TOTAL SYSTEM SERVICES INC (Form: 10-Q, Received: 08/07/2008 16:20:16)

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: June 30, 2008


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.

www.tsys.com
(Exact name of registrant as specified in its charter)


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

One TSYS Way, Post Office Box 1755, Columbus, Georgia 31902
(Address of principal executive offices) (Zip Code)

(706) 649-2310
(Registrant’s telephone number, including area code)

1600 First Avenue, Post Office Box 1755, Columbus, Georgia 31902
(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, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ

Accelerated filer o

Non-accelerated filer o
(Do not check if a smaller reporting company)

Smaller reporting company 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: August 7, 2008
Common Stock, $0.10 par value		197,678,378 shares

TOTAL SYSTEM SERVICES, INC.
INDEX


	Page
	Number

Part I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets (unaudited) — June 30, 2008 and December 31, 2007		3
Condensed Consolidated Statements of Income (unaudited) — Three and six months ended June 30, 2008 and 2007		4
Condensed Consolidated Statements of Cash Flows (unaudited) — Six months ended June 30, 2008 and 2007		6
Notes to Unaudited Condensed Consolidated Financial Statements		7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		16
Item 3. Quantitative and Qualitative Disclosures About Market Risk		33
Item 4. Controls and Procedures		35
Part II. Other Information
Item 1A. Risk Factors		36
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		36
Item 4. Submissions of Matters to a Vote of Security Holders		37
Item 6. Exhibits		38
Signatures		39
Exhibit Index		40
EX-10.1 AMENDED AND RESTATED DEFERRED COMPENSATION PLAN
EX-10.2 AMENDED AND RESTATED DIRECTORS' DEFERRED COMPENSATION PLAN
EX-31.1 SECTION 302, CERTIFICATION OF THE CEO
EX-31.2 SECTION 302, CERTIFICATION OF THE CFO
EX-32 SECTION 906, CERTIFICATION OF THE CEO AND CFO

TOTAL SYSTEM SERVICES, INC.

Part I — Financial Information

Condensed Consolidated Balance Sheets
(Unaudited)


(in thousands, except per share data)	June 30, 2008			December 31, 2007
Assets
Current assets:
Cash and cash equivalents (includes $136.4 million on deposit with a related party at 2007)	$	257,803			210,518
Restricted cash (includes $8.2 million on deposit with a related party at 2007)		25,315			29,688
Accounts receivable, net of allowance for doubtful accounts and billing adjustments of $9.3 million and $10.1 million at 2008 and 2007, respectively (includes $331 due from a related party at 2007)		267,678			256,970
Deferred income tax assets		30,707			17,152
Prepaid expenses and other current assets		72,635			72,250

Total current assets		654,138			586,578
Property and equipment, net of accumulated depreciation and amortization of $281.6 million and $266.4 million at 2008 and 2007, respectively		288,159			283,138
Computer software, net of accumulated amortization of $399.9 million and $365.6 million at 2008 and 2007, respectively		189,616			205,830
Contract acquisition costs, net		159,468			151,599
Goodwill		143,172			142,545
Equity investments		85,377			80,905
Other intangible assets, net of accumulated amortization of $14.3 million and $12.8 million at 2008 and 2007, respectively		12,567			13,462
Other assets		13,582			14,963

Total assets	$	1,546,079			1,479,020

Liabilities and Shareholders’ Equity
Current liabilities:
Current portion of long-term debt	$	74,050			8,648
Current portion of obligations under capital leases		3,686			3,080
Accrued salaries and employee benefits		47,315			85,142
Accounts payable (includes $12 and $281 payable to related parties at 2008 and 2007, respectively)		40,277			41,817
Other current liabilities (includes $11.2 million payable to related parties for 2007)		141,020			135,108

Total current liabilities		306,348			273,795
Long-term debt, excluding current portion		184,061			252,659
Deferred income tax liabilities		73,623			67,428
Obligations under capital leases, excluding current portion		7,963			3,934
Other long-term liabilities		31,005			28,151

Total liabilities		603,000			625,967

Minority interests in consolidated subsidiaries		9,801			8,580

Shareholders’ equity:
Common stock — $0.10 par value. Authorized 600,000 shares; 200,369 and 199,660 issued at 2008 and 2007, respectively; 197,685 and 197,965 outstanding at 2008 and 2007, respectively		20,037			19,966
Additional paid-in capital		120,246			104,762
Accumulated other comprehensive income, net		33,076			28,322
Treasury stock, at cost (shares of 2,684 and 1,695 at 2008 and 2007, respectively)		(57,566	)		(34,138	)
Retained earnings		817,485			725,561

Total shareholders’ equity		933,278			844,473

Total liabilities and shareholders’ equity	$	1,546,079			1,479,020

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements

TOTAL SYSTEM SERVICES, INC.

Condensed Consolidated Statements of Income
(Unaudited)


	Three months ended June 30,
(in thousands, except per share data)	2008			2007
Revenues:
Electronic payment processing services (includes $1.5 million from related parties for 2007)	$	242,420			244,750
Merchant acquiring services		65,576			64,277
Other services (includes $2.4 million from related parties for 2007)		64,379			55,067

Revenues before reimbursable items		372,375			364,094
Reimbursable items (includes $0.7 million from related parties for 2007)		110,738			96,061

Total revenues		483,113			460,155

Expenses:
Salaries and other personnel expense		147,666			145,532
Net occupancy and equipment expense		74,789			69,278
Spin related expenses		1,255			—
Other operating expenses (includes $2.4 million to related parties for 2007)		51,018			53,368

Expenses before reimbursable items		274,728			268,178
Reimbursable items		110,738			96,061

Total expenses		385,466			364,239

Operating income		97,647			95,916

Nonoperating income (expense):
Interest income (includes $3.3 million from related parties for 2007)		1,698			6,159
Interest expense		(2,887	)		(366	)
Gain (loss) on foreign currency translation, net		198			(845	)
Other income		579			44

Total nonoperating income (expense)		(412	)		4,992

Income before income taxes, minority interests and equity in income of equity investments		97,235			100,908
Income taxes		34,122			35,603

Income before minority interests and equity in income of equity investments		63,113			65,305
Minority interests in consolidated subsidiaries’ net income, net of tax		(697	)		(602	)
Equity in income of equity investments, net of tax		668			985

Net income	$	63,084			65,688

Basic earnings per share	$	0.32			0.33

Diluted earnings per share	$	0.32			0.33

Weighted average common shares outstanding		196,281			196,693
Increase due to assumed issuance of shares related to common equivalent shares		689			457

Weighted average common and common equivalent shares outstanding		196,970			197,150

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements

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


	Six months ended June 30,
(in thousands, except per share data)	2008			2007
Revenues:
Electronic payment processing services (includes $2.8 million from related parties for 2007)	$	483,699			474,809
Merchant acquiring services		127,242			124,957
Other services (includes $4.4 million from related parties for 2007)		121,475			107,939

Revenues before reimbursable items		732,416			707,705
Reimbursable items (includes $1.2 million from related parties for 2007)		212,419			182,053

Total revenues		944,835			889,758

Expenses:
Salaries and other personnel expense		295,983			285,976
Net occupancy and equipment expense		147,676			136,627
Spin related expenses		8,150			—
Other operating expenses (includes $4.8 million to related parties for 2007)		96,186			103,507

Expenses before reimbursable items		547,995			526,110
Reimbursable items		212,419			182,053

Total expenses		760,414			708,163

Operating income		184,421			181,595

Nonoperating income (expense):
Interest income (includes $6.6 million from related parties for 2007)		4,261			11,647
Interest expense		(6,227	)		(576	)
Gain (loss) on foreign currency translation, net		2,141			(162	)
Other income		714			58

Total nonoperating income		889			10,967

Income before income taxes, minority interests and equity in income of equity investments		185,310			192,562
Income taxes		67,157			70,494

Income before minority interests and equity in income of equity investments		118,153			122,068
Minority interests in consolidated subsidiaries’ net income, net of tax		(947	)		(952	)
Equity in income of equity investments, net of tax		2,492			1,845

Net income	$	119,698			122,961

Basic earnings per share	$	0.61			0.63

Diluted earnings per share	$	0.61			0.62

Weighted average common shares outstanding		196,513			196,591
Increase due to assumed issuance of shares related to common equivalent shares		680			493

Weighted average common and common equivalent shares outstanding		197,193			197,084

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements

TOTAL SYSTEM SERVICES, INC.

Condensed Consolidated Statements of Cash Flows
(Unaudited)


	Six months ended June 30,
(in thousands)	2008			2007
Cash flows from operating activities:
Net income	$	119,698			122,961
Adjustments to reconcile net income to net cash provided by operating activities:
Minority interests in consolidated subsidiaries’ net income, net of tax		947			952
(Gain) loss on foreign currency, net		(2,141	)		162
Equity in income of equity investments, net of tax		(2,492	)		(1,845	)
Dividends received from equity investments		3,248			2,994
Depreciation and amortization		79,755			76,607
Amortization of debt issuance costs		77			—
Share-based compensation		15,675			6,596
Excess tax benefit from share-based payment arrangements		(81	)		(3,869	)
Asset impairments		—			620
Provisions for bad debt expenses and billing adjustments		3,201			148
Charges for transaction processing provisions		(541	)		437
Deferred income tax benefit		(9,016	)		(2,760	)
Loss on disposal of equipment, net		159			23
(Increase) decrease in:
Accounts receivable		(14,130	)		(6,150	)
Prepaid expenses, other current assets and other long-term assets		870			(8,921	)
Increase (decrease) in:
Accounts payable		686			(814	)
Accrued salaries and employee benefits		(37,814	)		(31,870	)
Other current liabilities and other long-term liabilities		16,666			(35,765	)

Net cash provided by operating activities		174,767			119,506

Cash flows from investing activities:
Purchases of property and equipment, net		(26,296	)		(21,438	)
Additions to licensed computer software from vendors		(8,598	)		(4,810	)
Additions to internally developed computer software		(8,332	)		(7,458	)
Cash used in acquisitions and equity investments		(295	)		(472	)
Additions to contract acquisition costs		(28,417	)		(9,542	)

Net cash used in investing activities		(71,938	)		(43,720	)

Cash flows from financing activities:
Dividends paid on common stock (includes $22.3 million paid to related parties during 2007)	$	(27,768	)		(27,598	)
Subsidiary dividends paid to noncontrolling shareholders		(241	)		—
Repurchase of common stock		(23,594	)		—
Excess tax benefit from share-based payment arrangements		81			3,869
Principal payments on long-term debt borrowings and capital lease obligations		(6,870	)		(1,744	)
Proceeds from borrowings		2,506			6,805
Proceeds from exercise of stock options		251			5,112

Net cash used in financing activities		(55,635	)		(13,556	)

Effect of exchange rate changes on cash and cash equivalents		91			841

Net increase in cash and cash equivalents		47,285			63,071
Cash and cash equivalents at beginning of year		210,518			389,123

Cash and cash equivalents at end of period	$	257,803			452,194

Cash paid for interest	$	6,227			576

Cash paid for income taxes, net of refunds	$	62,175			93,087

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.

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 2007 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 immaterial reclassifications have been made to the 2007 financial statements to conform to the presentation adopted in 2008.

Note 2 — Supplementary Balance Sheet Information

Cash and Cash Equivalents

Cash and cash equivalent balances are summarized as follows:


(in thousands)	June 30, 2008		December 31, 2007
Cash and cash equivalents in domestic accounts	$	213,816		171,715
Cash and cash equivalents in foreign accounts		43,987		38,803

Total	$	257,803		210,518

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)	June 30, 2008		December 31, 2007
Prepaid expenses	$	12,584		12,766
Income taxes receivable		—		10,838
Supplies inventory		8,706		8,725
Other		51,345		39,921

Total	$	72,635		72,250

Contract Acquisition Costs, net

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


(in thousands)	June 30, 2008		December 31, 2007
Payments for processing rights, net	$	95,107		96,449
Conversion costs, net		64,361		55,150

Total	$	159,468		151,599

Amortization related to payments for processing rights, which is recorded as a reduction of revenues, was $7.4 million and $5.8 million for the three months ended June 30, 2008 and 2007, respectively. For the six months ended June 30, 2008 and 2007, amortization related to payments for processing rights was $13.7 million and $11.7 million, respectively.

Amortization expense related to conversion costs was $3.2 million and $4.2 million for the three months ended June 30, 2008 and 2007, respectively. For the six months ended June 30, 2008 and 2007, amortization related to conversion costs was $6.7 million and $8.1 million, respectively.

Other Current Liabilities

Significant components of other current liabilities are summarized as follows:


(in thousands)	June 30, 2008		December 31, 2007
Client liabilities	$	32,647		32,199
Accrued expenses		31,647		32,520
Accrued income taxes		5,980		2,657
Deferred revenues		28,468		25,733
Dividends payable		13,863		13,859
Transaction processing provisions		5,160		8,525
Client postage deposits		4,257		4,244
Other		18,998		15,371

Total	$	141,020		135,108

Note 3 — Comprehensive Income

For the three and six months ended June 30, comprehensive income is summarized below:


	Three months ended June 30,				Six months ended June 30,
(in thousands)	2008		2007		2008		2007
Net income	$	63,084		65,688		119,698		122,961
Other comprehensive income (OCI), net of tax:
Foreign currency translation adjustments		377		2,783		4,730		2,676
Change in accumulated OCI related to postretirement healthcare plans		12		—		24		—

Total	$	63,473		68,471		124,452		125,637

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, 2007

Amount

Tax Effect

Net-of-Tax Amount

June 30, 2008

Foreign currency translation adjustments

29,202

6,481

(1,751

)

4,730

33,932

Change in accumulated OCI related to postretirement healthcare plans

(880

)

(14

)

(856

)

Total

28,322

6,519

(1,765

)

4,754

33,076

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 four 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. During the second quarter of 2008, TSYS reorganized and renamed its operating segments in a manner that reflects the way the CODM views the business. The new operating segments are North American Services segment, Global Services segment and Merchant Services segment. As part of the reorganization, TSYS reclassed the segment results for TSYS de Mexico from Global Services to North American Services to reflect the change.

Effective January 1, 2008, TSYS merged the operations of TSYS Prepaid, Inc. into TSYS. Effective February 1, 2008, TSYS merged the operations of Golden Retriever, L.L.C. (Golden Retriever) with TSYS Acquiring Solutions, L.L.C. (TSYS Acquiring). As a result, previous segment results were reclassified to move Golden Retriever from North American Services to Merchant Services to reflect the change related to the merger.

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

North American Services include electronic payment processing services and other services provided from within the North American region. Global Services include electronic payment processing and other services provided from outside the North American region. Merchant Services include electronic processing and other services provided to merchant acquiring institutions.


(in thousands)	North American			Global			Merchant			Spin-Related
Operating Segments	Services			Services			Services			Costs			Consolidated
At June 30, 2008
Identifiable assets	$	1,326,230			354,861			181,556			—		$	1,862,647
Intersegment eliminations		(314,768	)		(1,716	)		(84	)		—			(316,568	)

Total assets	$	1,011,462			353,145			181,472			—		$	1,546,079


At December 31, 2007
Identifiable assets	$	1,278,403			319,279			189,956			—		$	1,787,638
Intersegment eliminations		(305,847	)		(1,526	)		(1,245	)		—			(308,618	)

Total assets	$	972,556			317,753			188,711			—		$	1,479,020


Three months ended June 30, 2008
Revenues before reimbursables	$	242,248			77,032			58,291			—		$	377,571
Intersegment revenues		(4,663	)		(286	)		(247	)		—			(5,196	)

Revenues before reimbursables from external customers	$	237,585			76,746			58,044			—		$	372,375

Segment total revenues	$	336,168			79,903			74,567			—		$	490,638
Intersegment revenues		(6,992	)		(286	)		(247	)		—			(7,525	)

Revenues from external customers	$	329,176			79,617			74,320			—		$	483,113

Depreciation and amortization	$	25,047			8,797			6,682			—		$	40,526

Intersegment expenses	$	2,673			(2,649	)		(7,514	)		—		$	(7,490	)

Segment operating income	$	69,075			11,741			18,086			(1,255	)	$	97,647

Income before income taxes, minority interest and equity in income of equity investments	$	69,343			10,867			18,280			(1,255	)	$	97,235

Income taxes	$	23,634			4,299			6,637			(448	)	$	34,122

Equity in income of equity investments	$	366			302			—			—		$	668

Net income	$	46,074			6,174			11,643			(807	)	$	63,084


(in thousands)	North American			Global			Merchant			Spin-Related
Operating Segments	Services			Services			Services			Costs			Consolidated
Three months ended June 30, 2007
Revenues before reimbursables	$	253,566			58,043			59,008			—		$	370,617
Intersegment revenues		(5,754	)		(372	)		(397	)		—			(6,523	)

Revenues before reimbursables from external customers	$	247,812			57,671			58,611			—		$	364,094


Segment total revenues	$	333,098			60,733			74,888			—		$	468,719
Intersegment revenues		(7,795	)		(372	)		(397	)		—			(8,564	)

Revenues from external customers	$	325,303			60,361			74,491			—		$	460,155

Depreciation and amortization	$	25,740			5,507			6,763			—		$	38,010

Intersegment expenses	$	3,061			(3,726	)		(7,899	)		—		$	(8,564	)

Segment operating income	$	69,578			10,048			16,290			—		$	95,916

Income before income taxes, minority interest and equity in income of equity investments	$	75,107			9,053			16,748			—		$	100,908

Income taxes	$	27,344			2,235			6,024			—		$	35,603

Equity in income of equity investments	$	824			161			—			—		$	985

Net income	$	48,587			6,377			10,724			—		$	65,688


Six months ended June 30, 2008
Revenues before reimbursables	$	485,019			144,989			113,420			—		$	743,428
Intersegment revenues		(9,894	)		(689	)		(429	)		—			(11,012	)

Revenues before reimbursables from external customers	$	475,125			144,300			112,991			—		$	732,416

Segment total revenues	$	665,077			149,726			145,504			—		$	960,307
Intersegment revenues		(14,354	)		(689	)		(429	)		—			(15,472	)

Revenues from external customers	$	650,723			149,037			145,075			—		$	944,835

Depreciation and amortization	$	50,027			16,492			13,236			—		$	79,755

Intersegment expenses	$	5,447			(6,190	)		(14,694	)		—		$	(15,437	)

Segment operating income	$	140,225			19,186			33,160			(8,150	)	$	184,421

Income before income taxes, minority interest and equity in income of equity investments	$	140,178			19,618			33,664			(8,150	)	$	185,310

Income taxes	$	50,271			7,212			12,045			(2,371	)	$	67,157

Equity in income of equity investments	$	916			1,576			—			—		$	2,492

Net income	$	90,823			13,035			21,619			(5,779	)	$	119,698


Six months ended June 30, 2007
Revenues before reimbursables	$	493,672			111,006			114,689			—		$	719,367
Intersegment revenues		(10,529	)		(595	)		(538	)		—			(11,662	)

Revenues before reimbursables from external customers	$	483,143			110,411			114,151			—		$	707,705

Segment total revenues	$	646,693			116,134			142,635			—		$	905,462
Intersegment revenues		(14,571	)		(595	)		(538	)		—			(15,704	)

Revenues from external customers	$	632,122			115,539			142,097			—		$	889,758

Depreciation and amortization	$	51,691			11,307			13,609			—		$	76,607

Intersegment expenses	$	6,537			(6,965	)		(15,270	)		—		$	(15,698	)

Segment operating income	$	132,059			21,160			28,376			—		$	181,595

Income before income taxes, minority interest and equity in income of equity investments	$	142,720			20,431			29,411			—		$	192,562

Income taxes	$	53,529			6,407			10,558			—		$	70,494

Equity in income of equity investments	$	1,742			103			—			—		$	1,845

Net income	$	90,933			13,175			18,853			—		$	122,961

Revenues by Geographic Area

Revenues for North American Services and Merchant 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 Global 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 six months ended June 30, 2008 and 2007, respectively, based on the domicile of the Company’s customers.


