UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1995
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 (I.R.S. Employer
incorporation or organization) Identification No.)
1200 Sixth Avenue, Post Office Box 1755, Columbus, Georgia 31902
(Address of principal executive offices) (Zip Code)
(706) 649-2310
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
CLASS OUTSTANDING AS OF November 10, 1995
- --------------------------- -----------------------------------------
Common Stock,$.10 par value 64,631,294
<PAGE>
<TABLE>
TOTAL SYSTEM SERVICES, INC.
Part I - Financial Information
Item 1 - Financial Statements
Consolidated Balance Sheets
(Unaudited)
<CAPTION>
September 30, December 31,
1995 1994
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents (includes
$21,222,203 and $13,862,765 deposit with a
related party at 1995 and 1994,
respectively) $ 22,306,181 14,684,674
Accounts receivable, net (includes
$2,949,860 receivable from related parties
at 1995) 45,505,346 36,102,888
Prepaid expenses and other current assets 9,388,746 7,850,804
----------- -----------
Total current assets 77,200,273 58,638,366
Property and equipment, less accumulated
depreciation of $54,976,814 and $51,468,537
at 1995 and 1994, respectively 47,789,555 47,895,253
Computer software, less accumulated amortization
of $14,761,810 and $9,393,910 at 1995 and 1994,
respectively 39,276,990 39,239,821
Other assets 26,068,507 19,268,890
----------- -----------
Total assets $ 190,335,325 165,042,330
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 7,951,052 5,496,449
Current portion of long-term debt and
obligations under capital leases (includes
$1,965,775 and $35,000 payable to a related
party at 1995 and 1994, respectively) 2,201,464 255,631
Dividends payable (includes $1,174,515 payable
to a related party at 1995 and 1994) 1,454,204 1,454,205
Income taxes payable 584,268 1,716,798
Accrued retirement benefits 8,059,731 5,846,225
Other current liabilities 16,172,124 10,448,063
----------- -----------
Total current liabilities 36,422,843 25,217,371
Long-term debt and obligations under capital
leases, excluding current portion 773,449 906,567
Deferred income taxes 16,486,952 15,914,554
----------- -----------
Total liabilities 53,683,244 42,038,492
----------- -----------
Shareholders' equity:
Common stock - $.10 par value. Authorized
100,000,000 shares; issued 64,728,694 at
1995 and 1994; 64,631,294 outstanding at
1995 and 1994 6,472,869 6,472,869
Additional paid-in capital 11,986,379 11,986,379
Treasury stock, at cost (475,789) (475,789)
Restricted stock awards, net of amortization (1,221,306) (1,674,364)
Cumulative currency translation, net of deferred
income taxes (629,211) --
Retained earnings 120,519,139 106,694,743
----------- -----------
Total shareholders' equity 136,652,081 123,003,838
----------- -----------
Total liabilities and shareholders' equity $ 190,335,325 165,042,330
=========== ===========
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
TOTAL SYSTEM SERVICES, INC.
