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 1999 or
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[ ] 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 (I.R.S. Employer Identification No.)
incorporation or organization)
1600 First 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
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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 11, 2000, 194,832,720 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 $482,000,000 (based upon
the closing per share price of such stock on said date.)
Portions of the 1999 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 10, 2000 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 20 through 25, 30 through Part I, Item 1, Business 34,
and 37 through 40
of Registrant's 1999 Annual Report
to Shareholders
Pages 30 through 34, and 37 and 38 Part I, Item 2, Properties
of Registrant's 1999 Annual
Report to Shareholders
Page 37 and 38 of Registrant's 1999 Part I, Item 3, Legal
Annual Report to Shareholders Proceedings
Page 43 of Registrant's 1999 Part II, Item 5, Market
Annual Report to Shareholders for Registrant's Common
Equity and Related Stockholder
Matters
Page 19 of Registrant's 1999 Part II, Item 6, Selected
Annual Report to Shareholders Financial Data
Pages 20 through 25 of Registrant's Part II, Item 7, Management's
1999 Annual Report to Shareholders Discussion and Analysis of
Financial Condition and
Results of Operations
Pages 26 through 41, and 43 Part II, Item 8, Financial
of Registrant's 1999 Annual Statements and Supplementary
Report to Shareholders Data
Pages 2 through 4, 6 and 27 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 13, 2000
Page 6, pages 17 through 20, and 23 Part III, Item 11,
of Registrant's Proxy Statement Executive Compensation
in connection with the Annual Meeting
of Shareholders to be held on April 13, 2000
Pages 7 and 8 and pages 24 through 26 Part III, Item 12, Security
Registrant's Proxy Statement in connection Ownership of Certain
with the Annual Meeting of Shareholders Beneficial Owners and
to be held on April 13, 2000 Management
Pages 23 through 27 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 13, 2000
and pages 32 and 33 of Registrant's 1999
Annual Report to Shareholders
Pages 26 through 41 of Registrant's Part IV, Item 14, Exhibits,
1999 Annual Report to Shareholders Financial Statement
Schedules and Reports
on Form 8-K
Cross Reference Sheet
Item No. Caption Page No.
- -------- ------- --------
Part I
Safe Harbor Statement 1
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 6
of Financial Condition and Results
of Operations
7A. Quantitative and Qualitative Disclosures
About Market Risk 6
8. Financial Statements and Supplementary 6
Data
9. Changes In and Disagreements With Accountants 7
on Accounting and Financial Disclosure
Part III
10. Directors and Executive Officers of 7
the Registrant
11. Executive Compensation 7
12. Security Ownership of Certain 7
Beneficial Owners and Management
13. Certain Relationships and Related 7
Transactions
Part IV
14. Exhibits, Financial Statement Schedules, 8
and Reports on Form 8-K
PART I
Safe Harbor Statement
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, services or conversions; (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) TSYS' performance
under - and retention of - current and future processing agreements with
customers; (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, including a shift
from credit cards to debit cards; (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., THE TOTAL SYSTEM and TSYS Total Solutions are federally
registered service marks of Total System Services, Inc.
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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 information technology
processors of credit, debit, commercial and retail cards. Based in Columbus,
Georgia, and traded on the New York Stock Exchange under the symbol "TSS," TSYS
provides the electronic link between buyers and sellers with a comprehensive
on-line system of data processing services marketed as THE TOTAL SYSTEM(R)
servicing issuing institutions throughout the United States, Canada, Mexico,
Honduras and the Caribbean, representing more than 206 million cardholder
accounts on file as of December 31, 1999. TSYS provides card production,
statement preparation, electronic commerce services, portfolio management
services, account acquisition, credit evaluation, risk management and customer
service to clients. Synovus Financial Corp.(R), a $12.5 billion asset,
multi-financial services company, owns 80.8 percent of TSYS.
TSYS has four wholly owned subsidiaries: (1) Columbus Depot Equipment
Company(sm), which sells and leases computer related equipment associated with
TSYS' transaction processing services; (2) TSYS Total Solutions,(R) Inc., which
provides mail and correspondence processing services, teleservicing, data
documentation capabilities, offset printing, customer service, collections and
account solicitation services; (3) Columbus Productions, Inc.(sm), which
provides full-service commercial printing and related services; and (4) TSYS
Canada, Inc., which provides programming support and assistance with the
conversion of card portfolios to TS2(R).
TSYS also holds a 49% equity interest in a joint venture company named
Total System Services de Mexico, S.A. de C.V., 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 offers
fully integrated merchant transaction and related electronic information
services to financial and nonfinancial institutions and their merchant
customers.
The services provided by TSYS are divided into two operating segments,
transaction processing services and support services. Transaction processing
services, including the programming services provided by TSYS Canada, Inc.,
account for more than 85% of TSYS' revenues. The support services provided by
TSYS' other subsidiaries, including the equipment leasing services provided by
Columbus Depot Equipment Company, the correspondence processing and other
services provided by TSYS Total Solutions, Inc. and the commercial printing
services provided by Columbus Productions, Inc., are aggregated into the segment
referred to as support services.
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., THE TOTAL SYSTEM, TOTAL ACCESS, ACE,
Partnership Card
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Services, TSYS Total Solutions, Transaction Special Processing and TSP, to which
TSYS believes strong customer identification attaches. TSYS also owns other
service marks. Management does not believe the loss of these marks would have a
material impact on the business of TSYS.
Major Customers. A significant amount of TSYS' revenues are derived
from long-term contracts with significant customers, including certain major
customers. For the year ended December 31, 1999, Bank of America Corporation
accounted for 16% of TSYS' total revenues. As a result, the loss of Bank of
America Corporation, or other major or significant customers, could have a
material adverse effect on TSYS' financial condition and results of operations.
Near the end of the first quarter of 1998, AT&T completed the sale of
its Universal Card Services to CITIBANK, now a part of Citigroup after
CITIBANK's merger with Travelers Group, Inc. CITIBANK accounted for
approximately 13% of total revenues for the year ended December 31, 1999. On
February 26, 1999, CITIBANK notified TSYS of its decision to terminate Universal
Card Services' processing agreement with TSYS for consumer credit card accounts
at the end of its original term on August 1, 2000. Consumer credit card accounts
represented 66.6% of CITIBANK's revenues to TSYS for the year ended December 31,
1999. TSYS' management believes that CITIBANK will not be a major customer for
the year 2000 and that the loss of revenues from CITIBANK for the months of
August through December 2000, combined with decreased expenses from the
reduction in hardware and software costs and the redeployment of personnel,
should not have a material adverse effect on TSYS' financial condition or
results of operations for the year ending December 31, 2000.
Competition. TSYS encounters vigorous competition in providing card
processing services from several different sources. The national market in third
party card processors is presently being provided by approximately seven
vendors. TSYS believes that it is the second largest third party card 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 card associations, data processing and bankcard computer
service firms and other such third party vendors located throughout the United
States. In addition to processing cards for United States clients, TSYS also
holds an approximately 37% market share of the Mexican card processing market
and an approximately 25% market share of the Canadian card processing market.
TSYS' major competitor in the card processing industry is First Data
Resources, Inc., a wholly owned subsidiary of First Data Corporation, which is
headquartered in Omaha, Nebraska, and provides card 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
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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, 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 Columbus Bank and Trust Company, TSYS is subject to
direct regulation by the Federal Reserve 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
Columbus Bank and Trust Company. In addition, as TSYS and its subsidiaries
operate as subsidiaries of Columbus Bank and Trust Company, they are subject to
regulation by the Federal Deposit Insurance Corporation.
Employees. As of December 31, 1999, TSYS had 4,163 full-time employees.
See the "Financial Review" Section on pages 20 through 25 and Note 1,
Note 4, Note 9, Note 11 and Note 12 of Notes to Consolidated Financial
Statements on pages 30 through 34, and pages 37 through 40 of TSYS' 1999 Annual
Report to Shareholders which are specifically incorporated herein by reference.
Item 2. Properties
TSYS owns a 377,000 square foot production center which is located on a
40.4 acre tract of land in north Columbus, Georgia. Primarily a production
center, this facility houses TSYS' primary data processing computer operations,
statement preparation, mail handling, microfiche production, purchasing and card
production, as well as other related operations.
TSYS owns a 110,000 square foot building on a 23-acre site in Columbus,
Georgia, which accommodates current and future office space needs. TSYS Total
Solutions, Inc., which is included in the segment support services, occupies
approximately 82,500 square feet of this building. TSYS also owns a 104,000
square foot building on an 18-acre site in Columbus which functions as a second
data center.
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 serves as TSYS'
corporate headquarters and houses administrative, client contact and programming
team members. The campus facility consolidated most of TSYS' multiple Columbus
locations. TSYS began moving personnel into
4
the new campus facility in December 1998 and had completed the move of a
substantial number of its personnel to this facility at the end of the third
quarter of 1999.
All of the properties listed above are utilized by TSYS for card
processing services with the one exception noted above with respect to the space
occupied by TSYS Total Solutions, Inc.
TSYS Total Solutions, Inc. and Columbus Productions, Inc., which are
included in the segment support services, own a 72,000 square foot production
facility and own a 32,000 square foot production facility, respectively,
located in Columbus, Georgia.
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 30 through 34, and pages 37 and 38 of TSYS' 1999
Annual Report to Shareholders which are specifically incorporated herein by
reference.
Item 3. Legal Proceedings
See Note 9 of Notes to Consolidated Financial Statements on pages 37
and 38 of TSYS' 1999 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' 1999 Annual Report to
Shareholders is specifically incorporated herein by reference.
Item 6. Selected Financial Data
The "Selected Financial Data" Section which is set forth on page 19 of
TSYS' 1999 Annual Report to Shareholders is specifically incorporated herein by
reference.
5
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The "Financial Review" Section which is set forth on pages 20 through
25 of TSYS' 1999 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
The foreign currency financial statements of TSYS' Mexican joint
venture and TSYS' wholly owned subsidiary with an operation in Canada are
translated into U.S. dollars at current exchange rates, except for revenues,
costs and expenses, and net income which are translated at the average exchange
rate for each reporting period. Net exchange gains or losses resulting from the
translation of assets and liabilities of TSYS' Mexican joint venture and the
Canadian operation, net of tax, are accumulated in a separate section of
shareholders' equity titled accumulated other comprehensive income. Currently,
TSYS does not use financial instruments to hedge its exposure to exchange rate
changes in Mexico or Canada because TSYS believes that the use of such
instruments would not be cost effective. TSYS' carrying value of its investment
in its Mexican joint venture was approximately $7.5 million (U.S.) at December
31, 1999, and the carrying value of the assets of its Canadian operation was
approximately $515,000 (U.S.) at December 31, 1999.
TSYS opened an office in the United Kingdom in 1999, which will serve
as the headquarters for TSYS' European operations. To date, TSYS' activities in
the United Kingdom have not been material. Currently, TSYS does not use
instruments to hedge its foreign exposure in the United Kingdom.
TSYS is also exposed to interest rate risk associated with the lease on
its campus facilities. The payments under the operating lease arrangement are
tied to the London Interbank Offered Rate ("LIBOR") and TSYS has evaluated the
hypothetical change in the lease obligation held at December 31, 1999 due to
changes in the LIBOR. The modeling technique used measured hypothetical changes
in lease obligations arising from selected hypothetical changes in the LIBOR.
Market changes reflected immediate hypothetical parallel shifts in the LIBOR
curve of plus or minus 50 basis points, 100 basis points and 150 basis points
over a 12-month period.
TSYS' only long-term liability is a note payable at a fixed interest
rate in an amount that is not material to TSYS' financial position.
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 Cash Flows,
Consolidated Statements of Shareholders' Equity and Comprehensive Income, Notes
to Consolidated Financial Statements and Report of
6
Independent Auditors" Sections, which are set forth on pages 26 through 41 of
TSYS' 1999 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" Section which is set forth on pages 2
through 4, the "EXECUTIVE OFFICERS" Section which is set forth on page 6, and
the "SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE" Section which is
set forth on page 27 of TSYS' Proxy Statement in connection with the Annual
Meeting of Shareholders of TSYS to be held on April 13, 2000 are specifically
incorporated herein by reference.
Item 11. Executive Compensation
The "DIRECTORS' COMPENSATION" Section which is set forth on page 6, the
"EXECUTIVE COMPENSATION - Summary Compensation Table; Stock Option Exercises and
Grants; and Change in Control Arrangements" Sections which are set forth on
pages 17 through 20, and the "COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION" Section which is set forth on page 23 of TSYS' Proxy Statement in
connection with the Annual Meeting of Shareholders of TSYS to be held on April
13, 2000 are specifically incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The "STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS" Section which
is set forth on pages 7 and 8, 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 24, 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 25
and 26 of TSYS' Proxy Statement in connection with the Annual Meeting of
Shareholders of TSYS to be held on April 13, 2000 are specifically incorporated
herein by reference.
Item 13. Certain Relationships and Related Transactions
The "TRANSACTIONS WITH MANAGEMENT" Section which is set forth on pages
23 and 24, the "RELATIONSHIPS BETWEEN TSYS, SYNOVUS, CB&T AND CERTAIN OF
SYNOVUS' SUBSIDIARIES - Beneficial Ownership of TSYS Common Stock by CB&T"
7
Section which is set forth on page 24, 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 pages 24 and 25, 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 26 and 27 of TSYS'
Proxy Statement in connection with the Annual Meeting of Shareholders of TSYS to
be held on April 13, 2000 are specifically incorporated herein by reference.
See also Note 2 of Notes to Consolidated Financial Statements on pages
32 and 33 of TSYS' 1999 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 26 through 41 of TSYS' 1999
Annual Report to Shareholders to Item 8, Part II, Financial Statements and
Supplementary Data.
Consolidated Balance Sheets - December 31, 1999 and 1998.
Consolidated Statements of Income - Years Ended December 31,
1999, 1998 and 1997.
Consolidated Statements of Cash Flows - Years Ended December
31, 1999, 1998 and 1997.
Consolidated Statements of Shareholders' Equity and
Comprehensive Income - Years Ended December 31, 1999, 1998 and
1997.
Notes to Consolidated Financial Statements.
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.
8
Schedule II - Valuation and Qualifying Accounts - Years Ended
December 31, 1999, 1998 and 1997.
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
filed with the Commission on April 18, 1997 (File No.
333-25401).
3.2 Bylaws of TSYS, as amended.
10. EXECUTIVE COMPENSATION PLANS AND ARRANGEMENTS
10.1 Director Stock Purchase Plan of TSYS.
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.
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, which was renamed the Total System Services, Inc.
2000 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
9
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.
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 incorporated by reference to
Exhibit 10.15 of TSYS' Annual
10
Report on Form 10-K for the fiscal year ended
December 31, 1997, as filed with the Commission on
March 23, 1998.
10.16 Synovus Financial Corp. 2000 Long-Term Incentive Plan
in which executive officers of TSYS participate.
13.1 Certain specified pages of TSYS' 1999 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 13, 2000, 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 1999 Annual Report on Form 10-K.
27.1 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, 1999 (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, 1999 (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 October 4, 1999, TSYS filed a Form 8-K with the Commission
announcing a common stock repurchase program.
On January 11, 2000, TSYS filed a Form 8-K with the Commission
in connection with the announcement of its earnings for the year ended December
31, 1999.
filings\tsys\tsys9910k.wpd
11
Report of Independent Auditors
The Board of Directors
Total System Services, Inc.
Under date of January 11, 2000, we reported on the consolidated balance sheets
of Total System Services, Inc. and subsidiaries as of December 31, 1999 and
1998, and the related consolidated statements of income, cash flows, and
shareholders' equity and comprehensive income for each of the years in the
three-year period ended December 31, 1999, as contained in the Total System
Services, Inc. 1999 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 1999. In
connection with our audits of the aforementioned consolidated financial
statements, we also audited the related consolidated 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 LLP
Atlanta, Georgia
January 11, 2000
TOTAL SYSTEM SERVICES, INC.
Schedule II
Valuation and Qualifying Accounts
<TABLE>
Additions
------------------------------
Charged
Balance at Charged to to other Balance at
beginning costs and accounts-- Deductions-- end
of period expenses describe describe of period
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1997:
Allowance for doubtful accounts $ 704,482 94,000 - (62,523)<F1> $ 735,959
============= ============== ============= =============== ==============
Year ended December 31, 1998:
Allowance for doubtful accounts $ 735,959 18,000 - (43,367)<F1> $ 710,592
============= ============== ============= =============== ==============
Year ended December 31, 1999:
Allowance for doubtful accounts $ 710,592 665,500 - (99,396)<F1> $ 1,276,696
============= ============== ============= =============== ==============
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
<F1> Accounts deemed to be uncollectible and written off during the year.
</FN>
</TABLE>
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 16, 2000 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 16, 2000
- -----------------------------------------
James H. Blanchard,
Director and Chairman of the
Executive Committee
/s/Richard W. Ussery Date: March 16, 2000
- -----------------------------------------
Richard W. Ussery,
Chairman of the Board
and Principal Executive Officer
/s/Philip W. Tomlinson Date: March 16, 2000
- -----------------------------------------
Philip W. Tomlinson,
President
and Director
/s/James B. Lipham Date: March 16, 2000
- -----------------------------------------
James B. Lipham,
Executive Vice President, Treasurer, Principal
Accounting and Financial Officer
/s/Richard Y. Bradley Date: March 16, 2000
- ------------------------------------------
Richard Y. Bradley,
Director
Date: March __, 2000
- ------------------------------------------
G. Wayne Clough,
Director
Date: March __, 2000
- ------------------------------------------
Thomas G. Cousins,
Director
Date: March __, 2000
- -----------------------------------------
Gardiner W. Garrard, Jr.,
Director
Date: March __, 2000
- -----------------------------------------
Sidney E. Harris,
Director
/s/John P. Illges, III Date: March 16, 2000
- -----------------------------------------
John P. Illges, III,
Director
/s/Mason H. Lampton Date: March 16, 2000
- -----------------------------------------
Mason H. Lampton,
Director
Date: March __, 2000
- -----------------------------------------
Samuel A. Nunn,
Director
Date: March __, 2000
- -----------------------------------------
H. Lynn Page,
Director
/s/W. Walter Miller, Jr. Date: March 16, 2000
- -----------------------------------------
W. Walter Miller, Jr.,
Director
/s/William B. Turner Date: March 16, 2000
- -----------------------------------------
William B. Turner,
Director
/s/James D. Yancey Date: March 16, 2000
- -----------------------------------------
James D. Yancey,
Director
Date: March __, 2000
- -----------------------------------------
Rebecca K. Yarbrough,
Director
As Amended and Restated
Effective January 14, 2000
BYLAWS
OF
TOTAL SYSTEM SERVICES, INC.
ARTICLE I. OFFICES
Section 1. Principal Office. The principal office for the transaction of the
business of the corporation shall be located in Muscogee County, Georgia, at
such place within said County as may be fixed from time to time by the Board of
Directors.
Section 2. Other Offices. Branch offices and places of business may be
established at any time by the Board of Directors at any place or places where
the corporation is qualified to do business, whether within or without the State
of Georgia.
ARTICLE II. SHAREHOLDERS' MEETINGS
--------------------------------------
Section 1. Meetings, Where Held. Any meeting of the shareholders of the
corporation, whether an annual meeting or a special meeting, may be held either
at the principal office of the corporation or at any place in the United States
within or without the State of Georgia.
Section 2. Annual Meeting. The annual meeting of the shareholders of the
corporation for the election of Directors and for the transaction of such other
business as may properly come before the meeting shall be held on such date and
at such time and place as is determined by the Board of Directors of the
corporation each year. Provided, however, that if the Board of Directors shall
fail to set a date for the annual meeting of shareholders in any year, that the
annual meeting of the shareholders of the corporation shall be held on the
second Monday in April of each year; provided, that if said day shall fall upon
a legal holiday, then such annual meeting shall be held on the next day
thereafter ensuing which is not a legal holiday. In addition to any other
applicable requirements, for business to properly come before the meeting,
notice of any nominations of persons for election to the Board of Directors or
of any other business to be brought before an annual meeting of shareholders by
a shareholder must be provided in writing to the Secretary of the corporation
not later than the close of business on the 45th day nor earlier than the close
of business on the
1
90th day prior to the date of the proxy statement released to shareholders
in connection with the previous year's annual meeting and such business must
constitute a proper subject to be brought before such meeting. Such
shareholder's notice shall set forth (a) as to each person whom the shareholder
proposes to nominate for election as a director all information relating to such
person that is required to be disclosed in solicitations of proxies for election
of directors, or is otherwise required, in each case pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended (including such person's
written consent to being named in the Proxy Statement in connection with such
annual meeting as a nominee and to serving as a director if elected), and
evidence reasonably satisfactory to the corporation that such nominee has no
interests that would limit such nominee's ability to fulfill his or her duties
of office; (b) as to any other business that the shareholder proposes to bring
before the meeting, a brief description of the business desired to be brought
before the meeting, the reasons for conducting such business at the meeting and
any material interest in such business of such shareholder and the beneficial
owner, if any, on whose behalf the proposal is made; and (c) as to the
shareholder giving the notice and the beneficial owner, if any, on whose behalf
the nomination or proposal is made (i) the name and address of such shareholder,
as they appear on the corporation's books, and of such beneficial owner and (ii)
the class and number of shares of the corporation that are owned beneficially
and held of record by such shareholder and such beneficial owner.
Notwithstanding anything in these bylaws to the contrary, no business shall be
conducted at the annual meeting except in accordance with the procedures set
forth in this Section 2. The Chairman of the Board of Directors shall, if the
facts warrant, determine and declare to the meeting that business has not been
properly brought before the meeting in accordance with the provisions of this
Section 2, and if the Chairman should so determine, the Chairman shall so
declare to the meeting and any such business not properly brought before the
meeting shall not be transacted."
Section 3. Special Meetings. A special meeting of the shareholders of the
corporation, for any purpose or purposes whatsoever, may be called at any time
by the Chairman of the Board, any Vice Chairman of the Board, if elected, the
President, any Vice President, a majority of the Board of Directors, or one or
more shareholders of the corporation holding at least 80% of the issued and
outstanding shares of common stock of the corporation. Such a call for a special
meeting must state the purpose of the meeting. This section, as it relates to
the call of a special meeting of the shareholders of the corporation by one or
more shareholders holding at least 80% of the issued and outstanding shares of
common stock of the corporation shall not be altered, deleted or rescinded
except upon the affirmative vote of the shareholders of the corporation holding
at least 80% of the issued and outstanding shares of common stock of the
corporation.
Section 4. Notice of Meetings. Unless waived, notice of each annual meeting
and of each special meeting of the shareholders of the corporation shall be
given to each shareholder of record entitled to vote, not less than ten (10)
days nor more than seventy (70) days prior to said meeting. Such notice shall
specify the place, day and hour of the meeting; and in the case of a special
meeting, it shall also specify the purpose or purposes for which the meeting is
called.
2
Section 5. Waiver of Notice. Notice of any annual or special meeting of the
shareholders of the corporation may be waived by any shareholder, either before
or after the meeting; and the attendance of a shareholder at a meeting, either
in person or by proxy, shall of itself constitute waiver of notice and waiver of
any and all objections to the place or time of the meeting, or to the manner in
which it has been called or convened, except when a shareholder attends solely
for the purpose of stating, at the beginning of the meeting, an objection or
objections to the transaction of business at such meeting.
Section 6. Quorum, Voting and Proxy. Shareholders representing a majority
of the issued and outstanding shares of common stock of the corporation shall
constitute a quorum at a shareholders' meeting. Each shareholder shall be
entitled to one vote for each share of common stock owned. Any shareholder may
be represented and vote at any shareholders' meeting by proxy filed with the
Secretary of the corporation on or before the date of such meeting; provided,
however, that no proxy shall be valid for more than 11 months after the date
thereof unless otherwise specified in such proxy.
Section 7. No Meeting Necessary When. Any action required by law or
permitted to be taken at any shareholders' meeting may be taken without a
meeting if, and only if, written consent, setting forth the action so taken,
shall be signed by all of the shareholders entitled to vote with respect to the
subject matter thereof. Such consent shall have the same force and effect as a
unanimous vote of the shareholders and shall be filed with the Secretary and
recorded in the Minute Book of the corporation.
ARTICLE III. DIRECTORS
-----------------------
Section 1. Number. The Board of Directors of the corporation shall consist
of not less than 8 nor more than 60 Directors. The number of Directors may vary
between said minimum and maximum, and within said limits, the shareholders
holding at least 80% of the issued and outstanding shares of common stock of the
corporation may, from time to time, by resolution fix the number of Directors to
comprise said Board. This section, as it relates to from time to time, fixing
the number of Directors of the corporation by the shareholders of the
corporation holding at least 80% of the issued and outstanding shares of common
stock of the corporation, shall not be altered, deleted or rescinded except upon
the affirmative vote of the shareholders of the corporation holding at least 80%
of the issued and outstanding shares of common stock of the corporation.
Section 2. Election and Tenure. The Board of Directors of the corporation
shall be divided into three classes serving staggered 3-year terms, with each
class to be as nearly equal in number as possible. At the first annual meeting
of the shareholders of the corporation, all members of the Board of Directors
shall be elected with the terms of office of Directors comprising the first
class to expire at the first annual meeting of the shareholders of the
corporation after their election, the terms of office of Directors comprising
the second class to expire at the second annual meeting of the shareholders of
the corporation after their election and the terms of office of Directors
3
comprising the third class to expire at the third annual meeting of the
shareholders of the corporation after their election, and as their terms of
office expires, the Directors of each class will be elected to hold office until
the third succeeding annual meeting of the shareholders of the corporation after
their election. In such elections, the nominees receiving a plurality of votes
shall be elected. This section, as it relates to the division of the Board of
Directors into three classes serving staggered 3-year terms, shall not be
altered, deleted or rescinded except upon the affirmative vote of the
shareholders of the corporation holding at least 80% of the issued and
outstanding shares of common stock of the corporation.
Section 3. Powers. The Board of Directors shall have authority to manage
the affairs and exercise the powers, privileges and franchises of the
corporation as they may deem expedient for the interests of the corporation,
subject to the terms of the Articles of Incorporation, bylaws, and such policies
and directions as may be prescribed from time to time by the shareholders of the
corporation.
Section 4. Meetings. The annual meeting of the Board of Directors shall be
held without notice immediately following the annual meeting of the shareholders
of the corporation, on the same date and at the same place as said annual
meeting of the shareholders. The Board by resolution may provide for regular
meetings, which may be held without notice as and when scheduled in such
resolution. Special meetings of the Board may be called at any time by the
Chairman of the Board, any Vice Chairman of the Board, if elected, the President
or by any two or more Directors.
Section 5. Notice and Waiver; Quorum. Notice of any special meeting of the
Board of Directors shall be given to each Director personally or by mail,
telegram or cablegram addressed to him at his last known address, at least one
day prior to the meeting. Such notice may be waived, either before or after the
meeting; and the attendance of a Director at any special meeting shall of itself
constitute a waiver of notice of such meeting and of any and all objections to
the place or time of the meeting, or to the manner in which it has been called
or convened, except where a Director states, at the beginning of the meeting,
any such objection or objections to the transaction of business. A majority of
the Board of Directors shall constitute a quorum at any Directors' meeting.
Section 6. No Meeting Necessary, When. Any action required by law or
permitted to be taken at any meeting of the Board of Directors may be taken
without a meeting if written consent, setting forth the action so taken, shall
be signed by all the Directors. Such consent shall have the same force and
affect as a unanimous vote of the Board of Directors and shall be filed with the
Secretary and recorded in the Minute Book of the corporation.
Section 7. Voting. At all meetings of the Board of Directors each Director
shall have one vote and, except as otherwise provided herein or provided by law,
all questions shall be determined by a majority vote of the Directors present.
4
Section 8. Removal. Any one or more Directors or the entire Board of
Directors may be removed from office, with or without cause, by the affirmative
vote of the shareholders of the corporation holding at least 80% of the issued
and outstanding shares of common stock of the corporation at any shareholders'
meeting with respect to which notice of such purpose has been given. This
section, as it relates to the removal of Directors of the corporation by the
shareholders of the corporation holding at least 80% of the issued and
outstanding shares of common stock of the corporation, shall not be altered,
deleted or rescinded except upon the affirmative vote of the shareholders of the
corporation holding at least 80% of the issued and outstanding shares of common
stock of the corporation.
Section 9. Vacancies. Any vacancy occurring in the Board of Directors
caused by an increase in the number of Directors may be filled by the
shareholders of the corporation for a full classified 3-year term, or such
vacancy may be filled by the Board of Directors until the next annual meeting of
the shareholders. Any vacancy occurring in the Board of Directors caused by the
removal of a Director shall be filled by the shareholders, or if authorized by
the shareholders, by the Board of Directors, for the unexpired term of the
Director so removed. Any vacancy occurring in the Board of Directors caused by a
reason other than an increase in the number of Directors or removal of a
Director may be filled by the Board of Directors, or the shareholders, for the
unexpired term of the Director whose position is vacated. Vacancies in the Board
of Directors filled by the Board of Directors may be filled by the affirmative
vote of a majority of the remaining Directors, though less than a quorum, or the
sole remaining Director, as the case may be.
Section 10. Dividends. The Board of Directors may declare dividends payable
in cash or other property out of the unreserved and unrestricted net earnings of
the current fiscal year, computed to the date of declaration of the dividend, or
the preceding fiscal year, or out of the unreserved and unrestricted earned
surplus of the corporation, as they may deem expedient.
Section 11. Committees. In the discretion of the Board of Directors, said
Board from time to time may elect or appoint, from its own members, one or more
committees as said Board may see fit to establish. Each such committee shall
consist of three or more Directors, and each shall possess such powers and be
charged with such responsibilities, subject to the limitations imposed by
applicable law, as the Board by resolution may from time to time prescribe.
Section 12. Officers, Salaries and Bonds. The Board of Directors shall elect
all officers of the corporation and fix their compensation. The fact that any
officer is a Director shall not preclude him from receiving a salary or from
voting upon the resolution providing the same. The Board of Directors may or may
not, in their discretion, require bonds from either or all of the officers and
employees of the corporation for the faithful performance of their duties and
good conduct while in office.
5
Section 13. Compensation of Directors. Directors, as such shall be entitled
to receive compensation for their service as Directors and such fees and
expenses, if any, for attendance at each regular or special meeting of the Board
and any adjournments thereof, as may be fixed from time to time by resolution of
the Board, and such fees and expenses shall be payable even though an
adjournment be had because of the absence of a quorum; provided, however, that
nothing herein contained shall be construed to preclude any director from
serving the corporation in any other capacity and receiving compensation
therefore. Members of either standing or special committees may be allowed such
compensation as may be provided from time to time by resolution of the Board for
serving upon and attending meetings of such committees.
Section 14. Emeritus Directors. When a member of the Board of Directors of
the corporation, as the case may be: (a) attains seventy (70) years of age or,
(b) prior to his attainment of seventy (70) years of age, retires from his
principal occupation, under the retirement policy and criteria established from
time to time by the Board of Directors of the corporation (except for a member
of the Board of Directors of the corporation: (1) who is, upon the attainment of
age seventy (70), then serving as an executive officer, including Chairman of
the Board or Chairman of the Executive Committee of the corporation or its
parent or grandparent corporation; or (2) who was sixty (60) years of age on
June 14, 1973), such director shall automatically, at his option, either (i)
retire from the Board of Directors of the corporation, as the case may be; or
(ii) be appointed as a member of the Emeritus Board of Directors of the
corporation. A member of the Board of Directors of the corporation: (1) who is,
upon the attainment of age seventy (70), then serving as an executive officer,
including Chairman of the Board or Chairman of the Executive Committee, of the
corporation or its parent or grandparent corporation; or (2) who was sixty (60)
years of age on June 14, 1973, may, at his option, either: (a) continue his
service as a member of the Board of Directors of the corporation, as the case
may be; or (b) be appointed as a member of the Emeritus Board of Directors of
the corporation. Members of the Emeritus Board of Directors of the corporation
shall be appointed annually by the Chairman of the Board of Directors of the
corporation at the Annual Meeting of the Board of Directors of the corporation,
or from time to time thereafter. Each member of the Emeritus Board of Directors
of the corporation, except in the case of his earlier death, resignation,
retirement, disqualification or removal, shall serve until the next succeeding
Annual Meeting of the Board of Directors of the corporation. Any individual
appointed as a member of the Emeritus Board of Directors of the corporation may,
but shall not be required to, attend meetings of the Board of Directors of the
corporation and may participate in any discussions thereat, but such individual
may not vote at any meeting of the Board of Directors of the corporation or be
counted in determining a quorum at any meeting of the Board of Directors of the
corporation, as provided in Section 5 of Article III of the bylaws of the
corporation. It shall be the duty of the members of the Emeritus Board of
Directors of the corporation to serve as goodwill ambassadors of the
corporation, but such individuals shall not have any responsibility or be
subject to any liability imposed upon a member of the Board of Directors of the
corporation or in any manner otherwise be deemed to be a member of the Board of
Directors of the corporation. Each member of the Emeritus Board of Directors of
the corporation shall be paid such compensation as may
6
be set from time to time by the Chairman of the Board of Directors of the
corporation and shall remain eligible to participate in any Director Stock
Purchase Plan maintained by, or participated in, from time to time by the
corporation according to the terms and conditions thereof. Notwithstanding the
foregoing, if a member of the Board of Directors of the corporation is initially
elected to the Board of Directors within six years of his attainment of seventy
(70) years of age, such member may, subject to his continuing election to the
Board of Directors of the corporation, serve as a director of the corporation
for a period ending the later of (i) six years from the date of his initial
election to the Board of Directors of the corporation; or (ii) the expiration of
the term of office of such director to which he was last elected during such six
year period, at which time such director shall automatically, at his option,
either (i) retire from the Board of Directors of the corporation; or (ii) be
appointed as a member of the Emeritus Board of Directors of the corporation."
Section 15. Advisory Directors. The Board of Directors of the corporation
may at its annual meeting, or from time to time thereafter, appoint any
individual to serve as a member of an Advisory Board of Directors of the
corporation. Any individual appointed to serve as a member of an Advisory Board
of Directors of the corporation shall be entitled to attend all meetings of the
Board of Directors and may participate in any discussion thereat, but such
individual may not vote at any meeting of the Board of Directors or be counted
in determining a quorum for such meeting. It shall be the duty of members of the
Advisory Board of Directors of the corporation to advise and provide general
policy advice to the Board of Directors of the corporation at such times and
places and in such groups and committees as may be determined from time to time
by the Board of Directors, but such individuals shall not have any
responsibility or be subject to any liability imposed upon a director or in any
manner otherwise deemed a director. The same compensation paid to directors for
their services as directors shall be paid to members of an Advisory Board of
Directors of the corporation for their services as advisory directors. Each
member of the Advisory Board of Directors except in the case of his earlier
death, resignation, retirement, disqualification or removal, shall serve until
the next succeeding annual meeting of the Board of Directors and thereafter
until his successor shall have been appointed.
ARTICLE IV. OFFICERS
---------------------
Section 1. Selection. The Board of Directors at each annual meeting shall
elect or appoint a Chairman of the Board, a President, a Secretary and a
Treasurer, each to serve for the ensuing year and until his successor is elected
and qualified, or until his earlier resignation, removal from office, or death.
The Board of Directors, at such meeting, may or may not, in the discretion of
the Board, elect one or more Vice Chairmen of the Board, one or more Chairmen of
the Board-Emeritus, one or more Vice Presidents, one or more Assistant Vice
Presidents, one or more Assistant Secretaries, one or more Assistant Treasurers,
and such other officers as the Board of Directors, in its discretion, shall
determine are desirable for the management of the business and affairs of the
corporation. When more than one Vice President is elected, they may, in the
discretion of the Board, be designated Executive Vice President, First Vice
President, Second Vice President, etc., according to seniority or rank, and any
person may hold two or more offices, except that the President shall not also
serve as the Secretary.
7
Section 2. Removal, Vacancies. Any officers of the corporation may be
removed from office at any time by the Board of Directors, with or without
cause. Any vacancy occurring in any office of the corporation may be filled by
the Board of Directors.
Section 3. Chairman of the Board. The Chairman of the Board of Directors,
shall, whenever present, preside at all meetings of the Board of Directors and
at all meetings of the shareholders. The Chairman of the Board of Directors
shall confer with the President on matters of general policy affecting the
business of the corporation and shall have, in his discretion, power and
authority to generally supervise all the affairs of the corporation and the acts
and conduct of all the officers of the corporation, and shall have such other
duties as may be conferred upon him. Any Vice Chairman of the Board, if elected,
shall perform the duties of the Chairman of the Board during the absence or
disability of the Chairman of the Board and shall have such other duties as may
be conferred upon him by the Board of Directors or the Chairman of the Board.
