NetSpend 2013 Annual Report Download - page 28

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Purchase of Private Equity Investments
In 2011, the Company entered into a limited
partnership agreement in connection with its
agreement to invest in an Atlanta, Georgia-based
venture capital fund focused exclusively on investing
in technology-enabled financial services companies.
Pursuant to the limited partnership agreement, the
Company has committed to invest up to $20 million
in the fund so long as its ownership interest in the
fund does not exceed 50%. The Company made
investments in the fund of $1.4 million, $3.0 million
and $1.6 million in 2013, 2012, and 2011,
respectively. The Company recorded gains on this
investment of $966,000, and $898,000 for the years
ended December 31, 2013 and 2012, respectively.
Cash Flows from Financing Activities
Years Ended December 31,
(in thousands) 2013 2012 2011
Proceeds from long-term
borrowings .......... $1,395,661 150,000 —
Proceeds from exercise of
stock options ......... 40,691 9,672 8,065
Excess tax benefit from
share-based payment
arrangements ........ 3,528 1,259 (523)
Purchase of
noncontrolling
interest ............. —— (174,050)
Subsidiary dividends paid
to noncontrolling
shareholders ......... (7,321) (2,797) (433)
Debt issuance costs ..... (13,573) (2,073) —
Dividends paid on
common stock ....... (56,510) (94,035) (53,949)
Repurchase of common
stock under plans and
tax withholding ....... (103,857) (74,939) (121,271)
Principal payments on
long-term borrowings
and capital lease
obligations .......... (166,805) (200,052) (28,892)
Net cash provided by
(used in) financing
activities ............. $1,091,814 (212,965) (371,053)
The main source of cash from financing activities has
been the use of borrowed funds. The major uses of
cash for financing activities have been the principal
payment on long term debt and capital lease
obligations, purchase of noncontrolling interests,
payment of dividends and the purchase of stock
under the stock repurchase plan as described below.
Net cash provided by financing activities for the year
ended December 31, 2013 was $1.1 billion and was
primarily the result of proceeds from long term
borrowings in connection with the NetSpend
acquisition. Net cash used in financing activities for
the year ended December 31, 2012 was
$213.0 million and was primarily the result of
principal payments on long-term debt borrowings
and capital lease obligations, the repurchase of
common stock ,and payment of dividends offset by
proceeds from borrowings of long-term debt. Net
cash used in financing activities for the year ended
December 31, 2011 was $371.1 million and was
primarily the result of the acquisition of the remaining
49% interest in TSYS Merchant Solutions (TMS),
payment of dividends and the repurchase of common
stock. Refer to Notes 12 and 23 in the consolidated
financial statements for more information on the
long-term debt financing and acquisitions.
Financing
In connection with the NetSpend acquisition, the
Company obtained commitments for a $1.2 billion
364-day bridge term loan facility. In May 2013, the
Company closed the bridge term loan and issued
debt of $1.4 billion to finance the NetSpend
acquisition. In April 2013, the Company entered into
a new credit agreement that provided for a five-year
term loan to the Company in the amount of $200.0
million. In May 2013, the Company closed its
issuance of $550.0 million aggregate principal
amount of 2.375% Senior Notes due 2018 and
$550.0 million aggregate principal amount of 3.750%
Senior Notes due 2023 (collectively, the “Notes”).
The interest on the Notes is payable semiannually.
Upon the issuance of the Notes, the Company
eliminated its bridge term loan facility. In July 2013,
the Company borrowed $100 million on its revolving
credit facility which was repaid as of December 31,
2013. In connection with the bridge term loan facility
and the aforementioned loans, the Company paid
debt issuance costs of $13.6 million in 2013.
In September 2012, TSYS obtained a $150.0 million
term loan, which was used to pay off an existing term
loan.
During 2008 and 2009, the Company’s International
segment borrowed approximately ¥2.0 billion in a
Yen-denominated three-year loan to finance activities
in Japan. In December 2013, the Company repaid
this loan for approximately $19.2 million.
Refer to Note 12 in the consolidated financial
statements for further information on TSYS’ long-term
debt and financing arrangements.
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