SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] Annual report pursuant to section 13 or 15(d) of the Securities Exchange
Act of 1934 for the fiscal year ended 1997 or
[ ] Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from ________ to__________ .
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.)
1200 Sixth 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. [ ]
As of February 12, 1998, 129,331,775 shares of the $.10 par value
common stock of Total System Services, Inc. were outstanding, and the aggregate
market value of the shares of $.10 par value common stock of Total System
Services, Inc. held by non-affiliates was approximately $537,383,000 (based upon
the closing per share price of such stock on said date.)
Portions of the 1997 Annual Report to Shareholders of Registrant are
incorporated in Parts I, II, III and IV of this report. Portions of the Proxy
Statement of Registrant dated March 12, 1998 are incorporated in Part III of
this report.
Registrant's Documents Incorporated by Reference
Part Number and Item
Document Incorporated Number of Form 10-K
by Reference Into Which Incorporated
- ---------------------- ------------------------
Pages 22 through 27, 32 through Part I, Item 1, Business
34, and 36 of Registrant's
1997 Annual Report to Shareholders
Pages 32 through 36, and 40 and 41 of Part I, Item 2, Properties
Registrant's 1997 Annual
Report to Shareholders
Pages 40 and 41 of Registrant's 1997 Part I, Item 3, Legal
Annual Report to Shareholders Proceedings
Page 43 of Registrant's 1997 Part II, Item 5, Market
Annual Report to Shareholders for Registrant's Common
Equity and Related Stock-
holder Matters
Page 21 of Registrant's 1997 Part II, Item 6, Selected
Annual Report to Shareholders Financial Data
Pages 22 through 27 of Registrant's Part II, Item 7, Management's
1997 Annual Report to Shareholders Discussion and Analysis of
Financial Condition and
Results of Operations
Pages 28 through 43 Part II, Item 8, Financial
of Registrant's 1997 Annual Statements and Supplementary
Report to Shareholders Data
Pages 2 through 4, 7, and 18 Part III, Item 10,
of Registrant's Proxy Statement in Directors and Executive
connection with the Annual Meeting Officers of the Registrant
of Shareholders to be held
on April 16, 1998
Pages 7 through 11, and 14 Part III, Item 11,
of Registrant's Proxy Statement Executive Compensation
in connection with the Annual Meeting
of Shareholders to be held on
April 16, 1998
Pages 5 and 16, and 15 through 17 of Part III, Item 12, Security
Registrant's Proxy Statement in Ownership of Certain
connection with the Annual Meeting of Beneficial Owners and
shareholders to be Management
held on April 16, 1998
Pages 14 and 15, and 17 and 18 Part III, Item 13,
of Registrant's Proxy Statement in Certain Relationships
connection with the Annual Meeting and Related Transactions
of Shareholders to be held on
April 16, 1998 and pages 34 through 36
of Registrant's 1997
Annual Report to Shareholders
Pages 28 through 42 of Registrant's Part IV, Item 14, Exhibits,
1997 Annual Report to Shareholders Financial Statement
Schedules and Reports
on Form 8-K
Cross Reference Sheet
Item No. Caption Page No.
- -------- ---------------- ---------
Part I
1. Business 2
2. Properties 4
3. Legal Proceedings 5
4. Submission of Matters to a Vote of 5
Security Holders
Part II
5. Market for Registrant's Common Equity 5
and Related Stockholder Matters
6. Selected Financial Data 5
7. Management's Discussion and Analysis 5
of Financial Condition and Results
of Operations
7A. Quantitative and Qualitative Disclosures About Market Risk 5
8. Financial Statements and Supplementary 6
Data
9. Changes In and Disagreements With Accountants 6
on Accounting and Financial Disclosure
Part III
10. Directors and Executive Officers of 6
the Registrant
11. Executive Compensation 6
12. Security Ownership of Certain 6
Beneficial Owners and Management
13. Certain Relationships and Related 7
Transactions
Part IV
14. Exhibits, Financial Statement Schedules, 7
and Reports on Form 8-K
PART I
Certain statements contained in this Annual Report on Form 10-K and the
exhibits hereto which are not statements of historical fact constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act (the "Act"). In addition, certain statements in future
filings by Total System Services, Inc.(R) ("TSYS (R)") with the Securities and
Exchange Commission, in press releases, and in oral and written statements made
by or with the approval of TSYS which are not statements of historical fact
constitute forward-looking statements within the meaning of the Act. Examples of
forward-looking statements include, but are not limited to: (i) projections of
revenues, income or loss, earnings or loss per share, the payment or non-payment
of dividends, capital structure and other financial items; (ii) statements of
plans and objectives of TSYS or its management or Board of Directors, including
those relating to products or services; (iii) statements of future economic
performance; and (iv) statements of assumptions underlying such statements.
