106,000 (based upon the closing price of such stock on June 30, 2003). DOCUMENTS INCORPORATED BY REFERENCE Portions of Registrant's Proxy Statement, including Financial Appendix, dated March 10, 2004 are incorporated in Parts I, II, III and IV of this report. The undersigned registrant hereby amends Item 15 of its Annual Report on Form 10-K for the year ended December 31, 2003 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, 2003, 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, 2003, as set forth below and in the attached exhibits. PART IV Item 15. 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-22 through F-48 of the Financial Appendix to TSYS' Proxy Statement to Item 8, Part II, Financial Statements and Supplementary Data. Consolidated Balance Sheets - December 31, 2003 and 2002. Consolidated Statements of Income - Years Ended December 31, 2003, 2002 and 2001. Consolidated Statements of Cash Flows - Years Ended December 31, 2003, 2002 and 2001. Consolidated Statements of Shareholders' Equity and Comprehensive Income - Years Ended December 31, 2003, 2002 and 2001. 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, 2003, 2002 and 2001. All other schedules are omitted because they are inapplicable or the required information is included in the Notes to Consolidated Financial Statements. 3. Exhibits 2 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, 2002, as filed with the Commission on March 19, 2003. 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, incorporated by reference to Exhibit 10.2 of TSYS' Annual Report on Form 10-K for the fiscal year ended December 31, 2001, as filed with the Commission on March 19, 2002. 10.3 Synovus Financial Corp. 2002 Long-Term Incentive Plan in which executive officers of TSYS participate, incorporated by reference to Exhibit 10.3 of TSYS' Annual Report on Form 10-K for the fiscal year ended December 31, 2001, as filed with the Commission on March 19, 2002. 10.4 Synovus Financial Corp./Total System Services, Inc. Deferred Compensation Plan, incorporated by reference to Exhibit 10.4 of TSYS' Annual Report on Form 10-K for the fiscal year ended December 31, 2001, as filed with the Commission on March 19, 2002. 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, incorporated by reference to Exhibit 10.6 of TSYS' Annual Report on Form 10-K for the fiscal year ended December 31, 2001, as filed with the Commission on March 19, 2002. 3 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. 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 Personal Use of Company Aircraft. 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, incorporated by reference to Exhibit 10.15 of TSYS' Annual Report on Form 10-K for the fiscal year ended December 31, 2001, as filed with the Commission on March 19, 2002. 10.16 Synovus Financial Corp. 2000 Long-Term Incentive Plan in which 4 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. 10.17 Split Dollar Insurance Agreement and related Executive Benefit Substitution Agreement of Synovus Financial Corp. in which executive officers of TSYS participate, incorporated by reference to Exhibit 10.19 of TSYS' Annual Report on Form 10-K for the fiscal year ended December 31, 2001, as filed with the Commission on March 19, 2002. 20.1 Proxy Statement, including Financial Appendix, for the Annual Meeting of Shareholders of TSYS to be held on April 15, 2004, certain pages of which are specifically incorporated herein by reference. 21.1 Subsidiaries of Total System Services, Inc. 23.1* Independent Auditors' Consents. 24.1 Powers of Attorney contained on the signature pages of the 2003 Annual Report on Form 10-K. 31.1* Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2* Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32 Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 99.1* Annual Report on Form 11-K for the Total System Services, Inc. Employee Stock Purchase Plan for the year ended December 31, 2003. 99.2* Annual Report on Form 11-K for the Total System Services, Inc. Director Stock Purchase Plan for the year ended December 31, 2003. *Filed herewith (b) Reports on Form 8-K On October 14, 2003, TSYS filed a Form 8-K with the Commission in connection with the announcement of its earnings for the third quarter of 2003. 5 On December 9, 2003, TSYS filed a Form 8-K with the Commission in connection with the election of Philip W. Tomlinson as Chief Executive Officer of TSYS. 