Consolidated Statements of Income
(Unaudited)
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenues:
Bankcard data
processing services
(includes $3,780,983
from related parties
for the three months
ended September 30,
1995) $ 58,191,627 43,076,496 156,007,944 118,501,082
Other services 7,916,689 4,861,394 22,613,906 15,250,273
---------- ---------- ----------- -----------
Total revenues 66,108,316 47,937,890 178,621,850 133,751,355
---------- ---------- ----------- -----------
Expenses:
Salaries and other
personnel expense 23,353,826 19,258,451 68,419,687 52,331,763
Net occupancy and
equipment expense 16,883,059 12,820,038 47,946,786 37,186,408
Other operating
expenses 15,125,002 7,342,682 33,724,928 20,175,536
---------- ---------- ----------- -----------
Total operating
expenses 55,361,887 39,421,171 150,091,401 109,693,707
---------- ---------- ----------- -----------
Operating income 10,746,429 8,516,719 28,530,449 24,057,648
Other nonoperating income:
Gain (loss) on disposal
of equipment, net 67,103 (3,514) 145,610 45,068
Interest income, net
(includes $149,136 and
$75,922 from a related
party for the three months
ended September 30, 1995
and 1994, respectively;
$273,178 and $173,813 for
the nine months ended
September 30, 1995 and
1994, respectively) 155,057 60,047 447,327 121,628
---------- ---------- ----------- -----------
Total other
nonoperating
income 222,160 56,533 592,937 166,696
---------- ---------- ----------- -----------
Income before income
taxes and equity in
income (loss) of
foreign joint
venture 10,968,589 8,573,252 29,123,386 24,224,344
Income taxes 3,907,549 2,856,492 10,601,124 8,934,104
---------- ---------- ----------- -----------
Income before equity
in income (loss) of
foreign joint
venture 7,061,040 5,716,760 18,522,262 15,290,240
Equity in income (loss)
of foreign joint venture 328,870 -- (335,254) --
---------- ---------- ----------- -----------
Net income $ 7,389,910 5,716,760 18,187,008 15,290,240
========== ========== =========== ===========
Net income
per share $ .114 .089 .281 .237
========== ========== =========== ===========
Weighted average
outstanding shares 64,631,294 64,631,294 64,631,294 64,628,979
========== ========== =========== ===========
Cash dividends
declared per
common share $ .0225 .0225 .0675 .0575
========== ========== =========== ===========
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
TOTAL SYSTEM SERVICES, INC.
Consolidated Statements of Cash Flows
(Unaudited)
<CAPTION>
Nine months ended
September 30,
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income $ 18,187,008 15,290,240
Adjustments to reconcile net income to net cash
provided by operating activities:
Equity in loss of foreign joint venture 335,254 --
Depreciation and amortization 15,503,471 11,695,850
Provision for doubtful accounts 436,095 (449,481)
Deferred income taxes 572,398 2,871,522
Gain on disposal of equipment, net (145,610) (45,068)
(Increase) decrease in:
Accounts receivable (9,838,553) 1,151,537
Prepaid expenses and other assets (7,803,594) (7,577,105)
Increase (decrease) in:
Accounts payable 2,454,603 1,765,881
Accrued retirement benefits and
other liabilities 7,213,095 1,158,762
---------- ----------
Net cash provided by operating activities 26,914,167 25,862,138
---------- ----------
Cash flows from investing activities:
Purchase of property and equipment (8,084,356) (7,737,374)
Purchase of computer software (3,991,897) (3,053,449)
Additions to developed software (1,920,323) (9,544,815)
Proceeds from disposal of equipment 720,903 87,505
Cash and cash equivalents acquired in business
acquisitions -- 463,347
Investment in foreign joint venture (3,455,865) --
---------- ----------
Net cash used in investing activities (16,731,538) (19,784,786)
---------- ----------
Cash flows from financing activities:
Proceeds from long-term debt 1,965,775 --
Principal payments on long-term debt (35,000) (869,573)
Payments under capital lease obligations (129,284) (143,199)
Dividends paid on common stock (4,362,613) (3,389,195)
---------- ----------
Net cash used in financing activities (2,561,122) (4,401,967)
---------- ----------
Net increase in cash and cash equivalents 7,621,507 1,675,385
Cash and cash equivalents at beginning of period 14,684,674 8,791,406
---------- ----------
Cash and cash equivalents at end of period $ 22,306,181 10,466,791
========== ==========
Cash paid for interest $ 80,250 90,866
========== ==========
Cash paid for income taxes $ 10,842,190 6,100,044
========== ==========
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
TOTAL SYSTEM SERVICES, INC.
Notes to Consolidated Financial Statements
(Unaudited)
Note 1 - Basis of Presentation
The accompanying unaudited consolidated financial statements represent the
accounts of Total System Services, Inc.sm (TSYS [registered trademark]) and its
wholly owned subsidiaries, Columbus Depot Equipment Company [service mark]
(CDEC [service mark]), Mailtek, Inc. [service mark] (Mailtek), Lincoln
Marketing, Inc. [service mark] (LMI) and Columbus Productions, Inc. [service
mark] (CPI).