	Three months ended June 30,				Six months ended June 30,
(in millions)	2008		2007		2008		2007
United States	$	365.4		362.5		719.5		700.2
Europe		68.3		49.1		127.2		95.0
Canada		31.3		30.8		62.9		60.8
Japan		8.1		6.1		15.6		11.4
Mexico		4.0		3.3		7.7		6.5
Other		6.0		8.4		11.9		15.9

Total	$	483.1		460.2		944.8		889.8

The following table reconciles geographic revenues to revenues by reportable segment for the three months ended June 30, 2008 and 2007, respectively, based on the domicile of the Company’s customers.


	North American Services				Global Services				Merchant Services
(in millions)	2008		2007		2008		2007		2008		2007
United States	$	291.4		288.2		—		0.2		74.0		74.1
Europe		0.2		0.4		68.1		48.7		—		—
Canada		31.1		30.7		—		—		0.2		0.1
Japan		—		—		8.1		6.1		—		—
Mexico		4.0		3.3		—		—		—		—
Other		2.5		2.7		3.4		5.4		0.1		0.3

Total	$	329.2		325.3		79.6		60.4		74.3		74.5

The following table reconciles geographic revenues to revenues by reportable segment for the six months ended June 30, 2008 and 2007, respectively, based on the domicile of the Company’s customers.


	North American Services				Global Services				Merchant Services
(in millions)	2008		2007		2008		2007		2008		2007
United States	$	575.0		558.6		0.1		0.2		144.4		141.4
Europe		0.5		0.9		126.7		94.1		—		—
Canada		62.6		60.5		—		—		0.3		0.3
Japan		—		—		15.6		11.4		—		—
Mexico		7.7		6.5		—		—		—		—
Other		4.9		5.6		6.6		9.9		0.4		0.4

Total	$	650.7		632.1		149.0		115.6		145.1		142.1

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


(in millions)	At June 30, 2008		At December 31, 2007
United States	$	210.3		208.3
Europe		72.9		70.3
Japan		2.1		1.9
Other		2.9		2.6

Total	$	288.2		283.1

Major Customers

For the three months ended June 30, 2008, the Company had three major customers which accounted for approximately 32.1%, or $155.0 million, of total revenues. For the three months ended June 30, 2007, these three major customers accounted for approximately 34.2%, or $157.3 million, of total revenues. For the six months ended June 30, 2008, the Company had three major customers which accounted for approximately 31.4%, or $297.1 million, of total revenues. For the six months ended June 30, 2007, these three major customers accounted for approximately 33.9%, or $301.9 million, of total revenues. Revenues from major customers for the periods reported are primarily attributable to the North American Services and Merchant Services segments.

Three months ended June 30,

Six months ended June 30,

2008

2007

2008

2007

% of

% of

% of

% of

(in millions)

Total

Total

Total

Total

Revenue

Dollars

Revenues

Dollars

Revenues

Dollars

Revenues

Dollars

Revenues

Client 1

81.3

16.8

57.3

12.4

150.5

15.9

109.8

12.3

Client 2

56.5

11.7

55.5

12.1

111.3

11.8

104.3

11.7

Client 3

17.2

3.6

44.5

9.7

35.3

3.7

87.8

9.9

Totals

155.0

32.1

157.3

34.2

297.1

31.4

301.9

33.9

Note 5 — Share-Based Compensation

The Company’s Annual Report on Form 10-K for the year ended December 31, 2007, 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 and spin-related 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 June 30, 2008, share-based compensation was $7.8 million, compared to $3.5 million for the same period in 2007. Included in the $7.8 million amount for 2008 and $3.5 million amount for 2007 is approximately $4.0 million and $1.7 million, respectively, related to expensing the fair value of stock options. For the six months ended June 30, 2008, share-based compensation was $15.7 million, compared to $6.6 million for the same period in 2007. Included in the $15.7 million amount for 2008 and $6.6 million amount for 2007 is approximately $9.7 million and $3.3 million, respectively, related to expensing the fair value of stock options.

Nonvested Share Awards

During the first six months of 2008, the Company issued 695,411 shares of TSYS common stock with a market value of $15.2 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 TSYS common stock at the date of issuance is amortized as compensation expense over the vesting period of the awards.

During the first six 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 TSYS common stock at the date of issuance is amortized as compensation expense over the vesting period of the awards.

As of June 30, 2008, there was approximately $21.2 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 2.7 years.

During the first six months of 2008, TSYS authorized a total grant of 182,816 shares of nonvested stock to two key executives with a performance-vesting schedule (2008 performance-vesting shares). These 2008 performance-vesting shares have seven one-year performance periods (2008-2014) during which the Compensation Committee establishes an earnings per share goal. Each year’s award is 20% of the total authorized shares, up to a maximum of 100% of the total grant. 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.

During 2005, TSYS authorized a total grant of 126,087 shares of nonvested stock to two key executives with a performance-vesting schedule (2005 performance-vesting shares). These performance-vesting shares have seven one-year performance periods (2005-2011) during each of which the Compensation Committee establishes an earnings per share goal and, if such goal is attained during any performance period, 20% of the performance-vesting shares will vest, up to a maximum of 100% of the total grant. 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 June 30, 2008, there was approximately $864,000 of total unrecognized compensation cost related to both the 2008 grant and 2005 grant of nonvested performance-vesting share-based compensation arrangements. That cost is expected to be recognized over the remainder of 2008.

On March 31, 2008, TSYS authorized performance based awards that have a market condition calculated on a combination of 2008 earnings per share growth and TSYS’ performance compared to the S&P 500 Technology Index during 2009 and 2010. Vesting

of this award will occur on the last day of the three-year market condition valuation period if the participant is still employed on that date. Retirement for purposes of this award is defined as age 62 with 15 years of service, or age 65 regardless of service. The fair value of the award is based on a Monte Carlo simulation as prescribed by Statement of Financial Accounting Standards No. 123 (Revised) (SFAS No. 123R) “Share-Based Payment (Revised).” Although the TSYS Board of Directors authorized the award on March 31, 2008, the final amount of the awards cannot be known until early 2009 due to the discretion that the Compensation Committee has in determining the final terms of the award. The Company has engaged a third-party valuation specialist to ascertain the fair value of this award. The third-party specialist completed the evaluation during the second quarter of 2008 and determined the valuation of the award to be approximately $4.4 million. The award will be amortized through December 2010. Until the award is deemed granted, TSYS will exclude the issuance of these units in reporting shares outstanding and the calculation of basic and diluted EPS.

Stock Option Awards

During the first six months of June 2008, the Company granted 768,855 stock options to key TSYS executive officers. The average fair value of the option grant was $9.73 per option and was estimated on the date of grant using the Black-Scholes-Merton option-pricing model with the following weighted average assumptions: exercise price of $23.15; risk-free interest rate of 3.42%; expected volatility of 36.57%; expected term of 8.7 years; and dividend yield of 1.21%.

As of June 30, 2008, there was approximately $7.9 million of total unrecognized compensation expense cost related to TSYS stock options that is expected to be recognized over a remaining weighted average period of 2.5 years.

Earnings Per Share

The diluted earnings per share calculation excludes stock options and nonvested awards that are convertible into 5.6 million and 5.8 million common shares for the three and six months ended June 30, 2008, respectively, and excludes 7,500 common shares for the three and six months ended June 30, 2007 because their inclusion would have been anti-dilutive.

Note 6 — Long-Term Debt

Refer to Note 11 of the Company’s audited financial statements for the year ended December 31, 2007 which are included as Exhibit 13.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2007, as filed with the SEC, for a discussion regarding long-term debt.

In June 2008, TSYS Managed Services EMEA, Ltd. borrowed £1.3 million, or approximately $2.5 million, through a short-term note. The interest rate on the note is the London Interbank Offered Rate (LIBOR) plus 2%, with interest payable quarterly. The term of the note is one year.

Note 7 — Supplementary Cash Flow Information

Contract Acquisition Costs

Cash used for contract acquisition costs for the six months ended June 30, 2008 and 2007, respectively, are summarized as follows:


(in thousands)	June 30, 2008		June 30, 2007
Payments for processing rights	$	12,401		5,843
Conversion costs		16,016		3,699

Total	$	28,417		9,542

Nonvested Awards

During the first six months of 2008 and 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 $6.5 million during 2008 related to a software enterprise license agreement and storage and other peripheral hardware. The Company acquired software under capital lease obligations in the amount of $4.1 million during 2007 related to a three year software agreement.

Note 8 — Legal Proceedings

The Company is subject to various legal proceedings and claims and is also subject to information requests, inquiries and investigations 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 litigation and similar matters when those matters present loss contingencies that TSYS determines to be both probable and reasonably estimable in accordance with Statement of Financial Accounting Standards No. 5 (SFAS No. 5), “Accounting for Contingencies. ”

Note 9 — Guarantees and Indemnifications

The Company has entered into processing and licensing agreements with its 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. In addition, the Company has indemnification obligations to Synovus Financial Corp. pursuant to the disaffiliation and related agreements entered into by the parties in connection with the spin-off.

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

Note 10 — 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 a few exceptions, the Company is no longer subject to income tax examinations from state and local authorities for years before 2001 and from foreign authorities before 2003. There are currently no Federal tax examinations in progress. However, a number of tax examinations are in progress by the relevant foreign and 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 Uncertainty in 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.

During the three months ended June 30, 2008, TSYS decreased its liability for prior year uncertain income tax positions as a discrete item by a net amount of approximately $1.2 million. This net decrease mostly resulted from decreases in reserves for Federal and State liabilities partly offset by increases in liabilities resulting from foreign transfer pricing issues.

TSYS recognizes potential interest and penalties related to the underpayment of income taxes as income tax expense in the condensed consolidated statements of income. Gross accrued interest and penalties on unrecognized tax benefits totaled $1.4 million and $1.6 million as of March 31, 2008 and June 30, 2008, respectively. The total amounts of unrecognized income tax benefits as of March 31, 2008 and June 30, 2008 that, if recognized, would affect the effective tax rates are $5.7 million and $4.5 million (net of the Federal benefit on state tax issues), respectively, which include interest and penalties of $1.0 million and $1.2 million.

Note 11 — Fair Value Measurement

In September 2006, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 157 (SFAS No. 157), “Fair Value Measurements.” Although this statement does not require any new fair value measurements, in certain cases its application has changed previous practice in determining fair value. SFAS No. 157 became effective for the Company beginning January 1, 2008 as it relates to fair value measurements of financial assets and liabilities and non-financial assets and liabilities that are recognized at fair value in its financial statements on a recurring basis (at least annually). It will be effective beginning January 1, 2009 for certain other non-financial assets and non-financial liabilities.

SFAS No. 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It establishes a hierarchy for fair value measurements based upon the inputs to the valuation and the degree to which they are observable or not observable in the market. The three levels in the hierarchy are as follows:

	•		Level 1 — Inputs to the valuation based upon quoted prices (unadjusted) for identical assets or liabilities in active markets that are accessible as of the measurement date.

	•		Level 2 — Inputs to the valuation include quoted prices in either markets that are not active, or in active markets for similar assets or liabilities, inputs other than quoted prices that are observable, and inputs that are derived principally from or corroborated by observable market data.

	•		Level 3 — Inputs to the valuation that are unobservable inputs for the asset or liability.

SFAS No. 157 assigns the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs.

In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159 (SFAS No. 159), “The Fair Value Option for Financial Assets and Financial Liabilities.” SFAS No. 159 permits the Company to choose to measure many financial instruments and certain other items at fair value. Upon adoption of SFAS No. 159 on January 1, 2008, TSYS did not elect the fair value option for any financial instrument it did not currently report at fair value.

The adoption of SFAS No. 157 and SFAS No. 159 did not have a material impact upon the Company’s financial position, results of operations and cash flows.

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, 2007.

A summary of the financial highlights for 2008, as compared to 2007, is provided below:


	Three months ended June 30,							Six months ended June 30,
(in millions, except per share data and employees)	2008		2007		% Change			2008		2007		% Change
Revenues before reimbursables	$	372.4		364.1		2.3	%	$	732.4		707.7		3.5	%
Total revenues		483.1		460.2		5.0			944.8		889.8		6.2
Operating income		97.6		95.9		1.8			184.4		181.6		1.6
Net income		63.1		65.7		(4.0	)		119.7		123.0		(2.7	)
Basic earnings per share (EPS)		0.32		0.33		(3.8	)		0.61		0.63		(2.6	)
Diluted EPS		0.32		0.33		(3.9	)		0.61		0.62		(2.7	)
Cash flows from operating activities		74.8		53.0		41.1			174.8		119.5		46.3
Other:
Average accounts on file (AOF)		371.6		433.6		(14.3	)		370.9		426.0		(12.9	)
Cardholder transactions processed		1,645.3		2,392.1		(31.2	)		3,150.2		4,537.6		(30.6	)
Average full-time equivalent employees (FTE)		7,572		6,783		11.6			7,388		6,755		9.4

Significant highlights for 2008 include:

Corporate

•

Announced the launch of ingenuity in action: n>gen ^SM , a new business paradigm that makes it easy for TSYS clients to efficiently and thoroughly manage all their complex payments-related business needs with point-and-click ease. n>gen is not a new platform and use of n>gen will not require conversion to a new platform — it adds a new level of business intelligence made available through analytical-based services, giving institutions a “total” view of their portfolios to make actionable, well-informed decisions on growth opportunities and overall risk.

North American

	•		Announced the signing of a payments processing agreement with Globalcard for the launch of its consumer card portfolio. Under terms of the agreement, TSYS will provide account processing services, risk management, portfolio management and reporting tools to Globalcard, a Mexican-based credit card company.

	•		Announced an agreement with PartnersFirst Affinity Services, a division of Torrey Pines Bank, to process its consumer credit card portfolio. In addition to core processing, PartnersFirst will leverage TSYS’ gold-standard technology for online credit card services and instant application; card, statement and letter production; and a full suite of customer care offerings. The partnership between TSYS and PartnersFirst offers consumers a full spectrum of credit card services for the small and mid-sized affinity partner market.

	•		Announced the renewal of its agreement with Canadian Tire Financial Services, a division of Canadian Tire Corporation, Limited, to exclusively process its payment cards programs. The multi-year agreement includes Canadian Tire’s MasterCard-branded and private label retail portfolios.

	•		Announced the renewal of a long-term agreement with Target Corporation, the operator of Target and SuperTarget stores, to service its REDcard portfolio. The multi-year agreement will include systems processing for Target ^® Visa ^® Credit Card, Target Credit Card ^SM , Target Check Card ^SM and the Target Business Card ^® . Target began working with TSYS in 2000 for the launch of its Visa product. TSYS began supporting the Target Credit Card ^SM portfolio in 2005. Target recently announced that it had

			entered into a $3.6 billion credit facility with Chase Bank USA, N.A. secured by an undivided interest in approximately 47% of its credit card receivables. Based upon information currently available to it, TSYS believes that, even after the creation of this credit facility, Target retains control of its credit card portfolio and the creation of this credit facility does not impact its recently extended processing relationship with Target.

