Segment Reporting and Major Customers

6 Months Ended

Jun. 30, 2013

Segment Reporting and Major Customers

Note 7 — Segment Reporting and Major Customers

Refer to Note 22 of the Company’s audited financial statements for the year ended December 31, 2012, which are included as Exhibit 13.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2012, as filed with the SEC, for a discussion regarding segment reporting and major customers.

In 2013, TSYS embarked on two corporate-wide initiatives that impact more than one operating segment. One initiative is a multi-year, multi-phase initiative that consists of enhancing TSYS’ issuing processing platforms. The other is an innovation initiative focused on enhancing existing product and service offerings through several new product concepts and ideas on how to change existing processes. The costs associated with these two new initiatives are not allocated to the operating segments, but are combined, along with the existing corporate administration, in a grouping titled “Corporate Admin and Other.” This is a change the chief operating decision maker requested and is used to evaluate performance and assess resources starting in 2013. The following operating results by segment comparison reflects the change in segment reporting from these initiatives, including the 2012 results.

The following table presents the Company’s operating results by segment:

Operating Segments	Three months ended June 30,						Six months ended June 30,
(in thousands)	2013			2012			2013			2012
Revenues before reimbursable items
North America Services	$	214,526			205,565			420,122			409,614
International Services		93,209			99,047			185,802			195,538
Merchant Services		112,952			97,701			222,253			196,056
Intersegment revenues		(3,175	)		(3,621	)		(6,428	)		(7,338	)
Revenues before reimbursable items from external customers	$	417,512			398,692			821,749			793,870
Total revenues
North America Services	$	248,640			239,557			488,429			480,156
International Services		98,087			103,415			195,183			203,775
Merchant Services		136,458			124,903			269,359			250,420
Intersegment revenues		(4,742	)		(5,224	)		(9,532	)		(10,538	)
Revenues from external customers	$	478,443			462,651			943,439			923,813
Depreciation and amortization
North America Services	$	18,213			18,821			36,296			37,274
International Services		11,492			15,006			24,343			27,917
Merchant Services		10,362			8,668			21,515			17,453
Corporate Admin and Other		479			718			889			1,442
Total depreciation and amortization	$	40,546			43,213			83,043			84,086
Segment operating income
North America Services	$	79,896			72,231			147,099			140,578
International Services		8,056			9,438			14,682			13,552
Merchant Services		33,590			32,950			62,917			67,169
Corporate Admin and Other		(26,228	)		(22,523	)		(54,481	)		(44,372	)
Operating income	$	95,314			92,096			170,217			176,927

	At
	June 30, 2013			December 31, 2012
Total assets
North America Services	$	2,935,826			1,744,877
International Services		388,144			445,642
Merchant Services		696,189			703,725
Intersegment eliminations		(831,982	)		(870,406	)
Total assets	$	3,188,177			2,023,838

Revenues by Geographic Area

Revenues for North America 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 International 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 based on the domicile of the Company’s customers:

	Three months ended June 30,				Six months ended June 30,
(in millions)	2013		2012		2013		2012
United States	$	313.3		303.8		618.1		609.3
Europe*		70.2		73.9		141.1		146.8
Canada		61.0		51.0		117.8		101.8
Japan*		16.8		19.5		33.2		37.9
Mexico		4.2		2.7		8.3		5.1
Other*		12.9		11.8		24.9		22.9
Total	$	478.4		462.7		943.4		923.8

* Revenues are impacted by movements in foreign currency exchange rates.

The following tables reconcile geographic revenues to revenues by operating segment based on the domicile of the Company’s customers:

	Three months ended June 30,
	North America Services				International Services				Merchant Services
(in millions)	2013		2012		2013		2012		2013		2012
United States	$	176.4		178.3		—		—		136.9		125.5
Europe*		0.2		0.2		70.0		73.7		—		—
Canada		61.0		51.0		—		—		—		—
Japan*		—		—		16.8		19.5		—		—
Mexico		4.2		2.7		—		—		—		—
Other*		3.1		2.5		9.7		9.3		0.1		—
Total	$	244.9		234.7		96.5		102.5		137.0		125.5

	Six months ended June 30,
	North America Services				International Services				Merchant Services
(in millions )	2013		2012		2013		2012		2013		2012
United States	$	347.9		357.9		—		—		270.2		251.4
Europe*		0.4		0.3		140.7		146.5		—		—
Canada		117.7		101.7		—		—		0.1		0.1
Japan*		—		—		33.2		37.9		—		—
Mexico		8.3		5.1		—		—		—		—
Other*		5.9		5.0		18.8		17.7		0.2		0.2
Total	$	480.2		470.0		192.7		202.1		270.5		251.7

* Revenues are impacted by movements in foreign currency exchange rates.

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

	At
(in millions)	June 30, 2013		December 31, 2012
United States	$	189.7		191.7
Europe*		45.3		51.3
Japan*		6.9		9.5
Other*		6.9		7.9
Total	$	248.8		260.4

* Total assets are impacted by movements in foreign currency exchange rates.

Major Customers

For the three and six months ended June 30, 2013 and 2012, the Company did not have any major customers.