Words such as "believes," "anticipates," "expects," "intends," "targeted," and
similar expressions are intended to identify forward-looking statements but are
not the exclusive means of identifying such statements.
Forward-looking statements involve risks and uncertainties which may
cause actual results to differ materially from those in such statements. Factors
that could cause actual results to differ from those discussed in the
forward-looking statements include, but are not limited to: (i) the strength of
the U.S. economy in general and other relevant economies; (ii) the financial
performance of current and future client contracts; (iii) inflation, interest
rate and foreign exchange rate fluctuations; (iv) timely and successful
implementation of processing systems to provide new products, improved
functionality and increased efficiencies; (v) changes in consumer spending,
borrowing and saving habits; (vi) technological changes; (vii) acquisitions;
(viii) the ability to increase market share and control expenses; (ix) changes
in laws, regulations, credit card association rules or other industry standards
affecting TSYS' business which require significant product redevelopment
efforts; (x) the effect of changes in accounting policies and practices, as may
be adopted by the regulatory agencies as well as the Financial Accounting
Standards Board; (xi) changes in TSYS' organization, compensation and benefit
plans; (xii) the costs and effects of litigation and of unexpected or adverse
outcomes in such litigation; (xiii) failure to successfully implement TSYS' Year
2000 modification plans substantially as scheduled and budgeted; and (xiv) the
success of TSYS at managing the risks involved in the foregoing.
Such forward-looking statements speak only as of the date on which such
statements are made, and TSYS undertakes no obligation to update any
forward-looking statement to reflect events or circumstances after the date on
which such statement is made to reflect the occurrence of unanticipated events.
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Synovus Financial Corp., Synovus, Columbus Bank and Trust Company and CB&T are
federally registered service marks of Synovus Financial Corp. TSYS, TS2, Total
System Services, Inc. and THE TOTAL SYSTEM are federally registered service
marks of Total System Services, Inc.
1
Item 1. Business.
Business. Established in 1983 as an outgrowth of an on-line accounting and
bankcard data processing system developed for Columbus Bank and Trust
Company(R), TSYS is now one of the world's largest credit, debit, commercial,
and private-label card processing companies. Based in Columbus, Georgia, and
traded on the New York Stock Exchange under the symbol "TSS," TSYS provides a
comprehensive on-line system of data processing services marketed as THE TOTAL
SYSTEM(R) servicing issuing institutions throughout the United States, Puerto
Rico, Canada and Mexico, representing approximately 93 million cardholder
accounts. TSYS provides card production, domestic and international clearing,
statement preparation, customer service support and management support. Synovus
Financial Corp.(R), a $9.3 billion asset, multi-financial services company, owns
80.7 percent of TSYS.
During 1997, TSYS had four wholly owned subsidiaries: (1) Columbus Depot
Equipment Company(sm) ("CDEC (sm)"), which sells and leases computer related
equipment associated with TSYS' bankcard data processing services; (2) Mailtek,
Inc.(sm) ("Mailtek"), which provides full-service direct mail production
services and offers data processing, list management, laser printing, computer
output microfiche, card embossing, encoding and mailing services; (3) TSYS Total
Solutions, Inc.(sm) ("TSI") (formerly Lincoln Marketing, Inc.), which provides
correspondence, fulfillment, telemarketing, data processing and mailing
services; and (4) Columbus Productions, Inc.(sm) ("CPI"), which provides
full-service commercial printing and related services. On December 31, 1997,
Mailtek was merged into TSI, and TSI continues to provide the services formerly
provided by Mailtek.
