(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Item 2.02. | Results of Operations and Financial Condition. |
Item 9.01. | Financial Statements and Exhibits. |
(d) | Exhibits. |
Exhibit Number | Description | |
99.1 | ||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
FISERV, INC. | ||||
Date: | May 7, 2020 | By: | /s/ Robert W. Hau | |
Robert W. Hau | ||||
Chief Financial Officer and Treasurer |
Exhibit 99.1 | ||
News Release |
For more information contact: | |
Media Relations: Britt Zarling Corporate Communications Fiserv, Inc. 414-378-4040 britt.zarling@fiserv.com | Investor Relations: Peter Poillon Investor Relations Fiserv, Inc. 212-266-3565 peter.poillon@fiserv.com |
For Immediate Release |
News Release |
• | Adjusted revenue increased slightly to $3.48 billion in the quarter compared to the prior year period. |
• | Internal revenue growth was 4% in the quarter, with 6% growth in the Merchant Acceptance segment, 1% growth in the Financial Technology segment and 3% growth in the Payments and Network segment compared to the prior year period. |
• | Adjusted earnings per share increased 16% to $0.99 in the quarter compared to the prior year period. |
• | Adjusted operating margin increased 10 basis points to 27.8% in the quarter compared to the prior year period. |
• | Free cash flow increased 3% to $760 million in the quarter compared to $738 million in the prior year period. |
• | The company repurchased 8.6 million shares of common stock for $885 million in the quarter. |
• | In February 2020, the company completed the sale of a 60% interest of its Investment Services business and retained a 40% interest. The company received net after-tax proceeds of $507 million from the transaction. |
• | In March 2020, the company acquired MerchantPro Express, an independent sales organization, and Bypass Mobile, an independent software vendor. |
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Fiserv, Inc. | |||||||
Condensed Consolidated Statements of Income | |||||||
(In millions, except per share amounts, unaudited) | |||||||
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Revenue | |||||||
Processing and services | $ | 3,075 | $ | 1,293 | |||
Product | 694 | 209 | |||||
Total revenue | 3,769 | 1,502 | |||||
Expenses | |||||||
Cost of processing and services | 1,635 | 624 | |||||
Cost of product | 532 | 174 | |||||
Selling, general and administrative | 1,404 | 341 | |||||
Gain on sale of businesses | (431 | ) | (10 | ) | |||
Total expenses | 3,140 | 1,129 | |||||
Operating income | 629 | 373 | |||||
Interest expense, net | (187 | ) | (57 | ) | |||
Debt financing activities | — | (59 | ) | ||||
Other income | 20 | 1 | |||||
Income before income taxes and loss from investments in unconsolidated affiliates | 462 | 258 | |||||
Income tax provision | (79 | ) | (31 | ) | |||
Loss from investments in unconsolidated affiliates | (6 | ) | (2 | ) | |||
Net income | 377 | 225 | |||||
Plus: net loss attributable to noncontrolling interests | 15 | — | |||||
Net income attributable to Fiserv | $ | 392 | $ | 225 | |||
GAAP earnings per share attributable to Fiserv - diluted | $ | 0.57 | $ | 0.56 | |||
Diluted shares used in computing earnings per share attributable to Fiserv | 691.2 | 399.1 | |||||
Earnings per share is calculated using actual, unrounded amounts. | |||||||
News Release |
Fiserv, Inc. | |||||||
Reconciliation of GAAP to | |||||||
Adjusted Net Income and Adjusted Earnings Per Share | |||||||
(In millions, except per share amounts, unaudited) | |||||||
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
GAAP net income | $ | 392 | $ | 225 | |||
GAAP net income attributable to First Data 1 | — | 169 | |||||
Combined net income attributable to Fiserv | 392 | 394 | |||||
Combined adjustments: | |||||||
Merger and integration costs 2 | 234 | 64 | |||||
Severance and restructuring costs 3 | 47 | 21 | |||||
Amortization of acquisition-related intangible assets 4 | 525 | 145 | |||||
Debt financing activities 5 | — | 60 | |||||
Impact of divestitures 6 | — | (17 | ) | ||||
Non wholly-owned entity activities 7 | (17 | ) | (12 | ) | |||
Tax impact of adjustments 8 | (179 | ) | (60 | ) | |||
Gain on sale of businesses 6 | (431 | ) | (9 | ) | |||
