NetSpend 2014 Annual Report Download - page 88

Other
On February 1, 2012, TSYS acquired contract-based intangible assets in its Merchant Services segment for
$1.7 million. These intangible assets are being amortized on a straight-line basis over their estimated useful lives
of five years which approximates their usage.
Redeemable Noncontrolling Interest
The fair value of the noncontrolling interest in CPAY, owned by a private company, was based on the actual
purchase price paid for the controlling interest in CPAY. Next, adjustments were made for lack of control and lack
of marketability that market participants would consider when estimating the fair value of the noncontrolling,
non-marketable interest in CPAY.
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 in CPAY to 25%. As a result of this transaction, the call and put
arrangements for CPAY, representing 25% of its total outstanding equity interests, were extended and may now
be exercised at the discretion of TSYS or the Seller on the third anniversary of the closing of the additional
purchase and upon the recurrence of certain other specified events.
The put option is not currently redeemable, but redemption is considered probable based upon the passage of
time of the third anniversary date of the 2014 purchase of additional equity. As such, the Company has adopted
the accounting policy 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. If the put option was redeemable as of
December 31, 2014, the redemption value was estimated to be approximately $22.5 million. 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.
Pro forma Results of Operations
The pro forma revenue and earnings of TSYS’ acquisitions other than NetSpend are not material to the
consolidated financial statements.
Note 25 Collaborative Arrangement
TSYS has a 45% ownership interest in an enterprise jointly owned with two other entities which operates aircraft
for the owners’ internal use. The arrangement allows each entity access to the aircraft and each entity pays for its
usage of the aircraft. Each quarter, the net operating results of the enterprise are shared among the owners
based on their respective ownership percentage.
TSYS records its usage of the aircraft and its share of net operating results of the enterprise in selling, general and
administrative expenses.
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