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 5, 2004 By: /s/Philip W. Tomlinson ----------------------------------------- Philip W. Tomlinson, Principal Executive Officer 6 EX-23.1 3 ex23-1.txt INDEPENDENT AUDITORS' CONSENTS Exhibit 23.1 Independent Auditors' Consent The Board of Directors Total System Services, Inc.: We consent to the incorporation by reference in the Registration Statement (No. 2-92497) on Form S-8 of Total System Services, Inc. of our report dated March 12, 2004, relating to the statements of financial condition of the Total System Services, Inc. Employee Stock Purchase Plan as of December 31, 2003 and 2002, and the related statements of operations and changes in plan equity for each of the years in the three-year period ended December 31, 2003, which report appears in the December 31, 2003 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, 2003 annual report on Form 10-K/A Amendment No. 1 of Total System Services, Inc. /s/ KPMG LLP Atlanta, Georgia April 5, 2004 Independent Auditors' Consent The Board of Directors Total System Services, Inc.: We consent to the incorporation by reference in the Registration Statement (No. 33-17376) on Form S-8 of Total System Services, Inc. of our report dated March 12, 2004, relating to the statements of financial condition of the Total System Services, Inc. Director Stock Purchase Plan as of December 31, 2003 and 2002, and the related statements of operations and changes in plan equity for each of the years in the three-year period ended December 31, 2003, which report appears in the December 31, 2003 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, 2003 annual report on Form 10-K/A Amendment No. 1 of Total System Services, Inc. /s/ KPMG LLP Atlanta, Georgia April 5, 2004 EX-31.1 4 ex31-1.txt CERTIFICATION OF CEO SECTION 302 EXHIBIT 31.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER I, Philip W. Tomlinson, certify that: 1. I have reviewed the Annual Report on Form 10-K/A, Amendment No. 1, of Total System Services, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a- 15(e) and 15d-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: April 5, 2004 /s/Philip W. Tomlinson -- ------------------------------------- Philip W. Tomlinson Chief Executive Officer Filings/tsys/11kTomlinson-ex 31-1.doc EX-31.2 5 ex31-2.txt CERTIFICATION OF CFO SECTION 302 EXHIBIT 31.2 CERTIFICATION OF CHIEF FINANCIAL OFFICER I, James B. Lipham, certify that: 1. I have reviewed the Annual Report on Form 10-K/A, Amendment No. 1, of Total System Services, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a- 15(e) and 15d-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: April 5, 2004 /s/James B. Lipham -- ------------------------------------ James B. Lipham Chief Financial Officer Filings/tsys/11kLipham-ex 31-2.doc EX-99.1 6 ex99-1.txt ANNUAL REPORT ON FORM 11-K EMPLOYEE STOCK PURCHASE PLAN Exhibit 99.1 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, 2003 ----------------------------------------------------- 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 TOTAL SYSTEM SERVICES, INC. EMPLOYEE STOCK PURCHASE PLAN Financial Statements December 31, 2003, 2002, and 2001 (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, 2003 and 2002, and the related statements of operations and changes in plan equity for each of the years in the three-year period ended December 31, 2003. 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, 2003 and 2002, 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, 2003 in conformity with accounting principles generally accepted in the United States of America. /s/KPMG LLP March 12, 2004 TOTAL SYSTEM SERVICES, INC. EMPLOYEE STOCK PURCHASE PLAN Statements of Financial Condition December 31, 2003 and 2002
Assets 2003 2002 ------------------- ------------------- Common stock of Total System Services, Inc. at market value - 1,748,194 shares (cost $31,386,554) in 2003 and 1,790,666 shares (cost $29,840,943) in 2002 (note 2) $ 54,421,275 24,173,986 Dividends receivable 31,149 30,500 Contributions receivable 534,764 487,962 ------------------- ------------------- $ 54,987,188 24,692,448 =================== =================== Plan Equity Plan equity (5,489 and 5,385 participants at December 31, 2003 and 2002, respectively) $ 54,987,188 24,692,448 =================== ===================
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, 2003, 2002, and 2001
2003 2002 2001 ------------------ ------------------ ------------------ Dividend income $ 123,777 108,225 93,195 Realized gain on distributions to participants (note 4) 4,026,165 1,913,128 4,686,645 Unrealized (depreciation) appreciation in common stock of Total System Services, Inc. (note 3) 28,701,678 (13,716,848) (6,065,826) Contributions (notes 1 and 2): Participants 8,147,986 7,575,583 6,650,650 Participating employers: Total System Services, Inc. 3,336,669 3,116,193 2,518,911 Columbus Depot Equipment Company 162 154 149 TSYS Total Solutions, Inc. -- -- 264,872 Columbus Productions, Inc. 45,584 49,355 57,972 TSYS Canada, Inc. 31,850 25,363 18,592 TSYS Total Debt Management, Inc. 56,446 62,385 -- ProCard, Inc. 95,316 27,653 -- DotsConnect, Inc. -- -- 56,101 Vital Processing Services, L.L.C. 481,998 511,160 423,270 Enhancement Services Corporation 15,092 -- -- TSYS Tech. Center 11,092 -- -- ------------------ ------------------ ------------------ Total employer contributions 4,074,209 3,792,263 3,339,867 ------------------ ------------------ ------------------ Increase (decrease) in Plan equity before withdrawals 45,073,815 (327,649) 8,704,531 Withdrawals by participants - common stock of Total System Services, Inc. at market value (631,575 shares in 2003, 441,103 shares in 2002, and 418,335 shares in 2001) (notes 2 and 4) (14,779,075) (9,310,243) (10,849,350) ------------------ ------------------ ------------------ Increase (decrease) in Plan equity for the year 30,294,740 (9,637,892) (2,144,819) Plan equity at beginning of year 24,692,448 34,330,340 36,475,159 ------------------ ------------------ ------------------ Plan equity at end of year $ 54,987,188 24,692,448 34,330,340 ================== ================== ==================