Tax impact of gain on sale of businesses 8 | 113 | 2 | |||||
Adjusted net income | $ | 684 | $ | 588 | |||
Weighted average common shares outstanding - diluted | 691.2 | 399.1 | |||||
Issuance of shares for combination | — | 286.3 | |||||
Dilutive impact of exchanged equity awards | — | 7.8 | |||||
Combined weighted average common shares outstanding - diluted 9 | 691.2 | 693.2 | |||||
GAAP earnings per share 9 | $ | 0.57 | $ | 0.56 | |||
Combined earnings per share 9 | $ | 0.57 | $ | 0.57 | |||
Combined adjustments - net of income taxes: | |||||||
Merger and integration costs 2 | 0.26 | 0.07 | |||||
Severance and restructuring costs 3 | 0.05 | 0.02 | |||||
Amortization of acquisition-related intangible assets 4 | 0.59 | 0.16 | |||||
Debt financing activities 5 | — | 0.07 | |||||
Impact of divestitures 6 | — | (0.02 | ) | ||||
Non wholly-owned entity activities 7 | (0.02 | ) | (0.01 | ) | |||
Gain on sale of businesses 6 | (0.46 | ) | (0.01 | ) | |||
Adjusted earnings per share | $ | 0.99 | $ | 0.85 |
News Release |
1 | Represents the financial results of First Data prior to the date of acquisition. For the three months ended March 31, 2019, this includes the results of First Data from January 1, 2019 through March 31, 2019. |
2 | Represents acquisition and related integration costs incurred as a result of the company's various acquisitions. Merger and integration costs include $221 million and $57 million in the first quarter of 2020 and 2019, respectively, related to the First Data acquisition. First Data integration-related costs in the first quarter of 2020 primarily include $52 million of accelerated depreciation and amortization associated with the termination of certain vendor contracts; $52 million of incremental share-based compensation, including the fair value of stock awards assumed by Fiserv; $45 million of other integration-related compensation costs; and $47 million of third party professional service fees associated with integration-related activities. Merger and integration costs related to the First Data acquisition in the first quarter of 2019 include $37 million of legal and other professional service fees, primarily consisting of transaction costs. |
3 | Represents severance and other costs associated with the achievement of ongoing expense management initiatives, including real estate and data center consolidation activities. |
4 | Represents amortization of intangible assets acquired through various acquisitions, including customer relationships, software/technology, and trade names. This adjustment does not exclude the amortization of other intangible assets such as contract assets (sales commissions and deferred conversion costs), capitalized and purchased software, and financing costs and debt discounts. See additional information on page 17 for an analysis of the company's amortization expense. |
5 | Represents expenses associated with entering into and maintaining a bridge term loan facility for the purpose of refinancing certain indebtedness of First Data upon the closing date of the acquisition. |
6 | Represents the earnings attributable to divested businesses, including two businesses acquired as part of the First Data acquisition that were sold in October 2019 and the sale of a 60% interest in the Investment Services business in February 2020. |
7 | Represents the company’s share of amortization of acquisition-related intangible assets at its unconsolidated affiliates, as well as the minority interest share of amortization of acquisition-related intangible assets at its subsidiaries in which it holds a controlling financial interest. |
8 | The tax impact of adjustments is calculated using a tax rate of 23%, which approximates the combined company's annual effective tax rate, exclusive of the actual tax impacts associated with the gain on sale of businesses. |
