Note 11 — Segment Reporting and Major Customers

Refer to Note 21 of the Company’s audited financial statements for the year ended December 31, 2018, which is included as Exhibit 13.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the SEC, for a discussion regarding segment reporting and major customers.

At TSYS, the chief operating decision maker (“CODM”) is a group consisting of Senior Executive Management. In the first quarter of 2019, the CODM changed the profitability measure for its operating segments to adjusted segment EBITDA. All periods presented have been adjusted to reflect this new measure.

The following table presents the Company’s total assets by segment:


	As of
(in thousands)	March 31, 2019		December 31, 2018
Issuer Solutions	$	7,075,930	6,843,451
Merchant Solutions		4,247,317	4,248,183
Consumer Solutions		1,419,687	1,374,667
Intersegment assets		(4,968,802)	(4,997,592)
Total assets	$	7,774,132	7,468,709

The Company maintains property and equipment, net of accumulated depreciation and amortization, in the following geographic areas:


	As of
(in thousands)	March 31, 2019		December 31, 2018
United States	$	321,654	321,119
Europe		47,994	45,872
Other		15,752	16,083
Total	$	385,400	383,074

The following table presents the Company’s depreciation and amortization by segment:


	Three months ended
		March 31,
(in thousands)	2019		2018
Depreciation and amortization by segment:
Issuer Solutions	$	35,167	28,331
Merchant Solutions		7,682	7,825
Consumer Solutions		4,416	4,259
Segment depreciation and amortization		47,265	40,415
Acquisition intangible amortization		54,957	63,023
Corporate administration and other		1,488	951
Total depreciation and amortization	$	103,710	104,389

The following tables reconcile geographic revenues to external revenues by operating segment based on the domicile of the Company’s customers:


	Three months ended March 31, 2019
(in thousands)	Issuer Solutions		Merchant Solutions	Consumer Solutions	Total
United States	$	271,130	344,298	219,191	$	834,619
Europe1		94,387	160	-		94,547
Canada1		79,633	388	-		80,021
Other1		25,009	335	-		25,344
Total	$	470,159	345,181	219,191	$	1,034,531

Certain of these revenues are impacted by movements in foreign currency exchange rates.


	Three months ended March 31, 2018
(in thousands)	Issuer Solutions		Merchant Solutions	Consumer Solutions	Total
United States	$	264,032	318,749	210,388	$	793,169
Europe1		95,143	125	-		95,268
Canada1		77,582	279	-		77,861
Other1		20,602	270	-		20,872
Total	$	457,359	319,423	210,388	$	987,170

Certain of these revenues are impacted by movements in foreign currency exchange rates.

The following table presents the Company’s operating results by segment:


Operating Segments	Three months ended March 31,

(in thousands)		2019	2018
Adjusted segment EBITDA1:
Issuer Solutions (a)	$	204,934	195,764
Merchant Solutions (b)		128,836	118,940
Consumer Solutions (c)		63,693	53,667
Corporate administration and other		(40,176)	(37,449)
Total		357,287	330,922
Less:
Share-based compensation		10,714	6,295
Cayan and TransFirst merger & acquisition (M&A) and integration expenses2		3,710	14,367
Depreciation and amortization		103,710	104,389
Contract asset amortization		8,038	6,874
Contract cost asset amortization		7,845	10,726
Operating income		223,270	188,271
Nonoperating expenses, net		(42,991)	(37,642)
Income before income taxes and equity in income of equity investments	$	180,279	150,629

Net revenue by segment:
Issuer Solutions (e)	$	433,473	423,574
Merchant Solutions (f)		342,956	317,403
Consumer Solutions (g)		219,178	210,489
Segment net revenue		995,607	951,466
Less: intersegment revenues		15,337	15,969
Net revenue3		980,270	935,497
Add: reimbursable items		54,261	51,673
Total revenues	$	1,034,531	987,170

Adjusted segment EBITDA margin on net revenue:
Issuer Solutions (a)/(e)		47.3%	46.2%
Merchant Solutions (b)/(f)		37.6%	37.5%
Consumer Solutions (c)/(g)		29.1%	25.5%

Adjusted segment EBITDA is net income excluding equity in income investments, interest expense (net of interest income), income taxes, depreciation, amortization, contract asset amortization, contract cost asset amortization, gains or losses on foreign currency translation, other nonoperating income or expenses, share-based compensation, litigation, claims, judgements or settlements and Cayan and TransFirst M&A and integration expenses.

Excludes share-based compensation

Net revenue is defined as total revenues less reimbursable items (such as postage) that are recorded by TSYS as expense.

Major Customers

For the three months ended March 31, 2019 and 2018, the Company did not have any major customers.