The statements have been prepared in accordance with the instructions to
Form 10-Q and do not include all information and footnotes necessary for fair
presentation of financial position, results of operations and cash flows in
conformity with generally accepted accounting principles. All adjustments,
consisting of normal recurring accruals, which, in the opinion of management,
are necessary for a fair statement of financial position and results of
operations for the periods covered by this report have been included. The
accompanying unaudited consolidated financial statements should be read in
conjunction with the Company's consolidated financial statements and related
notes appearing in the Company's 1994 annual report previously filed on Form
10-K. Certain reclassifications have been made to the 1994 Consolidated
Financial Statements contained herein to conform with the presentation adopted
in 1995.
<PAGE>
TOTAL SYSTEM SERVICES, INC.
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
The following tables set forth certain revenue and expense items as a
percentage of total revenues and the percentage increases or decreases in
those items for the three months ended September 30:
Percentage
Percentage of Change in
Total Revenues Dollar Amounts
-------------- --------------
1995 1994 1995 vs. 1994
---- ---- -------------
Revenues:
Bankcard data processing services 88.0% 89.9% 35.1%
Other services 12.0 10.0 62.8
----- -----
Total revenues 100.0 100.0 37.9
----- -----
Expenses:
Salaries and other personnel
expense 35.3 40.2 21.3
Net occupancy and equipment
expense 25.5 26.7 31.7
Other operating expenses 22.9 15.3 106.0
----- -----
Total operating expenses 83.7 82.2 40.4
----- -----
Operating income 16.3 17.8 26.2
Other nonoperating income 0.3 0.1 293.0
----- -----
Income before income
taxes and equity in
income (loss) of foreign
joint venture 16.6 17.9 27.9
Income taxes 5.9 6.0 36.8
----- -----
Income before equity in
income (loss) of foreign
joint venture 10.7 11.9 23.5
Equity in income (loss) of foreign
joint venture 0.5 - nm
----- -----
Net income 11.2% 11.9% 29.3%
===== =====
nm = not meaningful
<PAGE>
Results of Operations (continued)
The following tables set forth certain revenue and expense items as a
percentage of total revenues and the percentage increases or decreases in
those items for the nine months ended September 30:
Percentage
Percentage of Change in
Total Revenues Dollar Amounts
-------------- --------------
1995 1994 1995 vs. 1994
---- ---- --------------
Revenues:
Bankcard data processing services 87.3% 88.6% 31.7%
Other services 12.7 11.4 48.3
----- -----
Total revenues 100.0 100.0 33.5
----- -----
Expenses:
Salaries and other personnel
expense 38.3 39.1 30.7
Net occupancy and equipment
expense 26.8 27.8 28.9
Other operating expenses 18.9 15.1 67.2
----- -----
Total operating expenses 84.0 82.0 36.8
----- -----
Operating income 16.0 18.0 18.6
Other nonoperating income 0.3 0.1 255.7
----- -----
Income before income
taxes and equity in
income (loss) of foreign
joint venture 16.3 18.1 20.2
Income taxes 5.9 6.7 18.7
----- -----
Income before equity in
income (loss) of foreign
joint venture 10.4 11.4 21.1
Equity in income (loss) of foreign
joint venture (0.2) - nm
----- -----
Net income 10.2% 11.4% 18.9%
===== =====
nm = not meaningful
Total revenues increased $18.2 million or 37.9% and $44.9 million or 33.5%
during the three months and nine months ended September 30, 1995, respectively,
as compared to the same periods in 1994.
Revenues from bankcard data processing services increased during the third
quarter and first nine months of 1995 due to an increase in the average number
of cardholder accounts on file and related increases in the volume of author-
izations and transactions for cardholder accounts processed. Average
cardholder accounts on file for the three months and nine
<PAGE>
Results of Operations (continued)
months ended September 30, 1995, were 57,210,135 and 50,441,517,
respectively; average cardholder accounts on file for the same periods in 1994
were 41,055,138 and 38,004,300. Cardholder accounts on file at September 30,
1995, were 57,989,288, a 38.9% increase over the 41,742,815 accounts on file
at September 30, 1994.