Section 4. President. In the absence of the Chairman of the Board and if
there be no Vice Chairman of the Board elected, or in his absence, the President
shall preside at all meetings of the Board of Directors and at all meetings of
the shareholders. The immediate supervision of the affairs of the corporation
shall be vested in the President. It shall be his duty to attend constantly to
the business of the corporation and maintain strict supervision over all of its
affairs and interests. He shall keep the Board of Directors fully advised of the
affairs and condition of the corporation, and shall manage and operate the
business of the corporation pursuant to such policies as may be prescribed from
time to time by the Board of Directors. The President shall, subject to approval
of the Board, hire and fix the compensation of all employees and agents of the
corporation, other than officers, and any person thus hired shall be removable
at his pleasure.
Section 5. Vice President. Any Vice President of the corporation may be
designated by the Board of Directors to act for and in the place of the
President in the event of sickness, disability or absence of the President or
the failure of the President to act for any reason, and when so designated, such
Vice President shall exercise all the powers of the President in accordance with
such designation. The Vice Presidents shall have such duties as may be required
of, or assigned to, them by the Board of Directors, the Chairman of the Board,
the Vice Chairman of the Board, if elected, or the President.
Section 6. Secretary. It shall be the duty of the Secretary to keep a
record of the proceedings of all meetings of the shareholders and Board of
Directors; to keep the stock records of the corporation; to notify the
shareholders and Directors of meetings as provided by these bylaws; and to
perform such other duties as may be prescribed by the Board of Directors, the
Chairman of the Board, any Vice Chairman of the Board, if elected, or the
President. Any Assistant Secretary, if elected, shall perform the duties of the
Secretary during the absence or disability of the Secretary and shall perform
such other duties as may be prescribed by the Board of Directors, the Chairman
of the Board, any Vice Chairman of the Board, if elected, the President or the
Secretary.
8
Section 7. Treasurer. The Treasurer shall keep, or cause to be kept, the
financial books and records of the corporation, and shall faithfully account for
its funds. He shall make such reports as may be necessary to keep the Board of
Directors, the Chairman of the Board, any Vice Chairman of the Board, if
elected, and the President fully informed at all times as to the financial
condition of the corporation, and shall perform such other duties as may be
prescribed by the Board of Directors, the Chairman of the Board, any Vice
Chairman of the Board, if elected, or the President. Any Assistant Treasurer, if
elected, shall perform the duties of the Treasurer during the absence or
disability of the Treasurer, and shall perform such other duties as may be
prescribed by the Board of Directors, the Chairman of the Board, any Vice
Chairman of the Board, if elected, the President or the Treasurer.
ARTICLE V. CONTRACTS, ETC.
--------------------------
Section 1. Contracts, Deeds and Loans. All contracts, deeds, mortgages,
pledges, promissory notes, transfers and other written instruments binding upon
the corporation shall be executed on behalf of the corporation by the Chairman
of the Board, any Vice Chairman of the Board, if elected, the President, any
Executive Vice President, any Vice Presidents who report directly to such
Executive Vice Presidents, or by such other officers or agents as the Board of
Directors may designate from time to time. Any such instrument required to be
given under the seal of the corporation may be attested by the Secretary or
Assistant Secretary of the corporation.
Section 2. Proxies. The Chairman of the Board, any Vice Chairman of the
Board, if elected, the President, any Vice President, the Secretary or the
Treasurer of the corporation shall have full power and authority, on behalf of
the corporation, to attend and to act and to vote at any meetings of the
shareholders, bond holders or other security holders of any corporation, trust
or association in which the corporation may hold securities, and at and in
connection with any such meeting shall possess and may exercise any and all of
the rights and powers incident to the ownership of such securities and which as
owner thereof the corporation might have possessed and exercised if present,
including the power to execute proxies and written waivers and consents in
relation thereto. In the case of conflicting representation at any such meeting,
the corporation shall be represented by its highest ranking officer, in the
order first above stated. Notwithstanding the foregoing, the Board of Directors
may, by resolution, from time to time, confer like powers upon any other person
or persons.
ARTICLE VI. CHECKS AND DRAFTS
------------------------------
Checks and drafts of the corporation shall be signed by such officer or officers
or such other employees or persons as the Board of Directors may from time to
time designate.
9
ARTICLE VII. STOCK
-------------------
Section 1. Certificates of Stock. The certificates for shares of capital
stock of the corporation shall be in such form as shall be determined by the
Board of Directors. They shall be numbered consecutively and entered into the
stock book of the corporation as they are issued. Each certificate shall state
on its face the fact that the corporation is a Georgia corporation, the name of
the person to whom the shares are issued, the number and class of shares (and
series, if any) represented by the certificate and their par value, or a
statement that they are without par value. In addition, when and if more than
one class of shares shall be outstanding, all share certificates of whatever
class shall state that the corporation will furnish to any shareholder upon
request and without charge a full statement of the designations, relative
rights, preferences and limitations of the shares of each class authorized to be
issued by the corporation.
Section 2. Signature; Transfer Agent; Registrar. Share certificates shall be
signed by the President or any Vice President and by the Secretary or an
Assistant Secretary of the corporation, and shall bear the seal of the
corporation or a facsimile thereof. The Board of Directors may from time to time
appoint transfer agents and registrars for the shares of capital stock of the
corporation or any class thereof, and when any share certificate is
countersigned by a transfer agent or registered by a registrar, the signature of
any officer of the corporation appearing thereon may be a facsimile signature.
In case any officer who signed, or whose facsimile signature was placed upon,
any such certificate shall have died or ceased to be such officer before such
certificate is issued, it may nevertheless be issued with the same effect as if
he continued to be such officer on the date of issue.
Section 3. Stock Book. The corporation shall keep at its principal office,
or at the office of its transfer agent, wherever located, with a copy at the
principal office of the corporation, a book, to be known as the stock book of
the corporation, containing in alphabetical order name of each shareholder of
record, together with his address, the number of shares of each kind, class or
series of stock held by him and his social security number. The stock book shall
be maintained in current condition. The stock book, including the share
register, or the duplicate copy thereof maintained at the principal office of
the corporation, shall be available for inspection and copying by any
shareholder at any meeting of the shareholders upon request, or, for a bona fide
purpose which is in the best interest of the business of the corporation, at
other times upon the written request of any shareholder or holder of a voting
trust certificate. The stock book may be inspected and copied either by a
shareholder or a holder of a voting trust certificate in person, or by their
duly authorized attorney or agent. The information contained in the stock book
and share register may be stored on punch cards, magnetic tape, or any other
approved information storage devices related to electronic data processing
equipment, provided that any such method, device, or system employed shall first
be approved by the Board of Directors, and provided further that the same is
capable of reproducing all informations contained therein, in legible and
understandable form, for inspection by shareholders or for any other proper
corporate purpose.
10
Section 4. Transfer of Stock; Registration of Transfer. The stock of the
corporation shall be transferred only by surrender of the certificate and
transfer upon the stock book of the corporation. Upon surrender to the
corporation, or to any transfer agent or registrar for the class of shares
represented by the certificate surrendered, of a certificate properly endorsed
for transfer, accompanied by such assurances as the corporation, or such
transfer agent or registrar, may require as to the genuineness and effectiveness
of each necessary endorsement and satisfactory evidence of compliance with all
applicable laws relating to securities transfers and the collection of taxes, it
shall be the duty of the corporation, or such transfer agent or registrar, to
issue a new certificate, cancel the old certificate and record the transactions
upon the stock book of the corporation.
Section 5. Registered Shareholders. Except as otherwise required by law,
the corporation shall be entitled to treat the person registered on its stock
book as the owner of the shares of the capital stock of the corporation as the
person exclusively entitled to receive notification, dividends or other
distributions, to vote and to otherwise exercise all the rights and powers of
ownership and shall not be bound to recognize any adverse claim.
Section 6. Record Date. For the purpose of determining shareholders
entitled to notice of or to vote at any meeting of shareholders or any
adjournment thereof, or to express consent to or dissent from any proposal
without a meeting, or for the purpose of determining shareholders entitled to
receive payment of any dividend or the allotment of any rights, or for the
purpose of any other action affecting the interests of shareholders, the Board
of Directors may fix, in advance, a record date. Such date shall not be more
than seventy (70) nor less than ten (10) days before the date of any such
meeting nor more than seventy (70) days prior to any other action. In each case,
except as otherwise provided by law, only such persons as shall be shareholders
of record on the date so fixed shall be entitled to notice of and to vote at
such meeting and any adjournment thereof, to express such consent or dissent, or
to receive payment of such dividend or such allotment of rights, or otherwise be
recognized as shareholders for any other related propose, notwithstanding any
registration of a transfer of shares on the stock book of the corporation after
any such record date so fixed.
Section 7. Lost Certificates. When a person to whom a certificate of stock
has been issued alleges it to have been lost, destroyed or wrongfully taken, and
if the corporation, transfer agent or registrar is not on notice that such
certificate has been acquired by a bona fide purchaser, a new certificate may be
issued upon such owner's compliance with all of the following conditions,
to-wit: (a) He shall file with the Secretary of the corporation, and the
transfer agent or the registrar, his request for the issuance of a new
certificate, with an affidavit setting for the time, place and circumstances of
the loss; (b) He shall also file with the Secretary, and the transfer agent or
the registrar, a bond with good and sufficient security acceptable to the
corporation and the transfer agent or the registrar, or other agreement of
indemnity acceptable to the corporation and the transfer agent or the registrar,
conditioned to indemnify and save harmless the corporation and the
11
transfer agent or the registrar from any and all damage, liability and expense
of every nature whatsoever resulting from the corporation's or the transfer
agent's or the registrar's issuing a new certificate in place of the one alleged
to have been lost; and (c) He shall comply with such other reasonable
requirements as the Board of Directors, the Chairman of the Board, any Vice
Chairman of the Board, if elected, or the President of the corporation, and the
transfer agent or the registrar shall deem appropriate under the circumstances.
Section 8. Replacement of Mutilated Certificates. A new certificate may be
issued in lieu of any certificate previously issued that may be defaced or
mutilated upon surrender for cancellation of a part of the old certificate
sufficient in the opinion of the Secretary and the transfer agent or the
registrar to duly identify the defaced or mutilated certificate and to protect
the corporation and the transfer agent or the registrar against loss or
liability. Where sufficient identification is lacking, a new certificate may be
issued upon compliance with the conditions set forth in Section 7 of this
Article VII.
ARTICLE VIII. INDEMNIFICATION AND REIMBURSEMENT
-----------------------------------------------
Subject to any express limitations imposed by applicable law, every person
now or hereafter serving as a director, officer, employee or agent of the
corporation and all former directors and officers, employees or agents shall be
indemnified and held harmless by the corporation from and against the obligation
to pay a judgement, settlement, penalty, fine (including an excise tax assessed
with respect to an employee benefit plan), and reasonable expenses (including
attorneys' fees and disbursements) that may be imposed upon or incurred by him
or her in connection with or resulting from any threatened, pending, or
completed, action, suit, or proceeding, whether civil, criminal, administrative,
investigative, formal or informal, in which he or she is, or is threatened to be
made, a named defendant or respondent: (a) because he or she is or was a
director, officer, employee, or agent of the corporation; (b) because he or she
is or was serving at the request of the corporation as a director, officer,
partner, trustee, employee, or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise; or (c) because he or
she is or was serving as an employee of the corporation who was employed to
render professional services as a lawyer or an accountant to the corporation;
regardless of whether such person is acting in such a capacity at the time such
obligation shall have been imposed or incurred, if (i) such person acted in a
manner he or she believed in good faith to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal proceeding, if
such person had no reasonable cause to believe his or her conduct was unlawful
or (ii), with respect to an employee benefit plan, such person believed in good
faith that his or her conduct was in the interests of the participants in and
beneficiaries of the plan.
Reasonable expenses incurred in any proceeding shall be paid by the
corporation in advance of the final disposition of such proceeding if authorized
by the Board of Directors in the specific case, or if authorized in accordance
with procedures adopted by the Board of Directors, upon receipt of a written
undertaking executed personally by or on
12
behalf of the director, officer, employee, or agent to repay such amount if it
shall ultimately be determined that he or she is not entitled to be indemnified
by the corporation, and a written affirmation of his or her good faith belief
that he or she has met the standard of conduct required for indemnification.
The foregoing rights of indemnification and advancement of expenses shall
not be deemed exclusive of any other right to which those indemnified may be
entitled, and the corporation may provide additional indemnity and rights to its
directors, officers, employees or agents to the extent they are consistent with
law.
The provisions of this Article VIII shall cover proceedings whether now
pending or hereafter commenced and shall be retroactive to cover acts or
omissions or alleged acts or omissions which heretofore have taken place. In the
event of death of any person having a right of indemnification or advancement of
expenses under the provisions of this Article VIII, such right shall inure to
the benefit of his or her heirs, executors, administrators and personal
representatives. If any part of this Article VIII should be found to be invalid
or ineffective in any proceeding, the validity and effect of the remaining
provisions shall not be affected.
ARTICLE IX.
MERGERS, CONSOLIDATIONS AND OTHER DISPOSITIONS OF ASSETS
--------------------------------------------------------
The affirmative vote of the shareholders of the corporation holding at least 80%
of the issued and outstanding shares of common stock of the corporation shall be
required to approve any merger or consolidation of the corporation with or into
any corporation, and the sale, lease, exchange or other disposition of all, or
substantially all, of the assets of the corporation to or with any other
corporation, person or entity, with respect to which the approval of the
corporation's shareholders is required by the provisions of the corporate laws
of the State of Georgia. This Article shall not be altered, deleted or rescinded
except upon the affirmative vote of the shareholders holding at least 80% of the
issued and outstanding shares of common stock of the corporation.
ARTICLE X.
CRITERIA FOR CONSIDERATION OF TENDER OR OTHER OFFERS
----------------------------------------------------
Section 1. Factors to Consider. The Board of Directors of the corporation
may, if it deems it advisable, oppose a tender or other offer for the
corporation's securities, whether the offer is in cash or in the securities of a
corporation or otherwise. When considering whether to oppose an offer, the Board
of Directors may, but is not legally obligated to, consider any pertinent
issues; by way of illustration, but not of limitation, the Board of Directors
may, but shall not be legally obligated to, consider all or any of the
following:
(i) whether the offer price is acceptable based on the historical and
present operating results or financial condition of the
corporation;
13
(ii) whether a more favorable price could be obtained for the
corporation's securities in the future;
(iii)the impact which an acquisition of the corporation would have on
the employees and customers of the corporation and its
subsidiaries and the communities which they serve;
(iv) the reputation and business practices of the offeror and its
management and affiliates as they would affect the employees and
customers of the corporation and its subsidiaries and the future
value of the corporation's stock;
(v) the value of the securities, if any, that the offeror is offering
in exchange for the corporation's securities, based on an
analysis of the worth of the corporation as compared to the
offeror or any other entity whose securities are being offered;
and
(vi) any antitrust or other legal or regulatory issues that are raised
by the offer.
Section 2. Appropriate Actions. If the Board of Directors determines that
an offer should be rejected, it may take any lawful action to accomplish its
purpose including, but not limited to, any or all of the following: (i) advising
shareholders not to accept the offer; (ii) litigation against the offeror; (iii)
filing complaints with governmental and regulatory authorities; (iv) acquiring
the corporation's securities; (v) selling or otherwise issuing authorized but
unissued securities of the corporation or treasury stock or granting options or
rights with respect thereto; (vi) acquiring a company to create an antitrust or
other regulatory problem for the offeror; and (vii) soliciting a more favorable
offer from another individual or entity.
ARTICLE XI. AMENDMENT
----------------------
Except as otherwise specifically provided herein, the bylaws of the corporation
may be altered, amended or added to by a majority of the issued and outstanding
shares of common stock of the corporation present and voting therefor at a
shareholders' meeting or, subject to such limitations as the shareholders may
from time to time prescribe, by a majority vote of all the Directors then
holding office at any meeting of the Board of Directors.
14
TOTAL SYSTEM SERVICES, INC.
DIRECTOR STOCK PURCHASE PLAN
AMENDED AND RESTATED AS OF FEBRUARY 24, 2000
The name of this plan is the Total System Services, Inc. Director Stock
Purchase Plan (the "Plan"). The purpose of the Plan is to enable Total System
Services, Inc. ("TSYS") to promote interest in its success, growth and
development by providing directors of TSYS a convenient means of purchasing
shares of TSYS Common Stock in the open market, by means of voluntary
contributions and 50% matching contributions from TSYS.
ARTICLE I
DEFINITIONS
A. TSYS Common Stock: The shares of common stock of the par value of $.10
per share of TSYS, and any shares which may be issued and exchanged for or upon
a change of such shares whether in subdivision or in combination thereof and
whether as a part of a classification or reclassification thereof, or otherwise.
B. TSYS: Total System Services, Inc.
C. Company: Total System Services, Inc.
D. Contribution Date: The date in each calendar month on which Participant
contributions to the Plan shall be made.
E. Effective Date of the Plan: February 24, 2000.
F. Director: Any person who currently serves or in the future shall be
elected to serve as a member, advisory member or emeritus member of the Board of
Directors of TSYS who receive compensation as fees or other cash remuneration
for serving in such capacity.
G. Offering Period: The last fifteen days of each calendar quarter during
which Directors may elect to begin participation in the Plan.
1
I. Participant: A Director who shall have become a Participant in the Plan
by submitting to the Agent through TSYS an Automatic Transfer Contribution Form
or a cash contribution and whose participation in the Plan shall not have been
terminated.
J. Automatic Transfer Contribution Form: The form which a Participant
forwards to the Agent through TSYS so as to participate in the Plan. This form
shall contain a description, including the account number, of the demand deposit
account maintained by the Participant from which the Participant desires his
Participant contribution to the Agent of the Plan to be made by automatic
transfer.
K. Plan Year: The period commencing on January 1st of each year and ending
on December 31st of each year.
L. Stock Share Account: The separate account which is required to be
established and maintained with respect to each Participant for the purpose of
recording TSYS Common Stock purchased for and allocated to the Participant under
the Plan.
M. Agent of the Plan, or Agent: State Street Bank and Trust Company, as the
Agent of the Plan, and any duly appointed successor Agent.
ARTICLE II
PARTICIPATION
A Director may become a Participant in the Plan during an Offering
Period by submitting an Automatic Transfer Contribution Form or a cash
contribution to the Agent of the Plan through TSYS.
ARTICLE III
PARTICIPANT CONTRIBUTIONS
Participants may contribute to the Plan by submitting an Automatic Transfer
Contribution
2
Form or cash contributions at the participation levels shown below to the Agent
of the Plan through TSYS.
In connection with the Participant automatic transfer contribution
procedure, automatic transfer contributions to the Agent of the Plan shall be
made on either a monthly or a quarterly basis, as designated by the Participant,
by the financial services institution which maintains the demand deposit account
designated by the Participant to be the source of such contributions according
to the following schedule of levels of participation:
Participant
Participation Level Contribution Monthly/Quarterly
------------------- ------------ -----------------
A $ 333.33 Monthly
B $1,000.00 Monthly
C $1,666.67 Monthly
D $5,000.00 Quarterly
Automatic transfer contributions shall be made only on Contribution Dates.
The Agent of the Plan and TSYS shall have sole and absolute discretion in the
determination of the Contribution Date upon which the automatic transfer
contributions of Participants in the Plan shall be made.
Automatic transfer contributions may be authorized only during an Offering
Period and only by submitting an Automatic Transfer Contribution Form to the
Agent through TSYS. A Participant may change the participation level of his or
her automatic transfer contribution by submitting a new Automatic Transfer
Contribution Form to the Agent through TSYS at least fifteen days prior to a
Contribution Date. Automatic Transfer Contributions may be terminated pursuant
to Article XIII hereof. TSYS shall remit Participant's Automatic Transfer
Contributions to the Agent on the appropriate Contribution Date.
3
ARTICLE IV
TSYS' MATCHING CONTRIBUTIONS
TSYS shall make contributions to the Plan for each of their Directors who
are Participants in the Plan.
In connection with the Participant automatic transfer contribution
procedure, TSYS' contributions to the Agent of the Plan for the Directors who
are Participants in the Plan shall be made on the Contribution Date, on either a
monthly or a quarterly basis, in accordance with such Participant's designation
for his or her Participant contribution. Cash contributions and automatic
transfer contributions for such Participants will be made according to the
following schedule of levels of participation:
Participation Level TSYS Contribution Monthly/Quarterly
------------------- ----------------- -----------------
A $ 166.67 Monthly
B $ 500.00 Monthly
C $ 833.33 Monthly
D $2,500.00 Quarterly
As TSYS contributions to the Plan must be treated by the Participants for
whom such contributions are made as compensation for serving as Directors, such
amount will be reflected on the Form 1099 furnished to Directors annually by
TSYS.
ARTICLE V
ADMINISTRATION OF PLAN
The Plan shall be administered by TSYS. TSYS may, from time to time,
adopt rules and regulations not inconsistent with the Plan for carrying out the
Plan or for providing for any and all matters not specifically covered herein.
4
The functions and duties of TSYS in general, are as follows:
(a) To establish rules for the administration and make
interpretations of the Plan, which rules and interpretations will
apply to all Participants similarly situated.
(b) To make provision for payment of contributions to the Agent of
the Plan.
(c) To maintain, with the assistance of the Agent of the Plan,
records, including, but not limited to, those with respect to
Participant contributions and TSYS contributions and dividends
paid to the Agent of the Plan.
(d) To file with the appropriate governmental agencies any and all
reports and notifications required of the Plan and to provide all
Participants with any and all reports and notifications to which
they are by law entitled.
(e) To engage a certified public accountant to perform an annual
audit of the Plan.
(f) To give prompt notification to the Agent of the effectiveness,
the initiation of proceedings which could result in the
termination of effectiveness and the termination of effectiveness
of registration, exemption or qualification of the Plan and/or
the TSYS Common Stock offered thereunder under federal and
applicable state securities laws.
(g) To receive from and, upon its approval thereof, to promptly
forward to the Agent of the Plan the written requests of
Participants for the issuance of stock certificates for all or
part of the full number of shares of TSYS Common Stock in such
Participants' Stock Share Accounts.
(h) To give prompt notification to the Agent of the Plan of the
termination of the participation of any Participant in the Plan
for any reason whatsoever.
(i) To perform any and all other functions reasonably necessary to
administer the Plan.
TSYS shall indemnify each employee of TSYS involved in the administration
of the Plan against all costs, expenses and liabilities, including attorneys'
fees, incurred in connection with any action, suit or proceeding instituted
against such employee alleging any act or omission or
5
commission performed by such employee while acting in good faith in discharging
his or her duties with respect to the Plan. This indemnification is limited to
the extent such costs and expenses are not covered under insurance as may be now
or hereafter provided by TSYS.
ARTICLE VI
AGENT OF THE PLAN
The Agent of the Plan shall be State Street Bank and Trust Company, and any
Successor Agent appointed by TSYS.
The Agent shall receive all contributions made by TSYS and Participants in
cash only. All contributions so received, ("Fund"), shall be held, managed, and
administered pursuant to the terms of the Plan. No part of the Fund shall be
used for or diverted to purposes other than for the exclusive benefit of the
Participants and former Participants in the Plan.
Any Agent of the Plan may be removed by TSYS at any time. Any Agent of the
Plan may resign at any time upon 120 days notice in writing to TSYS. Upon
removal or resignation of such Agent, TSYS shall appoint a successor Agent of
the Plan who shall have the same powers and duties as those conferred upon the
Agent hereunder. Upon acceptance of such appointment by the successor Agent, the
predecessor Agent shall assign, transfer, and pay over to such successor Agent
the funds and properties then constituting the Fund and any and all records it
might have with regard to the Fund and the administration of the Fund.
Any corporation into which any corporate agent may be merged or with which
it may be consolidated, or any corporation resulting from any merger or
consolidation to which any corporate agent may be a party, or any corporation to
which all or substantially all of the business of any corporate agent may be
transferred, shall be the successor of such agent
6
without the filing of any instrument or performance of any further act.
The Agent of the Plan shall have the following powers and authority in the
administration and investment of the Fund:
(a) To purchase for the benefit of the Participants in the Plan shares of
TSYS Common Stock in its name as Agent of the Plan, to retain the same and
shares of TSYS Common Stock previously acquired under the Existing Plan and to
cause such shares to be disposed of pursuant to the terms of the Plan.
(b) To cause any TSYS Common Stock held as part of the Fund to be
registered in the Agent's own name or in the name of one or more nominees, but
the books and records of the Agent shall at all times show that all such
investments are part of the Fund.
(c) To keep such portions of the Fund in cash or cash balances as the
Agent, from time to time, may in its sole discretion deem to be in the best
interests of the Participants in the Plan without liability for interest
thereon.
(d) To make, execute, acknowledge and deliver any and all documents of
transfer and conveyance and any and all other instruments as may be necessary or
appropriate to carry out the powers herein granted.
(e) To employ subagents to engage in the actual purchase of TSYS Common
Stock for the benefit of the Participants in the Plan.
(f) To do all such acts, take all such proceedings, and exercise all such
rights and privileges, although not specifically mentioned herein, as the Agent
of the Plan may deem necessary or desirable to administer the Fund, and to carry
out and satisfy the purposes and intent of the Plan.
The Agent shall keep accurate and detailed accounts of all receipts,
disbursements, and other transactions hereunder, including, but not limited to,
Participant and TSYS contributions
7
received, dividends and other distributions received, and TSYS Common Stock
purchased, allocated and held for, and TSYS Common Stock distributed to,
Participants hereunder. All accounts, books, and records relating to such
transactions shall be open to inspection and audit at all reasonable times by
any person designated by TSYS.
On or before the fifteenth day following the close of each month or upon
such other reporting schedules and for such other reporting periods as TSYS and
the Agent of the Plan shall agree, the Agent shall file with TSYS a written
report setting forth all receipts, disbursements, and other transactions
effected during such preceding month or reporting period, and setting forth the
current status of the Fund.
ARTICLE VII
STOCK PURCHASE
The Agent of the Plan shall purchase shares of TSYS Common Stock in the
open market for the benefit of the Participants in the Plan.
In the event that the Agent retains the services of subagents to make such
purchases of shares of TSYS Common Stock, such subagents shall not be controlled
by, controlling or under common control with TSYS or its affiliates. Neither
TSYS nor any of its affiliates shall have, nor exercise, directly or indirectly,
any control or influence over the times when, or the prices at which, TSYS
Common Stock may be purchased by the Agent or its subagents, the amounts of TSYS
Common Stock to be so purchased or the manner in which such TSYS Common Stock is
to be purchased. The Agent may retain the services of said subagents only upon
the execution of subagency agreements by and between the Agent and subagents
which sets forth terms and conditions not materially different from those
contained herein with regard to the purchase of TSYS Common Stock.
Neither the Agent of the Plan, TSYS, nor any subagent retained by the Agent
shall have
8
any responsibility as to the value of TSYS Common Stock acquired under the Plan.
The duties of the Agent and any subagent to cause the purchase of TSYS Common
Stock under the Plan shall be subject to any and all legal restrictions or
limitations imposed at the time by governmental authority, including, but not
limited to, the Securities and Exchange Commission, and shall be subject to any
other restrictions, limitations or considerations deemed valid by such Agent or
any subagent. Accordingly, neither the Agent of the Plan, TSYS, nor any subagent
shall be liable in any way if, as a result of such restrictions, limitations or
considerations, the whole amount of funds available under the Plan for the
purchase of TSYS Common Stock is not applied to the purchase of such shares at
the time herein otherwise provided or contemplated.
ARTICLE VIII
ALLOCATION OF STOCK
As promptly as practical after each purchase by the Agent (or any
subagents) of TSYS Common Stock for the benefit of the Participants in the Plan,
the Agent of the Plan shall determine the average cost per share of all shares
so purchased. The Agent shall then ratably allocate such shares to the Stock
Share Accounts of the Participants, charging each such Participant with the
average cost, including transactional costs, of the shares so allocated. Full
shares and fractional share interests in one share (to three decimal places)
shall be allocated.
ARTICLE IX
ISSUANCE OF SHARES OF STOCK CERTIFICATES AND/OR CASH
A Participant may request that the Agent issue shares or sell shares for
all or a part of the full number of shares of TSYS Common Stock in a
Participant's Stock Share Account. As promptly as practicable, in accordance
with and after receipt by the Agent of such Participant's request, the Agent
will (1) issue such shares to such Participant, to the Participant's TSYS
9
Dividend Reinvestment and Direct Stock Purchase Plan account, or to any person
or brokerage account designated in writing by such Participant; or (2) sell all
or the specified number of shares, deduct brokerage commissions and a
transaction charge, and mail a check for the net proceeds to the Participant.
The Agent will notify TSYS of such issuance or sale of shares. The Participant
request must clearly indicate the number of shares to be issued or sold, or
specify that all shares held in such Participant's Stock Share Account are to be
issued or sold; otherwise, the Agent shall return such request to TSYS without
issuing or selling any shares in such Participant's account. No Participant
shall have the authority or power to direct the date or sales price at which
shares may be sold.
ARTICLE X
DIVIDENDS AND DISTRIBUTIONS
Stock dividends and stock splits received by the Agent of the Plan will be
allocated by such Agent to each Participant's Stock Share Account to the extent
that such stock is attributable to the allocated TSYS Common Stock in such
Participant's Stock Share Account. Cash dividends received by the Agent of the
Plan shall be used to acquire additional shares of TSYS Common Stock pursuant to
the provisions of the Plan, and such shares so acquired will be allocated
ratably to the Stock Share Accounts of Participants.
ARTICLE XI
VOTING RIGHTS
Each Participant in the Plan shall have the rights and powers of ordinary
shareholders with respect to the shares of TSYS Common Stock in such
Participant's Stock Share Account, including, but not limited to, the right to
vote such shares. TSYS shall deliver or cause to be delivered to the
Participants in the Plan at the time and in the manner such materials are sent
to TSYS shareholders generally all reports, proxy solicitation materials and all
other disclosure
10
type communications distributed to TSYS shareholders generally.
ARTICLE XII
REPORTS TO PARTICIPANTS
As soon as practical following the end of each Plan Year, or more often and
as often as TSYS may elect, TSYS and/or the Agent of the Plan shall send to each
Participant a written report of all transactions for such Participant's benefit
under the Plan for such Plan year.
ARTICLE XIII
TERMINATION OF PARTICIPATION IN PLAN
A Participant may terminate his or her participation in the Plan by
contacting TSYS at least fifteen (15) days prior to a Contribution Date. TSYS
will communicate the Participant's request to the Agent. As promptly as
practical, the Agent of the Plan, will, in accordance with the instructions of
such former Participant, (1) issue the number of full shares of TSYS Common
Stock allocated to his or her Stock Share Account, together with a check for any
fractional share interests and any remaining cash balance to the Participant or
to the Participant's TSYS Dividend Reinvestment and Direct Stock Purchase Plan
Account or other person or brokerage account designated by the Participant in
writing; or (2) issue a check made payable to the Participant for the net cash
proceeds from the sale of such shares, after deduction of brokerage commissions
and a transaction charge. The Agent will notify TSYS of such issuance or sale of
shares. If a Participant terminates his or her participation in the Plan, such
Participant may not re-enter the Plan until the expiration of a six month
waiting period.
Assignments or pledges of any interests under the Plan are not allowed.
ARTICLE XIV
TERMINATION OF STATUS AS A DIRECTOR
Participation in the Plan shall automatically terminate without notice upon
termination
11
of the Participant's status as a Director whether by death, retirement,
resignation or otherwise. If termination is other than by death, the Agent of
the Plan will, in accordance with the Participant's instructions, as promptly as
practical, (1) issue the number of full shares of TSYS Common Stock allocated to
his Stock Share Account and not previously distributed, together with a check
for any fractional share interests and any remaining cash balance to the
Participant or to the Participant's TSYS Dividend Reinvestment and Direct Stock
Purchase Plan Account or other person or brokerage account designated by the
Participant in writing; or (2) issue a check made payable to the Participant for
the net cash proceeds from the sale of such shares, after deduction of brokerage
commissions and a transaction charge. The Agent will notify TSYS of such
issuance or sale of shares. If no such instructions are provided by the former
Participant, the shares will be delivered in certificate form to the former
Participant at his or her last known address.
If termination is by reason of death, settlement shall be made by the
Agent, as promptly as practical and after notification and approval by TSYS and
will be to the Participant's duly appointed legal representative after
satisfaction of any applicable legal requirements.
ARTICLE XV
EXPENSES
TSYS shall bear the cost of administering the Plan, including any transfer
taxes incurred in transferring the TSYS Common Stock from the Plan to the
Participants. Any broker's fees, commissions, postage or other transaction costs
actually incurred will be included in the cost of the TSYS Common Stock to
Participants.
ARTICLE XVI
LIMITATION ON THE SALE OF STOCK
No TSYS Common Stock will be offered or sold under the Plan to any Director
in any
12
state where the sale of such stock is not permitted under the applicable laws of
such state. For purposes of this Article XVI, the offering or sale of stock is
not permitted under the applicable laws of a state if, inter alia, the
securities laws of such state would require the Plan and/or the TSYS Common
Stock offered pursuant thereto, to be registered in such state and the Plan
and/or TSYS Common Stock is not registered therein.
ARTICLE XVII
AMENDMENT, TERMINATION AND SUSPENSION OF THE PLAN
The formula provisions of the Plan relating to Participant and TSYS
contributions as set forth in Article III and Article IV, respectively, of the
Plan may not be amended more than once every six months, other than to comport
with changes in the Internal Revenue Code, the Employee Retirement Income
Security Act, or the rules thereunder. With the exception of the restrictions
set forth in the previous sentence, TSYS reserves the right to amend the Plan at
any time; however, no amendment shall affect or diminish any Participant's right
to the benefit of contributions made by such Participant or TSYS prior to the
date of such amendment, and no amendment shall affect the authority, duties,
rights, liabilities or indemnities of the Agent of the Plan without the Agent's
prior written consent.
TSYS reserves the right to terminate the Plan. In such event, there will be
no further Participant contributions and no further TSYS contributions, but the
Agent of the Plan will make purchases of TSYS Common Stock out of available
funds and will allocate such stock to the Stock Share Accounts of the
Participants in the usual manner. Upon termination of the Plan, distributions of
TSYS Common Stock and any cash held as a part of the fund shall be governed by
the provisions of Article XIV hereof.
TSYS reserves the right to suspend its contributions to the Plan if the
Board of Directors
13
of TSYS feels that the financial condition of TSYS warrants such suspension.
Such suspension shall remain in effect until such time as TSYS' Board of
Directors determines that the financial condition of TSYS warrants the
restoration of the Plan to full active status. During the time TSYS
contributions are suspended, TSYS' Board of Directors shall determine whether
Participant contributions are to be continued or suspended. If TSYS' Board of
Directors permits the continuance of Participant contributions, each Participant
may elect to continue or suspend Participant contributions on his or her own
behalf. If the Participant elects to continue to make Participant contributions
while TSYS contributions are suspended, TSYS shall be under no obligation at any
future date to make contributions with respect to such Participant's
contributions made during such period of suspension. During any period of
suspension under this Article XVII, the Plan shall continue normal operation to
the extent practical.
ARTICLE XVIII
SUSPENSION OR TERMINATION IF
STOCK PURCHASE IS PROHIBITED
In addition to all rights to terminate or suspend the Plan otherwise
reserved herein, it is understood that the Plan may be suspended or terminated
at any time or from time to time by TSYS' Board of Directors if the Plan's
continuance would, for any reason, be prohibited under any federal and state law
even though such prohibition arises because of some act on the part of TSYS,
including, but not limited to, TSYS engaging in a distribution of securities. If
the Plan is suspended under this Article XVIII, no TSYS contributions or
Participant contributions shall be made and no TSYS Common Stock shall be
purchased until the Plan is restored to an active status. If the Plan is
terminated pursuant to this Article XVIII, there shall be no further Participant
contributions and no further TSYS contributions and there shall be no additional
purchases of TSYS Common Stock. As soon as practical after the termination
pursuant to this
14
Article XVIII, distribution of TSYS Common Stock and any cash held as a part of
the Fund shall be governed by the provisions of Article XIV hereof.
ARTICLE XIX
CONSTRUCTION
This Plan shall be governed by and construed under the laws of the State of
Georgia. IN WITNESS WHEREOF, TSYS has caused this Agreement to be executed by
its duly authorized officer as of the month, day and year first above written.
TOTAL SYSTEM SERVICES, INC.
By: /s/ Richard W. Ussery
Title: Chairman of the Board/Chief
Executive Officer
15
SYNOVUS FINANCIAL CORP.