	•		Announced the development by TSYS Loyalty of an innovative product that calculates points and rewards for customers who subscribe to multiple products with a single financial institution, including direct deposit, credit, mortgage, insurance and Certificate of Deposit accounts. TSYS Enterprise Rewards ^SM (patent pending) also supports a Web interface, which allows the subscriber to manage their total relationship with a single access point.

	•		Announced the successful market launch of what we believe is the industry’s most advanced benefits payments system. Fringe Benefits Management Company, the first third-party administrator to use this innovative solution, offers its subscribers the ability to pay from multiple healthcare tax-advantaged accounts, credit accounts and cash accounts through a single card.

Global

•

Completed a contract to provide Standard Bank of South Africa card issuing, merchant acquiring and related payment services for the multiple countries across Africa in which Standard Bank operates. The South African-based financial services company has a global presence, operating in 18 countries in Africa and 20 countries on other continents, including the key financial centers of Europe, the Americas and Asia.

Financial Review

This Financial Review provides a discussion of critical accounting policies and estimates, related party transactions and off-balance sheet arrangements. This Financial Review also discusses the results of operations, financial position, liquidity and capital resources of TSYS and outlines the factors that have affected its recent earnings, as well as those factors that may affect its future earnings.

Critical Accounting Policies and Estimates

The Company’s financial position, results of operations and cash flows are impacted by the accounting policies the Company has adopted. In order to gain a full understanding of the Company’s financial statements, one must have a clear understanding of the accounting policies employed.

Factors that could affect the Company’s future operating results and cause actual results to vary materially from expectations are set forth in the Company’s forward-looking statements. Negative developments in these or other risk factors could have a material adverse effect on the Company’s financial position, results of operations and cash flows. For a detailed discussion regarding the Company’s risk factors, see “Item 1A: Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2007.

For a detailed discussion regarding the Company’s critical accounting policies and estimates, 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, 2007. There have been no material changes to the Company’s critical accounting policies, estimates and assumptions or the judgments affecting the application of those estimates and assumptions in 2008.

Related Party Transactions

The Company believes the terms and conditions of transactions between the Company and 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 comparable to those which could have been obtained in transactions with unaffiliated parties. The Company’s margins with respect to related party transactions are comparable to margins recognized in transactions with unrelated third parties.

Off-Balance Sheet Arrangements

Operating Leases: As a method of funding its operations, TSYS employs noncancelable operating leases for computer equipment, software and facilities. These leases allow the Company to provide the latest technology while avoiding the risk of ownership. Neither the assets nor obligations related to these leases are included on the balance sheet.

Contractual Obligations: The total liability (with state amounts tax effected) for uncertain tax positions under FIN 48 at June 30, 2008 is $4.5 million. Refer to Note 10 in the Notes to Unaudited Condensed Consolidated Financial Statements for more information on income taxes. The Company is not able to reasonably estimate the amount by which the liability will increase or decrease over time; however, at this time, the Company does not expect a significant payment related to these obligations within the next year.

As indicated in the Company’s 2007 Annual Report on Form 10-K, total contractual cash obligations at December 31, 2007 were estimated at $591.3 million. These contractual cash obligations include lease payments and software arrangements.

Results of Operations

The following table sets forth certain income statement captions as a percentage of total revenues and the percentage increases or decreases in those items for the three months ended June 30, 2008 and 2007, respectively:


							% Change
	% of Total Revenues						in Dollar Amounts
	2008			2007			2008 vs. 2007
Revenues:
Electronic payment processing services		50.2	%		53.2	%		(1.0	)%
Merchant acquiring services		13.6			14.0			2.0
Other services		13.3			11.9			16.9

Revenues before reimbursable items		77.1			79.1			2.3
Reimbursable items		22.9			20.9			15.3

Total revenues		100.0			100.0			5.0

Expenses:
Salaries and other personnel expense		30.6			31.6			1.5
Net occupancy and equipment expense		15.5			15.1			8.0
Spin related expenses		0.3			—		nm
Other operating expenses		10.5			11.6			(4.4	)

Expenses before reimbursable items		56.9			58.3			2.4
Reimbursable items		22.9			20.9			15.3

Total expenses		79.8			79.2			5.8

Operating income		20.2			20.8			1.8
Nonoperating income		(0.1	)		1.1			(108.2	)

Income before income taxes, minority interest and equity in income of equity investments		20.1			21.9			(3.6	)
Income taxes		7.0			7.7			(4.2	)

Income before minority interest and equity in income of equity investments		13.1			14.2			(3.4	)
Minority interests in consolidated subsidiaries’ net income		(0.1	)		(0.1	)		15.9
Equity in income of equity investments		0.1			0.2			(32.2	)

Net income		13.1	%		14.3	%		(4.0	)%


nm = not meaningful

The following table sets forth certain income statement captions as a percentage of total revenues and the percentage increases or decreases in those items for the six months ended June 30, 2008 and 2007, respectively:


							% Change
	% of Total Revenues						in Dollar Amounts
	2008			2007			2008 vs. 2007
Revenues:
Electronic payment processing services		51.2	%		53.4	%		1.9	%
Merchant acquiring services		13.5			14.0			1.8
Other services		12.8			12.1			12.5

Revenues before reimbursable items		77.5			79.5			3.5
Reimbursable items		22.5			20.5			16.7

Total revenues		100.0			100.0			6.2

Expenses:
Salaries and other personnel expense		31.3			32.1			3.5
Net occupancy and equipment expense		15.6			15.4			8.1
Spin related expenses		0.9			—		nm
Other operating expenses		10.2			11.6			(7.1	)

Expenses before reimbursable items		58.0			59.1			4.2
Reimbursable items		22.5			20.5			16.7

Total expenses		80.5			79.6			7.4

Operating income		19.5			20.4			1.6
Nonoperating income		0.1			1.2			(91.9	)

Income before income taxes, minority interest and equity in income of equity investments		19.6			21.6			(3.8	)
Income taxes		7.1			7.9			(4.7	)

Income before minority interest and equity in income of equity investments		12.5			13.7			(3.2	)
Minority interests in consolidated subsidiaries’ net income		(0.1	)		(0.1	)		(0.4	)
Equity in income of equity investments		0.3			0.2			35.1

Net income		12.7	%		13.8	%		(2.7	)%


		nm = not meaningful

Revenues

Total revenues increased $23.0 million and $55.1 million, or 5.0% and 6.2%, respectively, during the three and six months ended June 30, 2008, compared to the same periods in 2007. The increase in revenues for the three and six months ended June 30, 2008 includes an increase of $0.6 million and $2.2 million, respectively, related to the effects of currency translation of its foreign-based subsidiaries and branches. Excluding reimbursable items, revenues increased $8.3 million and $24.7 million, or 2.3% and 3.5%, respectively, during the three and six months ended June 30, 2008, compared to the same periods in 2007.

International Revenues

TSYS provides services to its clients worldwide and plans to continue to expand its service offerings internationally in the future.

Total revenues from clients domiciled outside the United States for the three and six months ended June 30, 2008 and 2007, respectively, are summarized below:


	Three months ended June 30,							Six months ended June 30,
(in millions)	2008		2007		% Change			2008		2007		% Change
Europe	$	68.3		49.1		39.1		$	127.2		95.0		33.9
Canada		31.3		30.8		1.5			62.9		60.8		3.4
Japan		8.1		6.1		34.2			15.6		11.4		36.9
Mexico		4.0		3.3		21.2			7.7		6.5		17.8
Other		6.0		8.4		(28.7	)		11.9		15.9		(24.4	)

Totals	$	117.7		97.7		20.5		$	225.3		189.6		18.8

Note: The Company has two equity investments located in Mexico and China that are accounted for under the equity method of accounting, and therefore, TSYS does not include the revenues of its equity investments in consolidated revenues.

The increase in revenues in 2008 from clients domiciled outside the United States was a result of acquisitions, internal growth of existing clients, the increased use of value added products and services, and the effects of currency translation.

TSYS expects to continue to grow its international revenues in the future through acquisitions, business expansion, new client signings and internal growth.

Value Added Products and Services

The Company’s revenues are impacted by the use of optional value added products and services of TSYS’ processing systems. Value added products and services are optional features to which each client can choose to subscribe in order to potentially increase the financial performance of its portfolio. Value added products and services include: risk management tools and techniques, such as credit evaluation, fraud detection and prevention, and behavior analysis tools; and revenue enhancement tools and customer retention programs, such as loyalty programs and bonus rewards. These revenues can increase or decrease from period to period as clients subscribe to or cancel these services. Value added products and services are included primarily in electronic payment processing services revenue. For the three months ended June 30, 2008 and 2007, value added products and services represented 12.4% and 13.3%, respectively, of total revenues. For the six months ended June 30, 2008 and 2007, value added products and services represented 12.2% and 13.1%, respectively, of total revenues.

Major Customers

A significant amount of the Company’s revenues is derived from long-term contracts with large clients, including its major customers. TSYS derives revenues from providing various processing, merchant acquiring and other services to these clients, including processing of consumer and commercial accounts, as well as revenues for reimbursable items. Refer to Note 4 in the Notes to Unaudited Condensed Consolidated Financial Statements for more information regarding major customers. The loss of these clients, or any significant client, could have a material adverse effect on the Company’s financial position, results of operations and cash flows.

In August 2005, TSYS finalized a five year definitive agreement with Capital One Financial Corporation (Capital One) to provide processing services for its North American portfolio of consumer and small business credit card accounts. TSYS completed the conversion of Capital One’s portfolio from its in house processing system to TSYS’ processing system in March 2007. TSYS expects to maintain the card processing functions of Capital One for at least five years. After a minimum of three years of processing with TSYS, the agreement provides Capital One the opportunity to license TS2 under a long-term payment structure.

In October 2006, TSYS deconverted the Bank of America consumer card portfolio. TSYS continues to provide commercial and small business card processing for Bank of America and MBNA, as well as merchant processing for Bank of America, according to the terms of the existing agreements for those services. In 2007, TSYS provided debit card embossing services to Bank of America.

In October 2004, TSYS finalized a definitive agreement with Chase to service the combined card portfolios of Chase Card Services and to upgrade its card-processing technology. Pursuant to the agreement, TSYS converted the consumer accounts of Chase to a modified version of TS2 in July 2005. In July 2007, Chase had the option to either extend the processing agreement for up to five additional two-year periods or migrate the portfolio in-house, under a perpetual license of a modified version of TSYS’ processing system with a six-year payment term. Chase discontinued its processing agreement at the end of July 2007 according to the original schedule and began processing in-house.

Although the revenues associated with the Chase licensing arrangement are expected to be much lower than the revenues associated with the Chase consumer processing arrangement, management believes the impact should not have a material adverse effect on TSYS’ financial position, results of operations or cash flows, as TSYS has planned and implemented a paring down of the resources dedicated to the consumer portfolio through employee attrition and/or redeployment, as well as through equipment lease expirations. TSYS expects to continue to support Chase in processing its commercial portfolio.

With the migration to a licensing arrangement and the resulting reduction in revenues, TSYS believes that the revenues from Chase for periods following the migration will represent less than 10% of TSYS’ total consolidated revenues.

Revenues from major customers for the periods reported are primarily attributable to the North American Services segment and Merchant Services segment.

AOF Data (in millions)


	2008		2007		% Change
At June 30,		372.9		439.2		(15.1	)
QTD Average		371.6		433.6		(14.3	)
YTD Average		370.9		426.0		(12.9	)

AOF by Portfolio Type (in millions)


	2008				2007
At June 30,	AOF		%		AOF		%		% Change
Consumer		211.9		56.8		277.0		63.1		(23.5	)
Retail		58.6		15.7		57.3		13.0		2.2
Stored value		31.2		8.4		42.9		9.8		(27.2	)
Commercial		41.7		11.2		35.0		8.0		19.3


	2008				2007
At June 30,	AOF		%		AOF		%		% Change
Government services		24.5		6.6		21.9		5.0		11.8
Debit		5.0		1.3		5.1		1.1		(1.5	)

Total		372.9		100.0		439.2		100.0		(15.1	)

AOF by Geographic Area (in millions)


	2008				2007
At June 30,	AOF		%		AOF		%		% Change
Domestic		289.0		77.5		368.0		83.8		(21.5	)
International		83.9		22.5		71.2		16.2		17.8

Total		372.9		100.0		439.2		100.0		(15.1	)

Note: The accounts on file distinction between domestic and international is based on the geographic domicile of the Company’s processing clients.

Activity in AOF (in millions)


	June 2007 to			June 2006 to
	June 2008			June 2007
Beginning balance		439.2			366.5
Internal growth of existing clients		39.5			33.1
New clients		30.1			105.5
Purges/Sales		(13.3	)		(14.0	)
Deconversions		(122.6	)		(51.9	)

Ending balance		372.9			439.2

Electronic Payment Processing Services

Electronic payment processing services revenues are generated primarily from charges based on the number of accounts on file, transactions and authorizations processed, statements mailed, cards embossed and mailed, and other processing services for cardholder accounts on file. Cardholder accounts on file include active and inactive consumer credit, retail, debit, stored value, government services and commercial card accounts. Due to the organic growth of TSYS’ clients and the expanding use of cards, as well as increases in the scope of services offered to clients, revenues relating to electronic payment processing services have continued to grow. Revenues from electronic payment processing services decreased $2.3 million, or 1.0%, and increased $8.9 million, or 1.9%, for the three and six months ended June 30, 2008, respectively, compared to the same periods in 2007. The decrease for the three months is attributable to deconverted portfolios and the Chase migration to licensing. The increase for the six months is attributable to new business and growth of existing clients.

Merchant Acquiring Services

Merchant acquiring services revenues are derived from providing acquiring solutions, related systems and integrated support services to financial institutions and other merchant acquirers. Revenues from merchant acquiring services include processing all payment forms including credit, debit, prepaid, electronic benefit transfer and electronic check for merchants of all sizes across a wide array of retail market segments. Merchant acquiring services’ products and services include: authorization and capture of transactions; clearing and settlement of transactions; information reporting services related to transactions; merchant billing services; and point-of-sale equipment sales and service.

Revenues from merchant acquiring services are mainly generated by TSYS’ wholly owned subsidiary TSYS Acquiring Solutions, L.L.C. (TSYS Acquiring) and majority owned subsidiary GP Network Corporation. Merchant acquiring services revenues for the three and six months ended June 30, 2008 was $65.6 million and $127.2 million, respectively, compared to $64.3 million and $125.0 million for the same periods last year. The increase is attributable to internal growth of transactions of existing clients offset by client deconversions in the terminal distribution business and price compression.

TSYS Acquiring’s results are driven by the authorization and capture transactions processed at the point-of-sale and clearing and settlement transactions. TSYS Acquiring’s authorization and capture transactions are primarily through dial-up or Internet connectivity.

Other Services

Revenues from other services consist primarily of revenues generated by TSYS’ wholly owned subsidiaries not included in electronic payment processing services or merchant acquiring services, as well as TSYS’ business process management services. Revenues from other services increased $9.3 million, or 16.9%, and $13.5 million, or 12.5%, for the three and six months ended June 30, 2008, respectively, compared to the same periods in 2007. The increase is attributable to new call center business in the Global Services segment.

Reimbursable Items

As a result of the FASB’s Emerging Issues Task Force No. 01-14 (EITF No. 01-14), “ Income Statement Characterization of Reimbursements Received for ‘Out-of-Pocket’ Expenses Incurred ,” the Company has included reimbursements received for out-of-pocket expenses as revenues and expenses. Reimbursable items increased $14.7 million, or 15.3%, and $30.4 million, or 16.7%, for the three and six months ended June 30, 2008, respectively, compared to the same periods last year. TSYS recognized approximately $44.1 million and $78.9 million of attorney fees and court costs as additional reimbursable items for the three and six months ended June 30, 2008, respectively.

The majority of reimbursable items relates to the Company’s domestic-based clients and is primarily costs associated with postage and court costs. The Company’s reimbursable items are impacted with changes in postal rates and changes in the volumes of all mailing activities by its clients. Effective May 14, 2007, and then again on May 12, 2008, the United States Postal Service increased the rate of first class mail.

Operating Expenses

Total expenses increased 5.8% and 7.4% for the three and six months ended June 30, 2008, respectively, compared to the same periods in 2007. The fluctuation in expense includes an increase of $1.1 million and $2.5 million for the three and six months ended June 30, 2008, respectively, related to the effects of currency translation of its foreign-based subsidiaries, branches and divisions. Excluding reimbursable items, total expenses increased 2.4% and 4.2% for the three and six months ended June 30, 2008, respectively, compared to the same periods in 2007. The fluctuation in operating expenses is attributable to changes in each of the expense categories as described below.

Salaries and Other Personnel Expense

Summarized below are the major components of salaries and other personnel expense for the three and six months ended June 30:


	Three months ended June 30,									Six months ended June 30,
(in thousands)	2008			2007			% Change			2008			2007			% Change
Salaries	$	112,733			103,692			8.7	%	$	219,339			205,183			6.9	%
Employee benefits		20,176			26,242			(23.1	)		49,693			53,077			(6.4	)
Nonemployee wages		16,918			13,337			26.9			30,728			23,254			32.1
Share-based compensation		5,998			3,548			69.1			9,743			6,596			47.7
Other		3,324			3,867			(14.0	)		6,910			6,668			3.6
Less capitalized expenses		(11,483	)		(5,154	)		122.8			(20,430	)		(8,802	)		132.1

Total	$	147,666			145,532			1.5	%	$	295,983			285,976			3.5	%

Salaries and other personnel expense increased $2.1 million, or 1.5%, and $10.0 million, or 3.5%, for the three and six months ended June 30, 2008, respectively, compared to the same periods in 2007. The change in salaries and other personnel expense is associated with the normal salary increases and related benefits, offset by the higher level of employment costs capitalized as software development and contract acquisition costs. Salaries and other personnel expense include the accrual for performance-based incentive benefits, which includes bonuses, profit sharing and employer 401(k) expenses. For the three months ended June 30, 2008 and 2007, the Company accrued $200,000 and $10.7 million, respectively, for performance-based incentives. For the six months ended June 30, 2008 and 2007, the Company accrued $4.6 million and $18.2 million, respectively, for performance-based incentives.

