UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-Q

(Mark One)

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: September 30, 2007

o		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 (State or other jurisdiction of incorporation or organization)		58-1493818 (I.R.S. Employer Identification No.)

(Address of principal executive offices)		(Zip Code)

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ     No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o      Accelerated filer þ      Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o     No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

CLASS		OUTSTANDING AS OF: November 7, 2007
Common Stock, $0.10 par value		197,911,497 shares

 

 

TOTAL SYSTEM SERVICES, INC.
INDEX

						Page
						Number
Part I. Financial Information
		Item 1. Financial Statements
				Condensed Consolidated Balance Sheets (unaudited) — September 30, 2007 and December 31, 2006			3
				Condensed Consolidated Statements of Income (unaudited) — Three and nine months ended September 30, 2007 and 2006			5
				Condensed Consolidated Statements of Cash Flows (unaudited) — Nine months ended September 30, 2007 and 2006			7
				Notes to Unaudited Condensed Consolidated Financial Statements			9
		Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations					22
		Item 3. Quantitative and Qualitative Disclosures About Market Risk					48
		Item 4. Controls and Procedures					51
Part II. Other Information
		Item 1A. Risk Factors					52
		Item 2. Unregistered Sales of Equity Securities and Use of Proceeds					52
		Item 6. Exhibits					53
Signatures							54
Exhibit Index							55
EX-3.2 BYLAWS, AS AMENDED
EX-31.1 SECTION 302 CERTIFICATION OF CEO
EX-31.2 SECTION 302 CERTIFICATION OF CFO
EX-32 SECTION 906 CERTIFICATION OF CEO AND CFO

TOTAL SYSTEM SERVICES, INC.

		September 30,				December 31,
(in thousands, except per share information)		2007				2006
Assets
Current assets:
Cash and cash equivalents (includes $318.2 million and $241.0 million on deposit with a related party at 2007 and 2006, respectively)		$	592,834				389,123
Restricted cash (includes $5.4 million and $5.0 million on deposit with a related party at 2007 and 2006, respectively)			32,079				31,568
Accounts receivable, net of allowance for doubtful accounts and billing adjustments of $10.2 million and $11.0 million at 2007 and 2006, respectively (includes $894 and $34 due from a related party at 2007 and 2006, respectively)			251,778				246,637
Deferred income tax assets			27,909				21,556
Prepaid expenses and other current assets			58,809				55,832
Total current assets			963,409				744,716
Property and equipment, net of accumulated depreciation and amortization of $258.6 million and $226.4 million at 2007 and 2006, respectively			276,113				271,321
Computer software, net of accumulated amortization of $364.5 million and $337.7 million at 2007 and 2006, respectively			190,338				216,450
Contract acquisition costs, net			161,239				167,449
Goodwill, net			142,450				133,337
Equity investments			65,669				62,064
Other intangible assets, net of accumulated amortization of $12.2 million and $9.6 million at 2007 and 2006, respectively			13,999				21,314
Other assets			13,669				17,590
Total assets		$	1,826,886				1,634,241

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

TOTAL SYSTEM SERVICES, INC.
Condensed Consolidated Balance Sheets (continued)
(Unaudited)

		September 30,				December 31,
(in thousands, except per share information)		2007				2006
Liabilities and Shareholders’ Equity
Current liabilities:
Accrued salaries and employee benefits		$	71,335				80,697
Accounts payable (includes $230 and $95 payable to related parties at 2007 and 2006, respectively)			37,419				31,589
Current portion of obligations under capital leases			3,655				3,156
Current portion of notes payable			2,167				—
Other current liabilities (includes $11.2 million payable to related parties for both 2007 and 2006, respectively)			137,704				180,345
Total current liabilities			252,280				295,787
Deferred income tax liabilities			72,318				75,019
Notes payable, excluding current portion			70,146				—
Obligations under capital leases, excluding current portion			3,716				3,625
Other long-term liabilities			30,718				36,221
Total liabilities			429,178				410,652
Minority interests in consolidated subsidiaries			7,943				6,229
Shareholders’ equity:
Common stock — $0.10 par value. Authorized 600,000 shares; 199,199 and 198,676 issued at 2007 and 2006, respectively; 197,494 and 196,912 outstanding at 2007 and 2006, respectively			19,920				19,868
Additional paid-in capital			84,835				66,677
Accumulated other comprehensive income, net			25,575				20,641
Treasury stock (1,705 shares at 2007 and 1,764 shares at 2006)			(34,300	)			(35,233	)
Retained earnings			1,293,735				1,145,407
Total shareholders’ equity			1,389,765				1,217,360
Total liabilities and shareholders’ equity		$	1,826,886				1,634,241

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

TOTAL SYSTEM SERVICES, INC.
Condensed Consolidated Statements of Income
(Unaudited)

		Three months ended
		September 30,
(in thousands, except per share information)		2007				2006
Revenues:
Electronic payment processing services (includes $1.3 million and $1.2 million from related parties for 2007 and 2006, respectively)		$	240,608				232,175
Merchant acquiring services			65,163				65,548
Other services (includes $2.4 million and $2.0 million from related parties for 2007 and 2006, respectively)			53,251				44,615
Revenues before reimbursable items			359,022				342,338
Reimbursable items (includes $0.6 million and $0.4 million from related parties for 2007 and 2006, respectively)			98,543				99,477
Total revenues			457,565				441,815
Expenses:
Salaries and other personnel expense			144,990				139,206
Net occupancy and equipment expense			68,715				77,883
Spin assessment expenses			1,692				—
Other operating expenses (includes $2.4 million and $2.0 million to related parties for 2007 and 2006, respectively)			52,406				52,992
Expenses before reimbursable items			267,803				270,081
Reimbursable items			98,543				99,477
Total expenses			366,346				369,558
Operating income			91,219				72,257
Nonoperating income (expense):
Interest income (includes $4.1 million and $1.7 million from related parties for 2007 and 2006, respectively)			6,983				3,363
Interest expense			(916	)			(235	)
Gain on foreign currency translation, net			905				282
Other			21				—
Total nonoperating income			6,993				3,410
Income before income taxes, minority interest and equity in income of equity investments			98,212				75,667
Income taxes			30,947				22,380
Income before minority interest and equity in income of equity investments			67,265				53,287
Minority interests in consolidated subsidiaries’ net income, net of tax			(483	)			(183	)
Equity in income of equity investments, net of tax			2,020				1,202
Net income		$	68,802				54,306
Basic earnings per share		$	0.35				0.28
Diluted earnings per share		$	0.35				0.28
Weighted average common shares outstanding			196,740				196,500
Increase due to assumed issuance of shares related to common equivalent shares			349				331
Weighted average common and common equivalent shares outstanding			197,089				196,831

