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 June 30, 1996
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 [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
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 August 13, 1996
- ---------------------------- ----------------------------------------
Common Stock, $.10 par value 129,289,680
<PAGE>
TOTAL SYSTEM SERVICES, INC.
INDEX
Page
Number
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets - June 30, 1996 and
December 31, 1995................................ 3
Consolidated Statements of Income - Three months and
six months ended June 30, 1996 and 1995.......... 4
Consolidated Statements of Cash Flows - Six months
ended June 30, 1996 and 1995..................... 6
Notes to Consolidated Financial Statements......... 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations............ 8
Part II. Other Information
Item 4. Submission of Matters to a Vote of
Security Holders............................... 14
Item 6(a) Exhibits...................................... 15
(b) Reports on Form 8-K........................... 15
Signatures.................................................. 16
- 2 -
<PAGE>
<TABLE>
TOTAL SYSTEM SERVICES, INC.
PART 1 - FINANCIAL INFORMATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<CAPTION>
June 30, December 31,
1996 1995
------------ ------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents (includes
$22,229,777 and $16,742,926 on deposit
with a related party at 1996 and 1995,
respectively $ 23,512,307 18,849,623
Accounts receivable, net of allowance
for doubtful accounts of $718,574 and
$714,374 at 1996 and 1995, respectively 49,788,843 49,614,779
Prepaid expenses and other current assets 11,494,777 9,362,500
----------- -----------
Total current assets 84,795,927 77,826,902
Property and equipment, less accumulated
depreciation of $58,388,965 and $54,944,079
at 1996 and 1995, respectively 60,834,871 54,572,903
Computer software, less accumulated
amortization of $20,557,722 and $16,317,318
at 1996 and 1995, respectively 38,407,404 39,215,561
Other assets 33,896,155 27,384,435
----------- -----------
Total assets $ 217,934,357 198,999,801
=========== ===========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 8,768,924 5,811,334
Current portion of long-term debt
and obligations under capital leases 231,401 243,786
Accrued employee benefits 7,885,318 10,412,551
Other current liabilities (includes
$1,576,857 and $1,578,899 payable to
related parties at 1996 and 1995,
respectively) 28,968,052 21,113,104
----------- -----------
Total current liabilities 45,853,695 37,580,775
Long-term debt and obligations under
capital leases, excluding current portion 589,991 686,955
Deferred income taxes 15,779,150 16,260,050
----------- -----------
Total liabilities 62,222,836 54,527,780
----------- -----------
Shareholders' equity:
Common stock - $.10 par value. Authorized
300,000,000 shares; issued 129,483,522
and 129,461,544 at 1996 and 1995,
respectively; 129,288,722 and 129,266,744
outstanding at 1996 and 1995, respectively 12,948,352 12,946,154
Additional paid-in capital 5,047,191 4,445,755
Treasury stock, at cost (475,789) (475,789)
Cumulative currency translation adjustments (1,376,550) (1,052,081)
Retained earnings 139,568,317 128,607,982
----------- -----------
Total shareholders' equity 155,711,521 144,472,021
----------- -----------
Total liabilities and
shareholders' equity $217,934,357 198,999,801
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
- 3 -
<PAGE>
<TABLE>
TOTAL SYSTEM SERVICES, INC.
Consolidated Statements of Income
(Unaudited)
<CAPTION>
Three months ended
June 30,
------------------------------
1996 1995
------------------------------
<S> <C> <C>
Revenues:
Bankcard data processing services
(includes $6,073,598 and $1,068,673
received from related parties for
the three months ended June 30, 1996
and 1995, respectively $ 64,912,966 51,349,566
Other services 9,576,421 7,783,559
----------- -----------
Total revenues 74,489,387 59,133,125
----------- -----------
Expenses:
Salaries and other personnel expense 31,386,559 22,690,823
Net occupancy and equipment expense 20,165,536 15,904,215
Other operating expenses (includes
$1,902,612 and $63,501 paid to related
parties for the three months ended June
30, 1996 and 1995, respectively 12,947,404 10,517,294
----------- -----------
Total operating expenses 64,499,499 49,112,332
----------- -----------
Operating income 9,989,888 10,020,793
----------- -----------
Nonoperating income:
Gain on disposal of equipment, net 97,148 61,856
Interest income, net (includes $287,000
and $113,437 from a related party
for the three months ended June 30, 1996
and 1995, respectively 289,573 142,691
----------- -----------
Total nonoperating income 386,721 204,547
----------- -----------
Income before income taxes and equity in
income(loss) of joint ventures 10,376,609 10,225,340
Income taxes 3,793,885 3,749,226
----------- -----------
Income before equity in income(loss)
of joint ventures 6,582,724 6,476,114
Equity in income(loss) of joint venture 1,317,393 (462,535)
----------- -----------
Net income $ 7,900,117 6,013,579
=========== ===========
Net income per share $ .06 .05
=========== ===========
Weighted average shares outstanding 129,288,792 129,262,588
=========== ===========
Cash dividends per common share $ .011 .011
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
- 4 -
<PAGE>
<TABLE>
TOTAL SYSTEM SERVICES, INC.
