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. DIRECTOR STOCK PURCHASE PLAN
TOTAL SYSTEM SERVICES, INC.
1200 FIRST AVENUE
COLUMBUS, GEORGIA 31901
(706) 649-2204
Exhibit 99.2
TOTAL SYSTEM SERVICES, INC.
DIRECTOR 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. 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, 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. Director 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.
DIRECTOR 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 -
122,465 shares (cost $474,192) in 1999 and
139,116 shares (cost $487,160) in 1998 $ 1,997,710 3,269,225
Dividends receivable 1,225 1,391
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$ 1,998,935 3,270,616
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Plan Equity
Plan equity (13 and 11 participants at December 31, 1999 and
1998, respectively) $ 1,998,935 3,270,616
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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, 1999, 1998, and 1997
1999 1998 1997
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Dividend income $ 5,428 5,019 4,355
Realized gain on distributions to participants
(notes 2 and 4) 277,688 356,245 --
Unrealized appreciation (depreciation) in
common stock of Total System Services, Inc.
(note 3) (1,258,547) 710,468 (217,211)
Contributions (notes 1 and 2):
Participants 38,333 35,333 29,334
Total System Services, Inc. 19,167 17,667 14,667
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(917,931) 1,124,732 (168,855)
Withdrawals by participants - common stock of
Total System Services, Inc. at market value
(20,000 shares in 1999, 19,366 shares in
1998, and -0- shares in 1997) - (notes 2 and 4) (353,750) (420,001) --
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Increase (decrease) in Plan equity
for the year (1,271,681) 704,731 (168,855)
Plan equity at beginning of year 3,270,616 2,565,885 2,734,740
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Plan equity at end of year $ 1,998,935 3,270,616 2,565,885
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See accompanying notes to financial statements.
3
TOTAL SYSTEM SERVICES, INC.
DIRECTOR STOCK PURCHASE PLAN
Notes to Financial Statements
December 31, 1999, 1998, and 1997
(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.
Synovus Service Corp. serves as the Plan administrator. State Street
Bank and Trust Company serves as the Plan agent, 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. Cash contributions by a
participant cannot exceed $1,000 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 upon withdrawal from the Plan, each participant
may elect to receive the shares of TSYS common stock held on his behalf
by the Agent, together with a check for any fractional share interest and
any remaining cash balance.
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.
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.
4 (Continued)
TOTAL SYSTEM SERVICES, INC.
DIRECTOR STOCK PURCHASE PLAN
Notes to Financial Statements
December 31, 1999, 1998, and 1997
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 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 date of record.
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.
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.
(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 $ 1,523,518 2,782,065 2,071,597
Unrealized appreciation at beginning
of year 2,782,065 2,071,597 2,288,808
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Unrealized appreciation (depreciation)
for the year $ (1,258,547) 710,468 (217,211)
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5 (Continued)
TOTAL SYSTEM SERVICES, INC.
DIRECTOR STOCK PURCHASE PLAN
Notes to Financial Statements
December 31, 1999, 1998, and 1997
(4) Realized Gain on Withdrawal Distributions to Participants
The gain realized on withdrawal distributions to participants is
summarized as follows:
1999 1998
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Market value at dates of distribution
or redemption of common stock of TSYS $ 353,750 420,001
Less cost (computed on an average cost basis)
of shares of common stock of
TSYS distributed or redeemed 76,062 63,756
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Total realized gain $ 277,688 356,245
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There were no distributions to participants during 1997.