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

TOTAL SYSTEM SERVICES, INC.
Condensed Consolidated Statements of Income
(Unaudited)

		Nine months ended
		September 30,
(in thousands, except per share information)		2007				2006
Revenues:
Electronic payment processing services (includes $4.1 million and $3.7 million from related parties for 2007 and 2006, respectively)		$	715,417				685,537
Merchant acquiring services			190,120				195,317
Other services (includes $6.6 million and $5.7 million from related parties for 2007 and 2006, respectively)			161,190				133,827
Revenues before reimbursable items			1,066,727				1,014,681
Reimbursable items (includes $1.8 million and $1.4 million from related parties for 2007 and 2006, respectively)			280,597				268,589
Total revenues			1,347,324				1,283,270
Expenses:
Salaries and other personnel expense			430,966				380,931
Net occupancy and equipment expense			205,342				234,453
Spin assessment expenses			1,692				—
Other operating expenses (includes $7.1 million and $7.2 million to related parties for 2007 and 2006, respectively)			155,913				170,452
Expenses before reimbursable items			793,913				785,836
Reimbursable items			280,597				268,589
Total expenses			1,074,510				1,054,425
Operating income			272,814				228,845
Nonoperating income (expense):
Interest income (includes $10.7 million and $4.9 million from related parties for 2007 and 2006, respectively)			18,630				9,297
Interest expense			(1,492	)			(364	)
Gain on foreign currency translation, net			744				195
Other			79				—
Total nonoperating income			17,961				9,128
Income before income taxes, minority interest and equity in income of equity investments			290,775				237,973
Income taxes			101,442				78,492
Income before minority interest and equity in income of equity investments			189,333				159,481
Minority interests in consolidated subsidiaries’ net income, net of tax			(1,435	)			(448	)
Equity in income of equity investments, net of tax			3,865				3,073
Net income		$	191,763				162,106
Basic earnings per share		$	0.98				0.82
Diluted earnings per share		$	0.97				0.82
Weighted average common shares outstanding			196,641				196,891
Increase due to assumed issuance of shares related to common equivalent shares			429				302
Weighted average common and common equivalent shares outstanding			197,070				197,193

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

		TOTAL SYSTEM SERVICES, INC.
		Condensed Consolidated Statements of Cash Flows
		(Unaudited)

		Nine months ended
		September 30,
(in thousands)		2007				2006
Cash flows from operating activities:
Net income		$	191,763				162,106
Adjustments to reconcile net income to net cash provided by operating activities:
Minority interests in consolidated subsidiaries’ net income, net of tax			1,435				448
Gain on foreign currency, net			(744	)			(195	)
Equity in income of equity investments, net of tax			(3,865	)			(3,073	)
Dividends received from equity investments			2,994				2,371
Depreciation and amortization			114,213				130,306
Share-based compensation			9,881				6,574
Asset impairments			1,158				—
Provisions for bad debt expenses and billing adjustments			1,612				948
Charges for transaction processing provisions			531				7,914
Deferred income tax benefit			(6,828	)			(24,150	)
Loss on disposal of equipment, net			497				105
(Increase) decrease in:
Accounts receivable			(5,627	)			(40,765	)
Prepaid expenses, other current assets and other long-term assets			(1,041	)			8,923
Increase (decrease) in:
Accounts payable			6,148				14,323
Accrued salaries and employee benefits			(9,341	)			(18,936	)
Excess tax benefit from share-based payment arrangements			(4,022	)			(1,646	)
Other current liabilities and other long-term liabilities			(51,286	)			(14,849	)
Net cash provided by operating activities			247,478				230,404
Cash flows from investing activities:
Purchases of property and equipment, net			(36,420	)			(21,203	)
Additions to licensed computer software from vendors			(8,194	)			(9,650	)
Additions to internally developed computer software			(11,749	)			(13,699	)
Cash acquired in acquisitions			—				4,341
Cash used in acquisitions			(472	)			(74,919	)
Additions to contract acquisition costs			(20,878	)			(39,578	)
Net cash used in investing activities			(77,713	)			(154,708	)

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

TOTAL SYSTEM SERVICES, INC.
Condensed Consolidated Statements of Cash Flows (continued)
(Unaudited)

		Nine months ended
		September 30,
(in thousands)		2007				2006
Cash flows from financing activities:
Dividends paid on common stock (includes $33.5 million and $30.3 million paid to related parties during 2007 and 2006, respectively)		$	(41,425	)			(37,504	)
Repurchase of common stock			—				(21,843	)
Excess tax benefit from share-based payment arrangements			4,022				1,646
Principal payments on long-term debt borrowings and capital lease obligations			(3,893	)			(1,561	)
Proceeds from borrowings of long-term debt			73,968				—
Proceeds from exercise of stock options			5,258				3,725
Net cash provided by (used in) financing activities			37,930				(55,537	)
Effect of exchange rate changes on cash and cash equivalents			(3,984	)			(2,006	)
Net increase in cash and cash equivalents			203,711				18,153
Cash and cash equivalents at beginning of year			389,123				237,569
Cash and cash equivalents at end of period		$	592,834				255,722
Cash paid for interest		$	1,492				364
Cash paid for income taxes, net of refunds		$	143,066				118,649

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

TOTAL SYSTEM SERVICES, INC.
Notes to Unaudited Condensed Consolidated Financial Statements

Note 1 — Basis of Presentation

     The accompanying unaudited condensed consolidated financial statements of Total System Services, Inc.^® (TSYS^® or the Company) include the accounts of TSYS and its wholly owned subsidiaries and TSYS’ majority owned foreign subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. In addition, the Company evaluates its relationship with other entities to identify whether they are variable interest entities as defined by the Financial Accounting Standards Board’s (FASB’s) Interpretation No. 46(R) (FIN No. 46R), “Consolidation of Variable Interest Entities,” and to assess whether it is the primary beneficiary of such entities. If the determination is made that the Company is the primary beneficiary, then that entity is included in the consolidated financial statements in accordance with FIN No. 46R.