The card portfolios of our existing customers continue to grow. In
addition, in June of 1995, over four million cardholder accounts of Mexican
banks processing with Total System Services de Mexico, S.A. de C.V. ("TSM"),
a joint venture between TSYS and a number of Mexican banks, were converted to
THE TOTAL SYSTEM [service mark]. At the same time, approximately 168,000
merchant accounts of the Mexican banks were converted to THE TOTAL SYSTEM,
increasing our merchant base to approximately 552,000 accounts. Also in June
1995, approximately 700,000 cardholder accounts and over 40,000 merchant
accounts of an existing customer but serviced by another processor were added
to THE TOTAL SYSTEM, so that TSYS is now processing all of this client's
accounts. During the third quarter of 1995, approximately 2.5 million
cardholder accounts were added, almost all of which were attributable to
existing customers. No significant conversions or deconversions occurred
during the third quarter.
AT&T Universal Card Services Corp. ("AT&T") continues to be a major
customer of TSYS, accounting for 22.0% and 22.1% of total revenues for the
three months and nine months ended September 30, 1995, respectively, compared
to 25.3% and 24.4% for the same periods in 1994. In June 1995, an amendment
to the processing agreement between TSYS and AT&T relative to the conversion of
AT&T's accounts to a customized version of the new cardholder processing
software system, TS2, was signed. The amended agreement voids the previously
agreed upon imposition of a 5% discount on AT&T's processing fees which was
effective from June 1, 1995, until the conversion of AT&T's accounts to TS2.
Under the amended agreement, a new, mutually agreeable conversion schedule
will be established. TSYS and AT&T are currently discussing the timing of
AT&T's conversion to TS2. The amended agreement further states there will be
no penalties payable, or additional processing fee discounts granted, by TSYS
to AT&T for any failure to complete the conversion in accordance with the
new schedule, nor will there be any premiums payable by AT&T to TSYS for
completion of the conversion prior to the completion date established under
the new agreement.
NationsBank accounted for 12.4% and 12.6% of total revenues for the three
months and nine months ended September 30, 1995, respectively, compared to
11.9% and 12.1% for the same periods in 1994. TSYS' processing agreement with
NationsBank expired in September 1995. On October 25, 1995, TSYS announced
the execution of a new agreement with NationsBank to continue processing its
credit card portfolio.
In March of 1994, TSYS announced the signing of a long-term credit card
processing agreement with Bank of America. Due to delays in software systems
development, on January 5, 1995, TSYS announced that it had reached an
agreement in principle with Bank of America
<PAGE>
Results of Operations (continued)
regarding amendments to their credit card processing agreement under which,
among other things, the conversions of Bank of America's credit card accounts
will be deferred beyond their contractually specified completion dates. On
March 15, 1995, TSYS and Bank of America executed a definitive amendment
to the credit card processing agreement reflecting the terms of the agreement
in principle. The completion of the conversions of Bank of America's credit
card accounts is now scheduled to be accomplished during 1996 and, when
accomplished, is expected to have a positive impact on TSYS' results of
operations. The processing agreement with Bank of America, including the
definitive amendment and related payments by TSYS, are not expected to have a
significant impact on TSYS' 1995 results of operations. TSYS' processing
agreement with Bank of America will extend for 10 years, subject to its terms
and conditions, from the date of the complete conversion of Bank of America's
accounts to TS2.
Revenues from other services increased 62.8% and 48.3% for the three months
and nine months ended September 30, 1995, respectively, compared to the same
periods in 1994. Revenues from other services consist primarily of revenues
generated by TSYS' wholly owned subsidiaries. Combined revenues of these
subsidiaries accounted for 10.6% and 11.1% of total consolidated revenues for
the three and nine months ended September 30, 1995, respectively.
Total operating expenses increased 40.4% and 36.8% for the three months
and nine months ended September 30, 1995, over the same periods in 1994.
Investments in people and equipment to accommodate increased processing
volumes and preparation for the conversions of customers, including Bank of
America and AT&T, to TS2 are primarily responsible for these increases.
Employment expenses increased 21.3% and 30.7% for the third quarter and
first nine months of 1995, respectively, compared to the same periods in 1994.
