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 1999
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 1-10254
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TOTAL SYSTEM SERVICES, INC. EMPLOYEE STOCK PURCHASE PLAN
TOTAL SYSTEM SERVICES, INC.
1200 FIRST AVENUE
COLUMBUS, GEORGIA 31901
(706) 649-2204
Exhibit 99.1
TOTAL SYSTEM SERVICES, INC.
EMPLOYEE STOCK PURCHASE PLAN
Financial Statements
December 31, 1999, 1998, and 1997
(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, 1999 and
1998, and the related statements of operations and changes in plan equity for
each of the years in the three-year period ended December 31, 1999. 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 generally accepted auditing
standards. 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, 1999 and 1998, 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, 1999 in conformity with generally
accepted accounting principles.
Atlanta, Georgia
March 31, 2000
TOTAL SYSTEM SERVICES, INC.
EMPLOYEE STOCK PURCHASE PLAN
Statements of Financial Condition
December 31, 1999 and 1998
Assets 1999 1998
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Common stock of Total System Services, Inc. at market value -
1,557,070 shares (cost $19,032,710) in 1999 and
1,460,648 shares (cost $14,900,070) in 1998 $ 25,399,712 34,325,229
Dividends receivable 15,573 14,599
Contributions receivable 326,837 335,028
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$ 25,742,122 34,674,856
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Plan Equity
Plan equity (5,072 and 4,064 participants at
December 31, 1999 and 1998, respectively) $ 25,742,122 34,674,856
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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, 1999,
1998, and 1997
1999 1998 1997
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Dividend income $ 60,016 54,247 43,042
Realized gain on distributions to participants
(note 4) 2,576,977 3,410,267 2,613,432
Unrealized appreciation (depreciation) of common
stock of Total System Services, Inc. (note 3) (13,058,157) 6,909,967 (4,514,084)
Contributions (notes 1 and 2):
Participants 5,141,574 4,179,393 3,554,948
Employer:
Total System Services, Inc. 2,071,247 1,695,051 1,454,293
Columbus Depot Equipment Company 411 358 334
TSYS Total Solutions, Inc. 183,889 79,930 67,093
Columbus Productions, Inc. 54,768 47,502 45,105
TSYS Canada, Inc. 17,887 10,438 --
Vital Processing Services, L.L.C. 248,987 211,072 155,937
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Total employer contributions 2,577,189 2,044,351 1,722,762
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(2,702,401) 16,598,225 3,420,100
Withdrawals by participants - common stock of
Total System Services, Inc. at
market value (321,694 shares in 1999,
281,516 shares in 1998, and 250,185
shares in 1997) -
(notes 2 and 4) (6,230,333) (6,405,895) (4,350,111)
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Increase (decrease) in Plan equity
for the year (8,932,734) 10,192,330 (930,011)
Plan equity at beginning of year 34,674,856 24,482,526 25,412,537
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Plan equity at end of year $ 25,742,122 34,674,856 24,482,526
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See accompanying notes to financial statements.
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TOTAL SYSTEM SERVICES, INC.
EMPLOYEE STOCK PURCHASE PLAN
Notes to Financial Statements
December 31, 1999, 1998, and 1997
(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) employees to purchase
shares of common stock of TSYS at prevailing market prices from
contributions made by them and TSYS.
Synovus Service Corp. serves as the Plan administrator. State
Street Bank and Trust Company serves as the Plan agent, hereafter
referred to as "Agent."
All employees who work twenty hours per week or more are eligible to
participate in the Plan after completing three months of continuous
employment prior to the beginning of a calendar quarter. Participants who
have previously withdrawn shares from their Plan account remain eligible
to participate, but with certain exceptions, are precluded from receiving
matching contributions from the Plan sponsor for a specified period of
time. A participant may contribute to the Plan based on a formula through
payroll deductions in multiples of $1 with a minimum deduction of $10 per
month and a maximum deduction not to exceed a specified percentage of
compensation (ranging from 3% to 7%). Effective January 1, 1999,
participants initially joining the Plan, requesting reinstatement in the
Plan or making a change under the Plan must select their payroll
deduction amount as a percentage of compensation, with a minimum
contribution level of 0.5%. Participants in the Plan prior to January 1,
1999 may continue contributing to the Plan through payroll deductions in
whole dollar amounts. Contributions to the Plan are to be made by TSYS in
an amount equal to one-half of each participant's contribution.
Participants are immediately vested in their contributions and TSYS'
matching contributions.
The Plan provides, among other things, that all expenses of the Plan and
its administration shall be paid by TSYS with the exception of brokers'
fees, commissions, postage, and transaction costs which are included in
the cost of each participant's investment in common stock of TSYS.
The Plan provides that upon withdrawal from the Plan, each participant
may elect to receive the proceeds from his account balance in the form of
shares of common stock of TSYS and a check for any fractional shares and
cash held, a lump-sum cash distribution, or a combination of both.
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.
On April 16, 1998, the TSYS Board of Directors approved a three-for-two
stock split which was effected on May 8, 1998 in the form of a 50% stock
dividend to shareholders of record as of April 27, 1998.
4 (Continued)
TOTAL SYSTEM SERVICES, INC.
EMPLOYEE STOCK PURCHASE PLAN
Notes to Financial Statements
December 31, 1999, 1998, and 1997
All share and per share data for all periods presented in the
accompanying financial statements and related notes has been restated to
reflect the additional shares resulting from these stock splits.
(2) Summary of Accounting Policies
The investment in common stock of TSYS is stated at market value. The
1999 and 1998 market values are based on the closing price at year-end.
The December 31, 1999 and 1998 market values were $16.31 and $23.50 per
share, respectively.
The realized gain on distributions to participants is determined by
computing the difference between the average cost per common stock share
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, 1999, 1998, and 1997, 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 $25,000, $21,000, and $23,000 for
the years ended December 31, 1999, 1998, and 1997, respectively.
Dividend income is accrued on the record date.
The Plan is not qualified under Sections 401(a) or 501(a) of the Internal
Revenue Code of 1986, as amended. The Plan does not provide for income
taxes because any income is taxable to the participants. Participants in
the Plan must treat as compensation income their pro rata share of
contributions made to the Plan by TSYS. Cash dividends paid on common
stock of TSYS purchased under the Plan will be 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 generally
accepted accounting principles 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.
5 (Continued)
TOTAL SYSTEM SERVICES, INC.
EMPLOYEE STOCK PURCHASE PLAN
Notes to Financial Statements
December 31, 1999, 1998, and 1997
(3) Unrealized Appreciation (Depreciation) in Common Stock of TSYS
Changes in unrealized appreciation (depreciation) in common stock of TSYS
are as follows:
1999 1998 1997
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Unrealized appreciation at end of year $ 6,367,002 19,425,159 12,515,192
Unrealized appreciation at beginning of
year
19,425,159 12,515,192 17,029,276
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Unrealized appreciation
(depreciation) for the year
$ (13,058,157) 6,909,967 (4,514,084)
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(4) Realized Gain on Withdrawal Distributions to Participants
The gain realized on withdrawal distributions to participants is
summarized as follows:
1999 1998 1997
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Market value at dates of distribution or
redemption of shares of common stock
of TSYS $ 6,230,333 6,405,895 4,350,111
Less cost (computed on an average
cost basis) of shares of common
stock of TSYS distributed or
redeemed 3,653,356 2,995,628 1,736,679
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Total realized gain $ 2,576,977 3,410,267 2,613,432
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