Prior to the spin-off by Synovus Financial Corp. (Synovus) to its shareholders of all the shares of TSYS held by Synovus, Synovus provided certain administrative services, such as human resources, legal, security and tax preparation and compliance, to TSYS in exchange for a management fee, which is included in other operating expenses, to cover TSYS’ pro rata share of services. With the spin-off, TSYS will begin recruiting employees and assuming these functions during 2008. During this transition period, TSYS will continue to utilize Synovus’ administrative services until these functions are operational within TSYS in exchange for an adjusted management fee based on utilization. As it assumes these functions, the Company expects salaries and other personnel expenses to increase, while other operating expenses decrease. TSYS’ headcount will also increase by approximately 60 people as these administrative services transition.

Capitalized salaries and personnel expenses increased $6.3 million and $11.6 million for the three and six months ended June 30, 2008, respectively, as compared to the same periods in 2007, as a result of increased client conversion and implementation activity in the international segment.

The Company’s salaries and other personnel expense is greatly influenced by the number of employees. Below is a summary of the Company’s employee data:

Employee Data:


FTE	2008		2007		% Change
At June 30,		7,582		6,773		11.9
QTD Average		7,572		6,783		11.6
YTD Average		7,388		6,755		9.4

The majority of the increase in the number of employees in 2008 as compared to 2007 is a result of the expansion of TSYS’ international business.

Share-based compensation expenses include the impact of expensing the fair value of stock options, as well as expenses associated with nonvested shares. For the three months ended June 30, 2008, share-based compensation was $6.0 million, compared to $3.5 million for the same period in 2007. For the six months ended June 30, 2008, share-based compensation was $9.7 million, compared to $6.6 million for the same period in 2007. The increase is attributable to grants awarded in 2008.

Net Occupancy and Equipment Expense

Summarized below are the major components of net occupancy and equipment expense for the three and six months ended June 30, 2008 and 2007:


	Three months ended June 30,							Six months ended June 30,
(in thousands)	2008		2007		% Change			2008		2007		% Change
Depreciation and amortization	$	29,263		26,931		8.7	%	$	57,946		54,934		5.5	%
Equipment and software rentals		21,164		22,294		(5.1	)		41,675		43,131		(3.4	)
Repairs and maintenance		12,738		11,274		13.0			25,686		21,547		19.2
Other		11,624		8,779		32.4			22,369		17,015		31.5

Totals	$	74,789		69,278		8.0	%	$	147,676		136,627		8.1	%

Net occupancy and equipment expense increased $5.5 million, or 8.0%, and $11.0 million, or 8.1%, for the three and six months ended June 30, 2008, respectively, over the same periods in 2007.

Repairs and maintenance increased for the three and six months ended June 30, 2008, as compared to the same periods in 2007, as a result of support for additional software licenses and equipment.

Spin Related Expenses

In July 2007, Synovus’ Board of Directors appointed a special committee of independent directors to make a recommendation with respect to whether to distribute Synovus’ ownership interest in TSYS to Synovus’ shareholders. As a result, the TSYS Board of Directors formed a special committee of independent TSYS directors to consider the terms of any proposed spin-off by Synovus of its ownership interest in TSYS, including the size of the pre-spin cash dividend. TSYS incurred expenses associated with advisory and legal services in connection with the spin assessment. As the spin-off was finalized and completed, TSYS also incurred expenses for the incremental fair value associated with converting Synovus stock options held by TSYS employees to TSYS options. During the three and six months ended June 30, 2008, the Company incurred approximately $1.3 million and $8.2 million, respectively, of spin related expenses. TSYS expects to incur additional spin related costs in 2008 associated with legal and advisory services, incremental fair value associated with the Synovus stock option conversion and other costs associated with unwinding the different commingled processes that Synovus and TSYS previously shared. TSYS estimates that it will incur approximately $16.0 million of spin related costs in operating expenses in 2008.

Other Operating Expenses

Summarized below are the major components of other operating expenses for the three and six months ended June 30, 2008 and 2007:


	Three months ended June 30,								Six months ended June 30,
(in thousands)	2008			2007		% Change			2008			2007		% Change
Third-party data processing services	$	10,783			11,348		(5.0	)	$	20,807			20,711		0.5
Travel and business development		6,361			5,982		6.3			13,346			12,331		8.2
Supplies and stationery		5,973			5,392		10.8			11,341			10,092		12.4
Professional advisory services		7,277			6,839		6.4			10,905			12,403		(12.1	)
Amortization of conversion costs		3,209			4,285		(25.1	)		6,667			8,140		(18.1	)
Court costs associated with debt collection services		4,574			2,647		72.8			6,655			6,917		(3.8	)
Amortization of acquisition intangibles		673			928		(27.5	)		1,332			1,762		(24.4	)
Service level quality expenses		(806	)		1,229		(165.6	)		(541	)		437	nm
Terminal deployment costs		105			124		(15.6	)		241			124		94.7
Management fees		37			2,270		(98.4	)		72			4,542		(98.4	)
Bad debt (recoveries) expense		231			123		87.7			(1,331	)		190	nm
Other		12,601			12,201		3.3			26,692			25,858		3.2

Totals	$	51,018			53,368		(4.4	)	$	96,186			103,507		(7.1	)


nm = not meaningful

Other operating expenses include, among other things, amortization of conversion costs, costs associated with delivering merchant services, professional advisory fees and court costs associated with the Company’s debt collection business. Other operating expenses also include charges for processing errors, contractual commitments and bad debt expense. As described in the Critical Accounting Policies section set forth in “Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s 2007 Form 10-K, management’s evaluation of the adequacy of its transaction processing reserves and allowance for doubtful accounts is based on a formal analysis which assesses the probability of losses related to contractual contingencies, processing errors and uncollectible accounts. Increases and decreases in transaction processing provisions and charges for bad debt expense are reflected in other operating expenses.

Other operating expenses for the three and six months ended June 30, 2008 decreased $2.3 million, or 4.4%, and $7.3 million, or 7.1%, respectively, as compared to the same periods in 2007. The decrease in operating expenses is primarily the result of the decrease in management fees due to the transitioning away from administrative services previously supplied by Synovus. The decrease in the amount of service level quality expenses is associated with changes in estimates for processing errors and contractual contingencies as a result of the Company’s improved level of service.

Operating Income

Operating income increased 1.8% and 1.6% for the three and six months ended June 30, 2008, respectively, over the same periods in 2007. The Company’s operating profit margin for the three and six months ended June 30, 2008 was 20.2% and 19.5%, respectively, compared to 20.8% and 20.4% for the same periods last year. TSYS’ operating margin decreased for the three and six months ended June 30, 2008, as compared to the same periods in 2007, as the result of spin related costs.

Nonoperating Income (Expense)

Interest income for the three months ended June 30, 2008 was $1.7 million, a decrease of $4.5 million, compared to $6.2 million for the same period in 2007. Interest income for the six months ended June 30, 2008 was $4.3 million, a decrease of $7.4 million, compared to $11.6 million for the same period in 2007. The decrease in interest income is primarily attributable to less cash available to invest primarily due to the payment of the one-time special dividend of $600 million paid in December 2007 associated with the spin-off.

Interest expense for the three months ended June 30, 2008 was $2.9 million, an increase of $2.5 million compared to $366,000 for the same period in 2007. Interest expense for the six months ended June 30, 2008 was $6.2 million, an increase of $5.6 million compared to $576,000 for the same period in 2007. The increase in interest expense in 2008 compared to 2007 relates to the increased borrowings undertaken by the Company in 2007, primarily associated with paying the one-time special dividend.

On October 25, 2007, TSYS announced that it had entered into an agreement and plan of distribution with Synovus under which Synovus planned to distribute all of its shares of TSYS stock to Synovus’ shareholders in a spin-off transaction, which spin-off took place on December 31, 2007. Prior to the spin-off transaction and in accordance with the agreement and plan of distribution, TSYS agreed to pay a one-time aggregate cash dividend of $600 million to all TSYS shareholders, including Synovus. TSYS funded the dividend with a combination of cash on hand and the use of a revolving credit facility.

For the three months ended June 30, 2008 and 2007, the Company recorded a translation gain of approximately $198,000 and a translation loss of approximately $845,000, respectively, related to intercompany loans and foreign denominated balance sheet accounts. For the six months ended June 30, 2008 and 2007, the Company recorded a translation gain of approximately $2.1 million and a translation loss of approximately $162,000, respectively, related to intercompany loans and foreign denominated balance sheet accounts.

Occasionally, the Company will provide financing to its subsidiaries in the form of an intercompany loan, which is required to be repaid in U.S. dollars. For its subsidiaries whose functional currency is something other than the U.S. dollar, the translated balance of the financing (liability) is adjusted upward or downward to match the U.S.-dollar obligation (receivable) on the Company’s financial statements. The upward or downward adjustment is recorded as a gain or loss on foreign currency translation. As a result of these financing arrangements, the Company recorded a foreign currency translation loss of $701,000 and a gain of $240,000 on the Company’s financing for the three and six months ended June 30, 2008, respectively. The balance of these financing arrangements at June 30, 2008 was approximately $10.9 million.

The Company records foreign currency translation adjustments on foreign-denominated balance sheet accounts. The Company maintains several cash accounts denominated in foreign currencies, primarily in Euros and British Pounds Sterling (BPS). As the Company translates the foreign-denominated cash balances into U.S. dollars, the translated cash balance is adjusted upward or downward depending upon the foreign currency exchange movements. The upward or downward adjustment is recorded as a gain or loss on foreign currency translation in the Company’s statements of income. As those cash accounts have increased, the upward or downward adjustments have increased. The Company recorded a net translation gain of approximately $899,000 and $1.9 million for the three and six months ended June 30, 2008, respectively, related to the translation of foreign denominated balance sheet accounts, most of which were cash. The balance of the Company’s foreign-denominated cash accounts subject to risk of translation gains or losses at June 30, 2008 was approximately $10.0 million, the majority of which is denominated in Euros.

Income Taxes

TSYS’ effective income tax rate for the three months ended June 30, 2008 was 35.1%, compared to 35.3% for the same period in 2007. TSYS’ effective tax rate for the six months ended June 30, 2008 was 36.0%, compared to 36.6% for the same period in 2007. The calculation of the effective tax rate is income taxes plus income taxes associated with equity income divided by TSYS’ pretax income adjusted for minority interests in consolidated subsidiaries’ net income and equity pre-tax earnings of its equity investments. Refer to Note 10 in the Notes to Unaudited Condensed Consolidated Financial Statements for more information on income taxes.

In the normal course of business, TSYS is subject to examinations from various tax authorities. These examinations may alter the timing or amount of taxable income or deductions or the allocation of income among tax jurisdictions.

TSYS continually monitors and evaluates the potential impact of current events and circumstances on the estimates and assumptions used in the analysis of its income tax positions, and, accordingly, TSYS’ effective tax rate may fluctuate in the future.

Equity in Income of Equity Investments

The Company has three equity investments located in the United States, Mexico and China that are accounted for under the equity method of accounting. TSYS’ share of income from its equity in equity investments was $668,000 and $985,000 for the three months ended June 30, 2008 and 2007, respectively. TSYS’ share of income from its equity in equity investments was $2.5 million and $1.8 million for the six months ended June 30, 2008 and 2007, respectively.

Net Income

Net income for the three months ended June 30, 2008 decreased 4.0%, or $2.6 million, to $63.1 million, or basic and diluted earnings per share of $0.32, compared to $65.7 million, or basic and diluted earnings per share of $0.33, for the same period in 2007. Net income for the six months ended June 30, 2008 decreased 2.7%, or $3.3 million, to $119.7 million, or basic and diluted earnings per share of $0.61, compared to $123.0 million, or basic and diluted earnings per share of $0.63 and $0.62, respectively, for the same period in 2007.

Net Profit Margin

The Company’s net profit margin for the three months ended June 30, 2008 was 13.1%, compared to 14.3% for the same period last year. The Company’s net profit margin for the six months ended June 30, 2008 was 12.7%, compared to 13.8% for the same period last year. TSYS’ profit margin is impacted by the consolidation of majority-owned subsidiaries. The Company recognizes only its share of net profits from these entities, while consolidating all their revenues, which has the impact of lowering overall net profit margins. TSYS’ net profit margin decreased for the quarter as the result of spin related costs.

Operating Segments

North American Services

North American Services segment provides electronic payment processing and related services, including debt collection services, to clients primarily based in North America.

For the second quarter of 2008, total revenues for North American Services segment were $329.2 million, an increase of 1.2%, compared to $325.3 million for the same period last year. Year-to-date total revenues for North American Services segment were $650.7 million, an increase of 2.9%, compared to $632.1 million for the same period last year. The increase is attributable to the increase in reimbursable items, primarily court costs, new clients and internal growth of existing clients, partially offset by the decline in accounts on file and transaction volumes.

At the end of June 2008, North American Services had 340.8 million accounts on file, a decrease of 18%, compared to 416.7 million accounts on file last year. For the second quarter of 2008, North American Services processed 1.7 billion transactions, a decrease of 34%, compared to 2.6 billion for the same period last year. Excluding the impact of deconverted clients in 2007, transactions processed increased 6%. Through the first six months of 2008, North American Services processed 3.3 billion transactions, a decrease of 34%, compared to 4.9 billion for the same period last year. Excluding the impact of deconverted clients in 2007, transactions processed increased 7%.

For the second quarter of 2008, North American Services segment’s operating income was $69.1 million, a decrease of 0.7%, compared to $69.6 million for the same period last year. For the six months ended June 30, 2008, North American Services segment’s operating income was $140.2 million, an increase of 6.2%, compared to $132.1 million for the same period last year.

Global Services

Global Services segment provides electronic payment processing and related services, including debt collection services, to clients primarily based outside the North America region.

For the second quarter of 2008, total revenues for Global Services segment were $79.6 million, an increase of 31.9%, compared to $60.4 million for the same period last year. Year-to-date total revenues for Global Services segment were $149.0 million, an increase of 28.9%, compared to $115.5 million for the same period last year. The increase is driven by growth in accounts and transactions processed.

At the end of June 2008, Global Services had 32.1 million accounts on file, an increase of 42%, compared to 22.5 million accounts on file last year. For the second quarter of 2008, Global Services processed 264.5 million transactions, an increase of 28%, compared to 207.2 million for the same period last year. Through the first six months of 2008, Global Services processed 481.9 million transactions, an increase of 20%, compared to 403.2 million for the same period last year.

For the second quarter of 2008, Global Services segment’s operating income was $11.7 million, an increase of 16.9%, compared to $10.0 million for the same period last year. For the six months ended June 30, 2008, Global Services segment’s operating income was $19.2 million, a decrease of 9.3%, compared to $21.2 million for the same period last year. The decrease in operating income for the six month period is the result of infrastructure costs incurred prior to converting new business late in the first quarter of 2008.

Merchant Services

Merchant Services segment provides merchant processing and related services to clients primarily based in the United States.

For the second quarter of 2008, total revenues for Merchant Services segment were $74.3 million, a decrease of 0.2%, compared to $74.5 million for the same period last year. Year-to-date total revenues for Merchant Services segment were $145.1 million, an increase of 2.1%, compared to $142.1 million for the same period last year. During the second quarter of 2008, Merchant Services processed 1.32 billion Point-of-Sale transactions, an increase of 2%, compared to 1.29 billion for the same period last year. Through the first six months of 2008, Merchant Services processed 2.53 billion Point-of-Sale transactions, an increase of 3%, compared to 2.45 billion for the same period last year. Merchant Services segment continues to be impacted by price compression and deconversions.

For the second quarter of 2008, Merchant Services segment’s operating income was $18.1 million, an increase of 11.0%, compared to $16.3 million. For the six months ended June 30, 2008, Merchant Services segment’s operating income was $33.2 million, an increase of 16.9%, compared to $28.4 million for the same period last year.

Profit Margins and Reimbursable Items

Management believes that reimbursable items distort operating and net profit margins as defined by generally accepted accounting principles. Management evaluates the Company’s operating performance based upon operating and net profit margins excluding reimbursable items. Management believes that operating and net profit margins excluding reimbursable items are more useful because reimbursable items do not impact profitability as the Company receives reimbursement for expenses incurred on behalf of its clients.

Below is the reconciliation between reported margins and adjusted margins excluding reimbursable items for the three and six months ended June 30, 2008 and 2007, respectively:


	Three months ended June 30,						Six months ended June 30,
(in thousands)	2008			2007			2008			2007
Operating income	$	97,647			95,916		$	184,421			181,595

Net income	$	63,084			65,688		$	119,698			122,961

Total revenues	$	483,113			460,155		$	944,835			889,758

Operating margin (as reported)		20.2	%		20.8	%		19.5	%		20.4	%

Net profit margin (as reported)		13.1	%		14.3	%		12.7	%		13.8	%

Revenue before reimbursable items	$	372,375			364,094		$	732,416			707,705

Adjusted operating margin		26.2	%		26.3	%		25.2	%		25.7	%

Adjusted net profit margin		16.9	%		18.0	%		16.3	%		17.4	%

Projected Outlook for 2008

TSYS expects its 2008 net income to increase between 5-7% as compared to 2007, based on the following assumptions: (1) expenses associated with the spin-off, net of tax, will be $10 million; (2) there will be no significant movements in LIBOR and TSYS will not make any significant draws on its $252 million revolving credit facility; (3) estimated total revenues will increase 6% to 8% in 2008; (4) anticipated growth levels in employment, equipment and other expenses, which are included in 2008 estimates, will be accomplished; (5) there will be no significant movement in foreign currency exchange rates related to TSYS’ business; and (6) TSYS will not incur significant expenses associated with the conversion of new large clients or acquisitions, or any significant impairment of goodwill or other intangibles, and there will be no significant portfolio deconversions.