The average number of employees was 2,050 and 2,068 for the three months and
nine months ended September 30, 1995, compared to 1,951 and 1,836 for the same
periods in 1994. In addition to the growth in the number of employees, the
increase in salaries and other employment expenses is attributable to normal
salary increases and related benefits. Employment expenses capitalized were
$739,294 and $1,920,323 for the three months and nine months ended September
30, 1995, respectively, compared to $2,044,255 and $8,921,271, respectively,
for the same periods in 1994. The core of the new cardholder processing
software system was completed in September 1994, and since that time, amounts
capitalized relate to enhancements to TS2. At October 31, 1995, TSYS had
2,072 full-time and 109 part-time employees.
Net occupancy and equipment expense was up 31.7% and 28.9% for the third
quarter and first nine months of 1995, over the same periods in 1994. A
significant portion of this increase can be attributed to amortization of TS2,
which was $826,222 and $2,478,666 for the three months and nine months ended
September 30, 1995, compared to none in the same periods of 1994 as
amortization of TS2 commenced in October 1994. Equipment and software
rentals, which represents the largest component of net occupancy and equipment
expense, increased 40.7% and 34.8% for the three and nine months ended
September 30, 1995, compared to the
<PAGE>
Results of Operations (continued)
same periods in 1994, primarily due to upgrades of certain mainframe computers
and acquisition of additional direct access storage devices.
Other operating expenses increased 106.0% and 67.2% for the three and nine
months ended September 30, 1995, over the same periods in 1994. Beginning in
July 1995, TSYS paid management fees to Synovus Administrative Services Corp.
(see discussion below) which are included in this category and amounted to $1.5
million in the third quarter of 1995. Increases in other operating expenses
are also associated with increased supplies necessary to support the growth in
volumes of business. The increase in the cost of supplies is due to an
increase in the cost of paper as well as increased volumes. Also contributing
to the growth in other operating expenses are costs related to the conversion
of clients to TS2.
Interest, net, includes interest expense of $66,452 and $34,112 and
interest income of $221,509 and $94,159 for the third quarters of 1995 and
1994, respectively. For the first nine months of 1995 and 1994, respectively,
interest expense was $108,262 and $125,521 and interest income was $555,589
and $247,149. Interest expense has decreased due to normal repayments of
long-term debt. Interest income has increased as more cash has been available
for investment and short-term interest rates have increased.
TSYS' effective income tax rate for the third quarter of 1995 was 34.6%,
compared to 33.3% for the same period in 1994. For the nine months ended
September 30, 1995, the effective tax rate was 36.8%, compared to 36.9% for the
nine months ended September 30, 1994. Prior to the third quarter of 1995,
TSYS' effective tax rate was declining attributable to the realization of
certain income tax planning strategies, including the recognition of research
and experimentation credits for ongoing development activities and a
reduction in effective state income tax rates; however, with the completion
of the core of our new cardholder processing system, TS2, research and
development credits have decreased, effecting an increase in TSYS' effective
tax rate. Deferred income taxes at September 30, 1995, primarily relate to
the differences in the tax and book treatments of costs associated with the
development of TS2 and other software.
Liquidity and Capital Resources
During the third quarter of 1995, TSYS purchased property and equipment of
$1.3 million for total purchases of $8.1 million in the first nine months of
1995; purchases consisted primarily of computer equipment and the addition of
a new, state-of-the-art printing press. Computer software was increased during
the third quarter by $2.3 million, bringing the total additions for 1995 to
$5.9 million. These additions to software include costs related to
enhancements to the new cardholder processing system, TS2, of $739,300 and
purchases of computer software of $1.6 million. These expenditures are
necessary in order for TSYS to continue operating with the latest technology,
enabling the Company to continue providing quality service in an increasingly
competitive environment, as well as providing capacity for increasing volumes
of business.
<PAGE>
Liquidity and Capital Resources (continued)
As discussed above, TSM began operations in June 1995 following the
successful completion of the largest conversion of credit card processing
services in the history of Mexico's credit card industry - more than 4
million cardholder accounts and approximately 168,000 merchant accounts.
TSM occupies a new state-of-the-art, 52,000 square-foot facility located in
Toluca, Mexico, approximately 35 miles west of Mexico City. Card and
statement production services are being performed by TSM at the Mexican
facility, while TSM has subcontracted data processing services to TSYS.
Revenues from this processing were $3.6 million and $4.2 million for the
three months and nine months ended September 30, 1995, respectively.
