NetSpend 2015 Annual Report Download - page 25

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Below is a summary of AOF for the Company’s North America Services and International Services segments
combined:
As of December 31, Percent Change
(in millions) 2015 2014 2013 2015 vs. 2014 2014 vs. 2013
Consumer Credit .................................. 382.1 270.0 228.9 41.5% 18.0%
Retail ............................................ 26.1 28.4 27.8 (7.9) 2.2
Total Consumer ................................. 408.2 298.4 256.7 36.8 16.3
Commercial ....................................... 45.4 41.6 39.9 9.2 4.2
Other ............................................ 26.6 22.4 18.9 18.8 18.7
Subtotal1....................................... 480.2 362.4 315.5 32.5 14.9
Prepaid/Stored Value2.............................. 97.2 127.3 118.0 (23.7) 7.9
Government Services3.............................. 79.3 67.4 62.2 17.8 8.2
Commercial Card Single Use4........................ 75.8 59.6 45.3 27.1 31.5
Total AOF ........................................ 732.5 616.7 541.0 18.8 14.0
1 Traditional accounts include consumer, retail, commercial, debit and other accounts. These accounts are grouped together
due to the tendency to have more transactional activity than prepaid, government services and single use accounts.
2 Prepaid does not include NetSpend accounts.These accounts tend to have less transactional activity than the traditional
accounts. Prepaid and stored value cards are issued by firms through retail establishments to be purchased by consumers
to be used at a later date. These accounts tend to be the least active of all accounts on file.
3 Government services accounts are disbursements of student loan accounts issued by the Department of Education, which
have minimal activity.
4 Commercial card single use accounts are one-time use accounts issued by firms to book lodging and other travel related
expenses.
Major Customer
The Company works to maintain a large and diverse customer base across various industries. Although the
Company does not have a major customer on a consolidated basis, a significant amount of the Company’s
revenues are derived from long-term contracts with large clients. TSYS derives revenues from providing various
processing and other services to these clients, including processing of consumer and commercial accounts, as
well as revenues for reimbursable items. The loss of one of the Company’s large clients could have a material
adverse effect on the Company’s financial position, results of operations and cash flows.
Refer to Note 22 in the Consolidated Financial Statements for more information on major customers.
Operating Segments
TSYS’ services are provided through four operating segments: North America Services, International Services,
Merchant Services and NetSpend.
Issuing Services – North America Services and International Services
The Company’s North America Services and International Services segments have many long-term customer
contracts with card issuers providing account processing and output services for printing and embossing items.
These contracts generally require advance notice prior to the end of the contract if a client chooses not to renew.
Additionally, some contracts may allow for early termination upon the occurrence of certain events such as a
change in control. The termination fees paid upon the occurrence of such events are designed primarily to cover
balance sheet exposure related to items such as capitalized conversion costs or client incentives associated with
the contract and, in some cases, may cover a portion of lost future revenue and profit. Although these contracts
may be terminated upon certain occurrences, the contracts provide the segment with a steady revenue stream
since a vast majority of the contracts are honored through the contracted expiration date.
These services are provided throughout the period of each account’s use, starting from a card-issuing client
processing an application for a card. Services may include processing the card application, initiating service for
the cardholder, processing each card transaction for the issuing retailer or financial institution and accumulating
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