2000 EMPLOYEE LONG-TERM INCENTIVE PLAN
SECTION 1. General Purpose of Plan
The name of this plan is the Synovus Financial Corp. 2000 Employee Long-Term
Incentive Plan (the "Plan"), formerly the 1996 Employee Long-Term Incentive
Plan. The purpose of the Plan is to enable Synovus Financial Corp. (the
"Corporation") and its Subsidiaries to attract, retain, motivate, and reward
employees who make a significant contribution to the Corporation's long-term
success, and to enable such employees to acquire and maintain an equity interest
in Synovus Financial Corp.
SECTION 2. Definitions
For purposes of the Plan, the following terms shall be defined as set forth
below:
a. "Award" means any award of Stock Options, Option Price Adjustment
Rights, Stock Appreciation Rights, Restricted Stock, or Performance
Awards, whether in cash or stock or a combination thereof,
authorized by the Committee under this Plan.
b. "Board" means the Board of Directors of the Corporation or the
Executive Committee of the Board of Directors of the Corporation.
c. "Cause" means a felony conviction of a Participant or the failure of
a Participant to contest prosecution for a felony, or a
Participant's willful misconduct, dishonesty, embezzlement, fraud,
deceit or civil rights violations, any of which acts cause the
Corporation or any Subsidiary liability or loss, as determined by
the Board.
d. "Code" means the Internal Revenue Code of 1986, as amended, or any
successor thereto.
e. "Committee" means the Compensation Committee, or any other committee
of the Board appointed for the purpose of administering the Plan,
which committee shall consist exclusively of two or more
Disinterested Persons, at least two of whom are directors of both
the Corporation and of Total System. In the context of Awards made
to employees of Total System, the term "Committee" shall mean only
those members of the Committee who are directors of both the
Corporation and of Total System.
f. "Commission" means the Securities and Exchange Commission.
g. "Corporation" means Synovus Financial Corp.
h. "Disability" means total and permanent physical or mental disability
or incapacity of an employee to fulfill at any time or from time to
time his normal duties as an employee, as certified in writing by
two competent physicians, one of which shall be selected by the
Committee and the other of which shall be selected by the employee
or his duly appointed guardian or legal or personal representative.
In addition, for purposes of determining Disability as it applies to
any Incentive Stock Option, the term "Disability" shall be
interpreted consistently with Code Sections 421-424.
i. "Disinterested Person" is a person who meets both (i) the definition
of "disinterested person" as set forth in Rule 16b-3 as promulgated
by the Commission under the Exchange Act, or any successor
definition adopted by the Commission, and (ii) the definition of
"outside director" as set forth in Code Section 162(m), as amended
from time to time.
j. "Early Retirement" means retirement from active employment with the
Corporation or any Subsidiary pursuant to the early retirement
provisions of the applicable Corporation or Subsidiary pension plan.
k. "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and any successor thereto.
l. "Fair Market Value" means, as of any given date, the closing price
of the Stock on such date (or if no transactions were reported on
such date on the next preceding date on which transactions were so
reported) in the principal market in which such Stock is traded on
such date as reported in The Wall Street Journal (or any other
publication designated by the Committee) except that, with respect
to grants of Restricted Stock, "Fair Market Value" for Restricted
Stock on the date of grant shall be determined as of the time and
date of the Restricted Stock grant by the Compensation Committee.
m. "Incentive Stock Option" means any Stock Option intended to be and
designated as an "incentive stock option" within the meaning of
Section 422 of the Code.
n. "Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
o. "Normal Retirement" means retirement from active employment with the
Corporation or any Subsidiary on or after the normal retirement date
specified in the applicable Corporation or Subsidiary pension plan.
p. "Option Price Adjustment Right" means a right granted under Section
6 in tandem with a Stock Option which entitles the recipient to have
applied as a credit against the exercise price of the related Stock
Option an amount equal to: (i) the total number of shares of stock
subject to the Option Price Adjustment Right (or the portion or
portions thereof which the recipient from time to time elects to use
for this purpose), multiplied by (ii) a fixed percentage of the Fair
Market Value of a share of Stock on a date to be designated by the
Committee.
q. "Participant" means any employee of the Corporation and its
Subsidiaries designated by the Committee to receive an Award
under the Plan.
r. "Performance Award" means an award of shares of Stock or cash to a
Participant pursuant to Section 9 contingent upon achieving certain
performance goals.
s. "Plan" means this Synovus Financial Corp. 2000 Employee Long-Term
Incentive Plan.
t. "Restricted Stock" means an award of shares of Stock that are
subject to restrictions under Section 8.
u. "Retirement" means Normal or Early Retirement under the applicable
Corporation or Subsidiary pension plan.
v. "Stock" means the common stock of the Corporation or any successor
corporation.
w. "Stock Appreciation Right" means a right granted under Section 7,
which entitles the holder to receive a cash payment or an award of
Stock or, if applicable, as a credit against the purchase price of a
related Stock Option, in an amount equal to the difference between
(i) the Fair Market Value of the Stock covered by such right at the
date the right is granted and (ii) the Fair Market Value of the
Stock covered by such right at the date the right is exercised,
unless otherwise determined by the Committee pursuant to Section 7,
multiplied by the number of shares covered by the right.
x. "Stock Option" means any option to purchase shares of Stock granted
to employees pursuant to Section 6.
y. "Subsidiary" means any corporation (other than Synovus Financial
Corp.) in an unbroken chain of corporations beginning with the
Corporation if each of the corporations (other than the last
corporation in the unbroken chain) owns stock possessing 50% or more
of the total combined voting power of all classes of stock in one of
the other corporations in the chain.
z. "Total System" means Total System Services, Inc., a Subsidiary of
the Corporation of which approximately 19% of the stock is publicly
held.
SECTION 3. Administration
The Plan shall be administered by the Committee which shall at all times consist
of not less than two Disinterested Persons, at least two of whom are directors
of both the Corporation and of Total System. Whenever under this Plan, any act
or decision is to be made with respect to Awards made to employees of Total
System, including without limitation the selection of Total System employees
for the grant of Awards and the establishment, administration and certification
of attainment of relevant performance goals, if any, such act or decision shall
be made by, and the term "Committee" in that context shall mean, only those
members of the Committee who are directors of both the Corporation and of Total
Systems.
The Committee shall have the power and authority to grant to eligible employees,
pursuant to the terms of the Plan: (i) Stock Options; (ii) Option Price
Adjustment Rights; (iii) Stock Appreciation Rights; (iv) Restricted Stock; or
(v) Performance Awards.
In particular, the Committee shall have the authority:
(i) to select the employees of the Corporation and its Subsidiaries to
whom Stock Options, Option Price Adjustment Rights, Stock Appreciation
Rights, Restricted Stock, or Performance Awards or a combination of
the foregoing from time to time will be granted hereunder; (ii) to
grant Incentive Stock Options, Non-Qualified Stock Options, Option
Price Adjustment Rights, Stock Appreciation Rights, Restricted Stock,
or Performance Awards, or a combination of the foregoing, hereunder;
(iii) to determine the number of shares of Stock to be covered by each
such Award granted hereunder;
(iv) to determine the terms and conditions, not inconsistent with the terms
of the Plan, of any Award granted hereunder including, but not limited
to, any restriction on any Award and/or the shares of Stock relating
thereto based on performance and/or such other factors as the
Committee may determine, in its sole discretion, and any vesting
acceleration features based on performance and/or such other factors
as the Committee may determine, in its sole discretion;
(v) to determine whether, to what extent and under what circumstances
Stock and other amounts payable with respect to an Award under this
Plan shall be deferred either automatically or at the election of a
Participant, including providing for and determining the amount (if
any) of deemed earnings on any deferred amount during any deferral
period.
Subject to Section 10, the Committee shall have the authority to adopt, alter
and repeal such administrative rules, guidelines and practices governing the
Plan as it shall, from time to time, deem advisable; to interpret the terms and
provisions of the Plan and any Award issued under the Plan (and any agreements
relating thereto); and to otherwise supervise the administration of the Plan.
All decisions made by the Committee pursuant to the provisions of the Plan shall
be final and binding on all persons, including the Corporation and all Plan
Participants. It is not anticipated that the Plan will be presented for
shareholder approval.
SECTION 4. Stock Subject to Plan
The total number of shares of Stock reserved and available for distribution
under the Plan shall be 20,000,000. Such shares may consist, in whole or in
part, of authorized and unissued shares or treasury shares.
If any shares of Stock that have been subject to option cease to be subject to
option without having been exercised, or if any shares subject to any Restricted
Stock, Option Price Adjustment Rights, Stock Appreciation Rights, or Performance
Awards granted hereunder are forfeited or such Awards are otherwise terminated
without having been exercised, such shares shall again be available for
distribution in connection with future Awards under the Plan in each case to the
full extent available pursuant to the rules and interpretations of the
Securities and Exchange Commission under Section 16 of the Exchange Act. In the
event that prior to the Award's cancellation, termination, expiration, or lapse,
the holder of the Award at any time received one or more "benefits of ownership"
pursuant to such Award (as defined by the Securities and Exchange Commission,
pursuant to any rule or interpretation promulgated under Section 16 of the
Exchange Act), the Stock subject to such Award shall not be available for
regrant under the Plan.
In the event of any merger, reorganization, consolidation, recapitalization,
stock dividend, or other change in corporate structure affecting the Stock, a
substitution or adjustment shall be made in the aggregate number of shares
reserved for issuance under the Plan, in the number and option price of shares
subject to outstanding Stock Options granted under the Plan and in the number of
shares subject to Stock Appreciation Rights, Option Price Adjustment Rights,
Restricted Stock or Performance Awards granted under the Plan as may be
determined to be appropriate by the Committee, in its sole discretion, in order
to preserve each Participant's rights substantially proportionate to the
Participant's rights existing prior to such event, provided that the number of
shares subject to any Award shall always be a whole number. Such adjusted option
price shall also be used to determine the amount payable by the Corporation upon
the exercise of any Stock Appreciation Rights or Option Price Adjustment Rights
associated with any Stock Option the price of which is adjusted.
Notwithstanding any provision in the Plan to the contrary, the maximum number of
shares of Stock with respect to one or more Awards that may be granted to any
one Participant in any calendar year shall be 2,000,000.
SECTION 5. Eligibility
Any employee of the Corporation or any of its Subsidiaries (but excluding
members of the Committee and any person who is a director of the Corporation or
any Subsidiary, but not an employee of the Corporation or any Subsidiary) is
eligible to be granted Stock Options, Option Price Adjustment Rights, Stock
Appreciation Rights, Restricted Stock or Performance Awards. The Participants
under the Plan shall be selected from time to time by the Committee, in its sole
discretion, from among those eligible, and the Committee shall determine, in its
sole discretion, the number of shares covered by each Award or grant.
SECTION 6. Stock Options
Stock Options may be granted either alone or in addition to other Awards granted
under the Plan. Any Stock Option granted under the Plan shall be in such form as
the Committee may from time to time approve, and the provisions of Stock Option
Awards need not be the same with respect to each optionee.
The Stock Options granted under the Plan may be of two types: (i) Incentive
Stock Options (subject to the provisions of Section 15 of the Plan) and (ii)
Non-Qualified Stock Options.
The Committee shall have the authority to grant any optionee Incentive Stock
Options, Non-Qualified Stock Options, or both types of Stock Options (in each
case with or without Option Price Adjustment Rights or Stock Appreciation
Rights). To the extent that any Stock Option does not qualify as an Incentive
Stock Option, it shall constitute a separate Non-Qualified Stock Option.
Anything in the Plan to the contrary notwithstanding, no term of this Plan
relating to Incentive Stock Options shall be interpreted, amended or altered,
nor shall any discretion or authority granted under the Plan be so exercised, so
as to disqualify either the Plan or any Incentive Stock Option under Section 422
of the Code.
Stock Options granted under the Plan shall be subject to the following terms and
conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem desirable:
(a) Option Price. The option price per share of Stock purchasable under a
Stock Option shall be determined by the Committee at the time of
grant. The option price per share of Stock may be equal to or more or
less than the Fair Market Value of the Stock on the date of grant,
except that the option price for any Incentive Stock Option shall be
not less than 100% of the Fair Market Value of the Stock on the date
of the grant of the Stock Option (determined without regard to any
Option Price Adjustment Rights or Stock Appreciation Rights). If the
option is an Incentive Stock Option and if the employee to whom the
Incentive Stock Option is granted owns directly or indirectly more
than 10% of the total combined voting power of all classes of Stock
immediately before the grant of the option, then the option price per
share of Stock must be at least 110% of the Fair Market Value of the
Stock on the date of grant.
(b) Option Term. The term of each Stock Option shall be fixed by the
Committee, but no Stock Option shall be exercisable more than ten
years after the date such Stock Option is granted. If the option is an
Incentive Stock Option and if the employee to whom the Incentive Stock
Option is granted owns directly or indirectly more than 10% of the
total combined voting power of all classes of Stock immediately before
the grant of the option, then the term of the option may not exceed
five years.
(c) Exercisability. Subject to paragraph (j) of this Section 6 with
respect to Incentive Stock Options, Stock Options shall be exercisable
at such time or times and subject to such terms and conditions as
shall be determined by the Committee at grant, provided, however, that
except as provided in paragraphs (f) and (g) of Section 6, unless a
longer vesting period is otherwise determined by the Committee at
grant, no Stock Option shall be exercisable for a period of six months
after the date of the grant of the option. If the Committee provides,
in its discretion, that any Stock Option is exercisable only in
installments, the Committee may waive such installment exercise
provision at any time in whole or in part based on performance and/or
such other factors as the Committee may determine in its sole
discretion.
(d) Method of Exercise. Stock Options may be exercised in whole or in part
at any time during the exercise period described in Section 6(c) by
giving written notice of exercise to the Corporation specifying the
number of shares to be purchased, accompanied by payment in full of
the purchase price, in cash, by check or such other instrument as may
be acceptable to the Committee. If approved and as determined by the
Committee, in its sole discretion, at or after grant, payment in full
or in part may also be made in the form of unrestricted Stock owned by
the optionee (based on the Fair Market Value of the Stock on the date
the option is exercised, as determined by the Committee). Payment of
the exercise price of a Stock Option and any withholding tax due at
exercise also may be made through any program or procedure (including
but not limited to a broker-dealer cashless exercise program) if
approved by the Committee. No shares of Stock resulting from the
exercise of a Stock Option shall be issued until full payment therefor
has been made. An optionee shall have the rights to dividends or other
rights of a stockholder with respect to shares subject to the option
when the optionee has given written notice of exercise and has paid in
full for such shares.
(e) Transferability of Options.
(1) Incentive Stock Options. No Incentive Stock Option shall be
transferable by the optionee, otherwise than by will or by the
laws of descent and distribution, or be subject to attachment,
execution or similar process. All Incentive Stock Options shall
be exercisable, during the optionee's lifetime, only by the
optionee.
(2) Non-Qualified Stock Options. Non-Qualified Stock Options shall
likewise be non-transferable by the optionee, otherwise than by
will or by the laws of descent and distribution, and not subject
to attachment, execution or similar process; provided, however,
that the Committee may by resolution or after grant designate
existing or future Non-Qualified Stock Options as "transferable,"
meaning that the optionee may sign an agreement which transfers
all or a portion of such Non-Qualified Stock Option (either
exercisable or non-exercisable) to (A) a member of the optionee's
Immediate Family, (B) any trust or trusts in which members of the
optionee's Immediate Family have more than a fifty percent (50%)
beneficial interest, (C) any entity in which optionee and/or
members of the optionee's Immediate Family own more than fifty
percent (50%) of the voting interests, or (D) any foundation in
which optionee and/or optionee's Immediate Family members control
the management of the foundation's assets, subject to such terms
and conditions as the Committee may establish. The form of
agreement pursuant to which such options are transferred must be
approved by the Committee and executed by the optionee,
transferee and the Company. Following transfer, any such options
shall continue to be subject to the same terms and conditions as
were applicable immediately prior to transfer, except that the
term "optionee" shall be deemed to refer to the transferee
subject to any terms and conditions established by the Committee.
Subsequent transfers of such transferred options shall be
prohibited, except by will or the laws of descent and
distribution. For purposes of this Subsection, "Immediate Family"
means the optionee's child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, former spouse, sibling,
mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, sister-in-law, nephew or niece of the optionee
(including by adoption), and any person sharing the optionee's
household (other than a tenant or employee).
(f) Termination by Death (other than by suicide). Unless otherwise
determined by the Committee at or after grant, if any optionee's
employment with the Corporation or any Subsidiary terminates by reason
of death (other than by suicide), the Stock Option may thereafter be
immediately exercised, to the extent then exercisable (or on such
accelerated basis as the Committee shall determine at or after grant),
by the legal representative of the estate or by the legatee of the
optionee under the will of the optionee, for a period of one year from
the date of such death or until the expiration of the stated term of
such Stock Option, whichever period is the shorter.
(g) Termination by Reason of Disability. Unless otherwise determined by
the Committee at or after grant, if any optionee's employment with the
Corporation or any Subsidiary terminates by reason of Disability, any
Stock Option held by such optionee may thereafter be exercised, to the
extent it was exercisable at the time of termination due to Disability
(or on such accelerated basis as the Committee shall determine at or
after grant), but may not be exercised after one year from the date of
such termination of employment or the expiration of the stated term of
such Stock Option, whichever period is the shorter; provided, however,
that, if the optionee dies within such one year period, any
unexercised Stock Option held by such optionee shall thereafter be
exercisable to the extent to which it was exercisable at the time of
death for a period of twelve months from the date of such death or for
the stated term of such Stock Option, whichever period is the shorter.
In the event of termination of employment by reason of Disability, if
an Incentive Stock Option is exercised after the expiration of the
exercise periods that apply for purposes of Section 422 of the Code,
such Stock Option will thereafter be treated as a Non-Qualified Stock
Option.
(h) Termination by Reason of Retirement. Unless otherwise determined by
the Committee at or after grant, if any optionee's employment with the
Corporation or any Subsidiary terminates by reason of Normal or Early
Retirement, any Stock Option held by such optionee may thereafter be
exercised to the extent it was exercisable at the time of such
Retirement (or on such accelerated basis as the Committee shall
determine at or after grant), but may not be exercised after the
expiration of the stated term of such Stock Option; and, provided that
if the optionee dies within such period any unexercised Stock Option
held by such optionee shall thereafter be exercisable, to the extent
to which it was exercisable at the time of death, for the remainder of
the stated term of the Stock Option. In the event of termination of
employment by reason of Retirement, if an Incentive Stock Option is
exercised after the exercise periods that apply for purposes of
Section 422 of the Code, such Stock Option will thereafter be treated
as a Non-Qualified Stock Option.
(i) Other Termination. Unless otherwise determined by the Committee at or
after grant, if an optionee's employment with the Corporation or any
Subsidiary terminates for Cause or for death by reason of suicide or
for any reason other than Disability or Normal or Early Retirement or
death other than by suicide, the Stock Option shall thereupon
terminate, except that such Stock Option may be exercised to the
extent such Stock Option could have been exercised on the date of
cessation of employment for the lesser of three months from the date
of termination or the balance of such Stock Option's term if the
optionee's employment with the Corporation or any Subsidiary is
involuntarily terminated by the optionee's employer without Cause.
(j) Limit on Value of Incentive Stock Options First Exercisable Annually.
The aggregate Fair Market Value (determined at the time of grant) of
the Stock for which "incentive stock options" within the meaning of
Section 422 of the Code are exercisable for the first time by an
optionee during any calendar year under the Plan (and/or any other
stock option plans of the Corporation or any Subsidiary) shall not
exceed $100,000.
(k) Option Price Adjustment Rights. The Committee shall have the
discretion to grant Option Price Adjustment Rights in conjunction with
all or part of any Stock Option granted under the Plan, either at or
after the time of grant of such Stock Option. Option Price Adjustment
Rights shall be exercisable only at such time as and to the same
extent that the Stock Options to which the Option Price Adjustment
Rights relate are exercisable. An Option Price Adjustment Right
granted with respect to a given Stock Option shall terminate and no
longer be exercisable upon the termination or exercise of the related
Stock Option. An Option Price Adjustment Right may be exercised by an
optionee by exercising and surrendering the applicable potion of the
related Stock Option. Upon such exercise and surrender, the optionee
shall be entitled to have applied as a credit against the exercise
price of the related Stock Option an amount equal to: (i) the total
number of shares of stock subject to the Option Price Adjustment Right
(or the portion or portions thereof which the optionee from time to
time elects to use for this purpose), multiplied by (ii) a fixed
percentage of the Fair Market Value of a share of Stock on a date to
be designated by the Committee.
SECTION 7. Stock Appreciation Rights
(a) Grant and Exercise When Granted in Conjunction With Stock Options.
Stock Appreciation Rights may be granted alone or in conjunction with
all or part of any Stock Option granted under the Plan and may contain
terms and conditions different from those of the related Stock Option,
except as otherwise provided below. In the case of a Non-Qualified
Stock Option, such rights may be granted either at or after the time
of the grant of such Non-Qualified Stock Option. In the case of an
Incentive Stock Option, such rights may be granted only at the time of
the grant of such Incentive Stock Option.
A Stock Appreciation Right or applicable portion thereof granted
with respect to a given Stock Option shall terminate and no longer
be exercisable upon the termination or exercise of the related
Stock Option, except that, unless otherwise provided by the
Committee at the time of grant, a Stock Appreciation Right granted
with respect to less than the full number of shares covered by a
related Stock Option shall only be reduced if and to the extent
that the number of shares covered by the exercise or termination
of the related Stock Option exceeds the number of shares not
covered by the Stock Appreciation Right.
A Stock Appreciation Right may be exercised by an optionee, in
accordance with paragraph (c) of this Section 7, by surrendering
the applicable portion of the related Stock Option. Upon such
exercise and surrender, the optionee shall be entitled to receive
an amount determined in the manner prescribed in paragraph (c) of
this Section 7. Stock Options which have been so surrendered, in
whole or in part, shall no longer be exercisable to the extent the
related Stock Appreciation Rights have been exercised.
(b) Grant and Exercise When Granted Alone. Stock Appreciation Rights may
be granted at the discretion of the Committee in a manner not related
to an award of a Stock Option. The Committee should have the
discretion to determine the terms and conditions of any Stock
Appreciation Rights not related to a Stock Option Award. A Stock
Appreciation Right granted under this Section 7(b) is not exercisable
for a period of six months from the date of grant, unless a longer
period is otherwise determined by the Committee. The Stock
Appreciation Right, granted under Section 7(b), shall be exercisable
in accordance with Section 7(c) over a period not to exceed ten years.
Any Stock Appreciation Right which is outstanding on the last day of
the exercisable period shall be automatically exercised on such date
for cash or Common Stock, as determined by the Committee, without any
action by the holder if, on that date, the Fair Market Value of the
Stock exceeds the exercise price of the Stock Appreciation Right.
(c) Terms and Conditions. Stock Appreciation Rights shall be subject to
such terms and conditions, not inconsistent with the provisions of the
Plan, as shall be determined from time to time by the Committee,
including the following:
(i) Stock Appreciation Rights granted pursuant to Section 7(a) shall
be exercisable only at such time or times and to the extent that
the Stock Options to which the Stock Appreciation Rights relate
shall be exercisable in accordance with the provisions of Section
6 and this Section 7 of the Plan; provided, however, that any
Stock Appreciation Right granted subsequent to the grant of the
related Stock Option shall not be exercisable during the first
six months of the term of the Stock Appreciation Right, except
that this additional limitation shall not apply in the event of
death other than by suicide or Disability of the optionee prior
to the expiration of the six-month period.
(ii) Upon the exercise of a Stock Appreciation Right granted pursuant
to Section 7(a), an optionee shall be entitled to receive an
amount in cash or shares of Stock equal in value to the excess of
the Fair Market Value of one share of Stock over the option price
per share specified in the related Stock Option, multiplied by
the number of shares in respect of which the Stock Appreciation
Right shall have been exercised, with the Committee having the
right to determine the form of payment. Upon the exercise of a
Stock Appreciation Right granted pursuant to Section 7(b), the
holder shall be entitled to receive an amount in cash or shares
of Stock equal in value to the excess of the Fair Market Value of
one share of Stock over the Fair Market Value of one share of
Stock at the date the Stock Appreciation Right was granted
multiplied by the number of shares in respect of which the Stock
Appreciation Right shall have been exercised, with the Committee
having the right to determine the form of payment.
(iii)No Stock Appreciation Right shall be transferable by the holder,
other than by will or the laws of descent and distribution, or be
subject to attachment, execution or similar process. All Stock
Appreciation Rights shall be exercisable, during the holder's
lifetime, only by the holder.
(iv) Upon the exercise of a Stock Appreciation Right granted pursuant
to Section 7(a), the Stock Option or part thereof to which such
Stock Appreciation Right is related shall be deemed to have been
exercised for the purpose of the limitation set forth in Section
4 of the Plan on the number of shares of Stock to be issued under
the Plan.
(v) A Stock Appreciation Right granted in connection with an
Incentive Stock Option pursuant to Section 7(a), may be exercised
only if and when the market price of the Stock subject to the
Incentive Stock Option exceeds the exercise price of such Stock
Option.
(vi) In its sole discretion, the Committee may provide, at the time of
grant of a Stock Appreciation Right under this Section 7, that
such Stock Appreciation Right can be exercised only in the event
of a "Change of Control" (as defined in Section 12 below).
Furthermore, the Committee may provide, at the time of grant of
any Stock Appreciation Right, that such Stock Appreciation Right
can be exercised only upon the attainment of specified
performance goals or other such criteria as the Committee may
determine in its sole discretion.
(vii)In the discretion of the Committee, if the Plan is approved by
the shareholders of the Corporation in accordance with Section 15
of the Plan, a Stock Appreciation Right may provide that any
exercise by a Participant of all or a portion of a Stock
Appreciation Right for cash, may only be made during the period
beginning on the third business day following the date of the
Corporation's release of its quarterly or annual summary
statements of earnings to the public and ending on the twelfth
business day following such date; provided, however, that the
foregoing shall not apply to any exercise by a Participant of a
Stock Appreciation Right for cash where the date of exercise is
automatic or fixed in advance under the Plan and is outside the
control of the Participant.
SECTION 8. Restricted Stock
(a) Administration. Shares of Restricted Stock may be issued either alone
or in addition to other Awards granted under the Plan. The Committee
shall determine the employees of the Corporation and its Subsidiaries
to whom, and the time or times at which, grants of Restricted Stock
will be made, the number of shares to be awarded, the price, if any,
to be paid by the recipient of Restricted Stock (subject to Section
8(b) hereof), the time or times within which such Awards may be
subject to forfeiture, the nature of the restrictions, including any
performance requirements, the circumstances under which restrictions
will lapse and all other conditions of the Awards. The Committee may
also condition the grant of Restricted Stock upon the attainment of
specified performance goals, or such other criteria as the Committee
may determine, in its sole discretion. The provisions of Restricted
Stock Awards need not be the same with respect to each recipient.
(b) Awards and Certificates. The prospective recipient of an Award of
shares of Restricted Stock shall not have any rights with respect to
such Award, unless and until such recipient has executed an agreement
evidencing the Award (a "Restricted Stock Award Agreement") and has
delivered a fully executed copy thereof to the Corporation, and has
otherwise complied with the then applicable terms and conditions.
(i) Awards of Restricted Stock must be accepted within a period of
thirty days (or such shorter period as the Committee may specify)
after the Award date by executing a Restricted Stock Award
Agreement and paying whatever price, if any, is required.
(ii) Each Participant who is awarded Restricted Stock shall be issued
a stock certificate in respect of such shares of Restricted Stock
to be held in escrow as described below.
Such certificate shall be registered in the name of the
Participant, and shall bear an appropriate legend
referring to the terms, conditions, and restrictions
applicable to such Award, substantially in the
following form:
"The transferability of this certificate and the
shares of stock represented hereby are subject to
the terms and conditions (including forfeiture)
of the Synovus Financial Corp. 2000 Employee
Long-Term Incentive Plan and a Restricted Stock
Award Agreement entered into between the
registered owner and Synovus Financial Corp.
Copies of such Plan and Agreement are on file in
the offices of Synovus Financial Corp., One
Arsenal Place, 901 Front Avenue, Suite 301,
Columbus, Georgia, 31901."
(iii)The Committee shall require that the stock certificate
evidencing such shares be held in escrow by Synovus Trust Company
("STC"), or any other escrow agent designated by the Committee
until the restrictions thereon shall have lapsed, and that, as a
condition of any Restricted Stock Award, the Participant shall
have delivered a stock power, endorsed in blank, relating to the
Stock covered by such Award. In the event the Participant has
obtained a loan to purchase the Restricted Stock or to pay any
taxes due with respect to the Restricted Stock, STC or other
escrow agent shall have the right to require that the shares
continue to be held in escrow until such loan is repaid.
(c) Restrictions and Conditions. The shares of Restricted Stock awarded
pursuant to this Section 8 shall be subject to the following
restrictions and conditions:
(i) Subject to the provisions of this Plan and Restricted Stock Award
Agreements, during the period of six months after the Award or
such longer period as may be set by the Committee commencing on
the grant date (the "Restriction Period"), the Participant shall
not be permitted to sell, transfer, pledge or assign shares of
Restricted Stock awarded under the Plan. Within these limits, the
Committee may, in its sole discretion, provide for the lapse of
such restrictions in installments and may accelerate or waive
such restrictions in whole or in part based on performance and/or
such other factors as the Committee may determine, in its sole
discretion.
(ii) Except as provided in paragraph (c)(i) of this Section 8, the
Participant shall have, with respect to the shares of Restricted
Stock, all of the rights of a stockholder of the Corporation,
including the right to receive any dividends, unless the
Committee shall declare otherwise at the time of the Award.
Dividends paid in cash with respect to shares of
Restricted Stock shall not be subject to any
restrictions or subject to forfeiture. Dividends paid
in Stock of the Corporation or Stock received in
connection with a stock split with respect to
Restricted Stock shall be subject to the same
restrictions as on such Restricted Stock. Certificates
for shares of unrestricted Stock shall be delivered to
the Participant promptly after, and only after, the
period of forfeiture shall expire without forfeiture in
respect of such shares of Restricted Stock and the
repayment of any loans obtained to purchase the
Restricted Stock or to pay any taxes due with respect
to the Restricted Stock.
(iii)Subject to the provisions of the Restricted Stock Award Agreement
and this Section 8, upon termination of employment for any reason
during the Restriction Period, all shares still subject to
restriction (together with any price paid for such shares by the
Participant) shall be forfeited by the Participant, unless
otherwise determined by the Committee.
(iv) The Committee may, in its sole discretion, waive in whole or in
part any or all restrictions with respect to any Participant's
shares of Restricted Stock.
SECTION 9. Performance Awards
(a) Administration. Shares of Stock and/or a payment in cash may be
distributed under the Plan to an employee upon the attainment of
performance objectives, as a Performance Award. The Committee shall
determine the employees of the Corporation and its Subsidiaries to
whom Performance Awards are granted, the terms and conditions of the
performance objectives, the term of the performance period and the
value and form of the payment of the Performance Award.
(b) Performance Objectives. The Committee, in its sole discretion may
establish, under this Section 9, performance objectives either in
terms of Corporation-wide objectives or in terms of objectives that
are related to the specific performance of an employee or a bank, a
group, division, department, or Subsidiary within the Corporation in
which the Participant is employed. A minimum level of performance, at
the discretion of the Committee, may be established.
If, at the end of the performance period, the specified objectives
have been attained, the Participant is deemed to have fully earned
the Performance Award. If such performance objectives are only
partially attained, the Participant may be deemed by the Committee
to have partly earned the Performance Award and would become
eligible to receive a portion of the total Award, as determined by
the Committee. If a required minimum level of achievement has not
been met, as determined by the Committee, the Participant is
entitled to no portion of the Performance Award. If, at the end of
the performance period, performance exceeds the target, the
Participant, at the Committee's discretion, may receive a multiple
of the Performance Award. The Committee may adjust the payment of
Awards or the performance objectives if events occur or
circumstances arise which would cause a particular payment or set
of performance objectives to be inappropriate as a measure of
performance.
(c) Terms and Conditions. A Participant to whom a Performance Award has
been granted is given performance objectives to be reached over a
specified period, the "performance period." Generally this period
shall be not less than one year.
Any Participant granted a Performance Award pursuant to this
Section 9 who by reason of death (other than by suicide),
Disability or Retirement terminates employment before the end of
the performance period is entitled to receive a portion of any
earned Performance Award. The Committee, in its discretion, will
determine the amount of the Performance Award earned, if any, and
the time at which payment will be made.
A Participant who terminates employment for any other reason,
including death by suicide, forfeits all rights under the
Performance Award.
SECTION 10. Amendments and Termination
The Board may amend, alter, or discontinue the Plan at any time, but no
amendment, alteration, or discontinuation shall be made which affects an
existing Award under the Plan without the optionee's or Participant's consent.
If stockholder approval of this Plan is obtained, no amendment, alteration or
discontinuation shall be made by the Board which, without the approval of the
stockholders, would:
(a) increase the total number of shares reserved for the purpose of the
Plan, except as provided for in accordance with Section 4 of the Plan;
(b) decrease the option price of any Stock Option to less than 100% of the
Fair Market Value on the date of the granting of the option, except as
provided for in accordance with Section 4 of the Plan;
(c) change the Participants or class of Participants eligible to
participate in the Plan;
(d) extend the maximum option period under paragraph (b) of Section 6 of
the Plan; or
(e) materially increase in any other way the benefits accruing to
Participants.
The Committee may amend the terms of any Award or option theretofore granted,
prospectively or retroactively, but no such amendment shall affect an existing
Award under the Plan without the Participant's consent. The Committee may also
substitute new Stock Options for previously granted Stock Options, including
options granted under other plans applicable to the Participant, and previously
granted Stock Options having higher option prices.
SECTION 11. Change of Control
The following provisions shall apply in the event of a "Change of Control," as
defined in this Section 11:
(a) In the event of a "Change of Control" as defined in paragraph (c) of
this Section 11, the vesting of any outstanding Stock Options, Option
Price Adjustment Rights, Stock Appreciation Rights, Restricted Stock
or Performance Awards shall be accelerated so that all Awards not
previously exercisable and vested are fully exercisable and vested.
(b) If the employment of a Participant is terminated for any reason
following a Change of Control, any outstanding Stock Options, Option
Price Adjustment Rights, Stock Appreciation Rights, Restricted Stock
or Performance Awards granted to the Participant that are not fully
exercisable and vested shall become fully exercisable and vested as of
the date of such termination of employment and any obligations to pay
amounts to the Corporation or any Subsidiary in connection with an
Award shall be terminated as of the date of such termination of
employment.
(c) For purposes of this Section 11, a "Change of Control" means the
happening of any of the following:
(i) when any "person," as such term is used in Section 13(d) and
14(d) of the Exchange Act (other than the Corporation or a
Subsidiary or any Corporation employee benefit plan (including
its trustee)), is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly of
securities of the Corporation representing 20% or more of the
combined voting power of the Corporation's then outstanding
securities;
(ii) the occurrence of a transaction requiring stockholder approval
for the acquisition of the Corporation by an entity other than
the Corporation or a Subsidiary through purchase of assets, or by
merger, or otherwise;
(iii)the filing of an application with any regulatory authority having
jurisdiction over the ownership of the Corporation by any
"person," as defined in the preceding paragraph, to acquire 20%
or more of the combined voting power of the Corporation's then
outstanding securities; or
(iv) the occurrence of a "Triggering Event" as such term is defined in
the Rights Agreement dated April 20, 1989, by and between the
Corporation and Trust Company Bank, the provisions of which are
incorporated herein by this reference.
(d) For purposes of this Section 11, a "Change of Control" shall not
result from any transaction precipitated by the Corporation's
insolvency, appointment of a conservator, or determination by a
regulatory agency that the Corporation is insolvent, nor from any
transaction initiated by the Corporation in regard to creating a
holding company of which the Corporation would be a primary entity,
nor from any transaction initiated by the Corporation in regard to
converting from a publicly traded company to a privately held company.
SECTION 12. General Provisions
(a) All certificates for shares of Stock delivered under the Plan shall be
subject to such stock transfer orders and other restrictions as the
Committee may deem advisable under the rules, regulations, and other
requirements of the Commission, any stock exchange upon which the
Stock is then listed, and any applicable Federal or state securities
or other laws, and the Committee may cause a legend or legends to be
put on any such certificates to make appropriate reference to such
restrictions.