     These financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all information and footnotes necessary for a fair presentation of financial position, results of operations and cash flows in conformity with accounting principles generally accepted in the United States of America. The preparation of the consolidated financial statements requires management of the Company to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. These estimates and assumptions are developed based upon all information available. Actual results could differ from estimated amounts. All adjustments, consisting of normal recurring accruals, which, in the opinion of management, are necessary for a fair presentation of financial position and results of operations for the periods covered by this report have been included.

     The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s summary of significant accounting policies, consolidated financial statements and related notes appearing in the Company’s 2006 Annual Report previously filed on Form 10-K. Results of interim periods are not necessarily indicative of results to be expected for the year.

     Certain reclassifications have been made to the 2006 financial statements to conform to the presentation adopted in 2007.

Cash and Cash Equivalents

     Cash and cash equivalent balances are summarized as follows:

(in thousands)		September 30, 2007				December 31, 2006
Cash and cash equivalents in domestic accounts		$	532,849				344,197
Cash and cash equivalents in foreign accounts			59,985				44,926
Total		$	592,834				389,123

     The Company maintains accounts outside the United States denominated in currencies other than the U.S. dollar. All amounts in domestic accounts are denominated in U.S. dollars.

Prepaid Expenses and Other Current Assets

     Significant components of prepaid expenses and other current assets are summarized as follows:

(in thousands)		September 30, 2007				December 31, 2006
Prepaid expenses		$	13,041				14,837
Supplies inventory			9,285				12,311
Other			36,483				28,684
Total		$	58,809				55,832

Contract Acquisition Costs, net

     Significant components of contract acquisition costs, net of accumulated amortization, are summarized as follows:

(in thousands)		September 30, 2007				December 31, 2006
Payments for processing rights, net		$	103,246				107,896
Conversion costs, net			57,993				59,553
Total		$	161,239				167,449

     Amortization related to payments for processing rights, which is recorded as a reduction of revenues, was $6.6 million and $6.8 million for the three months ended September 30, 2007 and 2006, respectively. For the nine months ended September 30, 2007 and 2006, amortization related to payments for processing rights was $18.3 million and $20.6 million, respectively.

     Amortization expense related to conversion costs was $3.8 million and $4.5 million for the three months ended September 30, 2007 and 2006, respectively. For the nine months ended September 30, 2007 and 2006, amortization related to conversion costs was $11.9 million and $13.9 million, respectively.

Other Current Liabilities

     Significant components of other current liabilities are summarized as follows:

(in thousands)		September 30, 2007				December 31, 2006
Client liabilities		$	36,535				36,161
Accrued expenses			36,520				44,578
Deferred revenues			22,533				19,311
Dividends payable			13,825				13,785
Transaction processing provisions			10,286				12,645
Accrued income taxes			(6,213	)			25,384
Client postage deposits			3,920				6,736
Other			20,298				21,745
Total		$	137,704				180,345

Note 3 — Comprehensive Income

     For the three and nine months ended September 30, comprehensive income is summarized below:

		Three months ended								Nine months ended
		September 30,								September 30,
(in thousands)		2007				2006				2007				2006

Net income		$	68,802				54,306				191,763				162,106
Other comprehensive income:
Foreign currency translation adjustments, net of tax			2,259				6,116				4,934				10,822
Total		$	71,061				60,422				196,697				172,928

     The income tax effects allocated to and the cumulative balance of accumulated other comprehensive income are as follows:

		Beginning Balance				Pretax												Ending Balance
(in thousands)		December 31, 2006				Amount				Tax Effect				Net-of-Tax Amount				September 30, 2007
Foreign currency translation adjustments		$	21,570			$	7,312				(2,415	)		$	4,897			$	26,467
Underfunded defined benefit postretirement plan			(929	)			57				(20	)			37				(892	)
		$	20,641			$	7,369				(2,435	)		$	4,934			$	25,575

Note 4 — Segment Reporting and Major Customers

     The Company reports selected information about operating segments in accordance with Statement of Financial Accounting Standards No. 131 (SFAS No. 131), “Disclosures about Segments of an Enterprise and Related Information.” The Company’s segment information reflects the information that the chief operating decision maker (CODM) uses to make resource allocations and strategic decisions. The CODM at TSYS consists of the chairman of the board and chief executive officer, the president and the three senior executive vice presidents.

     Through online accounting and electronic payment processing systems, TSYS provides electronic payment processing and other services to card-issuing and merchant acquiring institutions in the United States and internationally. The Company has three reportable segments: domestic-based support services, international-based support services and merchant acquiring services.

     In April 2007, TSYS’ wholly-owned subsidiary, Enhancement Services Corporation, changed its name to TSYS Loyalty, Inc. (TSYS Loyalty).

     Domestic-based support services include electronic payment processing services and other services provided from within the United States. The domestic-based support services segment includes the financial results of TSYS, excluding its foreign branch offices and divisions, and including the following subsidiaries: Columbus Depot Equipment Company, Columbus Productions, Inc., TSYS Canada, Inc., TSYS Total Debt Management, Inc., ProCard, Inc., TSYS Technology Center, Inc., TSYS Prepaid, Inc., Merlin Solutions, L.L.C. and TSYS Loyalty and its wholly owned subsidiary, Golden Retriever Systems, L.L.C.

     International-based support services include electronic payment processing and other services provided from outside the United States. International-based support services include the financial results of GP Network Corporation, TSYS Japan Co., Ltd., TSYS Servicos de Transacoes Eletronicas Ltda., Total System Services Holding Europe LP and its subsidiaries and TSYS’ foreign branch offices and divisions. TSYS’ share of the equity earnings of its equity investments, Total System Services de México, S.A. de C.V. (TSYS de México) and China UnionPay Data Co., Ltd. (CUP Data), are included in international-based support services because TSYS de México’s and CUP Data’s operations and client bases are located outside the United States.

     Merchant acquiring services include the financial results of TSYS Acquiring Solutions, L.L.C., and its wholly owned subsidiary TSYS POS Systems and Services, L.L.C.