TSYS also holds a 49% equity interest in a joint venture company named
Total System Services de Mexico, S.A. de C.V.("TSM"), which provides credit card
related processing services to Mexican banks, and a 50% interest in Vital
Processing Services L.L.C., a joint venture with Visa U.S.A. Inc. that combines
the front-end authorization and back-end accounting and settlement processing of
financial and nonfinancial institutions and their merchant customers.
Seasonality. Due to the seasonal nature of the credit card industry, TSYS'
revenues and results of operations have generally increased in the fourth
quarter of each year because of increased transaction and authorization volumes
during the traditional holiday shopping season.
Service Marks. TSYS owns the federally registered service marks TSYS, TS2,
Total System Services, Inc. and THE TOTAL SYSTEM, to which TSYS believes strong
customer identification attaches. TSYS also owns other service marks. Management
does not believe the loss of such marks would have a material impact on the
business of TSYS.
Major Customers. A significant amount of TSYS' revenues are derived from
certain major customers who are processed under long-term contracts. For the
year ended December 31, 1997, AT&T Universal Card Services Corp. and NationsBank
accounted for 14.35% and 11.13%, respectively, of TSYS' total revenues. As a
result, the loss of one of
2
TSYS' major customers could have a material adverse effect on TSYS' financial
condition and results of operations.
Competition. TSYS encounters vigorous competition in providing bankcard
data processing services from several different sources. The national market in
third party bankcard data processors is presently being provided by
approximately five vendors. TSYS believes that it is the second largest third
party bankcard processor in the United States. In addition, TSYS competes
against software vendors which provide their products to institutions which
process in-house. TSYS is presently encountering, and in the future anticipates
continuing to encounter, substantial competition from bankcard associations,
data processing and bankcard computer service firms and other such third party
vendors located throughout the United States.
TSYS' major competitor in the bankcard data processing industry is First
Data Resources, Inc., a wholly owned subsidiary of First Data Corporation, which
is headquartered in Omaha, Nebraska, and provides bankcard data processing
services, including authorization and data entry services. The principal methods
of competition between TSYS and First Data Resources are price, quality,
features and functionality and reliability of service. Certain other
subsidiaries of First Data Corporation also compete with TSYS. In addition,
there are a number of other companies which have the necessary financial
resources and the technological ability to develop or acquire products and, in
the future, to provide services similar to those being offered by TSYS.
Regulation and Examination. TSYS is subject to being examined, and is
indirectly regulated, by the Office of the Comptroller of the Currency, the
Federal Reserve Board ("Board"), the Federal Deposit Insurance Corporation, the
Office of Thrift Supervision, the National Credit Union Administration, and the
various state financial regulatory agencies which supervise and regulate the
banks, savings institutions and credit unions for which TSYS provides bankcard
data processing services. Matters reviewed and examined by these federal and
state financial institution regulatory agencies have included TSYS' internal
controls in connection with its present performance of bankcard data processing
services, and the agreements pursuant to which TSYS provides such services.
As the Federal Reserve Bank of Atlanta has approved Synovus' indirect
ownership of TSYS through CB&T, TSYS is subject to direct regulation by the
Board. TSYS was formed with the prior written approval of, and is subject to
regulation and examination by, the Department of Banking and Finance of the
State of Georgia as a subsidiary of CB&T and is authorized to engage in only
those activities which CB&T itself is authorized to engage in directly, which
includes the bankcard and other data processing services presently being
provided by TSYS. As TSYS and its subsidiaries operate as subsidiaries of CB&T,
they are subject to regulation by the Federal Deposit Insurance Corporation.
Employees. As of February 28, 1998, TSYS had 3,158 full-time employees and
128 part-time employees.