(b) Nothing set forth in this Plan shall prevent the Board from adopting
other or additional compensation arrangements, subject to stockholder
approval if such approval is required; and such arrangements may be
either generally applicable or applicable only in specific cases. The
Corporation and its Subsidiaries specifically reserve the right to
terminate (whether by dismissal, discharge, retirement or otherwise)
any Participant's employment with the Company or a Subsidiary at any
time at will. Neither the granting of an Award nor the adoption of the
Plan shall confer upon any employee of the Corporation or its
Subsidiaries any right to continued employment with the Corporation or
a Subsidiary, as the case may be, nor shall it interfere in any way
with the right of the Corporation or a Subsidiary to terminate the
employment of any of its employees at any time.
(c) Each Participant shall, no later than the date as of which the value
of an Award first becomes includable in the gross income of the
Participant for Federal income tax purposes, pay to the Corporation,
or make arrangements satisfactory to the Committee regarding payment
of, any Federal, state, or local taxes of any kind required by law to
be withheld with respect to the Award. The obligations of the
Corporation under the Plan shall be conditional on such payment or
arrangements and the Corporation (and, where applicable, its
Subsidiaries), shall, to the extent permitted by law, have the right
to deduct any such taxes from any payment of any kind otherwise due to
the Participant. A Participant may irrevocably elect to have the
withholding tax obligations or, in the case of all Awards hereunder
except Stock Options which have related Option Price Adjustment Rights
or Stock Appreciation Rights, if the Committee so determines, any
additional tax obligation with respect to any Awards hereunder
satisfied by (a) having the Corporation withhold shares of Stock
otherwise deliverable to the Participant with respect to the Award or
(b) delivering to the Corporation shares of unrestricted Stock;
provided, however, that if the Participant is an "officer" of the
Corporation within the meaning of Section 16 of the Exchange Act, no
such election shall be made (i) unless the Plan has been approved by
shareholders in accordance with Section 15 of the Plan and (ii) such
election is made either (a) during one of the "window" periods
described in section (c)(3)(iii) of Rule 16b-3 promulgated under the
Exchange Act, or (b) at least six months prior to the date income is
recognized with respect to the Award.
(d) No members of the Board or the Committee, nor any officer or employee
of the Corporation acting on behalf of the Board or the Committee,
shall be personally liable for any action, determination, or
interpretation taken or made in good faith with respect to the Plan,
and all members of the Board or the Committee and each and any officer
or employee of the Corporation acting on their behalf shall, to the
extent permitted by law, be fully indemnified and protected by the
Corporation in respect of any such action, determination or
interpretation provided such individual first gives the Corporation an
opportunity, at its own expense, to handle and defend any legal action
before such individual undertakes to handle and defend such legal
action.
(e) The existence of Stock Options, Option Price Adjustment Rights, Stock
Appreciation Rights, Restricted Stock and Performance Awards shall not
affect the right or power of the Corporation and its shareholders to
make adjustments, recapitalizations, reorganizations, or other changes
to the Corporation's capital structure or its business; issue bonds,
debentures, preferred or prior preference stocks affecting the
Corporation's Common Stock or the rights thereof; dissolve or
liquidate the Corporation, or sell or transfer any part of its assets
or business; or any other corporate act, whether of a similar
character or otherwise.
(f) The validity, interpretation, and administration of the Plan and of
any rules, regulations, determinations, or decisions made thereunder,
and the rights of any and all persons having or claiming to have any
interest therein or thereunder, shall be determined exclusively in
accordance with the laws of the State of Georgia, except where those
laws may be superseded by the laws of the United States of America.
Without limiting the generality of the foregoing, the period within
which any action in connection with the Plan must be commenced shall
be governed by the laws of the State of Georgia.
(g) The obligation of the Corporation to make payment of Awards in Stock
shall be subject to all applicable laws, rules and regulations, and to
such approvals by government agencies as may be required. The
Corporation shall be under no obligation to register under the
Securities Act of 1933, as amended from time to time ("1993 Act"), any
of the shares of Stock paid under the Plan. If the Stock paid under
the Plan may in certain circumstances be exempt from registration
under the 1933 Act, the Corporation may restrict the transfer of such
Stock in such manner as it deems advisable to ensure the availability
of any such exemption.
SECTION 13. Cash Awards and Loans
The Committee, in its sole discretion, at any time may authorize special cash
Awards to Participants to enable them to fund the exercise price of a Stock
Option or any taxes that must be paid or withheld upon the exercise of a Stock
Option, Option Price Adjustment Right or Stock Appreciation Right, to fund the
purchase price (if any) of Restricted Stock or any taxes that must be paid or
withheld with respect to Restricted Stock, or to fund any taxes that must be
paid or withheld with respect to any Performance Award. The Committee in its
sole discretion, at any time, may assist a Participant in obtaining a loan for
any funds required in connection with any aspect of the Plan, including without
limitation the exercise or purchase price of any Award and any taxes that must
be paid or withheld in connection with any Award.
SECTION 14. Accounting
It is the intent of the Board that the accounting expenses for any Awards under
this Plan to employees of Subsidiaries be charged to the Subsidiaries employing
such employees and not to the Corporation. The Board of Directors and the
Committee shall have the right to adopt any policies and procedures required in
order to carry out this intent.
SECTION 15. Effective Date of Plan
The Plan shall become effective upon the earlier of its adoption by the Board of
Directors or by the Executive Committee of the Board of Directors; provided,
however, that Incentive Stock Options awarded hereunder shall be automatically
converted into Non-Qualified Stock Options if shareholder approval of the Plan
is not obtained within twelve months of the Plan's effective date.
SECTION 16. Term of Plan
No Stock Option, Option Price Adjustment Right, Stock Appreciation Right,
Restricted Stock or Performance Award shall be granted pursuant to the Plan on
or after the tenth anniversary of the effective date of the Plan, but Awards
theretofore granted may extend beyond that date.
SECTION 17. Execution
IN WITNESS WHEREOF, the Corporation has caused this Plan to be signed by its
duly authorized officers effective as of this 1st day of February, 2000.
SYNOVUS FINANCIAL CORP.
By: /s/G. Sanders Griffith, III
Title: Senior Executive Vice President
SELECTED FINANCIAL DATA
The following comparisons highlight significant historical trends in TSYS'
results of operations and financial condition. Total revenues and net income
have grown over the last five years at compounded annual growth rates of 23.3%
and 25.0%, respectively. The balance sheet data also reflect the continued
strong financial position of TSYS, as evidenced by the current ratio of 1.7:1 at
December 31, 1999, and increased shareholders' equity. The following financial
data should be read in conjunction with the Consolidated Financial Statements
and related Notes thereto and Financial Review, included elsewhere in this
Annual Report.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
Years Ended December 31,
------------------------------------------------------------------
(in thousands except per share data) 1999 1998 1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Income Statement Data:
Revenues:
Bankcard data processing services $456,840 350,310 324,718 277,870 218,953
Other services 77,086 45,884 36,781 33,778 30,755
- -------------------------------------------------------------------------------------------------------------------------------
Total revenues 533,926 396,194 361,499 311,648 249,708
- -------------------------------------------------------------------------------------------------------------------------------
Expenses:
Salaries and other personnel expense 207,618 160,855 147,438 124,259 94,946
Net occupancy and equipment expense 151,964 105,658 94,685 82,118 64,549
Other operating expenses 86,052 63,312 59,447 53,368 47,291
- -------------------------------------------------------------------------------------------------------------------------------
Total operating expenses 445,634 329,825 301,570 259,745 206,786
- -------------------------------------------------------------------------------------------------------------------------------
Equity in income of joint ventures 12,327 12,974 9,347 7,094 69
- -------------------------------------------------------------------------------------------------------------------------------
Operating income 100,619 79,343 69,276 58,997 42,991
- -------------------------------------------------------------------------------------------------------------------------------
Nonoperating income:
Gain (loss) on disposal of property and equipment, net 798 (48) (36) 31 (123)
Interest income, net of expense 2,159 2,492 2,315 1,416 839
- -------------------------------------------------------------------------------------------------------------------------------
Total nonoperating income 2,957 2,444 2,279 1,447 716
- -------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 103,576 81,787 71,555 60,444 43,707
Income taxes 34,983 26,956 24,077 21,007 15,977
- -------------------------------------------------------------------------------------------------------------------------------
Net income $ 68,593 54,831 47,478 39,437 27,730
- -------------------------------------------------------------------------------------------------------------------------------
Basic earnings per share $ .35 .28 .24 .20 .14
- -------------------------------------------------------------------------------------------------------------------------------
Diluted earnings per share $ .35 .28 .24 .20 .14
- -------------------------------------------------------------------------------------------------------------------------------
Cash dividends declared per share $ .040 .038 .030 .030 .030
- -------------------------------------------------------------------------------------------------------------------------------
Weighted average common shares outstanding 194,913 194,020 193,956 193,931 193,895
- -------------------------------------------------------------------------------------------------------------------------------
Weighted average common and common
equivalent shares outstanding 195,479 194,669 194,239 194,177 194,123
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
December 31,
-----------------------------------------------------------------
(in thousands) 1999 1998 1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Total assets $457,350 348,908 296,858 245,759 199,000
Working capital 76,414 60,472 70,899 52,274 37,687
Total long-term debt 204 342 475 676 931
Shareholders' equity 334,292 270,354 221,255 178,878 144,472
</TABLE>
19
FINANCIAL REVIEW
This Financial Review provides a discussion of the results of operations,
financial condition, liquidity and capital resources of TSYS and creates
awareness of the factors that have affected its recent earnings, as well as
those factors that may affect its future earnings. The accompanying Consolidated
Financial Statements and related Notes and Selected Financial Data are an
integral part of this Financial Review and should be read in conjunction with
it.
BANKCARD
REVENUES
(MILLIONS OF DOLLARS)
95 $219.0
96 $277.9
97 $324.7
98 $350.3
99 $456.8
[GRAPH OMITTED]
RESULTS OF OPERATIONS
Revenues
TSYS' revenues are derived from providing bankcard data processing and related
services to banks and other institutions generally under long-term processing
contracts. TSYS' services are provided through the Company's cardholder systems,
TS2 and TS1, to financial institutions and other organizations throughout the
United States, Mexico, Canada, Honduras and the Caribbean.
Bankcard data processing revenues are generated primarily from charges
based on the number of accounts billed, transactions and authorizations
processed, statements mailed, credit bureau requests, credit cards embossed and
mailed, and other processing services for cardholder accounts on file.
Cardholder accounts on file include active and inactive bank, retail, debit,
stored value and commercial card accounts. Due to the expanding use of cards and
the increase in the number of cardholder accounts processed by TSYS, as well as
increases in the scope of services offered to customers, revenues relating to
bankcard data processing services have continued to grow. Processing contracts
with large customers, representing a significant portion of the Company's total
revenues, generally provide for discounts on certain services based on the size
and activity of customers' portfolios. Therefore, bankcard data processing
revenues and the related margins are influenced by the customer mix relative to
the size of customer card portfolios, as well as the number and activity of
individual cardholder accounts processed for each customer.
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. Furthermore, growth in card portfolios of
existing customers, the conversion of cardholder accounts of new customers to
THE TOTAL SYSTEM, and the loss of cardholder accounts impact the results of
operations from period to period. Another factor, among others, which may affect
TSYS' revenues and results of operations from time to time is the sale by a
customer of its business, its card portfolio or a segment of its accounts to a
party which processes cardholder accounts internally or uses another third-party
processor. Consolidation in the financial services industry could favorably or
unfavorably impact TSYS' financial condition and results of operations in the
future.
The average number of cardholder accounts on file increased 78.4% to
180.4 million in 1999, compared to 101.1 million in 1998, which represented a
15.9% increase over 87.2 million in 1997. At December 31, 1999, TSYS' cardholder
accounts on file were approximately 206.2 million, up from 117.6 million and
92.8 million at December 31, 1998 and 1997, respectively. The increase in
cardholder accounts on file at December 31, 1999, as compared to December 31,
1998, included net internal growth of existing customers of approximately 7.8
million accounts, and approximately 80.8 million accounts added during 1999 were
due to new customers and portfolio acquisitions by existing customers.
TSYS had approximately 147.2 million accounts being processed on TS2 at
year-end 1999, compared to 62.8 million at year-end 1998 and 19.2 million at
year-end 1997. The increase in accounts being processed on TS2 during 1999 is
the result of converting approximately 79.0 million new accounts and net
internal growth of existing customers of approximately 5.4 million accounts.
TSYS and Visa U.S.A. Inc. formed a joint venture, known as Vital
Processing Services L.L.C. (Vital), which offers fully integrated merchant
transaction and related electronic information services to financial and
nonfinancial institutions and their merchant customers. Vital is structured with
its own management team and separate board of directors and has its corporate
headquarters in Tempe, Arizona.
Since 1994, TSYS has been providing processing services for commercial
cards which include purchasing cards, corporate cards and fleet cards for
employees. At December 31, 1999, TSYS was processing approximately 10.8 million
commercial card accounts, a 26.0% increase over the approximately 8.6 million
being processed at year-end 1998, a 72.8% increase over the 5.0 million at
year-end 1997. The increase in 1998 over 1997 is attributable to the addition of
the U.S. General Services Administration's contracts for commercial card
services.
As a result of the completion of the conversions of the account
portfolios for Sears and Nordstrom, TSYS became the leading third-party
processor of retail accounts. At December 31, 1999, TSYS was processing
approximately 88.7 million retail card accounts, a 527.8% increase over the
approximately 14.1 million being processed at year-end 1998, a 120.0% increase
over the 6.4 million at year-end 1997. On a per account basis, the processing
revenues generated by retail accounts are generally lower than the processing
revenues associated with bankcard accounts. However, TSYS realizes profit
20
margins from retail accounts similar to those it generates from bankcard
accounts.
A significant amount of the Company's revenues is derived from
long-term contracts with large customers, including certain major customers. Two
of the Company's customers, NationsBank and Bank of America, merged effective
September 30, 1998. The new parent company of these entities is Bank of America
Corporation. In September 1999, TSYS announced a new ten-year agreement with the
combined entity to continue processing its credit card portfolio until 2009. The
combination of NationsBank and Bank of America under a single processing
agreement with TSYS reduced TSYS' revenues in 1999 and will reduce the Company's
revenues in future years because together NationsBank and Bank of America will
be entitled to receive greater discounts than either would have been entitled to
receive standing alone. Bank of America accounted for approximately 16%, 21% and
20% of total revenues for the years ended December 31, 1999, 1998 and 1997,
respectively. The loss of Bank of America, or any other major or significant
customers, could have a material adverse effect on the Company's financial
condition and results of operations.
Near the end of the first quarter of 1998, AT&T completed the sale of
Universal Card Services (UCS) to CITIBANK, a part of Citigroup. CITIBANK
accounted for approximately 13%, 13% and 15% of total revenues for the years
ended December 31, 1999, 1998 and 1997, respectively. On February 26, 1999,
Citibank notified TSYS of its decision to terminate UCS' processing agreement
with TSYS for consumer credit card accounts at the end of its original term on
August 1, 2000. Consumer credit card accounts represented 66.6% of CITIBANK's
revenues to TSYS for the year ended December 31, 1999. TSYS' management believes
that CITIBANK will not be a major customer for the year 2000 and that the loss
of revenues from CITIBANK for the months of August through December 2000,
combined with decreased expenses from the reduction in hardware and software
costs and the redeployment of personnel, should not have a material adverse
effect on the Company's financial condition or results of operations for the
year ending December 31, 2000.
In May 1998, the Company announced the signing of a long-term
processing agreement with Sears, Roebuck and Co. to convert and process its 65
million retail accounts. TSYS successfully converted the first 7.2 million of
these accounts to TS2 in October 1998 and completed the conversion in May 1999.
In January 2000, the Company announced a one-year extension of its long-term
retail processing agreement with Sears until 2010.
Revenues from other services consist primarily of revenues generated by
TSYS' wholly owned subsidiaries, Columbus Depot Equipment Company (CDEC), TSYS
Total Solutions, Inc. (TSI), and Columbus Productions, Inc. (CPI). CDEC provides
TSYS customers with an option to lease certain equipment necessary for online
communications and for the use of TSYS applications. TSI provides TSYS customers
and others with mail and correspondence processing services, teleservicing, data
documentation capabilities, offset printing, customer service, collections and
account solicitation services. CPI provides full-service commercial printing
services to TSYS customers and others.
Effective January 1, 1999, TSYS acquired Partnership Card Services
(PCS) from its majority shareholder, Columbus Bank and Trust Company (CB&T), the
flagship bank of Synovus Financial Corp. The business of PCS has become part of
TSYS' wholly owned subsidiary, TSI. During 1999, PCS generated revenues of
approximately $26.8 million.
OPERATING
INCOME
(MILLIONS OF DOLLARS)
95 $ 43.0
96 $ 59.0
97 $ 69.3
98 $ 79.3
99 $100.6
[GRAPH OMITTED]
OPERATING EXPENSES
As a percentage of revenues, operating expenses increased in 1999 to 83.5%,
compared to 83.2% and 83.4% for 1998 and 1997, respectively. Operating expenses
were $445.6 million in 1999, compared to $329.8 million in 1998 and $301.6
million in 1997. The principal increases in operating expenses in 1999 as
compared to 1998 resulted from the addition of personnel; the additional
investment in property, equipment and software; the development of global
business--including the establishment of a physical presence in the United
Kingdom; the cost of materials associated with the services provided by all
companies, particularly the supplies related to processing the increased number
of accounts; and certain costs associated with ongoing enhancements to TS2, as
well as certain costs associated with the conversion of customers to TS2.
Salaries and other personnel expense increased 29.1% in 1999 over 1998,
compared to 9.1% in 1998 over 1997. A significant portion of TSYS' operating
expenses relates to salaries and other personnel costs. During 1999, the average
number of employees increased to 4,106, compared to 3,382 in 1998 and 2,895 in
1997. The change in total employment costs consists of increases of $61.7
million, $32.8 million and $27.6 million in 1999, 1998 and 1997, respectively.
The increase in total employment costs are associated with the growth in the
number of employees--including those attributable to the acquisition of PCS,
salary increases and related employee benefits. These changes were reduced by
$14.9 million, $19.4 million and $4.4 million in 1999, 1998 and 1997,
respectively, invested in software development costs and contract acquisition
costs.
21
The following table sets forth certain revenue and expense items as a
percentage of total revenues and the percentage increase or decrease in those
items from the table of Selected Financial Data presented on page 19:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Percentage Change
in Dollar Amounts
Percentage of Total Revenues --------------------
Years Ended December 31, 1999 1998
-------------------------------- vs vs
1999 1998 1997 1998 1997
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues:
Bankcard data processing services 85.6% 88.4 89.8 30.4 7.9
Other services 14.4 11.6 10.2 68.0 24.7
- ------------------------------------------------------------------------------------------------
Total revenues 100.0 100.0 100.0 34.8 9.6
- ------------------------------------------------------------------------------------------------
Expenses:
Salaries and other personnel expense 38.9 40.6 40.8 29.1 9.1
Net occupancy and equipment expense 28.5 26.7 26.2 43.8 11.6
Other operating expenses 16.1 15.9 16.4 35.9 6.5
- ------------------------------------------------------------------------------------------------
Total operating expenses 83.5 83.2 83.4 35.1 9.4
- ------------------------------------------------------------------------------------------------
Equity in income of joint ventures 2.3 3.2 2.6 (5.0) 38.8
- ------------------------------------------------------------------------------------------------
Operating income 18.8 20.0 19.2 26.8 14.5
- ------------------------------------------------------------------------------------------------
Nonoperating income:
Gain (loss) on disposal of property and equipment, net 0.2 (0.0) (0.0) nm nm
Interest income, net of expense 0.4 0.6 0.6 (13.4) 7.7
- ------------------------------------------------------------------------------------------------
Total nonoperating income 0.6 0.6 0.6 21.0 7.2
- ------------------------------------------------------------------------------------------------
Income before income taxes 19.4 20.6 19.8 26.6 14.3
Income taxes 6.6 6.8 6.7 29.8 12.0
- ------------------------------------------------------------------------------------------------
Net income 12.8% 13.8 13.1 25.1 15.5
- ------------------------------------------------------------------------------------------------
nm = not meaningful
</TABLE>
Due to the importance of technology to its business, a large portion of
TSYS' employees are programmers--approximately 22.7% in 1999, compared to 26.0%
and 31.1% in 1998 and 1997, respectively. The decrease in the percentage of
programmers in 1999 is primarily the result of the increased number of
nonprogramming personnel attributable to the PCS acquisition. Although TSYS has
not experienced any difficulty in recruiting programming personnel, there can be
no assurance that TSYS will be able to continue to recruit, hire and retain
sufficient numbers of technical personnel necessary to support its continued
growth.
The Company participates in the state of Georgia's incentive program
called Intellectual Capital Partnership Program (ICAPP). ICAPP is a commitment
by the state of Georgia for classrooms, teachers, computer equipment and
high-tech training designed to meet Georgia businesses' needs for technical
analysts, computer systems personnel and mainframe programmers. As of December
31, 1999, approximately 641 graduates of these classes had become full-time
employees of TSYS. The Company plans to continue to utilize ICAPP in the future
to fulfill programming positions.
In February 1998, TSYS announced the formation of TSYS Canada, Inc.
(TCI), a wholly owned subsidiary incorporated in the state of Georgia and
headquartered in Columbus. On February 1, 1998, TCI opened an office in Welland,
Ontario, Canada, which currently employs 21 programmers who are providing
support and assistance with the conversion of card portfolios to TS2.
Net occupancy and equipment expense increased 43.8% in 1999 over 1998,
compared to 11.6% in 1998 over 1997. Computer equipment and software rentals,
which represent the largest component of net occupancy and equipment expense,
increased $27.5 million, or 51.5%, in 1999 compared to 1998, and $3.1 million,
or 6.2%, in 1998 compared to 1997. Due to rapidly changing technology in
computer equipment and software, TSYS' equipment needs and software needs are
achieved primarily through operating leases. During 1999 and the last half of
1998, the Company made significant investments in computer software licenses
related to the new East Center data center to accommodate increased volumes and
expected growth in the number of accounts associated with new and existing
customers.
22
TSYS continues to monitor and assess its building and equipment needs
as it positions itself for future growth and expansion. In 1997, construction
began on a campus-type facility which now serves as the Company's corporate
headquarters and houses administrative, client contact and programming team
members. The Company has entered into an operating lease agreement relating to
the new corporate campus. Under the agreement, the lessor has purchased the
properties, paid the construction and development costs and leased the
facilities to the Company. The lease provides for substantial residual value
guarantees and includes purchase options at the original cost of the property.
Real estate taxes, insurance, maintenance and operating expenses applicable to
the leased property are the obligations of the Company. The Company began moving
personnel into the new campus facility in December 1998, and had completed the
move of a substantial number of its personnel to this facility at the end of the
third quarter of 1999. With the move to the corporate campus, the Company did
not renew leases on certain facilities. The increase in net occupancy and
equipment expenses related to occupying the campus was $6.4 million in 1999, and
is expected to be $7.6 million in 2000, net of the relinquished lease
obligations.
In addition, TSYS began an expansion of its operations center in north
Columbus during 1997, which was completed in 1998. The Company moved its card
production services from downtown Columbus into the new addition in December
1998. A separate building was completed on the North Center property in 1997 to
serve as TSI's headquarters.
In 1998, TSYS also purchased 18 acres of land containing a 104,000
square-foot building in east Columbus. The building was prepared as an
additional data center (East Center) and placed in service during the fourth
quarter of 1998.
Other operating expenses increased 35.9% in 1999 compared to 1998 and
6.5% in 1998 compared to 1997. The increase in the growth rate of other
operating expenses in 1999 is primarily due to amortization of increased
contract acquisition costs which were $12.3 million, $6.9 million and $4.4
million in 1999, 1998 and 1997, respectively; increased transaction processing
provisions; increased travel and other business development costs associated
with exploring both domestic and international business opportunities, including
the establishment of an international office in the United Kingdom.
OPERATING INCOME
Operating income increased 26.8% to $100.6 million in 1999, compared to $79.3
million in 1998, an increase of 14.5% over 1997 operating income of $69.3
million. Excluding equity in income of joint ventures, operating income
increased 33.0% to $88.3 million, compared to $66.4 million in 1998, and
increased 10.7% over the amount for 1997 of $59.9 million. The operating income
margin decreased to 18.8% in 1999, compared to 20.0% and 19.2% in 1998 and 1997,
respectively. The decrease in the operating margin was a result of operating
expenses increasing at a faster rate than revenues in 1999.
NONOPERATING INCOME
Nonoperating income increased in 1999 over 1998 due to the gain on the sale of
two of the Company's buildings related to the Company's move to the new
corporate campus. Interest income for 1999 was $2.2 million, a 13.0% decrease
compared to the $2.5 million in 1998, a 6.8% increase compared to $2.4 million
in 1997. Interest expense was $36,000, a 22.7% increase over the $29,000 in
1998, a 36.4% decrease compared to $46,000 in 1997. The variation in interest
income is attributable to the fluctuations in the cash available for investment.
INCOME TAXES
Income tax expense was $35.0 million, $27.0 million and $24.1 million in 1999,
1998 and 1997, respectively, representing effective income tax rates of 33.8%,
33.0% and 33.6%, respectively. The change in TSYS' effective income tax rate for
1999, as compared to 1998 and 1997, is attributable to certain state tax credits
and the establishment of a valuation allowance relating to those credits.
NET INCOME
Net income increased 25.1% to $68.6 million (basic and diluted earnings per
share of $.35) in 1999 compared to 1998. In 1998, net income increased 15.5% to
$54.8 million (basic and diluted earnings per share of $.28) compared to $47.5
million (basic and diluted earnings per share of $.24) in 1997. The increase in
net income is attributable to increased operating revenues.
FINANCIAL CONDITION, LIQUIDITY
AND CAPITAL RESOURCES
The Consolidated Statements of Cash Flows show the Company's cash flows from
operating, investing and financing activities. TSYS' primary methods for funding
its operations and growth has been cash flows generated from operations, lease
financing and the occasional use of borrowed funds to supplement financing of
capital expenditures. TSYS' net cash provided by operating activities in 1999
was $134.5 million, compared to $62.9 million in 1998 and $65.1 million in 1997.
The major uses of cash flows provided by operations have been the internal
development and purchase of computer software; the addition of property and
equipment, primarily computer equipment; investments in contract acquisition
costs associated with obtaining and serving new customers; and the payment of
cash dividends.
Capital expenditures for property and equipment were $19.8 million in
1999, compared to $37.0 million in 1998 and $18.0 million in 1997. Expenditures
for purchased computer software were $42.3 million in 1999, compared to $29.5
million in 1998 and $14.1 million in 1997. Additions to capitalized software
development costs, principally enhancements to TS2, were $11.9 million in 1999,
$10.0 million in 1998 and $997,000 in 1997. During 1998, TSYS purchased and
leased computer hardware and related equipment, including software, to establish
the East Center data center and to accommodate future growth.
23
The Company's investments in contract acquisition costs were $15.8
million in 1999, $20.1 million in 1998 and $17.6 million in 1997. These amounts
include cash payments for processing rights and other direct salary related
costs incurred in the connection with contracts.
At December 31, 1999, TSYS' carrying value in its investment in TSYS de
Mexico was $7.5 million. During the years ended December 31, 1998 and 1997, due
to Mexico's highly inflationary economy, TSYS expensed all currency translation
adjustments. The Mexican economy was removed from highly inflationary status
effective January 1, 1999. As a result, TSYS reflected currency translation
adjustments in 1999 as an adjustment to the Company's equity investment in TSYS
de Mexico and in accumulated other comprehensive income. The Company had a
currency translation adjustment of $425,000 related to TSYS de Mexico in 1999.
On January 1, 1999, TSYS acquired Partnership Card Services from its
majority shareholder, CB&T, the flagship bank of Synovus Financial Corp., in
exchange for 854,042 newly issued shares of TSYS common stock. PCS operated as a
division of CB&T, providing services such as credit, collection and customer
service to card-issuing financial institutions, including CB&T. PCS has become
part of TSYS' wholly owned subsidiary, TSI. This transaction increased CB&T's
ownership of TSYS to 80.8%.
In October 1999, the Company announced a plan to purchase up to 1.5
million shares of its common stock from time to time and at various prices over
the next two years. Through December 31, 1999, the Company had purchased 77,100
shares for $1.3 million under this plan. Total dividends declared on TSYS common
stock were $7.8 million in 1999, $7.3 million in 1998 and $5.8 million in 1997.
In April 1998, the Company increased its quarterly dividend by 33.3% to $.01 per
share from $.0075 per share.
In 1997, construction was begun on a campus-type facility which now
serves as the Company's corporate headquarters. The Company entered into an
operating lease agreement relating to the new corporate campus. Under the
agreement, the lessor purchased the land, paid for construction and development
costs and leased the property to the Company. The lease provides for a
substantial residual value guarantee, up to $81.4 million, and includes purchase
options at the original cost of the property. Real estate taxes, insurance,
maintenance and operating expenses applicable to the leased property are
obligations of the Company.
In addition, TSYS completed two construction projects in 1998, costing
approximately $25 million--the North Center expansion and the construction of an
additional state-of-the-art data center, the new East Center.
Although the impact of inflation on its operations cannot be precisely
determined, the Company believes that by controlling its operating expenses and
by taking advantage of economies of scale through utilization of more efficient
computer hardware and software, it can minimize the impact of inflation.
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, as evidenced by TSYS' current ratio of 1.7:1. At
December 31, 1999, TSYS had working capital of $76.4 million, compared to $60.5
million in 1998 and $70.9 million in 1997.
Management believes that outside sources for capital will be available
to finance expansion projects and possible acquisitions should the Company
decide to pursue such financing. 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 and/or debt securities such as industrial revenue bonds.
However, there can be no assurance that funds will be available on terms
acceptable to TSYS.
YEAR 2000 READINESS DISCLOSURE
Many computer programs were written with a two-digit date field. If these
programs were not made Year 2000 compliant, they would not be able to correctly
process date information for the year 2000 and beyond. Remediation efforts went
beyond the Company's internal computer systems and required coordination with
customers, vendors, government entities and other third parties to assure that
their systems and related interfaces were compliant. Failure to achieve timely
remediation of the Company's critical programs and computer systems for Year
2000 would have had a material adverse effect on the Company's financial
condition and results of operations.
TSYS experienced a smooth transition in passing the century date
changeover. TSYS did not experience any significant internal or external issues
concerning Y2K, and all TSYS companies, systems, facilities and clients
processed, and have continued to process, without incident. TSYS will continue
to monitor Y2K issues by overseeing critical tasks during the year 2000. The
TSYS Year 2000 Command Center and Command Posts will remain staffed during the
first quarter of 2000, but on a smaller scale than during 1999. TSYS has
executive and senior management scheduled on a rotating weekly schedule to
handle issues as they arise. Heightened coverage of month-end, leap-year and
quarter-end processing is planned, and TSYS intends to maintain its reporting
methods to evaluate any problems.
TSYS currently estimates the total cost for the Year 2000 Project will
amount to approximately $17 million of direct costs. This amount consists
primarily of the costs associated with personnel dedicated to the Year 2000
Project and hardware/software costs related to testing. During 1999, TSYS
incurred $6.8 million of direct costs associated with the Year 2000 Project and
has incurred $15.8 million since project inception.
24
SAFE HARBOR FOR YEAR 2000 FORWARD-LOOKING STATEMENTS
All forward-looking statements regarding Y2K readiness, including estimates,
forecasts and expectations, are inherently uncertain as they are based on
various expectations and assumptions concerning future events and are subject to
numerous risks and uncertainties which could cause actual events or results to
differ materially from those projected. Important factors upon which the
Company's Y2K forward-looking statements are premised include: (a) retention of
employees and contractors working on Y2K projects; (b) customers' remediation of
their internal systems to be Y2K ready and their cooperation in timely testing;
(c) no material disruption of telecommunication, data transmission networks,
payment networks, government services, utilities or other infrastructure
services and no unexpected failure of third-party products; (d) no unexpected
failures by third parties providing services to the Company; (e) no undiscovered
subversion of systems or program code affecting the Company's systems; and (f)
no undiscovered material flaws in the Company's test processes.
FORWARD-LOOKING STATEMENTS
Certain statements contained in this Annual Report 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 TSYS 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 nonpayment
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, services or conversions; (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 relevant foreign economies; (ii) the Company's
performance under, and retention of, current and future processing agreements
with customers; (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, including a shift
from credit to debit cards; (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 Financial Accounting Standards Board or the Securities and
Exchange Commission; (xi) changes in TSYS' organization, compensation and
benefit plans; (xii) the costs and effects of litigation; (xiii) failure to
successfully implement the Company's Year 2000 modification plans substantially
as scheduled and budgeted; (xiv) lower than anticipated internal growth rates
for existing customers; and (xv) 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.
LEGAL PROCEEDINGS
In November 1998, a class action complaint was filed against NationsBank of
Delaware, N.A., in the United States District Court for the Southern District of
Mississippi. On March 23, 1999, the named plaintiff amended the complaint and
named the Company and certain credit bureaus as defendants in the case. The
named plaintiff alleges, among other things, that the defendants failed to
report properly the credit standing of each member of the putative class. The
named plaintiff has defined the class as all persons and entities within the
United States who obtained credit cards from NationsBank and whose accounts were
purchased by or transferred to U.S. BankCard and whose accounts were reported to
credit bureaus or credit agencies incorrectly in August 1998. The amended
complaint alleges negligence, violation of the Fair Credit Reporting Act, breach
of the duty of good faith and fair dealing, and seeks declaratory relief,
injunctive relief and the imposition of punitive damages. This lawsuit seeks
unspecified damages. Though settlement negotiations have occurred, these
negotiations have to date not resulted in a definitive settlement agreement
among the parties. TSYS is not in a position to determine its possible exposure,
if any, as a result of the litigation.
