NetSpend 2014 Annual Report Download - page 80

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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. In the first quarter of 2014, the CODM decided that all share-based compensation costs should be
included in the category “Corporate Administration and Other” for purposes of segment disclosures. All prior
periods were restated to reflect this change. This change is used to evaluate performance and assess resources
starting in the first quarter of 2014. 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 in 2013, 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 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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