Consolidated Statements of Income
(Unaudited)
<CAPTION>
Six months ended
June 30,
------------------------------
1996 1995
------------------------------
<S> <C> <C>
Revenues:
Bankcard data processing services
(includes $11,041,703 and $886,918
received from related parties for
the six months ended June 30, 1996
and 1995, respectively $127,662,708 97,816,317
Other services 17,928,658 14,697,217
----------- -----------
Total revenues 145,591,366 112,513,534
----------- -----------
Expenses:
Salaries and other personnel expense 60,479,646 45,065,861
Net occupancy and equipment expense 39,111,484 31,063,727
Other operating expenses (includes
$4,333,444 and $127,704 paid to related
parties for the six months ended June
30, 1996 and 1995, respectively 28,141,053 18,599,926
----------- -----------
Total operating expenses 127,732,183 94,729,514
----------- -----------
Operating income 17,859,183 17,784,020
----------- -----------
Nonoperating income:
Gain on disposal of equipment, net 239,352 78,507
Interest income, net (includes $555,180
and $273,178 from a related party
for the six months ended June 30, 1996
and 1995, respectively 571,297 292,270
----------- -----------
Total nonoperating income 810,649 370,777
----------- -----------
Income before income taxes and equity in
income(loss) of joint ventures 18,669,832 18,154,797
Income taxes 6,828,327 6,693,575
----------- -----------
Income before equity in income(loss)
of joint ventures 11,841,505 11,461,222
Equity in income(loss) of joint ventures 2,027,826 (664,124)
----------- -----------
Net income $ 13,869,331 10,797,098
=========== ===========
Net income per share $ .11 .08
=========== ===========
Weighted average shares outstanding 129,285,341 129,262,588
=========== ===========
Cash dividends per common share $ .023 .023
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
- 5 -
<PAGE>
<TABLE>
TOTAL SYSTEM SERVICES, INC
Consolidated Statements of Cash Flows
(Unaudited)
<CAPTION>
Six months ended
June 30,
--------------------------
1996 1995
--------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 13,869,331 10,797,098
Adjustments to reconcile net income to net cash
provided by operating activities:
Equity in (income) loss of joint ventures (2,027,826) 664,124
Depreciation and amortization 11,321,549 9,587,800
Provision for doubtful accounts 60,000 26,789
Deferred income tax expense (480,900) 581,030
Gain on disposal of equipment, net (239,352) (78,507)
(Increase) decrease in:
Accounts receivable (234,064) (7,568,803)
Prepaid expenses and other assets (5,196,757) (4,915,087)
Increase (decrease) in:
Accounts payable 2,957,590 71,591
Accrued expenses and other current
liabilities 4,426,399 (838,795)
----------- -----------
Net cash provided by operating activities 24,455,970 8,327,240
----------- -----------
Cash flows from investing activities:
Purchase of property and equipment (11,614,333) (6,845,717)
Additions to computer software (3,432,247) (3,559,470)
Proceeds from disposal of equipment 352,771 138,414
Investment in joint ventures (2,081,379) (3,455,865)
----------- -----------
Net cash used in investing activities (16,775,188) (13,722,638)
----------- -----------
Cash flows from financing activities:
Proceeds from long-term debt -- 1,965,775
Principal payments on long-term debt and
capital lease obligations (109,349) (117,658)
Dividends paid on common stock (2,908,749) (2,908,409)
----------- -----------
Net cash used in financing activities (3,018,098) (1,060,292)
----------- -----------
Net increase (decrease) in cash
and cash equivalents 4,662,684 (6,455,690)
Cash and cash equivalents at beginning
of period 18,849,623 14,684,674
----------- -----------
Cash and cash equivalents at end of period $ 23,512,307 8,228,984
=========== ===========
Cash paid for interest $ 12,884 18,621
=========== ===========
Cash paid for income taxes $ 7,447,716 7,032,605
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
- 6 -
<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. [service mark] (TSYS [registered
service mark]) 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 inform-
ation 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 1995 annual report previously filed on Form 10-K.