9 | GAAP earnings per share is computed by dividing GAAP net income by the weighted average common shares outstanding - diluted during the period. Combined earnings per share is computed by dividing combined net income attributable to Fiserv by the combined weighted average common shares outstanding - diluted during the period. The combined weighted average common shares outstanding - diluted is computed based on the historical Fiserv weighted average shares outstanding - diluted determined in accordance with GAAP, adjusted to include the Fiserv shares issued as merger consideration and shares subject to First Data equity awards assumed by Fiserv in connection with the First Data acquisition. |
News Release |
Fiserv, Inc. | |||||||
Financial Results by Segment | |||||||
(In millions, unaudited) | |||||||
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Total Company | |||||||
Revenue | $ | 3,769 | $ | 1,502 | |||
First Data revenue 1 | — | 2,316 | |||||
Combined revenue | 3,769 | 3,818 | |||||
Combined adjustments: | |||||||
Intercompany eliminations 2 | — | (2 | ) | ||||
Output Solutions postage reimbursements | (235 | ) | (250 | ) | |||
Deferred revenue purchase accounting adjustments | 12 | — | |||||
Merchant Services adjustment 3 | (68 | ) | (93 | ) | |||
Adjusted revenue | $ | 3,478 | $ | 3,473 | |||
Operating income | $ | 629 | $ | 373 | |||
First Data operating income 1 | — | 424 | |||||
Combined operating income | 629 | 797 | |||||
Combined adjustments: | |||||||
Merger and integration costs | 234 | 64 | |||||
Severance and restructuring costs | 47 | 21 | |||||
Amortization of acquisition-related intangible assets | 525 | 145 | |||||
Merchant Services adjustment 3 | (36 | ) | (55 | ) | |||
Gain on sale of businesses | (431 | ) | (9 | ) | |||
Adjusted operating income | $ | 968 | $ | 963 | |||
Operating margin | 16.7 | % | 24.8 | % | |||
Adjusted operating margin | 27.8 | % | 27.7 | % | |||
Merchant Acceptance | |||||||
Revenue | $ | 1,401 | $ | — | |||
First Data revenue 1 | — | 1,427 | |||||
Combined revenue | 1,401 | 1,427 | |||||
Combined adjustments: | |||||||
Deferred revenue purchase accounting adjustments | 2 | — | |||||
Merchant Services adjustment 3 | (68 | ) | (93 | ) | |||
Adjusted revenue | $ | 1,335 | $ | 1,334 | |||
Operating income | $ | 317 | $ | — | |||
First Data operating income 1 | — | 396 | |||||
Combined operating income | 317 | 396 | |||||
Combined adjustments: | |||||||
Merger and integration costs | 2 | — | |||||
Merchant Services adjustment 3 | (36 | ) | (55 | ) | |||
Adjusted operating income | $ | 283 | $ | 341 | |||
Operating margin | 22.6 | % | — | ||||
Adjusted operating margin | 21.2 | % | 25.6 | % | |||
News Release |
Fiserv, Inc. | |||||||
Financial Results by Segment (cont.) | |||||||
(In millions, unaudited) | |||||||
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Financial Technology 4 | |||||||
Revenue | $ | 718 | $ | 725 | |||
Operating income | $ | 204 | $ | 203 | |||
Operating margin | 28.3 | % | 28.0 | % | |||
Payments and Network | |||||||
Revenue | $ | 1,386 | $ | 651 | |||
First Data revenue 1 | — | 716 | |||||
Combined revenue | 1,386 | 1,367 | |||||
Combined adjustments: | |||||||
Intercompany eliminations 2 | — | (2 | ) | ||||
Deferred revenue purchase accounting adjustments | 10 | — | |||||
Adjusted revenue | $ | 1,396 | $ | 1,365 | |||
Operating income | $ | 565 | $ | 274 | |||
First Data operating income 1 | — | 249 | |||||
Combined operating income | 565 | 523 | |||||
Combined adjustments: | |||||||
Merger and integration costs | 10 | — | |||||
Adjusted operating income | $ | 575 | $ | 523 | |||
Operating margin | 40.8 | % | 42.1 | % | |||
Adjusted operating margin | 41.2 | % | 38.4 | % | |||
Corporate and Other | |||||||
Revenue | $ | 264 | $ | 126 | |||
First Data revenue 1 | — | 173 | |||||
Combined revenue | $ | 264 | $ | 299 | |||
Combined adjustments: | |||||||
Output Solutions postage reimbursements | (235 | ) | (250 | ) | |||
Adjusted revenue | $ | 29 | $ | 49 | |||
Operating loss | $ | (457 | ) | $ | (104 | ) | |
First Data operating loss 1 | — | (221 | ) | ||||
Combined operating loss | (457 | ) | (325 | ) | |||
Combined adjustments: | |||||||
Merger and integration costs | 222 | 64 | |||||
Severance and restructuring costs | 47 | 21 | |||||
Amortization of acquisition-related intangible assets | 525 | 145 | |||||
Gain on sale of businesses | (431 | ) | (9 | ) | |||
Adjusted operating loss | $ | (94 | ) | $ | (104 | ) | |
See pages 3-5 for disclosures related to the use of non-GAAP financial measures. | |||||||