See the "Financial Review" Section on pages 22 through 27 and Note 1, Note
4 and Note 9 of Notes to Consolidated Financial Statements on pages 32 through
34, page 36,
3
and pages 40 and 41 of TSYS' 1997 Annual Report to Shareholders which are
specifically incorporated herein by reference.
Item 2. Properties.
TSYS owns its 73,000 square foot South Center located at 1000 Fifth Avenue,
Columbus, Georgia 31901, and owns its 60,000 square foot Annex Building located
at 420 10th Street, Columbus, Georgia 31901. TSYS also owns a warehouse
facility, various other tracts of real estate located near or adjacent to its
South Center and Annex Building which are used for parking and/or future
expansion needs, and leases additional office space in Columbus, Georgia,
Atlanta, Georgia, and Jacksonville, Florida.
The approximately 32,000 square foot Columbus Depot, located at 1200 Sixth
Avenue, Columbus, Georgia 31901, which is owned by TSYS and is on the National
Register of Historic Places, houses TSYS' executive offices and several
corporate divisions.
TSYS also owns a 252,000 square foot production center which is located on
a 40.4 acre tract of land in north Columbus, Georgia ("North Center"). Primarily
a production center, this facility houses TSYS' primary data processing computer
operations, statement preparation, mail handling, microfiche production and
purchasing, as well as other related operations. TSYS began expanding the North
Center in 1997 to add additional space to house TSYS' card production services.
A separate 72,000 square foot building was completed on the North Center
property in 1997 to serve as TSI's headquarters.
TSYS owns a 110,000 square foot building on a 23-acre site in Columbus,
Georgia, which accommodates current and future office space needs for technical
staff.
During 1997, TSYS entered into an operating lease for the purpose of
financing its 540,000 square foot new campus-type facility on approximately 46
acres of land in downtown Columbus, Georgia. The campus facility will
consolidate most of TSYS' multiple Columbus locations and will facilitate future
growth. The campus development will be a multi year phased project.
All properties owned and leased by TSYS are in good repair and suitable
condition for the purposes for which they are used.
In addition to its real property, TSYS owns and/or leases a substantial
amount of computer equipment.
See Note 1, Note 2, Note 3, Note 4 and Note 9 of Notes to Consolidated
Financial Statements on pages 32 through 36, and pages 40 and 41 of TSYS' 1997
Annual Report to Shareholders which are specifically incorporated herein by
reference.
4
Item 3. Legal Proceedings.
See Note 9 of Notes to Consolidated Financial Statements on pages 40 and 41
of TSYS' 1997 Annual Report to Shareholders which is specifically incorporated
herein by reference.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
The "Quarterly Financial Data, Stock Price, Dividend Information" Section
which is set forth on page 43 of TSYS' 1997 Annual Report to Shareholders is
specifically incorporated herein by reference.
On November 6, 1995, TSYS issued 4,156 shares of TSYS Common Stock to an
individual for no monetary consideration in connection with his employment by
TSYS.
On January 29, 1996, TSYS issued 21,978 shares to the two former
shareholders of Mailtek. These shares were issued pursuant to the Acquisition
Agreement between TSYS, Mailtek and the shareholders of Mailtek pursuant to
which TSYS purchased all 10,000 of the issued and outstanding shares of $.05 par
value common stock of Mailtek on July 15, 1992.
All of the shares of TSYS Common Stock referenced above were issued
pursuant to the exemption from registration set forth in Section 4(2) of the
Securities Act of 1933 as they were issued to a limited number of persons.
Item 6. Selected Financial Data.
The "Selected Financial Data" Section which is set forth on page 21 of
TSYS' 1997 Annual Report to Shareholders is specifically incorporated herein by
reference.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
The "Financial Review" Section which is set forth on pages 22 through 27 of
TSYS' 1997 Annual Report to Shareholders, which includes the information
encompassed within "Management's Discussion and Analysis of Financial Condition
and Results of Operations," is specifically incorporated herein by reference.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
None.
5
Item 8. Financial Statements and Supplementary Data.
