NetSpend 2012 Annual Report Download - page 24

measurement is based on significant inputs that are
both observable (Level 2) and non-observable
(Level 3) in the market as defined in ASC 820. Key
assumptions include (a) cash flow projections based
on market participant data and developed by
Company management, (b) a discount rate of
approximately 13%, (c) a terminal value based on a
long-term sustainable growth rate of approximately
3%, (d) an effective tax rate of approximately 36%,
(e) financial multiples of companies deemed to be
similar to TMS, and (f) adjustments because of the
lack of control or lack of marketability that market
participants would consider when estimating the fair
value of the noncontrolling interest in TMS.
Refer to Note 24 in the consolidated financial
statements for more information on the acquisition of
TMS.
Stock Repurchase Plan
On April 20, 2010, TSYS announced a stock
repurchase plan to purchase up to 10 million shares
of TSYS stock. The shares may be purchased from
time to time over the next two years at prices
considered attractive to the Company. On May 3,
2011, TSYS announced that its Board had approved
an increase in the number of shares that may be
repurchased under its current share repurchase plan
from up to 10 million shares to up to 15 million
shares of TSYS stock. The expiration date of the plan
was also extended to April 30, 2013. In July 2012,
TSYS announced that its Board had approved an
increase in the number of shares that may be
repurchased under its current share repurchase plan
from up to 15 million shares to up to 20 million
shares of TSYS stock. Through December 31, 2012,
the Company purchased 12.9 million shares for
approximately $240.4 million, at an average price of
$18.64. The Company has 7.1 million shares
remaining under the plan. Refer to Note 17 in the
consolidated financial statements for more
information on treasury stock.
Dividends
Dividends on common stock of $94.0 million were
paid in 2012, compared to $53.9 million and $55.1
million in 2011 and 2010, respectively. The Company
paid dividends of $0.50 per share in 2012 and
$0.28 per share in 2011 and 2010. On October 25,
2011, TSYS announced that its Board of Directors
approved a 42.9% increase in the regular quarterly
dividend payable on the Company’s common stock
from $0.07 per share to $0.10 per share, payable on
January 3, 2012 to shareholders of record as of the
close of business on December 15, 2011.
Significant Noncash Transactions
During 2012, 2011 and 2010, the Company issued
311,000, 206,000, and 197,000 shares of common
stock, respectively, to certain key employees and
non-management members of its Board of Directors.
The grants to certain key employees were issued in
the form of nonvested stock bonus awards for
services to be provided in the future by such officers
and employees. Beginning in 2011, the grants to the
Board of Directors were fully vested on the date of
grant. The market value of the common stock at the
date of issuance is amortized as compensation
expense over the vesting period of the awards.
Refer to Notes 16 and 23 in the consolidated financial
statements for more information on share-based
compensation and significant noncash transactions.
Additional Cash Flow Information
Off-Balance Sheet Financing
TSYS uses various operating leases in its normal
course of business. These “off-balance sheet”
arrangements obligate TSYS to make payments for
computer equipment, software and facilities. These
computer and software lease commitments may be
replaced with new lease commitments due to new
technology. Management expects that, as these
leases expire, they will be evaluated and renewed or
replaced by similar leases based on need.
The following table summarizes future contractual
cash obligations, including lease payments and
software arrangements, as of December 31, 2012, for
the next five years and thereafter:
Contractual Cash Obligations
Payments Due By Period
(in millions) Total 1 Year or Less 1-3 Years 3-5 Years After 5 Years
Operating
leases ....... $195 89 81 12 13
Debt
obligations . . . 202 27 55 120 —
Capital lease
obligations . . . 31 13 16 2 —
Total contractual
cash
obligations . . . $428 129 152 134 13
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