Operating margin percentages are calculated using actual, unrounded amounts. |
News Release |
1 | Represents the financial results of First Data prior to the date of acquisition. For the three months ended March 31, 2019, this includes the results of First Data from January 1, 2019 through March 31, 2019. |
2 | Represents the elimination of intercompany revenue and expense between First Data and the company. |
3 | Represents an adjustment primarily related to the company's joint venture with Bank of America. The company and Bank of America jointly announced the dissolution of the Banc of America Merchant Services joint venture ("BAMS"), to be effective June 2020. The company owns 51% of BAMS and BAMS' financial results are 100% consolidated into the company's financial statements for GAAP reporting purposes. Upon dissolution of the joint venture, the company is entitled to receive a 51% share of the joint venture's value via an agreed upon contractual separation process. In addition, Bank of America has the right to require the company to continue providing merchant processing and related services to the joint venture clients allocated to Bank of America in the dissolution of the joint venture through June 2023 at current pricing. The company anticipates an ongoing relationship with Bank of America to provide processing and other support services to other Bank of America merchant clients following the joint venture's dissolution. The non-GAAP adjustment reduces adjusted revenue and adjusted operating income by the joint venture revenue and expense that is not expected to be retained by the company upon dissolution and is partially offset by an increase to processing and services revenue. |
4 | For all periods presented in the Financial Technology segment, there were no adjustments to GAAP measures presented and thus the adjusted measures are equal to the GAAP measures presented. |
News Release |
Fiserv, Inc. | |||||||
Condensed Consolidated Statements of Cash Flows | |||||||
(In millions, unaudited) | |||||||
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Cash flows from operating activities | |||||||
Net income | $ | 377 | $ | 225 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and other amortization | 279 | 100 | |||||
Amortization of acquisition-related intangible assets | 553 | 45 | |||||
Amortization of financing costs, debt discounts and other | 12 | 60 | |||||
Share-based compensation | 108 | 19 | |||||
Deferred income taxes | (57 | ) | 8 | ||||
Gain on sale of businesses | (431 | ) | (10 | ) | |||
Loss from investments in unconsolidated affiliates | 6 | 2 | |||||
Distributions from unconsolidated affiliates | 11 | — | |||||
Other operating activities | — | (2 | ) | ||||
Changes in assets and liabilities, net of effects from acquisitions and dispositions: | |||||||
Trade accounts receivable | 200 | 6 | |||||
Prepaid expenses and other assets | 6 | (26 | ) | ||||
Contract costs | (96 | ) | (58 | ) | |||
Accounts payable and other liabilities | (88 | ) | (26 | ) | |||
Contract liabilities | 8 | 30 | |||||
Net cash provided by operating activities | 888 | 373 | |||||
Cash flows from investing activities | |||||||
Capital expenditures, including capitalization of software costs | (246 | ) | (98 | ) | |||
Proceeds from sale of business | 584 | — | |||||
Payments for acquisition of businesses, net of cash acquired and including working capital adjustments | (110 | ) | 56 | ||||
Distributions from unconsolidated affiliates | 36 | — | |||||
Other investing activities | — | 6 | |||||
Net cash provided by (used in) investing activities | 264 | (36 | ) | ||||
Cash flows from financing activities | |||||||
Debt proceeds | 1,832 | 587 | |||||
Debt repayments | (2,040 | ) | (680 | ) | |||
Short-term borrowings, net | 7 | — | |||||
Payments of debt financing, redemption and other costs | — | (56 | ) | ||||
Proceeds from issuance of treasury stock | 48 | 32 | |||||
Purchases of treasury stock, including employee shares withheld for tax obligations | (970 | ) | (183 | ) | |||
Distributions paid to noncontrolling interests and redeemable noncontrolling interests | (26 | ) | — | ||||
Other financing activities | 15 | — | |||||