The "Quarterly Financial Data, Stock Price, Dividend Information" Section,
which is set forth on page 43, and the "Consolidated Balance Sheets,
Consolidated Statements of Income, Consolidated Statements of Shareholders'
Equity, Consolidated Statements of Cash Flows, Notes to Consolidated Financial
Statements and Report of Independent Auditors" Sections, which are set forth on
pages 28 through 42 of TSYS' 1997 Annual Report to Shareholders are specifically
incorporated herein by reference.
Item 9. Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure.
None.
PART III
Item 10. Directors and Executive Officers of the Registrant.
The "ELECTION OF DIRECTORS - Information Concerning Number and
Classification of Directors and Nominees" Section which is set forth on pages 2
and 3, the "ELECTION OF DIRECTORS - Information Concerning Directors and
Nominees for Class III Directors - General Information" Section which is set
forth on pages 3 and 4, the "ELECTION OF DIRECTORS - Executive Officers" Section
which is set forth on page 7, and the "SECTION 16(a) Beneficial Ownership
Reporting Compliance" Section which is set forth on page 18 of TSYS' Proxy
Statement in connection with the Annual Meeting of Shareholders of TSYS to be
held on April 16, 1998 are specifically incorporated herein by reference.
Item 11. Executive Compensation.
The "EXECUTIVE COMPENSATION - Summary Compensation Table; Stock Option
Exercises and Grants; Compensation of Directors; Change in Control Arrangements;
and Compensation Committee Interlocks and Insider Participation" Sections which
are set forth on pages 7 through 11, and page 14 of TSYS' Proxy Statement in
connection with the Annual Meeting of Shareholders of TSYS to be held on April
16, 1998 are specifically incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The "ELECTION OF DIRECTORS - Information Concerning Directors and Nominees
for Class III Directors - TSYS Common Stock Ownership of Directors and
Management" Section which is set forth on pages 5 and 6, the "RELATIONSHIPS
BETWEEN TSYS, SYNOVUS, CB&T AND CERTAIN OF SYNOVUS' SUBSIDIARIES - Beneficial
Ownership of TSYS Common Stock by CB&T" Section which is set forth on page 15,
and the "RELATIONSHIPS BETWEEN TSYS, SYNOVUS, CB&T AND CERTAIN OF SYNOVUS'
SUBSIDIARIES - Synovus Common Stock Ownership of Directors and Management"
Section which is set forth on pages 16 and 17 of TSYS' Proxy Statement in
connection with
6
the Annual Meeting of Shareholders of TSYS to be held on April 16, 1998 are
specifically incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions.
The "EXECUTIVE COMPENSATION - Compensation Committee Interlocks and Insider
Participation" Section which is set forth on page 14, "EXECUTIVE COMPENSATION -
Transactions with Management" Section which is set forth on pages 14 and 15, the
"RELATIONSHIPS BETWEEN TSYS, SYNOVUS, CB&T AND CERTAIN OF SYNOVUS' SUBSIDIARIES
- - Beneficial Ownership of TSYS Common Stock by CB&T" Section which is set forth
on page 15, the "RELATIONSHIPS BETWEEN TSYS, SYNOVUS, CB&T AND CERTAIN OF
SYNOVUS' SUBSIDIARIES - Interlocking Directorates of TSYS, Synovus and CB&T"
Section which is set forth on page 15, and the "RELATIONSHIPS BETWEEN TSYS,
SYNOVUS, CB&T, AND CERTAIN OF SYNOVUS' SUBSIDIARIES - Bankcard Data Processing
Services Provided to CB&T and Certain of Synovus' Subsidiaries; Other Agreements
Between TSYS, Synovus, CB&T and Certain of Synovus' Subsidiaries" Section which
is set forth on pages 17 and 18 of TSYS' Proxy Statement in connection with the
Annual Meeting of Shareholders of TSYS to be held on April 16, 1998 are
specifically incorporated herein by reference.
See also Note 2 of Notes to Consolidated Financial Statements on pages 34
through 36 of TSYS' 1997 Annual Report to Shareholders which is specifically
incorporated herein by reference.