		Domestic-				International-				Merchant
(in thousands)		based support				based support				acquiring
Operating Segments		services				services				services				Consolidated
At September 30, 2007
Identifiable assets		$	1,623,928				365,066				188,765			$	2,177,759
Intersegment eliminations			(349,626	)			(1,094	)			(153	)			(350,873	)
Total assets		$	1,274,302				363,972				188,612			$	1,826,886
At December 31, 2006
Identifiable assets		$	1,517,299				308,713				210,117			$	2,036,129
Intersegment eliminations			(400,957	)			(894	)			(37	)			(401,888	)
Total assets		$	1,116,342				307,819				210,080			$	1,634,241
Three months ended September 30, 2007
Revenues before reimbursables		$	243,404				64,148				58,641			$	366,193
Intersegment revenues			(6,960	)			(106	)			(105	)			(7,171	)
Revenues before reimbursables from external customers		$	236,444				64,042				58,536			$	359,022
Segment total revenues		$	324,803				66,779				75,356			$	466,938
Intersegment revenues			(9,162	)			(106	)			(105	)			(9,373	)
Revenues from external customers		$	315,641				66,673				75,251			$	457,565
Depreciation and amortization		$	24,591				6,455				6,561			$	37,607
Intersegment expenses		$	3,506				(4,995	)			(7,884	)		$	(9,373	)
Segment operating income		$	59,889				12,569				18,761			$	91,219
Income before income taxes, minority interest and equity in income of equity investments		$	67,060				12,130				19,022			$	98,212
Income taxes		$	20,084				4,033				6,830			$	30,947
Equity in income of equity investments		$	—				2,020				—			$	2,020
Net income		$	48,890				7,720				12,192			$	68,802
Three months ended September 30, 2006
Revenues before reimbursables		$	242,584				44,320				59,723			$	346,627
Intersegment revenues			(4,258	)			—				(31	)			(4,289	)
Revenues before reimbursables from external customers		$	238,326				44,320				59,692			$	342,338
Segment total revenues		$	325,919				51,591				70,592			$	448,102
Intersegment revenues			(6,256	)			—				(31	)			(6,287	)
Revenues from external customers		$	319,663				51,591				70,561			$	441,815
Depreciation and amortization		$	32,156				5,328				6,674			$	44,158
Intersegment expenses		$	3,668				(2,343	)			(7,599	)		$	(6,274	)
Segment operating income		$	48,666				7,946				15,645			$	72,257
Income before income taxes, minority interest and equity in income of equity investments		$	52,688				6,602				16,377			$	75,667
Income taxes		$	14,722				(31	)			7,689			$	22,380
Equity in income of equity investments		$	—				1,202				—			$	1,202
Net income		$	38,821				6,797				8,688			$	54,306

		Domestic-				International-				Merchant
(in thousands)		based support				based support				acquiring
Operating Segments		services				services				services				Consolidated
Nine months ended September 30, 2007
Revenues before reimbursables		$	738,712				175,154				171,694			$	1,085,560
Intersegment revenues			(17,495	)			(701	)			(637	)			(18,833	)
Revenues before reimbursables from external customers		$	721,217				174,453				171,057			$	1,066,727
Segment total revenues		$	973,133				182,913				216,354			$	1,372,400
Intersegment revenues			(23,738	)			(701	)			(637	)			(25,076	)
Revenues from external customers		$	949,395				182,212				215,717			$	1,347,324
Depreciation and amortization		$	76,305				17,762				20,146			$	114,213
Intersegment expenses		$	9,897				(11,961	)			(23,007	)		$	(25,071	)
Segment operating income		$	190,336				35,570				46,908			$	272,814
Income before income taxes, minority interest and equity in income of equity investments		$	210,027				32,661				48,087			$	290,775
Income taxes		$	73,737				10,441				17,264			$	101,442
Equity in income of equity investments		$	—				3,865				—			$	3,865
Net income		$	138,625				22,316				30,822			$	191,763
Nine months ended September 30, 2006
Revenues before reimbursables		$	740,341				109,178				178,729			$	1,028,248
Intersegment revenues			(13,471	)			—				(96	)			(13,567	)
Revenues before reimbursables from external customers		$	726,870				109,178				178,633			$	1,014,681
Segment total revenues		$	963,855				128,163				211,659			$	1,303,677
Intersegment revenues			(20,311	)			—				(96	)			(20,407	)
Revenues from external customers		$	943,544				128,163				211,563			$	1,283,270
Depreciation and amortization		$	95,759				14,101				20,446			$	130,306
Intersegment expenses		$	18,949				(15,448	)			(23,864	)		$	(20,363	)
Segment operating income		$	176,412				12,029				40,404			$	228,845
Income before income taxes, minority interest and equity in income of equity investments		$	186,170				9,718				42,085			$	237,973
Income taxes		$	58,636				2,461				17,395			$	78,492
Equity in income of equity investments		$	—				3,073				—			$	3,073
Net income		$	128,352				9,064				24,690			$	162,106

     Revenues for domestic-based support services and merchant acquiring services include electronic payment processing and other services provided from the United States to clients domiciled in the United States or other countries. Revenues for international-based support services include electronic payment processing and other services provided from facilities outside the United States to clients based predominantly outside the United States.

     The following geographic data presents revenues for the three and nine months ended September 30, 2007 and 2006, respectively, based on the domicile of the Company’s customers.

		Three months ended September 30,								Nine months ended September 30,
(in millions)		2007				2006				2007				2006
United States		$	352.2				359.6				1,052.4				1,069.8
Europe			56.1				43.7				151.1				112.6
Canada			32.4				25.4				93.2				71.5
Japan			6.3				5.0				17.7				13.4

     The following table reconciles geographic revenues to revenues by reportable segment for the three months ended September 30, 2007 and 2006, respectively, based on the domicile of the Company’s customers.

		Domestic-based								International-based								Merchant acquiring
		support services								support services								services
(in millions)		2007				2006				2007				2006				2007				2006
United States		$	276.8				289.3				0.5				—				74.9				70.3
Europe			0.4				0.4				55.7				43.3				—				—
Canada			32.2				25.2				—				—				0.2				0.1
Japan			—				—				6.3				5.0				—				—
Mexico			3.6				3.2				—				—				—				—
Other			2.6				1.6				4.2				3.3				0.2				0.1
Total		$	315.6				319.7				66.7				51.6				75.3				70.5

     The following table reconciles geographic revenues to revenues by reportable segment for the nine months ended September 30, 2007 and 2006, respectively, based on the domicile of the Company’s customers.