Financial Position, Liquidity and Capital Resources

The Condensed Consolidated Statements of Cash Flows detail the Company’s cash flows from operating, investing and financing activities. TSYS’ primary method of funding its operations and growth has been cash generated from current operations and the use of leases. TSYS has occasionally used borrowed funds to supplement financing of capital expenditures, acquisitions and most recently the spin-off.

Cash Flows From Operating Activities


	Six months ended June 30,
(in thousands)	2008			2007
Net income	$	119,698			122,961
Depreciation and amortization		79,755			76,607
Dividends from equity investments		3,248			2,994
Other noncash items and charges, net		5,788			464
Net change in current and long-term assets and current and long-term liabilities		(33,722	)		(83,520	)

Net cash provided by operating activities	$	174,767			119,506

TSYS’ main source of funds is derived from operating activities, specifically net income. During the six months ended June 30, 2008, the Company generated $174.8 million in cash from operating activities compared with $119.5 million for the same period last year. The increase in 2008 in net cash provided by operating activities was primarily the result of increased current and long-term liabilities in the current period compared to a decrease in the prior year period.

Net change in current and long-term assets and current and long-term liabilities include accounts receivable, prepaid expenses, other current assets and other assets, accounts payable, accrued salaries and employee benefits, other current liabilities and other liabilities. The change in accounts receivable at June 30, 2008, as compared to December 31, 2007, is the result of timing of collections compared to billings. The change in accounts payable and other liabilities for the same period is the result of the timing of payments, funding of performance-based incentives and payments of vendor invoices.

Cash Flows From Investing Activities


	Six months ended June 30,
(in thousands)	2008			2007
Purchases of property and equipment, net	$	(26,296	)		(21,438	)
Additions to licensed computer software from vendors		(8,598	)		(4,810	)
Additions to internally developed computer software		(8,332	)		(7,458	)
Cash used in acquisitions and equity investments, net of cash acquired		(295	)		(472	)
Additions to contract acquisition costs		(28,417	)		(9,542	)

Net cash used in investing activities	$	(71,938	)		(43,720	)

The major uses of cash for investing activities have been the addition of property and equipment, primarily computer equipment, the purchase of licensed computer software and internal development of computer software, investments in contract acquisition costs associated with obtaining and servicing new or existing clients, and business acquisitions. The Company used $71.9 million in cash for investing activities for the six months ended June 30, 2008, compared to $43.7 million for the same period in 2007. The major uses of cash for investing activities in 2008 was for the addition of equipment and contract acquisition costs. The major use of cash for investing activities in 2007 was for the addition of equipment.

Contract Acquisition Costs

TSYS makes cash payments for processing rights, third-party development costs and other direct salary-related costs in connection with converting new customers to the Company’s processing systems. The Company’s investments in contract acquisition costs were $11.2 million for the three months ended June 30, 2008, bringing the total for 2008 to $28.4 million compared to $9.5 million for the six months ended June 30, 2007. The Company had cash payments for processing rights of approximately $5.4 million and $12.4 million during the three and six months ended June 30, 2008, respectively, compared to $0.5 million and $5.8 million for the same periods last year.

Conversion cost additions were $16.0 million and $3.7 million for the six months ended June 30, 2008 and 2007, respectively. The increase in the amount of conversion cost additions for 2008, as compared to 2007, is the result of increased activity related to more conversions occurring in 2008 versus 2007.

Cash Flows From Financing Activities


	Six months ended June 30,
(in thousands)	2008			2007
Dividends paid on common stock	$	(27,768	)		(27,598	)
Proceeds from borrowings		2,506			6,805
Repurchase of common stock		(23,594	)		—
Principal payments on long-term debt borrowings and capital lease obligations		(6,870	)		(1,744	)
Other		91			8,981

Net cash used in financing activities	$	(55,635	)		(13,556	)

The major use of cash for financing activities has been the payment of dividends and repurchase of common stock. The main source of cash from financing activities has been the occasional use of borrowed funds and the exercise of stock options. Net cash used in financing activities for the six months ended June 30, 2008 was $55.6 million mainly as a result of the payment of dividends and repurchase of TSYS common stock. Net cash used in financing activities for the six months ended June 30, 2007 was $13.6 million mainly as a result of the payment of dividends.

Borrowings

Stock Repurchase Plan

On April 20, 2006, TSYS announced that its Board had approved a stock repurchase plan to purchase up to 2 million shares, which at the time represented slightly more than five percent of the shares of TSYS stock held by shareholders other than Synovus. The shares were to be purchased from time to time over a two year period and would depend on various factors including price, market conditions, acquisitions and the general financial position of TSYS. Repurchased shares are to be used for general corporate purposes.

With the completion of the spin-off, the TSYS Board of Directors 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 2 million to 10 million.

During the six months ended June 30, 2008, TSYS purchased 1 million shares of TSYS common stock. The Company has approximately 7,898,000 shares remaining that could be repurchased under the stock repurchase plan.

Dividends

Dividends on common stock of $13.9 million were paid during the three months ended June 30, 2008, bringing the total for 2008 to $27.8 million compared to $27.6 million paid during the six months ended June 30, 2007.

Significant Noncash Transactions

Refer to Note 7 of the Notes to Unaudited Condensed Consolidated Financial Statements for more information about supplementary cash flow information.

Foreign Exchange

TSYS operates internationally and is subject to potentially adverse movements in foreign currency exchange rates. Since December 2000, TSYS has not entered into foreign exchange forward contracts to reduce its exposure to foreign currency rate changes. TSYS continues to analyze potential hedging instruments to safeguard it from significant foreign currency translation risks.

Impact of Inflation

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 more efficient computer hardware and software, it can minimize the impact of inflation.

Working Capital

TSYS may seek additional external sources of capital in the future. The form of any such financing will vary depending upon prevailing market and other conditions and may include short-term or long-term borrowings from financial institutions or the issuance of additional equity 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. 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 2.1:1. At June 30, 2008, TSYS had working capital of $347.8 million compared to $312.8 million at December 31, 2007.

Legal Proceedings

Recent Accounting Pronouncements

The Company’s Annual Report on Form 10-K for the year ended December 31, 2007, as filed with the SEC, contains a discussion of recent accounting pronouncements and the expected impact on the Company’s financial statements.

Forward-Looking Statements

Certain statements contained in this filing which are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act (the Act). These forward-looking statements include, among others: (i) TSYS’ plans to continue to expand its service offerings internationally and expectation that international revenues will continue to grow; (ii) TSYS’ expectation that it will maintain the card processing functions of Capital One for at least five years; (iii) management’s belief that Chase’s discontinuation of its processing agreement will not have a material adverse affect on TSYS and that TSYS will continue to support Chase in processing its commercial portfolio; (iv) TSYS’ belief that Target’s credit facility with Chase will not impact TSYS’ processing relationship with Target; (v) TSYS’ expectation with respect to spin-related costs; (vi) TSYS’ expectation that it will be able to fund a significant portion of its capital expenditure needs through internally generated cash in the future; (vii) TSYS’ expected net income growth for 2008; (viii) TSYS’ belief with respect to lawsuits, claims and other complaints; (ix) the expected financial impact of recent accounting pronouncements; (x) TSYS’ expectation with respect to certain tax matters; and the assumptions underlying such statements, including, with respect to TSYS’ expected increase in net income for 2008: (a) expenses associated with the spin-off will be approximately $10 million net of tax; (b) there will be no significant movements in LIBOR and TSYS will not make any significant draws on its revolving credit facility; (c) estimated total revenues will increase 6% to 8% in 2008; (d) there will be no significant movement in foreign currency exchange rates related to TSYS’ business; (e) anticipated growth levels in employment, equipment and other expenses, which are included in 2008 estimates, will be accomplished; and (f) TSYS will not incur significant expenses associated with the conversion of new large clients and/or acquisitions, or any significant impairment of goodwill or other intangibles, and there will be no significant portfolio deconversions. 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 revenue, 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 or services; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements. Words such as “believes,” “anticipates,” “expects,” “intends,” “targeted,” “estimates,” “projects,” “plans,” “may,” “could,” “should,” “would,” and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying these statements.

These statements are based upon the current beliefs and expectations of TSYS’ management and are subject to significant risks and uncertainties. Actual results may differ materially from those contemplated by the forward-looking statements. A number of important factors could cause actual results to differ materially from those contemplated by our forward looking statements. Many of these factors are beyond TSYS’ ability to control or predict. These factors include, but are not limited to: (i) revenues that are lower than anticipated; (ii) expenses associated with the spin-off are higher than expected; (iii) movements in LIBOR are greater than expected and draws on the revolving credit facility are greater than expected; (iv) TSYS incurs expenses associated with the signing of a significant client; (v) internal growth rates for TSYS’ existing clients are lower than anticipated; (vi) TSYS does not convert and deconvert clients’ portfolios as scheduled; (vii) adverse developments with respect to foreign currency exchange rates; (viii) adverse developments with respect to entering into contracts with new clients and retaining current clients; (ix) continued consolidation in the financial services industry, including the merger of TSYS clients with entities that are not TSYS clients or the sale of portfolios by TSYS clients to entities that are not TSYS clients; (x) TSYS is unable to control expenses and increase market share, both domestically and internationally; (xi) adverse developments with respect to the credit card industry in general, including a decline in the use of cards as a payment mechanism; (xii) TSYS is unable to successfully manage any impact from slowing economic conditions or consumer spending; (xiii) the impact of acquisitions, including their being more difficult to integrate than anticipated; (xiv) the costs and effects of litigation, investigations or similar matters or adverse facts and developments relating thereto; (xv) the impact of the application of and/or changes in accounting principles; (xvi) TSYS’ inability to timely, successfully and cost-effectively improve and implement processing systems to provide new products, increased functionality and increased efficiencies; (xvii) TSYS’ inability to anticipate and respond to technological changes, particularly with respect to e-commerce; (xviii) changes occur in laws, regulations, credit card associations rules or other industry standards affecting TSYS’ business which require significant product redevelopment efforts or reduce the market for or value of its products; (xix) successfully managing the potential both for patent protection and patent liability in the context of rapidly developing legal framework for expansive patent protection; (xx) no material breach of security of any of our systems; (xxi) overall market conditions; (xxii) the loss of a major supplier; (xxiii) the impact on TSYS’ business, as well

as on the risks set forth above, of various domestic or international military or terrorist activities or conflicts; and (xxiv) TSYS’ ability to manage the foregoing and other risks.

These forward-looking statements speak only as of the date on which they are made and TSYS does not intend to update any forward-looking statement as a result of new information, future developments or otherwise.

TOTAL SYSTEM SERVICES, INC.

Item 3 — Quantitative and Qualitative Disclosures About Market Risk

Foreign Exchange Risk

The Company is exposed to foreign exchange risk because it has assets, liabilities, revenues and expenses denominated in foreign currencies other than the U.S. dollar. These currencies 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 foreign operations, net of tax, are accumulated in a separate section of shareholders’ equity entitled “accumulated other comprehensive income, net.” The following represents the amount of other comprehensive gain for the three and six months ended June 30, 2008 and 2007, respectively:


	Three months ended June 30,				Six months ended June 30,
(in millions)	2008		2007		2008		2007
Other comprehensive gain	$	0.4		2.8	$	4.8		2.7

Currently, the Company does not use financial instruments to hedge exposure to exchange rate changes.

The following table presents the carrying value of the net assets of our foreign operations in U.S. dollars at June 30, 2008:


(in millions)	June 30, 2008
Europe	$	147.9
China		69.0
Mexico		7.0
Japan		4.8
Canada		0.6
Other		15.3

TSYS records foreign currency translation adjustments associated with other balance sheet accounts. The Company maintains several cash accounts denominated in foreign currencies, primarily in Euros and BPS. As TSYS translates the foreign-denominated cash balances into U.S. dollars, the translated cash balance is adjusted upward or downward depending upon the foreign currency exchange movements. The upward or downward adjustment is recorded as a gain or loss on foreign currency translation in the statements of income. As those cash accounts have increased, the upward or downward adjustments have increased. TSYS recorded a translation gain of approximately $899,000 and $1.9 million for the three and six months ended June 30, 2008, respectively, relating to the translation of cash and other balance sheet accounts. The balance of the foreign-denominated cash accounts subject to risk of translation gains or losses at June 30, 2008 was approximately $10.0 million, the majority of which is denominated in Euros.

The Company provides financing to its international operations in Europe and Japan through intercompany loans that require each operation to repay the financing in U.S. dollars. The functional currency of each operation is the respective local currency. As it translates the foreign currency denominated financial statements into U.S. dollars, the translated balance of the financing (liability) is adjusted upward or downward to match the U.S. dollar obligation (receivable) on its financial statements. The upward or downward adjustment is recorded as a gain or loss on foreign currency translation. As a result of these financing arrangements, TSYS recorded a foreign currency translation loss of $701,000 and a gain of $240,000 on the financing with foreign operations during the three and six months ended June 30, 2008, respectively. The balance of the financing arrangements at June 30, 2008 was approximately $10.9 million.

A summary of account balances subject to foreign currency exchange rate changes between the local currencies and the U.S. dollar follows:


		Balance at
(in millions)		June 30, 2008
Asset	Cash	$	10.0
Liability	Intercompany financing arrangements		(10.9	)

	Net account balances	$	(0.9	)

The following table presents the potential effect on income before income taxes of hypothetical shifts in the foreign currency exchange rate between the local currencies and the U.S. dollar of plus or minus 100 basis points, 500 basis points and 1,000 basis points based on the net liability account balance of $0.9 million at June 30, 2008.


	Effect of Basis Point Change
	Increase in basis point of									Decrease in basis point of
(in thousands)	100			500			1,000			100		500		1,000
Effect on income before income taxes	$	(9	)		(43	)		(86	)		9		43		86

Interest Rate Risk

TSYS is also exposed to interest rate risk associated with the investing of available cash and the use of debt. TSYS invests available cash in conservative short-term instruments and is primarily subject to changes in the short-term interest rates.

On December 21, 2007, the Company entered into a Credit Agreement with Bank of America N.A., as Administrative Agent, The Royal Bank of Scotland plc, as Syndication Agent, and the other lenders. The Credit Agreement provides for a $168 million unsecured five year term loan to the Company and a $252 million five year unsecured revolving credit facility. The principal balance of loans outstanding under the credit facility bears interest at a rate of London Interbank Offered Rate (LIBOR) plus an applicable margin of 0.60%. Interest is paid on the last date of each interest period; however, if the period exceeds three months, interest is paid every three months after the beginning of such interest period.

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 LIBOR plus 45 basis points. The interest is payable monthly.

In connection with the formation of TSYS Managed Services EMEA, Ltd. (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 June 2008, the balance of the loan from Merchants was approximately £2.0 million, or approximately $3.9 million, payable in total in five years, at an interest rate of the LIBOR plus 2%, with interest payable quarterly.

TOTAL SYSTEM SERVICES, INC.

Item 4 — Controls and Procedures

We have evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this quarterly report as required by Rule 13a-15 of the Securities Exchange Act of 1934, as amended (“Exchange Act”). This evaluation was carried out under the supervision and with the participation of our management, including our chief executive officer and chief financial officer. Based on this evaluation, the chief executive officer and chief financial officer concluded that as of June 30, 2008, TSYS’ disclosure controls and procedures were designed and effective to ensure that the information required to be disclosed by TSYS in reports that it files under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and also designed to ensure that the information required to be disclosed in the reports that TSYS files or submits under the Exchange Act is accumulated and communicated to management, as appropriate to allow timely decisions regarding required disclosure. No change in TSYS’ internal control over financial reporting occurred during the period covered by this report that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

TOTAL SYSTEM SERVICES, INC.

Part II — Other Information

Item 1A — Risk Factors

In addition to the other information set forth in this report, one should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2007, which could materially affect the Company’s financial position, results of operations or cash flows. The risks described in the Company’s Annual Report on Form 10-K are not the only risks facing the Company. Additional risks and uncertainties not currently known to the Company or that the Company currently deems to be immaterial also may materially adversely affect the Company’s financial position, results of operations or cash flows.

Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds

The following table sets forth information regarding the Company’s purchases of its common stock on a monthly basis during the three months ended June 30, 2008:


					Total Number of		Maximum Number of
					Shares Purchased as		Shares That May Yet
					Part of Publicly		Be Purchased
(in thousands, except per share data)	Total Number of		Average Price		Announced Plans		Under the Plans
Period	Shares Purchased		Paid per Share		or Programs		or Programs
April 2008		—	$	—		1,602		8,398
May 2008		—		—		1,602		8,398
June 2008		500		24.45		2,102		7,898

Total		500	$	24.45

TOTAL SYSTEM SERVICES, INC.
Part II — Other Information

Item 4 — Submission of Matters to a Vote of Security Holders

The annual shareholders’ meeting of Total System Services, Inc. was held April 30, 2008. There were two proposals voted on at the meeting.