PART IV
Item 14. 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 28 through 42 of TSYS' 1997
Annual Report to Shareholders to Item 8, Part II, Financial Statements and
Supplementary Data.
Consolidated Balance Sheets - December 31, 1997 and 1996.
Consolidated Statements of Income - Years Ended December 31,
1997, 1996 and 1995.
Consolidated Statements of Shareholders' Equity - Years Ended
December 31, 1997, 1996 and 1995.
Consolidated Statements of Cash Flows - Years Ended December
31, 1997, 1996 and 1995.
Notes to Consolidated Financial Statements.
7
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, 1997, 1996 and 1995.
All other schedules are omitted because they are inapplicable
or the required information is included in the Notes to Consolidated Financial
Statements.
3. Exhibits
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 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, 1996, as filed with the
Commission on March 20, 1997.
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, 1992, as filed
with the Commission on March 18, 1993.
10.2 Group "Y" Key Executive Restricted Stock Bonus Plan of TSYS,
incorporated by reference to Exhibit 10.2 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.
10.3 1985 Key Employee Restricted Stock Bonus Plan of TSYS,
incorporated by reference to Exhibit 10.3 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.
8
10.4 1990 Key Employee Restricted Stock Bonus Plan of TSYS,
incorporated by reference to Exhibit 10.4 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.
10.5 Total System Services, Inc. 1992 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 Excess Benefit Agreement of TSYS, incorporated by reference
to Exhibit 10.6 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.
10.7 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 use of aircraft, incorporated
by reference to Exhibit 10.9 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.
10.10 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.
9
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 Lease Agreement between First Security Bank, National
Association, and TSYS.
11.1 Statement re Computation of Per Share Earnings.
13.1 Certain specified pages of TSYS' 1997 Annual Report to
Shareholders which are specifically incorporated herein by
reference.
20.1 Proxy Statement for the Annual Meeting of Shareholders of
TSYS to be held on April 16, 1998, certain pages of which
are specifically incorporated herein by reference.
21.1 Subsidiaries of Total System Services, Inc.
23.1 Independent Auditors' Consent.
24.1 Powers of Attorney contained on the signature pages of the
1997 Annual Report on Form 10-K.
27.1 Financial Data Schedule (for SEC use only).
27.2 Amended and Restated Financial Data Schedule (for SEC use
only).
27.3 Amended and Restated Financial Data Schedule (for SEC use
only).
27.4 Amended and Restated Financial Data Schedule (for SEC use
only).
99.1 Annual Report on Form 11-K for the Total System Services,
Inc. Employee Stock Purchase Plan for the year ended
December 31, 1997 (to be filed as an amendment hereto within
120 days of the end of the period covered by this report.)
99.2 Annual Report on Form 11-K for the Total System Services,
Inc. Director Stock Purchase Plan for the year ended
December 31, 1997 (to be filed as an amendment hereto within
120 days of the end of the period covered by this report.)
(b) Reports on Form 8-K
On November 25, 1997, TSYS filed a Form 8-K with the
Commission in connection with the announcement of the signing of a seven year
credit card processing agreement with Canadian Tire Acceptance Limited and the
signing of a six year credit
10
card processing agreement with BB&T Corporation.
On December 22, 1997, TSYS filed a Form 8-K with the
Commission in connection with the announcement of the signing of a ten year
credit card processing agreement with Royal Bank of Canada.
On March 9, 1998, TSYS filed a Form 8-K with the Commission in
connection with the announcement that it is engaged in negotiations with Sears,
Roebuck and Co. to support Sears' private-label credit card accounts.
filings\TSYS\TSYS97.10K
11
Report of Independent Auditors
The Board of Directors
Total System Services, Inc.