See accompanying notes to financial statements. 3 TOTAL SYSTEM SERVICES, INC. EMPLOYEE STOCK PURCHASE PLAN Notes to Financial Statements December 31, 2003, 2002, and 2001 (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). TSYS serves as the Plan administrator. Prior to August 1, 2002, the Plan agent was State Street Bank and Trust Company. Effective August 1, 2002, the Plan agent is Mellon Investor Services, LLC, hereafter referred to as "Agent." Prior to July 1, 2002, all employees who work twenty hours per week or more were eligible to participate in the Plan after completing three months of continuous employment prior to the beginning of a calendar quarter. Effective July 1, 2002, the Plan was amended to allow employees who work 20 hours per week or more to become eligible to participate in the plan on the first payroll date after completing three months of continuous employment. Effective December 31, 2002, employees of TSYS or TSYS affiliates who are employed in a country other than the United States and are eligible to participate in a compensatory stock plan sponsored by TSYS or TSYS affiliates similar to the Plan that has been established pursuant to the laws of that country are not eligible to participate in the Plan. Participants contribute to the Plan through payroll deductions as a percentage of compensation. The minimum contribution was 0.5%, and the maximum contribution ranges from 3% to 7%, based on years of service. Effective July 1, 2002, the minimum allowable contribution is 1% of compensation. 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 each participant may withdraw at any time all or some of his or her account balance. The participant may elect to receive the proceeds in the form of shares of common stock of TSYS or in a lump-sum cash distribution. Prior to January 23, 2002, participants who had previously withdrawn shares from their Plan account remained eligible to participate, but with certain exceptions were precluded from receiving matching contributions from the Plan sponsor for a specified period of time. Effective January 23, 2002, the Plan was amended to allow employees to make unlimited withdrawals without their employer matching contributions being suspended. 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/her 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 2003 and 2002 market values are based on the closing price at year-end. The December 31, 2003 and 2002 market values were $31.13 and $13.50 per share, respectively. 4 (Continued) TOTAL SYSTEM SERVICES, INC. EMPLOYEE STOCK PURCHASE PLAN Notes to Financial Statements December 31, 2003, 2002, and 2001 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, 2002 and 2001, 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 $1,827 and $28,587 for the years ended December 31, 2002 and 2001, 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's investments include common stock of TSYS which is exposed to market and credit risks. Due to the level of risk associated with investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the Plan's financial statements. 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. Management of the Plan believes that the carrying amount of receivables is a reasonable approximation of the fair value due to the short-term nature of these instruments. 5 (Continued) TOTAL SYSTEM SERVICES, INC. EMPLOYEE STOCK PURCHASE PLAN Notes to Financial Statements December 31, 2003, 2002, and 2001 (3) Unrealized (Depreciation) Appreciation in Common Stock of TSYS Changes in unrealized (depreciation) appreciation in common stock of TSYS are as follows:
2003 2002 2001 ----------- ------------- ------------ Unrealized appreciation (depreciation at end of year $23,034,721 (5,666,957) 8,049,891 Unrealized (depreciation) appreciation at beginning of year (5,666,957) 8,049,891 14,115,717 ----------- ------------- ------------ Unrealized appreciation (depreciation) for the year $28,701,678 (13,716,848) (6,065,826) =========== ============= ============
(4) Realized Gain on Withdrawal Distributions to Participants The gain realized on withdrawal distributions to participants is summarized as follows:
2003 2002 2001 ----------- ------------- ------------ Market value at dates of distribution or redemption of shares of common stock of TSYS $14,779,075 9,310,243 10,849,350 Less cost (computed on an average cost basis) of shares of common stock of TSYS distributed or redeemed 10,752,910 7,397,115 6,162,705 ----------- ------------ ------------ Total realized gain $ 4,026,165 1,913,128 4,686,645 =========== ============= ============