Proposal I voted on at the meeting was the election of five class I directors. Following is a tabulation of votes for each nominee:


			WITHHELD
NOMINEE	VOTES FOR		AUTHORITY TO VOTE
Kriss Cloninger III		160,740,061		8,568,688
G. Wayne Clough		165,508,426		3,800,323
H. Lynn Page		160,522,045		8,786,704
Philip W. Tomlinson		165,216,879		4,091,870
Richard W. Ussery		165,370,057		3,938,692

Richard E. Anthony, James H. Blanchard, Richard Y. Bradley, Walter W. Driver Jr., Gardiner W. Garrard Jr., Sidney E. Harris, Alfred W. Jones III, Mason H. Lampton, W. Walter Miller Jr., John T. Turner, M. Troy Woods, James D. Yancey and Rebecca K. Yarbrough also continued to serve as directors following the annual shareholders’ meeting.

Proposal II voted on at the meeting was the ratification of the appointment of KPMG LLP as the Independent Auditor. Following is a tabulation of votes:


FOR			165,889,635
AGAINST			1,884,727
ABSTAIN			1,534,386

TOTAL SYSTEM SERVICES, INC.
Part II — Other Information

Item 6 — Exhibits

a) Exhibits


Exhibit
Number		Description
10.1		Amended and Restated Total System Services, Inc. Deferred Compensation Plan

10.2		Amended and Restated Total System Services, Inc. Directors’ Deferred Compensation Plan

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32		Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

TOTAL SYSTEM SERVICES, INC.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	TOTAL SYSTEM SERVICES, INC.
Date: August 7, 2008	by:	/s/ Philip W. Tomlinson
		Philip W. Tomlinson
		Chairman of the Board and Chief Executive Officer


Date: August 7, 2008	by:	/s/ James B. Lipham
		James B. Lipham
		Senior Executive Vice President and Chief Financial Officer

TOTAL SYSTEM SERVICES, INC.

Exhibit Index


Exhibit Number		Description
10.1		Amended and Restated Total System Services, Inc. Deferred Compensation Plan

10.2		Amended and Restated Total System Services, Inc. Directors’ Deferred Compensation Plan

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32		Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

EXHIBIT 10.1

AMENDED AND RESTATED
TOTAL SYSTEM SERVICES, INC.
DEFERRED COMPENSATION PLAN

EFFECTIVE JANUARY 1, 2009

PLAN DOCUMENT

I. INTRODUCTION

	A.		Purpose of Plan . The Employer has adopted the Plan set forth herein to provide benefits in excess of those that may be accrued under the Employer’s qualified retirement plans as a result of the limitations of Code Section 401(a)(17) and 415 as a means by which certain designated employees may elect to defer designated portions of their Compensation, or in the discretion of the Employer, receive additional amounts of deferred compensation in the form of Discretionary Credits.

	B.		Status of Plan . To the extent the Plan provides benefits in excess of the limitations of Code Section 415, the Plan is intended to be an “excess benefit plan” within the meaning of Sections 3(36) and 4(6) of ERISA, and to the extent the Plan provides other benefits, the Plan is intended to be “a plan which is unfunded and is maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees” within the meaning of Sections 201(2), 301(a)(3), 401(a)(1), and 4021(b)(6) of ERISA, and shall be interpreted and administered to the extent possible in a manner consistent with that intent. This Plan is intended to constitute a nonqualified deferred compensation plan and to meet the requirements of Code Section 409A.

	C.		Establishment of Plan . The Plan is established as of the Effective Date upon the transfer of certain assets and liabilities of the Synovus Financial Corp./Total System Services, Inc. Deferred Compensation Plan (“Prior Plan”) in connection with the spin-off of the Company from Synovus Financial Corp. All elections under the provisions of the Prior Plan (including deferral, investment and distribution elections and beneficiary designations) shall be recognized as valid elections under this Plan with respect to Accounts transferred from the Prior Plan to this Plan. In addition, any Participant employed by the Employer on December 31, 2007, and any Eligible Employee who transfers from Synovus Financial Corp. or any Affiliate of Synovus Financial Corp. to the Company or any Affiliate of the Company from January 1, 2008 to December 31, 2008, shall receive credit for service under this Plan to the same extent such service was recognized under the provisions of the Prior Plan.

II. DEFINITIONS

Wherever used herein, the following terms have the meanings set forth below, unless a different meaning is clearly required by the context:

	A.		“Account” means, for each Participant, the bookkeeping account established for his or her benefit under the Plan.

	B.		“Code” means the Internal Revenue Code of 1986, as amended from time to time. Reference to any section or subsection of the Code includes reference to any

comparable or succeeding provisions of any legislation that amends, supplements or replaces such section or subsection.

	C.		“Compensation” means, with respect to a Participant, his or her base salary, including any bonuses, overtime, commissions and incentives. Compensation shall not include any amounts previously deferred under this Plan or any other nonqualified deferred compensation plan.

	D.		“Discretionary Credit” means an amount credited to a Participant’s Account by the Employer in accordance with Section IV.B.

	E.		“Effective Date” means January 1, 2008.

	F.		“Elective Deferral” means the portion of Compensation which is deferred by a Participant under Section IV.A.

	G.		“Eligible Employee” means each individual selected by the Plan Administrator for eligibility from among the group of highly compensated or managerial employees of the Employer.

	H.		“Employer” means Total System Services, Inc. and any of its affiliates.

	I.		“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time. Reference to any section or subsection of ERISA includes reference to any comparable or succeeding provisions of any legislation that amends, supplements or replaces such section or subsection.

	J.		“Participant” means any individual who participates in the Plan in accordance with Article III.

	K.		“Plan” means the Amended and Restated Total System Services, Inc. Deferred Compensation Plan and as set forth herein and all subsequent amendments hereto.

	L.		“Plan Administrator” means the Employer, or the person, persons or entity otherwise designated by the Employer to administer the Plan.

	M.		“Plan Year” means the calendar year, except that the initial plan year may be a period of less than 12 months’ duration beginning on the Effective Date.

	N.		“Valuation Date” means each business day in the Plan year and any such other date designated by the Plan Administrator.

	O.		“Vested” means the nonforfeitable right to a portion of the Participant’s Account attributable to Discretionary Credits, if any, determined in accordance with the vesting schedule set forth in Section V.D.

III. PARTICIPATION

	A.		Commencement of Participation . Any individual who is an Eligible Employee on or after the Effective Date and who has elected to defer part of his or her Compensation in accordance with Section IV.A or who has been selected to receive Discretionary Credits under Section IV.B shall become a Participant on the date such Elective Deferral election or Discretionary Credit is made, as the case may be.

	B.		Continued Participation . Subject to Section III.C, an individual who has become a Participant in the Plan shall continue to be a Participant so long as any amount remains credited to his or her Account.

	C.		Termination of Participation . The Plan Administrator may terminate an employee’s participation in the Plan prospectively for any reason, effective as of the first day of the Plan Year following such termination of participation, including but not limited to the Plan Administrator’s determination that such termination is necessary in order to maintain the Plan as a “plan which is unfunded and is maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees” within the meaning of Sections 201(2), 301(a)(3), 401(a)(1), and 4021(b)(6) of ERISA. Amounts credited to a Participant’s Account (regardless of the extent otherwise Vested) shall be paid out to such Participant in accordance with the Participant’s election under Article VI.

IV. DEFERRALS AND CREDITS

Elective Deferrals .

	1.		In general. An individual who is an Eligible Employee may elect to defer a designated portion of Compensation to be earned during a Plan Year, by filing an irrevocable written election with the Plan Administrator prior to the first day of the Plan Year in which such Compensation is to be earned. An individual who first becomes an Eligible Employee on or after the first day of any Plan Year may elect to defer a designated portion of his or her Compensation by filing an irrevocable written election with the Plan Administrator on or before the date that is 30 days after the date on which the employee first becomes an Eligible Employee. The deferral election shall apply only to Compensation earned after the date on which the Eligible Employee files his or her deferral election form.

	2.		Nature of Election. Each election under this Section IV for a Plan Year (or the balance of a Plan Year) shall be made on a form approved or prescribed by the Plan Administrator and shall apply only to Compensation earned for the calendar year after the date the election form is completed and filed with the Plan Administrator. The election form

shall apply to bonuses and shall specify the whole percentage or flat dollar amount that is to be deferred. A Participant may revoke his or her deferral election as of the first day of any Plan Year which follows such revocation by giving written notice to the Plan Administrator before that day (or any such earlier date as the Plan Administrator may prescribe). Any deferral election made under this Section IV.A shall continue to be effective until revoked or changed pursuant to this paragraph.

Excess Benefit Credits . The Employer shall credit the Account of each Participant with the excess of any employer contributions that would have been allocated to the Participant’s account under the TSYS Money Purchase Pension Plan (the “Money Purchase Plan”), the TSYS Profit Sharing Plan (the “Profit Sharing Plan”) or the TSYS 401(k) Savings Plan (the “401(k) Plan”) but for the limitation of Code Sections 401(a)(17) and 415 over the amount actually credited to such account; such credits to be made as of the date or dates that the amounts would have been allocated to the Participant’s account under the Money Purchase Plan, the Profit Sharing Plan or the 401(k) Plan.

V. ACCOUNTS

	A.		Accounts . The Plan Administrator shall establish an Account for each Participant reflecting Elective Deferrals or Discretionary Credits made for the Participant’s benefit together with any adjustments hereunder. Subject to Sections V.E and IX.A, the Employer shall deposit the amount of deferrals and credits for a period as soon as practicable after the date as of which such amounts are credited to the Accounts. As of each Valuation Date, the Plan Administrator shall provide the Participant with a statement of his or her Account reflecting the income, gains and losses (realized and unrealized), amounts of deferrals and credits, and distributions of such Account since the prior Valuation Date.

	B.		Investments . Each Participant’s Account shall be deemed invested in shares of any open-end registered investment company for which Fidelity Investments or one of its subsidiaries or affiliates (collectively “Fidelity”) serves as investment advisor or for which Fidelity is the principal underwriter, or any other investment option selected by the Plan Administrator. If any Participant or beneficiary makes an investment selection, the Employer (or in the event of the establishment of a trust hereunder, the trustee of such trust as directed by the Employer) may follow such investment selection but shall not be legally bound to do so.

	C.		Payments . Each Participant’s Account shall be reduced by the amount of any payment made to or on behalf of the Participant under Article VI as of the date such payment is made.

	D.		Vesting . A Participant will at all times be 100% Vested in the portion of his or her Account attributable to Elective Deferrals. A Participant will be vested in the portion of his or her Account attributable to Excess Benefit Credits from the

Profit Sharing Plan or the Money Purchase Pension Plan according to the following schedule, based on his or her years of service with the Employer. A Participant’s years of service for this purpose will be determined by the Administrator pursuant to uniform rules based on the time elapsed since the Participant’s commencement of employment with the Employer or its affiliates.


Years of Service		% Vested
less than 1		0
2		25
3		50
4		75
5 or more		100

	E.		Forfeiture of non-Vested Amounts . To the extent that any amounts credited to a Participant’s Account are not Vested at the time the Account becomes distributable under the Plan, such non-Vested amounts shall be forfeited and may be used by the Employer as future Discretionary Credits for other Participants.

	F.		Plan Mergers . From time to time, other non-qualified deferred compensation plans may be merged into the Plan. All Accounts resulting from such merged plans will be 100% vested as of the date of merger. A list of merged plans, together with any special terms and conditions adopted in connection with the merger, is attached to the Plan as Exhibit “A.”

VI. PAYMENTS

	A.		Unforeseeable Financial Emergency . A Participant who believes he or she is suffering an “Unforeseeable Financial Emergency” may apply to the Plan Administrator for a distribution under the Plan in order to alleviate such emergency. An “Unforeseeable Financial Emergency” shall mean a severe financial hardship resulting from an illness or accident of the Participant or a dependent (as defined in Section 152 of the Code without regard to Section 152(b)(1), (b)(2), and (d)(1)(B)), loss of the Participant’s property due to casualty (including the need to rebuild a home not otherwise covered by insurance), or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. Except as otherwise provided herein, the purchase of a home and the payment of college tuition are not unforeseeable emergencies. Whether a Participant or dependent is faced with an unforeseeable emergency is to be determined by the Plan Administrator based on the relevant facts and circumstances of each case, but, in any case, a distribution on account of an unforeseeable emergency may not be made to the extent that such emergency is or may be relieved through reimbursement or compensation from insurance or otherwise, by liquidation of the Participant’s assets, to the extent the liquidation of such assets would not cause severe financial hardship, or by cessation of deferrals under the arrangement. If the Plan Administrator determines, in its sole discretion, that a participant qualified for a distribution due to an Unforeseeable Financial Emergency, the Employer shall be directed to pay to the Participant an amount which it determines is necessary or appropriate, not to exceed the Vested portion of the Participant’s Account balance, and the Employer shall pay such amount to the Participant in a single lump sum cash payment.

	B.		Timing of Distribution . Each Participant shall specify as part of his or her deferral election under Section IV.A, the date on which the Elective Deferrals and/or Discretionary Credits made on his or her behalf , if any, shall be distributed. The Participant may elect the timing of the payment of all vested amounts credited to his or her Account from one of the following options:

	1.		the January 1 following a specified date, which must be at least two years after the Plan Year for which the Elective Deferrals or Discretionary Credits are made, or

	2.		subject to Section VI.C below, within 90 days following termination of employment for any reason including retirement or death.

The foregoing election shall be made on a form approved or prescribed by the Plan Administrator. A Participant may irrevocably elect to subsequently postpone such distribution provided that: (i) the subsequent election shall not take effect for at least 12 months after the date on which it is made; (ii) the subsequent election must be made at least 12 months prior to the original payment date; and (iii) the subsequent election shall result in a new payment date that is delayed by

at least five (5) years, as measured from the original payment date. Any subsequent election must be in writing, filed in a manner acceptable to the Plan Administrator and comply with such other restrictions, consistent with Section 409A, that are imposed generally by the Plan Administrator on such postponements.

If no election is in effect with respect to a portion of a Participant’s Account, subject to Section VI.C below, payment will be made within 90 days following termination of employment for any reason including retirement or death.

	C.		Mandatory 6 Month Delay . Notwithstanding anything in this Article VI to the contrary, any payment made under this Plan on account of the Participant’s termination of employment for any reason, except on account of death, shall commence no earlier than the first day of the seventh month following the Participant’s termination of employment from the Employer. In the case of installment payments under Section VI.E that would have otherwise been paid during the first six months following the Participant’s termination of employment, the first payment will include a lump sum payment equal to any annual installment that would have been made during such 6 month delay.

	D.		Beneficiary Designation . A Participant shall designate a beneficiary who shall be entitled to receive any Vested amounts remaining in the Participant’s Account after his or death. Such designation shall be made in writing on a form approved or prescribed by the Plan Administrator, and may be changed by the Participant at any time. If there is no such designation or no designated beneficiary survives the Participant, payment shall be made to the Participant’s estate.

	E.		Form of Payment .

Each Participant shall specify as part of his or her deferral election under Section IV.A a form of payment of the Elective Deferrals and/or Discretionary Credits, made on his or her behalf, if any. The Participant may elect the form of payment of all Vested amounts credited to his or her Account from one of the following options:

	a)		a single lump sum payment; or

	b)		annual installments over a period elected by the Participant up to 10 years, the amount of each installment to equal the balance of his or her Account immediately prior to the installment divided by the number of installments remaining to be paid.

The foregoing election shall be made on a form approved or prescribed by the Plan Administrator. A Participant may irrevocably elect to subsequently change such form of payment provided that: (i) the subsequent election shall not take effect for at least 12 months after the

			date on which it is made; (ii) the subsequent election must be made at least 12 months prior to the original payment date; and (iii) the subsequent election shall result in a new payment date that is delayed by at least five (5) years, as measured from the original payment date. Any subsequent election must be in writing, filed in a manner acceptable to the Plan Administrator and comply with such other restrictions, consistent with Section 409A, that are imposed generally by the Plan Administrator on such postponements.

			If no election is in effect with respect to a portion of a Participant’s Account, payment will be made in the form of annual installments for a period of 10 years.

			Payments under this Section shall be made in cash. Any such election shall be made in such form and with such prior notice as the Administrator may require. Regardless of the Participant’s election, if the Participant’s vested Account balance is less than or equal to $10,000, the distribution will be made in a single lump sum payment.

VII. ADMINISTRATION

	A.		Plan Administrator; Interpretation. The Plan Administrator shall oversee the administration of the Plan. The Plan Administrator shall have complete discretionary control and authority to administer all aspects of the Plan, including without limitation the power to appoint agents and counsel, and to determine the rights and benefits and all claims, demands and actions arising out of the provisions of the Plan of any Participant, beneficiary, deceased Participant, or other person having or claiming to have any interest under the Plan, in a manner consistent with Section VII.B. The Plan Administrator shall have the exclusive discretionary power to interpret the Plan and to decide all matters under the Plan. Such interpretation and decision shall be final, conclusive and binding on all Participants and any person claiming under or through any Participant, in the absence of clear and convincing evidence that the Plan Administrator acted arbitrarily and capriciously. Any individual serving as Plan Administrator, or on a committee acting as Plan Administrator, who is a Participant will not vote or act on any matter relating solely to himself or herself. When making a determination or calculation, the Plan Administrator shall be entitled to rely on information furnished by a Participant, a beneficiary, or any other person or entity. The Plan Administrator shall be deemed to be the plan administrator with responsibility for complying with any reporting and disclosure requirements of ERISA.