Under date of January 23, 1998, we reported on the consolidated balance sheets
of Total System Services, Inc. and subsidiaries as of December 31, 1997 and
1996, and the related consolidated statements of income, shareholders' equity,
and cash flows for each of the years in the three-year period ended December 31,
1997, as contained in the Total System Services, Inc. 1997 Annual Report to
Shareholders. These consolidated financial statements and our report thereon are
incorporated by reference in the Total System Services, Inc. Annual Report on
Form 10-K for the year 1997. In connection with our audits of the aforementioned
consolidated financial statements, we also audited the related financial
statement schedule as listed in the accompanying index. This financial statement
schedule is the responsibility of the Company's management. Our responsibility
is to express an opinion on this financial statement schedule based on our
audits.
In our opinion, such financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein.
/s/KPMG Peat Marwick LLP
KPMG PEAT MARWICK LLP
Atlanta, Georgia
January 23, 1998
TOTAL SYSTEM SERVICES, INC.
Schedule II
Valuation and Qualifying Accounts
Additions
---------------------------
Charged
Balance at Charged to to other Balance at
beginning costs and accounts-- Deductions-- end of
of period expenses describe describe period
- ------------------------------------------------------------------------------------------------------------------------------------
Year ended December 31, 1995:
Allowance for doubtful accounts $ 255,768 509,500 - (50,894)<F1> $ 714,374
============ =========== =========== ============== ===========
Year ended December 31, 1996:
Allowance for doubtful accounts $ 714,374 94,500 - (104,392)<F1> $ 704,482
============ =========== =========== ============== ===========
Year ended December 31, 1997:
Allowance for doubtful accounts $ 704,482 94,000 - (62,523)<F1> $ 735,959
============ =========== =========== ============== ===========
<FN>
<F1> Accounts deemed to be uncollectible and written off during the year.
</FN>
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)
March 23, 1998 By:/s/Richard W. Ussery
Richard W. Ussery,
Chairman and
Principal Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints James H. Blanchard, Richard W. Ussery and
Philip W. Tomlinson, and each of them, his true and lawful attorney(s)-in-fact
and agent(s), with full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities, to sign any or all
amendments to this report and to file the same, with all exhibits and schedules
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney(s)-in-fact and agent(s) full
power and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorney(s)-in-fact and agent(s), or their substitute(s), may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, this report has been signed by the following
persons in the capacities and on the dates indicated.
/s/James H. Blanchard Date: March 23, 1998
- ------------------------------------------------
James H. Blanchard,
Director and Chairman of the
Executive Committee
/s/Richard W. Ussery Date: March 23, 1998
- ------------------------------------------------
Richard W. Ussery,
Chairman of the Board
and Principal Executive Officer
14
/s/Philip W. Tomlinson Date: March 23, 1998
- --------------------------------------------------
Philip W. Tomlinson,
President
and Director
/s/James B. Lipham Date: March 23, 1998
- -------------------------------------------------
James B. Lipham,
Executive Vice President, Treasurer, Principal
Accounting and Financial Officer
/s/Griffin B. Bell Date: March 23, 1998
- -------------------------------------------------
Griffin B. Bell,
Director
/s/Richard Y. Bradley Date: March 23, 1998
- -------------------------------------------------
Richard Y. Bradley,
Director
/s/Gardiner W. Garrard, Jr., Date: March 23, 1998
- --------------------------------------------------
Gardiner W. Garrard, Jr.,
Director
/s/John P. Illges, III Date: March 23, 1998
- --------------------------------------------------
John P. Illges, III,
Director
/s/Mason H. Lampton Date: March 23, 1998
- --------------------------------------------------
Mason H. Lampton,
Director
/s/Samuel A. Nunn Date: March 23, 1998
- ---------------------------------------------------
Samuel A. Nunn,
Director
/s/H. Lynn Page Date: March 23, 1998
- -------------------------------------------------
H. Lynn Page,
Director
/s/W. Walter Miller, Jr. Date: March 23, 1998
- -------------------------------------------------
W. Walter Miller, Jr.,
Director
/s/William B. Turner Date: March 23, 1998
- -------------------------------------------------
William B. Turner,
Director
/s/James D. Yancey Date: March 23, 1998
- --------------------------------------------------
James D. Yancey,
Director
filings/TSYS.\confo.sig