The data processing services are being performed at TSYS' operations facility
in north Columbus.
TSYS has invested $6.2 million in TSM, $3.5 million of which was in the
first six months of 1995, maintaining its 49% equity interest in the
joint venture. At September 30, 1995, the cumulative currency translation
adjustment related to the Company's equity investment amounted to $629,211,
net of deferred income taxes. Although the Mexican economy has continued to
improve during the third quarter of 1995, and the value of the Mexican peso
remained relatively stable during the third quarter, TSYS' revenues from
processing services provided to TSM and TSYS' share of earnings from the
joint venture are not expected to be significant to TSYS' results of
operations for 1995.
During the second quarter of 1995, CPI obtained temporary financing in
the amount of $1,965,775 from Columbus Bank and Trust Company ("CB&T") for
the purchase of a new printing press which collateralizes the note. Interest
at CB&T's prime rate is paid monthly. No principal payment is due for a
period of one year at which time CPI plans to arrange permanent financing.
Effective July 1, 1995, a new, wholly owned subsidiary of Synovus
Financial Corp., Synovus Administrative Services Corp. ("SASC"), was formed
which is providing certain administrative services to TSYS and other related
companies. Services provided by SASC include human resources, maintenance,
security, communications, corporate education, travel and administration.
In connection with the formation of this new company, approximately 110 TSYS
employees were transferred to SASC, and TSYS sold to the new company property
and equipment at book value of approximately $438,000. TSYS is paying a
management fee to SASC which is expected to be offset by the reduction in
expenses. During the third quarter of 1995, TSYS hired approximately 100
new employees, primarily programmers; therefore, employment expenses did not
decrease in the third quarter as might be expected.
On August 7, 1995, TSYS announced the purchase of a 23-acre site in
Columbus, Georgia, which includes a new, 110,000 square foot building, for
$6.2 million. The new location will accommodate current work needs and
facilitate future growth. Modifications are currently underway to adapt the
building to TSYS' requirements, and it is expected to be ready for occupancy
in late December 1995.
<PAGE>
Liquidity and Capital Resources (continued)
On August 16, 1995, TSYS and Visa U.S.A. ("Visa") announced an agreement
in principle to merge their merchant processing operations. The planned
venture will form a new, stand-alone processing company to offer fully
integrated merchant transaction and related electronic information services to
financial institutions and their merchant customers. The new organization, to
be known as Vital Processing Services, will be structured with its own
management team and a separate Board of Directors. A location for Vital's
headquarters has not been determined. The two companies, TSYS and Visa, will
be equal shareholders in the joint venture. The parties are currently
negotiating a definitive agreement which is expected to be executed by early
1996. The impact of this venture on TSYS' future results of operations has not
been determined at this time.
TSYS may seek external sources of capital in the future. The Company has
a credit facility available for short-term borrowing needs with CB&T that
provides availability of $5.0 million at CB&T's prime rate of interest.
Historically, the Company has not required any short-term borrowings and has
not borrowed any significant funds on a short-term basis in 1995 and 1994.
The Company may seek long-term debt or other external sources of capital to
finance investment in software development, computer equipment, acquisitions
or other strategic alliances in the future. The form of any such financing
will vary depending upon prevailing market and other conditions and may include
short or long-term borrowings from financial institutions, or the issuance of
additional debt or equity securities. However, there can be no assurance
that funds will be available on terms acceptable to TSYS. Management expects
that TSYS will continue to be able to fund a significant portion of its capital
expenditure needs through internally generated cash in the future. At
September 30, 1995, TSYS had working capital of $40.8 million compared to
$33.4 million at December 31, 1994.
<PAGE>
TOTAL SYSTEM SERVICES, INC.
Part II - Other Information
Item 6 - Exhibits and Reports on Form 8-K
a) Exhibits
(11) - Statement re Computation of Per Share Earnings
(27) - Financial Data Schedule
b) Forms 8-K filed since the 10-Q for the three months ended June 30, 1995
1. The report dated August 16, 1995, included the following important
event:
(a.) On August 16, 1995, Total System Services, Inc. ("Registrant")
announced an agreement in principle with Visa U.S.A. to merge
their merchant processing operations. Consummation of the
transaction is subject to mutually satisfactory due diligence,
the execution of a definitive agreement and the approval of the
transaction, or the expression of no objection to the
transaction, by the appropriate federal and state regulatory
authorities.