25
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
December 31,
1999 1998
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents (includes $54.3 million and $9.4 million
on deposit with a related party at 1999 and 1998, respectively) $ 54,903,107 9,555,760
Accounts receivable, net of allowance for doubtful accounts of
$1.3 million and $711,000 at 1999 and 1998, respectively 99,601,498 84,795,727
Prepaid expenses and other current assets (note 10) 25,171,328 25,370,604
- ----------------------------------------------------------------------------------------------------------
Total current assets 179,675,933 119,722,091
Property and equipment, net (Note 3) 96,254,657 92,619,005
Computer software, net (Note 4) 98,824,792 65,861,735
Other assets (Notes 5 and 10) 82,594,156 70,705,481
- ----------------------------------------------------------------------------------------------------------
Total assets $ 457,349,538 348,908,312
- ----------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 15,267,979 7,403,023
Accrued salaries and employee benefits 36,421,238 24,643,449
Current portion of long-term debt and obligations under
capital leases 44,520 130,781
Other current liabilities (includes $1.9 and $1.7 million
payable to related parties
at 1999 and 1998, respectively) (Note 10) 51,528,099 27,072,542
- ----------------------------------------------------------------------------------------------------------
Total current liabilities 103,261,836 59,249,795
Long-term debt and obligations under capital leases,
excluding current portion 159,766 211,316
Deferred income taxes (Note 7) 19,635,880 19,093,482
- ----------------------------------------------------------------------------------------------------------
Total liabilities 123,057,482 78,554,593
- ----------------------------------------------------------------------------------------------------------
Shareholders' equity (Notes 2 and 6):
Common stock -- $.10 par value. Authorized 300,000,000
shares; 195,079,087 and 194,225,045 issued at 1999 and
1998, respectively; 194,861,620 and 194,043,785 outstanding
at 1999 and 1998, respectively 19,507,909 19,422,504
Additional paid-in capital 6,442,300 1,882,814
Accumulated other comprehensive income (1,453,708) (1,179,337)
Treasury stock (1,529,176) (300,788)
Retained earnings 311,324,731 250,528,526
- ----------------------------------------------------------------------------------------------------------
Total shareholders' equity 334,292,056 270,353,719
- ----------------------------------------------------------------------------------------------------------
Commitments and contingencies (Note 9)
Total liabilities and shareholders' equity $ 457,349,538 348,908,312
- ----------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
26
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Years Ended December 31,
1999 1998 1997
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues:
Bankcard data processing services (includes $37.1 million, $31.7 million
and $29.2 million from related parties for the years ended
December 31, 1999, 1998 and 1997, respectively) $456,839,589 350,309,833 324,717,864
Other services (includes $5.5 million, $1.5 million
and $1.1 million from related parties for the years ended
December 31, 1999, 1998 and 1997, respectively) 77,086,422 45,884,235 36,781,535
- -----------------------------------------------------------------------------------------------------------------------------------
Total revenues (Notes 2 and 11) 533,926,011 396,194,068 361,499,399
- -----------------------------------------------------------------------------------------------------------------------------------
Expenses:
Salaries and other personnel expense 207,618,319 160,854,929 147,438,458
Net occupancy and equipment expense 151,964,229 105,658,033 94,685,343
Other operating expenses (includes $13.1 million, $10.9 million
and $10.4 million to related parties for the years ended
December 31, 1999, 1998 and 1997, respectively) 86,051,059 63,312,582 59,446,283
- -----------------------------------------------------------------------------------------------------------------------------------
Total operating expenses (Note 2) 445,633,607 329,825,544 301,570,084
- -----------------------------------------------------------------------------------------------------------------------------------
Equity in income of joint ventures (Note 5) 12,326,609 12,974,348 9,347,183
- -----------------------------------------------------------------------------------------------------------------------------------
Operating income 100,619,013 79,342,872 69,276,498
- -----------------------------------------------------------------------------------------------------------------------------------
Nonoperating income (expense):
Gain (loss) on disposal of property and equipment, net 797,916 (48,470) (35,632)
Interest income, net of expense (includes $1.9 million, $2.3 million
and $2.1 million from a related party for the years ended
December 31, 1999, 1998 and 1997, respectively) 2,159,074 2,492,725 2,315,043
- -----------------------------------------------------------------------------------------------------------------------------------
Total nonoperating income (Note 2) 2,956,990 2,444,255 2,279,411
- -----------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 103,576,003 81,787,127 71,555,909
Income taxes (Note 7) 34,983,027 26,955,984 24,077,437
- -----------------------------------------------------------------------------------------------------------------------------------
Net income $ 68,592,976 54,831,143 47,478,472
- -----------------------------------------------------------------------------------------------------------------------------------
Basic earnings per share $ .35 .28 .24
- -----------------------------------------------------------------------------------------------------------------------------------
Diluted earnings per share $ .35 .28 .24
- -----------------------------------------------------------------------------------------------------------------------------------
Weighted average common shares outstanding 194,912,983 194,019,689 193,956,373
Increase due to assumed issuance of shares related to stock options outstanding 565,610 649,762 282,183
- -----------------------------------------------------------------------------------------------------------------------------------
Weighted average common and common equivalent shares outstanding 195,478,593 194,669,451 194,238,556
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
27
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Years Ended December 31,
1999 1998 1997
- ------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net income $ 68,592,976 54,831,143 47,478,472
Adjustments to reconcile net income to net cash
provided by operating activities:
Equity in income of joint ventures (12,326,609) (12,974,348) (9,347,183)
Depreciation and amortization 50,182,601 37,473,673 29,141,073
Provision for doubtful accounts 665,500 18,000 94,000
Deferred income tax expense (benefit) 542,398 5,338,794 (1,546,790)
(Gain) loss on disposal of property and equipment, net (797,916) 48,470 35,632
(Increase) decrease in:
Accounts receivable (15,471,271) (15,362,807) (10,500,389)
Prepaid expenses and other assets (1,953,576) (5,088,094) (1,860,648)
Increase (decrease) in:
Accounts payable 7,864,956 1,002,658 1,711,896
Accrued expenses and other current liabilities 37,228,296 (2,341,598) 9,911,535
- ------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 134,527,355 62,945,891 65,117,598
- ------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (19,772,202) (36,998,466) (18,033,160)
Additions to computer software (54,188,928) (39,502,459) (15,106,064)
Proceeds from disposal of property and equipment 4,540,483 86,669 74,797
Dividends received from joint ventures 5,104,905 5,618,616 3,252,561
Increase in contract acquisition costs (15,812,318) (20,104,849) (17,557,631)
Purchase of short-term investments -- -- (998,228)
Redemption of short-term investments -- 998,228 5,000,000
- ------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (80,128,060) (89,902,261) (43,367,725)
- ------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of common stock (1,290,748) -- --
Principal payments on long-term debt and obligations
under capital leases (70,619) (132,415) (201,275)
Dividends paid on common stock (7,787,981) (6,790,492) (5,818,326)
Proceeds from exercise of stock options 97,400 99,115 109,593
- ------------------------------------------------------------------------------------------------------------------
Net cash used in financing activities (9,051,948) (6,823,792) (5,910,008)
- ------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 45,347,347 (33,780,162) 15,839,865
Cash and cash equivalents at beginning of year 9,555,760 43,335,922 27,496,057
- ------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 54,903,107 9,555,760 43,335,922
- ------------------------------------------------------------------------------------------------------------------
Cash paid for interest (net of capitalized amounts) $ 23,934 29,399 46,691
- ------------------------------------------------------------------------------------------------------------------
Cash paid for income taxes (net of refunds received) $ 24,647,585 27,167,086 22,908,026
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
Significant noncash transaction: The Company acquired Partnership Card Services
through the issuance of 854,042 shares of common stock with a market value of
$20,070,000 (Note 12).
See accompanying Notes to Consolidated Financial Statements.
28
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Years Ended December 31, 1999, 1998 and 1997
- ------------------------------------------------------------------------------------------------------------------
Accumulated
Common Stock Additional Other
------------------------------ Paid-in Comprehensive
Shares Amount Capital Income
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
At December 31, 1996 194,225,283 $ 19,422,528 324,851 (1,178,182)
Net income -- -- -- --
Common stock issued from
treasury shares for exercise of
stock options (Note 6) -- -- 102,434 --
Amortization of restricted stock awards -- -- -- --
Cash dividends declared ($.030 per share) -- -- -- --
Tax benefit associated with stock awards -- -- 31,788 --
- ------------------------------------------------------------------------------------------------------------------
At December 31, 1997 194,225,283 19,422,528 459,073 (1,178,182)
Comprehensive income:
Net income -- -- -- --
Other comprehensive income (loss),
net of tax:
Foreign currency
translation adjustments -- -- -- (1,155)
- ------------------------------------------------------------------------------------------------------------------
Other comprehensive income (loss) -- -- -- --
- ------------------------------------------------------------------------------------------------------------------
Comprehensive income -- -- -- --
Common stock issued from
treasury shares for exercise of
stock options (Note 6) -- -- 91,292 --
Amortization of restricted stock awards -- -- -- --
Cash paid for fractional shares
in connection with stock split (238) (24) (4,738) --
Cash dividends declared ($.038 per share) -- -- -- --
Tax benefit associated with stock awards -- -- 1,337,187 --
- ------------------------------------------------------------------------------------------------------------------
At December 31, 1998 194,225,045 19,422,504 1,882,814 (1,179,337)
Comprehensive income:
Net income -- -- -- --
Other comprehensive income (loss),
net of tax:
Foreign currency
translation adjustments -- -- -- (274,371)
- ------------------------------------------------------------------------------------------------------------------
Other comprehensive income (loss) -- -- -- --
- ------------------------------------------------------------------------------------------------------------------
Comprehensive income -- -- -- --
Common stock issued
in acquisition (Note 12) 854,042 85,405 3,342,220 --
Common stock issued from
treasury shares for exercise of
stock options (Note 6) -- -- 79,903 --
Purchase of treasury shares -- -- -- --
Cash dividends declared ($.040 per share) -- -- -- --
Tax benefit associated with stock awards -- -- 1,137,363 --
- ------------------------------------------------------------------------------------------------------------------
At December 31, 1999 195,079,087 $ 19,507,909 6,442,300 (1,453,708)
- ------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Total
Treasury Retained Shareholders'
Stock Earnings Equity
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
At December 31, 1996 (473,544) 160,782,094 $ 178,877,747
Net income -- 47,478,472 47,478,472
Common stock issued from
treasury shares for exercise of
stock options (Note 6) 95,843 -- 198,277
Amortization of restricted stock awards -- 487,242 487,242
Cash dividends declared ($.030 per share) -- (5,818,770) (5,818,770)
Tax benefit associated with stock awards -- -- 31,788
- ---------------------------------------------------------------------------------------------------
At December 31, 1997 (377,701) 202,929,038 221,254,756
Comprehensive income:
Net income -- 54,831,143 54,831,143
Other comprehensive income (loss),
net of tax:
Foreign currency
translation adjustments -- -- (1,155)
- ---------------------------------------------------------------------------------------------------
Other comprehensive income (loss) -- -- (1,155)
- ---------------------------------------------------------------------------------------------------
Comprehensive income -- -- 54,829,988
Common stock issued from
treasury shares for exercise of
stock options (Note 6) 76,913 -- 168,205
Amortization of restricted stock awards -- 44,325 44,325
Cash paid for fractional shares
in connection with stock split -- -- (4,762)
Cash dividends declared ($.038 per share) -- (7,275,980) (7,275,980)
Tax benefit associated with stock awards -- -- 1,337,187
- ---------------------------------------------------------------------------------------------------
At December 31, 1998 (300,788) 250,528,526 270,353,719
Comprehensive income:
Net income -- 68,592,976 68,592,976
Other comprehensive income (loss),
net of tax:
Foreign currency
translation adjustments -- -- (274,371)
- ---------------------------------------------------------------------------------------------------
Other comprehensive income (loss) -- -- (274,371)
- ---------------------------------------------------------------------------------------------------
Comprehensive income -- -- 68,318,605
Common stock issued
in acquisition (Note 12) -- -- 3,427,625
Common stock issued from
treasury shares for exercise of
stock options (Note 6) 62,360 -- 142,263
Purchase of treasury shares (1,290,748) -- (1,290,748)
Cash dividends declared ($.040 per share) -- (7,796,771) (7,796,771)
Tax benefit associated with stock awards -- -- 1,137,363
- ---------------------------------------------------------------------------------------------------
At December 31, 1999 (1,529,176) 311,324,731 $ 334,292,056
- ----------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
29
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 BASIS OF PRESENTATION AND
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS: Total System Services, Inc. (TSYS or the Company) is an 80.8% owned
subsidiary of Columbus Bank and Trust Company (CB&T) which is a wholly owned
subsidiary of Synovus Financial Corp. (Synovus). Synovus' stock is traded on the
NYSE under the symbol "SNV." TSYS provides bankcard data processing and related
services to banks and other card-issuing institutions throughout the United
States, Mexico, Canada, Honduras and the Caribbean.
PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION: The accompanying
consolidated financial statements of Total System Services, Inc. include the
accounts of TSYS and its wholly owned subsidiaries, Columbus Depot Equipment
Company, TSYS Total Solutions, Inc., Columbus Productions, Inc. and TSYS Canada,
Inc. Significant intercompany accounts and transactions have been eliminated in
consolidation.
Management of the Company has made a number of estimates and
assumptions relating to the reporting of assets and liabilities and the
disclosure of contingent liabilities at the date of the consolidated financial
statements and the reported amounts of revenues and expenses during the reported
periods to prepare these financial statements in conformity with generally
accepted accounting principles. Actual results could differ from those
estimates.
INVESTMENTS IN JOINT VENTURES: TSYS' 49% investment in Total System Services de
Mexico, S.A. de C.V. (TSYS de Mexico), a bankcard data processing operation
located in Mexico, is accounted for using the equity method of accounting, as is
TSYS' 50% investment in Vital Processing Services L.L.C. (Vital), a merchant
processing operation headquartered in Tempe, Arizona.
PROPERTY AND EQUIPMENT: Property and equipment are stated at cost less
accumulated depreciation and amortization. Depreciation expense is computed
using the straight-line method over the estimated useful lives of the assets.
Buildings and improvements are depreciated over 5-40 years, computer equipment
over 2-4 years, and furniture and other equipment over 3-15 years.
COMPUTER SOFTWARE: The Company capitalizes software development costs incurred
from the time technological feasibility of the software product or enhancement
is established until the software is ready for use in licensing to or providing
processing services to customers. Research and development costs and computer
software maintenance costs are expensed as incurred. Software development costs
related to the TS2 processing system are amortized using the greater of (1) the
straight-line method over the estimated useful life of 10 years or (2) the ratio
of current revenues to current and anticipated revenues. All other software
development costs and costs of purchased computer software are amortized using
the greater of (1) the straight-line method over the estimated useful life (3-5
years) or (2) the ratio of current revenues to current and anticipated revenues.
The carrying value of computer software costs is reviewed for
impairment by the Company, and impairments are recognized when the expected
undiscounted net operating cash flows derived from such intangible assets are
less than their carrying value. If such review indicates impairment, the Company
uses fair value in determining the amount that should be written off.
REVENUE RECOGNITION: The Company's bankcard data processing revenues are derived
from long-term processing contracts with banks and other institutions and are
recognized as revenues at the time the services are performed. The Company's
bankcard data processing service contracts generally contain original terms
ranging from three to ten years. The Company's other service revenues are
recognized as those services are performed.
CONTRACT ACQUISITION COSTS: The Company capitalizes contract acquisition costs
related to signing or renewing long-term contracts. These costs, which primarily
consist of cash payments for rights to provide processing services, incremental
internal conversion and software development costs, and third-party software
development costs, are amortized using the straight-line method over the
contract term beginning when the customer's cardholder accounts are converted to
the Company's processing system. The Company evaluates the carrying value of
contract acquisition costs for impairment on the basis of whether these costs
are fully recoverable from expected undiscounted net
30
operating cash flows of the related contract. If such review indicates
impairment, the Company uses fair value in determining the amount that should be
written off. All costs incurred prior to contract execution are expensed as
incurred.
GOODWILL: Goodwill results from the excess of cost over the fair value of net
assets of businesses acquired and is being amortized using the straight-line
method over periods of five to 15 years. The Company reviews goodwill for
impairment on the basis of whether the goodwill is fully recoverable from
expected undiscounted net operating cash flows of the related business units. If
such review indicates impairment, the Company uses fair value in determining the
amount that should be written off.
INCOME TAXES: Income tax expense reflected in TSYS' consolidated financial
statements is computed based on the taxable income of TSYS as a separate entity.
A consolidated federal income tax return is filed for Synovus and its majority
owned subsidiaries, including TSYS.
The Company accounts for income taxes in accordance with the asset and
liability method. Under the asset and liability method, deferred income tax
assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred income
tax assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred income tax assets
and liabilities of a change in tax rates is recognized in income in the period
that includes the enactment date.
CASH FLOW REPORTING: Investments with a maturity of three months or less when
purchased are considered to be cash equivalents.
EARNINGS PER SHARE: Basic earnings per share (EPS) is calculated as income
available to common stockholders divided by the weighted average number of
common shares outstanding during the period. Diluted EPS is calculated to
reflect the potential dilution that would occur if stock options or other
contracts to issue common stock were exercised and resulted in additional common
stock that would share in the earnings of the Company.
FAIR VALUES OF FINANCIAL INSTRUMENTS: The Company uses financial instruments in
the normal course of its business. The carrying values of cash equivalents,
accounts receivable, accounts payable, accrued salaries and employee benefits,
and other current liabilities approximate fair value due to the short-term
maturities of these assets and liabilities. The investments in joint ventures
are accounted for by the equity method and pertain to privately held companies
for which a fair value is not readily available. The Company believes the fair
values of its investments in joint ventures exceed their respective carrying
values.
TREASURY STOCK: The Company uses the cost method when it purchases its own
common stock as treasury shares, and displays treasury stock as a reduction of
shareholders' equity.
FOREIGN CURRENCY TRANSLATION: Foreign currency financial statements of the
Company's Mexican joint venture and the Company's wholly owned subsidiary with
an operation in Canada are translated into U.S. dollars at current exchange
rates, except for revenues, costs and expenses, and net income which are
translated at the average exchange rates for each reporting period. Net exchange
gains or losses resulting from the translation of assets and liabilities of the
Canadian operation, net of tax, are accumulated in a separate section of
shareholders' equity titled accumulated other comprehensive income.
From January 1, 1997, through December 31, 1998, the Mexican economy
was designated as highly inflationary, and thus all currency translation
adjustments related to the Mexican joint venture for the years ended December
31, 1998 and 1997, were expensed. The Mexican economy was removed from highly
inflationary status effective January 1, 1999; thus, net exchange gains or
losses resulting from the translation of assets and liabilities of the Company's
Mexican joint venture, net of tax, are accumulated in a separate section of
shareholders' equity titled accumulated other comprehensive income.
31
COMPREHENSIVE INCOME: Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income," requires companies to display, with the same
prominence as other financial statements, the components of comprehensive
income. TSYS displays the items of other comprehensive income in its
consolidated statements of shareholders' equity and comprehensive income.
RECLASSIFICATIONS: Certain reclassifications have been made to the 1998 and 1997
financial statements to conform to the presentation adopted in 1999.
RECENT ACCOUNTING PRONOUNCEMENTS: In June 1998, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 133 (SFAS
133), "Accounting for Derivative Instruments and Hedging Activities." SFAS 133
standardizes the accounting for derivative instruments, including certain
derivative instruments embedded in other contracts. Under the standard, entities
are required to carry all derivative instruments in the balance sheet at fair
value. The accounting for changes in the fair value (i.e., gains or losses) of a
derivative instrument depends on whether it has been designated and qualifies as
part of a hedging relationship and, if so, on the reason for holding it. If
certain conditions are met, entities may elect to designate a derivative
instrument as a hedge of exposures to changes in fair values, cash flows or
foreign currencies. If the hedged exposure is a fair value exposure, the gain or
loss on the derivative instrument is recognized in earnings in the period of
change together with the offsetting loss or gain on the hedged item attributable
to the risk being hedged. If the hedged exposure is a cash flow exposure, the
effective portion of the gain or loss on the derivative instrument is reported
initially as a component of other comprehensive income (outside earnings) and
subsequently reclassified into earnings when the forecasted transaction affects
earnings. Any amounts excluded from the assessment of hedge effectiveness as
well as the ineffective portion of the gain or loss is reported in earnings
immediately. If the derivative instrument is not designated as a hedge, the gain
or loss is recognized in earnings in the period of change.
For TSYS, SFAS 133, as amended by SFAS 137, is effective January 1,
2001. On adoption, the provisions of SFAS 133 must be applied prospectively.
TSYS is in the process of assessing the impact that SFAS 133 will have on its
financial statements.
NOTE 2 RELATIONSHIPS WITH AFFILIATED COMPANIES
At December 31, 1999, CB&T owned 157,455,980 shares (approximately 80.8%) of
TSYS common stock.
TSYS has entered into agreements with CB&T and certain of its
affiliates, pursuant to which TSYS performs bankcard data processing services.
Such bankcard data processing service revenues were $8,049,915, $4,225,439 and
$2,609,762 during the years ended December 31, 1999, 1998 and 1997,
respectively. Miscellaneous data processing services performed by TSYS for
certain Synovus nonbanking affiliates generated revenues of $221,844, $175,801
and $148,036 during the years ended December 31, 1999, 1998 and 1997,
respectively; these revenues are included in bankcard data processing services.
Bankcard data processing revenues related to TSYS de Mexico, the Company's
Mexican joint venture, were $15,954,155, $17,362,650 and $18,365,224 for the
years ended December 31, 1999, 1998 and 1997, respectively. Merchant processing
revenues, included in bankcard data processing revenues, related to Vital, the
Company's joint venture with Visa, were $12,898,723, $9,873,293 and $8,115,010
for the years ended December 31, 1999, 1998 and 1997.
Revenues from other services provided by TSYS to Synovus and its
affiliates were $5,483,784, $1,539,009 and $1,110,899 during the years ended
December 31, 1999, 1998 and 1997, respectively.
TSYS maintains an unsecured credit agreement with CB&T. The credit
agreement has a maximum available principal balance of $5.0 million, with
interest at prime. TSYS did not use the credit facility during 1999 or 1998.
In 1999, 1998 and 1997, TSYS received interest income of $1,865,621,
$2,342,416 and $2,075,315, respectively from CB&T. In 1997, TSYS paid CB&T
interest of $123,420 on a short-term construction loan, all of which was
capitalized.
During 1999, 1998 and 1997, Synovus Technologies, Inc.(STI) paid TSYS
$143,405, $248,187 and $224,154, respectively, for data links, network services
and other miscellaneous items.
32
TSYS leases a portion of its facilities from STI and CB&T, and leases
portions of the buildings it owns to CB&T. TSYS made lease payments for
facilities to STI of $220,000 in 1998 and $240,000 in 1997. Lease payments made
to CB&T amounted to $36,308 in 1999, $72,515 in 1998 and $53,790 in 1997. Lease
payments received from CB&T amounted to $18,411 in 1998 and $11,628 in 1997.
TSYS has entered into a management agreement with Synovus pursuant to
which TSYS pays for management, legal and tax services provided by Synovus. Such
management fees amounted to $1,524,780 in 1999, $1,283,494 in 1998 and
$1,216,089 in 1997.
TSYS maintains an agreement with Synovus Service Corp. (SSC) to provide
human resource, payroll, security, maintenance and other administrative services
to TSYS and its subsidiaries. TSYS paid SSC $10,639,179, $9,892,790 and
$9,232,001 for these services in 1999, 1998 and 1997, respectively. TSYS
received $51,594 in 1999 and $26,169 in 1998 and in 1997 in rent from SSC. TSYS
also received $382,840 and $199,492 in 1999 and 1998, respectively, for data
processing provided to SSC. TSYS made lease payments to SSC for $27,690 in 1998
and $31,274 in 1997.
Due to the addition of Partnership Card Services, TSYS paid CB&T
$345,893 in 1999 for marketing rights. TSYS also paid STI $765,741 in 1999 for
fees associated with lockbox services.
TSYS maintains deposit accounts with CB&T, the majority of which are
interest-earning and on which TSYS receives market rates of interest. Included
in cash and cash equivalents are deposit balances with CB&T of $54.3 million and
$9.4 million at December 31, 1999 and 1998, respectively.
Certain officers of TSYS and other TSYS employees participate in the
Synovus Incentive Plans. Nonqualified options to acquire Synovus common stock
were granted in 1999, 1998 and 1997 as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Number of Shares
1999 1998 1997
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Stock options 948,683 849,431 545,875
- -------------------------------------------------------------------------------
</TABLE>
The stock options were granted with an exercise price equal to the fair
market value of Synovus common stock at the date of grant. The options vest and
become exercisable over two to three years and expire eight to ten years from
date of grant.
In 1996, certain officers were also granted restricted stock awards
valued at the price paid for the Synovus shares at the date of grant of
$764,422, which is being amortized as compensation expense over the five-year
vesting period.
The Company believes the terms and conditions of transactions between
TSYS, CB&T, Synovus and other affiliated companies are comparable to those which
could have been obtained in transactions with unaffiliated parties.
NOTE 3 PROPERTY AND EQUIPMENT
Property and equipment balances at December 31 are as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C>
Land $ 6,092,433 2,784,807
Buildings and improvements 66,758,819 69,956,718
Computer equipment 57,105,222 49,738,864
Furniture and other equipment 48,643,289 46,883,429
Construction in progress 644,345 239,939
- --------------------------------------------------------------------------------
179,244,108 169,603,757
Less accumulated depreciation
and amortization 82,989,451 76,984,752
- --------------------------------------------------------------------------------
Property and equipment, net $ 96,254,657 92,619,005
- --------------------------------------------------------------------------------
</TABLE>
Depreciation and amortization of property and equipment was
$15,637,169, $13,212,897 and $11,935,776 for the years ended December 31, 1999,
1998 and 1997, respectively.
NOTE 4 COMPUTER SOFTWARE
Computer software at December 31 is summarized as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
1999 1998
- -----------------------------------------------------------------------------
<S> <C> <C>
Purchased computer software $111,331,549 68,636,125
TS2 33,048,872 33,048,872
Other capitalized software
development costs 26,786,646 14,853,415
- -----------------------------------------------------------------------------
171,167,067 116,538,412
Less accumulated amortization 72,342,275 50,676,677
- -----------------------------------------------------------------------------
Computer software, net $ 98,824,792 65,861,735
- -----------------------------------------------------------------------------
</TABLE>
33
Amortization expense related to purchased computer software costs was
$16,153,985, $12,057,582 and $7,212,571 for the years ended December 31, 1999,
1998 and 1997, respectively. Amortization of TS2 and capitalized software
development costs was $5,472,776, $4,716,278 and $4,455,148 for the years ended
December 31, 1999, 1998 and 1997, respectively.
NOTE 5 INVESTMENT IN JOINT VENTURE
TSYS holds a 50% equity interest in Vital, a joint venture with Visa U.S.A.,
which combines the front-end authorization and back-end accounting and
settlement processing of merchants. The condensed financial information for this
joint venture as of December 31, 1999 and 1998, and for the years ended December
31, 1999, 1998 and 1997, is summarized as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
1999 1998
- ---------------------------------------------------------------------------
<S> <C> <C>
BALANCE SHEET DATA:
Current assets $ 63,066,000 45,761,000
Total assets 86,337,000 63,586,000
Liabilities (all current) 30,412,000 21,036,000
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
1999 1998 1997
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
STATEMENT OF INCOME DATA:
Revenues $151,581,000 127,222,000 111,322,000
Operating income 19,234,000 19,526,000 13,054,000
Net income* 20,065,000 20,725,000 13,957,000
- ---------------------------------------------------------------------------
</TABLE>
*Vital is a limited liability company and is taxed in a manner similar
to a partnership; therefore, net income related to Vital does not include income
tax expense.
NOTE 6 SHAREHOLDERS' EQUITY
STOCK SPLIT: In May 1998, a three-for-two common stock split was effected in the
form of a stock dividend. All share and shareholders' equity amounts included
herein have been restated to reflect the split for all periods presented.
TREASURY STOCK: In October 1999, the Company announced a plan to purchase up to
1.5 million shares of its common stock from time to time and at various prices
over the next two years. Through December 31, 1999, the Company had purchased
77,100 shares for $1.3 million under this plan. At December 31, 1999, 217,467
shares were held as treasury shares at a cost of $1,529,176. At December 31,
1998 and 1997, 181,260 shares at a cost of $300,788 and 229,946 shares at a cost
of $377,701, respectively, were held as treasury shares.
During 1999, certain employees of the Company exercised options for
41,100 shares of common stock that were issued from treasury shares. During 1998
and 1997, employees exercised options for 48,925 and 63,975 shares of common
stock, respectively.
LONG-TERM INCENTIVE PLAN: Total System Services, Inc. maintains a Long-Term
Incentive Plan (LTI Plan) to attract, retain, motivate and reward employees who
make a significant contribution to the Company's long-term success and to enable
such employees to acquire and maintain an equity interest in the Company. The
LTI Plan is administered by the Compensation Committee of the Company's Board of
Directors and enables the Company to grant stock options, stock appreciation
rights, restricted stock and performance awards; 2.4 million shares of common
stock were reserved for distribution under the LTI Plan. Options granted under
the LTI Plan may be incentive stock options or nonqualified stock options as
determined by the Committee at the time of grant. Incentive stock options are
granted at a price not less than 100% of the fair market value of the stock on
the grant date, and nonqualified options are granted at a price to be determined
by the Committee. Option vesting terms are established by the Committee at the
time of grant and presently range from one to five years. The expiration date of
options granted under the LTI Plan is determined at the time of grant and may
not exceed ten years from the date of the grant. At December 31, 1999, there
were options outstanding under the LTI Plan to purchase 1,599,500 shares of the
Company's common stock, of which 423,500 shares were exercisable. There were no
shares available for grant at December 31, 1999, under the LTI Plan.
Additionally, options (not issued under the LTI Plan) to purchase 37,500 shares
of the Company's common stock were outstanding at December 31, 1999, of which
25,000 were exercisable.
34
A summary of the status of the Company's options granted as of December
31, 1999, 1998 and 1997, and changes during the years ended on those dates is
presented below:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997
- -----------------------------------------------------------------------------------------------------------------------------------
Weighted Weighted Weighted
Average Average Average
Options Exercise Price Options Exercise Price Options Exercise Price
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Options:
Outstanding at beginning of year 1,678,100 $ 12.15 1,727,025 $ 11.86 283,500 $ 2.00
Granted -- -- -- -- 1,507,500 13.30
Exercised (41,100) 2.00 (48,925) 2.00 (63,975) 2.00
Forfeited/canceled -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Outstanding at end of year 1,637,000 $ 12.41 1,678,100 $ 12.15 1,727,025 $ 11.86
- -----------------------------------------------------------------------------------------------------------------------------------
Options exercisable at year-end 448,500 $ 10.24 330,100 $ 7.60 219,525 $ 2.00
- -----------------------------------------------------------------------------------------------------------------------------------
Weighted average fair value of options
granted during the year $ -- $ -- $ 5.31
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The following table summarizes information about stock options
outstanding at December 31, 1999:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Number Weighted Number
Outstanding at Average Remaining Weighted Average Exercisable at Weighted Average
December 31, 1999 Contractual Life in Years Exercise Price December 31, 1999 Exercise Price
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
129,500 2.50 $ 2.00 129,500 $ 2.00
37,500 9.03 18.50 25,000 18.50
1,470,000 7.84 13.17 294,000 13.17
- ------------------------------------------------------------------------------------------------------------
1,637,000 7.44 $ 12.41 448,500 $ 10.24
- ------------------------------------------------------------------------------------------------------------
</TABLE>
The Company applies Accounting Principles Board Opinion No. 25 and
related interpretations in accounting for its plans. Had compensation cost for
the Company's stock-based compensation plans been determined consistent with
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation," the Company's net income and earnings per share would have been
reduced to the unaudited pro forma amounts indicated below:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
Years Ended December 31, 1999 1998 1997
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Net income applicable to
common shareholders
As reported $ 68,592,976 54,831,143 47,478,472
Pro forma 67,411,857 53,156,712 47,150,775
Basic earnings per share:
As reported .35 .28 .24
Pro forma .35 .27 .24
Diluted earnings per share:
As reported .35 .28 .24
Pro forma .34 .27 .24
</TABLE>
The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option-pricing model with the following weighted average
assumptions used: dividend yield of 0.0%; expected volatility of 41.6%;
risk-free interest rate of 5.87%; and expected lives of 3.95 years for all
options.
35
ACCUMULATED OTHER COMPREHENSIVE INCOME: Comprehensive income for TSYS consists
of net income and foreign currency translation adjustments recorded as a
component of shareholders' equity. The income tax effects allocated to and the
cumulative balance of each component of other comprehensive income are as
follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Balance at Balance at
December 31, 1998 Pretax Amount Tax Benefit December 31, 1999
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Currency translation adjustments $(1,179,337) (433,795) 159,424 $(1,453,708)
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Balance at Balance at
December 31, 1997 Pretax Amount Tax Benefit December 31, 1998
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Currency translation adjustments $(1,178,182) (1,155) -- $(1,179,337)
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE 7 INCOME TAXES
The provision for income taxes includes income taxes currently payable and those
deferred because of temporary differences between the financial statement
carrying amounts and tax bases of assets and liabilities.
The components of income tax expense included in the Consolidated
Statements of Income were as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Years Ended December 31, 1999 1998 1997
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current income tax expense:
Federal $ 32,816,025 20,669,630 24,267,412
State 1,624,604 947,560 1,356,815
- ---------------------------------------------------------------------------------------------------------------------------------
Total current income tax expense 34,440,629 21,617,190 25,624,227
- ---------------------------------------------------------------------------------------------------------------------------------
Deferred income tax expense (benefit):
Federal 512,265 5,042,194 (1,460,857)
State 30,133 296,600 (85,933)
- ---------------------------------------------------------------------------------------------------------------------------------
Total deferred income tax expense (benefit): 542,398 5,338,794 (1,546,790)
- ---------------------------------------------------------------------------------------------------------------------------------
Total income tax expense $ 34,983,027 26,955,984 24,077,437
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Income tax expense differed from the amounts computed by applying the
statutory U.S. federal income tax rate of 35% to income before income taxes as a
result of the following:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Years Ended December 31, 1999 1998 1997
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Computed "expected" income tax expense $ 36,251,600 28,625,494 25,044,568
Increase (decrease) in income tax expense resulting from:
State income tax expense, net of federal income tax benefit 1,075,579 808,704 826,073
Foreign tax credits (969,000) (1,473,788) (1,335,483)
Other, net (1,375,152) (1,004,426) (457,721)
- ---------------------------------------------------------------------------------------------------------------------------------
Total income tax expense $ 34,983,027 26,955,984 24,077,437
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The tax effects of the significant components of deferred income tax
assets and liabilities are presented in the following table:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
At December 31, 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Deferred income tax assets:
Primarily accruals not deductible until paid $ 8,200,673 6,016,675
State income tax credits 2,621,530 --
- ---------------------------------------------------------------------------------------------------------------------------------
Gross deferred income tax assets 10,822,203 6,016,675
Less valuation allowance (1,400,000) --
- ---------------------------------------------------------------------------------------------------------------------------------
Net deferred income tax assets 9,422,203 6,016,675
- ---------------------------------------------------------------------------------------------------------------------------------
Deferred income tax liabilities:
Computer software development costs (18,310,745) (20,029,964)
Excess tax over financial statement depreciation (6,306,942) (1,961,901)
Other, net (4,440,396) (3,118,292)
- ---------------------------------------------------------------------------------------------------------------------------------
Gross deferred income tax liability (29,058,083) (25,110,157)
- ---------------------------------------------------------------------------------------------------------------------------------
Net deferred income tax liability $(19,635,880) (19,093,482)
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
As of December 31, 1999, TSYS had state income tax credit carryforwards
of $2,621,530. In assessing the realizability of deferred income tax assets,
management considers whether it is more likely than not that some portion or all
of the deferred income tax assets will not be realized. The ultimate realization
of deferred income tax assets is dependent upon the generation of future taxable
income during the periods in which those temporary differences become
deductible. Management considers the scheduled reversal of deferred tax
liabilities, projected future taxable income and tax planning strategies in
making this assessment. At December 31, 1999, based upon the level of historical
taxable income and projections for future taxable income over the periods in
which the deferred income tax assets are deductible, management believes that it
is more likely than not that TSYS will realize the benefits of these deductible
differences, net of existing valuation allowances. The valuation allowance for
deferred tax assets as of December 31, 1999, was $1,400,000. There was no
valuation allowance at December 31, 1998.
36
NOTE 8 EMPLOYEE BENEFIT PLANS
The Company provides benefits to its employees by allowing employees to
participate in certain defined contribution plans. These employee benefit plans
are described as follows:
PROFIT SHARING PLAN: The Company's employees are eligible to participate in the
Synovus Financial Corp./Total System Services, Inc. (Synovus/TSYS) Profit
Sharing Plan. The Company's contributions to the plan are contingent upon
achievement of certain financial goals. The terms of the plan limit the
Company's contribution to 9% of participant compensation, as defined, not to
exceed the maximum allowable deduction under Internal Revenue Service
guidelines. TSYS' annual contributions to the plan charged to expense are as
follows:
<TABLE>
--------------------------------------
<S> <C>
1999 $10,992,344
1998 8,365,937
1997 6,828,175
--------------------------------------
</TABLE>
MONEY PURCHASE PLAN: The Company's employees are eligible to participate in the
Synovus/TSYS Money Purchase Pension Plan, a defined contribution pension plan.
The terms of the plan provide for the Company to make annual contributions to
the plan equal to 7% of participant compensation, as defined. The Company's
contributions to the plan charged to expense are as follows:
<TABLE>
-------------------------------------
<S> <C>
1999 $8,413,213
1998 6,438,388
1997 5,294,540
-------------------------------------
</TABLE>
401(K) PLAN: The Company's employees are eligible to participate in the
Synovus/TSYS 401(k) Plan. The terms of the plan allow employees to contribute up
to 10% of pretax compensation with a discretionary company contribution up to a
maximum of 5% of participant compensation, as defined, based upon the Company's
attainment of certain financial goals. The Company's contributions to the plan
charged to expense are as follows:
<TABLE>
-------------------------------------
<S> <C>
1999 $5,443,934
1998 1,142,828
1997 21,861
-------------------------------------
</TABLE>
Stock Purchase Plan: The Company maintains stock purchase plans for directors
and employees, whereby TSYS makes contributions equal to one-half of employee
and director voluntary contributions. The funds are used to purchase presently
issued and outstanding shares of TSYS common stock for the benefit of
participants. TSYS' contributions to these plans charged to expense are as
follows:
<TABLE>
-------------------------------------
<S> <C>
1999 $2,352,505
1998 1,862,698
1997 1,588,618
-------------------------------------
</TABLE>
POSTRETIREMENT MEDICAL BENEFITS PLAN: TSYS provides certain medical benefits to
qualified retirees through a postretirement medical benefits plan. The benefit
expense and accrued benefit cost associated with the plan are not significant to
the Company's consolidated financial statements.
NOTE 9 COMMITMENTS AND CONTINGENCIES
LEASE COMMITMENTS: TSYS is obligated under noncancelable operating leases for
computer equipment and facilities. Management expects that, as these leases
expire, they will be renewed or replaced by similar leases. In 1997, the Company
entered into an operating lease agreement for the Company's new corporate
campus. Under the agreement, which is guaranteed by Synovus Financial Corp., the
lessor paid for the construction and development costs and has leased the
facilities to the Company for a term of three years beginning in November 1999.