Note 2 - Stock Split
On March 29, 1996, TSYS declared a two-for-one stock split, which was
effected on April 22, 1996, in the form of a 100% stock dividend on its $.10
par value common stock. All shareholders' equity, share and per share amounts
in the accompanying consolidated financial statements have been restated to
give effect to the split. Prior to the split, TSYS' charter was amended to
increase authorized shares from 100 million to 300 million.
Note 3 - Joint Venture
Effective May 1, 1996, Vital Processing Services L.L.C. ("Vital") became
operational. Vital is an equally owned joint venture between Visa U.S.A.'s
Merchant Bank Services ("Visa") and Total System Services, Inc., to which TSYS
contributed cash and other assets. The joint venture combines Visa's point-of-
sale processing operations and TSYS' merchant accounting and settlement
services and is being accounted for using the equity method of accounting.
Note 4 - Supplementary Balance Sheet Information
A significant component of other assets included on the consolidated
balance sheets at June 30, 1996, and December 31, 1995, is contract acquisition
costs, net, of $17,751,465 and $17,628,448, respectively.
- 7 -
<PAGE>
TOTAL SYSTEM SERVICES, INC.
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
The following table sets 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 June 30:
Percentage of
Total Revenues Change in Dollars
1996 1995 1996 vs 1995
--------------------- -----------------
Revenues:
Bankcard data processing services 87.1% 86.8% 26.4%
Other services 12.9 13.2 23.0
----- -----
Total revenues 100.0 100.0 26.0
----- -----
Expenses:
Salaries and other
personnel expense 42.1 38.4 38.3
Net occupancy and equipment
expense 27.1 26.9 26.8
Other operating expenses 17.4 17.8 23.1
----- -----
Total operating expenses 86.6 83.1 31.3
----- -----
Operating income 13.4 16.9 (0.3)
Nonoperating income 0.5 0.3 89.1
----- -----
Income before income taxes and
equity in income(loss) of joint
ventures 13.9 17.2 1.5
Income taxes 5.1 6.3 1.2
----- -----
Income before equity in
income(loss) of joint
ventures 8.8 10.9 1.6
Equity in income (loss) of
joint ventures 1.8 (0.8) nm
----- -----
Net income 10.6% 10.1% 31.4%
===== =====
nm - not meaningful
- 8 -
<PAGE>
Results of Operations (continued)
The following table sets forth certain revenue and expense items as a
percentage of total revenues and the percentage increases or decreases in those
items for the six months ended June 30:
Percentage of
Total Revenues Change in Dollars
1996 1995 1996 vs 1995
------------------- -----------------
Revenues:
Bankcard data processing services 87.7% 86.9% 30.5%
Other services 12.3 13.1 22.0
----- -----
Total revenues 100.0 100.0 29.4
----- -----
Expenses:
Salaries and other personnel expense 41.5 40.1 34.2
Net occupancy and equipment expense 26.9 27.6 25.9
Other operating expenses 19.3 16.5 51.3
----- -----
Total operating expenses 87.7 84.2 34.8
----- -----
Operating income 12.3 15.8 0.4
Nonoperating income 0.5 0.3 118.6
----- -----
Income before income taxes and
equity in income(loss) of joint
ventures 12.8 16.1 2.8
Income taxes 4.7 5.9 2.0
----- -----
Income before equity in income
(loss) of joint ventures 8.1 10.2 3.3
Equity in income(loss) of joint
ventures 1.4 (0.6) nm
----- -----
Net income 9.5% 9.6% 28.5%
===== =====
nm - not meaningful
Total revenues increased $15.4 million, or 26.0% and $33.1 million or
29.4% during the three months and six months ended June 30, 1996, compared to
the same periods in 1995.