	B.		Claims Procedure .

In General. If any person believes he or she is being denied any rights or benefits under the Plan, such person may file a claim in writing with the Plan Administrator. If any such claim is wholly or partially denied, the

Plan Administrator will notify such person of its decision in writing. Such notification will contain (i) specific reasons for the denial, (ii) specific reference to pertinent plan provisions, (iii) a description of any additional material or information necessary for such person to perfect such claim and an explanation of why such material or information is necessary and (iv) information as to the steps to be taken if the person wishes to submit a request for review. Such notification will be given within 90 days after the claim is received by the Plan Administrator (or within 180 days, if special circumstances require an extension of time for processing the claim, and if written notice of such extension and circumstances is given to such person within the initial 90 day period).

Appeals. Within 60 days after the date on which a person receives a written notice of a denied claim (or, if applicable, within 60 days after the date on which such denial is considered to have occurred) such person (or his or her duly authorized representative) may (i) file a written request with the Plan Administrator for a review of his or her denied claim and of pertinent documents and (ii) submit written issues and comments to the Plan Administrator. The Plan Administrator will notify such person of its decision in writing. Such notification will be written in a manner calculated to be understood by such person and will contain specific reasons for the decision as well as specific references to pertinent plan provisions. The decision on review will be made within 60 days after the request for review is received by the Plan Administrator (or within 120 days, if special circumstances require an extension of time for processing the request, such as an election by the Plan Administrator to hold a hearing, and if written notice of such extension and circumstances is given to such person within the initial 60 day period).

Indemnification of Plan Administrator . The Employer agrees to indemnify and to defend to the fullest extent permitted by law any director, officer or employee of the Employer or any affiliated company who serves as the Plan Administrator or as a member of a committee appointed to serve as Plan Administrator, or who assists the Plan Administrator in carrying out its duties as part of his or her employment (including any such individual who formerly served in any such capacity) against all liabilities, damages, costs and expenses (including attorneys’ fees and amounts paid in settlement of any claims approved by the Employer) occasioned by any act or omission to act in connection with the Plan, if such act or omission is in good faith.

VIII. AMENDMENT AND TERMINATION

	A.		Amendments . The Employer shall have the right to amend the Plan from time to time, subject to Section VIII.C, by an instrument in writing which has been executed on the Employer’s behalf by an officer thereof or by vote of its Board of Directors.

	B.		Termination of Plan . This Plan is strictly a voluntary undertaking on the part of the Employer and shall not be deemed to constitute a contract between the Employer and any Eligible Employee (or any other employee) or a consideration for, or an inducement or condition of employment for, the performance of the services by any Eligible Employee (or other employee). The Employer reserves the right to terminate the Plan at any time, subject to Section VIII.C, by an instrument in writing which has been executed on said Employer’s behalf by an officer thereof or by vote of its Board of Directors; provided, the Plan may not be terminated before the date on which all amounts credited to all Participant Accounts have been distributed in accordance with Article VI, except as permitted under Code Section 409A and Treas. Reg. Section 1.409A-3(j)(ix)..

	C.		Existing Rights . No amendment or termination of the Plan shall adversely affect the rights of any Participant with respect to amounts credited to his or her Account that are attributable to Elective Deferrals or Discretionary Credits credited prior to the date of such amendment or termination. Any termination of the Plan will cause each Participant to be 100% Vested in his or her Account, notwithstanding Section V.D. The limitations described in this Section VIII.C shall not apply to any amendment of the Plan which is reasonably necessary, in the opinion of counsel, (i) to preserve the intended income tax consequences of the Plan or (ii) to guard against other material adverse impacts on Participants and beneficiaries, and which, in the opinion of counsel, is drafted primarily to preserve such intended consequences, or status, or to guard against such adverse impacts.

	D.		Assignment . The rights and obligations of the Employer shall enure to the benefit of and shall be binding upon its successors and assigns.

IX. MISCELLANEOUS

No Funding . The Plan constitutes a mere promise by the Employer to make benefit payments to such Participants and beneficiaries in the future and Participants and beneficiaries shall have the status of general unsecured creditors of the Employer. Any Accounts established pursuant to the Plan shall remain the property of the Employer until distributed, and nothing in the Plan will otherwise be construed to create a trust or to obligate the Employer or any other person to segregate a fund, purchase an insurance contract, or in any other way currently to fund the future payment of any benefits hereunder, nor will anything herein be construed to give any employee or any other person rights to any specific assets of

the Employer or of any other person. The Employer may, in its sole discretion, create a grantor trust to pay its obligations hereunder, but shall have no obligation to do so. In all events, it is the intent of the Employer that the Plan be treated as unfunded for tax purposes and for purposes of Title I of ERISA.

B.		Nonassignability . None of the benefits, payments, proceeds or claims of any Participant or beneficiary shall be subject to any claim of any creditor of any Participant or beneficiary and, in particular, the same shall not be subject to attachment or garnishment or other legal process by any creditor of such Participant or beneficiary, nor shall any Participant or beneficiary have any right to alienate, anticipate, commute, pledge, encumber, sell, transfer or assign any of the benefits or payments or proceeds which he may expect to receive, contingently or otherwise, under the Plan.

C.		Limitation of Participants’ Rights . Participation in the Plan shall not give any Eligible Employee the right to be retained in the employ of the Employer or any right or interest in the Plan other than as herein provided. The Employer reserves the right to dismiss any Eligible Employee without any liability for any claim against the Employer, except to the extent provided herein.

D.		Government Regulations . It is intended that this Plan will comply with all applicable laws and government regulations, and the Employer shall not be obligated to perform an obligation hereunder in any case where, in the opinion of the Employer’s counsel, such performance would result in the violation of any law or regulation.

E.		Governing Law . The Plan shall be construed, administered, and governed in all respects under and by the laws of the State of Georgia. If any provision shall be held by a court of competent jurisdiction to be invalid or unenforceable, the remaining provisions hereof shall continue to be fully effective.

F.		Headings and Subheadings . Headings and subheadings in this Plan are inserted for convenience only and are not to be considered in the construction of the provisions hereof.

Exhibit “A”

Merged Plans


Plan's Name	Date of Merger	Terms and Conditions

Vital Processing Services, LLC Deferred Retention Compensation Plan	July 8, 2005	New distribution elections permitted until 7/31/05 for participants who have not separated from service (separated participants Stephen Swope will be paid in a lump sum in August of 2005 and Glen Hunter will be paid in May of 2006). New distribution elections may be made for 1-15 years and on annual or monthly basis; other distribution provisions governed by TSYS Plan. Contribution elections grandfathered (including elections for percentages and specific dollar amounts) so long as compliant with Internal Revenue Code Section 409A.

Vital Processing Services, LLC Long-Term Incentive Plan	July 8, 2005	New distribution elections permitted until 7/31/05 for participants who have not separated from service. New distribution elections may be made for 1-15 years and on annual or monthly basis; other distribution provisions governed by TSYS Plan. Contribution elections grandfathered (including elections for percentages and specific dollar amounts) so long as compliant with Internal Revenue Code Section 409A.

EXHIBIT 10.2

AMENDED AND RESTATED TOTAL SYSTEM SERVICES, INC.
DIRECTORS’ DEFERRED COMPENSATION PLAN

Effective as of the 1 ^st day of January, 2009, Total System Services, Inc. (the “Company”) hereby approves and adopts the amended and restated Total System Services, Inc. Directors’ Deferred Compensation Plan (the “Plan”).

BACKGROUND AND PURPOSE

A. Goal . The Company desires to provide members of its Board of Directors with an opportunity (i) to defer the receipt and income taxation of a portion of such directors’ retainers, fees, and other compensation as described in the Plan; and (ii) to receive an investment return on those deferred amounts.

B. Purpose . The purpose of the Plan is to set forth the terms and conditions pursuant to which these deferrals may be made and deemed invested and to describe the nature and extent of the Directors’ rights to their deferred amounts.

C. Type of Plan . The Plan constitutes an unfunded, nonqualified deferred compensation plan and is intended to meet the requirements of Code Section 409A.

ARTICLE I
DEFINITIONS

For purposes of the Plan, each of the following terms, when used with an initial capital letter, shall have the meaning set forth below unless a different meaning plainly is required by the context.

1.1 “Account” shall mean, with respect to a Participant or Beneficiary, the total notional dollar amount or value evidenced by the last balance posted in accordance with the terms of the Plan to the record established for such Participant or Beneficiary with respect to the Deferral Contributions of such Participant for any Plan Year.

1.2 “Beneficiary” shall mean, with respect to a Participant, the person(s) determined in accordance with Section 5.5 to receive any death benefits that may be payable under the Plan upon the death of the Participant.

1.3 “Board” shall mean the Board of Directors of Total System Services, Inc.

1.4 “Business Day” shall mean each day on which the New York Stock Exchange operates and is open to the public for trading.

1.5 “Code” shall mean the Internal Revenue Code of 1986, as amended.

1.6 “Company” or “TSYS” shall mean Total System Services, Inc., a Georgia corporation.

1.7 “Compensation” shall mean the total of the directors’ fees and retainers which actually would be payable to a Director in cash during a Plan Year absent a Deferral Election under this Plan.

1.8 “Deferral Contributions” shall mean, for each Plan Year, that portion of a Participant’s Compensation deferred under the Plan pursuant to Section 3.2.

1.9 “Deferral Election” shall mean a written election form provided by the Plan Administrator on which a Participant may elect to defer under the Plan all or a portion of such individual’s Compensation for a Plan Year.

1.10 “Director” shall mean a member of the Board.

1.11 “Effective Date” shall mean January 1, 2009. The original effective date of the Plan was January 1, 2002.

1.12 “Election Deadline” shall mean, with respect to a Plan Year:

(a) For a Director who is then a member of the Board, the December 20 (or if December 20 is not a Business Day, the last Business Day immediately preceding December 20) immediately preceding the first day of such Plan Year.

(b) For a Director who is first elected by shareholders to be a member of the Board after (or within thirty (30) days before) the Election Deadline described in Section 1.12(a) above with respect to a Plan Year, the date which is thirty (30) days after the date the Director first becomes eligible to participate in the Plan.

1.13 “Investment Election” shall mean a written election form provided by the Plan Administrator on which a Participant may elect to have such individual’s Deferral Contributions for a Plan Year (and all investment earnings attributable thereto) invested to the extent permitted under the terms of the Plan.

1.14 “Investment Options” shall mean (a) any designated open-end registered investment company for which . Fidelity Investments or one of its subsidiaries or affiliates (collectively “Fidelity”) serves as investment advisor or for which Fidelity is the principal underwriter, and (b) any other investment option selected by the Plan Administrator.

1.15 “Participant” shall mean any person participating in the Plan pursuant to the provisions of Article II.

1.16 “Plan” shall mean the Total System Services, Inc. Directors’ Deferred Compensation Plan, as contained herein and all amendments hereto.

1.17 “Plan Administrator” shall mean the Company’s Compensation Committee and any individual or committee the Board designates to act on the Compensation Committee’s behalf with respect to any or all of the Compensation Committee’s responsibilities hereunder.

1.18 “Plan Year” shall mean each calendar year period beginning on January 1 and ending on December 31.

1.19 “Specified Employee” shall mean specified employee within the meaning of Section 409A.

1.20 “Valuation Date” shall mean each business day in the Plan Year and such other date(s) as designated by the Plan Administrator.

ARTICLE II
ELIGIBILITY AND PARTICIPATION

2.1 Annual Participation . Each individual who is a Director as of the first day of a Plan Year and is a member of the Board before the beginning of such Plan Year shall be eligible to defer all or a portion of such individual’s Compensation and thereby to actively participate in the Plan for such Plan Year. Such individual’s participation shall become effective as of the first day of such Plan Year, assuming such individual properly and timely completes the election procedures described below.

2.2 Interim Plan Year Participation . Each individual who becomes a Director during a Plan Year shall be immediately eligible to make a Deferral Election and thereby to participate actively in the Plan for the remainder of such Plan Year.

2.3 Election Procedures . Each Director shall elect to defer all or a portion of such individual’s Compensation and thereby become an active Participant for a Plan Year by delivering a completed Deferral Election and an Investment Election by the Election Deadline. The Plan Administrator also may require the Director to complete other forms and provide other data, as a condition of participation in the Plan.

2.4 Cessation of Eligibility . A Director’s active participation in the Plan shall terminate, and such individual shall not be eligible to make any additional Deferral Contributions for any portion of a Plan Year following the date such individual’s service as a Director with Total System Services, Inc. ceases. In addition, an individual who actively participated in the Plan during prior Plan Years but who is not a Director or does not complete the election procedures, for a subsequent Plan Year, shall cease active participation in the Plan for such subsequent Plan Year. Even if an individual’s active participation in the Plan ends, such individual shall remain an inactive Participant in the Plan until the earlier of (i) the date the full amount of such individual’s Accounts is

distributed from the Plan, or (ii) the date such individual again becomes a Director and recommences active participation in the Plan. During the period of time that an individual is an inactive Participant in the Plan, such individual’s Accounts shall continue to be credited with earnings as provided in the Plan.

ARTICLE III
PARTICIPANTS’ ACCOUNTS; DEFERRAL CONTRIBUTIONS

3.1 Participants’ Accounts .

(a) Establishment of Accounts . The Plan Administrator shall establish and maintain an Account on behalf of each Participant for each Plan Year for which the Participant makes Deferral Contributions. The Plan Administrator shall credit each Participant’s Account with the Participant’s Deferral Contributions for such Plan Year and earnings attributable thereto, and shall maintain such Account until the value thereof has been distributed to or on behalf of the Participant or the Participant’s Beneficiary.

3.2 Deferral Contributions .

(a) Each Director may irrevocably elect to have Deferral Contributions made for a Plan Year by completing in a timely manner a Deferral Election and an Investment Election and following other election procedures as provided in Section 2.3. Subject to any modifications, additions or exceptions that the Plan Administrator, in its sole discretion, deems necessary, appropriate or helpful, the following terms shall apply to such Deferral Elections:

(b) Effective Date . A Participant’s Deferral Election for all or a portion of a Plan Year shall be effective beginning with the first Compensation (i) in such Plan Year with respect to a Participant participating for the entire Plan Year, and (ii) with respect to a Participant participating for a portion of a Plan Year, in the calendar month following the calendar month in which the Participant makes a Deferral Election. To be effective, a Participant’s Deferral Election must be made by the Election Deadline. Any Participant who fails to deliver a Deferral Election, or to complete any of the other requisite election procedures, in a timely manner, shall be deemed to have elected not to participate in the Plan for that Plan Year.

(c) Term . Each Participant’s Deferral Election regarding Compensation for a Plan Year shall remain in effect with respect to a portion of all Compensation paid or payable during such Plan Year, but shall not apply to any subsequent Plan Year.

(d) Deferral Amount . To defer Compensation, a Participant’s Deferral Election shall specify the percentage of Compensation for a Plan Year to be deferred. A Director may defer for any Plan Year zero percent (0%) or one hundred percent (100%) of the Participant’s Compensation for such Plan Year.

The percentage so elected shall be withheld from each payment of Compensation otherwise payable to such Participant during the Plan Year. Notwithstanding any provision of this Plan or a Deferral Election to the contrary, however, the amount withheld from any payment of Compensation shall be reduced automatically, if necessary, so that it does not exceed the amount of such payment net of all withholding, allotments and deductions, other than any reduction pursuant to such Deferral Election. No amounts shall be withheld during any period an individual ceases to receive Compensation as a Director for any reason during the Plan Year.

(e) Revocation . Once made for a Plan Year, a Participant may not revoke a Deferral Election for such Plan Year.

(f) Crediting of Deferral Contributions . The Plan Administrator shall credit to each Participant’s Account for a Plan Year the amount of Compensation reflected on the Participant’s Deferral Election as of the date(s) on which such Compensation would have been paid if not subject to the Participant’s Deferral Election.

3.3 Vesting . A Participant shall at all times be fully vested in such Participant’s Deferral Contributions and all deemed investment earnings attributable thereto.

ARTICLE IV
DETERMINATION AND CREDITING OF INVESTMENT RETURN

4.1 General Investment Parameters . The rate of return credited to each Participant’s Accounts shall be determined on the basis of the Investment Option(s) applicable to the Participant’s Accounts.

4.2 Investment of Existing Account Balances . A Participant may change the percentage of an existing Account balance that will be invested in Investment Options in accordance with procedures established by the Plan Administrator.

4.3 Investment Subaccounts . For the sole purpose of tracking a Participant’s investment elections and calculating investment earnings attributable to a Participant’s Account for a Plan Year pursuant to the terms of this Article IV, the Plan Administrator may establish and maintain for such Participant for such Plan Year separate subaccounts, as necessary, the total of which shall equal such Participant’s Account for such Plan Year.

ARTICLE V
PAYMENT OF ACCOUNT BALANCES

5.1 Benefit Amounts .

(a) Benefit Entitlement . As the benefit under the Plan, each Participant (or Beneficiary) shall be entitled to receive the total amount of the Participant’s (or Beneficiary’s) Accounts, determined as of the most recent Valuation Date, and payable at such times and in such forms as described in this Article V.

(b) Valuation of Benefit . For purposes hereof, each Account of a Participant as of any Valuation Date shall be equal to (i) the total amount of all of such Participant’s Deferral Contributions credited thereto; plus or minus (as applicable) (ii) all investment earnings or losses attributable thereto; minus (iii) the total amount of all benefit payments previously made therefrom.