		Domestic-based								International-based								Merchant acquiring
		support services								support services								services
(in millions)		2007				2006				2007				2006				2007				2006
United States		$	837.1				859.0				0.6				—				214.7				210.7
Europe			1.3				1.1				149.8				111.5				—				—
Canada			92.8				71.1				—				—				0.4				0.4
Japan			—				—				17.7				13.4				—				—
Mexico			10.2				8.5				—				—				—				—
Other			8.0				3.8				14.1				3.3				0.6				0.5
Total		$	949.4				943.5				182.2				128.2				215.7				211.6

     The Company maintains property and equipment, net of accumulated depreciation and amortization, in the following geographic areas:

		At September 30,				At December 31,
(in thousands)		2007				2006
United States		$	205,580				204,662
Europe			66,397				63,099
Japan			1,951				1,935
Canada			52				55
Other			2,133				1,570
Total		$	276,113				271,321

Major Customers

     For the three months ended September 30, 2007, the Company had three major customers which accounted for approximately 32.2%, or $147.3 million, of total revenues. For the three months ended September 30, 2006, these three major customers accounted for approximately 39.7%, or $175.3 million, of total revenues. For the nine months ended September 30, 2007, the Company had three major customers which accounted for approximately 33.4%, or $449.3 million, of total revenues. For the nine months ended September 30, 2006, these three major customers accounted for approximately 37.8%, or $485.8 million, of total revenues. Revenues from major customers for the periods reported are primarily attributable to the domestic-based support services and merchant acquiring services segments.

		Three months ended September 30,																Nine months ended September 30,
		2007								2006								2007								2006
						% of								% of								% of								% of
Revenue						Total								Total								Total								Total
(in millions)		Dollars				Revenues				Dollars				Revenues				Dollars				Revenues				Dollars				Revenues
Client 1		$	62.7				13.7			$	19.3				4.4			$	172.5				12.8			$	43.8				3.4
Client 2			56.8				12.4				109.1				24.7				161.2				12.0				307.2				23.9
Client 3			27.8				6.1				46.9				10.6				115.6				8.6				134.8				10.5
Totals		$	147.3				32.2			$	175.3				39.7			$	449.3				33.4			$	485.8				37.8

Note 5 — Share-Based Compensation

     The Company’s Annual Report on Form 10-K for the year ended December 31, 2006, as filed with the SEC, contains a discussion of the Company’s share-based compensation plans and policy.

Share-Based Compensation

     TSYS’ share-based compensation costs are included as expenses and classified as salaries and other personnel expenses. TSYS does not include amounts associated with share-based compensation as costs capitalized as software development and contract acquisition costs. For the three months ended September 30, 2007, share-based compensation was $3.3 million, compared to $2.1 million for the same period in 2006. Included in the $3.3 million amount for 2007 and $2.1 million amount for 2006 is approximately $1.5 million and $1.6 million, respectively, related to expensing the fair value of stock options. For the nine months ended September 30, 2007, share-based compensation was $9.9 million, compared to $6.6 million for the same period in 2006. Included in the $9.9 million amount for 2007 and $6.6 million amount for 2006 is approximately $4.8 million and $5.1 million, respectively, related to expensing the fair value of stock options.

Nonvested Awards

     During the first nine months of 2007, the Company issued 241,260 shares of TSYS common stock with a market value of $7.6 million to certain key employees and non-management members of its board of directors under nonvested stock bonus awards for services to be provided by such officers, directors and employees in the future. The market value of the common stock at the date of issuance is amortized as compensation expense over the vesting period of the awards.

     During the first nine months of 2006, the Company issued 150,775 shares of TSYS common stock with a market value of $3.0 million to certain key employees and non-management members of its board of directors under nonvested stock bonus awards for services to be provided by such officers and directors in the future.

     As of September 30, 2007, there was approximately $12.5 million of total unrecognized compensation cost related to nonvested share-based compensation arrangements. That cost is expected to be recognized over a remaining weighted average period of 2.1 years.

     During 2005, TSYS authorized a total grant of 126,087 shares of nonvested stock to two key executives with a performance-vesting schedule (performance-vesting shares). These performance-vesting shares have seven one-year performance periods (2005-2011) during which the Compensation Committee establishes an earnings per share goal. Each year’s award is 20% of the total authorized shares. Compensation expense for each year’s award is measured on the grant date based on the quoted market price of TSYS common stock and is expensed on a straight-line basis for the year.

     As of September 30, 2007, there was approximately $244,000 of total unrecognized compensation cost related to nonvested performance-vesting share-based compensation arrangements. That cost is expected to be recognized over the remainder of 2007.

Stock Option Awards

     The Company did not grant any TSYS stock options during the nine months ended September 30, 2007 and 2006, respectively.

     As of September 30, 2007, there was approximately $7,500 of total unrecognized compensation expense cost related to TSYS stock options that is expected to be recognized over a remaining weighted average period of 0.2 year.

Long-Term Incentive Plans — Synovus

     During the first nine months of 2007, Synovus Financial Corp. (Synovus) granted 102,653 stock options to key TSYS officers and employees. The fair value of the option grant was $7.22 per option and was estimated on the date of grant using the Black-Scholes-Merton option-pricing model with the following weighted average assumptions: risk-free interest rate of 4.78%; expected volatility of 21.76%; expected life of 6.0 years; and dividend yield of 2.60%. The expected life of 6.0 years was determined using the “simplified” method, as prescribed by SEC’s Staff Accounting Bulletin No. 107.

     During the first nine months of 2006, Synovus granted 304,933 stock options to key TSYS executive officers. The fair value of the option grant was $6.57 per option and was estimated on the date of grant using the Black-Scholes-Merton option-pricing model with the following weighted average assumptions: risk-free interest rate of 4.48%; expected volatility of 25.1%; expected life of 6.0 years; and dividend yield of 2.80%. The expected life of 6.0 years was determined using the “simplified” method, as prescribed by SEC’s Staff Accounting Bulletin No. 107.

     As of September 30, 2007, there was $5.3 million of total unrecognized compensation expense cost related to Synovus stock options that is expected to be recognized over a remaining weighted average period of 0.9 years.