6 EX-99.2 7 ex99-2.txt ANNUAL REPORT ON FORM 11-K DIRECTOR STOCK PURCHASE PLAN Exhibit 99.2 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, 2003 ----------------------------------------------------- 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 TOTAL SYSTEM SERVICES, INC. DIRECTOR STOCK PURCHASE PLAN Financial Statements December 31, 2003, 2002, and 2001 (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, 2003 and 2002, and the related statements of operations and changes in plan equity for each of the years in the three-year period ended December 31, 2003. 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, 2003 and 2002, 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, 2003 in conformity with accounting principles generally accepted in the United States of America. /s/KPMG LLP March 12, 2004 TOTAL SYSTEM SERVICES, INC. DIRECTOR STOCK PURCHASE PLAN Statements of Financial Condition December 31, 2003 and 2002
Assets 2003 2002 ------------------- ------------------- Common stock of Total System Services, Inc. at market value - 181,445 shares (cost $2,044,510) in 2003 and 160,378 shares (cost $1,622,077) in 2002 (note 2) $ 5,648,387 2,165,105 Dividends receivable 3,629 2,806 ------------------- ------------------- $ 5,652,016 2,167,911 =================== =================== Plan Equity Plan equity (17 and 16 participants at December 31, 2003 and 2002, respectively) $ 5,652,016 2,167,911 =================== ===================
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, 2003, 2002, and 2001
2003 2002 2001 ------------------ ------------------ ------------------ Dividend income $ 13,756 10,606 8,134 Realized gain on distributions to participants (notes 2 and 4) -- 81,191 394,021 Unrealized appreciation (depreciation) in common stock of Total System Services, Inc. (note 3) 3,060,849 (1,243,550) (585,276) Contributions (notes 1 and 2): Participants 273,000 304,000 344,000 Total System Services, Inc. 136,500 152,000 172,000 ------------------ ------------------ ------------------ Increase (decrease) in Plan equity before withdrawals 3,484,105 (695,753) 332,879 Withdrawals by participants: Common stock of Total System Services, Inc. at market value (0 shares in 2003, 8,752 shares in 2002, 22,472 shares in 2001) - (notes 2 and 4) -- (165,037) (539,328) ------------------ ------------------ ------------------ Increase (decrease) in Plan equity for the year 3,484,105 (860,790) (206,449) Plan equity at beginning of year 2,167,911 3,028,701 3,235,150 ------------------ ------------------ ------------------ Plan equity at end of year $ 5,652,016 2,167,911 3,028,701 ================== ================== ==================
See accompanying notes to financial statements. 3 TOTAL SYSTEM SERVICES, INC. DIRECTOR STOCK PURCHASE PLAN Notes to Financial Statements December 31, 2003, 2002, and 2001 (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. TSYS serves as the plan administrator. Prior to August 1, 2002, the Plan agent was State Street Bank and Trust Company. Effective August 1, 2002, the Plan agent is Mellon Investor Services, LLC, 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 each participant may withdraw at any time all or some of his or her account balance. The participant may elect to receive the proceeds in the form of shares of common stock of TSYS or in a lump-sum cash distribution. 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 2003 and 2002 market values are based on the closing price at year-end. The December 31, 2003 and 2002 market values were $31.13 and $13.50 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. Dividend income is accrued on the record date. 4 (Continued) TOTAL SYSTEM SERVICES, INC. DIRECTOR STOCK PURCHASE PLAN Notes to Financial Statements December 31, 2003, 2002, and 2001 The Plan's investments include common stock of TSYS which is exposed to market and credit risks. Due to the level of risk associated with investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the Plan's financial statements. 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. Management of the Plan believes that the carrying amount of receivables is a reasonable approximation of the fair value due to the short-term nature of these instruments. 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:
2003 2002 2001 ----------- ------------- ------------ Unrealized appreciation at end of year $ 3,603,877 543,028 1,786,578 Unrealized appreciation at beginning of year 543,028 1,786,578 2,371,854 Unrealized appreciation (depreciation) for the year $ 3,060,849 (1,243,550) (585,276) =========== ============= ============
5 (Continued) TOTAL SYSTEM SERVICES, INC. DIRECTOR STOCK PURCHASE PLAN Notes to Financial Statements December 31, 2003, 2002, and 2001 (4) Realized Gain on Withdrawal Distributions to Participants The gain realized on withdrawal distributions to participants is summarized as follows:
2003 2002 2001 ----------- ------------- ------------ Market value at dates of distribution or redemption of common stock of TSYS $ --- 165,037 539,328 Less cost (computed on an average cost basis) of shares of common stock of TSYS distributed or redeemed --- 83,846 145,307 ----------- ------------ ------------ Total realized gain $ --- 81,191 394,021 =========== ============= ============
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