Segment Reporting, including Geographic Area Data and Major Customers

12 Months Ended

Dec. 31, 2015

Segment Reporting, including Geographic Area Data and Major Customers

Note 22 Segment Reporting, including Geographic Area Data and Major Customers

TSYS provides global payment processing and other services to card-issuing and merchant acquiring institutions in the United States and internationally through online accounting and electronic payment processing systems. Corporate expenses, such as finance, legal, human resources, mergers and acquisitions and investor relations are categorized as Corporate Administration and Other.

In the first quarter of 2014, the Company’s Japan-based entities qualified for discontinued operations treatment.

In July 2013, TSYS completed its acquisition of all the outstanding stock of NetSpend, which previously operated as a publicly traded company. NetSpend’s financial results are included in the NetSpend segment.

Refer to Note 24 for more information on acquisitions.

North America Services includes electronic payment processing services and other services provided from within the North America region. International Services includes electronic payment processing and other services provided from outside the North America region. Merchant Services includes electronic processing and other services provided to merchants and merchant acquirers. The NetSpend segment provides GPR prepaid debit and payroll cards and alternative financial service solutions to the underbanked and other consumers in the United States.

At TSYS, the chief operating decision maker (CODM) is a group consisting of Senior Executive Management and above. In the first quarter of 2014, the CODM decided that all share-based compensation costs should be included in the category “Corporate Administration and Other” for purposes of segment disclosures. All prior periods were restated to reflect this change. This change is used to evaluate performance and assess resources starting in the first quarter of 2014. The information utilized by the CODM consists of the financial statements and the main metrics monitored are revenue growth and growth in profitability.

Upon completion of the NetSpend acquisition in 2013, the CODM implemented a new metric called adjusted segment operating income in order to analyze each segment’s results of operations. This new metric consists of operating income adjusted for amortization of acquisition related intangibles and corporate administrative and other costs. All periods presented have been adjusted to reflect this new measure. Depreciation and amortization for the segments changed as a result of this new metric removing amortization associated with intangible assets from the total for the segments.

The Company believes the terms and conditions of transactions between the segments are comparable to those which could have been obtained in transactions with unaffiliated parties. TSYS’ operating segments share certain resources, such as information technology support, that TSYS allocates asymmetrically.

Years Ended December 31,
(in thousands)
Operating Segments	2015			2014			2013
Revenues before reimbursable items
North America Services	$	1,147,254			954,082			860,645
International Services		331,159			341,785			321,484
Merchant Services		474,040			435,649			446,277
NetSpend		580,377			482,686			207,851
Intersegment revenues		(33,481	)		(21,224	)		(12,549	)
Revenues before reimbursable items from external customers	$	2,499,349			2,192,978			1,823,708
Total revenues
North America Services	$	1,334,258			1,117,764			1,000,073
International Services		354,725			363,359			341,549
Merchant Services		549,369			510,120			533,050
NetSpend		580,377			482,686			207,851
Intersegment revenues		(39,188	)		(27,052	)		(18,218	)
Revenues from external customers	$	2,779,541			2,446,877			2,064,305
Depreciation and amortization
North America Services	$	99,544			86,513			74,480
International Services		34,892			38,909			41,708
Merchant Services		18,268			14,571			12,034
NetSpend		10,686			7,509			3,121
Segment depreciation and amortization		163,390			147,502			131,343
Acquisition intangible amortization		92,522			96,971			65,893
Corporate Administration and Other		2,352			2,147			1,790
Total depreciation and amortization	$	258,264			246,620			199,026
Adjusted segment operating income
North America Services	$	429,064			351,512			321,619
International Services		60,087			55,123			42,068
Merchant Services		150,225			134,872			155,643
NetSpend		137,837			128,285			66,353
Total adjusted segment operating income		777,213			669,792			585,683
Acquisition intangible amortization		(92,522	)		(96,971	)		(65,893	)
NetSpend merger and acquisition operating expenses		—			(3,217	)		(14,220	)
Share-based compensation		(41,549	)		(30,790	)		(28,933	)
Corporate Administration and Other		(109,035	)		(107,174	)		(94,137	)
Operating income	$	534,107			431,640			382,500
As of December 31,	2015			2014
Total assets
North America Services	$	3,516,328			3,327,160
International Services		348,714			356,590
Merchant Services		689,781			695,744
NetSpend		1,504,740			1,556,369
Intersegment assets		(2,151,263	)		(2,202,282	)
Total assets	$	3,908,300			3,733,581

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

	As of December 31,
(in thousands)	2015		2014
United States	$	241,814		237,865
Europe		41,953		45,503
Other		6,131		7,217
Totals	$	289,898		290,585

GEOGRAPHIC AREA REVENUE BY OPERATING SEGMENT:    The following tables reconcile segment external revenue to revenues by geography for the years ended December 31:

	2015
(in thousands)	North America Services		International Services		Merchant Services		NetSpend		Total		%
United States	$	981,588		—		548,079		580,377	$	2,110,044		75.9
Europe1		796		303,832		22		—		304,650		11.0
Canada1		288,728		—		355		—		289,083		10.4
Mexico		16,558		—		—		—		16,558		0.6
Other1		18,329		40,198		679		—		59,206		2.1
Total	$	1,305,999		344,030		549,135		580,377	$	2,779,541		100.0

	2014
(in thousands)	North America Services		International Services		Merchant Services		NetSpend		Total		%
United States	$	778,766		—		508,747		482,686	$	1,770,199		72.3
Europe1		781		304,308		—		—		305,089		12.5
Canada		290,248		—		248		—		290,496		11.9
Mexico		16,216		—		—		—		16,216		0.7
Other1		16,305		47,888		684		—		64,877		2.7
Total	$	1,102,316		352,196		509,679		482,686	$	2,446,877		100.0

	2013
(in thousands)	North America Services		International Services		Merchant Services		NetSpend		Total		%
United States	$	712,252		—		533,939		207,851	$	1,454,042		70.4
Europe1		774		293,803		—		—		294,577		14.3
Canada		242,975		—		178		—		243,153		11.8
Mexico		16,513		—		—		—		16,513		0.8
Other1		14,492		40,962		566		—		56,020		2.7
Total	$	987,006		334,764		534,683		207,851	$	2,064,305		100.0

1 Revenues are impacted by movements in foreign currency exchange rates

MAJOR CUSTOMER:    For the years ended December 31, 2015, 2014 and 2013, the Company had no major customers.