2. The report dated October 25, 1995, included the following important
event:
(a.) On October 25, 1995, Total System Services, Inc. ("Registrant")
announced the renewal of a long-term contract with NationsBank
to continue processing its credit card portfolio through
September 30, 2000.
<PAGE>
TOTAL SYSTEM SERVICES, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TOTAL SYSTEM SERVICES, INC.
Date: November 10, 1995 By: /s/ Richard W. Ussery
-----------------------
Richard W. Ussery
Chairman of the Board
and Chief Executive
Officer
Date: November 10, 1995 By: /s/ James B. Lipham
-----------------------
James B. Lipham
Executive Vice President
and Chief Financial Officer
<PAGE>
<TABLE>
TOTAL SYSTEM SERVICES, INC.
Statement re Computation of Per Share Earnings
The following computations set forth the calculations of primary and fully
diluted earnings per share for the three months and nine months ended September
30, 1995 and 1994:
Three Months Ended Nine Months Ended
September 30, 1995 September 30, 1995
Fully Fully
Primary Diluted Primary Diluted
Earnings Earnings Earnings Earnings
Per Share Per Share Per Share Per Share
<S> <C> <C> <C> <C>
Net income $ 7,389,910 $ 7,389,910 $ 18,187,008 $ 18,187,008
========== ========== ========== ==========
Weighted average
number of
common shares
outstanding 64,631,294 64,631,294 64,631,294 64,631,294
Increase due to
contingently
issuable shares
associated with
an acquisition 15,152 15,152 15,152 15,152
Increase due to
assumed issuance
of shares related
to stock options
outstanding 65,345 69,340 62,376 69,340
---------- ---------- ---------- ----------
Adjusted weighted
average number of
common and common
equivalent shares
outstanding 64,711,791 64,715,786 64,708,822 64,715,786
========== ========== ========== ==========
Net income per
common and common
equivalent share $ .114 $ .114 $ .281 $ .281
========== ========== ========== =========
</TABLE>
<TABLE>
Three Months Ended Nine Months Ended
September 30, 1994 September 30, 1994
Fully Fully
Primary Diluted Primary Diluted
Earnings Earnings Earnings Earnings
Per Share Per Share Per Share Per Share
<S> <C> <C> <C> <C>
Net income $ 5,716,760 $ 5,716,760 $ 15,290,240 $ 15,290,240
========== ========== ========== ==========
Weighted average
number of
common shares
outstanding 64,631,294 64,631,294 64,628,979 64,628,979
Increase due to
contingently
issuable shares
associated with
an acquisition 19,849 39,698 19,849 39,698
Increase due to
assumed issuance
of shares related
to stock options
outstanding 53,951 62,135 18,178 21,622
---------- ---------- ---------- ---------
Adjusted weighted
average number of
common and common
equivalent shares
outstanding 64,705,094 64,733,127 64,667,006 64,690,299
========== ========== ========== ==========
Net income per
common and common
equivalent share $ .088 $ .088 $ .236 $ .236
========== ========== ========= =========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000721683
<NAME> TOTAL SYSTEM SERVICES, INC.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 22,306,181
<SECURITIES> 0
<RECEIVABLES> 45,505,346
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 77,200,273
<PP&E> 102,766,369
<DEPRECIATION> 54,976,814
<TOTAL-ASSETS> 190,335,325
<CURRENT-LIABILITIES> 36,422,843
<BONDS> 0
<COMMON> 6,472,869
0
0
<OTHER-SE> 130,179,212
<TOTAL-LIABILITY-AND-EQUITY> 190,335,325
<SALES> 178,621,850
<TOTAL-REVENUES> 178,621,850
<CGS> 0
<TOTAL-COSTS> 150,091,401
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 28,788,132
<INCOME-TAX> 10,601,124
<INCOME-CONTINUING> 18,187,008
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,187,008
<EPS-PRIMARY> .281
<EPS-DILUTED> 0
</TABLE>