Net cash used in financing activities | (1,134 | ) | (300 | ) | |||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (17 | ) | — | ||||
Net change in cash, cash equivalents and restricted cash | 1 | 37 | |||||
Cash, cash equivalents and restricted cash, beginning balance | 933 | 415 | |||||
Cash, cash equivalents and restricted cash, ending balance | $ | 934 | $ | 452 | |||
News Release |
Fiserv, Inc. | |||||||
Condensed Consolidated Balance Sheets | |||||||
(In millions, unaudited) | |||||||
March 31, 2020 | December 31, 2019 | ||||||
Assets | |||||||
Cash and cash equivalents | $ | 896 | $ | 893 | |||
Trade accounts receivable – net | 2,582 | 2,782 | |||||
Prepaid expenses and other current assets | 1,055 | 1,503 | |||||
Settlement assets | 8,400 | 11,868 | |||||
Total current assets | 12,933 | 17,046 | |||||
Property and equipment – net | 1,708 | 1,606 | |||||
Customer relationships – net | 13,327 | 14,042 | |||||
Other intangible assets – net | 3,677 | 3,600 | |||||
Goodwill | 35,695 | 36,038 | |||||
Contract costs – net | 566 | 533 | |||||
Investments in unconsolidated affiliates | 2,814 | 2,720 | |||||
Other long-term assets | 1,878 | 1,954 | |||||
Total assets | $ | 72,598 | $ | 77,539 | |||
Liabilities and Equity | |||||||
Accounts payable and accrued expenses | $ | 2,875 | $ | 3,080 | |||
Short-term and current maturities of long-term debt | 338 | 287 | |||||
Contract liabilities | 506 | 492 | |||||
Settlement obligations | 8,400 | 11,868 | |||||
Total current liabilities | 12,119 | 15,727 | |||||
Long-term debt | 21,630 | 21,612 | |||||
Deferred income taxes | 4,227 | 4,247 | |||||
Long-term contract liabilities | 154 | 155 | |||||
Other long-term liabilities | 922 | 941 | |||||
Total liabilities | 39,052 | 42,682 | |||||
Redeemable noncontrolling interests | 259 | 262 | |||||
Fiserv shareholders' equity | 31,843 | 32,979 | |||||
Noncontrolling interests | 1,444 | 1,616 | |||||
Total equity | 33,287 | 34,595 | |||||
Total liabilities and equity | $ | 72,598 | $ | 77,539 | |||
News Release |
Internal Revenue Growth 1 | Three Months Ended March 31, | |||||||||
2020 | 2019 | Growth | ||||||||
Total Company | ||||||||||
Adjusted revenue | $ | 3,478 | $ | 3,473 | ||||||
Currency impact 2 | 45 | — | ||||||||
Acquisition adjustments | (6 | ) | — | |||||||
Divestiture adjustments | (147 | ) | (219 | ) | ||||||
Internal revenue | $ | 3,370 | $ | 3,254 | 4% | |||||
Merchant Acceptance | ||||||||||
Adjusted revenue | $ | 1,335 | $ | 1,334 | ||||||
Currency impact 2 | 34 | — | ||||||||
Acquisition adjustments | (6 | ) | — | |||||||
Divestiture adjustments | (116 | ) | (157 | ) | ||||||
Internal revenue | $ | 1,247 | $ | 1,177 | 6% | |||||
Financial Technology | ||||||||||
Adjusted revenue | $ | 718 | $ | 725 | ||||||
Currency impact 2 | 2 | — | ||||||||
Divestiture adjustments | — | (9 | ) | |||||||
Internal revenue | $ | 720 | $ | 716 | 1% | |||||
Payments and Network | ||||||||||
Adjusted revenue | $ | 1,396 | $ | 1,365 | ||||||
Currency impact 2 | 9 | — | ||||||||
Divestiture adjustments | (2 | ) | (4 | ) | ||||||
Internal revenue | $ | 1,403 | $ | 1,361 | 3% | |||||
Corporate and Other | ||||||||||
Adjusted revenue | $ | 29 | $ | 49 | ||||||
Divestiture adjustments | (29 | ) | (49 | ) | ||||||
Internal revenue | $ | — | $ | — |
1 | Internal revenue growth is measured as the increase in adjusted revenue (see pages 10-12) for the current period excluding the impact of foreign currency fluctuations and revenue attributable to acquisitions (except for revenue attributable to First Data which is presented on a combined company basis) and dispositions, divided by adjusted revenue from the prior period excluding revenue attributable to dispositions. Revenue attributable to dispositions includes the revenue associated with Banc of America Merchant Services, the dissolution of which is anticipated in June 2020, and transition services revenue within Corporate and Other. |
2 | Currency impact is measured as the increase or decrease in adjusted revenue for the current period by applying prior period foreign currency exchange rates to present a constant currency comparison to prior periods. |
News Release |
Free Cash Flow | Three Months Ended March 31, | |||||||