5.2 Elections of Timing and Form . In conjunction with, and at the time of, completing a Deferral Election for each Plan Year, a Participant shall select the timing and form of the distribution that will apply to the Account of such Participant for Deferral Contributions (and investment earnings attributable thereto) for such Plan Year. The terms applicable to this selection process are as follows:

(a) Timing . For a Participant’s Account for each Plan Year, the Participant may elect that distribution will be made or commence as of: (1) any January 1 following a special date, (2) the January 1 immediately following the date a Participant attains a specified age, or (3) the January 1 immediately following the Participant’s cessation of service as a Director of the Company. The special date or age selected above must be at least two years after the Plan Year for which the Deferral Contributions are made.

(b) Form of Distribution . For a Participant’s Account for each Plan Year, the Participant may elect that the distribution will be paid in one of the following forms:

(i) a single lump-sum cash payment; or

(ii) substantially equal annual installments (adjusted for investment earnings or losses between payments in the manner described in Article IV) over a period of five (5) to ten (10) years.

(c) Multiple Selections . A Participant may select a different benefit payment or commencement date and/or a different form of distribution with respect to such Participant’s Account for each Plan Year. For ease of administration, the Plan Administrator may combine Accounts and subaccounts of a Participant to which the same benefit payment/commencement date and the same form of distribution apply.

5.3 Benefit Payments to a Participant .

(a) Timing . A Participant shall receive or begin receiving a distribution of each of such Participant’s Accounts as of the January 1 selected by such Participant with respect to each such Account pursuant to the terms of Section 5.2(a). An amount payable “as of” any January 1 shall be made as soon as practicable after such January 1 and, unless extenuating circumstances arise, no later than January 31, provided that under no circumstances, such payment will be made more than 90 days after January 1.

(b) Form of Distribution . A Participant shall receive or begin receiving a distribution of each of such Participant’s Accounts in cash in the form selected by such Participant with respect to such Account pursuant to the terms of Section 5.2(b).

(c) Valuation of Single Lump-Sum Payments . The amount of a Participant’s single lump-sum distribution of any of such Participant’s Accounts as of any applicable January 1 shall be equal to the value of such Account as of the Valuation Date immediately preceding the date on which such distribution is paid.

(d) Valuation of Installment Payments . For purposes of determining the amount of any installment payment to be paid as of a January 1 from an Account, the Account balance shall be divided by the number of remaining installments to be paid from such Account (including the current installment).

(e) Mandatory 6 Month Delay . Notwithstanding anything in this Section 5.3 to the contrary, in the case where a Participant is a Specified Employee, any payment made under this Plan on account of such Participant’s cessation of service as a Director of the Company shall commence no earlier than the first day of the seventh month following the Participant’s termination of employment from the Company. In the case of installment payments under Section 5.2(b) that would have otherwise been paid during the first six months following the Participant’s termination of employment from the Company, the first payment will include a lump sum payment equal to any annual installment that would have been made during such 6 month delay.

5.4 Death Benefits .

(a) General . If a Participant dies before receiving the entire amount of the benefit under the Plan, such Participant’s Beneficiary shall receive distribution of amounts remaining in the Participant’s Accounts in the form, as elected by the Participant on a Beneficiary designation form described in Section 5.5, of either:

(i) a single lump-sum cash payment of the entire balance in the Participant’s Accounts as of the January 1 immediately following the date of the Participant’s death; or

(ii) (A) for Accounts with respect to which distribution has not commenced under Section 5.2 at the time of the Participant’s death, substantially equal annual installments (adjusted for investment earnings between payments in the manner described in Article IV) over a period of five (5) to ten (10) years, commencing as of the January 1 immediately following the Participant’s death; and (B) for Accounts with respect to which distribution has commenced in the form of installments described in Section 5.2(b)(ii) at the time of the Participant’s death, continuation of such installment payment schedule.

An amount payable “as of” any January 1 shall be made as soon as practicable after such January 1 and, unless extenuating circumstances arise, no later than January 31, provided that under no circumstances, such payment will be made more than 90 days after January 1.

(b) Valuation . The valuation rules described in subsections 5.3(c) and 5.3(d) shall apply to payments described in this Section 5.4.

5.5 Beneficiary Designation .

(a) General . A Participant shall designate a Beneficiary or Beneficiaries for all of such Participant’s Accounts by completing the form prescribed for this purpose for the Plan by the Plan Administrator and submitting such form as instructed by the Plan Administrator. Once a Beneficiary designation is made, it shall continue to apply until and unless such Participant makes and submits a new Beneficiary designation form for this Plan.

(b) No Designation or Designee Dead or Missing . In the event that:

(i) a Participant dies without designating a Beneficiary;

(ii) the Beneficiary designated by a Participant is not surviving or in existence when payments are to be made or commence to such designee under the Plan, and no contingent Beneficiary, surviving or in existence, has been designated; or

(iii) the Beneficiary designated by a Participant cannot be located by the Plan Administrator within 1 year from the date benefit payments are to be made or commence to such designee;

then, in any of such events, the Beneficiary of such Participant shall be the Participant’s surviving spouse, if any, who can then be located, and if not, the

estate of the Participant. The entire balance in the Participant’s Accounts shall be paid to such Beneficiary in the form of a single lump-sum cash payment described in Section 5.4(a)(i).

(c) Death of Beneficiary . If a Beneficiary who survives the Participant, and to whom payment of Plan benefits commences, dies before complete distribution of the Participant’s Accounts, the entire balance in such Accounts shall be paid to the estate of such Beneficiary in the form of a single lump-sum cash payment as of the January 1 immediately following such Beneficiary’s death. An amount payable “as of” any January 1 shall be made as soon as practicable after such January 1 and, unless extenuating circumstances arise, no later than January 31, provided that under no circumstances, such payment will be made more than 90 days after January 1. The valuation rules described in subsection 5.3(c) shall apply to any payments described in this subsection 5.5(c).

5.6 Unforeseeable Financial Emergency . A Participant who believes he or she is suffering an “Unforeseeable Financial Emergency” may apply to the Plan Administrator for a distribution under the Plan in order to alleviate such emergency. An “Unforeseeable Financial Emergency” shall mean a severe financial hardship resulting from an illness or accident of the Participant or a dependent (as defined in Section 152 of the Code without regard to Section 152(b)(1), (b)(2), and (d)(1)(B)), loss of the Participant’s property due to casualty (including the need to rebuild a home not otherwise covered by insurance), or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. Except as otherwise provided herein, the purchase of a home and the payment of college tuition are not unforeseeable emergencies. Whether a Participant or dependent is faced with an unforeseeable emergency is to be determined by the Plan Administrator based on the relevant facts and circumstances of each case, but, in any case, a distribution on account of an unforeseeable emergency may not be made to the extent that such emergency is or may be relieved through reimbursement or compensation from insurance or otherwise, by liquidation of the Participant’s assets, to the extent the liquidation of such assets would not cause severe financial hardship, or by cessation of deferrals under the arrangement. If the Plan Administrator determines, in its sole discretion, that a Participant qualified for a distribution due to an Unforeseeable Financial Emergency, the Participant will receive a distribution in an amount which it determines is necessary or appropriate, not to exceed the Participant’s Account balance, and the Plan Administrator shall pay such amount to the Participant in a single lump sum cash payment.

5.7 Taxes . If the whole or any part of any Participant’s or Beneficiary’s benefit hereunder shall become subject to any estate, inheritance, income, employment or other tax which a Company shall be required to pay or withhold, the Company shall have the full power and authority to withhold and pay such tax out of any monies or other property in its hand for the account of the Participant or Beneficiary whose interests hereunder are so affected. Prior to making any payment, the Company may

require such releases or other documents from any lawful taxing authority as it shall deem necessary.

ARTICLE VI
CLAIMS

6.1 Initial Claim . Claims for benefits under the Plan may be filed with the Plan Administrator on forms or in such other written documents, as the Plan Administrator may prescribe. The Plan Administrator shall furnish to the claimant written notice of the disposition of a claim within 90 days after the application therefor is filed. In the event the claim is denied, the notice of the disposition of the claim shall provide the specific reasons for the denial, citations of the pertinent provisions of the Plan, and, where appropriate, an explanation as to how the claimant can perfect the claim and/or submit the claim for review.

6.2 Appeal . Any Participant or Beneficiary who has been denied a benefit shall be entitled, upon request to the Plan Administrator, to appeal the denial of the claim. The claimant (or a duly authorized representative) may review pertinent documents related to the Plan and in the Plan Administrator’s possession in order to prepare the appeal. The request for review, together with written statement of the claimant’s position, must be filed with the Plan Administrator no later than 60 days after receipt of the written notification of denial of a claim provided for in Section 6.1. The Plan Administrator’s decision shall be made within 60 days following the filing of the request for review. If unfavorable, the notice of the decision shall explain the reasons for denial and indicate the provisions of the Plan or other documents used to arrive at the decision.

6.3 Satisfaction of Claims . The payment of the benefits due under the Plan to a Participant or Beneficiary shall discharge the Company’s obligations under the Plan, and neither the Participant nor the Beneficiary shall have any further rights under the Plan upon receipt by the appropriate person of all benefits. In addition, (i) if any payment is made to a Participant or Beneficiary with respect to benefits described in the Plan from any source arranged by the Company including, without limitation, any fund, trust, insurance arrangement, bond, security device, or any similar arrangement, such payment shall be deemed to be in full and complete satisfaction of the obligation of the Company under the Plan to the extent of such payment as if such payment had been made directly by such Company.

ARTICLE VII
PLAN ADMINISTRATION

7.1 Rights and Duties of the Plan Administrator . The Plan Administrator shall administer the Plan and shall have all powers necessary to accomplish that purpose, including (but not limited to) the following:

(a) to construe, interpret and administer the Plan;

(b) to make determinations required by the Plan, and to maintain records regarding Participants’ and Beneficiaries’ benefits hereunder;

(c) to compute and certify to Company the amount and kinds of benefits payable to Participants and Beneficiaries, and to determine the time and manner in which such benefits are to be paid;

(d) to authorize all disbursements by Company pursuant to the Plan;

(e) to maintain all the necessary records of the administration of the Plan;

(f) to make and publish such rules and procedures for the regulation of the Plan as are not inconsistent with the terms hereof;

(g) to delegate to other individuals or entities from time to time the performance of any of its duties or responsibilities hereunder; and

(h) to hire agents, accountants, actuaries, consultants and legal counsel to assist in operating and administering the Plan.

The Plan Administrator shall have the exclusive right to construe and interpret the Plan, to decide all questions of eligibility for benefits and to determine the amount of such benefits, and its decisions on such matters shall be final and conclusive on all parties.

7.2 Bond; Compensation . The Plan Administrator and (if applicable) its members shall serve as such without bond and without compensation for services hereunder. All expenses of the Plan Administrator shall be paid by the Company.

ARTICLE VIII
AMENDMENT AND TERMINATION

8.1 Amendments . Subject to Section 8.3, the Board shall have the right, in its sole discretion, to amend the Plan in whole or in part at any time and from time to time. In addition, the Plan Administrator shall have the right, in its sole discretion, to amend the Plan at any time and from time to time so long as such amendment will not result in a material increase in liabilities associated with the Plan.

8.2 Termination of Plan . Subject to Section 8.3, the Company reserves the right to discontinue and terminate the Plan at any time, for any reason. Any action to terminate the Plan shall be taken by the Board and such termination shall be binding on the Company, Participants and Beneficiaries; provided, however, the Plan may not be terminated before the date on which all amounts credited to all Participant accounts

have been distributed in accordance with Article 5, except as permitted under Code Section 409A and Treas. Reg. Section 1.409A-3(j)(ix).

8.3 Limitation on Authority . Except as otherwise provided in this Section 8.3, no contractual right created by and under any Deferral Election made prior to the effective date of any amendment or termination shall be abrogated by any amendment or termination of the Plan, absent the express, written consent of the Participant who made the Deferral Election.

(a) Plan Amendments . The limitation on authority described in this Section 8.3 shall not apply to any amendment of the Plan which is reasonably necessary, in the opinion of counsel, (i) to preserve the intended income tax consequences of the Plan described in Section 9.1, or (ii) to guard against other material adverse impacts on Participants and Beneficiaries, and which, in the opinion of counsel, is drafted primarily to preserve such intended consequences, or status, or to guard against such adverse impacts.

(b) Plan Termination . The limitation on authority described in this Section 8.3 shall not apply to any termination of the Plan as the result of a determination that, in the opinion of counsel or of an accounting firm, Participants and Beneficiaries generally are subject to federal income taxation on Deferral Contributions or other amounts in Participant Accounts prior to the time of distribution of amounts under the Plan but only if such termination is reasonably necessary to guard against material adverse impacts on Participants and Beneficiaries, or the Company; provided, however, the Plan may not be terminated before the date on which all amounts credited to all Participant accounts have been distributed in accordance with Article 5, except as permitted under Code Section 409A and Treas. Reg. Section 1.409A-3(j)(ix).

(c) Opinions . In each case in which an opinion is contemplated in this Section 8.3, such opinion shall be in writing and delivered to the Board, rendered by a nationally recognized law or accounting firm selected or approved by the Board.

ARTICLE IX
MISCELLANEOUS

9.1 Taxation . It is the intention of the Company that the benefits payable hereunder shall not be deductible by the Company nor taxable for federal income tax purposes to Participants or Beneficiaries until such benefits are paid by the Participating Company to such Participants or Beneficiaries. When such benefits are so paid, it is the intention of the Company that they shall be deductible by the Company under Code Section 162.

9.2 Withholding . All payments made to a Participant or Beneficiary hereunder shall be reduced by any applicable federal, state or local withholding or other taxes or charges as may be required under applicable law.

9.3 No Continued Directorship . Nothing herein contained is intended to be nor shall be construed as constituting a contract or other arrangement between the Company and any Participant to the effect that the Participant will be employed by the Company or continue to be a Director for any specific period of time.

9.4 Headings . The headings of the various articles and sections in the Plan are solely for convenience and shall not be relied upon in construing any provisions hereof. Any reference to a section shall refer to a section of the Plan unless specified otherwise.

9.5 Gender and Number . Use of any gender in the Plan will be deemed to include all genders when appropriate, and use of the singular number will be deemed to include the plural when appropriate, and vice versa in each instance.

9.6 Assignment of Benefits . The right of a Participant or Beneficiary to receive payments under the Plan may not be anticipated, alienated, sold, assigned, transferred, pledged, encumbered, attached or garnished by creditors of such Participant or Beneficiary, except by will or by the laws of descent and distribution and then only to the extent permitted under the terms of the Plan.

9.7 Legally Incompetent . The Plan Administrator, in its sole discretion, may direct that payment be made to an incompetent or disabled person, for whatever reason, to the guardian of such person or to the person having custody of such person, without further liability on the part of the Company for the amount of such payment to the person on whose account such payment is made.

9.8 Entire Document . This Plan document sets forth the entire Plan and all rights and limits. Except for a formal amendment hereto, no document shall modify the Plan or create any additional rights or benefits.

9.9 Governing Law . The Plan shall be construed, administered and governed in all respects in accordance with applicable federal law and, to the extent not preempted by federal law, in accordance with the laws of the State of Georgia. If any provisions of this instrument shall be held by a court of competent jurisdiction to be invalid or unenforceable, the remaining provisions hereof shall continue to be fully effective.

9.10 No Funding . The Plan constitutes a mere promise by the Company to make benefit payments to such Participants and Beneficiaries in the future and Participants and Beneficiaries shall have the status of general unsecured creditors of the Company. Any Accounts established pursuant to the Plan shall remain the property of the Company until distributed, and nothing in the Plan will otherwise be construed to

create a trust or to obligate the Company or any other person to segregate a fund, purchase an insurance contract, or in any other way currently to fund the future payment of any benefits hereunder, nor will anything herein be construed to give any employee or any other person rights to any specific assets of the Company or of any other person. The Company may, in its sole discretion, create a grantor trust to pay its obligations hereunder, but shall have no obligation to do so. In all events, it is the intent of the Company that the Plan be treated as unfunded for tax purposes. This Plan is not subject to the provisions of the Employee Retirement Income Security Act of 1974.

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Philip W. Tomlinson, certify that:

1.		I have reviewed this quarterly report on Form 10-Q of Total System Services, Inc.;

2.		Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.		Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.		The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	(a)		Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	(b)		Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	(c)		Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	(d)		Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

	(a)		All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	(b)		Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date: August 7, 2008	/s/ Philip W. Tomlinson
	Philip W. Tomlinson
	Chairman of the Board and Chief Executive Officer

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, James B. Lipham, certify that:

1.		I have reviewed this quarterly report on Form 10-Q of Total System Services, Inc.;

2.		Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.		Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.		The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a- 15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	(a)		Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	(b)		Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	(c)		Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	(d)		Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

	(a)		All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	(b)		Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date: August 7, 2008	/s/ James B. Lipham
	James B. Lipham
	Senior Executive Vice President and Chief Financial Officer

EXHIBIT 32

CERTIFICATION OF PERIODIC REPORT

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, Philip W. Tomlinson, the Chairman of the Board and Chief Executive Officer of Total System Services, Inc. (the “Company”), and James B. Lipham, the Senior Executive Vice President and Chief Financial Officer of the Company, hereby certify that, to the best of his knowledge:

(1)		The Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2008 (the “Report”) fully complies with the requirements of section 13(a) or section 15(d) of the Securities Exchange Act of 1934; and

(2)		The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



August 7, 2008	/s/ Philip W. Tomlinson
	Philip W. Tomlinson
	Chairman of the Board and Chief Executive Officer


August 7, 2008	/s/ James B. Lipham
	James B. Lipham
	Senior Executive Vice President and Chief Financial Officer

This certification “accompanies” the Form 10-Q to which it relates, is not deemed filed with the SEC and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-Q, irrespective of any general incorporation language contained in such filing).

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents