NetSpend 2013 Annual Report Download - page 69

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Refer to Note 23 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. 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, 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.
In early 2013, TSYS embarked on two corporate-wide
initiatives that impact more than one operating
segment. One initiative is a multi-year, multi-phase
initiative that consists of enhancing TSYS’ issuing
processing platforms. The other is an innovation
initiative focused on enhancing existing product and
service offerings through several new product
concepts and ideas on how to change existing
processes. The costs associated with these two new
initiatives are not allocated to the operating
segments, but are combined, along with the existing
corporate administration, in a grouping titled
“Corporate Administration and Other.” This was a
change the CODM requested and was used to
evaluate performance and assess resources starting in
the first quarter of 2013. The following operating
results by segment comparison reflects the change in
segment reporting from these initiatives, including
the 2012 and 2011 results.
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.
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