Revenues from bankcard data processing services increased $13.6 million
or 26.4% and $29.8 million or 30.5% in the three and six months ended June 30,
1996, respectively, compared to the same periods of 1995. Increased revenues
from bankcard data processing are attributable to the conversion of cardholder
accounts of new customers and growth in the card portfolios of existing
customers. Increases in the volume of authorizations and transactions
associated with the additional cardholder accounts, as well as growth in new
services offered, also contributed to the increased revenues. In the second
quarter of 1996, more than two million accounts of two new customers were
added to THE TOTAL SYSTEM (service mark). Also, in April 1996, approximately
two million accounts of another new customer were converted to TS2, TSYS' new
- 9 -
<PAGE>
Results of Operations (continued)
cardholder processing software system. Another significant factor in the
growth in bankcard data processing revenues is the more than 3.5 million
cardholder accounts being processed for Total System Services de Mexico,
S.A. de C.V. ("TSYS de Mexico"), TSYS' Mexican joint venture; the conversion of
these accounts to THE TOTAL SYSTEM was completed in July 1995.
Average cardholder accounts on file for the three months and six months
ended June 30, 1996, were 69.5 million and 67.7 million, respectively; average
cardholder accounts on file for the same periods in 1995 were 50.4 million and
47.9 million. Cardholder accounts on file at June 30, 1996, were 73.2 million,
a 31.8% increase over the 55.5 million accounts on file at June 30, 1995.
The joint venture between TSYS and Visa U.S.A., known as Vital Processing
Services L.L.C. ("Vital"), became operational on May 1, 1996. Vital merges
TSYS' back-office merchant processing and Visa's Merchant Bank Services'
point-of-sale processing operations. On TSYS' consolidated income statement,
the results of operations of the joint venture for the two months of operations
in the second quarter of 1996 are included in equity in the income of joint
ventures. The change in classification of the Company's revenues and expenses
from its merchant operations to an equity interest in the Vital joint venture
affects the comparability of prior periods presented in the Company's income
statement and is the primary factor in the decrease in operating income for the
second quarter of 1996, compared to the same quarter in 1995. Revenues and
expenses associated with its merchant operations for the month of April 1996
are included in TSYS' results of operations.
A significant amount of the Company's revenues are derived from certain
major customers who are processed under long-term contracts. For the three
months and six months ended June 30, 1996, two customers accounted for
approximately 29% and 30% of total revenues, respectively. As a result, the
loss of one of the Company's major customers could have a material adverse
effect on the Company's results of operations.
TSYS has converted approximately 4.5 million of Bank of America's cardholder
accounts to its new cardholder system, TS2. Conversions to TS2 of remaining
portions of Bank of America's cardholder accounts are currently expected to
continue into 1997. Management believes all of Bank of America's cardholder
accounts will be successfully converted to TS2.
During the second quarter, TSYS and Bank of America amended their processing
agreement to, among other things, eliminate the financial penalties and
termination rights associated with prior conversion delays. The conversion and
processing of Bank of America's cardholder accounts is not expected to have a
material impact on TSYS' 1996 financial condition or results of operations.
- 10 -
<PAGE>
Results of Operations (continued)
Revenues from other services, primarily generated by TSYS' wholly owned
subsidiaries, increased 23.0% and 22.0% for the three months and six months
ended June 30, 1996, compared to the same periods in 1995. The increase in
revenues can be attributed primarily to increased business from existing
customers and the acquisition of two significant new customers by one
subsidiary of TSYS.
Total operating expenses increased 31.3% and 34.8% for the three months
and six months ended June 30, 1996, compared to the same period in 1995.
Increases in expenses are reflected in all categories and are attributable to
the addition of personnel and equipment; the cost of materials associated with
the services provided by all companies, particularly the supplies related to
processing the increased number of accounts on THE TOTAL SYSTEM; certain
processing provisions, and expenses associated with the conversion of customers
to TS2.
Employment expenses increased 38.3% and 34.2% for the three months and
six months ended June 30, 1996, respectively, compared to the same periods in
1995. The average number of employees in the second quarter of 1996 increased
to 2,488, an 18.1% increase over the 2,106 in the same period of 1995. For the
six months ended June 30, 1996, the average number of employees was 2,408, a
16.0% increase over the 2,075 in the same period of 1995. In addition to the
growth in number of employees, the increase in employment expenses is
attributable to normal salary increases and related employee benefits.
Nonemployee compensation, primarily temporary help and contract programmers, is
included in employment expenses and also contributed to the increase. At July
31, 1996, TSYS had 2,474 full-time and 144 part-time employees.
