NetSpend 2014 Annual Report Download - page 36

principal payments on long-term debt borrowings and capital lease obligations offset by proceeds from the
exercise of stock options. 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.
Refer to Notes 13 and 24 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 13 in the Consolidated Financial Statements for further information on TSYS’ long-term debt and
financing arrangements.
Purchase of Noncontrolling Interest
In connection with the acquisition of CPAY, the Company is party to call and put arrangements with respect to
the membership units that represent the remaining noncontrolling interest of CPAY. The call arrangement is
exercisable by TSYS and the put arrangement is exercisable by the Seller. The put arrangement is outside the
control of the Company by requiring the Company to purchase the Seller’s entire equity interest in CPAY at a put
price at fair market value. At the time of the original acquisition, the redemption of the put option was
considered probable based upon the passage of time of the second anniversary date. The put arrangement is
recorded on the balance sheet and is classified as redeemable noncontrolling interest outside of permanent
equity.
In February 2014, the Company purchased an additional 15% equity interest in CPAY for $37.5 million, reducing
its redeemable noncontrolling interest to 25%. The call and put options for the Seller’s 25% equity interest were
extended as a result of this transaction.
The put option is not currently redeemable, but redemption is considered probable based upon the passage of
time toward the third anniversary date of the 2014 purchase of additional equity. The Company’s accounting
policy is to accrete changes in the redemption value over the period from the date of issuance to the earliest
redemption date, which the Company believes to be in 2017. The Company did not accrete any changes to the
redemption value as the balance as of December 31, 2014 exceeded the accretion fair value amount.
Refer to Note 24 in the Consolidated Financial Statements for more information on this purchase.
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