2020 | 2019 | |||||||
Net cash provided by operating activities | $ | 888 | $ | 373 | ||||
First Data net cash provided by operating activities 1 | — | 615 | ||||||
First Data payments for contract assets 2 | — | (31 | ) | |||||
Combined net cash provided by operating activities | 888 | 957 | ||||||
Combined capital expenditures | (246 | ) | (233 | ) | ||||
Combined adjustments: | ||||||||
Distributions paid to noncontrolling interests and redeemable noncontrolling interests | (26 | ) | (52 | ) | ||||
Distributions from unconsolidated affiliates 3 | 36 | — | ||||||
Severance, restructuring, merger and integration payments | 139 | 86 | ||||||
Tax payments on adjustments and debt financing | (31 | ) | (20 | ) | ||||
Free cash flow | $ | 760 | $ | 738 | ||||
1 | Represents the financial results of First Data prior to the date of acquisition. For the three months ended March 31, 2019, this includes the results of First Data from January 1, 2019 through March 31, 2019. |
2 | Represents the conformity of First Data's historical classification of payments for contract assets to be consistent with the company's classification and treatment. |
3 | Distributions from unconsolidated affiliates totaled $47 million and $52 million for the three months ended March 31, 2020 and 2019, respectively, of which $11 million of the 2020 distributions are recorded within net cash provided by operating activities and $52 million of the 2019 distributions are recorded within First Data net cash provided by operating activities. |
News Release |
Total Amortization 1 | Three Months Ended March 31, | |||||||
2020 | 2019 | |||||||
Acquisition-related intangible assets | $ | 553 | $ | 45 | ||||
Capitalized software | 38 | 38 | ||||||
Purchased software | 56 | 12 | ||||||
Financing costs, debt discounts and other | 12 | 63 | ||||||
Sales commissions | 22 | 20 | ||||||
Deferred conversion costs | 7 | 5 | ||||||
Total amortization | $ | 688 | $ | 183 | ||||
First Data acquisition-related intangible assets | $ | — | $ | 100 | ||||
First Data capitalized software | — | 25 | ||||||
First Data purchased software | — | 29 | ||||||
First Data financing costs, debt discounts and other | — | 3 | ||||||
First Data sales commissions | — | — | ||||||
First Data deferred conversion costs | — | 9 | ||||||
Total First Data amortization 2 | $ | — | $ | 166 | ||||
Combined acquisition-related intangible assets | $ | 553 | $ | 145 | ||||
Combined capitalized software | 38 | 63 | ||||||
Combined purchased software | 56 | 41 | ||||||
Combined financing costs, debt discounts and other | 12 | 66 | ||||||
Combined sales commissions | 22 | 20 | ||||||
Combined deferred conversion costs | 7 | 14 | ||||||
Total combined amortization | $ | 688 | $ | 349 |
1 | The company adjusts its non-GAAP results to exclude amortization of acquisition-related intangible assets as such amounts are inconsistent in amount and frequency and are significantly impacted by the timing and/or size of acquisitions (see corresponding adjustment on page 8). The adjustment for acquired First Data software/technology excludes only the incremental amortization related to the fair value purchase accounting allocation. Management believes that the adjustment of acquisition-related intangible asset amortization supplements the GAAP information with a measure that can be used to assess the comparability of operating performance. Although the company excludes amortization from acquisition-related intangible assets from its non-GAAP expenses, management believes that it is important for investors to understand that such intangible assets were recorded as part of purchase accounting and contribute to revenue generation. Amortization of intangible assets that relate to past acquisitions will recur in future periods until such intangible assets have been fully amortized. Any future acquisitions may result in the amortization of additional intangible assets. |
2 | Represents the financial results of First Data prior to the date of acquisition. For the three months ended March 31, 2019, this includes the results of First Data from January 1, 2019 through March 31, 2019. |
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