Net occupancy and equipment expense was up 26.8% and 25.9% for the second
quarter and first six months of 1996, respectively, over the same periods in
1995. Equipment and software rentals, the largest components of occupancy and
equipment expense, were up 33.1% and 31.8% in the second quarter and first six
months of 1996, respectively, compared to the same periods of 1995. Due to the
rapidly changing technology in computer equipment, TSYS fills a substantial
portion of its equipment needs through operating leases. Computer upgrades and
other additional equipment were leased subsequent to the first half of 1995 to
accommodate increased volumes due to growth in the number of accounts being
processed.
Other operating expenses increased 23.1% and 51.3% for the three months and
six months ended June 30, 1996, compared to the same period in 1995. Manage-
ment fees totaling $2.5 million and $4.9 million were paid to affiliated
companies for various services in the three and six months ended June 30, 1996,
respectively. The majority of these management fees resulted from the
formation of Synovus Administrative Services Corp. and are included in other
operating expenses in the second quarter and first six months of 1996, but
were primarily reflected as salaries and other personnel
- 11 -
<PAGE>
Results of Operations (continued)
expenses in the same periods of 1995. Other factors contributing to the
increase in other operating expenses were supplies associated with processing
the increased number of accounts and increased travel costs. Other operating
expenses also increased as a result of certain provisions made for contractual
or negotiated processing commitments. The processing provisions were deemed
necessary in view of the increased risks associated with the significant
increase in the number of accounts being processed.
Interest income, net, includes interest expense of $14,284 and $23,047
and interest income of $303,857 and $165,738 for the second quarters of 1996
and 1995, respectively. For the first six months of 1996 and 1995,
respectively, interest expense was $29,657 and $41,810, and interest income was
$600,954 and $334,080. Interest expense has decreased due to a reduction in
debt outstanding. The increase in interest income is the result of
fluctuations in cash available for investment and short-term interest rates.
TSYS' effective income tax rate for the second quarter of 1996 was 32.4%,
compared to 38.4% for the same period in 1995. For the six months ended June
30, 1996, the effective tax rate was 33.0%, compared to 38.3% for the six
months ended June 30, 1995. The decline in TSYS' effective tax rate is
primarily due to certain effective tax planning strategies.
TSYS' share of earnings from its equity in joint ventures was $1.3 million
and $2.0 million for the second quarter and first six months of 1996,
respectively. TSYS has a 49% and 50% interest in Total System Services de
Mexico and Vital Processing Services L.L.C., respectively. Vital became
operational May 1, 1996.
TSYS de Mexico, which became operational in July 1995, continues to perform
as expected. The Mexican economy, particularly in terms of inflation and
exchange rates, has improved relative to 1995. TSYS remains confident of the
operational performance of the Mexican joint venture in 1996; however, there
remains uncertainty in the Mexican economy which management continues to
monitor.
Liquidity and Capital Resources
During the second quarter of 1996, TSYS purchased property and equipment
of $5.4 million for total purchases of $11.6 million in the first six months of
1996. Computer software was increased during the second quarter by $1.8
million, bringing the total additions for 1996 to $3.4 million; additions were
primarily purchased software. Dividends on common stock of $1.5 million were
paid in the second quarter of 1996, bringing the total dividends paid in 1996
to $2.9 million.
- 12 -
<PAGE>
Liquidity and Capital Resources (continued)
During the first quarter of 1996, TSYS announced its decision to remain
in Columbus, Georgia, and build a new campus-type facility on 50 acres of land
north of downtown Columbus. The decision was based on a commitment by the
state of Georgia to collegiate high-tech education and cooperation by the
city of Columbus in making available a suitable building site. The campus
facility will consolidate TSYS' multiple Columbus locations and will facilitate
future growth. The campus development will be a multi-year phased project with
initial construction scheduled to begin in early 1997. Financing for the
project is expected to be through the internal generation of funds and the
potential use of funds from external sources, possibly through the issuance of
industrial revenue bonds.
TSYS may seek external sources of capital in the future. The form of
any such financing will vary depending upon prevailing market and other
conditions and may include short-term or long-term borrowings from financial
institutions, or the issuance of additional equity securities and/or industrial
revenue bonds. 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 June 30, 1996, TSYS had working
capital of $38.9 million compared to $40.2 million at December 31, 1995.
- 13 -
<PAGE>
TOTAL SYSTEM SERVICES, INC.