The lease provides for substantial residual value guarantees and includes
purchase options at original cost of the property. The amount of the residual
value guarantees relative to the assets under this lease is projected to be
$81.4 million. The terms of this lease financing arrangement require, among
other things, that the Company maintain certain minimum financial ratios and
provide certain information to the lessor.
The future minimum lease payments under noncancelable operating leases
with remaining terms greater than one year for the next five years and
thereafter and in the aggregate as of December 31, 1999, are as follows:
<TABLE>
------------------------------------------------
<S> <C>
2000 $ 96,739,240
2001 99,353,493
2002 85,029,844
2003 44,741,177
2004 and thereafter 35,354,852
------------------------------------------------
$361,218,606
------------------------------------------------
</TABLE>
Total rental expense under all operating leases in 1999, 1998 and 1997
was $85,928,317, $55,926,412 and $52,765,480, respectively.
37
CONTRACTUAL COMMITMENTS: In the normal course of its business, the Company
maintains processing contracts with its customers. These processing contracts
contain commitments, including, but not limited to, minimum standards and time
frames against which the Company's performance is measured. In the event the
Company does not meet its contractual commitments with its customers, the
Company may incur penalties and/or certain customers may have the right to
terminate their contracts with the Company. The Company does not believe that it
will fail to meet its contractual commitments to an extent that will result in a
material adverse effect on its financial condition or results of operations.
CONTINGENCIES: The Company is subject to lawsuits, claims and other complaints
arising out of the ordinary conduct of its business. In the opinion of
management, based in part upon the advice of legal counsel, all matters are
adequately covered by insurance, or if not covered, are without merit or are of
such kind or involve such amounts that would not have a material adverse effect
on the financial condition or results of operations of the Company if disposed
of unfavorably.
In November 1998, a class action complaint was filed against
NationsBank of Delaware, N.A., in the United States District Court for the
Southern District of Mississippi. On March 23, 1999, the named plaintiff amended
the complaint and named the Company and certain credit bureaus as defendants in
the case. The named plaintiff alleges, among other things, that the defendants
failed to report properly the credit standing of each member of the putative
class. The named plaintiff has defined the class as all persons and entities
within the United States who obtained credit cards from NationsBank and whose
accounts were purchased by or transferred to U.S. BankCard and whose accounts
were reported to credit bureaus or credit agencies incorrectly in August 1998.
The amended complaint alleges negligence, violation of the Fair Credit Reporting
Act, breach of the duty of good faith and fair dealing, and seeks declaratory
relief, injunctive relief and the imposition of punitive damages. This lawsuit
seeks unspecified damages. Though settlement negotiations have occurred, these
negotiations have to date not resulted in a definitive settlement agreement
among the parties. TSYS is not in a position to determine its possible exposure,
if any, as a result of the litigation.
NOTE 10 SUPPLEMENTARY BALANCE SHEET INFORMATION
Significant components of prepaid expenses and other current assets
are summarized as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
1999 1998
- --------------------------------------------------------------------------
<S> <C> <C>
Contract acquisition costs, net $ 7,861,069 9,900,416
Prepaid expenses 9,709,740 7,643,395
Other 7,600,519 7,826,793
- --------------------------------------------------------------------------
Total $25,171,328 25,370,604
- --------------------------------------------------------------------------
</TABLE>
Significant components of other noncurrent assets are summarized as
follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
1999 1998
- --------------------------------------------------------------------------
<S> <C> <C>
Contract acquisition costs, net $43,001,304 36,780,395
Investment in joint venture 35,101,217 28,304,322
Other 4,491,635 5,620,764
- --------------------------------------------------------------------------
Total $82,594,156 70,705,481
- --------------------------------------------------------------------------
</TABLE>
Significant components of other current liabilities are summarized as
follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
1999 1998
- --------------------------------------------------------------------------
<S> <C> <C>
Customer postage deposits $14,913,211 14,753,284
Transaction processing provisions 5,445,862 3,941,318
Other 31,169,026 8,377,940
- --------------------------------------------------------------------------
Total $51,528,099 27,072,542
- --------------------------------------------------------------------------
</TABLE>
NOTE 11 SEGMENT REPORTING
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131 (SFAS 131), "Disclosures about Segments
of an Enterprise and Related Information." SFAS 131 establishes standards for
the way public business enterprises are to report information about operating
segments in annual financial statements and requires those enterprises to report
selected financial information about operating segments in interim financial
reports issued to shareholders. It also establishes standards for related
disclosures about products and services, geographic areas and major customers.
Through an online accounting and bankcard data processing system, Total
System Services, Inc. provides card processing services to card-issuing
institutions in the United States, Mexico, Canada, Honduras and the Caribbean.
TSYS' subsidiaries provide support services including correspondence processing,
commercial printing and equipment leasing. Segments are identified based on the
services provided. Transaction processing services account for more than 85% of
financial activity in all of the quantitative thresholds required to be measured
under SFAS 131. One subsidiary, whose sole business activity is to provide
programming support services to the parent company, was aggregated into
transaction processing services.
38
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Transaction Support
OPERATING SEGMENTS Processing Services Services Consolidated
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1999
Total revenue $ 465,243,321 71,319,006 $ 536,562,327
Intersegment revenue (779,800) (1,856,516) (2,636,316)
- -------------------------------------------------------------------------------------------------------
Revenue from external customers $ 464,463,521 69,462,490 $ 533,926,011
- -------------------------------------------------------------------------------------------------------
Equity in income of joint ventures $ 12,326,609 -- $ 12,326,609
- -------------------------------------------------------------------------------------------------------
Segment operating income $ 88,697,914 11,921,099 $ 100,619,013
- -------------------------------------------------------------------------------------------------------
Income tax expense $ 30,473,569 4,509,458 $ 34,983,027
- -------------------------------------------------------------------------------------------------------
Net income $ 61,159,112 7,433,864 $ 68,592,976
- -------------------------------------------------------------------------------------------------------
Identifiable assets $ 445,504,370 47,704,132 $ 493,208,502
Intersegment eliminations (35,704,897) (154,067) (35,858,964)
- -------------------------------------------------------------------------------------------------------
Total assets $ 409,799,473 47,550,065 $ 457,349,538
- -------------------------------------------------------------------------------------------------------
1998
Total revenue $ 356,744,792 41,330,147 $ 398,074,939
Intersegment revenue (502,069) (1,378,802) (1,880,871)
- -------------------------------------------------------------------------------------------------------
Revenue from external customers $ 356,242,723 39,951,345 $ 396,194,068
- -------------------------------------------------------------------------------------------------------
Equity in income of joint ventures $ 12,974,348 -- $ 12,974,348
- -------------------------------------------------------------------------------------------------------
Segment operating income $ 72,722,361 6,620,511 $ 79,342,872
- -------------------------------------------------------------------------------------------------------
Income tax expense $ 24,488,076 2,467,908 $ 26,955,984
- -------------------------------------------------------------------------------------------------------
Net income $ 50,980,990 3,850,153 $ 54,831,143
- -------------------------------------------------------------------------------------------------------
Identifiable assets $ 341,926,653 32,895,850 $ 374,822,503
Intersegment eliminations (24,955,949) (958,242) (25,914,191)
- -------------------------------------------------------------------------------------------------------
Total assets $ 316,970,704 31,937,608 $ 348,908,312
- -------------------------------------------------------------------------------------------------------
1997
Total revenue $ 330,137,416 31,988,727 $ 362,126,143
Intersegment revenue (76,038) (550,706) (626,744)
- -------------------------------------------------------------------------------------------------------
Revenue from external customers $ 330,061,378 31,438,021 $ 361,499,399
- -------------------------------------------------------------------------------------------------------
Equity in income of joint ventures $ 9,347,183 -- $ 9,347,183
- -------------------------------------------------------------------------------------------------------
Segment operating income $ 64,495,841 4,780,657 $ 69,276,498
- -------------------------------------------------------------------------------------------------------
Income tax expense $ 22,186,324 1,891,113 $ 24,077,437
- -------------------------------------------------------------------------------------------------------
Net income $ 44,584,665 2,893,807 $ 47,478,472
- -------------------------------------------------------------------------------------------------------
Identifiable assets $ 289,094,906 32,158,029 $ 321,252,935
Intersegment eliminations (24,333,886) (61,112) (24,394,998)
- -------------------------------------------------------------------------------------------------------
Total assets $ 264,761,020 32,096,917 $ 296,857,937
- -------------------------------------------------------------------------------------------------------
</TABLE>
GEOGRAPHIC AREA DATA: The following geographic data represent revenues based on
the geographic locations of customers. Substantially all property and equipment
is located in the United States.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
1999 1998 1997
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
United States $ 493,231,724 376,303,345 341,901,236
Mexico 15,954,041 17,362,650 18,365,222
Canada 22,531,042 1,838,322 659,783
Other 2,209,204 689,751 573,158
- -------------------------------------------------------------------------------------------------------
Totals $ 533,926,011 396,194,068 361,499,399
- -------------------------------------------------------------------------------------------------------
</TABLE>
39
MAJOR CUSTOMERS: For the years ended December 31, 1999, 1998 and 1997, two major
customers accounted for approximately 29%, 34% and 35% of total revenues,
respectively. One of these customers provided 16%, or $86.9 million, of total
revenues in 1999; 21%, or $82.3 million, in 1998; and 20%, or $70.3 million, in
1997. The other major customer accounted for 13%, or $69.3 million, of total
revenues in 1999; 13%, or $53.1 million, in 1998; and 15%, or $55.0 million, in
1997. Revenues from major customers for the years reported are attributable to
all reporting segments.
NOTE 12 ACQUISITION
Effective January 1, 1999, TSYS acquired Partnership Card Services (PCS) from
its majority shareholder, Columbus Bank and Trust Company, the flagship bank of
Synovus Financial Corp., in exchange for 854,042 newly issued shares of TSYS
common stock with a market value of approximately $20.1 million. Prior to the
acquisition by TSYS, PCS operated as a division of CB&T, providing services such
as credit, collection and customer service to card-issuing financial
institutions, including CB&T. The business of PCS has become part of TSYS'
wholly owned subsidiary, TSI.
Because the acquisition of PCS was a transaction between entities under
common control, the Company has reflected the acquisition at historical cost in
a manner similar to a pooling of interests and has reflected the results of
operations of PCS in the Company's financial statements beginning January 1,
1999.
Presented below are the pro forma consolidated results of TSYS'
operations for the years 1998 and 1997, as though the acquisition of PCS had
occurred at the beginning of 1997, compared to TSYS' actual consolidated results
of operations for 1999.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Years Ended December 31,
1999 1998 1997
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues $533,926,011 410,417,905 367,244,690
- ------------------------------------------------------------------------------------
Net Income 68,592,976 56,408,790 48,395,247
- ------------------------------------------------------------------------------------
Earnings per share -
basic and diluted .35 .29 .25
- ------------------------------------------------------------------------------------
</TABLE>
40
REPORT OF INDEPENDENT AUDITORS
[KPMG LOGO] 303 Peachtree Street, N.E.
Suite 2000
Atlanta, GA 30308
The Board of Directors
Total System Services, Inc.:
We have audited the accompanying consolidated balance sheets of Total
System Services, Inc. and subsidiaries as of December 31, 1999 and 1998, and the
related consolidated statements of income, cash flows and shareholders' equity
and comprehensive income for each of the years in the three-year period ended
December 31, 1999. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Total System
Services, Inc. and subsidiaries at December 31, 1999 and 1998, and the results
of their operations and their cash flows for each of the years in the three-year
period ended December 31, 1999, in conformity with generally accepted accounting
principles.
/s/ KPMG LLP
January 11, 2000
41
REPORT OF FINANCIAL RESPONSIBILITY
The management of Total System Services, Inc. is responsible for the
integrity and objectivity of the consolidated financial statements and other
financial information presented in this report. These statements have been
prepared in accordance with generally accepted accounting principles and
necessarily include amounts based on judgements and estimates by management.
TSYS maintains internal accounting control policies and related
procedures designed to provide reasonable assurance that assets are safeguarded,
that transactions are executed in accordance with management's authorization and
properly recorded, and that accounting records may be relied upon for the
preparation of reliable published annual and interim financial statements and
other financial information. The design, monitoring and revision of internal
accounting control systems involve, among other things, management's judgement
with respect to the relative cost and expected benefits of specific control
measures. The Company also maintains an internal auditing function which
evaluates and reports on the adequacy and effectiveness of internal accounting
controls and policies and procedures.
The Company's consolidated financial statements have been audited by
independent auditors who have expressed their opinion with respect to the
fairness of these statements.
The Audit Committee of the Board of Directors, composed solely of
outside directors, meets periodically with TSYS' management, internal auditors
and independent auditors to review matters relating to the quality of financial
reporting and internal accounting controls. Both the internal auditors and the
independent auditors have unrestricted access to the Committee.
<TABLE>
<S> <C>
/s/ Richard W. Ussery /s/ James B. Lipham
- --------------------------------------------------- -----------------------------------
Richard W. Ussery James B. Lipham
Chairman of the Board & Chief Executive Officer Executive Vice President & Chief Financial
Officer
/s/ Dorenda K. Weaver /s/ Ronald L. Barnes
- --------------------------------------------------- -----------------------------------
Dorenda K. Weaver Ronald L. Barnes
Senior Vice President & Controller Senior Vice President & General Auditor
</TABLE>
42
QUARTERLY FINANCIAL DATA, STOCK PRICE, DIVIDEND INFORMATION
TSYS' common stock trades on the New York Stock Exchange (NYSE) under the symbol
"TSS." Price and volume information appears under the abbreviation "TotlSysSvc"
in NYSE daily stock quotation listings. As of February 11, 2000, there were
10,404 holders of record of TSYS common stock, some of whom are holders in
nominee name for the benefit of different shareholders.
The fourth quarter dividend of $.01 per share was declared on December
13, 1999, and was paid January 3, 2000, to shareholders of record on December
23, 1999. Total dividends declared in 1999 and in 1998 amounted to $7.8 million
and $7.3 million, respectively. It is the present intention of the Board of
Directors of TSYS to continue to pay cash dividends on its common stock.
PRESENTED HERE IS A SUMMARY OF THE UNAUDITED QUARTERLY FINANCIAL DATA
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998.
REVENUES NET INCOME
(Millions of Dollars) (Millions of Dollars)
1999 1998 1999 1998
QTR 1 $115.3 $ 96.3 QTR 1 $12.9 $10.3
QTR 2 $137.0 $ 91.5 QTR 2 $18.4 $11.7
QTR 3 $137.8 $ 99.4 QTR 3 $16.9 $15.2
QTR 4 $143.8 $109.0 QTR 4 $20.3 $17.8
[GRAPH OMITTED] [GRAPH OMITTED]
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
First Second Third Fourth
(in thousands except per share data) Quarter Quarter Quarter Quarter
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1999 Revenues .............................. $115,311 136,992 137,827 143,796
Operating income ...................... 19,242 27,636 23,881 29,860
Net income ............................ 12,949 18,436 16,934 20,274
Basic earnings per share .............. .07 .09 .09 .10
Diluted earnings per share ............ .07 .09 .09 .10
Cash dividends declared per share ..... .01 .01 .01 .01
Stock prices:
High .................................. 26 1/4 20 7/8 19 5/8 19
Low ................................... 18 1/4 17 9/16 14 1/8 15
- --------------------------------------------------------------------------------------------------------------------------
1998 Revenues .............................. $ 96,318 91,469 99,402 109,005
Operating income ...................... 14,580 16,433 22,139 26,191
Net income ............................ 10,250 11,650 15,172 17,759
Basic earnings per share .............. .05 .06 .08 .09
Diluted earnings per share ............ .05 .06 .08 .09
Cash dividends declared per share ..... .008 .01 .01 .01
Stock prices:
High .................................. 21 7/16 23 15/16 21 7/16 24 3/16
Low ................................... 15 18 7/16 14 13/16 14 7/16
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
43
TSYS(R)
TOTAL SYSTEM SERVICES, INC.(R)
Richard W. Ussery March 10, 2000
Chairman of the Board
Dear Shareholder:
You are cordially invited to attend our Annual Meeting of Shareholders at
9:30 a.m. on Thursday, April 13, 2000, at the TSYS Riverfront Campus Auditorium,
1600 First Avenue, Columbus, Georgia. Enclosed with this Proxy Statement are
your proxy card and the 1999 Annual Report.
We hope that you will be able to be with us and let us give you a review of
1999. Whether you own a few or many shares of stock and whether or not you plan
to attend in person, it is important that your shares be voted on matters that
come before the meeting. To make sure your shares are represented, we urge you
to vote promptly.
Thank you for helping us make 1999 a good year. We look forward to your
continued support in 2000 and another good year.
Sincerely yours,
/s/Richard W. Ussery
RICHARD W. USSERY
Total System Services, Inc. Post Office Box 2506 Columbus, Georgia 31902-2506
TSYS(R)
TOTAL SYSTEM SERVICES, INC.(R)
NOTICE OF THE 2000 ANNUAL MEETING OF SHAREHOLDERS
TIME............... 9:30 a.m. E.T.
Thursday, April 13, 2000
PLACE.............. TSYS Riverfront Campus Auditorium
1600 First Avenue
Columbus, Georgia 31901
ITEMS OF BUSINESS.. (1) To elect five directors to serve until the Annual
Meeting of Shareholders in 2003, one director to
serve until the Annual Meeting of Shareholders
in 2002 and three directors to serve until the
Annual Meeting of Shareholders in 2001.
(2) To approve the Synovus Financial Corp. 2000
Long-Term Incentive Plan (TSYS is an 80.8%
owned subsidiary of Synovus).
(3) To approve the TSYS 2000 Long-Term Incentive Plan.
(4) To transact such other business as may properly
come before the meeting and any adjournment thereof.
RECORD DATE........ Holders of record of TSYS common stock at the close of
business on February 11, 2000, are entitled to vote
at the meeting.
ANNUAL REPORT...... TSYS' 1999 Annual Report, which is not a part of
the proxy soliciting material, is enclosed.
PROXY VOTING....... It is important that your shares be represented and
voted at the meeting. You can vote your shares by
completing and returning the proxy card sent to you.
Most shareholders can also vote their shares over the
Internet or by telephone. If Internet or telephone
voting is available to you, voting instructions are
printed on the proxy card sent to you. You can
revoke a proxy at any time prior to its exercise at the
meeting by following the instructions in the
accompanying Proxy Statement.
/s/G. Sanders Griffith, III
G. SANDERS GRIFFITH, III
Secretary
Columbus, Georgia
March 10, 2000
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING,
PLEASE VOTE YOUR SHARES PROMPTLY.
TABLE OF CONTENTS
Voting Information.............................................................1
Election of Directors..........................................................2
Meetings and Committees of the Board...........................................5
Directors' Compensation........................................................6
Executive Officers.............................................................6
Stock Ownership of Directors and Executive Officers............................7
Directors' Proposal to Approve the Synovus Financial Corp. 2000
Long-Term Incentive Plan..................................................8
Directors' Proposal to Approve the Total System Services, Inc. 2000
Long-Term Incentive Plan.................................................12
Executive Compensation........................................................17
Stock Performance Graph.......................................................20
Compensation Committee Report on Executive Compensation.......................21
Compensation Committee Interlocks and
Insider Participation....................................................23
Transactions With Management..................................................23
Relationships Between TSYS, Synovus, CB&T and
Certain of Synovus' Subsidiaries.........................................24
Section 16(a) Beneficial Ownership Reporting Compliance.......................27
Independent Auditors..........................................................27
General Information:
Financial Information....................................................28
Shareholder Proposals for the 2001 Proxy Statement.......................28
Director Nominees or Other Business for Presentation
at the Annual Meeting...............................................28
Solicitation of Proxies..................................................28
VOTING INFORMATION
PURPOSE
This Proxy Statement and the accompanying proxy card are being mailed to
TSYS shareholders beginning March 10, 2000. The TSYS Board of Directors is
soliciting proxies to be used at the 2000 Annual Meeting of TSYS Shareholders
which will be held on April 13, 2000, at 9:30 a.m., at the TSYS Riverfront
Campus Auditorium, 1600 First Avenue, Columbus, Georgia. Proxies are solicited
to give all shareholders of record an opportunity to vote on matters to be
presented at the Annual Meeting. In the following pages of this Proxy Statement,
you will find information on matters to be voted upon at the Annual Meeting of
Shareholders or any adjournment of that meeting.
WHO CAN VOTE
All shareholders of record of TSYS common stock as of the close of business
on February 11, 2000 are entitled to vote. Shares can be voted at the meeting
only if the shareholder is present or represented by a valid proxy.
SHARES OUTSTANDING
A majority of the outstanding shares of TSYS common stock must be present,
either in person or represented by proxy, in order to conduct the Annual Meeting
of TSYS Shareholders. On February 11, 2000, 194,832,720 shares of TSYS common
stock were outstanding.
COLUMBUS BANK AND TRUST COMPANY
Columbus Bank and Trust Company(R)("CB&T") owned individually 157,455,980
shares, or 80.8%, of the outstanding shares of TSYS common stock on February 11,
2000. CB&T(R) is a wholly owned banking subsidiary of Synovus Financial
Corp.(R), a multifinancial services company having 252,246,801 shares of voting
common stock outstanding on February 11, 2000.
PROXIES AND VOTING PROCEDURES
Your vote is important. Because many shareholders cannot attend the meeting
in person, it is necessary that a large number be represented by proxy. Most
shareholders have a choice of voting over the Internet, by using a toll-free
telephone number or by completing a proxy card and mailing it in the
postage-paid envelope provided. Please refer to your proxy card or the
information forwarded by your bank, broker or other holder of record to see
which options are available to you. Please be aware that if you vote over the
Internet, you may incur costs such as telephone and Internet access charges for
which you will be responsible. The Internet and telephone voting facilities for
shareholders of record will close at 11:59 p.m. E.T. on April 12, 2000.
You can revoke your proxy at any time before it is exercised by timely
delivery of a properly executed, later-dated proxy (including an Internet or
telephone vote) or by voting by ballot at the Annual Meeting. By providing
your voting instructions promptly, you may save TSYS the expense of a second
mailing.
The Internet and telephone voting procedures are designed to authenticate
shareholders by use of a control number and to allow you to confirm that your
instructions have been properly recorded.
The method by which you vote will in no way limit your right to vote at the
Annual Meeting if you later decide to attend in person. If your shares are held
in the name of a bank, broker or other holder of record, you must obtain a
proxy, executed in your favor, from the holder of record, to be able to vote
at the Annual Meeting.
All shares entitled to vote and represented by properly completed
proxies received prior to the Annual Meeting and not revoked will be voted at
the Annual Meeting in accordance with your instructions. IF YOU DO NOT
INDICATE HOW YOUR SHARES SHOULD BE VOTED ON A MATTER, THE SHARES REPRESENTED
BY YOUR PROPERLY COMPLETED PROXY WILL BE VOTED AS THE BOARD OF DIRECTORS
RECOMMENDS.
If any other matters are properly presented at the Annual Meeting for
consideration, including, among other things, consideration of a motion to
adjourn the meeting to another time or place, the persons named as proxies and
acting thereunder will have discretion to vote on those matters according to
their best judgment to the same extent as the person delivering the proxy would
be entitled to vote. At the date this Proxy Statement went to press, we did not
anticipate that any other matters would be raised at the Annual Meeting.
VOTES PER SHARE
Each share of TSYS common stock represented at the Annual Meeting is
entitled to one vote on each matter properly brought before the meeting.
TSYS DIVIDEND REINVESTMENT AND DIRECT STOCK PURCHASE PLAN
If you participate in this Plan, your proxy card represents shares held in
the Plan, as well as shares you hold directly in certificate form registered
in the same name.
REQUIRED VOTE
The presence, in person or by proxy, of the holders of a majority of the
shares entitled to vote generally for the election of directors is necessary to
constitute a quorum at the Annual Meeting. Abstentions and broker "nonvotes"
are counted as present and entitled to vote for purposes of determining a
quorum. A broker "nonvote" occurs when a nominee holding shares for a
beneficial owner does not vote on a particular proposal because the nominee
does not have discretionary voting power with respect to that item and has not
received instructions from the beneficial owner.
A plurality of the votes duly cast is required for the election of a
director (i.e., the nominee receiving the greatest number of votes will be
elected). Abstentions and broker nonvotes are not counted for purposes of the
election of a director. A properly completed proxy marked "withhold authority"
with respect to the election of one or more directors will not be voted with
respect to the director or directors indicated, although it will be counted for
purposes of determining whether there is a quorum. Cumulative voting is not
permitted. The affirmative vote of the holders of a majority of the votes cast
thereon is required to approve the Directors' proposals to approve the Synovus
2000 Long-Term Incentive Plan and the TSYS 2000 Long-Term Incentive Plan. Any
shares not voted (whether by abstention, broker nonvote or otherwise) have no
impact on the vote.
ELECTION OF DIRECTORS
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" ALL
NOMINEES.
NUMBER
The Board of Directors of TSYS consists of 16 members. As 18 board seats
have been authorized by TSYS' shareholders, TSYS has two directorships which
remain vacant. These vacant directorships could be filled in the future at the
discretion of TSYS' Board of Directors. This discretionary power gives TSYS'
Board of Directors the flexibility of appointing new directors in the periods
between TSYS' Annual Meetings should suitable candidates come to its attention.
The Board is divided into three classes whose terms are staggered so that the
term of one class expires at each Annual Meeting of Shareholders. The terms of
office of the Class I directors expire at the 2002 Annual Meeting, the terms of
office of the Class II directors expire at the 2000 Annual Meeting and the terms
of office of the Class III directors expire at the 2001 Annual Meeting. Proxies
cannot be voted at the 2000 Annual Meeting for a greater number of persons than
the number of nominees named.
NOMINEES
There are five directors, James H. Blanchard, Richard Y. Bradley, Gardiner
W. Garrard, Jr., John P. Illges, III and W. Walter Miller, Jr., who have been
nominated to stand for reelection as directors at the 2000 Annual Meeting for
terms expiring in 2003. In addition, G. Wayne Clough has been nominated to stand
for election as a director for a term expiring in 2002 and Thomas G. Cousins,
Sidney E. Harris and Rebecca K. Yarbrough have been nominated to stand for
election as directors for terms expiring in 2001. Messrs. Cousins, Harris and
Clough and Mrs. Yarbrough were each elected by TSYS' Board to fill vacant Board
seats and are being submitted to TSYS' shareholders as nominees for the first
time at the 2000 Annual Meeting.
The Board believes that each director nominee will be able to stand for
election. If any nominee becomes unable to stand for election, proxies in favor
of that nominee will be voted in favor of the remaining nominees and in favor of
any substitute nominee named by the Board. If you do not wish your shares voted
for one or more of the nominees, you may so indicate on the proxy.
BOARD OF DIRECTORS
Following is the principal occupation, age and certain other information
for each director nominee and other directors serving unexpired terms.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
TSYS Year
Director First
Classifi- Elected Principal Occupation
Name Age cation Director and Other Information
- ------------------------ ----- --------- --------- -------------------------------------------
<S> <C> <C> <C> <C>
James H. Blanchard<F1> 58 II 1982 Chairman of the Board and Chief
Executive Officer, Synovus Financial
Corp.; Chairman of the Executive
Committee, Total System Services, Inc.;
Director, BellSouth Corporation
Richard Y. Bradley<F2> 61 II 1991 Partner, Bradley & Hatcher (Law Firm);
Director, Synovus Financial Corp.
G. Wayne Clough<F3> 58 I 2000 President, Georgia Institute
of Technology
Thomas G. Cousins<F4> 68 III 1999 Chairman of the Board and Chief Executive
Officer, Cousins Properties Incorporated
(Real Estate Development); Director,
Shaw Industries, Inc.
Gardiner W. Garrard, Jr. 59 II 1982 President, The Jordan Company (Real
Estate Development); Director, Synovus
Financial Corp.
Sidney E. Harris<F5> 50 III 1999 Dean, J. Mack Robinson College of
Business, Georgia State University;
Director, Lanier Worldwide, Inc., The
ServiceMaster Company and Transamerica
Investors, Inc.
John P. Illges, III 65 II 1982 Senior Vice President and Financial
Consultant, The Robinson-Humphrey
Company, Inc. (Stockbroker); Director,
Synovus Financial Corp.
Mason H. Lampton 52 III 1986 Chairman of the Board and President,
The Hardaway Company and Chairman
of the Board, Standard Concrete Products
(Construction Companies); Director,
Synovus Financial Corp.
W. Walter Miller, Jr.<F6> 51 II 1993 Senior Vice President, Total System
Services, Inc.
Samuel A. Nunn<F7> 61 I 1997 Senior Partner, King & Spalding (Law
Firm); Director, The Coca-Cola Company, Dell
Computer Corporation, General Electric Company,
National Service Industries, Inc.,
Scientific-Atlanta, Inc.,
Internet Security Systems Group, Inc.
and Texaco Inc.
H. Lynn Page 59 I 1982 Director, Synovus Financial Corp.,
Columbus Bank and Trust Company and
Total System Services, Inc.
Philip W. Tomlinson<F8> 53 I 1982 President, Total System Services, Inc.
William B. Turner<F6> 77 III 1982 Chairman of the Executive Committee,
Columbus Bank and Trust Company and
Synovus Financial Corp.; Advisory
Director, W.C. Bradley Co. (Metal
Manufacturer and Real Estate)
Richard W. Ussery<F9> 52 I 1982 Chairman of the Board and Chief
Executive Officer, Total System Services,
Inc.
James D. Yancey 58 III 1982 President and Chief Operating Officer,
Synovus Financial Corp.; Chairman of the Board,
Columbus Bank and Trust Company;
Director, Shoney's, Inc.
Rebecca K. Yarbrough<F10> 62 III 1999 Private Investor
<FN>
- ---------
<F1> James H. Blanchard was elected Chairman of the Executive Committee of TSYS
in February 1992. From 1982 until 1992, Mr. Blanchard served as Chairman
of the Board of TSYS.
<F2> Richard Y. Bradley formed Bradley & Hatcher in September 1995. From 1991
until 1995, Mr. Bradley served as President of Bickerstaff Clay Products
Company, Inc.
<F3> G. Wayne Clough was elected as a director of TSYS in February 2000 by TSYS'
Board of Directors to fill a vacant Board seat.
<F4> Thomas G. Cousins was elected as a director of TSYS in October 1999 by
TSYS' Board of Directors to fill a vacant Board seat.
<F5> Sidney E. Harris was elected as a director of TSYS in December 1999 by
TSYS' Board of Directors to fill a vacant Board seat. Mr. Harris was
named dean of the J. Mack Robinson College of Business at Georgia State
University in July 1997. From 1991 until 1997, Mr. Harris served as dean of
the Drucker Graduate School.
<F6> Mr. Miller's spouse is the niece of William B. Turner.
<F7> Mr. Nunn joined the law firm of King & Spalding in January 1997. From 1972
until 1997, Mr. Nunn represented the State of Georgia in the United States
Senate.
<F8> Philip W. Tomlinson was elected President of TSYS in February 1992. From
1982 until 1992, Mr. Tomlinson served as Executive Vice President of TSYS.
<F9> Richard W. Ussery was elected Chairman of the Board of TSYS in February
1992. From 1982 until 1992, Mr. Ussery served as President of TSYS.
<F10>Rebecca K. Yarbrough was elected as a director of TSYS in October 1999 by
TSYS' Board of Directors to fill a vacant Board seat.
</FN>
</TABLE>
MEETINGS AND COMMITTEES OF THE BOARD
BOARD OF DIRECTORS
The business affairs of TSYS are managed under the direction of the Board
of Directors in accordance with the Georgia Business Corporation Code, as
implemented by TSYS' Articles of Incorporation and bylaws. Members of
the Board are kept informed through reports routinely presented at Board and
committee meetings by the Chief Executive Officer and other officers, and
through other means.
BOARD AND COMMITTEE MEETINGS
The Board of Directors held seven meetings in 1999. All directors attended
at least 85% of Board and committee meetings during 1999.
COMMITTEES OF THE BOARD
TSYS' Board of Directors has three principal standing committees -- an
Executive Committee, an Audit Committee and a Compensation Committee. There is
no Nominating Committee of TSYS' Board of Directors. The following table shows
the membership of the various committees.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Executive Audit Compensation
- ---------- ----- -------------
<S> <C> <C>
James H. Blanchard, Chair Gardiner W. Garrard, Jr., Chair Gardiner W. Garrard, Jr., Chair
Richard Y. Bradley John P. Illges, III G. Wayne Clough
Gardiner W. Garrard, Jr. Mason H. Lampton Mason H. Lampton
Philip W. Tomlinson
William B. Turner
Richard W. Ussery
James D. Yancey
</TABLE>
Executive Committee. During the intervals between meetings of TSYS' Board
of Directors, TSYS' Executive Committee possesses and may exercise any and all
of the powers of TSYS' Board of Directors in the management and direction of the
business and affairs of TSYS with respect to which specific direction has not
been previously given by TSYS' Board of Directors. During 1999, TSYS' Executive
Committee held four meetings.
Audit Committee. The primary functions to be engaged in by TSYS' Audit
Committee include: (i) annually recommending to TSYS' Board the independent
certified public accountants to be engaged by TSYS for the next fiscal year;
(ii) reviewing the plan and results of the annual audit by TSYS' independent
auditors; (iii) reviewing and approving the range of management advisory
services provided by TSYS' independent auditors; (iv) reviewing TSYS' internal
audit function and the adequacy of the internal accounting control systems of
TSYS; (v) reviewing the results of regulatory examinations of TSYS; (vi)
periodically reviewing the financial statements of TSYS; and (vii) considering
such other matters with regard to the internal and independent audit of TSYS as,
in its discretion, it deems to be necessary or desirable, periodically reporting
to TSYS' Board as to the exercise of its duties and responsibilities and, where
appropriate, recommending matters in connection with the audit function with
respect to which TSYS' Board should consider taking action. During 1999, TSYS'
Audit Committee held four meetings.
Compensation Committee. The primary functions to be engaged in by TSYS'
Compensation Committee include: (i) evaluating the remuneration of senior
management and board members of TSYS and its subsidiaries and the compensation
and fringe benefit plans in which officers, employees and directors of TSYS are
eligible to participate; and (ii) recommending to TSYS' Board whether or not it
should modify, alter, amend, terminate or approve such remuneration,
compensation or fringe benefit plans. During 1999, TSYS' Compensation Committee
held three meetings.
DIRECTORS' COMPENSATION
COMPENSATION
TSYS' directors receive a $20,000 retainer, and fees of $1,200 for each
meeting of TSYS' Board of Directors and each Executive Committee meeting they
personally attend. Members of the Committees of TSYS' Board of Directors (other
than the Executive Committee) receive fees of $750, with the Chairmen of such
Committees receiving fees of $1,200, for each Committee meeting they personally
attend. In addition, directors of TSYS receive a $1,200 fee for each board
meeting from which their absence is excused and a $1,200 fee for one meeting
without regard to the reason for their absence.
DIRECTOR STOCK PURCHASE PLAN
TSYS' Director Stock Purchase Plan is a nontax-qualified, contributory
stock purchase plan pursuant to which qualifying TSYS directors can purchase,
with the assistance of contributions from TSYS, presently issued and outstanding
shares of TSYS common stock. Under the terms of the Director Stock Purchase
Plan, qualifying directors can elect to contribute up to $5,000 per calendar
quarter to make purchases of TSYS common stock, and TSYS contributes an
additional amount equal to 50% of the directors' cash contributions.
Participants in the Director Stock Purchase Plan are fully vested in, and may
request the issuance to them of, all shares of TSYS common stock purchased for
their benefit under the Plan.
EXECUTIVE OFFICERS
The following table sets forth the name, age and position with TSYS of each
executive officer of TSYS.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Name Age Position with TSYS
- --------------------------- --- ------------------------------------
<S> <C> <C>
James H. Blanchard 58 Chairman of the Executive Committee
Richard W. Ussery 52 Chairman of the Board
and Chief Executive Officer
Philip W. Tomlinson 53 President
William A. Pruett 46 Executive Vice President
James B. Lipham 51 Executive Vice President
and Chief Financial Officer
M. Troy Woods 48 Executive Vice President
Kenneth L. Tye 47 Executive Vice President
and Chief Information Officer
G. Sanders Griffith, III 46 General Counsel and Secretary
</TABLE>
Messrs. Blanchard, Ussery and Tomlinson are directors of TSYS. William A.
Pruett was elected as Executive Vice President of TSYS in February 1993. From
1976 until 1993, Mr. Pruett served in various capacities with CB&T and/or TSYS,
including Senior Vice President. James B. Lipham was elected as Executive Vice
President and Chief Financial Officer of TSYS in July 1995. From 1984 until
1995, Mr. Lipham served in various financial capacities with Synovus and/or
TSYS, including Senior Vice President and Treasurer. M. Troy Woods was elected
as Executive Vice President of TSYS in July 1995. From 1987 until 1995, Mr.