     With the completion of the spin, TSYS expects to convert the Synovus options granted to TSYS employees to TSYS options. The number of TSYS options and exercise price will be based on Synovus’ share price immediately preceding the spin-off and TSYS’ share price during a 10-day trading period post-spin. All other terms and conditions of the original option grant will remain the same. As a result of the conversion, TSYS expects to incur additional stock option expense for the converted options. Refer to Note 12 in the Notes to Unaudited Condensed Consolidated Financial Statements for more information regarding the intended spin by Synovus.

Earnings Per Share

     The diluted earnings per share calculation excludes stock options and nonvested awards that are convertible into 17,500 and 7,500 common shares for the three and nine months ended September 30, 2007, respectively, and excludes 26,500 common shares for the three and nine months ended September 30, 2006, respectively, because their inclusion would have been anti-dilutive.

Note 6 — Long-Term Debt

     On October 25, 2007, TSYS announced that it has entered into an agreement and plan of distribution with Synovus under which Synovus plans to distribute all of its shares of TSYS stock to Synovus’ shareholders in a spin-off. Synovus currently owns 80.7% of TSYS. Prior to the spin-off transaction and in accordance with the agreement and plan of distribution, TSYS has agreed to pay a one-time aggregate cash dividend of $600 million to all TSYS shareholders, including Synovus. TSYS expects that the dividend will be funded by a combination of cash on hand and the use of a revolving credit facility. A $500 million revolving credit facility is anticipated to be finalized prior to the spin-off, of which $200 million will be used to fund the cash dividend. Refer to Note 12 for more information on the TSYS spin-off subsequent event.

     On August 3, 2007, the Company’s European operation obtained a loan of approximately £33 million or approximately $67.7 million from a third party mainly to repay the U.S. parent loan that was used for the acquisitions. The loan is payable in 18 months at a rate of the one-month London Interbank Offered Rate (LIBOR) plus 45 basis points. The interest is payable monthly. The Company’s plan is to finance international expansion through its European operations. The loan will result in increased interest expense and will eliminate the foreign currency translation gains and losses associated with the Company’s intercompany note. The loan is guaranteed by the parent company (TSYS).

     In January 2007, the Company’s operation in Japan borrowed ¥250 million, or approximately $2.1 million, through a short-term note. The interest rate on the note is the Japan prime rate plus 375 basis points. The term of the note is one year.

     In November 2006, TSYS announced an agreement to form a new venture called TSYS Managed Services EMEA, Ltd. (TSYS Managed Services) with Merchants. Refer to Note 10 for more information about the acquisition of TSYS Managed Services.

     In connection with the formation of TSYS Managed Services, both TSYS and Merchants agreed to provide long-term financing arrangements to TSYS Managed Services to fund future growth and expansion. At the end of September 2007, the balance of the loan from Merchants was approximately £2.0 million, or approximately $4.0 million, payable in total in five years, at an interest rate of the London Interbank Offered Rate (LIBOR) plus 2%, with interest payable quarterly.

     TSYS maintains an unsecured credit agreement with Columbus Bank & Trust. The credit agreement has a maximum available principal balance of $5.0 million, with interest at prime. TSYS did not use the credit facility for the nine months ended September 30, 2007 or 2006.

Note 7 — Supplementary Cash Flow Information

Contract Acquisition Costs

     Cash used for contract acquisition costs for the nine months ended September 30, 2007 and 2006, respectively, are summarized as follows:

(in thousands)		September 30, 2007				September 30, 2006
Payments for processing rights		$	12,760				10,663
Conversion costs			8,118				28,915
Total		$	20,878				39,578

Nonvested Awards

     During the first quarter of 2007, the Company issued shares of common stock to certain key employees and non-management members of its board of directors under nonvested stock bonus awards for services to be provided by such key employees and directors in the future. Refer to Note 5 for more information.

Equipment and Software Acquired Under Capital Lease Obligations

     The Company acquired equipment and software under capital lease obligations in the amount of $4.1 million during 2007 related to a three year software agreement and $5,000 during 2006 related to equipment.

Note 8 — Legal Proceedings

     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 believed to be adequately covered by insurance, or if not covered, are believed to be without merit or are of such kind or involve such amounts that would not have a material adverse effect on the financial position, results of operations or cash flows of the Company if disposed of unfavorably. The Company establishes reserves for expected future litigation exposures that TSYS determines to be both probable and reasonably estimable.

Note 9 — Guarantees and Indemnifications

     The Company has entered into processing and licensing agreements with clients that include intellectual property indemnification clauses. The Company generally agrees to indemnify its clients, subject to certain exceptions, against legal claims that TSYS’ services or systems infringe on certain third party patents, copyrights or other proprietary rights. In the event of such a claim, the Company is generally obligated to hold the client harmless and pay for related losses, liabilities, costs and expenses, including, without limitation, court costs and reasonable attorney’s fees. The Company has not made any indemnification payments pursuant to these indemnification clauses.

     The Company has not recorded a liability for guarantees or indemnities in the accompanying consolidated balance sheet since the maximum amount of potential future payments under such guarantees and indemnities is not determinable.

Note 10 — Business Combinations

TSYS Managed Services

     On November 16, 2006, TSYS announced an agreement with Merchants, a customer-contact company and a wholly owned subsidiary of Dimension Data, to deliver a comprehensive range of managed services to institutions across Europe, the Middle East and Africa. The agreement combines the call-center capabilities of Merchants with TSYS’ special business unit, both of which specialize in customer-servicing operations, including back-office, cross-selling and up-selling activities for financial institutions engaged in card issuing and merchant acquiring. The new venture is called TSYS Managed Services and includes existing Merchants centers that comprise more than 200 seats in Milton Keynes, England, near London, and Barneveld, The Netherlands, near Amsterdam. TSYS paid an aggregate consideration of approximately $2.8 million, including direct acquisition costs.

     Prior to the new agreement, TSYS contracted with Merchants to provide these services to TSYS’ international clients. TSYS consolidated TSYS Managed Services’ balance sheet and results of operations, as of November 16, 2006. The Company recorded the acquisition of majority ownership as a business combination requiring the Company to allocate the purchase price for the assets acquired and liabilities assumed based upon their relative fair values. The Company has preliminarily allocated $625,000 to goodwill related to TSYS Managed Services.

