NetSpend 2012 Annual Report Download - page 47

With the sale of certain assets and liabilities of TPOS
in 2010, the Company incurred a pre-tax goodwill
impairment of $2.2 million (approximately $1.5
million after-tax), which is included in loss on
discontinued operations, net of tax. TPOS was not a
significant component to the Merchant Services
segment. Refer to Note 2 for more information on
discontinued operations.
The gross amount and accumulated impairment loss of goodwill at December 31, 2012 and 2011 is as
follows:
2012
North America
Services International Services Merchant Services Consolidated
Gross amount ................................... $70,614 34,125 415,830 $520,569
Accumulated impairment losses .................... — — (2,225) (2,225)
Goodwill, net .................................. $70,614 34,125 413,605 $518,344
2011
North America
Services International Services Merchant Services Consolidated
Gross amount ..................................... $70,614 33,369 253,740 $357,723
Accumulated impairment losses ...................... — — (2,225) (2,225)
Goodwill, net ................................... $70,614 33,369 251,515 $355,498
The changes in the carrying amount of goodwill at December 31, 2012 and 2011 are as follows:
(in thousands) North America Services International Services Merchant Services Consolidated
Balance as of December 31, 2010 ................... $70,614 33,188 216,597 $ 320,399
TermNet purchase price allocation .................. — — 28,918 28,918
Infonox additional purchase consideration ............ — — 6,000 6,000
Currency translation adjustments ................... — 181 — 181
Balance as of December 31, 2011 ................... 70,614 33,369 251,515 355,498
CPAY purchase price allocation ................... — — 68,570 68,570
ProPay purchase price allocation .................. — — 93,520 93,520
Currency translation adjustments ................. — 756 — 756
Balance as of December 31, 2012 $70,614 34,125 413,605 $518,344
NOTE 11 Equity Investments
The Company has an equity investment with TSYS de
Mexico and records its 49% ownership using the
equity method of accounting. The operation prints
statements and provides card-issuing support
services to the equity investment clients and others.
The Company has an equity investment with CUP Data
and records its 44.56% ownership using the equity
method of accounting. China Union Pay Co., Ltd. (CUP)
is sanctioned by the People’s Bank of China, China’s
central bank, and has become one of the world’s
largest and fastest-growing payments networks. CUP
Data currently provides transaction processing, disaster
recovery and other services for banks and bankcard
issuers in China.
TSYS’ equity investments are recorded initially at cost
and subsequently adjusted for equity in earnings,
cash contributions and distributions, and foreign
currency translation adjustments. TSYS believes the
carrying value approximates the underlying assets of
the equity investments.
TSYS’ equity in income of equity investments (net of
tax) for the years ended December 31, 2012, 2011
and 2010 was $10.2 million, $8.7 million and $7.1
million, respectively.
A summary of TSYS’ equity investments at
December 31 is as follows:
(in thousands) 2012 2011
CUP Data ......................... $79,859 76,110
TSYS de México ................... 7,905 6,814
Total ............................. $87,764 82,924
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