Woods served in various capacities with TSYS, including Senior Vice President.
G. Sanders Griffith, III has served as General Counsel of TSYS since 1988 and
was elected as Secretary of TSYS in June 1995. Mr. Griffith currently serves as
Senior Executive Vice President, General Counsel and Secretary of Synovus and
has held various positions with Synovus since 1988. Kenneth L. Tye was elected
as Executive Vice President and Chief Information Officer of TSYS in August
1999. From 1971 until 1999, Mr. Tye served in various capacities wth CB&T
and/or TSYS, including Senior Vice President.
STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth ownership of shares of TSYS common stock
by each director, by each executive officer named in the Summary Compensation
Table on page 17 and by all directors and executive officers as a group as of
December 31, 1999.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares of TSYS Shares of TSYS Percentage of
Common Stock Common Stock Total Outstanding
Beneficially Beneficially Shares Shares of
Owned with Owned with of TSYS TSYS Common
Sole Voting Shared Voting Common Stock Stock
and Investment and Investment Beneficially Beneficially
Power as of Power as of Owned as of Owned as of
Name 12/31/99 12/31/99 12/31/99<F1> 12/31/99
-------------------------- ------------------- -------------------- ---------------- -------------
<S> <C> <C> <C> <C>
James H. Blanchard 783,443 360,480 1,143,923 *
Richard Y. Bradley 21,652 5,000 26,652 *
G. Wayne Clough --- --- --- ---
Thomas G. Cousins 27,800 --- 27,800 *
Gardiner W. Garrard, Jr. 12,646 --- 12,646 *
Sidney E. Harris --- --- --- ---
John P. Illges, III 103,797 81,750 185,547 *
Mason H. Lampton 39,647 104,234<F2> 143,881 *
James B. Lipham 80,859 1,200 131,259 *
W. Walter Miller, Jr. 86,466 12,814 106,480 *
Samuel A. Nunn 1,997 750 40,247 *
H. Lynn Page 347,546 314,596<F3> 662,142 *
William A. Pruett 158,480 --- 200,480 *
Philip W. Tomlinson 595,733 59,796 739,529 *
William B. Turner 159,790 576,000 735,790 *
Richard W. Ussery 553,426 66,000 703,426 *
M. Troy Woods 65,755 2,806 119,561 *
James D. Yancey 785,295 24,208 809,503 *
Rebecca K. Yarbrough 276,550 528,570 805,120 *
Directors and Executive
Officers as a group
(21 persons) 4,225,810 2,138,204 6,727,914 3.5
* Less than one percent of the outstanding shares of TSYS common stock.
- --------
<FN>
<F1> The totals shown for the following directors and executive officers of TSYS
include the number of shares of TSYS common stock that each individual has
the right to acquire within 60 days through the exercise of stock options:
Person Number of Shares
------ ----------------
James B. Lipham 49,200
W. Walter Miller, Jr. 7,200
Samuel A. Nunn 37,500
William A. Pruett 42,000
Philip W. Tomlinson 84,000
Richard W. Ussery 84,000
M. Troy Woods 51,000
In addition, the other executive officers of TSYS have rights to acquire an
aggregate of 9,000 shares of TSYS common stock within 60 days through the
exercise of stock options.
<F2> Includes 28,800 shares of TSYS common stock held in a trust for which Mr.
Lampton is not the trustee. Mr. Lampton disclaims beneficial ownership of
such shares.
<F3> Includes 48,742 shares of TSYS common stock held by a charitable foundation
of which Mr. Page is a trustee.
</FN>
</TABLE>
For a detailed discussion of the beneficial ownership of Synovus common
stock by TSYS' named executive officers and directors and by all directors and
executive officers of TSYS as a group, see "Synovus Common Stock
Ownership of Directors and Management" on page 25.
DIRECTORS' PROPOSAL TO APPROVE THE SYNOVUS FINANCIAL CORP. 2000
LONG-TERM INCENTIVE PLAN
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
TSYS' compensation program includes long-term performance awards under the
Synovus Financial Corp. 2000 Long-Term Incentive Plan (the "Synovus 2000 Plan").
The purpose of the Synovus 2000 Plan is to attract, retain, motivate and reward
employees who make a significant contribution to Synovus and its subsidiaries'
(including TSYS) long-term success, and to enable such employees to acquire and
maintain an equity interest in Synovus. Subject to approval by TSYS'
shareholders, compensation paid to TSYS' employees pursuant to the Synovus 2000
Plan is intended, to the extent reasonable, to qualify for tax deductibility
under Section 162(m) of the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder, as may be amended from time to time
("Section 162(m)").
Eligibility and Participation. Any employee of Synovus or its subsidiaries
(including TSYS), excluding members of the Compensation Committee and any
director who is not also an employee of Synovus or its subsidiaries, is eligible
to be selected to participate in the Synovus 2000 Plan. Approximately 3,134
employees currently participate in the Synovus 2000 Plan. The Committee, as
described below, has discretion to select participants from among eligible
employees from year to year.
Shares Subject to the Plan. The aggregate number of shares of Synovus
common stock which may be granted to participants pursuant to awards granted
under the Synovus 2000 Plan may not exceed twenty million (20,000,000).
Awards Under the Synovus 2000 Plan. Pursuant to the Synovus 2000 Plan,
Synovus may grant long-term performance awards to participants in the form of
stock options, stock appreciation rights ("SARs"), restricted stock or
performance awards.
Stock Options. The Committee may grant options under the Synovus 2000 Plan
in the form of qualified incentive stock options, nonqualified stock options or
a combination thereof. Options may be granted either alone or in tandem with
other awards granted under the Synovus 2000 Plan. Subject to the limits
described herein, the Committee shall have discretion in determining the number
of shares subject to options granted to each participant.
The option price of nonqualified stock options may be equal to, or more or
less than, one hundred percent (100%) of the fair market value of a share of
Synovus common stock on the date the option is granted. The option price of
qualified incentive stock options shall be at least equal to one hundred percent
(100%) of the fair market value of a share of Synovus common stock on the date
the option is granted. Options shall expire at such times as the Committee
determines at the time of grant; provided, however, that no option shall be
exercisable later than the tenth anniversary of its grant.
Options granted under the Synovus 2000 Plan shall be exercisable at such
times and subject to such restrictions and conditions as the Committee shall
approve; provided that no option may be exercisable prior to six months
following its grant. The option exercise price shall be payable in cash, by
check or by such other instrument as deemed acceptable by the Committee.
Payment of the exercise price and any withholding tax due at exercise may also
be made through any program approved by the Committee (including a broker-dealer
cashless exercise program).
Options may only be transferred under the laws of descent and distribution
and shall be exercisable only by the participant during his lifetime unless
otherwise specified by the Committee at or after grant. The participant's rights
in the event of termination of employment shall be specified by the Committee at
or after grant.
Subject to the terms of the Synovus 2000 Plan, the Committee may grant
option price adjustment rights in conjunction with all or part of any option
granted under the Synovus 2000 Plan, either at or after the time of grant of the
option. Such adjustment rights are exercisable only at the same time and to the
same extent as the corresponding option and shall terminate upon the
termination or exercise of such option. Upon exercise, the participant shall be
entitled to have applied as a credit against the exercise price of the related
option an amount equal to the total number of shares subject to the adjustment
right (or a portion thereof as designated by the participant) multiplied by a
fixed percentage of the fair market value of a share of Synovus common stock on
a date designated by the Committee.
Stock Appreciation Rights. SARs granted under the Synovus 2000 Plan may be
granted alone or in conjunction with all or part of any option granted under the
Synovus 2000 Plan. Subject to the terms of the Synovus 2000 Plan, the Committee
shall have discretion to determine the terms and conditions of any SAR granted
under the Synovus 2000 Plan. With respect to an SAR granted in conjunction with
an option, the grant price shall be equal to the option price of the related
option, and such SAR shall terminate upon the termination or exercise of the
related option. No SAR granted under the Synovus 2000 Plan may be exercisable
prior to six months following its grant, except in the case of death (other than
by suicide) or disability of the participant. The term of any SAR shall be
determined by the Committee, provided that such term may not exceed ten years.
SARs granted alone may be exercised upon the terms and conditions as are
imposed by the Committee. An SAR granted in conjunction with an option may be
exercised only with respect to the shares of common stock of Synovus for which
the related option is exercisable. SARs granted in connection with an incentive
stock option shall expire no later than the expiration of such incentive stock
option; the value of the payout for such SARs may be no more than one hundred
percent (100%) of the difference between the incentive stock option option price
and the fair market value of the shares subject to such incentive stock option
at exercise and may be exercised only when the fair market value of the shares
subject to the incentive stock option exceeds the incentive stock option option
price.
Upon exercise, a participant will receive the difference between the fair
market value of a share of common stock on the date of exercise and the grant
price multiplied by the number of shares with respect to which the SAR is
exercised. Payment due upon exercise may be in cash, in shares having a fair
market value of the SAR being exercised, or in a combination of cash and shares,
as determined by the Committee. The Committee may impose such restrictions on
the exercise of SARs as may be required to satisfy the requirements of Section
16 of the Securities Exchange Act. SARs may only be transferred under the laws
of descent and distribution and shall be exercisable only by the participant
during his lifetime.
Restricted Stock. Restricted stock may be granted in such amounts and
subject to such terms and conditions as determined by the Committee. The
Committee shall impose such conditions and/or restrictions on any shares of
restricted stock as it deems advisable, including, but not limited to, a
graduated vesting schedule and/or conditioning the grant of restricted stock on
the attainment of performance goals. Each participant who is awarded restricted
stock shall be issued a stock certificate in respect of such restricted stock,
which shall be held in escrow by an escrow agent designated by the Committee, as
provided under the Synovus 2000 Plan.
During the six month period following the date of grant of restricted
stock, or such longer period as may be determined by the Committee, restricted
stock may not be sold, transferred, pledged or assigned. Except as limited by
the Synovus 2000 Plan, the Committee may provide for the lapse of such
restrictions or may accelerate or waive such restrictions based on performance
or such other factors as determined by the Committee.
Participants holding restricted stock shall have all of the rights of
stockholders of Synovus, including the right to dividends, unless the Committee
determines otherwise at the time of grant. Dividends or distributions credited
during the restriction period and paid in shares shall be subject to the same
restrictions as the shares of restricted stock with respect to which they were
paid. All rights with respect to restricted stock shall be available only during
a participant's lifetime, and each restricted stock award agreement shall
specify whether the participant has a right to receive unvested restricted
shares in the event of termination of employment.
Performance Awards. Shares of stock and/or a payment in cash may be awarded
under the Synovus 2000 Plan in the amounts and subject to the terms and
conditions as determined by the Committee. The Committee may set performance
objectives which, depending on the extent to which they are met, will determine
the value of performance awards that will be paid out to participants.
Participants shall receive payment of performance awards earned, in cash and/or
shares of common stock, if the specified performance objectives have been
obtained. The Committee may also establish a minimum level of performance below
which no performance award may be payable.
In the event a participant's employment is terminated by reason of death
(other than by suicide), disability or retirement during a performance period,
the participant shall receive a prorated payout of the performance award at the
time and in the amount determined by the Committee. In the event employment is
terminated for any other reason, the participant's rights to any performance
award shall be forfeited. performance awards may not be sold, transferred,
pledged, assigned or otherwise alienated or hypothecated, other than by will or
by the laws of descent and distribution. A participant's rights under the
Synovus 2000 Plan shall be exercisable only by the participant during his
lifetime.
Objective Performance Measures. Performance objectives applicable to awards
granted under the Synovus 2000 Plan, as determined by the Committee, shall be
chosen from among the following alternatives, unless and until the Committee
proposes a change in such measures for shareholder vote or applicable tax and/or
securities laws change to permit Committee discretion to alter such performance
measures without obtaining shareholder approval: (i) total shareholder return;
(ii) return on equity; (iii) earnings per share growth; and (iv) return on
assets.
Maximum Amount Payable to Any Participant. The maximum number of shares
which may be awarded in any calendar year to any one participant is two million
(2,000,000). The maximum cash amount which may be awarded in any calendar year
to any participant is $1 million.
Adjustments in Connection With Certain Events. the Synovus 2000 Plan
provides that the Committee shall make a substitution or adjustment in the
number of shares reserved for issuance under the Synovus 2000 Plan in the number
and option price of shares subject to outstanding options and in the number of
shares subject to SARs, restricted stock or performance awards, as it deems
appropriate and equitable in connection with a change in corporate structure
affecting Synovus' stock.
Duration of the Synovus 2000 Plan. the Synovus 2000 Plan shall remain in
effect from the date it is adopted by Synovus' Board until the date terminated
by the Committee or Synovus' Board of Directors; provided, however, that no
award shall be granted on or after the tenth anniversary of the Synovus 2000
Plan's effective date; provided further, however, that no future awards will be
granted to TSYS' "covered employees," as defined below, unless shareholder
approval of the Synovus 2000 Plan is obtained.
Administration. The Synovus 2000 Plan will be administered by a committee
of the Board of Directors of Synovus (the "Committee") which will be comprised
of no fewer than two members who must be "outside directors" within the meaning
of Section 162(m). At least two of the Committee's members must be directors of
both Synovus and TSYS. Initially, the administering committee shall be the
Compensation Committee of Synovus' Board.
The Committee shall have authority to: (i) determine individuals to whom
awards will be granted; (ii) determine the terms and conditions upon which
awards shall be granted, including any restriction based on performance or other
factors; (iii) determine whether and to what extent awards shall be deferred;
and (iv) make all other determinations, perform all other acts, exercise all
other powers, and establish any other procedures it deems necessary, appropriate
or advisable in administering the Synovus 2000 Plan and maintaining compliance
with applicable law. In accordance with its responsibility to evaluate the
remuneration of TSYS' senior management, TSYS' Compensation Committee reviews
and approves all awards made to TSYS' employees.
Amendment of the Synovus 2000 Plan. Synovus' Board of Directors may amend,
alter or discontinue the Synovus 2000 Plan at any time except that no such
amendment, suspension or discontinuation of the Synovus 2000 Plan may affect an
existing award under the Synovus 2000 Plan without the affected participant's
consent. In addition, no amendment, alteration or discontinuation shall be made,
without the approval of shareholders, which would: (i) increase the total number
of shares reserved under the Synovus 2000 Plan; (ii) decrease the option price
of any option to less than one hundred percent (100%) of the fair market value
of a share on the date of grant; (iii) change the participants or class of
participants eligible to participate in the Synovus 2000 Plan; or (iv)
materially increase the benefits accruing to participants. The Synovus 2000
Plan, which was originally named the Synovus Financial Corp. 1996 Long-Term
Incentive Plan, was adopted by Synovus' Board of Directors in 1996. On February
1, 2000, Synovus' Board of Directors amended the Synovus 1996 Plan to add
additional authorized shares and to rename it the Synovus 2000 Plan.
Change in Control. In the event of a change in control of Synovus, as
defined in the Synovus 2000 Plan, the vesting of any outstanding awards granted
under the Synovus 2000 Plan shall be accelerated and all such awards shall be
fully exercisable.
Federal Income Tax Consequences of the Synovus 2000 Plan. The income tax
consequences under current federal tax law to participants and to Synovus and
its subsidiaries of incentive compensation awarded under the Synovus 2000 Plan
is generally as described below. Local and state tax authorities, however, may
also tax incentive compensation awarded under the Synovus 2000 Plan.
Consequences to Participants. Generally, for federal income tax purposes, a
participant will realize ordinary income and will incur tax liability upon
receipt of the payment of an award under the Synovus 2000 Plan in an amount
equal to such payment, if in cash, or the fair market value of any unrestricted
shares of stock received. The tax consequences to participants of the individual
types of awards which may be granted under the Synovus 2000 Plan are described
below.
Qualified Incentive Stock Options. With respect to options which qualify as
incentive stock options, a participant will not recognize ordinary income
for federal income tax purposes at the time options are granted or
exercised. If the participant disposes of shares acquired by exercise of an
incentive stock option before the expiration of two years from the date the
options are granted, or within one year after the issuance of shares upon
exercise of the incentive stock option, the participant will recognize in
the year of disposition: (a) ordinary income, to the extent that the lesser
of either (1) the fair market value of the shares on the date of option
exercise or (2) the amount realized on disposition exceeds the option
price; and (b) capital gain (or loss), to the extent that the amount
realized on disposition differs from the fair market value of the shares on
the date of option exercise. If the shares are sold after expiration of
these holding periods, the participant will realize capital gain or loss
(assuming the shares are held as capital assets) equal to the difference
between the amount realized on disposition and the option price.
Nonqualified Stock Options. With respect to options which do not qualify as
incentive stock options, the participant will recognize no income upon
grant of the option and, upon exercise, will recognize ordinary income to
the extent of the difference between the amount paid by the participant for
the shares and the fair market value of the shares on the date of option
exercise. Upon a subsequent disposition of the shares received under the
option, the participant will recognize capital gain or loss, as the case
may be, to the extent of the difference between the fair market value of
the shares at the time of exercise and the amount realized on the
disposition (assuming the shares are held as capital assets).
Stock Appreciation Rights. Ordinary income will be recognized by a
participant upon the exercise of an SAR, in an amount equal to the cash
received or the fair market value of the shares received on the exercise
date.
Restricted Stock. Participants holding restricted stock will recognize
ordinary income in the year in which the restrictions lapse, in the amount
of the fair market value of the shares as of the date of lapse of the
restrictions, unless the participant elects to include the fair market
value of the shares as of the date of grant in ordinary income at that
time.
Performance Awards. Ordinary income will be recognized by a participant in
the year in which it is received in an amount equal to the amount of the
performance award on the date of receipt.
Consequences to Synovus and Its Subsidiaries. In general, Synovus and its
subsidiaries will receive an income tax deduction at the same time and in the
same amount as the amount which is taxable to the employee as compensation,
except as provided below. To the extent a participant realizes capital gains, as
described above, Synovus and its subsidiaries will not be entitled to any
deduction for federal income tax purposes.
Under Section 162(m), compensation paid by a public company in excess of $1
million for any taxable year to "covered employees" generally is not deductible
by the company or its affiliates for federal income tax purposes unless it is
related to the performance of the company, is paid pursuant to a plan approved
by shareholders of the company and meets certain other requirements.
Generally, "covered employees" is defined under Section 162(m) as any
individual who is the chief executive officer or is among the four other highest
paid executive officers named in the summary compensation table in the company's
proxy statement, other than the chief executive officer, as of the last day of
the taxable year. It is anticipated that future awards will qualify as
performance based for purposes of Section 162(m), except for options subject to
adjustment rights and restricted stock not subject to preestablished performance
goals. Synovus does not presently anticipate making any such awards. However,
Synovus and TSYS reserve the ability to make awards which do not qualify for
full deductibility under Section 162(m) if the Committee determines that the
benefits of so doing outweigh full deductibility.
DIRECTORS' PROPOSAL TO APPROVE THE TOTAL SYSTEM SERVICES, INC. 2000
LONG-TERM INCENTIVE PLAN
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
TSYS' compensation program includes long-term performance awards under the
Total System Services, Inc. 2000 Long-Term Incentive Plan (the "TSYS 2000
Plan"). The purpose of the TSYS Plan is to attract, retain, motivate and reward
employees who make a significant contribution to TSYS' long-term success and to
enable such employees to acquire and maintain an equity interest in TSYS.
Subject to approval by TSYS' shareholders, compensation paid to TSYS' employees
pursuant to the TSYS 2000 Plan is intended, to the extent reasonable, to qualify
for tax deductibility under Section 162(m) of the Internal Revenue Code of 1986.
Eligibility and Participation. Any employee of TSYS or its subsidiaries,
excluding members of the Compensation Committee and any director who is not also
an employee of TSYS or its subsidiaries, is eligible to be selected to
participate in the TSYS 2000 Plan. Approximately 110 employees currently
participate in the TSYS 2000 Plan. The Committee, as described below, has
discretion to select participants from among eligible employees from year to
year.
Shares Subject to the Plan. The aggregate number of shares of TSYS common
stock which may be granted to participants pursuant to awards granted under the
TSYS Plan may not exceed two million four hundred thousand (2,400,000).
Awards Under the TSYS 2000 Plan. Pursuant to the TSYS 2000 Plan, TSYS may
grant long-term perform ance awards to participants in the form of stock
options, stock appreciation rights ("SARs"), restricted stock or performance
awards.
Stock Options. The Committee may grant options under the TSYS 2000 Plan in
the form of qualified incentive stock options, nonqualified stock options or a
combination thereof. Options may be granted either alone or in tandem with other
awards granted under the TSYS 2000 Plan. Subject to the limits described herein,
the Committee shall have discretion in determining the number of shares subject
to options granted to each participant.
The option price of nonqualified stock options may be equal to, or more or
less than, one hundred percent (100%) of the fair market value of a share of
TSYS common stock on the date the option is granted. The option price of
qualified incentive stock options shall be at least equal to one hundred percent
(100%) of the fair market value of a share of TSYS common stock on the date the
option is granted. Options shall expire at such times as the Committee
determines at the time of grant; provided, however, that no option shall be
exercisable later than the tenth anniversary of its grant.
Options granted under the TSYS 2000 Plan shall be exercisable at such times
and subject to such restrictions and conditions as the Committee shall approve;
provided that no option may be exercisable prior to six months following its
grant. The option exercise price shall be payable in cash, by check, or by such
other instrument as deemed acceptable by the Committee. Payment of the exercise
price and any withholding tax due at exercise may also be made through any
program approved by the Committee (including a broker-dealer cashless exercise
program).
Options may only be transferred under the laws of descent and distribution
and shall be exercisable only by the participant during his lifetime unless
otherwise specified by the Committee at or after grant. The participant's rights
in the event of termination of employment shall be specified by the Committee at
or after grant.
Subject to the terms of the TSYS 2000 Plan, the Committee may grant option
price adjustment rights in conjunction with all or part of any option granted
under the TSYS 2000 Plan, either at or after the time of grant of the option.
Such adjustment rights are exercisable only at the same time and to the same
extent as the corresponding option, and shall terminate upon the termination or
exercise of such option. Upon exercise, the participant shall be entitled to
have applied as a credit against the exercise price of the related option an
amount equal to the total number of shares subject to the adjustment right (or a
portion thereof as designated by the participant), multiplied by a fixed
percentage of the fair market value of a share of TSYS common stock on a date
designated by the Committee.
Stock Appreciation Rights. SARs granted under the TSYS 2000 Plan may be
granted alone or in conjunction with all or part of any option granted under the
TSYS 2000 Plan. Subject to the terms of the TSYS 2000 Plan, the Committee shall
have discretion to determine the terms and conditions of any SAR granted under
the TSYS 2000 Plan. With respect to an SAR granted in conjunction with an
option, the grant price shall be equal to the option price of the related
option, and such SAR shall terminate upon the termination or exercise of the
related option. No SAR granted under the TSYS 2000 Plan may be exercisable prior
to six months following its grant, except in the case of death (other than by
suicide) or disability of the participant. The term of any SAR shall be
determined by the Committee, provided that such term may not exceed ten years.
SARs granted alone may be exercised upon the terms and conditions as are
imposed by the Committee. An SAR granted in conjunction with an option may be
exercised only with respect to the shares of common stock of TSYS for which the
related option is exercisable. SARs granted in connection with an incentive
stock option shall expire no later than the expiration of such incentive stock
option, the value of the payout for such SARs may be no more than one hundred
percent (100%) of the difference between the incentive stock option option price
and the fair market value of the shares subject to such incentive stock option
at exercise and may be exercised only when the fair market value of the shares
subject to the incentive stock option exceeds the incentive stock option option
price.
Upon exercise, a participant will receive the difference between the fair
market value of a share of common stock on the date of exercise and the grant
price multiplied by the number of shares with respect to which the SAR is
exercised. Payment due upon exercise may be in cash, in shares having a fair
market value of the SAR being exercised or in a combination of cash and shares,
as determined by the Committee. The Committee may impose such restrictions on
the exercise of SARs as may be required to satisfy the requirements of Section
16 of the Securities Exchange Act. SARs may only be transferred under the laws
of descent and distribution and shall be exercisable only by the participant
during his lifetime.
Restricted Stock. Restricted stock may be granted in such amounts and
subject to such terms and conditions as determined by the Committee. The
Committee shall impose such conditions and/or restrictions on any shares of
restricted stock as it deems advisable, including, but not limited to, a
graduated vesting schedule and/or conditioning the grant of restricted stock on
the attainment of performance goals. Each participant who is awarded restricted
stock shall be issued a stock certificate in respect of such restricted stock,
which shall be held in escrow by an escrow agent designated by the Committee, as
provided under the TSYS 2000 Plan.
During the six month period following the date of grant of restricted
stock, or such longer period as may be determined by the Committee, restricted
stock may not be sold, transferred, pledged or assigned. Except as limited by
the TSYS 2000 Plan, the Committee may provide for the lapse of such restrictions
or may accelerate or waive such restrictions based on performance or such other
factors as determined by the Committee.
Participants holding restricted stock shall have all of the rights of
stockholders of TSYS, including the right to dividends, unless the Committee
determines otherwise at the time of grant. Dividends or distributions credited
during the restriction period and paid in shares shall be subject to the same
restrictions as the shares of restricted stock with respect to which they were
paid. All rights with respect to restricted stock shall be available only during
a participant's lifetime, and each restricted stock award agreement shall
specify whether the participant has a right to receive unvested restricted
shares in the event of termination of employment.
Performance Awards. Shares of stock and/or a payment in cash may be awarded
under the TSYS 2000 Plan in the amounts and subject to the terms and conditions
as determined by the Committee. The Committee may set performance objectives
which, depending on the extent to which they are met, will determine the value
of performance awards that will be paid out to participants. Participants shall
receive payment of performance awards earned, in cash and/or shares of common
stock, if the specified performance objectives have been obtained. The Committee
may also establish a minimum level of performance below which no performance
award may be payable.
In the event a participant's employment is terminated by reason of death
(other than by suicide), disability or retirement during a performance period,
the participant shall receive a prorated payout of the performance award at the
time and in the amount determined by the Committee. In the event employment is
terminated for any other reason, the participant's rights to any performance
award shall be forfeited. performance awards may not be sold, transferred,
pledged, assigned or otherwise alienated or hypothecated, other than by will or
by the laws of descent and distribution. A participant's rights under the TSYS
2000 Plan shall be exercisable only by the participant during his lifetime.
Objective Performance Measures. Performance objectives applicable to awards
granted under the TSYS 2000 Plan, as determined by the Committee, shall be
chosen from among the following alternatives, unless and until the Committee
proposes a change in such measures for shareholder vote or applicable tax and/or
securities laws change to permit Committee discretion to alter such performance
measures without obtaining shareholder approval: (i) total shareholder return;
(ii) return on equity; (iii) earnings per share growth; and (iv) return on
assets.
Maximum Amount Payable to Any Participant. The maximum number of shares
which may be awarded in any calendar year to any one participant is five hundred
thousand (500,000). The maximum cash amount which may be awarded in any calendar
year to any participant is $1 million.
Adjustments in Connection With Certain Events. the TSYS 2000 Plan provides
that the Committee shall make a substitution or adjustment in the number of
shares reserved for issuance under the TSYS 2000 Plan in the number and option
price of shares subject to outstanding options and in the number of shares
subject to SARs, restricted stock, or performance awards, as it deems
appropriate and equitable in connection with a change in corporate structure
affecting TSYS' stock.
Duration of the TSYS 2000 Plan. The TSYS 2000 Plan shall remain in effect
from the date it is adopted by TSYS' Board until the date terminated by the
Committee or TSYS' Board of Directors; provided, however, that no award shall be
granted on or after the tenth anniversary of the TSYS 2000 Plan's effective
date; provided further, however, that no future awards will be granted to TSYS'
"covered employees," as defined below, unless shareholder approval of the TSYS
2000 Plan is obtained.
Administration. The TSYS 2000 Plan will be administered by a committee of
the Board of Directors of TSYS (the "Committee") which will be comprised of no
fewer than two members who must be "outside directors" within the meaning of
Section 162(m). Initially, the administering committee shall be the Compensation
Committee of TSYS' Board.
The Committee shall have authority to: (i) determine individuals to whom
awards will be granted; (ii) determine the terms and conditions upon which
awards shall be granted, including any restriction based on performance or other
factors; (iii) determine whether and to what extent awards shall be deferred;
and (iv) make all other determinations, perform all other acts, exercise all
other powers, and establish any other procedures it deems necessary, appropriate
or advisable in administering the TSYS 2000 Plan and maintaining compliance with
applicable law.
Amendment of the TSYS 2000 Plan. TSYS' Board of Directors may amend, alter
or discontinue the TSYS 2000 Plan at any time except that no such amendment,
suspension or discontinuation of the TSYS 2000 Plan may affect an existing award
under the TSYS 2000 Plan without the affected participant's consent. In
addition, no amendment, alteration or discontinuation shall be made, without the
approval of shareholders, which would: (i) increase the total number of shares
reserved under the TSYS 2000 Plan; (ii) decrease the option price of any option
to less than one hundred percent (100%) of the fair market value of a share on
the date of grant; (iii) change the participants or class of participants
eligible to participate in the TSYS 2000 Plan; or (iv) materially increase the
benefits accruing to participants.
Change in Control. In the event of a change in control of TSYS, as defined
in the TSYS 2000 Plan, the vesting of any outstanding awards granted under the
TSYS 2000 Plan shall be accelerated and all such awards shall be fully
exercisable.
Federal Income Tax Consequences of the TSYS 2000 Plan. The income tax
consequences under current federal tax law to participants and to TSYS and its
subsidiaries of incentive compensation awarded under the TSYS 2000 Plan is
generally as described below. Local and state tax authorities, however, may also
tax incentive compensation awarded under the TSYS 2000 Plan.
Consequences to Participants. Generally, for federal income tax purposes, a
participant will realize ordinary income and will incur tax liability upon
receipt of the payment of an award under the TSYS 2000 Plan in an amount equal
to such payment, if in cash, or the fair market value of any unrestricted shares
of stock received. The tax consequences to participants of the individual types
of awards which may be granted under the TSYS 2000 Plan are described below.
Qualified Incentive Stock Options. With respect to options which qualify as
incentive stock options, a participant will not recognize ordinary income
for federal income tax purposes at the time options are granted or
exercised. If the participant disposes of shares acquired by exercise of an
incentive stock option before the expiration of two years from the date the
options are granted, or within one year after the issuance of shares upon
exercise of the incentive stock option, the participant will recognize in
the year of disposition: (a) ordinary income, to the extent that the lesser
of either (1) the fair market value of the shares on the date of option
exercise or (2) the amount realized on disposition exceeds the option
price; and (b) capital gain (or loss), to the extent that the amount
realized on disposition differs from the fair market value of the shares on
the date of option exercise. If the shares are sold after expiration of
these holding periods, the participant will realize capital gain or loss
(assuming the shares are held as capital assets) equal to the difference
between the amount realized on disposition and the option price.
Nonqualified Stock Options. With respect to options which do not qualify as
incentive stock options, the participant will recognize no income upon
grant of the option and, upon exercise, will recognize ordinary income to
the extent of the difference between the amount paid by the participant for
the shares and the fair market value of the shares on the date of option
exercise. Upon a subsequent disposition of the shares received under the
option, the participant will recognize capital gain or loss, as the case
may be, to the extent of the difference between the fair market value of
the shares at the time of exercise and the amount realized on the
disposition (assuming the shares are held as capital assets).
Stock Appreciation Rights. Ordinary income will be recognized by a
participant upon the exercise of an SAR, in an amount equal to the cash
received or the fair market value of the shares received on the exercise
date.
Restricted Stock. Participants holding restricted stock will recognize
ordinary income in the year in which the restrictions lapse, in the amount
of the fair market value of the shares as of the date of lapse of the
restrictions, unless the participant elects to include the fair market
value of the shares as of the date of grant in ordinary income at that
time.
Performance Awards. Ordinary income will be recognized by a participant in
the year in which it is received in an amount equal to the amount of the
performance award on the date of receipt.
Consequences to TSYS and Its Subsidiaries. In general, TSYS and its
subsidiaries will receive an income tax deduction at the same time and in the
same amount as the amount which is taxable to the employee as compensation,
except as provided below. To the extent a participant realizes capital gains, as
described above, TSYS and its subsidiaries will not be entitled to any deduction
for federal income tax purposes.
Under Section 162(m), compensation paid by a public company in excess of $1
million for any taxable year to "covered employees" generally is not deductible
by the company or its affiliates for federal income tax purposes unless it is
related to the performance of the company, is paid pursuant to a plan approved
by shareholders of the company and meets certain other requirements.
Generally, "covered employees" is defined under Section 162(m) as any
individual who is the chief executive officer or is among the four other highest
paid executive officers named in the summary compensation table in the company's
proxy statement, other than the chief executive officer, as of the last day of
the taxable year. It is anticipated that awards will qualify as performance
based for purposes of Section 162(m), except for options subject to adjustment
rights and restricted stock not subject to preestablished performance goals.
TSYS does not presently anticipate making any such awards. However, TSYS
reserves the ability to make awards which do not qualify for full deductibility
under Section 162(m) if the Committee determines that the benefits of so doing
outweigh full deductibility.
NEW PLAN BENEFITS
The second column in the following table shows all grants of options of
Synovus common stock to TSYS employees and officers under the Synovus 2000 Plan
for fiscal year 1999. Although it is not anticipated that there will be any
future grants of options under the TSYS 2000 Plan, the third column in the
following table shows the last grant of options of TSYS common stock, which was
made on November 3, 1997.
<TABLE>
<CAPTION>
Number of Shares Subject
to Options Granted
Name and Synovus 2000 TSYS 2000
Principal Position Plan<F1> Plan<F2>
--------------------------------------------------------------------
<S> <C> <C>
Richard W. Ussery
Chairman of the Board
and Chief Executive
Officer 90,170 420,000
Philip W. Tomlinson
President 64,937 420,000
William A. Pruett
Executive Vice
President 24,189 210,000
M. Troy Woods
Executive Vice
President 24,189 210,000
James B. Lipham
Executive Vice President
and Chief Financial
Officer 20,198 210,000
Executive Group 453,909 1,470,000
Nonexecutive Director
and Nominee Group<F3> -0- -0-
Nonexecutive Officer
Employee Group 712,650 -0-
<FN>
<F1>Every eligible employee, including each person named above, received 150
options with an exercise price equal to the fair market value of Synovus common
stock on July 20, 1999, which was $19.19 per share. These options, entitled
"Shared Interest," become exercisable upon the earlier of (a) July 20, 2002 or
(b) the date the fair market value of Synovus common stock reaches $38.75
(double the exercise price, as adjusted) and expire on July 19, 2007. The
remaining options listed in this column have an exercise price equal to the fair
market value of Synovus common stock on February 9, 1999, which was $22.88 per
share. These options become exercisable on February 9, 2001 and expire on
February 8, 2009. The actual value an optionee may realize will depend on the
excess of the fair market value of the stock less the exercise price on the date
the option is exercised. The per share fair market value of Synovus stock as of
February 16, 2000 was $17.50.
<F2>It is not anticipated that there will be any additional grants
of options under the TSYS 2000 Plan. The shares in this column reflect the last
grant of options of TSYS common stock, which was made on November 3, 1997.
<F3>There are no non-executive directors or nominee directors (or their
associates) who received such options nor any other person who is to receive 5%
of such options.
</FN>
</TABLE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes the cash and noncash compensation for each
of the last three fiscal years for the chief executive officer of TSYS and for
the other four most highly compensated executive officers of TSYS.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation Awards
-------------------------------------------------------- ------------------------------
Other Restricted Securities All
Annual Stock Underlying Other
Name and Compen- Award(s) Options/ Compen-
Principal Position<F1> Year Salary<F2> Bonus<F3> sation<F4> <F5> SARs sation<F6>
- ----------------------- ------ -------------- ----------- ------------ -------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Richard W. Ussery 1999 $464,000 $292,500 -0- -0- 90,170 $138,894
Chairman of the Board 1998 444,200 276,250 -0- -0- 106,422 116,712
and Chief Executive 1997 414,225 257,806 -0- -0- 540,491 141,895
Officer
Philip W. Tomlinson 1999 404,000 234,000 -0- -0- 64,937 116,561
President 1998 383,400 219,000 -0- -0- 75,750 97,145
1997 354,550 202,650 -0- -0- 505,715 115,674
William A. Pruett 1999 240,500 145,300 -0- -0- 24,189 72,110
Executive Vice 1998 224,750 134,850 -0- -0- 27,950 60,931
President 1997 210,150 131,090 -0- -0- 241,518 73,417
M. Troy Woods 1999 240,500 145,300 -0- -0- 24,189 67,381
Executive Vice 1998 220,000 110,000 -0- -0- 26,718 55,190
President 1997 194,375 102,187 -0- -0- 240,123 60,975
James B. Lipham 1999 202,500 122,500 -0- -0- 20,098 56,504
Executive Vice President 1998 182,500 91,250 -0- -0- 22,182 46,034
and Chief Financial 1997 162,500 86,250 -0- -0- 234,980 51,716
- --------------------
<FN>
<F1> Mr. Blanchard received no cash compensation from TSYS during 1999, other
than director fees.