     The acquisition of TSYS Managed Services allows TSYS to deliver the same managed services to clients in Europe and the broader region as it does to its domestic clients. TSYS Managed Services operates as a separate, majority owned subsidiary of TSYS. Revenues associated with TSYS Managed Services are included in other services and are included in international-based support services for segment reporting purposes.

TSYS Card Tech

     On July 11, 2006, TSYS acquired Card Tech, Ltd., a privately owned London-based payments firm, and related companies, increasing TSYS’ card issuing and merchant acquiring capabilities and extending its geographic reach to Asia Pacific, Europe, the Middle East and Africa. TSYS paid an aggregate consideration of approximately $59.5 million, including direct acquisition costs.

     Card Tech, Ltd. was established in 1989 and maintains service centers in London, England; Dubai, United Arab Emirates; Nicosia, Cyprus; Kuala Lumpur, Malaysia; and Noida, India.

     Card Tech, Ltd. has implemented its payments software for six of the 25 largest global banks and three of the largest global card issuers. TSYS formed and/or acquired five companies in connection with the Card Tech, Ltd. acquisition, which the Company collectively refers to as TSYS Card Tech.

     TSYS Card Tech’s software applications are utilized globally. TSYS Card Tech offers a server-based system with an established global footprint for comprehensive issuing and acquiring services. TSYS Card Tech offers products and services for installment loans, credit, debit, merchant acquiring and prepaid payment platforms in addition to fraud, risk management, authorizations, chargebacks, e-commerce and m-commerce solutions designed for the bankcard market. TSYS Card Tech’s applications are browser-based, multilingual, multicurrency and multi-country (including double-byte-enabled).

     TSYS consolidated TSYS Card Tech’s balance sheet and results of operations as of July 11, 2006. The purchase price allocation is presented below:

(in thousands)
Cash and cash equivalents		$	4,265
Intangible assets			19,100
Goodwill			32,700
Other assets			12,095
Total assets acquired			68,160
Other liabilities			8,693
Total liabilities assumed			8,693
Net assets acquired		$	59,467

     Revenues associated with TSYS Card Tech are included in electronic payment processing services and are included in international—based support services for segment reporting purposes.

Pro forma

     The pro forma impact of the TSYS Card Tech and TSYS Managed Services acquisitions on revenues and net income for periods prior to the acquisition was not material.

Note 11 — Income Taxes

     TSYS is a member of an affiliated group that files a consolidated U.S. Federal income tax return and most state and foreign income tax returns on a separate entity basis. In the normal course of business, the Company is subject to examinations by these taxing authorities unless statutory examination periods lapse. TSYS is no longer subject to U.S. Federal income tax examinations for years before 2004 and with few exceptions, the Company is no longer subject to income tax examinations from state and local or foreign tax authorities for years before 2001. There is currently no Federal or foreign tax examinations in progress. However, a number of tax examinations are in progress by the relevant state tax authorities. Although, TSYS is unable to determine the ultimate outcome of these examinations, TSYS believes that its liability for uncertain tax positions relating to these jurisdictions for such years is adequate.

     TSYS adopted the provisions of FASB Interpretation No. 48, “Accounting for Income Taxes — an Interpretation of FASB Statement 109” (FIN 48) on January 1, 2007. This interpretation prescribed a recognition threshold and measurement attribute for the financial statement recognition, measurement and disclosure of a tax position taken or expected to be taken in a tax return.

     As a result of the implementation of FIN 48, the Company recognized approximately a $2.0 million increase in the liability for unrecognized income tax benefits, which was accounted for as a reduction to the January 1, 2007, balance of retained earnings. This adjustment was the cumulative effect of applying a different measurement standard in accounting for uncertainty in income taxes. During the nine months ended September 30, 2007, TSYS decreased its liability for prior year uncertain income tax positions as a discrete item by a net amount of approximately $2.9 million (net of the federal tax effect) including $0.9 million in interest and penalties. This decrease resulted from resolving a state tax examination, expiring state audit period statutes and other new information impacting the potential resolution of material uncertain tax positions.

     A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (1):

		Three months ended				Nine months ended
(in millions)		September 30, 2007				September 30, 2007
Beginning balance		$	12.3				7.4
Current activity:
Additions based on tax positions related to current year			—				0.4
Additions for tax positions of prior years			—				4.5
Reductions for tax positions of prior years			(7.5	)			(7.5	)
Settlements			—				—
Net, current activity			(7.5	)			(2.6	)
Ending balance		$	4.8				4.8

     TSYS recognizes potential interest and penalties related to the underpayment of income taxes as income tax expense in the consolidated statements of income. Gross accrued interest and penalties on unrecognized tax benefits totaled $1.4 million and $1.0 million as of January 1, 2007 and September 30, 2007, respectively. The total amounts of unrecognized income tax benefits as of January 1, 2007 and September 30, 2007 that, if recognized, would affect the effective tax rates are $6.2 million and $4.5 million (net of the Federal benefit on State tax issues) respectively, which includes interest and penalties of $0.9 million and $0.8 million.

Note 12 — Subsequent Event

     On October 25, 2007, the Company announced that it has entered into an agreement and plan of distribution with Synovus, under which Synovus plans to distribute all of its shares of TSYS common stock in a spin-off to Synovus shareholders. Under the terms and conditions of the agreement, TSYS will become a fully independent company, allowing for broader diversification of the Company’s shareholder base, more liquidity of the Company’s shares and additional investment in strategic growth opportunities and potential acquisitions.

     Prior to the spin-off transaction and in accordance with the agreement and plan of distribution, TSYS has agreed to pay a one-time aggregate cash dividend of $600 million to all TSYS shareholders, including Synovus. TSYS expects that the dividend will be funded by a combination of cash on hand and the use of a revolving credit facility. Refer to Note 6 for more information on the revolving credit facility.

     In the spin-off, Synovus will distribute its 80.7 percent equity stake in TSYS, on a pro rata basis, to Synovus shareholders as of a record date to be determined by the Synovus board (expected to be on or around December 18, 2007). Based on the number of Synovus and TSYS shares outstanding as of September 30, 2007, Synovus shareholders can expect to receive approximately 0.49 shares of TSYS common stock for every share they own of Synvous; however, this is subject to change based on the number of Synovus shares outstanding on the record date.