Part II - Other Information
Item 4 - Submission of Matters to a Vote of Security Holders
The annual shareholders' meeting of Total System Services, Inc. was held
April 15, 1996. Voted on at the meeting was the election of Class I directors.
Following is a tabulation of votes for each nominee:
WITHHELD
AUTHORITY
NOMINEE VOTES FOR TO VOTE
Griffin B. Bell 122,834,119 64,134
Kenneth E. Evans 122,833,502 64,751
H. Lynn Page 122,836,616 61,637
Philip W. Tomlinson 122,839,163 59,090
Richard W. Ussery 122,833,787 64,466
The only other matter voted on at the meeting was approval of the Synovus
Financial Corp. Executive Bonus Plan. Following is a tabulation of the votes
on this plan:
FOR AGAINST ABSTAIN
121,975,417 474,333 448,503
- 14 -
<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 (For SEC use only)
b) Form 8-K filed during the quarter ended June 30, 1996
1. The report dated May 20, 1996, included the following
important event:
On May 20, 1996, Total System Services, Inc.
("Registrant") announced the completion of the merger of
its merchant processing operations with the merchant
processing operations of Visa U.S.A. through the formation
of Vital Processing Services L.L.C.
- 15 -
<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: August 13, 1996 by: /s/ Richard W. Ussery
---------------------
Richard W. Ussery
Chairman of the Board
and Chief Executive
Officer
Date: August 13, 1996 by: /s/ James B. Lipham
----------------------
James B. Lipham
Chief Financial Officer
- 16 -
<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 six months ended June 30,
1996 and 1995:
<CAPTION>
Three months ended Six months ended
June 30, 1996 June 30, 1996
---------------------- -----------------------
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 $ 7,900,117 $ 7,900,117 $ 13,869,331 13,869,331
=========== =========== =========== ===========
Weighted average
number of common
shares outstanding 129,288,792 129,288,792 129,285,341 129,285,341
Increase due to
contingently issuable
shares associated
with an acquisition -- -- -- --
Increase due to
assumed issuance of
shares related to
stock options
outstanding 166,134 166,134 160,729 165,169
----------- ----------- ---------- ----------
Adjusted weighted
average number of
common and common
equivalent shares
outstanding 129,454,926 129,454,926 129,446,070 129,450,510
=========== =========== =========== ===========
Net income per common
and common equivalent
share $ .06 $ .06 $ .11 .11
=========== =========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, 1995 June 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 $ 6,013,579 $ 6,013,579 $ 10,797,098 10,797,098
Weighted average
number of common
shares outstanding 129,262,588 129,262,588 129,262,588 129,262,588
Increase due to
contingently issuable
shares associated
with an acquisition 43,478 43,478 43,478 43,478
Increase due to
assumed issuance of
shares related to
stock options
outstanding 116,944 116,944 121,060 121,060
----------- ----------- --------- ---------
Adjusted weighted
average number of
common and common
equivalent shares
outstanding 129,423,010 129,423,010 129,427,126 129,427,126
=========== =========== =========== ===========
Net income per common
and common equivalent
share $ .05 $ .05 $ .08 $ .08
=========== =========== =========== ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000721683
<NAME> TOTAL SYSTEM SERVICES, INC.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 23,512,307
<SECURITIES> 0
<RECEIVABLES> 50,507,417
<ALLOWANCES> 718,574
<INVENTORY> 0
<CURRENT-ASSETS> 84,795,927
<PP&E> 119,223,836
<DEPRECIATION> 58,388,965
<TOTAL-ASSETS> 217,934,357
<CURRENT-LIABILITIES> 45,853,695
<BONDS> 0
0
0
<COMMON> 12,948,352
<OTHER-SE> 142,763,169
<TOTAL-LIABILITY-AND-EQUITY> 217,934,357
<SALES> 145,591,366
<TOTAL-REVENUES> 145,591,366
<CGS> 0
<TOTAL-COSTS> 127,732,183
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 18,669,832
<INCOME-TAX> 6,828,327
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,869,331
<EPS-PRIMARY> .11<F1>
<EPS-DILUTED> 0
<FN>
<F1>On March 29, 1996, TSYS announced a two-for-one stock split to be issued on
April 22, 1996, to shareholders of record as of April 11, 1996. Financial data
schedules have not been restated for prior periods for this recapitalization.
</FN>
</TABLE>