<F2> Amount consists of base salary and director fees for Messrs. Ussery
and Tomlinson.
<F3> Bonus amount for 1999 includes a special recognition award of $1,000 for
Messrs. Pruett, Woods and Lipham.
<F4> Perquisites and other personal benefits are excluded because the aggregate
amount does not exceed the lesser of $50,000 or 10% of annual salary and
bonus for the named executives.
<F5> Amount consists of market value of award on date of grant. As of December
31, 1999, Messrs. Ussery, Tomlinson, Pruett, Woods and Lipham held 19,006,
13,542, 5,104, 3,154 and 2,661 restricted shares, respectively, with a
value of $377,744, $267,359, $101,447, $62,686 and $52,887, respectively.
<F6> The 1999 amount consists of contributions or other allocations to defined
contribution plans of $30,448 for each executive; allocations pursuant to
defined contribution excess benefit agreements of $107,757, $85,445,
$41,171, $36,442 and $25,643 for each of Messrs. Ussery, Tomlinson, Pruett,
Woods and Lipham, respectively; premiums paid for group term life insurance
coverage of $542, $510, $491, $491 and $413 for each of Messrs. Ussery,
Tomlinson, Pruett, Woods and Lipham, respectively; and the economic benefit
of life insurance coverage related to split-dollar life insurance policies
of $147 and $158 for Messrs. Ussery and Tomlinson, respectively.
</FN>
</TABLE>
STOCK OPTION EXERCISES AND GRANTS
The following tables provide certain information regarding stock options
granted and exercised in the last fiscal year and the number and value of
unexercised options at the end of the fiscal year.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
Individual Grants
---------------------------------------------------------
% of Total Potential
Options/ Realized Value at
SARs Exercise Assumed Annual Rates of
Options/ Granted to or Stock Price Appreciation
SARs Employees Base For Option Term<F1>
Granted in Fiscal Price Expiration --------------------------
Name (#) Year ($/Share) Date 5%($) 10%($)
- ------------------- ----------- ------------- -------- -------------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
Richard W. Ussery 90,020<F2> 9.52% $22.88 02/08/09 $983,469 $2,354,473
150<F3> .016 19.19 07/19/07 1,374 3,291
Philip W. Tomlinson 64,787<F2> 6.85 22.88 02/08/09 707,798 1,694,504
150<F3> .016 19.19 07/19/07 1,374 3,291
William A. Pruett 24,039<F2> 2.54 22.88 02/08/09 262,626 628,740
150<F3> .016 19.19 07/19/07 1,374 3,291
M. Troy Woods 24,039<F2> 2.54 22.88 02/08/09 262,626 628,740
150<F3> .016 19.19 07/19/07 1,374 3,291
James B. Lipham 19,948<F2> 2.11 22.88 02/08/09 217,932 521,740
150<F3> .016 19.19 07/19/07 1,374 3,291
- ---------------
<FN>
<F1> The dollar gains under these columns result from calculations using the
identified growth rates and are not intended to forecast future price
appreciation of Synovus common stock.
<F2> Options to purchase Synovus common stock granted on February 9, 1999 at
fair market value. Options become exercisable on February 9, 2001 and are
transferable to family members.
<F3> Options to purchase Synovus common stock granted on July 20, 1999 at fair
market value. Options become exercisable upon the earlier of: (a) July 20,
2002; or (b) the date the per share fair market value of Synovus common
stock equals or exceeds $38.38.
</FN>
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
Number of Securities Value of
Underlying Unexercised Unexercised In-the-Money
Shares Value Options/SARs at FY-End (#) Options/SARs at FY-End ($)<F1>
Acquired on Realized -------------------------- -----------------------------
Name Exercise (#) ($)<F1> Exercisable/Unexercisable Exercisable/Unexercisable
- ------------------- ------------ ----------- -------------------------- -----------------------------
<S> <C> <C> <C> <C>
Richard W. Ussery 13,000 $213,061 340,551 / 196,592<F2> $1,805,548/ $ 103
-0- -0- 84,000 / 336,000<F3> 263,970/ 1,055,880
Philip W. Tomlinson -0- -0- 217,638 / 140,687<F2> 1,660,597/ 103
-0- -0- 84,000 / 336,000<F3> 263,970/ 1,055,880
William A. Pruett 6,500 93,124 88,265 / 52,139<F2> 727,403/ 103
-0- -0- 42,000 / 168,000<F3> 131,985/ 527,940
M. Troy Woods 12,150 214,241 53,778 / 50,907<F2> 287,925/ 103
-0- -0- 51,000 / 168,000<F3> 260,798/ 527,940
James B. Lipham -0- -0- 57,083 / 42,280<F2> 401,788/ 103
-0- -0- 49,200 / 168,000<F3> 235,035/ 527,940
- ----------
<FN>
<F1> Market value of underlying securities at exercise or year-end, minus the
exercise or base price.
<F2> Options pertain to shares of Synovus common stock.
<F3> Options pertain to shares of TSYS common stock.
</FN>
</TABLE>
CHANGE IN CONTROL ARRANGEMENTS
Long-Term Incentive Plans. Under the terms of the TSYS 2000 Long-Term
Incentive Plan and Synovus' 1992, 1994 and 2000 Long-Term Incentive Plans,
all awards become automatically vested in the event of a change of control.
Awards under the Plans may include stock options, restricted stock, stock
appreciation and performance awards. Messrs. Ussery, Tomlinson, Pruett, Lipham
and Woods each have restricted stock and stock options under the Synovus/TSYS
Long-Term Incentive Plans.
Change of Control Agreements. TSYS has entered into Change of Control
Agreements with Messrs. Ussery, Tomlinson, Pruett, Lipham and Woods, and certain
other officers. In the event of a Change of Control, as defined below, an
executive would receive the following:
* For Messrs. Ussery and Tomlinson, three times their current base
salary and bonus (bonus is defined as the average bonus over the past
three years measured as a percentage multiplied by the executive's
current base salary). Messrs. Pruett, Lipham and Woods would receive
two times their base salary and bonus, as defined above.
* Three years of medical, life, disability and other welfare benefits
(two years for Messrs. Pruett, Lipham and Woods).
* A pro rata bonus through the date of termination for the separation
year.
* A cash amount in lieu of a long-term incentive award for the year of
separation equal to 1.5 times the normal market grant, if the
executive received a long-term incentive award in the year of
separation, or 2.5 times the market grant if not.
In order to receive these benefits, an executive must be actually or
constructively terminated within one year following a Change of Control or the
executive may voluntarily or involuntarily terminate employment during the
thirteenth month following a Change of Control.
With respect to Synovus, a Change of Control under these agreements is
defined as (1) the acquisition of 20% or more of the "beneficial ownership" of
Synovus' outstanding voting stock, with certain exceptions for Turner family
members, (2) the persons serving as directors of Synovus as of January 1, 1996,
and their replacements or additions, ceasing to comprise at least two-thirds of
the Board members, (3) a merger, consolidation, reorganization or sale of
Synovus' assets unless the prior owners of Synovus own more than two-thirds of
the new company, no person owns more than 20% of the new company, and two-thirds
of the company's new Board members are prior Board members of Synovus, or (4) a
triggering event occurs as defined in the Synovus Rights Agreement. With respect
to TSYS, a Change of Control is generally defined the same as a Change of
Control of Synovus, except that (1) a spin-off of TSYS stock to Synovus
shareholders, and (2) any transaction in which Synovus continues to own more
than 50% of the outstanding stock of TSYS are specifically excluded from the
Change of Control definition. In the event an executive is impacted by the
Internal Revenue Service excise tax that applies to certain Change of Control
arrangements, the executive would receive additional payments so that he or she
would be in the same position as if the excise tax did not apply. The Change of
Control Agreements do not provide for any retirement benefits or perquisites.
STOCK PERFORMANCE GRAPH
The following graph compares the yearly percentage change in cumulative
shareholder return on TSYS common stock with the cumulative total return of the
Standard & Poor's 500 Index and the Standard & Poor's Computer Software &
Services Index for the last five fiscal years (assuming a $100 investment on
December 31, 1994 and reinvestment of all dividends).
[Omitted Stock Performance Graph is represented by the following table.]
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG
TSYS, S&P 500 AND S&P COMPUTER SOFTWARE & SERVICES INDEX
1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- -----
TSYS $100 $179 $316 $291 $416 $ 289
S&P 500 $100 $138 $169 $226 $290 $ 351
S&P CS&S $100 $141 $218 $304 $551 $1,020
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee ("Committee") of TSYS is responsible for
evaluating the compensation of senior management of TSYS and its subsidiaries
and TSYS Board members, as well as the compensation and other benefit plans in
which officers, employees and directors of TSYS and its subsidiaries
participate. The Committee has designed its compensation program to attract and
retain highly motivated and well-trained executives in order to create superior
shareholder value for TSYS shareholders.
Elements of Executive Compensation. The four elements of executive
compensation at TSYS are:
* Base Salary
* Annual Bonus
* Long-Term Incentives
* Other Benefits
The Committee believes that a substantial portion (though not a majority)
of an executive's compensation should be at risk based upon performance, both in
the short-term (through the annual bonus and the Synovus/TSYS Profit Sharing
Plan and the Synovus/TSYS 401(k) Savings Plan) and long-term (through long-term
incentives such as stock options and restricted stock awards). The remainder of
each executive's compensation is primarily based upon the competitive practices
of companies similar in size to TSYS ("similar companies"), with certain
adjustments as described below. The companies used for comparison under this
approach are not the same companies included in the peer group index appearing
in the Stock Performance Graph above. Each element of executive compensation is
discussed in detail below.
Base Salary. Base salary is an executive's annual rate of pay without
regard to any other elements of compensation. The Committee believes the base
salary of TSYS executives should reflect the outstanding stock performance of
TSYS over the past 10 years, which resulted in significant value for TSYS
shareholders. The Committee had difficulty, however, in obtaining appropriate
market data for determining the compensation of TSYS executives. Positions for
which market data could be obtained were targeted at the median level after the
Committee added a premium to size-based market data to reflect pay at companies
with similar strong stock performance. Positions for which market data could not
be obtained were determined based upon internal equity considerations. Based
solely upon these comparisons, the Committee increased Mr. Ussery's base salary
in 1999. The Committee also increased the base salaries of TSYS' other executive
officers in 1999 based solely upon these comparisons and internal equity
considerations, as described above.
Annual Bonus. The Committee may award annual bonuses to TSYS executives
under two different plans, the Synovus Executive Bonus Plan (which was approved
by TSYS shareholders) and the Synovus Incentive Bonus Plan. The Committee
selects the participants in each Plan from year to year. For 1999, Messrs.
Ussery, Tomlinson, Pruett, Woods and Lipham were selected to participate in the
Incentive Bonus Plan. Under the terms of the Plans, bonus amounts are paid as a
percentage of base pay based on the achievement of performance goals that are
established each year by the Committee. The performance goals may be chosen by
the Committee from among the following measurements:
* Number of cardholder, merchant and/or other customer accounts
processed and/or converted by TSYS;
* Successful negotiation or renewal of contracts with new and/or
existing customers by TSYS;
* Productivity and expense control;
* Stock price;
* Return on capital compared to cost of capital;
* Net income;
* Operating income;
* Earnings per share and/or earnings per share growth;
* Return on equity;
* Return on assets;
* Non-performing assets and/or loans as a percentage of total assets
and/or loans;
* Non-interest expense as a percentage of total expense;
* Loan charge-offs as a percentage of loans; and
* Asset growth.
The Committee established a payout matrix based on attainment of net income
goals during 1999 for Mr. Ussery and TSYS' other executive officers. The maximum
percentage payouts under the Plans for 1999 were 65% for Mr. Ussery and 60% for
Messrs. Tomlinson, Pruett, Woods and Lipham. TSYS' financial performance and
each executive's individual performance can reduce the bonus awards determined
by the attainment of the goals, although this was not the case for any of TSYS'
executive officers. Because the maximum net income target for 1999 under the
Plans was exceeded and the overall financial results of TSYS were favorable, Mr.
Ussery and TSYS' other executive officers were awarded the maximum bonus amount
for which each executive was eligible under the Plans' payout matrix.
Long-Term Incentives. The Committee has awarded both stock options and
restricted stock awards to executives. Because of the relatively low number of
publicly traded shares of TSYS, the Committee has awarded Synovus stock options
and restricted stock awards to TSYS executives, linking their interests to those
of Synovus and TSYS shareholders. Restricted stock awards are designed to focus
executives on the long-term performance of Synovus and TSYS. Stock options
provide executives with the opportunity to buy and maintain an equity interest
in Synovus and TSYS and to share in their capital appreciation. The Committee
has established a payout matrix for long-term grants that uses total shareholder
return measured by Synovus' performance (stock price increases plus dividends)
and how Synovus' total shareholder return compares to the return of a peer group
of companies. For the long- term incentive awards made in 1999, total
shareholder return and peer comparisons were measured during the 1996 to 1998
performance period. Under the payout matrix, the Committee awarded Messrs.
Ussery, Tomlinson, Pruett, Woods and Lipham stock options of 90,170, 64,937,
24,189, 24,189 and 20,198, respectively.
Benefits. Executives receive other benefits that serve a different purpose
than the elements of compensation discussed above. In general, these benefits
either provide retirement income or protection against catastrophic events such
as illness, disability and death. Executives generally receive the same benefits
offered to the employee population, with the only exceptions designed to promote
tax efficiency or to replace other benefits lost due to regulatory limits. The
Synovus/TSYS Profit Sharing Plan and the Synovus/TSYS 401(k) Savings Plan,
including an excess benefit plan which replaces benefits lost due to regulatory
limits (collectively the "Plan"), is the largest component of TSYS' benefits
package for executives. The Plan is directly related to the performance of TSYS
because the contributions to the Plan, up to a maximum of 14% of an executive's
compensation, depends upon TSYS' profitability. For 1999, Mr. Ussery and TSYS'
other executive officers received a Plan contribution of 12.05% of their
compensation, based upon the Plan's profitability formula. The remaining
benefits provided to executives are primarily based upon the competitive
practices of similar companies.
The Internal Revenue Code limits the deductibility for federal income tax
purposes of annual compensation paid by a publicly held corporation to its chief
executive officer and four other highest paid executives for amounts in excess
of $1 million, unless certain conditions are met. Because the Committee seeks to
maximize shareholder value, the Committee has taken steps to ensure that any
compensation paid to its executives in excess of $1 million is deductible. For
1999, Mr. Ussery would have been affected by this provision, but for the steps
taken by the Committee. The Committee reserves the ability to make awards which
do not qualify for full deductibility under the Internal Revenue Code, however,
if the Committee determines that the benefits of doing so outweigh full
deductibility.
The Committee believes that its executive compensation program serves the
best interests of the shareholders of TSYS. As described above, a substantial
portion of the compensation of TSYS' executives is directly related to TSYS'
performance. The Committee believes that the performance of TSYS to date
validates its compensation philosophy.
Mason H. Lampton
John P. Illges, III
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mason H. Lampton and John P. Illges, III served as members of TSYS'
Compensation Committee during 1999. No member of the Committee is a current or
former officer or employee of TSYS or its subsidiaries.
TRANSACTIONS WITH MANAGEMENT
During 1999, TSYS leased various properties in Columbus, Georgia from W.C.
Bradley Co. for office space and storage. The rent paid for the space in 1999,
which is approximately 71,915 square feet, was approximately $227,418. The lease
agreements were made on substantially the same terms as those prevailing at the
time for comparable leases for similar facilities with an unrelated third party
in Columbus, Georgia.
TSYS has entered into an agreement with CB&T with respect to the use of
aircraft owned or leased by CB&T and W.C.B. Air L.L.C. CB&T and W.C.B. Air are
parties to a Joint Ownership Agreement pursuant to which they jointly own or
lease aircraft. W.C. Bradley Co. owns all of the limited liability company
interests of W.C.B. Air. CB&T and W.C.B. Air have each agreed to pay fixed fees
for each hour they fly the aircraft owned and/or leased pursuant to the Joint
Ownership Agreeement. TSYS paid CB&T $881,970 for its use of the aircraft
during 1999, which was used by CB&T to satisfy its commitments under the Joint
Ownership Agreement. The charges payable by TSYS to CB&T in connection with its
use of this aircraft approximate charges available to unrelated third
parties in the State of Georgia for use of comparable aircraft for commercial
purposes. William B. Turner, a director of TSYS and Chairman of the Executive
Committee of CB&T and Synovus, is an advisory director and shareholder of W.C.
Bradley Co. James H. Blanchard, Chairman of the Executive Committee of TSYS,
Chairman of the Board of Synovus and a director of CB&T, is a director of W.C.
Bradley Co. W. Walter Miller, Jr., a director of W.C. Bradley Co., is Senior
Vice President and a director of TSYS. Elizabeth C. Ogie, the niece of William
B. Turner and the sister-in-law of W. Walter Miller, Jr., is a director of W.C
Bradley Co. and a director of CB&T and Synovus. Stephen T. Butler, the nephew of
William B. Turner and an officer and director of W.C. Bradley Co., is a director
of CB&T. W.B. Turner, Jr. and John T. Turner, the sons of William B. Turner, are
officers and directors of W.C. Bradley Co. and are also directors of CB&T.
TSYS is the lessee under an operating lease agreement pertaining to its new
corporate Campus. Under the operating lease agreement, the lessor purchased the
land, paid for construction and development costs and leased the property to
TSYS. During 1999, the lessor paid Cousins Properties Incorporated $662,923 for
managing the development of the Campus. Thomas G. Cousins, a director of TSYS,
is an officer, director and shareholder of Cousins Properties Incorporated.
King & Spalding, a law firm located in Atlanta, Georgia, performed legal
services on behalf of TSYS during 1999. Samuel A. Nunn, a director of TSYS,
is a Senior Partner of King & Spalding. Bradley & Hatcher, a law firm located
in Columbus, Georgia, performed legal services on behalf of TSYS during
1999. Richard Y. Bradley, a director of TSYS, CB&T and Synovus, is a partner of
Bradley & Hatcher.
For a description of certain transactions between TSYS and its affiliated
companies, upon whose Boards of Directors certain of TSYS' directors also serve,
see "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" on page 26.
RELATIONSHIPS BETWEEN TSYS, SYNOVUS, CB&T AND CERTAIN OF SYNOVUS'
SUBSIDIARIES
BENEFICIAL OWNERSHIP OF TSYS COMMON STOCK BY CB&T
The following table sets forth the number of shares of TSYS common stock
beneficially owned by CB&T, the only known beneficial owner of more than 5% of
the issued and outstanding shares of TSYS common stock, as of December 31, 1999.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Percentage of
Shares of Outstanding Shares of
TSYS Common Stock TSYS Common Stock
Name and Address of Beneficially Owned Beneficially Owned
Beneficial Owner as of 12/31/99 as of 12/31/99
- ------------------------ ------------------------ -----------------------------
<S> <C> <C>
Columbus Bank
and Trust Company 157,455,980(1)(2) 80.8%
1148 Broadway
Columbus, Georgia 31901
- ------------
<FN>
<F1> CB&T individually owns these shares.
<F2> As of December 31, 1999, Synovus Trust Company, a wholly owned trust
company subsidiary of CB&T, held in various fiduciary capacities a total of
1,639,923 shares (.84%) of TSYS common stock. Of this total, Synovus Trust
Company held 1,306,403 shares as to which it possessed sole voting power,
1,263,558 shares as to which it possessed sole investment power, 285,569
shares as to which it possessed shared voting power and 292,719 shares as
to which it possessed shared investment power. In addition, as of December
31, 1999, Synovus Trust Company held in various agency capacities an
additional 2,087,506 shares of TSYS common stock as to which it possessed
no voting or investment power. Synovus and its subsidiaries disclaim
beneficial ownership of all shares of TSYS common stock which are held by
Synovus Trust Company in various fiduciary and agency capacities.
</FN>
</TABLE>
CB&T, by virtue of its individual ownership of 157,455,980 shares, or
80.8%, of the outstanding shares of TSYS common stock on December 31, 1999 is
able to, and intends to, elect a majority of TSYS' Board of Directors. CB&T
presently controls TSYS.
INTERLOCKING DIRECTORATES OF TSYS, SYNOVUS AND CB&T
Seven of the sixteen members of and nominees to serve on TSYS' Board of
Directors also serve as members of the Boards of Directors of Synovus and CB&T.
They are James H. Blanchard, Richard Y. Bradley, Gardiner W. Garrard, Jr., John
P. Illges, III, H. Lynn Page, William B. Turner and James D. Yancey. Mason H.
Lampton serves as an Advisory Director of CB&T and as a director of Synovus.
SYNOVUS COMMON STOCK OWNERSHIP OF DIRECTORS AND MANAGEMENT
The following table sets forth the number of shares of Synovus common
stock beneficially owned by TSYS' directors, by each executive officer named in
the Summary Compensation Table on page 17 and by all directors and executive
officers as a group as of December 31, 1999.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares of Shares of Shares of
Synovus Synovus Synovus Percentage
Common Stock Common Stock Common Stock of
Beneficially Beneficially Beneficially Total Outstanding
Owned with Owned with Owned with Shares of Shares of
Sole Voting Shared Sole Voting Synovus Synovus
and Voting and but no Common Stock Common Stock
Investment Investment Investment Beneficially Beneficially
Power as of Power as of Power as of Owned as of Owned as of
Name 12/31/99 12/31/99 12/31/99 12/31/99<F1> 12/31/99
- -------------------- -------------- ------------ --------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
James H. Blanchard 1,588,506 --- 233,678 2,909,288 1.0
Richard Y. Bradley 20,794 129,895 --- 150,689 *
G. Wayne Clough --- --- --- --- ---
Thomas G. Cousins --- --- --- --- ---
Gardiner W. Garrard, Jr. 204,147 1,274,125 --- 1,478,272 *
Sidney E. Harris --- --- --- --- ---
John P. Illges, III 289,875 510,376<F2> --- 800,251 *
Mason H. Lampton 79,367 290,951<F3> --- 370,318 *
James B. Lipham 4,746 --- 2,660 86,521 *
W. Walter Miller, Jr. 30,345 63,379 --- 126,215 *
Samuel A. Nunn --- --- --- --- ---
H. Lynn Page 815,886 12,047 --- 827,933 *
William A. Pruett 5,979 --- 5,103 127,147 *
Philip W. Tomlinson 41,845 --- 13,451 348,534 *
William B. Turner 72,634 30,356,517<F4> --- 30,429,151 10.8
Richard W. Ussery 92,890 4,293 19,006 563,012 *
M. Troy Woods 3,681 --- --- 84,027 *
James D. Yancey 1,015,873 61,677 22,561 1,733,330 *
Rebecca K. Yarbrough 45,522 20,795 --- 66,317 *
Directors and Executive
Officers as a group
(21 persons) 4,405,016 32,724,055 367,633 40,601,281 14.2
* Less than one percent of the outstanding shares of Synovus common stock.
- -------------------
<FN>
<F1> The totals shown for the following directors and executive officers of TSYS
include the number of shares of Synovus common stock that each individual
has the right to acquire within 60 days through the exercise of stock
options:
Person Number of Shares
------ ----------------
James H. Blanchard 1,087,104
James B. Lipham 79,115
W. Walter Miller, Jr. 32,491
William A. Pruett 116,065
Philip W. Tomlinson 239,238
Richard W. Ussery 446,823
M. Troy Woods 80,346
James D. Yancey 633,219
In addition, the other executive officers of TSYS have rights to acquire an
aggregate of 336,176 shares of Synovus common stock within 60 days through
the exercise of stock options.
<F2> Includes 62,667 shares of Synovus common stock held by a charitable
foundation of which Mr. Illges is a trustee.
<F3> Includes 264,687 shares of Synovus common stock held in a trust for which
Mr. Lampton is not the trustee. Mr. Lampton disclaims beneficial ownership
of such shares.
<F4> Includes 2,620,493 shares of Synovus common stock held by a charitable
foundation of which Mr. Turner is a trustee, and 27,716,207 shares of
Synovus common stock beneficially owned by TB&C Bancshares, Inc., of
which Mr. Turner is an officer, director and shareholder.
</FN>
</TABLE>
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
During 1999, TSYS provided bankcard data processing services to CB&T and
certain of Synovus' other banking subsidiaries. The bankcard data processing
agreement between TSYS and CB&T can be terminated by CB&T upon 60 days prior
written notice to TSYS or terminated by TSYS upon 180 days prior written notice
to CB&T. During 1999, TSYS derived $8,049,915 in revenues from CB&T and certain
of Synovus' other banking subsidiaries for the performance of bankcard data
processing services and $221,844 in revenues from Synovus and its subsidiaries
for the performance of other data processing services. TSYS' charges to CB&T and
Synovus' other subsidiaries for bankcard and other data processing services are
comparable to, and are determined on the same basis as, charges by TSYS to
similarly situated unrelated third parties.
Synovus Service Corp., a wholly owned subsidiary of Synovus, provides
various services to Synovus' subsidiary companies, including TSYS. TSYS and
Synovus Service Corp. are parties to a Lease Agreement pursuant to which Synovus
Service Corp. leased from TSYS office space for lease payments aggregating
$51,594 during 1999. Synovus Service Corp. also paid TSYS $382,840 during 1999
for data processing services. The terms of these transactions are comparable to
those which could have been obtained in transactions with unaffiliated third
parties.
TSYS and Synovus and TSYS and Synovus Service Corp. are parties to
Management Agreements (having one year, automatically renewable, unless
terminated, terms), pursuant to which Synovus and Synovus Service Corp. provide
certain management services to TSYS. During 1999, these services included human
resource services, maintenance services, security services, communications
services, corporate education services, travel services, investor relations
services, corporate governance services, legal services, regulatory and
statutory compliance services, executive management services performed on behalf
of TSYS by certain of Synovus' officers and financial services. As compensation
for management services provided during 1999, TSYS paid Synovus and Synovus
Service Corp. management fees of $1,524,780 and $10,639,179, respectively.
Management fees are subject to future adjustments based upon charges at the time
by unrelated third parties for comparable services.
During 1999, Synovus Trust Company served as Trustee of various employee
benefit plans of TSYS. During 1999, TSYS paid Synovus Trust Company trustee's
fees under these plans of $317,081.
During 1999, Columbus Depot Equipment Company, a wholly owned subsidiary of
TSYS, and CB&T and nine of Synovus' other subsidiaries were parties to Lease
Agreements pursuant to which CB&T and nine of Synovus' other subsidiaries leased
from Columbus Depot Equipment Company computer related equipment for bankcard
and bank data processing services for lease payments aggregating $80,490. The
terms, conditions and rental rates provided for in these Agreements are
comparable to corresponding terms, conditions and rates provided for in leases
of similar equipment offered by unrelated third parties.
During 1999, Synovus Technologies, Inc., a wholly owned subsidiary of
Synovus, paid TSYS $143,405 for data links, network services and other
miscellaneous items related to the data processing services which Synovus
Technologies, Inc. provides to its customers, which amount was reimbursed to
Synovus Technologies, Inc. by its customers. During 1999, Synovus Technologies,
Inc. paid TSYS $24,900, primarily for computer processing services. During 1999,
TSYS paid Synovus Technologies $765,741 for lockbox services. The charges for
processing and other services are comparable to those between unrelated third
parties.
During 1999, TSYS and CB&T were parties to a Lease Agreement pursuant to
which TSYS leased office space from CB&T for lease payments of $36,308. The
terms, conditions and rental rates provided for in this Lease Agreement are
comparable to corresponding terms, conditions and rates provided for in leases
of similar facilities offered by unrelated third parties in the Columbus,
Georgia area. In addition, TSYS paid CB&T $345,893 during 1999 for marketing
rights. These charges are comparable to those between unrelated third parties.
During 1999, Synovus, CB&T and other Synovus subsidiaries paid to Columbus
Productions, Inc. and TSYS Total Solutions, Inc., wholly owned subsidiaries of
TSYS, an aggregate of $5,403,294 for printing, correspondence and facilities
management services. The charges for these services are comparable to those
between unrelated third parties.
During 1999, TSYS and its subsidiaries were paid $1,865,621 of interest by
CB&T in connection with deposit accounts with, and commercial paper purchased
from, CB&T. The interest rates paid are comparable to those provided for between
unrelated third parties.
The Board of Directors of TSYS has resolved that transactions with
officers, directors, key employees and their affiliates shall be approved by a
majority of its independent and disinterested directors, if otherwise permitted
by applicable law, and will be on terms no less favorable than could be obtained
from unrelated third parties.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires TSYS'
officers and directors, and persons who own more than ten percent of TSYS common
stock, to file reports of ownership and changes in ownership on Forms 3,4 and 5
with the Securities and Exchange Commission and the New York Stock Exchange.
Officers, directors and greater than ten percent shareholders are required by
Securities and Exchange Commission regulations to furnish TSYS with copies of
all Section 16(a) forms they file.
To TSYS' knowledge, based solely on its review of the copies of such forms
received by it, and written representations from certain reporting persons that
no Forms 5 were required for those persons, TSYS believes that during the fiscal
year ended December 31, 1999, all Section 16(a) filing requirements applicable
to its officers, directors and greater than ten percent beneficial owners were
complied with, except that Mr. Lampton reported one transaction late on a Form
4, Mr. Woods reported two transactions late on an amended Form 4 and Mr. Page
reported one transaction late on a Form 4.
INDEPENDENT AUDITORS
On March 1, 2000, TSYS' Board of Directors appointed KPMG LLP as the
independent auditors to audit the financial statements of TSYS and its
subsidiaries for the fiscal year ending December 31, 2000. The Board of
Directors knows of no direct or material indirect financial interest by KPMG in
TSYS or of any connection between KPMG and TSYS in the capacity of promoter,
underwriter, voting trustee, director, officer, shareholder or employee.
Representatives of KPMG will be present at TSYS' 2000 Annual Meeting with
the opportunity to make a statement if they desire to do so and will be
available to respond to appropriate questions.
GENERAL INFORMATION
FINANCIAL INFORMATION
Detailed financial information for TSYS and its subsidiaries for its 1999
fiscal year is included in TSYS' 1999 Annual Report that is being mailed to
TSYS' shareholders together with this Proxy Statement.
SHAREHOLDER PROPOSALS FOR THE 2001 PROXY STATEMENT
Any shareholder satisfying the Securities and Exchange Commission
requirements and wishing to submit a proposal to be included in the Proxy
Statement for the 2001 Annual Meeting of Shareholders should submit the proposal
in writing to the Secretary, Total System Services, Inc., 901 Front Avenue,
Suite 301, Columbus, Georgia 31901. TSYS must receive a proposal by November 10,
2000 in order to consider it for inclusion in the Proxy Statement for the 2001
Annual Meeting of Shareholders.
DIRECTOR NOMINEES OR OTHER BUSINESS FOR PRESENTATION AT THE ANNUAL MEETING
Shareholders who wish to present director nominations or other business at
the Annual Meeting are required to notify the Secretary of their intent at least
45 days but not more than 90 days before March 10, 2001 and the notice must
provide information as required in the bylaws. A copy of these bylaw
requirements will be provided upon request in writing to the Secretary, Total
System Services, Inc., 901 Front Avenue, Suite 301, Columbus, Georgia 31901.
This requirement does not apply to the deadline for submitting shareholder
proposals for inclusion in the Proxy Statement (see "Shareholder Proposals for
the 2001 Proxy Statement" above), nor does it apply to questions a shareholder
may wish to ask at the meeting.
SOLICITATION OF PROXIES
TSYS will pay the cost of soliciting proxies. Proxies may be solicited on
behalf of TSYS by directors, officers or employees by mail, in person or by
telephone, facsimile or other electronic means. TSYS will reimburse brokerage
firms, nominees, custodians and fiduciaries for their out-of-pocket expenses
for forwarding proxy materials to beneficial owners.
The above Notice of Annual Meeting and Proxy Statement are sent by order of
the TSYS Board of Directors.
/s/Richard W. Ussery
Richard W. Ussery
Chairman of the Board
Total System Services, Inc.
March 10, 2000
EXHIBIT 21.1
SUBSIDIARIES OF TOTAL SYSTEM SERVICES, INC.
<TABLE>
<CAPTION>
Name Ownership Percentage
- ----- --------------------
<S> <C>
Columbus Depot Equipment Company 100%
A Georgia corporation
TSYS Total Solutions, Inc. 100%
A Georgia corporation
Columbus Productions, Inc. 100%
A Georgia corporation
TSYS Canada, Inc. 100%
A Georgia corporation
Vital Processing Services L.L.C.
A Delaware limited liability company 50%
Total System Services de Mexico
A Mexican corporation 49%
</TABLE>
EXHIBIT 23.1
Independent Auditors' Consent
We consent to the incorporation by reference in the Registration Statements (No.
2-92497, No. 33-17376, No. 333-25401, and No. 333-41775) on Form S-8 and the
Registration Statement (No. 333-41775) on Form S-3 of Total System Services,
Inc. of our reports dated January 11, 2000, relating to the consolidated balance
sheets of Total System Services, Inc. and subsidiaries as of December 31, 1999
and 1998, and the related consolidated statements of income, cash flows, and
shareholders' equity and comprehensive income for each of the years in the
three-year period ended December 31, 1999, and the related financial statement
schedule, which reports appear in or are incorporated by reference in Total
System Services, Inc. Annual Report on Form 10-K for the year 1999.
/s/KPMG LLP
Atlanta, Georgia
March 14, 2000
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 16, 2000 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 16, 2000
- -----------------------------------------
James H. Blanchard,
Director and Chairman of the
Executive Committee
/s/Richard W. Ussery Date: March 16, 2000
- -----------------------------------------
Richard W. Ussery,
Chairman of the Board
and Principal Executive Officer
/s/Philip W. Tomlinson Date: March 16, 2000
- -----------------------------------------
Philip W. Tomlinson,
President
and Director
/s/James B. Lipham Date: March 16, 2000
- -----------------------------------------
James B. Lipham,
Executive Vice President, Treasurer, Principal
Accounting and Financial Officer
/s/Richard Y. Bradley Date: March 16, 2000
- ------------------------------------------
Richard Y. Bradley,
Director
Date: March __, 2000
- ------------------------------------------
G. Wayne Clough,
Director
Date: March __, 2000
- ------------------------------------------
Thomas G. Cousins,
Director
Date: March __, 2000
- -----------------------------------------
Gardiner W. Garrard, Jr.,
Director
Date: March __, 2000
- -----------------------------------------
Sidney E. Harris,
Director
/s/John P. Illges, III Date: March 16, 2000
- -----------------------------------------
John P. Illges, III,
Director
/s/Mason H. Lampton Date: March 16, 2000
- -----------------------------------------
Mason H. Lampton,
Director
Date: March __, 2000
- -----------------------------------------
Samuel A. Nunn,
Director
Date: March __, 2000
- -----------------------------------------
H. Lynn Page,
Director
/s/W. Walter Miller, Jr. Date: March 16, 2000
- -----------------------------------------
W. Walter Miller, Jr.,
Director
/s/William B. Turner Date: March 16, 2000
- -----------------------------------------
William B. Turner,
Director
/s/James D. Yancey Date: March __, 2000
- -----------------------------------------
James D. Yancey,
Director
Date: March __, 2000
- -----------------------------------------
Rebecca K. Yarbrough,
Director
filings/tss\noncon13.sig
<TABLE> <S> <C>
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<CIK> 0000721683
<NAME> TOTAL SYSTEM SERVICES, INC.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 54,903,107
<SECURITIES> 0
<RECEIVABLES> 100,878,194
<ALLOWANCES> 1,276,696
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<CURRENT-ASSETS> 179,675,933
<PP&E> 179,244,108
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0
0
<COMMON> 19,507,909
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<TOTAL-LIABILITY-AND-EQUITY> 457,349,538
<SALES> 533,926,011
<TOTAL-REVENUES> 533,926,011
<CGS> 0
<TOTAL-COSTS> 445,633,607
<OTHER-EXPENSES> 0
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<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 103,576,003
<INCOME-TAX> 34,983,027
<INCOME-CONTINUING> 68,592,976
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 68,592,976
<EPS-BASIC> .35
<EPS-DILUTED> .35
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