     Based on the number of TSYS shares outstanding as of September 30, 2007, it is expected that TSYS shareholders as of a record date to be determined by the TSYS board (expected to be on or around December 17, 2007), will receive a cash dividend of $3.04 per share. The final per share dividend will be determined based on the number of TSYS shares outstanding on the record date for the TSYS cash dividend. TSYS intends for its annual dividend per share to remain at $0.28.

     Subject to the completion of the spin-off, the TSYS Board of Directors has extended to April 2010 TSYS’ current share repurchase program that was set to expire in April 2008 and increased the number of shares that may be repurchased under the plan from up to 2 million to up to 10 million.

TOTAL SYSTEM SERVICES, INC.
Item 2 — Management’s Discussion and Analysis of Financial
Condition and Results of Operations

Financial Overview

     Total System Services, Inc.’s (TSYS’ or the Company’s) revenues are derived from providing electronic payment processing and related services to financial and nonfinancial institutions, generally under long-term processing contracts.

     For a detailed discussion regarding the Company’s Operations, see “Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2006.

     A summary of the financial highlights for 2007, as compared to 2006, is provided below:

		Three months ended												Nine months ended
		September 30,												September 30,
(in millions, except per share										Percent												Percent
data and employees)		2007				2006				Change				2007				2006				Change
Revenues before reimbursables		$	359.0				342.3				4.9	%		$	1,066.7				1,014.7				5.1	%
Total revenues			457.6				441.8				3.6				1,347.3				1,283.3				5.0
Operating income			91.2				72.3				26.2				272.8				228.8				19.2
Net income			68.8				54.3				26.7				191.8				162.1				18.3
Basic earnings per share (EPS)			0.35				0.28				26.5				0.98				0.82				18.4
Diluted EPS			0.35				0.28				26.5				0.97				0.82				18.4
Other:
Average accounts on file (AOF)			384.3				385.8				(0.4	)			412.1				413.6				(0.4	)
Average full-time equivalent employees (FTE)			6,751				6,640				1.7				6,752				6,616				2.0

	•		The impact of acquisitions on consolidated total revenues for the three and nine months ended September 30, 2007 was $12.0 million and $31.6 million, respectively. The impact of acquisitions on consolidated revenues before reimbursable items for the three and nine months ended September 30, 2007 was $15.7 million and $43.3 million, respectively. Refer to Other Services revenues on page 32 for the characterization from reimbursable items to other services revenues for the TSYS Managed Services acquisition. The impact of acquisitions on consolidated total expenses for the three and nine months ended September 30, 2007 was $10.1 million and $26.5 million, respectively. The impact of acquisitions on consolidated expenses before reimbursable items for the three and nine months ended September 30, 2007 was $13.8 million and $38.3 million, respectively.
	•		Cash flows from operating activities were $247.5 million for the nine months ended September 30, 2007, compared to $230.4 million for the same period in 2006.

     Significant highlights for 2007 include:

Domestic

	•		TSYS and Discover Financial Services signed an issuer processor agreement. Under the terms of the agreement, TSYS will begin processing prepaid and credit card transactions on the Discover Network, a business unit of Discover Financial Services.
	•		Commerce Bancorp, Inc. selected the TSYS Collections and Recovery System to manage its entire collections and recovery inventory. This allows the bank to more effectively work all of its delinquent and charged-off card and installment accounts, including automobile loans and mortgages.
	•		TSYS successfully completed the pilot program for the Wal-Mart MoneyCard, issued by GE and reloaded through Green Dot’s national reloading network. The Visa-branded prepaid product was first piloted in November of 2006 with TSYS, and was available in 2,600 Wal-Mart stores at the end of July 2007.
	•		JP Morgan Chase & Co. (Chase) discontinued its processing agreement at the end of July 2007 according to the original schedule and began processing in-house using a modified version of TSYS’ processing system.
	•		During the first quarter, TSYS completed the Capital One conversion.

International

	•		TSYS has signed a long-term agreement with Nationwide, the world’s largest Building Society, to process Nationwide’s credit card account portfolio and to build, operate and manage a new customer care center for member support services. Based on the scope of services, Nationwide would rank among TSYS’ largest clients. Servicing of Nationwide’s more than 1 million credit card Visa accounts and operation of a customer care center for Nationwide is planned for the first quarter of 2008.
	•		TSYS signed Tinkoff Credit Systems, a Moscow-based consumer lending bank, to supply its card management and authorization system. The bank plans to become the first credit card monoliner in Russia and will focus exclusively on issuing credit cards.
	•		TSYS and Lloyds TSB have successfully launched a new money transfer card in the UK. The new Silver account from Lloyds TSB includes an innovative money transfer prepaid product, aimed particularly at the growing number of newly arrived immigrants living and working in the U.K.
	•		TSYS and The Gift Voucher Shop (GVS) announced the successful launch of GVS’ One4all retail gift card campaign in hundreds of Post Offices in Ireland and on the GVS Web site.
	•		TSYS introduced Chip and PIN Secure Payments in Cyprus with the introduction of EMV cards through partnerships with three Cyprus-based banks, Marfin Popular Bank (formerly Laiki Bank, Cyprus), Hellenic Bank and Universal Bank. The Commercial Bank of Qatar also issued its first EMV card program utilizing TSYS’ card-management solution, PRIME.

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TSYS launched the Rewards card pilot program in the United Kingdom with Norwich Union (NU), which is now the second program that NU has live on the TSYS Prepaid platform.

	•		TSYS announced that CUP Data, TSYS’ joint venture with China UnionPay, has recently begun providing processing services for Huaxia Bank Co., Ltd, one of China’s largest nationwide banks. CUP Data now provides processing services for three of the four largest issuing banks in China that use outsourced services to support their payment programs.
	•		TSYS signed a contract extension with Spira de México, S.A. de C.V. (Spira), to continue processing its consumer-credit portfolio. Under terms of the agreement, TSYS will continue to provide risk management, portfolio management and reporting tools to Spira.
	•		TSYS’ PRIME card- and merchant-management system was chosen by Norway’s largest financial-services group, DnB NOR Bank ASA, to manage the fast-growing cards portfolio of its market-leading credit-card operator, DnB NOR Kort. DnB NOR Kort has plans to further expand its service solutions for DnB NOR Kort customers.