Segment Reporting and Major Customers

9 Months Ended

Sep. 30, 2016

Segment Reporting [Abstract]

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, 2015, which are included as Exhibit 13.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the SEC, for a discussion regarding segment reporting and major customers.

The following table presents the Company’s total assets by segment:

	As of
	September 30, 2016		December 31, 2015
North America Services	$	5,660,048	3,485,924
International Services		310,286	348,714
Merchant Services		3,325,108	689,781
NetSpend		1,468,576	1,504,740
Intersegment assets		(4,388,840)	(2,151,264)
Total assets	$	6,375,178	3,877,895

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

	As of
(in thousands)	September 30, 2016		December 31, 2015
United States	$	235,541	241,814
Europe*		39,774	41,953
Other*		6,418	6,131
Total	$	281,733	289,898

*Property and equipment are impacted by movements in foreign currency exchange rates. 

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

Operating Segments	Three months ended September 30,			Nine months ended September 30,
(in thousands)		2016	2015		2016	2015
Operating income (a)	$	155,327	163,104		442,835	416,202
Share-based compensation		13,069	11,295		33,792	31,468
TransFirst M&A and integration expenses1		1,830	-		25,908	-
Acquisition intangible amortization		53,341	22,883		134,748	69,601
Adjusted operating income (b)	$	223,567	197,282		637,283	517,271
Adjusted operating income by segment:
North America Services (c)	$	113,425	113,946		350,955	324,902
International Services (d)		15,524	18,370		41,564	38,706
Merchant Services (e)		90,784	42,387		219,056	117,192
NetSpend (f)		40,856	37,315		125,538	109,224
Corporate Administration and Other		(37,022)	(14,736)		(99,830)	(72,753)
Adjusted segment operating income2	$	223,567	197,282		637,283	517,271
Total revenues (g)	$	1,146,888	707,890		3,037,853	2,062,698
Reimbursable items, interchange and assessment expenses		357,300	71,504		781,684	208,444
Net revenue2 (h)		789,588	636,386		2,256,169	1,854,254
Intersegment		8,454	7,000		29,498	25,098
Segment net revenue	$	798,042	643,386		2,285,667	1,879,352
Segment net revenue:
North America Services (i)	$	300,754	293,571		901,563	846,989
International Services (j)		79,445	86,446		236,570	244,033
Merchant Services (k)		262,494	123,721		644,573	351,987
NetSpend (l)		155,349	139,648		502,961	436,343
Segment net revenue	$	798,042	643,386		2,285,667	1,879,352
Operating margin (GAAP) (a)/(g)		13.5%	23.0%		14.6%	20.2%
Adjusted operating margin on net revenue (b)/(h)		28.3%	31.0%		28.3%	27.9%
Adjusted segment operating margin on net revenue:
North America Services (c)/(i)		37.7%	38.8%		38.9%	38.4%
International Services (d)/(j)		19.5%	21.3%		17.6%	15.9%
Merchant Services (e)/(k)		34.6%	34.3%		34.0%	33.3%
NetSpend (f)/(l)		26.3%	26.7%		25.0%	25.0%
Depreciation and amortization:
North America Services	$	27,540	25,300		82,464	72,831
International Services		7,050	8,678		23,394	26,084
Merchant Services		6,846	4,670		18,702	13,394
NetSpend		3,241	2,632		9,466	7,547
Segment depreciation and amortization		44,677	41,280		134,026	119,856
Acquisition intangible amortization		53,341	22,883		134,748	69,601
Corporate Administration and Other		898	336		2,694	1,762
Total depreciation and amortization	$	98,916	64,499		271,468	191,219

¹ Excludes share-based compensation

² Net revenue and adjusted segment operating income are non-GAAP measures. Net revenue is total revenues less reimbursable items (such as postage), as well as, merchant acquiring interchange and assessment fees charged by the card associations or payment networks that are recorded by TSYS as expense.  Adjusted segment operating income excludes acquisition intangible amortization, TransFirst M&A and integration expenses, share-based compensation and expenses associated with Corporate Administration and Other.

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

	Three months ended September 30, 2016
(in thousands)	North America Services		International Services	Merchant Services	NetSpend	Total
United States	$	264,062	-	570,796	154,750	$	989,608
Europe*		207	74,620	57	-		74,884
Canada*		65,839	-	185	-		66,024
Other*		7,299	8,891	182	-		16,372
Total	$	337,407	83,511	571,220	154,750	$	1,146,888

	Nine months ended September 30, 2016
(in thousands)	North America Services		International Services	Merchant Services	NetSpend	Total
United States	$	776,671	-	1,275,474	500,889	$	2,553,034
Europe*		606	225,071	164	-		225,841
Canada*		208,739	23	507	-		209,269
Other*		24,478	24,643	588	-		49,709
Total	$	1,010,494	249,737	1,276,733	500,889	$	3,037,853

	Three months ended September 30, 2015
(in thousands)	North America Services		International Services	Merchant Services	NetSpend		Total
United States	$	257,756	-	142,667	139,648	$	540,071
Europe*		199	79,402	29	-		79,630
Canada*		68,396	-	164	-		68,560
Other*		8,306	11,138	185	-		19,629
Total	$	334,657	90,540	143,045	139,648	$	707,890

	Nine months ended September 30, 2015
(in thousands)	North America Services		International Services		Merchant Services	NetSpend	Total
United States	$	716,061	-		408,407	436,343	$	1,560,811
Europe*		597	223,671		81	-		224,349
Canada*		218,565	-	-	468	-		219,033
Other*		26,561	31,407		537	-		58,505
Total	$	961,784	255,078		409,493	436,343	$	2,062,698

*Certain of these revenues are impacted by movements in foreign currency exchange rates.

Major Customers

For the three and nine months ended September 30, 2016 and 2015, the Company did not have any major customers.